CODE OF FEDERAL REGULATIONS
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The Code of Federal Regulations is a codification of the general and permanent rules published in the Federal Register by the Executive departments and agencies of the Federal Government. The Code is divided into 50 titles which represent broad areas subject to Federal regulation. Each title is divided into chapters which usually bear the name of the issuing agency. Each chapter is further subdivided into parts covering specific regulatory areas.
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Title 7—
The Food and Nutrition Service current regulations in the volume containing parts 210-299, include the Child Nutrition Programs and the Food Stamp Program. The regulations of the Federal Crop Insurance Corporation are found in the volume containing parts 400-699.
All marketing agreements and orders for fruits, vegetables and nuts appear in the one volume containing parts 900-999. All marketing agreements and orders for milk appear in the volume containing parts 1000-1199. Part 900—General Regulations is carried as a note in the volume containing parts 1000-1199, as a convenience to the user.
Redesignation tables appear in the Finding Aids section of the volumes containing parts 210-299 and parts 1600-1899.
(This book contains parts 1600 to 1899)
7 U.S.C. 941
The purpose of this part is to effectuate the provisions of the Government in the Sunshine Act. This part applies to the deliberations of a quorum of the Directors of the Bank required to take action on behalf of the Bank where such deliberations determine or result in the joint conduct or disposition of official Bank business. Any deliberation to which this part applies is hereinafter in this part referred to as a meeting of the Board of Directors.
As used in this part:
(1) Deliberations to determine whether a meeting or portions of a meeting will be open or closed or whether information pertaining to closed meetings will be disclosed;
(2) Calling a meeting at a date earlier than announced as provided in § 1600.5;
(3) Changing the subject matter of a publicly announced meeting as provided in § 1600.5;
(4) Disposition of Board business by circulation of materials to individual Board members;
(5) Staff briefings of Board members;
(6) Informal background discussions among Board members and staff which clarify issues and expose varying views; or
(7) Sessions with individuals from outside the Bank where Board members listen to a presentation and may elicit additional information.
(a) Except as provided for in § 1600.6 every portion of every meeting of the Board shall be open to public observation. Observation does not include participation or disruptive conduct by observers, and persons engaging in such conduct will be removed from the meeting. Documents being considered at meetings of the Board may be obtained subject to the exemptions set forth in § 1600.8.
(b) Board members shall not jointly conduct or dispose of official Board business other than in accordance with this part.
(c) The Secretary of the Board shall be responsible for assuring that ample space, sufficient visibility, and adequate acoustics are provided for public observation of meetings of the Board.
A decision to hold a meeting of the Board should be made as provided in the bylaws of the Bank and at least ten days prior to the scheduled meeting date in order for the Secretary of the
(a) Except as otherwise provided in this section, public announcement of open meetings and meetings or portions thereof closed under § 1600.7 will be made at least seven days in advance of each meeting. Except to the extent that such information is determined to be exempt from disclosure under § 1600.6, each such public announcement will state the time, place, and subject matter of the meeting, whether it is to be open or closed to the public, and the name and telephone number of the official designated to respond to requests for information about the meeting. Each such announcement shall be submitted for publication in the
(b) If a meeting is closed, the Board may omit from the announcement information usually included, if and to the extent that it finds that disclosure would be likely to have any of the consequences listed in § 1600.6.
(c) Where a majority of the Board members determine by recorded vote that Bank business requires that a meeting be called on less than ten days notice, public announcement shall be made at the earliest practicable time. Such announcement will state the time, place, and the subject matter of the meeting, whether it is to be open or closed to the public, and the name and telephone number of the official designated to respond to requests for information about the meeting.
(d) The time or place of a meeting may be changed following the public announcement required by paragraph (a) of this section only if the Secretary publicly announces such change at the earliest practicable time. The subject matter of a meeting, or the determination of the Board to open or close a meeting, or portion of a meeting, to the public, may be changed following the public announcement required by this section only if:
(1) A majority of the Directors determines by a recorded vote that business so requires and that no earlier announcement of the change was possible; and
(2) The Secretary publicly announces such change and the vote of each Director upon such change at the earliest practicable time.
(e) The earliest practicable time, as used in this subsection, means as soon as possible, which should in few, if any, instances be later than the commencement of the meeting or portion in question.
(f) Each person interested in attending an open meeting of the Board should notify the Assistant Secretary of the Board at least one business day prior to the open meeting of their intention to attend the meeting. Any person who fails to do so may not be accommodated if there is insufficient space in the meeting room.
(a) A portion or portions of a Board meeting may be closed to the public and any information pertaining to such meeting otherwise required by § 1600.3 to be disclosed to the public may be withheld, where the Board determines that public disclosure of information to be discussed at such meetings is likely to:
(1) Disclose matters that are:
(i) Specifically authorized under criteria established by an Executive Order to be kept secret in the interests of national defense or foreign policy; and
(ii) In fact properly classified pursuant to such Executive Order.
(2) Relate solely to the internal personnel rules and practices of the Bank;
(3) Disclose matters specifically exempted from disclosure by statute
(i) Requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue; or
(ii) Establishes particular criteria for withholding or refers to particular types of matters to be withheld.
(4) Disclose trade secrets and commercial or financial information obtained from a person and privileged or confidential;
(5) Involve accusing any person of a crime, or formally censuring any person;
(6) Disclose information of a personal nature where disclosure would constitute a clearly unwarranted invasion of personal privacy;
(7) Disclose investigatory records compiled for law enforcement purposes, or information which if written would be contained in such records, but only to the extent that the production of such records or information would:
(i) Interfere with enforcement proceedings;
(ii) Deprive a person of a right to a fair trial or to an impartial adjudication;
(iii) Constitute an unwarranted invasion of personal privacy;
(iv) Disclose the identity of a confidential source, and, in the case of a record compiled by a criminal enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source;
(v) Disclose investigative techniques and procedures; or
(vi) Endanger the life or physical safety of law enforcement personnel.
(8) Disclose information contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of the Bank or any other agency responsible for the regulation or supervision of financial institutions;
(9) Disclose information the premature disclosure of which would be likely to significantly frustrate implementation of a proposed action of the Board or of another agency, except that this shall not apply in any instance where the content or nature of the proposed action has already been disclosed to the public or where the Board is required by law to make such disclosure on its own initiative prior to taking final action on such proposal; or
(10) Specifically concern the Board's participation in a civil action or proceeding, an action in a foreign court or international tribunal, or an arbitration, or the initiation, conduct, or disposition by the Board of a particular case of formal agency adjudication pursuant to the procedures in 5 U.S.C. 554 or otherwise involving a determination on the record after opportunity for a hearing.
(b) Any Board meeting or portion thereof, which may be closed, or any information which may be withheld under paragraph (a) of this section, will not be closed or withheld, respectively, in any case where the Board finds the public interest requires otherwise.
(a) A majority of all Directors may vote to close a meeting or withhold information pertaining to that meeting. A separate vote shall be taken with respect to any action under § 1600.6(a). A majority of the Board may act by taking a single vote with respect to a series of meetings, a portion or portions of which are proposed to be closed to the public, or with respect to any information concerning such series of meetings, so long as each meeting in such series involves the same particular subject matter and is scheduled to be held no more than thirty days after the initial meeting in such series. The vote of each Director participating in such vote shall be recorded and no proxy shall be allowed.
(b) Whenever any person whose interests may be directly affected by a portion of the Board's meeting requests that the Board close such portion to the public on the basis of exemptions in paragraph (a)(5), (a)(6), or (a)(7) of § 1600.6, the Board, upon request of any one of its members, will vote whether or not to close such portion of the meeting. The vote of each Director participating in such vote shall be recorded and no proxy shall be allowed.
(c) Before every Board meeting closed on the basis of one or more of the exemptions in § 1600.6(a), the Legal Counsel will publicly certify that, in Counsel's opinion, the meeting may be closed to the public and shall state each relevant exemption.
(d) Within one business day after any vote taken pursuant to paragraph (a), (b), or (c) of this section, the Board will make publicly available a written copy of the vote, reflecting the vote of each Board member. Except to the extent that such information is exempt from disclosure, if a meeting or portion of a meeting is to be closed to the public, the Board will make publicly available within one business day after the required vote a full written explanation of its action, together with a list of all persons expected to attend the meeting and their affiliation.
(a) The Secretary of the Board will maintain the following records for each Board meeting, or portion thereof which is closed to the public pursuant to a vote under § 1600.7:
(1) A copy of the Legal Counsel's certification required by § 1600.7;
(2) A copy of a statement from the presiding officer which sets forth the time and place of the closed meeting or portion thereof and a list of persons present; and
(3) A complete verbatim transcript or electronic recording adequate to record fully the proceedings of each Board meeting or portion of a meeting, except that in the case of a meeting or portion of a meeting closed to the public on the basis of exemptions in paragraph (a)(8) or (a)(10) of § 1600.6, the Secretary of the Board will maintain either a transcript, electronic recording, or a complete set of minutes. Such minutes shall fully and clearly describe all matters discussed and shall provide a full and accurate summary of actions taken and the reasons therefor, including a description of each of the views expressed on any item and the record of all roll-call vote reflecting the vote of each member of the question. All documents considered in connection with any action will be identified in such minutes.
(b) The retention period for the records required by paragraph (a) of this section will be for a period of at least two years after the particular Board meeting or until one year after the conclusion of any Board proceeding with respect to which the meeting or portion thereof was held, whichever occurs later.
(c) The Secretary of the Board will make promptly available to the public the transcript, electronic recording, transcription of the recording, or minutes of the discussion of any item on the agenda of a Board meeting, except for such item or items of such discussion as the Board determines to contain information which may be withheld on the basis of one or more of the exemptions in § 1600.6.
(d) Requests for public inspection of electronic recording, transcripts or minutes of Board meetings shall be made to the Assistant Secretary of the Board of Directors of the Rural Telephone Bank, room 4051-South Building, U.S. Department of Agriculture, 14th Street and Independence Avenue SW., Washington, DC 20250. Requests for inspection or copies of transcripts shall specify the date of the meeting, the name of the agenda and the agenda item number; this information will appear in the notice of the meeting.
(e) The transcripts, minutes, or transcriptions of electronic recordings of a Board meeting will disclose the identity of each speaker, and will be furnished to any person at the actual cost of transcription or duplication.
7 U.S.C. 941
Nomenclature changes to part 1610 appear at 59 FR 66439, Dec. 27, 1994.
Loans made by the Governor of the Rural Telephone Bank (the “Bank”) will be made in conformance with title IV of the Rural Electrification Act of 1936 (the “Act”), as amended (7 U.S.C. 941
As used in this part:
The aggregate amount of loans made will not exceed the amount authorized by the Board of Directors (the “Board”) of the Bank.
No application for a loan will be considered for approval by the Bank until it has been reviewed by RUS and the Governor has determined, based on such review, the eligibility of the applicant for a Bank loan and the amount thereof. Loan application forms are available from RUS on request. No fees or charges are assessed for Bank loans.
A Bank loan will not be made unless the applicant qualifies for a Bank loan of at least $50,000.
(a) The Bank makes loans, under section 408 of the Act, concurrently with RUS cost-of-money loans made under section 305(d)(2) of the Act. To qualify for concurrent Bank and RUS cost-of-money loans on or after November 1, 1993, a borrower must meet each of the following requirements:
(1) The average number of proposed subscribers per mile of line in the service area of the borrower is not more than 15, or the borrower has a projected TIER (including the proposed loans) of at least 1.0, but not greater than 5.0, as determined by the feasibility study prepared in connection with the loans, see 7 CFR part 1737, subpart H; and
(2) The Administrator of RUS has approved and the borrower is participating in a telecommunications modernization plan for the state, see 7 CFR part 1751, subpart B.
(b) The loan amounts from each program (Bank, including amounts for class B stock, and RUS cost-of-money) will be proportionate to the total amount of funds appropriated for the fiscal year for Bank loans and RUS cost-of-money loans. To determine the Bank portion, the total loan amount will be multiplied by the ratio of Bank funds appropriated for the fiscal year to the sum of RUS cost-of-money and Bank funds appropriated for the fiscal year in which the loan is approved. The same method would be used to calculate the RUS cost-of-money portion (see 7 CFR 1735.31(b)). If during the fiscal year the amount of funds appropriated changes, the ratio will be adjusted accordingly and applied only to those loans approved afterwards.
(c) The actual rate of interest on the Bank loan shall be determined as provided in § 1610.10; the RUS cost-of-money loan shall bear interest at a rate equal to the current cost of money to the Federal Government, on the date of advance of funds to the borrower, for loans of similar maturity, but not more than 7 percent per year (see 7 CFR 1735.31(c)).
(d) Generally, no more than 10 percent of lending authority from appropriations in any fiscal year for Bank and RUS cost-of-money loans may be loaned to a single borrower. The Bank will publish by notice in the
In the interest of making optimum use of the Bank's loan funds, a Bank loan for the acquisition of exchange facilities under section 408(a)(2) of the Act (7 U.S.C. 948(a)(2)) will not be recommended by the Governor for approval by the Secretary of Agriculture unless the Governor determines that the acquisition is reasonably necessary to improve the efficiency, effectiveness, or financial stability of the borrower's telephone system, that the location and character of the proposed acquisition are such that the acquisition is reasonably necessary to accomplish such improvement, and that the amount of the requested loan for such acquisition is reasonably justified by the nature and scope of the improvement which the acquisition would effect.
The policies embodied in 7 CFR part 1610, in all parts of 7 CFR chapter XVII except those identified below, will be utilized by the Governor in carrying out the Bank's loan program to the extent that such policies are consistent with title IV of the Act (7 U.S.C. 941
Borrowers receiving loans from the Bank shall be required to invest in class B stock at 5 percent of the total amount of loan funds advanced. Borrowers may purchase class B stock by:
(1) Paying an amount (using their own general funds) equal to 5 percent of the amount, exclusive of the amount for class B stock, of each loan advance, at the time of such advance; or
(2) Requesting that funds for the purchase of class B stock be included in the loan. If funds for class B stock are included in a loan, the funds for class B stock shall be advanced in an amount
(a) All loan fund advances made on or after December 22, 1987 under Bank loans approved on or after October 1, 1987, shall bear interest at the rate determined as established below, but not less than 5 percent per annum.
(b) The interest rate for the period beginning on the date the advance is made and ending at the close of the fiscal year in which the advance is made shall be the average yield on the date of advance on outstanding marketable obligations of the United States having a final maturity comparable to the final maturity of the advance. The interest rate shall be determined to the nearest 0.01 percent.
(1) For this determination, the Bank will use yields on actively traded Treasury issues adjusted to constant maturities obtained from the
(2) The Bank will notify the borrower in writing of the interest rate that applies to each advance.
(c) After the fiscal year in which the advance is made, the interest rate applied to the advance will be the sum of the calculations made in paragraphs (c) (1) through (5) of this section. This interest rate determination shall be made by the Governor within 30 days of the end of each fiscal year and shall be determined to the nearest 0.01 percent.
(1) The aggregate of all amounts received by the Bank during the fiscal year from the issuance of Class A stock, multiplied by the rate of return payable by the Bank during the fiscal year as specified in section 406(c) of the Act, which product is divided by the aggregate of the amounts advanced by the Bank during the fiscal year.
(2) The aggregate of all amounts received by the Bank during the fiscal year from the issuance of Class B stock, multiplied by the rate at which dividends are payable by the Bank during the fiscal year as specified in section 406(d) of the Act, which product is divided by the aggregate of the amounts advanced by the Bank during the fiscal year. Section 406(d) provides that “No dividends shall be payable on Class B stock.” The “amounts received by the Bank during the fiscal year from the issuance of Class B stock” means the amount of cash received during the fiscal year for the purchase of Class B stock, plus the amount advanced to borrowers by the Bank during the fiscal year for such purchases, less any Class B stock that is rescinded during the fiscal year.
(3) The aggregate of all amounts received by the Bank during the fiscal year from the issuance of Class C stock, multiplied by the rate at which dividends are payable by the Bank during the fiscal year as specified in section 406(e) of the Act, which product is divided by the aggregate of the amounts advanced by the Bank during the fiscal year.
(4) The amounts received by the Bank during the fiscal year from each issue of telephone debentures and other obligations of the Bank, multiplied, respectively, by the rates at which interest is payable by the Bank during the fiscal year to holders of each issue, each of which product is divided, respectively, by the aggregate of the amounts advanced by the Bank during the fiscal year.
(5) The amount by which the aggregate of the amounts advanced by the Bank during the fiscal year exceeds the aggregate of the amount received by the Bank from the issuance of Class A stock, Class B stock, Class C stock, and telephone debentures and other obligations of the Bank during the fiscal year, multiplied by the historic cost of money rate as of the close of the immediately preceding fiscal year, which product is divided by the aggregate of
(6) As used in paragraph (c)(5) of this section, the term “historic cost of money rate as of the close of the immediately preceding fiscal year,” means the sums of the results of the following calculations: The amounts advanced by the Bank in each fiscal year during the period beginning with fiscal year 1974 and ending with the immediately preceding fiscal year, multiplied, respectively, by the cost of money rate for the fiscal year (as set forth in Table I for fiscal years 1974 through 1987, and as determined by the Governor in paragraphs (c) (1) through (5) of this section for fiscal years after fiscal year 1987), with each product then divided by the aggregate of the amounts advanced by the Bank from the beginning of fiscal year 1974 through the end of the fiscal year just ended.
(d) A borrower with a Bank loan approved on or after October 1, 1987, and before December 22, 1987, and with funds not fully advanced as of December 22, 1987, may until the next advance under the loan or March 21, 1988, whichever is later, elect to have the interest rate specified in the loan commitment apply to the unadvanced portion in lieu of the rate which would otherwise apply as set forth in § 1610.10(a). A borrower making such an election shall contact, in writing, the applicable Area Office of RUS. The Governor shall then adjust the interest rate that applies to the unadvanced portion of the loan accordingly.
(e) If the Bank, pursuant to section 407(b) of the Act, issues telephone debentures to refinance outstanding telephone debentures or other obligations, the Bank shall reduce the interest rate charged on each advance of Bank loan funds made during the fiscal year(s) in which the refinanced debentures or other obligations were originally issued. The reduction shall be for the period beginning on the issue date of the refinancing debentures and ending on the date the advance matures or is completely prepaid, whichever is earlier. This reduction shall be in addition to any other interest rate reduction required by section 408(b)(3) of the Act. The interest rate shall be reduced by the amount which fully reflects that percentage of the funds saved by the Bank as a result of the refinancing which is equal to the percentage representation of the advance of all advances made during the fiscal year(s) involved. In no case, however, shall the interest rate be reduced to less than 5 percent per annum. The interest rate reduction for each advance shall be determined as follows:
(1) The funds saved by the Bank as a result of the refinancing shall be computed.
(2) The advance shall be divided by the total of all advances made during the fiscal year(s) involved, and stated to the nearest .01 percent.
(3) The percentage in paragraph (e)(2) of this section is multiplied by the amount in paragraph (e)(1) of this section to determine the savings for a particular advance. The interest rate on that advance is then reduced to fully reflect the savings over the remaining amortization period of the loan from which the advance was made.
(f) Within 60 days after the issue date described in paragraph (e) of this section, the Governor shall amend the loan documentation for each advance described in paragraph (e) of this section, as necessary, to reflect any interest rate reduction applicable to the advance by reason of paragraph (e) of this section, and shall notify each affected borrower of the reduction.
(g) Within 5 days of determining the cost of money rate for a fiscal year, the Governor shall:
(1) Cause the determination to be published in the
(2) Furnish a copy of the determination to the Comptroller General of the United States.
(h) A borrower should not wait until the end of the fiscal year to submit a requisition for an advance of loan funds if it wants the advance made in that fiscal year. Borrower requisitions submitted late in the fiscal year may not be processed in that fiscal year because of workload and other factors.
(a) Bank loans approved before November 1, 1993, may be prepaid in accordance with the terms thereof, including payment of the premium as provided therein.
(b) A borrower may prepay part or all of a Bank loan made on or after November 1, 1993, by paying the outstanding principal and any accrued interest without being required to pay a prepayment premium.
(c) Borrowers that qualify to issue a refunding note or notes in accordance with 7 CFR 1735.43, Payments on loans, shall not be required to pay a prepayment premium on all payments made in accordance with the new payment schedule.
Nomenclature changes to Chapter XVII appear at 59 FR 66440, Dec. 27, 1994.
5 U.S.C. 301, 552; 7 U.S.C. 901
(a) The Rural Electrification Administration (REA) was established by Executive Order No. 7037 on May 11, 1935. Statutory authority was provided by the Rural Electrification Act of 1936 (RE Act) (7 U.S.C. 901). The RE Act established REA as a lending agency with responsibility for developing a program for rural electrification.
(b) On October 28, 1949, the RE Act was amended to authorize REA to make loans to improve and extend telephone service in rural areas. The Rural Telephone Bank (RTB), an agency of the United States, was established by amendment to the RE Act, approved May 7, 1971. The Administrator of RUS serves as the Bank's chief executive with the title of Governor.
(c) The Secretary of Agriculture (Secretary) established the Rural Utilities Service (RUS) on October 20, 1994, pursuant to the Department of Agriculture Reorganization Act of 1994, (7 U.S.C. 6941
(a) The offices of RUS are located in the South Building of the United States Department of Agriculture at 1400 Independence Avenue, SW, Washington, DC 20250-1500. Hours of operation are from 8:15 AM to 4:45 PM, Eastern time on Federal Government business days.
(b) Information about RUS is available for public inspection and copying as required by the Freedom of Information Act, 5 U.S.C. 552
(c) RUS issues indexes of publications in conformance with the Freedom of Information Act and Department of Agriculture regulations at 7 CFR part 1. Many RUS issuances, including regulations, delegations of authority for headquarters and field staff, and other documents, are available on the world wide web at http://www.usda.gov/rus. Single hard copies of publications, forms, forms of basic loan and security instruments, and other materials are available either directly from RUS,
Department of Agriculture procedures for requests for official records under the Freedom of Information Act are found at 7 CFR part 1. Requests must be in writing and may be submitted in person or by mail to United States Department of Agriculture, Rural Development, Room 0164-S, 1400 Independence Avenue, SW, STOP 0742, Washington, DC 20250-0742; or by FAX to 202-720-1915. As set forth in 7 CFR 1.16, fees may be charged for processing of requests for records. An appeal of the agency determination concerning the request for official records shall be made in writing to the Administrator, Rural Utilities Service, United States Department of Agriculture, Room 4051-S, 1400 Independence Avenue, SW, STOP 1510, Washington, DC 20250-1500.
RUS requires that all persons submitting comments to a proposed rule or other document published by the agency in the
The Administrator, who also serves as Governor of the RTB, is appointed by the President, with the advice and consent of the Senate. The Under Secretary, Rural Development delegated to the Administrator, in 7 CFR part 2, responsibility for administering the programs and activities of RUS and RTB. The Administrator is aided directly by Deputy Administrators and by Assistant Administrators for the electric program, telecommunications program, the water and environmental programs, and program accounting and regulatory analysis, and by other staff offices. The work of the agency is carried out as described in this part.
Deputy Administrators aid and assist the Administrator. The Deputy Administrator, Program Policy and Telecommunications, provides overall policy direction to all RUS programs and directs and coordinates the telecommunications programs. The Deputy Administrator, Water and Environmental Programs, directs and coordinates the agency's water and waste disposal programs. The Deputy Administrators review agency policies in these areas and, as necessary, implement changes, and participate with the Administrator and other officials in planning and formulating the programs and activities of the agency, including the making and servicing of loans and grants.
RUS, through the Electric Program, makes loans and loan guarantees for rural electrification and the furnishing of electric service to persons in rural areas.
(a)
(b)
(c)
RUS and RTB, through the Telecommunications Program, make loans and loan guarantees to furnish and improve telecommunications service in rural areas.
(a)
(b)
(c)
RUS, through the Water and Environmental Programs, provides loan and grant funds for water and waste disposal projects serving the most financially needy rural communities.
(a)
(b)
(c)
RUS, through the Telecommunications Program, makes grants and
(a)
(b)
RUS, through Program Accounting and Regulatory Analysis, monitors and administers applicable regulations, RUS policy, and accounting requirements. The staffs assist the Assistant Administrator with respect to management, information systems, budgets, and other such matters.
(a)
(b) This division monitors borrowers’ accounting operations in order to ensure compliance with applicable statutory and regulatory requirements and with the requirements of the Office of Management and Budget.
(c) The two regional branches (the Northern Region and the Southern Region) work directly with borrowers. Each regional office has a staff of headquarters and field accountants. The Technical Accounting and Auditing Staff monitors industry developments, including the standards of the Financial Accounting Standards Board, and recommends Agency policies and procedures.
(d) Program Development and Regulatory Analysis directs and administers the preparation, clearance, processing, and distribution of RUS submissions to the Office of the
The Financial Services Staff evaluates the financial condition of financially troubled borrowers in order to protect the Government's interests.
The following persons are authorized, in descending order, to act for the Administrator when he or she is not on official duty in the Washington, DC, Metropolitan Area, is sick, has resigned, or is deceased. That is, if the first person on the list is also not on official duty in the Washington, DC, Metropolitan Area, is sick, has resigned, or is deceased, the second person on the list is authorized to act for the Administrator and so on down the list. Persons on this list may not redelegate the authority to act as the Administrator. The Administrator may in his or her discretion in writing, on a case-by-case basis, delegate authority to act as Administrator in his or her absence outside of this specified order.
(1) Deputy Administrator, Program Policy and Telecommunications.
(2) Deputy Administrator, Water and Environmental Programs.
(3) Assistant Administrator, Electric Program.
(4) Assistant Administrator, Telecommunications Program.
(5) Assistant Administrator, Water and Environmental Programs.
(6) Assistant Administrator, Program Accounting and Regulatory Analysis.
(a)
(1) All discretionary hardship loans.
(2) All loans, loan guarantees, and lien accommodations and subordinations of liens to finance operating costs.
(3) All loans, loan guarantees, and lien accommodations and subordinations of liens of more than $20,000,000 for distribution borrowers or more than $50,000,000 for power supply borrowers.
(4) All loans, loan guarantees, and lien accommodations and subordinations of liens for distribution borrowers that are members of a power supply borrower that is in default of its obligations to the Government or that is currently assigned to the Financial Services Staff, unless otherwise determined by the Administrator.
(5) All loans, loan guarantees, and lien accommodations and subordinations of liens that require an Environmental Impact Statement.
(6) Certifications and findings required by the RE Act or other applicable laws and regulations, the placing and releasing of conditions precedent to the advance of funds, and all security instruments, loan contracts, and all other necessary documents relating to the authorities reserved in this section.
(7) Execution of all loan contracts, security instruments, and all other documents in connection with loans, loan guarantees, and lien accommodations approved by the Administrator.
(b)
(1) Loans, loan guarantees, and lien accommodations and subordinations of liens for distribution borrowers in amounts not exceeding $20,000,000.
(2) Loans, loan guarantees, and lien accommodations and subordinations of liens for power supply borrowers in amounts not exceeding $50,000,000.
(3) Execution of all loan contracts, security instruments, and all other documents in connection with loans, loan guarantees, and lien accommodations approved by the Assistant Administrator, Electric Program.
(c)
(1) Loans, loan guarantees, and lien accommodations and subordinations of liens in amounts not exceeding $15,000,000 except for those approvals reserved to the Administrator.
(2) All certifications and findings required by the RE Act or other applicable laws and regulations, the imposing and releasing of conditions precedent to the advance of loan funds, and all security instruments, loan contracts, and all other documents relating to the delegations set forth in paragraph (c)(1) of this section.
(d)
(1) Loans, loan guarantees, and lien accommodations and subordinations of liens in amounts not exceeding $30,000,000, except for those approvals reserved to the Administrator.
(2) All certifications and findings required by the RE Act or other applicable laws and regulations, the placing and releasing of conditions precedent to the advance of funds, and all security instruments, loan contracts or all other documents relating to the delegations set forth in paragraph (d)(1) of this section.
(a)
(1) All loans, loan guarantees, and lien accommodations and subordinations of liens to finance operating costs.
(2) All loans, loan guarantees, or lien accommodations and subordinations of liens of $25,000,000 or more.
(3) Loans and loan guarantees with acquisition costs of $5,000,000 or more.
(4) Loans and loan guarantees containing funds to refinance outstanding debt of more than $5,000,000.
(5) All loan contracts, security instruments, and all other documents to be executed in connection with loans and loan guarantees approved by the Administrator.
(b)
(1) Loans, loan guarantees, and lien accommodations and subordinations of liens not to exceed $25,000,000 except for those reserved to the Administrator.
(2) Loans and loan guarantees with acquisition costs where the acquisition portion of the loan is less than $5,000,000.
(3) Loans and loan guarantees including refinancing amounts that do not exceed $5,000,000.
(4) Distance learning and telemedicine loans and loan guarantees that do not exceed $5,000,000.
(5) Loan contracts, security instruments, and other documents to be executed in connection with loans and loan guarantees approved by the Assistant Administrator, Telecommunications Program.
(c)
(1) Loans, loan guarantees, and lien accommodations and subordinations of liens of less than $10,000,000.
(2) Loans and loan guarantees with acquisition costs of less than $2,000,000.
(3) Loans and loan guarantees including refinancing amounts of less than $2,000,000.
(4) Any modifications in the method of carrying out loan purposes.
The State Rural Development Offices have the responsibility for making and servicing water and waste loans and grants.
(a)
(1) Grants or loan and grant combinations.
(2) The number selected from each state for financial assistance for grant approval and loans or grants approved.
(3) Extension of principal and interest repayments for rural development purposes.
(4) Loan contracts, security instruments, and all other documents to be executed in connection with loans and loan guarantees approved by the Administrator.
(b)
(1) Loans, that do not also include requests for grant funds, except for those reserved to the Administrator.
(2) Loan contracts, security instruments, and all other documents to be executed in connection with loans and loan guarantees approved by the Assistant Administrator, Telecommunications Program.
7 U.S.C. 901
(a) This subpart sets forth RUS's policies and procedures for making zero-interest loans and grants to borrowers in accordance with the cushion of credit payments program authorized in section 313 of the Act (7 U.S.C. 940c).
(b) The zero-interest loans and grants are provided for the purpose of promoting rural economic development and job creation projects.
(a) It is RUS's policy that borrowers use the Rural Economic Development Loan and Grant Program to promote projects that will result in a sustainable increase in the productivity of economic resources in rural areas and thereby lead to a higher level of income for rural citizens.
(b) It is RUS's policy that borrowers promote economic development in rural areas and job creation projects that:
(1) Are based on sound economic and financial analyses; and
(2) Take a long-term perspective.
(c) It is RUS's policy to direct the funds under this program to projects which are located in, or will primarily benefit, those rural areas that are experiencing the greatest economic hardship.
(d) It is RUS's policy to encourage economic development in rural areas and job creation projects without regard to service area.
(e) It is RUS's policy to encourage borrowers to make cushion of credit payments.
(f) It is RUS's policy to maintain liaisons with officials of other Federal, state, regional and local rural development agencies to coordinate this program with other rural economic development programs.
(1) The Administrator or Governor of the RTB is authorized to finance under sections 2, 4, 5, 201, 305, and 408 of the Act; or
(2) Is characterized as furnishing, generating or transmitting electric energy or other activities involved in providing electricity, or is characterized as providing telephone service. It will include electric and telephone facilities and equipment used in connection with providing such a service. It will not include a relatively insignificant amount of customer premises equipment, as determined by the Administrator.
Funds provided under this program come from interest differential credits to the subaccount and appropriated amounts made available to the subaccount.
Zero-interest loans and grants will be made during each fiscal year to the full extent of the amounts held in the subaccount subject only to limitations imposed by law. For administrative purposes, the Administrator will make a determination of the fiscal year-end amount held in the subaccount as of a date prior to, but as near as practicable to, the end of the fiscal year.
Zero-interest loans and grants may be made to any borrower that is not delinquent on any outstanding Federal debt or in bankruptcy proceedings. However, a zero-interest loan or grant will not be made to a borrower during any period in which the Administrator has determined that no additional financial assistance of any nature should be provided to the borrower pursuant to any provision of the Act. The determination to suspend eligibility for assistance under this subpart will be based on one or more of the following factors:
(a) The borrower's demonstrated unwillingness to exercise diligence in repaying RUS loans or loan guarantees that results in the Administrator being unable to find that a loan, or loan guaranteed by RUS, would be repaid within the time agreed;
(b) The borrower's demonstrated unwillingness to meet requirements in RUS's legal documents or regulations; or
(c) Other actions on the part of the borrower that thwart the achievement of the objectives of the RUS program.
(a) Zero-interest loans and grants must be used exclusively to promote rural economic development and/or job creation projects, including, but not limited to, project feasibility studies, start-up costs, business incubator projects, and other reasonable expenses for the purpose of fostering rural economic development.
(b) The Administrator will give preference to providing funds under this
(c) Zero-interest loans and grants may be used for Projects that enhance rural economic development by providing advanced telecommunications services and computer networks for medical and educational services, as follows: (1) For telecommunications end use and/or transmission facilities; and (2) Other portions of the project, such as modifications to buildings necessary to accommodate telecommunications equipment for medical care and other services, public or private education, and employment training.
(d) Zero-interest loans and grants may be used for community antenna television systems or facilities. The borrower will document that such facilities provide a tangible economic benefit to the proposed service area in accordance with § 1703.46 of this subpart. Notwithstanding this, the Administrator reserves the right to deny any proposal for community antenna television systems or facilities. Community antenna television systems or facilities will be considered for funding in accordance with § 1703.46 of this subpart and this section only when all of the following conditions exist:
(1) The proposed community antenna television system or facility is established in cooperation with a local educational and/or medical entity(ies) to provide educational and/or medical programming which addresses specific needs of rural residents;
(2) Services to be provided by the proposed community antenna television systems or facilities are not available in the area to be served, or services are not being provided by the existing television programming carrier at an affordable cost to residents; and
(3) Such community antenna systems or facilities will not present undue competition for existing television programming carriers in the area.
Grants may be made for the following purposes:
(a) The establishment and operation of a revolving loan program by Borrowers in accordance with § 1703.22;
(b) Project feasibility studies to assist for-profit and non-profit entities in conjunction with a loan for an authorized project. Feasibility studies will include management assistance, consultation, and research for planning individual projects that the Borrower has determined will benefit the rural community. Feasibility studies which may be financed under this section must be performed by qualified entities subject to § 1703.19, General requirements for grant funding. Feasibility studies must address the important aspects of project assessment and planning to ensure, to the extent practicable, the success of projects. These include the market, technical, economic, financial, and managerial issues related to project feasibility. Feasibility studies may be funded in connection with viable projects as a reimbursement to the project owner for expenses incurred during the initial planning stages of the project prior to project funding by RUS;
(c) The acquisition of technical assistance in conjunction with projects funded with zero-interest loans to enable for-profit and non-profit entities to obtain analysis of facilities and processes, managerial, financial and operational consultation. Grant funds may also be used in conjunction with zero-interest loans to enable non-profit business incubators to provide technical assistance. Technical assistance will enable project owners to identify and evaluate problems or potential problems and provide training in order that they may ultimately implement, manage, operate and maintain viable projects which are financed with zero-interest loan funds. Technical assistance financed under this section must be performed by qualified entities which are independent of the project owner subject to § 1703.19, General requirements for grant funding;
(d) Business incubators established by non-profit organizations to assist in
(e) Community development assistance to non-profit entities and public bodies for employment creation projects, or other projects which provide needed community facilities and services;
(f) Facilities and equipment to public, for-profit and non-profit entities to provide education and training to rural residents to facilitate economic development. Equipment and facilities may be funded to enable rural businesses to provide educational and job enhancement skills to employees;
(g) Facilities and equipment to public, for-profit and non-profit entities to provide medical care to rural residents. Equipment and facilities may be funded to enable eligible entities to provide medical training and related professional health care skills to rural health care providers;
(h) Projects which utilize advanced telecommunications and/or computer networks to facilitate medical or educational services or job training in accordance with paragraphs (f) and (g) of this section.
(a) Grants made under § 1703.18(a), establishment and operation of a revolving loan program by Borrowers, will be limited to Borrowers and can be made without zero-interest loans. Grants made under § 1703.18 (b) through (h) will be made only in conjunction with zero-interest loans, and on a pass-through basis.
(b) Pass-through grant funding for projects under § 1703.18 (b), (c), (f), (g) and (h) will be available for non-profit and for-profit entities. Pass-through grant funding for projects under § 1703.18 (d) and (e) will be available only for non-profit entities.
(c) All projects funded with zero-interest loans and grants will require supplemental funding in accordance with § 1703.23. For grants made under § 1703.18(a), the portion eligible for RUS funding may be fully funded with grant funds. For all other grants funded under § 1703.18, the portion of project costs eligible for RUS funding may be funded up to 20 percent with grant funds.
(d) Grant funding will be provided only to the extent necessary for a feasible project. A feasible project is a project which expects to generate sufficient income to pay operating expenses and debts and compensate for depreciation of equipment and facilities for the project which is to be funded by RUS. Depreciation must be based on allowable depreciation schedules as set forth by the United States Internal Revenue Service. Borrowers whose analyses of projects show feasibility without grant funds should not apply for grant funding. Borrowers requesting pass-through grant funds will base grant funding requests on borrower projected income and expense projections for the project, and documentation regarding depreciation of the equipment and facilities for the project. The Administrator will determine whether the Borrower's projections of income, expenses and depreciation are reasonable.
(e) For projects that project insufficient operating revenue the first two years to show feasibility, borrowers should first consider the deferral provisions set forth in § 1703.29(b) before determining the appropriate level of requested grant funding. Zero-interest loan and grant funding will be approved in accordance with paragraph (d) of this section based on the option which results in the lowest required grant percentage.
(f) The owner of the pass-through project that receives grant funds will be encouraged to commit that the project will be a demonstration project.
(g) Borrowers or project owners must demonstrate the availability and commitment of other sources of funding
(h) Feasibility studies and/or technical assistance funded with grants under § 1703.18 (b) and (c) must be performed by entities which are independent of the Borrower and qualified to provide such services. The project owner, if deemed qualified in accordance with this paragraph, may furnish a feasibility study under § 1703.18(b). Entities furnishing technical assistance under § 1703.18(c), must be independent of the project owner. To be deemed qualified, entities providing feasibility studies and/or technical assistance must:
(1) Provide sufficient documentation evidencing their proven ability, background and experience to furnish such services; and
(2) Provide sufficient documentation evidencing their legal authority and capacity to furnish such services.
(a) Zero-interest loans and grants must not be used:
(1) To fund or assist projects of which any director, officer, general manager or significant stockholder of the Borrower, or close relative thereof, is an owner, stockholder, partner or director, or which would, in the judgment of the Administrator, create a conflict of interest or the appearance of a conflict of interest. The Borrower must disclose to the Administrator information regarding any conflict of interest, potential conflict of interest or any appearance of a conflict of interest. The Administrator will determine whether there is a conflict of interest or whether any potential conflict of interest or appearance of a conflict of interest may adversely affect RUS's interests. A Borrower organized as, or consisting of a cooperative, widely held mutual corporation, tribal government, municipal power corporation, public power district, or a similar widely held organization would ordinarily be able to have an ownership interest in or manage a project operated on either a for-profit or non-profit basis. A Borrower organized as a closely held, for-profit corporation with more than 5 percent of its stock held by one legal person, its subsidiary or an affiliate, would ordinarily be able to own or manage a project operated on a non-profit basis only;
(2) For any costs incurred on the project:
(i) Prior to receipt of the Borrower's completed application by RUS during an application period unless the Administrator has specifically approved such usage in writing; or
(ii) For site development, the destruction or alteration of buildings, or other activities that would adversely affect the environment or limit the choice of reasonable alternatives prior to satisfying the requirements of § 1703.32;
(3) By the Borrower to purchase or lease any real property, materials, equipment, or services from its subsidiary, an affiliate, or significant stockholders, officers, managers or directors of the Borrower, or close relatives thereof, where the purchase or lease has not been fully disclosed to the Administrator and received the Administrator's prior written approval;
(4) By the recipient of a pass-through-loan or pass-through-grant to purchase or lease any real property, materials, equipment, or services from the Borrower, its subsidiary, an affiliate of the Borrower, or significant stockholders, officers, managers or directors of the Borrower, or close relatives thereof, where the purchase or lease has not been fully disclosed to the Administrator and received the Administrator's prior written approval;
(5) To pay off or refinance existing indebtedness incurred prior to receipt of the Borrower's completed application by RUS or for refinancing or repaying a loan made under the Act or a program administered by the Administrator;
(6) For any electric or telephone purpose, as determined by the Administrator;
(7) For the Borrower's electric or telephone operations or for any operations affiliated with the Borrower unless the Administrator has specifically informed the Borrower in writing that the operations are part of the approved purposes;
(8) To pay the salaries of any employee or owner of the Borrower, its subsidiaries, or affiliates. This restriction does not prohibit the use of loan or grant funds for printing and similar costs for project feasibility studies it has prepared, commissioned or purchased if specifically approved by the Administrator. This restriction is subject to the operating expense allowance for revolving loan funds set forth in § 1703.22 (a)(6);
(9) To fund feasibility studies and technical assistance as set forth in § 1703.18 independently of projects which are funded under the zero-interest loan and grant program;
(10) For community antenna television systems or facilities except as provided in § 1703.17(d) of this subpart;
(11) For proposed projects located in areas covered by the Coastal Barrier Resources Act (16 U.S.C. 3501
(12) For anything other than an approved purpose.
(b) [Reserved]
(a) A borrower may not charge interest for the use of the proceeds of the zero-interest loan provided under this program; however, it may charge reasonable loan servicing charges, reasonable legal fees involved in providing the RUS funds to the recipient, and the amount paid for an irrevocable letter of credit made payable to RUS and issued on behalf of the borrower that guarantees repayment of an RUS zero-interest loan, all as determined by the Administrator. A borrower may require the recipient of a pass-through-loan to provide and/or obtain adequate security for the zero-interest loan funds.
(b) A borrower must calculate any costs to charge in connection with the use of grant funds under this program for the project and must temporarily deposit the grant funds in accordance with 7 CFR parts 3015, Uniform Federal Assistance Regulations, and 3016, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, as appropriate. Grant funds will be disbursed to the Borrower in accordance with § 1703.61(b).
(c) A borrower may not make a profit from any zero-interest loan or grant provided from the subaccount, with the exception of the $500 interest income exclusion in paragraph (d) of this section.
(d) The Borrower may not requisition zero-interest loan funds unless those funds are deposited into the Borrower's RUS construction fund trustee account. The Borrower will be required to set up a separate Federally insured account called the Rural Economic Development Account, if loan funds are not expected to be disbursed within two months after receipt from RUS. All interest earned on temporarily deposited zero-interest loan funds in excess of $500 per 12-month period must be used for approved purposes or returned to RUS. Interest earned in excess of $500 per 12 month period and returned to RUS will not be used to reduce the Borrower's principal indebtedness. Grant funds will be disbursed by RUS in accordance with 7 CFR parts 3015 and 3016, and § 1703.61(b).
(e) The borrower may not condition the receipt of the proceeds of a zero-interest loan or grant under this subpart with the requirement that the recipient take electric or telephone service from the borrower.
Grant funds under this section will be provided only to RUS Borrowers on a non pass-through basis. RUS Borrowers will, in turn, provide loans to foster rural economic development in accordance with this subpart and the specific requirements of this section.
(a)
(1) The uses, restrictions and limitations for zero-interest loans set forth in §§ 1703.17, 1703.20 and 1703.21 respectively;
(2) Loans made by RUS Borrowers initially lending grant funds disbursed by RUS are limited to types of projects specified in § 1703.18 (d), (e), (f), (g) and
(3) All other requirements relevant to zero-interest pass-through loans and grants outlined in this subpart, except the minimum size of a zero-interest loan as specified in § 1703.28(f);
(4) The initial loans made from the revolving loan fund using the grant funds must carry an interest rate of zero percent; however, loans made from repayments of the initial loan may carry an interest rate in accordance with prior agreement with RUS. In either case, the Borrower may charge reasonable loan servicing fees;
(5) The Borrower will provide a board resolution certifying a commitment to provide and maintain additional funding to the revolving loan fund in an amount no less than 20 percent of the RUS grant approved. The Borrower will provide documentation that the additional funding has been deposited in the appropriate account in § 1703.22(h)(1) prior to grant disbursement. This requirement does not pertain to supplemental funding requirements for individual projects as set forth in § 1703.23. Additional funding required in this paragraph pertains only to borrowers establishing revolving loan funds, with the following provisions:
(i) Use of additional funding is subject to requirements set forth in paragraph (b) of this section and with RUS concurrence;
(ii) Individual projects funded under this section are subject to supplemental funds requirements set forth in § 1703.23;
(iii) At the Borrower's option with RUS concurrence, all or a portion of the additional funding may be used to assist project owners receiving funding from Federal grant funds under this section to meet their supplemental funding requirements set forth in § 1703.23 of this subpart. Such additional funding will be deemed as Federal funds and accounted for in accordance with paragraph (h)(1)(i)(A) of this section for electric borrowers or paragraph (h)(1)(ii)(A) of this section for telephone borrowers, as appropriate;
(iv) At the Borrower's option, all or a portion of the additional funding may be retained as non-Federal funds, for any rural economic development project(s), subject to paragraph (g) of this section and RUS concurrence. Additional funding committed as non-Federal will be accounted for in accordance with paragraph (h)(1)(i)(E) of this section for electric borrowers or paragraph (h)(1)(ii)(E) of this section for telephone borrowers, as appropriate;
(6) Grant funds will only be provided to an RUS Borrower for a revolving loan program when a proposed budget submitted to RUS demonstrates and the Borrower agrees in writing that no more than 10 percent of grant funds received are used to cover operating expenses of the revolving loan program. Operating expenses include the costs of administering the revolving loan fund and the provision of technical assistance to project owners. All proceeds in excess of those needed to cover authorized expenses, as described above, must revert to the revolving fund and be available for re-lending for eligible projects. Budgets which reflect expenses incurred in operating the fund must be submitted to RUS annually;
(7) The Borrower may charge reasonable loan servicing charges. For purposes of this section, loan servicing charges must not exceed an amount equal to the sum of one percent per year of the outstanding principal on the first day of each year on each project owner's zero-interest loan which is made from the RUS grant proceeds;
(8) The Borrower will submit documentation indicating that potential projects which are eligible for funding have sufficiently progressed in the planning stage to allow grant funding approved for a revolving loan program to be requisitioned by the Borrower, disbursed by RUS, and loaned to recipients within 3 years of the date of grant approval by RUS. Grant funds that have not been requisitioned within 3
(9) If the revolving loan program is terminated, further disbursement of grant funds will be cancelled. Repayments of loans made using grant funds which have been disbursed will be used in accordance with the Borrower's rural development plan;
(10) Payment of creditors which provide interim or construction financing to a viable project for eligible purposes as set forth in § 1703.18 of this subpart may be authorized. Refinancing for the sole purpose of replacing higher interest conventional financing with zero-interest revolving loan funds is not authorized.
(b)
(1) Specific objectives for the revolving loan program, revolving loan operating procedures, lending parameters, maximum and minimum loan amount, and types of projects to be funded;
(2) Documentation of Borrower's coordination of lending activities with other local entities that provide financing for rural economic development projects. Such documentation will indicate that the Borrower will not compete with, but supplement other sources of legal financing;
(3) Eligibility criteria if other than outlined in this subpart;
(4) The application process and method of disposition of the funds to the project owner; and
(5) A procedure for monitoring the project owner's accomplishments and reporting requirements by the project owner's management.
(c)
(1) Documented need for grant funds. The Borrower must identify a sufficient number of rural development projects of the type specified in § 1703.18 (d), (e), (f), (g), and (h) which are currently being planned requiring zero-interest loans equal to the amount of grant assistance requested from RUS. These projects may be supported with a community facilities plan, or other development plan, prepared by local community leaders in cooperation with the Borrower. For each project, the Borrower will submit information required under § 1703.34;
(2) Documented authority and ability of the Borrower to administer a revolving rural development loan program in accordance with the provisions of this subpart. The Borrower must provide a complete listing of all personnel responsible for administering this program along with a statement of their qualifications and experience;
(3) Documented ability of the Borrower to commit financial resources under the control of the Borrower to assist in the establishment of a rural development revolving loan program. This should include a statement of the sources of funding for the administration of the Borrower's operations, as well as financial and technical assistance for projects;
(4) Documentation that the Borrower has secured commitments of significant financial support from public agencies and/or private organizations for supplemental funding to support a rural development loan program;
(5) A list of proposed fees and other charges the Borrower will assess the projects it funds; and
(6) The Borrower's rural development policy for non-Federal funds in accordance with paragraphs (b) and (g) of this section.
(d)
(e)
(1) Only projects authorized by RUS in accordance with paragraphs (c)(1) and (e)(2) of this section, for which adequate documentation is submitted, including receipts for expenditures under the reimbursement method or unpaid invoices under the special disbursement method, as applicable, and certification of approved purposes, will be considered for disbursement;
(2) A project which was not submitted prior to grant approval in accordance with paragraph (c)(1) of this section, may be authorized for funding subsequent to grant approval. A project which is authorized for funding under this paragraph will be considered for disbursement at the first allowable time period after project authorization in accordance with paragraphs (e)(3) and (e)(4) of this section. Project authorization after grant approval is subject to the following requirements:
(i) The project meets the specific objectives for the Borrower's revolving loan program as outlined in paragraph (b)(1) of this section;
(ii) The Borrower presents evidence that the project requested for authorization can be funded prior to projects which were authorized prior to grant approval in accordance with paragraph (b)(1) of this section; and
(iii) RUS approves the project for funding in accordance with § 1703.34;
(3) Under the reimbursement method, grant funds requisitioned for individual projects in increments of less than $100,000, or less than 25 percent of the amount approved for the revolving loan fund, whichever is less, may be disbursed semi-annually. Submission periods for requisitioning grant funds on a semi-annual disbursement basis will be 14 days commencing from the 6-month anniversary date of grant approval. Grant funds under the special disbursement method will be requisitioned in accordance with the applicable provision in paragraph (e)(4) of this section;
(4) For the reimbursement method, grant funds requisitioned for individual projects in increments of $100,000 or greater, or at least 25 percent of the amount approved for the revolving loan fund, whichever is less, may be submitted for disbursement at any time. Under the special disbursement method, grant funds of less than $100,000 may be requisitioned for disbursement at any time. However, the minimum requisition will be $50,000, or the total grant award, whichever is less.
(f)
(2) Borrower records must include an accurate accounting and source documentation to support each transaction
(3) SF-269, “Financial Status Report,” and a revolving loan program activity report will be required of all Borrowers on an annual basis. Reports will be submitted no later than 90 days after December 31 of each year. The program activity report will contain an aggregate list of projects funded, the amount funded for each project, the project repayment schedule, a brief description of each project, the project objectives, whether or not the project has been completed, and the projected number of jobs created or saved by each project. Reports under this paragraph will be required until all grant funds have been disbursed and projects completed.
(4) A performance report will be required for each project funded on an annual basis. Performance reports will be due no later than 90 days after December 31 of each year. Performance reports will be submitted until one year after project completion. Project performance reports will contain the following:
(i) A comparison of actual accomplishments during the reporting period to the objectives established for the project and, if not attained, reasons why established objectives were not met;
(ii) Problems, delays, or adverse conditions which will materially affect attainment of planned project objectives, prevent the meeting of time schedules or objectives, or preclude the attainment of project work elements during established time periods. This disclosure shall be accompanied by a statement of the action taken or contemplated to resolve the situation;
(iii) Projected accomplishments for the next reporting period, if applicable; and
(iv) Status of compliance with any special conditions for project funding, if applicable.
(5) Borrowers must report and remit interest earned on advances of grant funds deposited in interest accounts to RUS on a quarterly basis in accordance with 7 CFR part 3015, Uniform Federal Assistance Regulations.
(g)
(1) To maintain a revolving loan account to promote rural economic development in accordance with the Borrower's rural development plan for non-Federal funds submitted in accordance with paragraph (b) of this section;
(2) To maintain the additional funding supplied by the Borrower in accordance with paragraph (a)(5) of this section and interest earnings within the revolving loan fund;
(3) Approval may be granted by the Administrator to terminate the revolving loan program, or modify the requirements set forth in paragraphs (g)(1) and (g)(2) of this section, upon written request and justification by the Borrower. Should the Borrower terminate the revolving loan program without obtaining approval by the RUS Administrator, the Borrower will return the amount of the original grant to RUS.
(h)
(1)
(i)
(B) A general ledger Account 124.1, “Other Investments—Federal Economic Development Loans.” The Borrower will debit this account in the amount of Federal funds the Borrower advances to non-associated organizations for authorized rural economic development projects. For each debit in this account, a corresponding credit will be made in Account 131.13 in paragraph (h)(1)(i)(A) of this section. This account will be credited with repayments of loans made with Federal economic development grant funds.
(C) A general ledger Account 123.3, “Investment in Associated Companies—Federal Economic Development Loans.” The Borrower will debit this account in the amount of Federal funds the Borrower advances to associated organizations for authorized rural economic development projects. For each debit in this account, a corresponding credit will be made in Account 131.13 in paragraph (h)(1)(i)(A) of this section. This account will be credited with repayments of loans made with Federal economic development grant funds.
(D) Account 421, “Miscellaneous Non-operating Income.” The Borrower will credit this account in the amount of grant funds disbursed by RUS resulting from an approved requisition request in accordance with paragraph (h)(2) of this section.
(E) A general ledger Account 131.14, “Cash-General—Economic Development Non-Federal Revolving Funds.” The Borrower will debit this account with any additional funds deemed non-Federal from the borrower as required by paragraph (a)(5)(iv) of this section, cash received from the repayment of loans made from accounts in paragraphs (h)(1)(i)(B), (h)(1)(i)(C), (h)(1)(i)(F), and (h)(1)(i)(G) of this section. The Borrower will credit this account to reflect loans made for rural economic development projects from non-Federal funds from accounts specified in paragraphs (h)(1)(i)(F) and (h)(1)(i)(G) of this section.
(F) A general ledger Account 124.2, “Other Investments—Non-Federal Economic Development Loans.” The Borrower will debit this account in the amount of non-Federal funds the Borrower advances to non-associated organizations for authorized rural economic development projects. For each debit in this account, a corresponding credit will be made in Account 131.14, in paragraph (h)(1)(i)(E) of this section. This account will be credited with repayments of loans made from non-Federal economic development funds.
(G) A general ledger Account 123.4, “Investment in Associated Companies—Non-Federal Economic Development Loans.” The Borrower will debit this account in the amount of non-Federal funds the Borrower advances to associated organizations for authorized rural economic development projects. For each debit in this account, a corresponding credit will be made in Account 131.14, in paragraph (h)(1)(i)(E) of this section. This account will be credited with repayments of loans made from non-Federal economic development funds.
(H) A general ledger Account 171 “Interest and Dividends Receivable.” The Borrower will debit this account with the amount of interest earned on the revolving loan fund. The Borrower will credit this account and debit the appropriate cash account when the cash is received.
(I) A general ledger Account 419, “Interest and Dividend Income.” The Borrower will credit this account with the amount of interest earned on the revolving loan fund.
(ii)
(B) A general ledger Account 1402.4, “Other Investments in Nonaffiliated Companies—Federal Economic Development Grant Loans.” The Borrower will debit this account in the amount of Federal funds the Borrower advances to nonaffiliated organizations for authorized rural economic development projects. For each debit in this account, a corresponding credit will be made in the appropriate account in paragraph (h)(1)(ii)(A) of this section. This account will be credited with repayments of loans made from Federal economic development grant funds.
(C) A general ledger Account 1401.1, “Other Investments in Affiliated Companies—Federal Economic Development Grant Loans.” The Borrower will debit this account in the amount of Federal funds the Borrower advances to affiliated organizations for authorized rural economic development projects. For each debit in this account, a corresponding credit will be made in the appropriate account in paragraph (h)(1)(ii)(A) of this section. This account will be credited with repayments of loans made from Federal economic development grant funds.
(D) Account 7360, “Other Non-operating Income (Class A Companies)”, or Account 7300, Non-operating Income and Expense (Class B Companies), as appropriate. The Borrower will credit these accounts, as appropriate, in the amount of grant funds disbursed by RUS resulting from an approved requisition request in accordance with paragraph (h)(2) of this section.
(E) A general ledger Account 1130.5, “Cash—General Fund—Economic Development Non-Federal Revolving Funds (Class A Companies)”, or Account 1120.15, “Cash—General Fund—Economic Development Non-Federal Revolving Funds (Class B Companies)”, as appropriate. The Borrower will debit the appropriate account with any additional funds deemed non-Federal from the Borrower as required by paragraph (a)(5) of this section, cash received from the repayment of loans made from accounts in paragraphs (h)(1)(ii)(B), (h)(1)(ii)(C), (h)(1)(ii)(F), and (h)(1)(ii)(G) of this section. The Borrower will credit the appropriate account to reflect loans made for rural economic development projects from non-Federal funds from accounts specified in paragraphs (h)(1)(ii)(F) and (h)(1)(ii)(G) of this section.
(F) A general ledger Account 1402.5, “Other Investments in Nonaffiliated Companies-Non-Federal Economic Development Grant Loans.” The Borrower will debit this account in the amount of non-Federal funds the Borrower advances to nonaffiliated organizations for authorized rural economic development projects. For each debit in this account, a corresponding credit will be made in the appropriate account in paragraph (h)(1)(ii)(E) of this section. This account will be credited with repayments of loans made from non-Federal economic development funds.
(G) A general ledger Account 1401.2, “Other Investments in Affiliated Companies—Non-Federal Economic Development Grant Loans.” The Borrower will debit this account in the amount of non-Federal funds the Borrower advances to affiliated organizations for authorized rural economic development projects. For each debit in this account, a corresponding credit will be made in the appropriate account in paragraph (h)(1)(ii)(E) of this section. This account will be credited with repayments of loans made from non-Federal economic development funds.
(H) A general ledger Account 1210, “Interest and Dividends Receivable.” The Borrower will debit this account with the amount of interest earned on the revolving fund loan. The borrower will credit this account and debit the appropriate cash account when the cash is received.
(I) A general ledger Account 7320, “Interest Income (Class A Companies)”, or Account 7300.2, “Interest Income (Class B Companies)”, as appropriate. The Borrower will credit this account with the amount of interest earned on the revolving fund loans.
(2)
(i) Standard Form 270, “Request for Advance of Reimbursement”;
(ii) Copies of cancelled checks and other verifiable source records supporting the transactions; and
(iii) Certification and evidence that the project costs to be reimbursed are for a project which has been authorized by RUS and are authorized costs for that project.
(3)
The Administrator will not select an application unless the project will receive supplemental funds in an amount at least equal to 20 percent of the RUS zero-interest loan and grant to be provided to the project, as determined by the Administrator. Supplemental funds as used in this section may come from the project owner in the form of equity funds, private sources, state and local government sources, other Federal Government sources, the borrower or other sources. Only supplemental funds that will be provided to the project after the date RUS receives the borrower's completed application may be used to satisfy this requirement. Supplemental financing must be verified and committed to the project in form and substance satisfactory to the Administrator before RUS will advance any funds.
Selection of applications will be based on a preference for applications requesting RUS financing which will be at least equal to 5 percent of the total project costs, as determined by the Administrator. Projects costs will be based on the amount that would be spent over the first 2 years after the first advance of RUS funds for the component or phase of the undertaking for which the borrower is requesting RUS funds, as determined by the Administrator. The Administrator may determine that a component or phase, especially actions necessary to initiate a larger project, constitute a distinct project for the purposes of this section.
The Administrator may require, as a condition to RUS financing, that the owner(s) of the project invest equity capital if determined to be financially necessary, based on an RUS financial analysis and sound lending practices.
(a) The maximum size of an application that will be considered for funding under this subpart during a fiscal year will be 3 percent of the projected total amount available for the zero-interest loans or grants under section 313 of the Act during that fiscal year, rounded to the nearest $10,000. This determination will be made by the Administrator for each fiscal year.
(b) Regardless of the projected total amount that will be available, the maximum size may not be lower than $200,000.
(c) The projected total amount available during a particular fiscal year is calculated as the sum of the projected
(d) After the Administrator has determined the maximum size for a fiscal year, a notice of the calculation and amount will be published promptly in the
(e) All unselected applications on file at RUS, including both loan and grant applications, from the same borrower for the same project will be considered to be one application in determining that the maximum size of the application is in accordance with this section.
(f) The minimum size of an application for assistance under this subpart that will be considered for funding is $10,000.
(a) The Administrator will determine the terms and repayment schedule of the zero-interest loan to the borrower based on the nature of the project and approved purposes. Ordinarily, the total term of the zero-interest loan, including any principal deferment period, will not exceed 10 years. The repayment terms the borrower sets on a pass-through-loan must equal the terms of the loan provided to the borrower unless a written request from the borrower to provide a longer deferment period, shorter total term of the loan, or other benefits is approved by the Administrator.
(b) The Administrator has the discretion to defer the repayment of principal up to two years, based on an analysis of the feasibility of the project. Ordinarily, if the Administrator considers the project to be a business expansion or going concern, the first repayment of principal will not begin until one year after the date of the RUS note. Ordinarily, if the Administrator considers the project to be a start-up project, the first repayment of principal will not begin until 2 years after the date of the RUS note. Loans must be repaid under terms set forth in RUS's legal documents.
(c) Unless the Administrator has specifically approved otherwise, the borrower will be required to repay the RUS zero-interest loan in full at such time as a pass-through-loan has been fully repaid to the borrower. If the borrower uses the proceeds of the RUS zero-interest loan to provide pass-through-loans to more than one entity, this requirement will only apply to that portion of the zero-interest loan associated with the loan that has been fully repaid to the borrower.
(d) If the Administrator determines that, as a result of state law, court rulings, or regulatory commission decisions, it is necessary to ensure that the borrower will repay the RUS zero-interest loan, the borrower may be required to provide an irrevocable letter of credit, or another form of guarantee satisfactory to the Administrator. The letter of credit or other guarantee is to be made payable to RUS. The letter of credit or other guarantee may not be secured by any assets under a RUS and/or Rural Telephone Bank mortgage and must be in form and substance satisfactory to the Administrator. RUS must receive the letter of credit or other guarantee prior to the advance of any zero-interest loan funds.
(a) The Administrator must approve any agreements between the borrower and the owner(s) of the project, those undertaking the project, or any intermediary that will re-lend or transfer the proceeds of the RUS funds, that the Administrator deems necessary.
(b) Borrowers must obtain the Administrator's approval of any loan, grant or security agreement, mortgage or note between the borrower and the owner(s) of the project, those undertaking the project or any intermediary that will re-lend or transfer the proceeds of the RUS funds, prior to the advance of RUS zero-interest loan or
(c) Borrowers must obtain the Administrator's written approval prior to revising or amending any loan, grant or security agreement, mortgage or note that has been reviewed and approved by the Administrator pursuant to paragraph (b) of this section. Additionally, the borrower must obtain the Administrator's written approval prior to executing, revising or amending any other agreement, in connection with the project, between the borrower and the owner(s) of the project, those undertaking the project or any intermediary that will re-lend or transfer the proceeds of the RUS funds.
(d) The borrower and the owner(s) of the project, or those undertaking the project, should make agreements and prepare documents in accordance with all applicable laws.
The project must not result primarily in the transfer of any existing employment or business activity from one area to another.
(a) Prospective recipients of zero-interest loans or grants should consider the potential environmental impact of their proposed projects at the earliest planning stage and plan development in a manner that reduces, to the extent practicable, the potential to affect the quality of the human environment adversely.
(b)
(c)
(2) The level and scope of the environmental review will be determined in accordance with the National Environmental Policy Act of 1969 (NEPA), as amended, (42 U.S.C. 4321
(3) Activity related to the project that will adversely affect the environment or limit the choice of reasonable alternatives must not be undertaken prior to completion of RUS's environmental review process.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(2) With the exception of zero-interest loans and grants for project feasibility studies, proposed projects are subject to the state and local government review process set forth in 7 CFR part 3015. Under the review process, state and local governments have 60 days to comment on the proposed project.
(3) The Administrator will not give final approval to an application until the requirements of 7 CFR part 3015, subpart V, regarding state and local government review have been satisfied.
(h)
(2) The regulation that implements this statute requires applicants for a zero-interest loan in excess of $150,000 and applicants for a grant in excess of $100,000 to file a certification statement regarding the use of Federal appropriated funds to lobby the Executive and Legislative branches of the Federal Government, and to file a disclosure form if engaged in these activities using unappropriated funds.
(3) In addition, persons that receive contracts or subcontracts in excess of $150,000 under a zero-interest loan and persons that receive subgrants, contracts or subcontracts in excess of $100,000 under a grant are required to file certification statements regarding lobbying the Executive and Legislative branches and, if engaged in these activities, to file disclosure forms.
(a) Borrowers may file an application on any official workday during the
(b) A completed application will consist of an original and two copies of:
(1)
(2)
(i) Requests a zero-interest loan and/or grant, including the amount of the zero-interest loan and/or the amount of the grant rounded to the nearest 1,000 dollars;
(ii) Includes the total combined deferment and repayment period requested for a zero-interest loan if less than 10 years;
(iii) Includes the board's endorsement of the proposed rural economic development project as described in the application;
(iv) States the proposed project does not violate §§ 1703.20 and 1703.21; and discloses any information regarding a conflict of interest, potential conflict of interest, or appearance of a conflict of interest that would allow the Administrator to make an informed decision;
(v) Authorizes an official of the borrower to requisition zero-interest loan or grant funds under this program;
(vi) For an application for a grant only, authorizes the chief executive officer of the borrower to execute and deliver on behalf of the borrower the certification Form AD-1049 regarding a drug-free workplace program as required in part 3017, subpart F of this title; and
(vii) Any other matters deemed necessary by the Administrator;
(3)
(i) Form AD-1047, “Certification Regarding Debarment, Suspension, and Other Responsibility Matters—Primary Covered Transactions,” as required in part 3015, subparts A through E of this title; and
(ii) Assurance statement or certification statement required under the Uniform Act as set forth in § 1703.33(d). For pass-through-loans and pass-through-grants, the ultimate recipient of the proceeds of the RUS zero-interest loan or grant must sign the assurance statement that it will comply with the applicable provisions of the Uniform Act or sign a certification that the provisions of the Uniform Act will not apply to the rural development project which will be partially financed with the proceeds of RUS funds. If the borrower will not provide a pass-through-loan or pass-through-grant to another entity, the borrower must submit a completed assurance statement or certification regarding the applicable provisions of the Uniform Act, or have such an assurance statement on file at RUS;
(4)
(i) For an application for a zero-interest loan in excess of $150,000 or for an application for a grant in excess of $100,000, a certification statement, “Certification Regarding Lobbying,” and, if the borrower is engaged in lobbying activities described under § 1703.33(h), a completed disclosure form, “Disclosure of Lobbying Activities”; and
(ii) For an application for a grant only, a completed certification form, “Certification Regarding Drug-Free Workplace Requirements (Grants),” Form AD-1049 as required in part 3017, subpart F of this title;
(5)
(i) A section entitled “Selection Factors” as set forth in § 1703.35;
(ii) A section entitled “Project Description” as set forth in § 1703.36;
(iii) Except for applications for project feasibility studies, a section entitled “Environmental Impact of the Project” as set forth in § 1703.37;
(iv) Monitoring plan. For a pass-through loan and/or grant, a copy of the Borrower's plan to monitor the loan and/or grant and ensure that the requirements of this subpart are met; and
(v) Scope of work. For an application for a loan and/or grant, a proposed scope of work for the project.
(c) The Administrator may request additional information it considers relevant from the borrower.
(d) During the application review process, the borrower may change the amount of the zero-interest loan or grant funds requested or other portions of its application, only if approved by the Administrator. A borrower that changes its request from a grant to a zero-interest loan must submit information necessary for the Administrator to evaluate a loan proposal as set forth in this subsection, and submit a new board resolution requesting the loan.
The application must contain a section addressing the “selection factors” consisting of the following:
(a) “Nature of the project” (§ 1703.46(g)(1)), which includes any information considered appropriate including aspects of the project that may not be obvious to an outside observer;
(b) “Job creation project” (§ 1703.46(g)(2)), which includes any information that is not readily apparent concerning whether the project would directly create jobs in rural areas. The number of the jobs and the basis for the job projection should be included under “Number of long-term jobs”;
(c) “Long-term improvements in economic development” (§ 1703.46(g)(3)), which addresses the extent to which the project will improve the productive potential of the labor force, industrial plant, infrastructure, natural resources and institutions by employing advanced technology, creating higher-skilled occupations, adding higher value to natural resources, creating jobs with higher-career potential, or is considered part of a knowledge intensive industry;
(d) “Diversifying the rural economy or alleviating underemployment” (§ 1703.46(g)(4)), which includes any information the borrower desires the Administrator to consider;
(e) “Supplemental funds” (§ 1703.46(h)(1)), which includes the name of each source and the respective amount of supplemental funds that was provided to the project within 6 months of submitting the application to RUS, and the amount that will be provided within two years of receiving RUS funds. Also indicate the nature and strength of the commitments to make these supplemental funds available, when these funds are expected to be disbursed, any special terms and conditions associated with the commitments, copies of the commitments, and, if established, the interest rate, term and deferment period on any loan for the project;
(f) “Economic conditions and job creation” (§ 1703.46(h)(2)), which includes:
(1) “Unemployment rates” (§ 1703.46(h)(2)(i)). List the county or counties in which the project will be located. It is not necessary to include the county, state or national unemployment rates. RUS obtains these rates from other Federal agencies;
(2) “Per capita personal income” (§ 1703.46(h)(2)(ii)). As with “Unemployment rates,” it is not necessary to include the county, state or national per capita personal income levels;
(3) “Change in population” (§ 1703.46(h)(2)(iii)). It is not necessary to include the county population levels;
(4) “Number of long-term jobs” (§ 1703.46(h)(2)(iv)). Include the number of long-term jobs that the project will directly create in rural areas and the total project cost;
(5) “Community-based economic development program” (§ 1703.46(h)(2)(v)).
(6) “Plan for improving the marketable skills of people in rural areas” (§ 1703.46(h)(2)(vi)). Include information on any written plan for the project to provide opportunities or incentives to improve the marketable skills of rural residents through training and/or education. For projects that consist of providing training or education, indicate how it will benefit rural residents;
(g) “Location” (§ 1703.46(h)(3)), which indicates whether or not the project will be located in a town and, if so, the name of the town;
(h) “Support for the program—cushion of credit payments” (§ 1703.46(h)(4)), which mentions any cushion of credits payments made recently in accounts at RUS;
(i) “Demonstration project” (§ 1703.46(h)(5)), which includes a discussion of any commitments from the owner(s) of the project to be a demonstration project and a copy of the written commitment;
(j) “Probability of success” (§ 1703.46(h)(6)), which includes:
(1) “Owners and management of the project” (§ 1703.46(h)(6)(i)) that discusses how the knowledge, experience, education and training of the proposed owners and management of the project increases the likelihood of long-term success; and
(2) “Ultimate recipient's business plan” (§ 1703.46(h)(6)(ii)), that references an attached copy of the business plan.
(i) The plan should include:
(A) A description of the project;
(B) A description of the business, if applicable, its products and the prospects of the industry;
(C) What will be produced or accomplished;
(D) The area to be served;
(E) Any market research or marketing plan;
(F) Any operating plan;
(G) Total project costs and projected use of funds by purpose or category;
(H) A financial plan, including a feasibility study with projected balance sheets, income statements and cash flow statements;
(I) The source of supplemental funds, the nature and strength of commitments from other sources of financing, and the equity contribution;
(J) The proposed ownership and management of the project;
(K) A description of any coordination with a local, regional or state development organization; and
(L) Other relevant information.
(ii) The scope of the plan should reflect the amount requested in the application, the risks involved with developing and operating the project, and the overall cost of the project. The plan should describe any coordination with a local, regional or state development organization.
In general, this section should be more detailed the larger the project for which the borrower is requesting funding. The section of the application on the “project description” must include:
(a) A description of the proposed project including the nature of the project, the location of the project, organizations that will be involved in the project and the primary beneficiaries of the project. Also include in this subsection a statement describing whether the borrower has or will have a direct or indirect (through a subsidiary or affiliated organization) ownership or similar beneficial interest in the facilities to be constructed or in the entity that will occupy or utilize these facilities. In addition, explain whether it seems likely that the proposed project will be undertaken or completed in the absence of an RUS zero-interest loan or grant;
(b) A separate paragraph entitled “Uses of RUS Funds and Total Project Costs”, that includes a breakdown of the specific uses of RUS funds and a breakdown of the specific uses of all funds necessary to ensure completion of the project. Project costs should be limited to the amount to be spent over the 2-year period after receiving RUS funds;
(c) For a project that involves the establishment of a new venture, such as a rural business incubator or a similar start-up venture, a discussion of how the costs of establishing, organizing
(d) If the borrower will provide a pass-through-loan or pass-through-grant to another entity, outline the terms and conditions that the borrower intends to place on the recipient of the RUS funds including the security arrangements and collateral on a zero-interest loan. The discussion of proposed security arrangements and collateral should reflect the amount requested in the application, the risks involved with developing and operating the project, and the overall cost of the project;
(e) For pass-through-loans and pass-through-grants, a description of the ultimate recipient, including the form of organization and ownership (i.e., corporation, nonprofit corporation, cooperative, partnership, sole proprietor), the owner(s) and the chief officers;
(f) If the project involves construction, a brief description of the construction necessary to make the project operational and the organization involved with the project that will be responsible for building the project facilities or having them built;
(g) A discussion of the manner in which the borrower intends to monitor the zero-interest loan and/or grant proceeds to ensure that they are used only for approved purposes; and
(h) If applicable, a discussion on any potential conflict of interest or the appearance of a conflict of interest, a clarification of any aspect of the project with respect to the restriction that it must not result primarily in the transfer of any existing employment or business activity from one area to another or a clarification of any aspect of the project with respect to limitations in §§ 1703.20 and 1703.21.
(a) For a proposed project that only involves internal modifications or equipment additions to buildings or other structures (for example; relocating interior walls or adding computer facilities) and/or external changes or additions to existing buildings, structures or facilities requiring physical disturbance of less than 0.4 hectare (0.99 acre), the environmental information normally required is:
(1) A copy of a flood hazard zone map from the Federal Emergency Management Agency with the location of the project site marked;
(2) A statement of whether or not the proposed project will be located within an area protected under the Coastal Barrier Resources Act (16 U.S.C. 3501
(3) A description of the internal modifications or equipment additions, and the external changes or additions to existing buildings, structures or facilities being proposed, the size of the site in hectares, and the general nature of the proposed use of the facilities once the project is completed, including any hazardous materials to be used, created or discharged, any substantial amount of air emissions, wastewater discharge, or solid waste that will be generated; and
(4) A statement of whether the project site contains or is near a property listed or eligible for listing in the National Register of Historic Places (16 U.S.C. 470).
(b) For all other proposed projects include:
(1) A copy of a flood hazard zone map from the Federal Emergency Management Agency with the location of the project site marked (42 U.S.C. 4001
(2) A diagram showing the general layout of the proposed facilities on the project site;
(3) The size of the project site in hectares;
(4) A map (preferably a U.S. Geological Survey map) of the project area indicating the boundaries of the project;
(5) A statement of whether or not the project will be located within an area protected under the Coastal Barrier Resources Act;
(6) The amount of property to be cleared, excavated, fenced or otherwise disturbed by the project;
(7) The current land use and zoning of the project site and any vegetation on the project site;
(8) A description of buildings or other major structures, including dimensions, to be constructed or modified;
(9) A statement of whether the presence of wetlands or existing agricultural operations are present at the project site (7 CFR part 1794); whether properties listed or eligible for listing in the National Register of Historic Places are on or near the project site; whether threatened or endangered species or critical habitat are on or near the project site (16 U.S.C. 1531
(10) The general nature of the proposed use of the facilities once the project is completed, including any hazardous materials to be used, created or discharged, any substantial amount of air emissions, wastewater discharge, or solid waste that will be generated (7 CFR part 1794); and
(11) A copy of any environmental review, study, assessment, report or other document that has been prepared in connection with obtaining permits, approvals or other financing for the proposed project from state, local or other Federal agencies. Such material, to the extent relevant, may be used to fulfill the requirements of this section.
(c) The Administrator may request additional environmental information in specific cases to satisfy § 1703.32.
Completed applications received at RUS by the 14th day of the month will be considered at the first selection date which occurs at least 40 days after the application was received. Completed applications received at RUS after the 14th day of a month will be either be held for the next application period or returned to the borrower, at the borrower's option. The review period of at least 40 days should allow sufficient time for state and local governments to review the proposed projects under the intergovernmental review process, as set forth in 7 CFR part 3015, and to provide sufficient time for the Administrator to fully review and analyze these applications. In the event state and local government review has not been completed, the Administrator's approval may be contingent upon the review being satisfactorily documented. The Administrator reserves the discretion to consider applications outside the normal selection period.
(a) The Administrator will only consider for selection applications that request funds for purposes as set forth in §§ 1703.17 and 1703.18 and are not ineligible under § 1703.20, as determined by the Administrator. The Administrator will not consider applications that do not conform with all of the provisions of this subpart, as determined by the Administrator. The Administrator will make the determination of all numbers, dollars, levels and rates, as well as the nature, costs, location and other characteristics of the proposed project, to calculate the number of points assigned to an application for each selection factor. Applications for zero-interest loans and grants will be ranked separately. In addition, applications requesting less than 5 percent of the total project costs as provided in § 1703.25 will be ranked separately, subject to § 1703.46(j). The Administrator will select applications that receive the greatest number of total points under paragraphs (f) and (g) of this section, subject to available funds and the provisions of § § 1703.25, 1703.46(i), and 1703.46(j).
(b) After reviewing an application, the Administrator may decline to select an application:
(1) That would result in a conflict of interest or the appearance of a conflict of interest;
(2) Based on the management and financial situation of the borrower applying for the zero-interest loan or grant. In determining the borrower's financial situation, the Administrator will consider, among other things, the borrower's existing and projected cash flows, equity to asset ratios, times interest earned ratios, debt service coverage ratios, the level of its investments, the level of its cash and other liquid assets, its working capital and repayment of its debts;
(3) Based on a determination that limitations under state laws will lessen the likelihood of repayment of the RUS
(4) Based on the unwillingness of the borrower applying for the zero-interest loan or grant to exercise diligence in repaying RUS loans or loan guarantees, and comply with RUS's legal documents and regulations;
(5) For an otherwise eligible project when any of the revenues of the project are derived from a legalized gambling activity; or
(6) For any illegal activity.
(c)(1) The Administrator will first evaluate the application and the project with respect to the three factors in this paragraph. The Administrator will not select applications requesting funds for projects that in the Administrator's best judgment have a low probability of:
(i) Being a viable business or operation;
(ii) Being successful as measured by long-term job creation or retention; and
(iii) Producing long-term economic development in rural areas.
(2) The Administrator's determination in paragraph (c) of this section will be based on the ultimate recipient's feasibility studies, income statements, cash flow statements, existing and projected balance sheets, market research, job creation potential, industry trends, and current economic conditions given the nature of the project. Long-term job creation and economic development in rural areas as used for this factor will mean jobs or economic development that would generally be expected to last at least five years.
(d) The Administrator will not award points under the selection factors in paragraphs (f) and (g) of this section for applications that:
(1) Involve the purchase land that will not be developed or used as a site for a project structure during the current phase of the project, as determined by the Administrator;
(2) Will be used for residential purposes or entertainment purposes at the residential level, such as residential dwellings and land sites, facilities to provide entertainment television, or personal, non-business related vehicle(s); however, nursing homes providing medical care, as determined by the Administrator, will not be considered to be residential dwellings;
(3) Will be used primarily to finance the purchase of an established business or operation rather than for economic development in rural areas or job creation purposes; or
(4) Will be used primarily to transfer property or real estate between owners without making any improvements or additions that will promote economic development in rural areas or job creation.
(e) After the above determinations, the Administrator will evaluate the applications and assign points with respect to the factors in paragraph (f) of this section. Applications evaluated under paragraph (f) of this section that do not receive at least 35 points or are not within the top 75 percent when all applications being assigned points are ranked from high to low by total number of points will not be evaluated with respect to the factors in paragraph (g) of this section. The only exception to this evaluation process would be the Administrator's determination that additional applications must be selected in accordance with § 1703.14. After such a determination, the remaining applications evaluated in paragraph (f) of this section will be also evaluated under the factors in paragraph (g) of this section.
(f)
(1)
(i) Is considered a start-up, expansion, or enhancement of a business, a business incubator, an industrial building or park, infrastructure necessary to connect these types of projects to existing infrastructure, necessary for the development and operation of these types of projects, or, in the Administrator's determination, basic infrastructure necessary for successful businesses in the rural economy;
(ii) Will provide technical assistance to rural businesses or rural residents, train or educate rural residents, promote economic development in rural areas on a non-profit basis, or provide medical care to rural residents; and
(iii) Will succeed as envisioned in the application, and the possibility that the owners or operators may become delinquent on their loan payments.
(2)
(3)
(4)
(g)
(1)
(A) Equal to 20%—10 points, the minimum number of points;
(B) Equal to 100%—20 points;
(C) Equal to 500%—30 points, the maximum number of points.
(ii) Ratios of supplemental funds to RUS funds falling between these levels will be assigned points based on a straight-line interpolation calculated to the nearest whole point. The result will be rounded based on the standard convention of a fraction of 1/2 or greater equals 1.
(2)
(A) If the unemployment rate in the county where the project will be located exceeds the National unemployment rate by 30 percent or more—10 points, the maximum number of points awarded.
(B) If the unemployment rate in the county where the project will be located is equal to the National unemployment rate—5 points.
(C) If the unemployment rate in the county where the project will be located is equal to or less than 75 percent of the National unemployment rate—0 points.
(D) If the unemployment rate in the county where the project will be located exceeds the state unemployment rate by 30 percent or more—8 points, the maximum number of points awarded.
(E) If the unemployment rate in the county where the project will be located is equal to the state unemployment rate—4 points.
(F) If the unemployment rate in the county where the project will be located is equal to or less than 75 percent of the state unemployment rate—0 points.
(G) For both the state and national unemployment rate calculations, rates falling between the levels will be assigned points based on straight-line interpolation calculated to the nearest whole point. The result will be rounded based on the standard convention of a fraction of 1/2 or greater equals 1. If the project will be located in several counties, the Administrator will use a simple average (mean) of the counties for the comparison. The Administrator will use the average of the most recent twelve months of unemployment rates it has obtained from the Bureau of Labor Statistics, U.S. Department of Labor or other government sources and processed into a suitable format.
(ii) A comparison will be made of the per capita personal income in the county where the project will be located to the state and national per capita personal income levels.
(A) If the per capita personal income level in the county where the project will be located is less than or equal to 90 percent of the National per capita personal income level—10 points, the maximum number of points awarded.
(B) If the per capita personal income level in the county where the project will be located is equal to the National per capita personal income level—5 points.
(C) If the per capita personal income level in the county where the project will be located exceeds the National per capita personal income level by 15 percent or more—0 points.
(D) If the per capita personal income level in the county where the project will be located is less than or equal to 90 percent of the state per capita personal income level—8 points, the maximum number of points awarded.
(E) If the per capita personal income level in the county where the project will be located is equal to the state per capita personal income level—4 points.
(F) If the per capita personal income level in the county where the project will be located exceeds the state per capita personal income level by 15 percent or more—0 points.
(G) For both the state and national per capita personal income calculations, incomes falling between the levels will be assigned points based on straight-line interpolation calculated to the nearest whole point. The result will be rounded based on the standard convention of a fraction of 1/2 or greater equals 1. If the project will be located in several counties, the Administrator will use a simple average (mean) of the counties for the comparison. The Administrator will use the most recent annual per capita personal income levels it has obtained from the Bureau of Economic Analysis, U.S. Department of Commerce or other government sources and processed into a suitable format.
(iii) A calculation will be made of the change in total population over the most recent two-year period in the county where the project will be located. The population change will be the based on the total percentage change over the two-year period calculated as follows: the population for the most recent year less the population as of two years prior to that year with the difference being divided by the population as of two years prior to the most recent year.
(A) If the percentage growth over the two-year period is negative 2.00 percent
(B) If the percentage growth over the two-year period is equal to zero or is positive (population increase)—0 points.
(C) Population growth percentages falling between these levels will be assigned points based on straight-line interpolation calculated to the nearest whole point. The result will be rounded based on the standard convention of a fraction of 1/2 or greater equals 1. If the project will be located in several counties, the Administrator will use a simple average (mean) of the counties for the comparison. The Administrator will use the most recent population data for all counties it has obtained from the Bureau of Economic Analysis, U.S. Department of Commerce or other government sources and processed into a suitable format. The data provide one population figure for the year.
(iv) The number of long-term jobs that the project will directly create in rural areas.
(A) For five or more direct long-term jobs per $100,000 of total project costs—15 points, the maximum number of points awarded.
(B) For two direct long-term jobs per $100,000 of total project costs—8 points.
(C) For no direct long-term jobs—0 points.
(D) Direct, long-term jobs under this factor are jobs that would generally be expected to last at least five years. Long-term jobs that would provide 6 months per year of equivalent full-time employment will be counted under this factor. Long-term jobs that would provide fewer months of employment would be given points based on the ratio of the number of months per year of employment to 12 months. Jobs of at least 20 hours per week will be counted under this factor. For construction of an industrial building, extension of water and/or sewer lines to a building, or a similar project, the Administrator will require a reasonable analysis of the number of jobs that will be created before awarding points for this factor. The Administrator reserves the right to adjust the number based on its analysis of the project, the explanation in the application of the businesses that will locate in the building(s), and any commitments from businesses to locate in the building(s). This factor will not count indirect job creation that results from an overall increase in the local economy once the project is completed. If total project costs per job falls between these levels, points will be assigned based on straight-line interpolation calculated to the nearest whole point. The result will be rounded based on the standard convention of a fraction of 1/2 or greater equals 1.
(v) Projects that are part of a local, community-based rural economic development program that would improve the local economy and enhance the well-being of rural residents—10 points. The determination will be based on information submitted by the borrower in its application and other information the Administrator considers appropriate.
(vi) Projects that have a written plan to provide opportunities or incentives to improve marketable skills for rural residents through training and/or education, or projects which consist of providing this training and/or education—5 points.
(3)
(4)
(A) If the borrower has $300,000 or three percent of total assets, whichever is less, in cushion of credit payments—15 points;
(B) If the borrower has $100,000 or one percent of total assets, whichever is less, in cushion of credit payments—10 points;
(C) If the borrower has at least $5,000 or 0.5 percent of total assets, whichever is less, in cushion of credit payments—5 points.
(ii) The amount of cushion of credit payments will be based on the amount at the time the Administrator evaluates the project. The calculation of a borrower's total assets will be based on RUS's most recently published Statistical Report, Rural Electric Borrowers (RUS Informational Publication 201-1) or Statistical Report, Rural Telephone
(5)
(6)
(ii) The ultimate recipient's business plan and indications that the project will successfully result in economic development in rural areas and/or job creation—up to 40 points. The Administrator's evaluation of the success of the project will be based on indications in the application and RUS's analysis that the project will be a viable business or operation, be successful in creating or retaining long-term jobs, and be successful in producing economic development that will result in long-term benefits to rural areas. The plan should include:
(A) A description of the project;
(B) A description of the business, if applicable, its products and the prospects of the industry;
(C) What will be produced or accomplished;
(D) The area to be served;
(E) Any market research or marketing plan;
(F) Any operating plan;
(G) Total project costs and projected use of funds by purpose or category;
(H) A financial plan, including a feasibility study with projected balance sheets, income statements and cash flow statements;
(I) The source of supplemental funds, the nature and strength of commitments from other sources of financing, and the equity contribution;
(J) The proposed ownership and management of the project;
(K) A description of any coordination with a local, regional or state development organization; and
(L) Other relevant information.
(iii) The Administrator expects the ultimate recipient's business plan referenced in paragraph (g)(6)(ii) of this section to be comparable to a plan normally submitted to a bank for long-term financing. In evaluating an application for this selection factor, the Administrator will consider the probability that the project will result in long-term economic development in rural areas and/or job creation as envisioned in the application.
(iv) Quality and completeness of borrower's initial application submitted to RUS—up to 10 points. The Administrator's determination will be based on the completeness and quality of the application as measured by the additional information required from the borrower to complete the analysis. For a pass-through loan and grant, the quality of the Borrower's plan to monitor the loan and grant and assure that the requirements of this subpart and 7 CFR parts 3015 and 3016 are met will also be considered.
(7)
(i) A designation of disaster area by the President of the United States which has been so designated within three years prior to applying to RUS;
(ii) The loss, removal, or closing of a major source or sources of employment in the last 3 years which causes an increase of 2 percentage points or more in the area's most recent unemployment rate compared with the period immediately before the dislocation;
(iii) Chronic or long-term economic deterioration, documented by one or both of the following conditions:
(A) An unemployment level equal to or greater than 1.5 times the National average unemployment percentage from 4 out of the last 5 years, starting with the most current statistics available. The applicant, when calculating
(B) A 15% loss of population due to out-migration over the most recent 10-year decennial census, based on the U.S. Bureau of the Census decennial data;
(iv) A designation as a Rural Empowerment Zone or Rural Enterprise Community by the Empowerment Zone Program authorized by Section 13301 of the Omnibus Reconciliation Act of 1993, Public Law 103-66 (107 Stat. 312), 26 U.S.C. 1391-1393.
(h)
(1)
(2)
(3)
(4)
(5)
(6)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(7)
(8)
(9)
(10)
(i)
(ii)
(iii)
(11)
(i) Regardless of the number of points assigned to a borrower's application, the Administrator may:
(1) Limit the number of applications selected in any one state during any fiscal year to the ratio of borrowers in that state to the total number of borrowers multiplied by three, or ten percent of the total number selections that have been made during the current fiscal year, or ten, whichever is greatest. The number of borrowers will be determined as of the latest published RUS statistical reports (Statistical Report, Rural Electric Borrowers, RUS Informational Publication 201-1 and Statistical Report, Rural Telephone Borrowers, RUS Informational Publication 300-4. These publications are available from the Rural Utilities Service, Administrative Services Division, Washington, DC 20250);
(2) Limit a borrower to one selected application during any selection period;
(3) Limit the number of applications selected for a particular project;
(4) Allocate available funds between applications from electric and telephone borrowers;
(5) Select an application receiving fewer points than another application if there are insufficient funds during a particular budget period to select the higher ranked application; except that the Administrator may ask the borrower that submitted the higher ranked application if it desires to reduce the amount of its application to the amount of funds available. The reduction may require additional supplemental funds to ensure a successful project. Based on information the borrower provides, the Administrator will re-analyze the project to ensure that the project will still be feasible with reduced funding; or
(6) Select the highest ranking applications for funds to finance projects that the Administrator classifies as project feasibility studies.
(j) During each selection period, the highest ranking application from among the applications requesting less
(k) The Administrator reserves the right to use the region or data it considers most appropriate if “county” data are unavailable for a particular area.
(a) RUS will inform a borrower whether the Administrator has selected its application. The advance of RUS funds after the selection has occurred is contingent upon the borrower meeting any terms and conditions the Administrator determines are necessary. A borrower that submitted an application which was not selected will be asked to inform RUS whether it desires to be reconsidered at a later date. The borrower may modify the application after it has been considered without resubmitting all the required material in an application, except if it changes the request from a grant to a zero-interest loan it must submit information necessary for the Administrator to evaluate a loan proposal as set forth in §§ 1703.35 and 1703.36 and submit a new board resolution requesting a loan. If the borrower so desires, the Administrator will consider an application for up to one year after the date RUS originally received the application. A borrower may submit new applications as often as it desires.
(b) During the period between the selection of the application and the execution of RUS's legal documents, the borrower must inform the Administrator if the project is no longer viable or the borrower no longer desires a zero-interest loan or grant for the project. Upon a determination by the Administrator to that effect, the selected application will be considered cancelled.
(c) If an application has been selected and the nature of the project changes, as determined by the Administrator, the borrower may be required to submit a new application to RUS for consideration. The selection may not be transferred to another project, as determined by the Administrator. At any time after the selection of an application, the Administrator may, upon a request from the borrower and receipt of any documentation the Administrator considers necessary, approve changes in the method of carrying out the purpose of the project as long as the overall purpose of the project remains the same, revise the amount of the zero-interest loan and/or grant, revise the loan maturity date and principal deferment period and make other adjustments. The Administrator may reduce the amount of the RUS loan or grant to reflect reductions in the amount of supplemental funds to be provided to the project. For substantial reductions in amount of supplemental funds to be provided to the project, the Administrator may require the borrower to re-apply for the RUS loan or grant funds.
(d) If state or local governments raise objections to a proposed project under the intergovernmental review process that are not resolved within three months of the Administrator's selection of the application, the Administrator may consider the selection of the application cancelled.
(a) After a borrower has submitted all information the Administrator determines is necessary for the selected application, RUS will send the necessary legal documents to the borrower to execute and return to RUS. The legal documents will include a letter of agreement and any legal documents the Administrator deems appropriate, including any loan agreements, notes, security instruments, certifications or legal opinions. The letter of agreement will, among other things, constitute the Administrator's approval of funds for the project subject to certain terms and conditions as determined by the Administrator, and include a project description, approved purposes of the zero-interest loan and/or grant, the maximum amount of zero-interest loan and/or grant, supplemental funds to be provided to the project and certain
(b) The Administrator has the discretion to include as an approved purpose the reimbursement of short-term financing and expenditures that were used for costs incurred on the project in accordance with § 1703.20(a)(2).
(c) If the borrower fails to submit within one month from the date of the Administrator's selection of an application all of the information that the Administrator determines to be necessary for RUS to prepare legal documents, the Administrator may consider the selection of the application cancelled.
(a) RUS will disburse zero-interest loan funds to the borrower which must disburse zero-interest loan proceeds to the project for approved purposes in accordance with the legal documents executed by the Administrator and the borrower and applicable RUS regulations. The borrower must make payments on a zero-interest loan as set forth in the legal documents executed by the Administrator and the borrower. The Borrower or project owner's share in the cost of the project must be utilized in advance of RUS zero-interest loan funds, or upon RUS approval, on a pro-rata distribution basis with loan funds during the disbursement period. The Borrower or project owner will not be permitted to provide its contribution at the end of the loan disbursement period.
(b) RUS will disburse grant funds to the borrower which must disburse grant proceeds to the project for approved purposes in accordance with the provisions of 7 CFR part 3015 and 7 CFR part 3016, as appropriate, the legal documents executed by the Administrator and the borrower, and applicable RUS regulations. Prior to the disbursement of grant funds under this subpart, the Borrower will provide evidence of fidelity bond coverage as required by 7 CFR 3015.17. The grant portion of a pass-through zero-interest loan and grant will be disbursed to the Borrower on a reimbursement basis after all other project funds have been utilized and evidence is provided that the project has been completed. Grants to Borrowers for establishment of revolving loan funds will be disbursed in accordance with § 1703.22 of this subpart.
(c) If the borrower fails to satisfy all conditions, requirements, and terms prerequisite to the advance of zero-interest loan and/or grant funds as set forth in the letter of agreement or other RUS legal documents within 120 days from the date the borrower signs the letter of agreement agreeing and accepting the conditions, requirements, and terms of the RUS zero-interest loan and/or grant, or such later date as the Administrator may approve, the Administrator may rescind the zero-interest loan and/or grant commitment.
(d) During the period between the execution of RUS's legal documents and the disbursement of funds, the borrower must provide the Administrator written notification if the project is no longer viable or the borrower no longer desires a zero-interest loan or grant for the project. After RUS has received the borrower's notification, the Administrator will rescind the commitment.
(e) The borrower must return to RUS all proceeds of the zero-interest loan and/or grant, including any interest earned on the funds being returned, which have not been lent or disbursed by the borrower for approved purposes during the six months following the advance of the loan or grant funds from RUS to the borrower, or such later date as the Administrator may approve. If the project is under the control of the borrower, all proceeds of the zero-interest loan and/or grant must be returned to RUS, including any interest earned on the funds being returned, which have not been expended by the borrower for approved purposes before the first anniversary of the date of the advance of the loan or grant funds from RUS to the borrower, or such later date as the Administrator may approve. Authorization of any extension rests solely within the discretion of the Administrator.
(a) RUS will review borrowers receiving zero-interest loans or grants, as necessary, to ensure that funds are expended for approved purposes. Borrowers receiving zero-interest loans or grants must monitor the project to the extent necessary to ensure that the project is in compliance with all applicable regulations, including ensuring that funds are expended for approved purposes. The borrower is responsible for ensuring that disbursements and expenditures of funds are properly supported with certifications, invoices, contracts, bills of sale, or any other forms of evidence determined appropriate by the Administrator and that such supporting material is available, at the borrower's premises, for review by the RUS field accountant, borrower's certified public accountant, the Office of Inspector General, the General Accounting Office and any other accountant conducting an audit of the borrower's financial statements or this rural economic development program. Borrowers will be required to permit RUS to inspect and copy its records and documents that pertain to the project.
(b) The Borrower must require the recipient of a pass-through loan and grant to provide an itemized list to the Borrower that shows the expenditures made on the project for approved purposes, including a certification to that effect. The Borrower will also require the recipient to attach invoices, receipts, bills of sale, and other evidence representing the items on the list of expenditures that at least total the amount of the RUS zero-interest loan and grant. In addition, the Borrower will also require the recipient to furnish a record of itemized receipts showing total project costs in such detail that will permit auditors to establish the RUS funding percentage. RUS's legal agreements will include the terms and conditions that the Borrower must require in its agreement with the recipient of a pass-through loan and grant covering the use and intended schedule of expenditures of the loan funds.
(c) RUS's legal documents may require the borrower to include in its legal documents with the recipient of a pass-through loan or a pass-through-grant the requirement to expend the funds for approved purposes by a certain date specified in RUS's legal documents or return to the borrower all funds that have not been expended by such date. The borrower must promptly return to RUS all unexpended funds that the recipient returns to the borrower under the terms set forth in the legal documents executed between the Administrator and the borrower. The borrower may request an extension due to delays in the project. Authorization of any extension rests solely within the discretion of the Administrator.
(d) The legal documents executed between the Borrower and the Administrator in connection with a zero-interest loan and/or grant must contain certain provisions giving the Administrator discretionary rights and remedies in the event a Borrower fails to comply with this subpart, other Federal regulations and statutes, or the terms, conditions and requirements of the executed legal documents. Regardless of any right or remedy the Administrator chooses to assert, if the Borrower uses any zero-interest loan and/or grant funds other than for approved purposes, the Borrower will be required to return to RUS the amount used for unapproved purposes. An unauthorized zero-interest loan amount which is returned will be considered a prepayment on the RUS note.
(e) Borrowers receiving zero-interest loans and/or grants will be subject to a rural economic development review of zero-interest loan and grant funds.
(f) The borrower must promptly notify the Administrator in writing if another entity is in default on a pass-through-loan between the borrower and the entity.
(g) Grants provided under this program will be administered in accordance with 7 CFR part 3015 and 7 CFR part 3016, as appropriate. Copies of these USDA Uniform Assistance regulations can be obtained by contacting RUS in Washington, DC. A Borrower that receives a grant for the establishment of a revolving loan fund, or project owner that receives a pass-
(h) For pass-through loans and grants awarded under this subpart, the Borrower must diligently monitor performance to ensure that time schedules are being met, projected work by time periods is being accomplished, and other performance objectives are being achieved. The Borrower must submit an original and one copy of each report to RUS on an annual basis. The project performance reports shall include, but not be limited to, the following:
(1) A comparison of actual accomplishments to the objectives established for that period;
(2) Reasons why any established objectives were not met;
(3) A description of any problems, delays, or adverse conditions which have occurred, or are anticipated, and which may affect the attainment of overall project objectives, prevent meeting of time schedules or objectives, or preclude the attainment of particular project work elements during established time periods. This disclosure shall be accompanied by a statement of the action taken or planned to resolve the situation; and
(4) Objectives and timetable established for the next reporting period.
(i) For pass-through loans and grants, a final project performance report will be required with the last SF 269, “Financial Status Report,” available from RUS in Washington, DC. The final report also must provide an evaluation of the success of the project in meeting the objectives of the program. The final report may serve as the last annual report.
(j) Monitoring requirements for Borrowers receiving grants for revolving loan funds are specified in § 1703.22.
For loans and grants awarded under this subpart, the Borrower must obtain prior approval for any material change to the scope or objectives of the approved project, including changes to the scope of work or budget. Failure to obtain prior approval of changes can result in suspension or termination of grant funds.
(a)
(b)
The purpose of the Distance Learning and Telemedicine (DLT) Loan and Grant Program is to encourage and improve telemedicine services and distance learning services in rural areas through the use of telecommunications, computer networks, and related advanced technologies by students, teachers, medical professionals, and rural residents. This subpart describes the general policies for administering the DLT program. Subpart E contains the policies and procedures related to grants; subpart F contains the policies and procedures related to a combination loan and grant; and subpart G contains the policies and procedures related to loans.
(a) The transmission of information is vital to the economic development, education, and health of rural Americans. To further this objective, RUS will provide financial assistance to distance learning and telemedicine projects that will improve the access of people residing in rural areas to educational, learning, training, and health care services.
(b) In providing financial assistance, RUS will give priority to rural areas that it believes have the greatest need for distance learning and telemedicine services. RUS believes that generally the need is greatest in areas that are economically challenged, costly to serve, and experiencing outward migration. This program is consistent with the provisions of the Telecommunications Act of 1996 that designate telecommunications service discounts for schools, libraries, and rural health care centers. RUS will take into consideration the community's involvement in the proposed project and the applicant's ability to leverage grant funds.
(c) In administering this subpart, RUS will not favor or mandate the use of one particular technology over another.
(d) Rural institutions are encouraged to cooperate with each other, with applicants, and with end-users to promote the program being implemented under this subpart.
(e) RUS staff will make diligent efforts to inform potential applicants in rural areas of the programs being implemented under this subpart.
(f) The Administrator will provide only loans under this subpart to any entity that has received a telecommunications or electric loan under the Rural Electrification Act of 1936. Telecommunications and Electric borrowers are encouraged to seek a loan under this subpart to bolster educational and health care opportunities in the rural communities they serve. A borrower receiving a loan shall:
(1) Make the loan available to entities that qualify as distance learning or telemedicine projects satisfying the requirements of this subpart, under any terms it so chooses as long as the terms are no more stringent than the terms under which it received the financial assistance.
(2) Use the loan to acquire, install, improve, or extend a distance learning or telemedicine system referred to in this subpart.
(g) The Administrator will allocate funds that are appropriated each fiscal year for the subparts E, F, and G, of this part respectively. Not more than 30 days before the end of the fiscal year, the Administrator may transfer any funds not committed to grants in the combination loan and grant program to the grant program.
(h) Financial assistance may be provided for end user sites. Financial assistance may also be provided for hubs located in rural or non-rural areas if they are necessary to provide distance learning or telemedicine services to rural residents at end user sites.
(i) The Administrator will publish, at the end of each fiscal year, a notice in the
(1) Provide educational programs, instruction, or information originating in one area, whether rural or not, to students and teachers who are located in rural areas; or
(2) Connect teachers and students, located in one rural area with teachers and students that are located in a different rural area.
(1) Rural elementary, secondary schools, and other educational institutions, such as institutions of higher education, vocational and adult training and education centers, libraries, and teacher training centers, and students, teachers and instructors using such rural educational facilities, that participate in a rural distance learning telecommunications program through a project funded under this subpart;
(2) Rural hospitals, primary care centers or facilities, such as medical centers, nursing homes, and clinics, and physicians and staff using such rural medical facilities, that participate in a rural telemedicine program through a project funded under this subpart; and
(3) Other rural community facilities, institutions, or entities that receive distance learning or telemedicine services.
(1) Assistance in learning to manage, operate, or use equipment or systems; and
(2) Studies, analyses, designs, reports, manuals, guides, literature, or other forms of creating, acquiring, or disseminating information.
(a) To be eligible to receive financial assistance under this subpart, the applicant must be organized in one of the following corporate structures:
(1) An incorporated organization, partnership, Indian tribe and tribal organization as defined in 25 U.S.C. 450b (b) and (c), or other legal entity, including a municipal corporation or a private corporation organized on a for-profit or not-for-profit basis, which operates, or will operate a school, college, university, learning center, training facility, or other educational institution, including a regional educational laboratory, library, hospital, medical center, medical clinic, or any rural community facility. A political subdivision of a State government, other than a political subdivision of a State government that operates a rural community facility, is not considered an eligible applicant; or
(2) A consortium, as defined in § 1703.102. A consortium which includes a political subdivision of a State government is only eligible if the political subdivision of the State government operates a rural community facility; or
(3) An incorporated organization, partnership, Indian tribe, and tribal organization as defined in 25 U.S.C. 450b (b) and (c), or other legal entity which is providing or proposes to provide telemedicine service or distance learning service to other legal entities or consortia at rates calculated to ensure that the economic value and other benefits of the financial assistance is
(b) At least one of the entities in a partnership or consortium must be eligible individually, and the partnership or consortium must provide written evidence of its legal capacity to contract with RUS and to obtain the applicable financial assistance. If a partnership or consortium lacks the capacity to contract, each individual entity must contract with RUS on its own behalf.
(c) Electric or telecommunications borrowers are eligible for loans only.
(a) During the period between the submission of an application and the execution of documents, the applicant must inform RUS if the project is no longer viable or the applicant no longer is requesting financial assistance for the project. When the applicant so informs RUS, the selection will be rescinded or the application withdrawn and written notice to that effect sent to the applicant.
(b) If an application has been selected and the scope of the project changes substantially, the applicant may be required to submit a new application to RUS for review and consideration depending on the degree of change. A new application will be subject to review in accordance with this subpart. The financial assistance may not be transferred by the applicant for use for another project.
(c) If State or local governments raise objections to a proposed project under the intergovernmental review process that are not resolved within 90 days of the Administrator's selection of the application, the Administrator will rescind the selection and written notice to that effect will be sent to the applicant. The Administrator, in his sole discretion may extend the 90 day period if it appears resolution is imminent.
(d) RUS may request additional information to complete the appropriate documents covering financial assistance.
(e)
(2) The grant agreement and the loan documents will include, among other things, conditions on the release or advance of funds and include at a minimum, a project description, approved purposes, the maximum amount of the financial assistance, supplemental funds required for the project, and certain agreements or commitments the applicant may have proposed in its application. In addition, the loan documents may contain covenants and conditions the Administrator deems necessary or desirable to provide additional assurance that loans will be repaid and the purposes of the loan will be accomplished.
(3) The recipient of a loan will be required to execute a security instrument in form and substance satisfactory to RUS and must, before receiving any advance of loan funds, provide security that is adequate, in the opinion of RUS, to assure repayment, within the time agreed, of all loans to the borrower under the DLT program. This assurance will generally be provided by a first lien upon all facilities and equipment financed by the loan. RUS may require additional security as it deems necessary.
(4) Adequate security may also be provided by third-party guarantees, letters of credit, pledges of revenue, or other forms of security satisfactory to RUS.
(5) The security instrument and other loan documents required by RUS in connection with a loan under the DLT program shall contain such pledges, covenants, and other provisions as may, in the opinion of RUS, be required to secure repayment of the loan.
(6) If the project does not constitute a complete operating system, the DLT recipient shall provide evidence, in form and substance satisfactory to
(f) Prior to the execution of a grant and loan document, RUS reserves the right to require any changes in the project or legal documents covering the project to protect the integrity of the DLT program and the interests of the government.
(g) If the applicant fails to submit, within 120 calendar days from the date of RUS’ selection of an application, all of the information that RUS determines to be necessary to prepare legal documents and satisfy other requirements of this subpart, RUS may rescind the selection of the application.
(a) For financial assistance of $100,000 or greater, prior to the disbursement of a grant and a loan, the recipient, if it is not a unit of government, will provide evidence of fidelity bond coverage as required by 7 CFR part 3019.
(b) Grants and loans will be disbursed to recipients on a reimbursement basis, or with unpaid invoices for the eligible purposes contained in this subpart, by the following process:
(1) An SF 270, “Request for Advance or Reimbursement,” will be completed by the recipient and submitted to RUS not more frequently than once a month;
(2) RUS will review the SF 270 for accuracy when received and will schedule payment if the form is satisfactory. Payment will ordinarily be made within 30 days; and
(3) For financial assistance approved during and subsequent to FY 1999, funds will be advanced in accordance with 7 CFR 1744.69.
(c) The recipient's share in the cost of the project must be disbursed in advance of the loan and grant, or if the recipient agrees, on a pro rata distribution basis with financial assistance during the disbursement period. Recipients will not be permitted to provide their contributions at the end of the project.
(d) A combination loan and grant will be disbursed on a pro rata basis based on the respective amounts of financial assistance provided.
(a) A project performance activity report will be required of all recipients on an annual basis until the project is complete and the funds are expended by the applicant.
(b) A final project performance report must be provided by the recipient. It must provide an evaluation of the success of the project in meeting the objectives of the program. The final report may serve as the last annual report.
(c) RUS will monitor recipients, as it determines necessary, to assure that projects are completed in accordance with the approved scope of work and that the financial assistance is expended for approved purposes.
(d) Recipients shall diligently monitor performance to ensure that time schedules are being met, projected work by time periods is being accomplished, and other performance objectives are being achieved. Recipients are to submit an original and one copy of all project performance reports, including, but not limited to, the following:
(1) A comparison of actual accomplishments to the objectives established for that period;
(2) A description of any problems, delays, or adverse conditions which have occurred, or are anticipated, and which may affect the attainment of overall project objectives, prevent the meeting of time schedules or objectives, or preclude the attainment of particular project work elements during established time periods. This disclosure shall be accompanied by a statement of the action taken or planned to resolve the situation; and
(3) Objectives and timetable established for the next reporting period.
A recipient of financial assistance shall provide RUS with an audit for each year, beginning with the year in which a portion of the financial assistance is expended, in accordance with the following:
(a) If the recipient is a for-profit entity, a Telecommunications or Electric borrower, or any other entity not covered by the following paragraph, the recipient shall provide an independent audit report in accordance with 7 CFR part 1773, “Policy on Audits of RUS Borrowers.”
(b) If the recipient is a State or local government, or non-profit organization, the recipient shall provide an audit in accordance with 7 CFR part 3052, “Audits of States, Local Governments, and Non-Profit Organizations.”
RUS will conduct reviews as necessary to determine whether the financial assistance was expended for approved purposes. The recipient is responsible for ensuring that the project complies with all applicable regulations, and that the grants and loans are expended only for approved purposes. The recipient is responsible for ensuring that disbursements and expenditures of funds are properly supported by invoices, contracts, bills of sale, canceled checks, or other appropriate forms of evidence, and that such supporting material is provided to RUS, upon request, and is otherwise made available, at the recipient's premises, for review by the RUS representatives, the recipient's certified public accountant, the Office of Inspector General, U. S. Department of Agriculture, the General Accounting Office, and any other official conducting an audit of the recipient's financial statements or records, and program performance for the grants and loans made under this subpart. The recipient shall permit RUS to inspect and copy any records and documents that pertain to the project.
The recipient shall obtain prior written approval by RUS for any material change to the scope or objectives of the project, including any changes to the scope of work or the budget submitted to RUS. Any material change shall be contained in a revised scope of work plan to be prepared by the recipient, submitted to, and approved by RUS in writing.
(a) The financial assistance may be terminated when RUS and the recipient agree upon the conditions of the termination, the effective date of the termination, and, in the case of a partial termination of the financial assistance, any unadvanced portion of the financial assistance to be terminated and any advanced portion of the financial assistance to be returned.
(b) The recipient may terminate the financial assistance by written notification to RUS, providing the reasons for such termination, the effective date, and, in the case of a partial termination, the portion of the financial assistance to be terminated. In the case of a partial termination, if RUS believes that the remaining portion of the financial assistance will not accomplish the approved purposes, then, RUS may terminate the financial assistance in its entirety, pursuant to the provisions of paragraph (a) of this section.
RUS will expedite consideration and determination of an application submitted by an RUS telecommunications borrower for a loan under the Act or an advance of such loan funds to be used in conjunction with financial assistance under subparts E, F, or G of this part. See 7 CFR part 1737 for loans and 7 CFR part 1744 for advances under this section.
(a) Grants may be used by eligible organizations for distance learning and telemedicine projects to finance up to 70 percent of the amount designated for approved purposes; at least 30 percent of the project must be funded by
(b) Only projected costs for approved grant purposes will be considered in determining the amount of DLT grant eligibility in accordance with paragraph (a) of this section.
(c) Funding from Federal sources other than RUS cannot be considered as matching contributions under this subpart.
Grants shall be expended only for the costs associated with the initial capital assets associated with the project. The following are approved grant purposes:
(a) Acquiring, by lease or purchase, eligible equipment as defined in § 1703.102;
(b) Acquiring instructional programming; and
(c) Providing technical assistance and instruction for using eligible equipment, including any related software; developing instructional programming; providing engineering or environmental studies relating to the establishment or expansion of the phase of the project that is being financed with the grant (this purpose shall not exceed 10 percent of the grant).
(a) The grant applicant's minimum matching contribution (as specified in § 1703.120) for approved purposes, generally must be in the form of cash. However, in-kind contributions for the purposes listed in § 1703.121 may be substituted for cash.
(b) In-kind items listed in § 1703.121 must be non-depreciated or new assets with established monetary values. Manufacturers’ or service providers’ discounts are not considered in-kind matching.
(c) Costs incurred by the applicant, or others on behalf of the applicant, for facilities or equipment installed, or other services rendered prior to submission of a completed application, shall not be considered as an eligible in-kind matching contribution.
(d) Costs incurred for non-approved purposes for grant outlined in § 1703.123 shall not be used as an in-kind matching contribution.
(a) A grant made under this subpart will not be provided or used:
(1) To cover the costs of installing or constructing telecommunications transmission facilities, other than those facilities not available and necessary for the completion of the proposed project and not otherwise available;
(2) To pay for medical equipment not having telemedicine as its essential function;
(3) To pay salaries, wages, or employee benefits to medical or educational personnel;
(4) To pay for the salaries or administrative expenses of the applicant or the project;
(5) To purchase equipment that will be owned by the local exchange carrier or another telecommunications service provider unless that service provider is the applicant.
(6) To duplicate facilities providing distance learning or telemedicine services in place or to reimburse the applicant or others for costs incurred prior to RUS’ receipt of the completed application;
(7) To pay costs of preparing the application package for financial assistance under this program;
(8) For projects whose sole objective is to provide links between teachers and students or between medical professionals who are located at the same facility;
(9) For site development and the destruction or alteration of buildings;
(10) For the purchase of land, buildings, or building construction;
(11) For projects located in areas covered by the Coastal Barrier Resources Act (16 U.S.C. 3501
(12) For any purpose that the Administrator has not specifically approved;
(13) Except for leases provided for in § 1703.121, to pay the cost of recurring or operating expenses for the project; or
(14) For any other purposes not specifically contained in § 1703.121.
(b) Except as otherwise provided in § 1703.112, grants shall not be used to finance a project, in part, when the success of the project is dependent upon the receipt of additional financial assistance under this subpart or is dependent upon the receipt of other financial assistance that is not assured.
Applications for grants under this subpart will be subject to limitations on the proposed amount of grant funds. The Administrator will establish the maximum amount of a grant to be made available to an individual recipient for each fiscal year under this subpart by publishing notice of the maximum amount in the
The following items are required to be submitted to RUS in support of an application for grant funds:
(a)
(b)
(1) A description of why the project is needed;
(2) An explanation of how the applicant will address the need cited in paragraph (b)(1) of this section, why the applicant requires financial assistance, the types of educational or medical services to be offered by the project, and the benefits to rural residents;
(3) A description of the applicant, documenting eligibility in accordance with § 1703.103;
(4) An explanation of the total project cost including a breakdown of the grant required and the source of matching contribution and other financial assistance for the remainder of the project;
(5) A statement specifying whether the project is either a distance learning or telemedicine facility as defined in § 1703.102. If the project provides both distance learning and telemedicine services, the applicant must identify the predominant use of the system;
(6) A general overview of the telecommunications system to be developed, including the types of equipment, technologies, and facilities used;
(7) A description of the participating hubs and end user sites and the number of rural residents that will be served by the project at each end user site; and
(8) A certification by the applicant that facilities constructed with grants do not duplicate adequate established telemedicine or distance learning services.
(9) A listing of the location of each end user site (city, town, village, borough, or rural areas) plus the State.
(c)
(d)
(1) The specific activities to be performed under the project;
(2) Who will carry out the activities;
(3) The time-frames for accomplishing the project objectives and activities; and
(4) A budget for all capital expenditures reflecting the line item costs for approved purposes for both the grant funds and other sources of funds for the project. Separately, the budget must specify any line item costs that are nonapproved purposes for grants as contained in § 1703.123.
(e)
(1) Applicants must include sufficient pro-forma financial data to demonstrate feasibility of the project and the financial capability of the project participants to continue a sustainable project for a minimum of 10 years after completion of the project. This documentation should include non-contingent sources of income or revenues that are sufficient to pay operating expenses including telecommunications access and toll charges, system maintenance, salaries, training, and any other general operating expenses, and provide for replacement of depreciable items.
(2) For each hub and end user site, the applicant must identify and provide reasonable evidence of each source of revenue. If the projection relies on cost sharing arrangements among hub and end user sites, the applicant must provide evidence of agreements made among project participants.
(3) For applicants eligible under § 1703.103(a)(3), an explanation of the economic analysis justifying the rate structure to ensure that the benefit, including cost saving, of the financial assistance is passed through to those receiving telemedicine or distance learning services.
(f)
(g)
(1) Payment of all proposed expenditures for the project;
(2) All required matching contribution in 1703.120;
(3) any additional matching funding provided in accordance with § 1703.126(b)(4); and
(4) Any other funds necessary to complete the project.
(h)
(1) The capabilities of the telecommunications terminal equipment, including a description of the specific equipment which will be used to deliver the proposed service. The applicant must document discussions with various technical sources which could include consultants, engineers, product vendors, or internal technical experts, provide detailed cost estimates for operating and maintaining the end user equipment and provide evidence that alternative equipment and technologies were evaluated.
(2) A listing of the proposed purchases or leases of telecommunications terminal equipment, telecommunications transmission facilities, data terminal equipment, interactive video equipment, computer hardware and software systems, and components that process data for transmission via telecommunications, computer network components, communication satellite ground station equipment, or any other elements of the telecommunications system designed to further the purposes of this subpart, that the applicant intends to build or fund using RUS financial assistance.
(3) A description of the consultations with the appropriate telecommunications carriers (including other interexchange carriers, cable television operators, enhanced service providers, providers of satellite services and telecommunications equipment manufacturers and distributors) and the anticipated role of such providers in the proposed telecommunications system.
(i)
(1) E.O. 11246, Equal Employment Opportunity, as amended by E.O. 11375 and as supplemented by regulations contained in 41 CFR part 60;
(2) Architectural barriers;
(3) Flood hazard area precautions;
(4) Assistance and Real Property Acquisition Policies Act of 1970;
(5) Drug-Free Workplace Act of 1998 (41 U.S.C. 701);
(6) E.O.s 12549 and 12689, Debarment and Suspension;
(7) Byrd Anti-Lobbying Amendment (31 U.S.C. 1352).
(j)
(2) The applicant may use the “Environmental Questionnaire,” available from RUS, to assist in complying with the requirements of this section.
(k)
(l)
(m)
(n)
(o)
(p)
(a)
(1) The need for services and benefits derived from services (up to 55 points);
(2) The comparative rurality of the project service area (up to 45 points);
(3) The economic need of the applicant's service area as estimated by the NSLP or other supplemental objective criteria (up to 35 points);
(4) The ability of the applicant to leverage resources (up to 35 points);
(5) Innovativeness of the project (up to 15 points);
(6) The cost effectiveness of the system (up to 35 points);
(7) Project participation in EZ/ECs (Empowerment Zone and Enterprise Communities) and Champion Communities (up to 15 points).
(b) Scoring criteria:
(1)
(ii) RUS will consider the extent of the applicant's documentation explaining the economic, education, or health care challenges facing the community; the applicant's proposed plan to address these challenges; how the grant can help; and why the applicant cannot complete the project without a grant. RUS will also consider the extent to which the applicant provides evidence that economic, education, or health care challenges could not be addressed without employing advanced technology. The Administrator will also consider any support by recognized experts in the related educational or health care field, any documentation substantiating the educational or health care underserved nature of the applicant's proposed service area, and any justification for specific educational or medical services which are needed and will provide direct benefits to rural residents.
(A) Some examples of benefits to be provided by the project include, but are not limited to:
(
(
(
(
(
(
(
(
(
(B) Other matters that will be considered by RUS under this criterion include:
(
(
(
(
(2)
(i) The following definitions are used in the evaluation of rurality:
(A) Exceptionally Rural Area means any area of the United States not included within the boundaries of any incorporated or unincorporated city, village, or borough having a population in excess of 5,000 inhabitants.
(B) Rural Area means any area of the United States included within the boundaries of any incorporated or unincorporated city, village, or borough having a population over 5,000 and not in excess of 10,000 inhabitants.
(C) Mid-Rural Area means any area of the United States included within the boundaries of any incorporated or unincorporated city, village, or borough having a population over 10,000 and not in excess of 20,000 inhabitants.
(D) Urban Area means any area of the United States included within the boundaries of any incorporated or unincorporated city, village, or borough having a population in excess of 20,000 inhabitants.
(ii) There are a total of 45 possible points for this criterion. Each end user site will receive points based on its location in accordance with paragraph (b)(2)(i) of this section. If a hub is utilized as an end user site, the hub will be considered as an end user site. The applicant will receive points as follows:
(A) If the end user site is located in an Exceptionally Rural Area, it will receive 45 points.
(B) If the end user site is located in a Rural Area, it will receive 30 points.
(C) If the end user site is located in a Mid-Rural Area, it will receive 15 points.
(D) If the end user site is located in an Urban Area, it will receive 0 points.
(iii) The total score for this criterion will be based on the average score for all the end user sites included in the project.
(iv) An application must receive a minimum of 20 points as an average score for all the end user sites under this criterion to be eligible for a grant.
(3)
(i) The following guidelines will be used to determine the applicable NSLP percent for a particular application:
(A) Public schools or non-profit private schools of high school grade or under will use the actual eligibility percentage for that particular school.
(B) Schools and institutions of higher learning ineligible to participate in the NSLP and non-school end user sites (medical facilities, libraries, etc.) will use the eligibility percentage of all students in the school district where the end user will be located.
(C) Percentage ratios will be rounded up to the next highest or rounded down to the next lowest whole number for fraction of percentages at or greater than .5 or less than .5, respectively.
(D) The project NSLP percentage will be determined by the average of the NSLP percentages of the end user sites. If end user sites fall within different percentile categories, the eligibility percentages associated with each end user site will be averaged to determine the percentile category. For purposes of averaging, if a hub is also utilized as an end user site, the hub will be considered as an end user site.
(ii) The applicant will receive points as follows:
(A) NSLP percentage greater than or equal to 75 percent—35 points
(B) NSLP percentage greater than or equal to 50 percent but less than 75 percent—25 points
(C) NSLP percentage greater than or equal to 25 percent but less than 50 percent—15 points
(D) NSLP percentage less than 25% percent—0 points
(4)
(i) Matching contribution for a grant for approved purposes greater than 42.85 percent, but less than or equal to 70 percent of the grant—0 points.
(ii) Matching contribution for a grant for approved purposes greater than 70 percent, but less than or equal to 100 percent of the grant—15 points.
(iii) Matching contribution for a grant for approved purposes greater than 100 percent, but less than or equal to 150 percent of the grant—25 points.
(iv) Matching contribution for a grant for approved purposes greater than 150 percent, but less than or equal to 200 percent of the grant—30 points.
(v) Matching contribution for a grant for approved purposes greater than 200 percent of the grant—35 points.
(5)
(i) The extent to which the project differs from a technical standpoint;
(ii) The extent to which the project differs from an educational or medical programmatic standpoint;
(iii) The extent to which the project reflects a unique adaptation of technology based on the special needs or circumstances of the proposed area to be served by the project; and
(iv) The potential of the project to influence or lead changes in how telecommunications services can be delivered in other areas.
(6)
(i) The extent to which the applicant has considered various technological options for delivering the services. The applicant must provide sufficient documentation reflecting accepted analytical and financial methodologies to substantiate its choice of technology as the most cost-effective option. RUS will consider the applicant's documentation and analysis comparing various systems and technologies.
(ii) Whether buying or leasing specific equipment is more cost effective.
(iii) The extent to which the project will utilize other existing networks at the regional, statewide, national or international levels. To the extent possible, educational and health care networks should be designed to utilize the widest practicable number of other networks that expand the capabilities of the project, thereby affording rural residents opportunities that may not be available at the local level. The ability to connect to the Internet alone cannot be used as the sole basis to fulfill this criteria.
(iv) The extent to which the facilities being constructed with financial assistance, particularly financial assistance under this chapter provided to entities
(v) The extent to which the project utilizes existing telecommunications transmission facilities that could provide the transmission path for the needed services. For projects that do not utilize existing transmission facilities, RUS will consider documentation explaining the necessity of this option. RUS will also consider any agreements between the applicant and other entities for sharing transmission facilities to lower the fixed costs of such facilities.
(7)
(a) Applications will be selected for approval based on scores assigned, availability of funds, and the provisions of this section. RUS will make determinations regarding the reasonableness of all numbers; dollar levels; rates; the nature and design of the project; costs; location; and other characteristics of the application and the project to determine the number of points assigned to a grant application for all selection criteria.
(b) Regardless of the number of points an application receives in accordance with § 1703.126, the Administrator may, based on a review of the applications in accordance with the requirements of this subpart:
(1) Limit the number of applications selected for projects located in any one State during a fiscal year;
(2) Limit the number of selected applications for a particular project;
(3) Select an application receiving fewer points than another higher scoring application if there are insufficient funds during a particular funding period to select the higher scoring application. In this case, however, the Administrator will provide the applicant of the higher scoring application the opportunity to reduce the amount of its grant request to the amount of funds available. If the applicant agrees to lower its grant request, it must certify that the purposes of the project can be met, and the Administrator must determine the project is financially feasible at the lower amount in accordance with § 1703.125(e)(1). An applicant or multiple applicants affected under this paragraph will have the opportunity to be considered for loan financing in accordance with subparts F and G of this part.
(c) RUS will not approve a grant if RUS determines that:
(1) The applicant's proposal does not indicate financial feasibility or is not sustainable in accordance with the requirements of § 1703.125(e)(1);
(2) The applicant's proposal indicates technical flaws, which, in the opinion of RUS, would prevent successful implementation, operation, or sustainability of the project;
(3) Other applications would provide more benefit to rural America based on a review of the financial and technical information submitted in accordance with § 1703.125(e).
(4) Any other aspect of the applicant's proposal fails to adequately address any requirement of this subpart or contains inadequacies which would, in the opinion of RUS, undermine the ability of the project to meet the general purpose of this subpart or comply with policies of the DLT Program contained in § 1703.101.
(d) Grant applications will be ranked by the type of application (health care or educational) and total points scored. Grants available for medical and educational applicants may be allocated based on the total number of medical and educational applications scoring in the top 50 percent of all applications received for that fiscal year. Based on the number and type of applications received, applications may be ranked only in one category based on the predominant use of the project.
(e) RUS may reduce the amount of the applicant's grant based on insufficient program funding for the fiscal
(f) RUS will provide the applicant with an explanation of any determinations made with regard to paragraphs (c)(1) through (c)(4) of this section prior to making final project selections for the year. The applicant will be provided 15 days from the date of RUS’ letter to respond, provide clarification, or make any adjustments or corrections to the project. If, in the opinion of the Administrator, the applicant fails to adequately respond to any determinations or other findings made by the Administrator, the project will not be funded, and the applicant will be notified of this determination. If the applicant does not agree with this finding an appeal may be filed in accordance with § 1703.129.
(g) Grantees shall comply with all applicable provisions of 7 CFR parts 3015, 3016, and 3019.
(a) Applications for grants shall be submitted to the RUS, U.S. Department of Agriculture, 1400 Independence Avenue, SW., STOP 1590, Washington, DC 20250-1590. Applications should be marked “Attention: Assistant Administrator, Telecommunications Program”.
(b) Applications must be submitted to RUS postmarked not later than the application filing deadline established by the Administrator if the applications are to be considered during the period for which the application was submitted. The deadline for submission of applications each fiscal year will be published, and provided through other notices, by RUS in the
(c) All applicants must submit an original and two copies of a completed application. Applicants must also submit a copy of the application to the State government point of contact, if one has been designated for the State, at the same time it submits an application to RUS. All applications must include the information required by § 1703.125.
All qualifying applications under this subpart will be scored based on the criteria contained in § 1703.126. Awards will be made by RUS based on the highest ranking applications and the amount of financial assistance available for grants. All applicants will be notified in writing of the score each application receives, and included in this notification will be a tentative minimum required score to receive financial assistance. If the score received by the applicant could result in the denial of its application, or if its score, while apparently sufficient to qualify for financial assistance, may be surpassed by the score awarded to a competing application after appeal, that applicant may appeal its numerical scoring. Any appeal must be based on inaccurate scoring of the application by RUS and no new information or data that was not included in the original application
(a) A combination loan and grant may be used by eligible organizations as defined in § 1703.103 for distance learning and telemedicine projects to finance 100 percent of the cost of approved purposes contained in § 1703.131 provided that no financial assistance may exceed the maximum amount for the year in which the combination loan and grant is made.
(b) Applicants must meet the minimum eligibility requirement for determining the extent to which the project serves rural areas as determined in § 1703.126(b)(2) (the applicant must receive at least 20 points to be eligible to receive financial assistance under this subpart).
The approved purposes for a combination loan and grant are:
(a) Acquiring, by lease or purchase, eligible equipment or facilities as defined in § 1703.102;
(b) Acquiring instructional programming;
(c) Providing technical assistance and instruction for using eligible equipment, including any related software; developing instructional programming; providing engineering or environmental studies relating to the establishment or expansion of the phase of the project that is being financed with a combination loan and grant (this purpose shall not exceed 10 percent of the total requested financial assistance);
(d) Paying for medical or educational equipment and facilities that are shown to be necessary to implement the project, including vehicles utilizing distance learning and telemedicine technology to deliver educational and health care services. The applicant must demonstrate that such items are necessary to meet the purposes under this subpart and financial assistance for such equipment and facilities is not available from other sources at a cost which would not adversely affect the economic viability of the project;
(e) Providing links between teachers and students or medical professionals who are located at the same facility, provided that such facility receives or provides distance learning or telemedicine services as part of a distance learning or telemedicine network which meets the purposes of this subpart;
(f) Providing for site development and alteration of buildings in order to meet the purposes of this subpart. Financial assistance for this purpose must be necessary and incidental to the total amount of financial assistance requested;
(g) Purchasing of land, buildings, or building construction determined by RUS to be necessary and incidental to the project. The applicant must demonstrate that financial assistance funding from other sources is not available at a cost that does not adversely impact the economic viability of the project as determined by the Administrator. Financial assistance for this purpose must be necessary and incidental to the total amount of financial assistance requested; and
(h) Acquiring telecommunications transmission facilities provided that no telecommunications carrier will install such facilities under the Act or through other financial procedures within a reasonable time period and at a cost to the applicant that does not impact the economic viability of the
(a) Without limitation, a combination loan and grant made under this subpart shall not be expended:
(1) To pay salaries, wages, or employee benefits to medical or educational personnel;
(2) To pay for the salaries or administrative expenses of the applicant or the project;
(3) To purchase equipment that will be owned by the local exchange carrier or another telecommunications service provider, unless the applicant is the local exchange carrier or other telecommunications service provider;
(4) To duplicate facilities providing distance learning or telemedicine services in place or to reimburse the applicant or others for costs incurred prior to RUS’ receipt of the completed application;
(5) For projects located in areas covered by the Coastal Barrier Resources Act (16 U.S.C. 3501
(6) For any purpose that the Administrator has not specifically approved;
(7) Except for leases (see § 1703.131), to pay the cost of recurring or operating expenses for the project; or,
(8) For any other purposes not specifically outlined in § 1703.131.
(b) Except as otherwise provided in § 1703.112, funds shall not be used to finance a project, in part, when the success of the project is dependent upon the receipt of additional financial assistance under this subpart or is dependent upon the receipt of other funding that is not assured.
Applications for a combination loan and grant under this subpart will be subject to limitations on the proposed amount of loans and grants. The Administrator will establish the maximum amount of loans and grants and the portion of grant funds as a percentage of total assistance for each project to be made available to an individual recipient for each fiscal year under this subpart, by publishing notice of the maximum amount in the
The following items are required to be submitted to RUS in support of an application for a combination loan and grant:
(a)
(b)
(1) A description of why the project is needed;
(2) An explanation of how the applicant will address the need cited in paragraph (b)(1) of this section, why the applicant requires financial assistance, the types of educational or medical services to be offered by the project, and the benefits to the rural residents;
(3) A description of the applicant, documenting eligibility in accordance with § 1703.103;
(4) An explanation of the total project cost including a breakdown of the combination loan and grant required and the source of funding, if applicable, for the remainder of the project;
(5) A statement specifying whether the project provides predominantly distance learning or telemedicine services as defined in § 1703.102. If the project provides both distance learning and telemedicine services, the applicant must identify the predominant use of the system;
(6) A general overview of the telecommunications system to be developed, including the types of equipment, technologies, and facilities used;
(7) A description of the participating hubs and end user sites and the number of rural residents that will be served by the project at each end user site;
(8) A certification by the applicant that facilities constructed with a combination loan and grant do not duplicate adequately established telemedicine or distance learning services.
(9) A listing of the location of each end user site (city, town, village, borough, or rural area plus the State).
(c)
(1) The specific activities to be performed under the project;
(2) Who will carry out the activities;
(3) The time-frames for accomplishing the project objectives and activities; and
(4) A budget for capital expenditures reflecting the line item costs for both the combination loan and grant and any other sources of funds for the project.
(d)
(1) Applicants must include sufficient pro-forma financial data that adequately reflects the financial capability of project participants and the project as a whole to continue a sustainable project for a minimum of 10 years and repay the loan portion of the combination loan and grant. This documentation should include sources of sufficient income or revenues to pay operating expenses including telecommunications access and toll charges, system maintenance, salaries, training, and any other general operating expenses, provide for replacement of depreciable items, and show repayment of interest and principal for the loan portion of the combination loan and grant.
(2) A list of property which will be used as collateral to secure repayment of the loan. The applicant shall purchase and own collateral that secures the loan free from liens or security interests and take all actions necessary to perfect a security interest in the collateral that secures the loan. RUS considers as adequate security for a loan, a guarantee by a RUS telecommunications or electric borrower or by another qualified party. Additional forms of security, including letters of credit, real estate, or any other items will be considered. RUS will determine the adequacy of the security offered.
(3) As applicable, a depreciation schedule covering all assets of the project. Those assets for which a combination loan and grant are being requested should be clearly indicated.
(4) For each hub and end user site, the applicant must identify and provide reasonable evidence of each source of revenue. If the projection relies on cost sharing arrangements among hub and end user sites, the applicant must provide evidence of agreements made among project participants.
(5) For applicants eligible under § 1703.103(a)(3), an explanation of the economic analysis justifying the rate structure to ensure that the benefit, including cost saving, of the financial assistance is passed through to the other persons receiving telemedicine or distance learning services.
(e)
(f)
(1) The capabilities of the telecommunications terminal equipment, including a description of the specific equipment which will be used to deliver the proposed service. The applicant must document discussions with various technical sources which could include consultants, engineers, product vendors, or internal technical experts, provide detailed cost estimates for operating and maintaining the end user equipment and provide evidence that alternative equipment and technologies were evaluated.
(2) A listing of the proposed purchases or leases of telecommunications terminal equipment, telecommunications transmission facilities, data terminal equipment, interactive video equipment, computer hardware and software systems, and components that process data for transmission via telecommunications, computer network components, communication satellite ground station equipment, or any other elements of the telecommunications system designed to further the purposes of this subpart, that the applicant intends to build or fund using a combination loan and grant.
(3) A description of the consultations with the appropriate telecommunications carriers (including other interexchange carriers, cable television operators, enhanced service providers, providers of satellite services, and telecommunications equipment manufacturers and distributors) and the anticipated role of such providers in the proposed telecommunications system.
(4) Results of discussions with local exchange carriers serving the project area addressing the concerns contained in § 1703.131(h).
(5) The capabilities of the telecommunications transmission facilities, including bandwidth, networking topology, switching, multiplexing, standards, and protocols for intra-networking and open systems architecture (the ability to effectively communicate with other networks). In addition, the applicant must explain the manner in which the transmission facilities will deliver the proposed services. For example, for medical diagnostics, the applicant might indicate whether or not a guest or other diagnosticians can join the network from locations off the network. For educational services, indicate whether or not all hub and end-user sites are able to simultaneously hear in real-time and see each other or the instructional material in real-time. The applicant must include detailed cost estimates for operating and maintaining the network, and include evidence that alternative delivery methods and systems were evaluated.
(g)
(1) E.O. 11246, Equal Employment Opportunity, as amended by E.O. 11375 and as supplemented by regulations contained in 41 CFR part 60;
(2) Architectural barriers;
(3) Flood hazard area precautions;
(4) Assistance and Real Property Acquisition Policies Act of 1970;
(5) Drug-Free Workplace Act of 1998 (41 U.S.C. 701);
(6) E.O.s 12549 and 12689, Debarment and Suspension;
(7) Byrd Anti-Lobbying Amendment (31 U.S.C. 1352).
(h)
(2) The applicant may use the “Environmental Questionnaire,” available from RUS, to assist in complying with the requirements of this section.
(i)
(j)
(k)
(l)
(a) A combination loan and grant will be approved based on availability of funds, the financial feasibility of the project in accordance with § 1703.134(d), the services to be provided which demonstrate that the project meets the general requirements of this subpart, the design of the project; costs; location; and other characteristics of the application.
(b) RUS will determine, from the information submitted with each application for a combination loan and grant, whether the application achieves sufficient priority, based on the criteria set forth in the 1996 Act, to receive a combination loan and grant from funds available for the fiscal year. If such priority is achieved, RUS will process the combination loan and grant application on a first-in, first-out basis, provided that the total amount of applications on-hand for combination loans and grants does not exceed 90 percent of the total loan and grant funding available for the fiscal year. At such time as the total amount of applications eligible for combination loans and grants, if such applications were approved, exceeds 90 percent of amount of combination loan and grant funding available, RUS will process the remaining applications using the evaluation criteria set forth in § 1703.126.
(c) RUS will not approve a combination loan and grant if RUS determines that:
(1) The applicant's proposal does not indicate financial feasibility, or will not be adequately secured in accordance with the requirements contained in § 1703.134(d);
(2) The applicant's proposal indicates technical flaws, which, in the opinion of RUS, would prevent successful implementation, or operation of the project; or
(3) Any other aspect of the applicant's proposal fails to adequately address any requirements of this subpart or contains inadequacies which would, in the opinion of RUS, undermine the ability of the project to meet the general purpose of this subpart or comply with policies of the DLT program contained in § 1703.101.
(d) RUS will provide the applicant with a statement of any determinations made with regard to paragraphs (c)(1) through (c)(3) of this section. The applicant will be provided 15 days from the date of RUS’ letter to respond, provide clarification, or make any adjustments or corrections to the project. If, in the opinion of the Administrator, the applicant fails to adequately respond to any determinations or other findings made by the Administrator, the project will not be funded, and the applicant will be notified of this determination. If the applicant does not agree with this finding, an appeal may be filed in accordance with § 1703.137.
(a) RUS will accept applications for a combination loan and grant submitted by RUS telecommunications General Field representatives (GFRs), by Rural Development State Directors, or by applicants themselves. Applications for a combination loan and grant under this subpart may be filed at any time and will be evaluated as received.
(b) Applications submitted to the State Director, Rural Development, in the State serving the headquarters of the project will be evaluated as they are submitted. All applicants must submit an original and two copies of a completed application. The applicant must also submit a copy of the application to the State government point of contact, if one has been designated for the State, at the same time it submits an application to the State Director. The State Director will:
(1) Review each application for completeness in accordance with § 1703.134, and notify the applicant, within 15 working days of receiving the application, of the results of this review, acknowledging a complete application, or citing any information that is incomplete. To be considered for a combination loan and grant, the applicant must submit any additional information requested to complete the application within 15 working days of the date of the State Director's written response. If the applicant fails to submit such information, the application will be returned to the applicant.
(2) Within 30 days of the determination of a completed application in accordance with paragraph (b)(1) of this section, review the application to determine suitability for financial assistance in accordance with § 1703.135, and other requirements of this subpart. Based on its review, the State Director will work with the applicant to resolve any questions or obtain any additional information. The applicant will be notified, in writing, of any additional information required to allow a financial assistance recommendation and will be provided a reasonable period of time to furnish the additional information.
(3) Based on the review in accordance with § 1703.135 and other requirements of this subpart, make a preliminary determination of suitability for financial assistance. A combination loan and grant recommendation will be prepared by the State Director with concurrence of the RUS telecommunications GFR that addresses the provisions of sections § 1703.134 and § 1703.135 and other applicable requirements of this subpart.
(4) If the application is determined suitable for further consideration by RUS, forward an original and one copy of the application with a financial assistance recommendation, signed jointly, to the Assistant Administrator, Telecommunications Program, Rural Utilities Service, Washington, DC. The applicant will be notified by letter of this action. Upon receipt of the application from the State Director, RUS will conduct a review of the application and the financial assistance recommendation. A final determination will be made within 15 days. If the Administrator determines that a combination loan and grant can be approved, the State Director will be notified and the State Director will notify the applicant. A combination loan and grant will be processed, approved, and serviced in accordance with §§ 1703.105 through 1703.112 of subpart D.
(5) If the State Director determines that the application is not suitable for further consideration by RUS, notify the applicant with the reasons for this determination. The applicant may appeal this determination pursuant to section § 1703.137 of this subpart.
(c) Applications submitted by RUS telecommunications GFRs or directly by applicants will be evaluated as they are submitted. All applicants must submit an original and two copies of a completed application. The applicant must also submit a copy of the application to the State government point of contact, if one has been designated for the State, at the same time it submits an application to RUS. RUS will:
(1) Review each application for completeness in accordance with § 1703.134, and notify the applicant, within 15 working days of receiving the application, of the results of this review, acknowledging a complete application, or citing any information that is incomplete. To be considered for a combination loan and grant assistance, the applicant must submit any additional information requested to complete the application within 15 working days of the date of the RUS written response. If the applicant fails to submit such information, the application will be returned to the applicant.
(2) Within 30 days of the determination of a completed application in accordance with paragraph (c)(1) of this
(3) If the application is determined suitable for further consideration by RUS, conduct a review of the application and financial assistance recommendation. A final determination will be made within 15 days. If the Administrator determines that a combination loan and grant can be approved, the applicant will be notified. A combination loan and grant will be processed, approved, and serviced in accordance with §§ 1703.105 through 1703.112 of subpart D.
(4) If RUS determines that the application is not suitable for further consideration, notify the applicant with the reasons for this determination. The applicant will be able to appeal in accordance with § 1703.137 of this subpart.
Any appeal must be made, in writing, within 10 days after the applicant is notified of the determination to deny the application. Appeals shall be submitted to the Administrator, RUS, U.S. Department of Agriculture, 1400 Independence Ave., SW., STOP 1590, Washington, DC 20250-1590. Thereafter, the Administrator will review the appeal to determine whether to sustain, reverse, or modify the original determination. Final determinations will be made after consideration of all appeals. The Administrator's determination will be final. A copy of the Administrator's decision will be furnished promptly to the applicant.
A loan may be used by eligible organizations as defined in § 1703.103 for distance learning and telemedicine projects to finance 100 percent of the cost of approved purposes contained in § 1703.141 provided that no financial assistance may exceed the maximum amount for the year in which the loan is made. Entities seeking a loan must be able to provide security and execute a note with a maturity period greater than one year. The following entities are eligible for loans under this subpart:
(a) Organizations as defined in § 1703.103. If a RUS telecommunications borrower is seeking a loan, the borrower does not need to submit all of the financial security information required by § 1703.144(d). The borrower's latest financial report (Form 479) filed with RUS and any additional information relevant to the project, as determined by RUS, will suffice;
(b) Any non-profit or for-profit entity, public or private entity, urban or rural institution, or rural educational broadcaster, which proposes to provide and receive distance learning and telemedicine services to carry out the purposes of this subpart; or
(c) Any entity that contracts with an eligible organization in paragraphs (a) or (b) of this section for constructing distance learning or telemedicine facilities for the purposes contained in § 1703.141, except for those purposes in § 1703.141(h).
(d) Applicants must meet the minimum eligibility requirement for determining the extent to which the project serves rural areas as contained in § 1703.126(b)(2) (the applicant must receive at least 20 points to be eligible to receive financial assistance under this subpart).
The following are approved purposes for loans:
(a) Acquiring, by lease or purchase, eligible equipment or facilities as defined in § 1703.102;
(b) Acquiring instructional programming;
(c) Providing technical assistance and instruction for using eligible equipment, including any related software; developing instructional programming; providing engineering or environmental studies relating to the establishment or expansion of the phase of the project that is being financed with the loan (financial assistance for this purpose shall not exceed 10 percent of the requested financial assistance);
(d) Paying for medical or educational equipment and facilities which are shown to be necessary to implement the project, including vehicles utilizing distance learning and telemedicine technology to deliver educational and health care services. The applicant must demonstrate that such items are necessary to meet the purposes under this subpart and financial assistance for such equipment and facilities is not available from other sources at a cost which would not adversely affect the economic viability of the project;
(e) Providing links between teachers and students or medical professionals who are located at the same facility, provided that such facility receives or provides distance learning or telemedicine services as part of a distance learning or telemedicine network which meets the purposes of this subpart;
(f) Providing for site development and alteration of buildings in order to meet the purposes of this subpart. Loans for this purpose must be necessary and incidental to the total amount of financial assistance requested;
(g) Purchasing of land, buildings, or building construction, where such costs are demonstrated necessary to construct distance learning and telemedicine facilities. The applicant must demonstrate that funding from other sources is not available at a cost which does not adversely impact the economic viability of the project as determined by the Administrator. Financial assistance for this purpose must be necessary and incidental to the total amount of financial assistance requested;
(h) Acquiring of telecommunications transmission facilities provided that no telecommunications carrier will install such facilities under the Act or through other financial procedures within a reasonable time period and at a cost to the applicant that does not impact the economic viability of the project, as determined by the Administrator;
(i) Any project costs, except for salaries and administrative expenses, not included in paragraphs (a) through (h) of this section, incurred during the first two years of operation after the financial assistance has been approved.The applicant must show that financing such costs are necessary for the establishment or continued operation of the project and that financing is not available for such costs elsewhere, including from the applicant's financial resources. The Administrator will determine whether such costs will be financed based on information submitted by the applicant. Loans shall not be made exclusively to finance such costs, and financing for such costs will not exceed 20 percent of the loan provided to a project under this section; and
(j) All of the costs needed to provide distance learning broadcasting to rural areas. Loans may be used to cover the costs of facilities and end-user equipment dedicated to providing educational broadcasting to rural areas for distance learning purposes. If the facilities are not 100 percent dedicated to broadcasting, a portion of the financing may be used to fund such facilities based on a percentage of use factor that approximates the distance learning broadcasting portion of use.
(a) Loans made under this subpart will not be provided to pay the costs of recurring or operating expenses incurred after two years from approval of the project except for leases (see § 1703.141).
(b) Loans made under this subpart will not be provided for any of the following costs:
(1) To purchase equipment that will be owned by the local exchange carrier
(2) To duplicate facilities providing distance learning or telemedicine services in place or to reimburse the applicant or others for costs incurred prior to RUS’ receipt of the completed application;
(3) For projects located in areas covered by the Coastal Barrier Resources Act (16 U.S.C. 3501
(4) To pay for salaries, wages, or administrative expenses; or
(5) For any purpose that the Administrator has not specifically approved.
(c) Except as otherwise provided in § 1703.112, funds shall not be used to finance a project, in part, when the success of the project is dependent upon the receipt of additional financial assistance under this subpart G or is dependent upon the receipt of other funding that is not assured.
Applications for loans under this subpart will be subject to limitations on the proposed amount of loans. The Administrator will establish the maximum amount of a loan available to an applicant under this subpart, by publishing notice of the maximum amount in the
The following items are required to be submitted in support of an application for a loan:
(a)
(b)
(1) A description of why the project is needed;
(2) An explanation of how the applicant will address the need (see paragraph (b)(1) of this section), why the applicant requires financial assistance, the types of educational or medical services to be offered by the project, and the benefits to the rural residents;
(3) A description of the applicant, documenting eligibility in accordance with § 1703.103;
(4) An explanation of the total project cost including a breakdown of the loan required and the source of funding, if applicable, for the remainder of the project;
(5) A statement specifying whether the project provides predominantly distance learning or telemedicine services as defined in § 1703.102. If the project provides both distance learning and telemedicine services, the applicant must identify the predominant use of the system;
(6) A general overview of the telecommunications system to be developed, including the types of equipment, technologies, and facilities used;
(7) A description of the participating hubs and end user sites and the number of rural residents which will be served by the project at each end user site;
(8) A certification by the applicant that facilities funded by a loan do not duplicate adequate established telemedicine or distance learning services.
(9) A listing of the location of each end user site (city, town, village, borough, or rural area plus the State).
(c)
(1) The specific activities to be performed under the project;
(2) Who will carry out the activities;
(3) The time-frames for accomplishing the project objectives and activities; and
(4) A budget for capital expenditures reflecting the line item costs for the loan and any other sources of funds for the project.
(d)
(1) Applicants must include sufficient pro-forma financial data which adequately reflects the financial capability of project participants and the project as a whole to continue a sustainable project for a minimum of 10 years and repay the requested loan. This documentation should include sources of sufficient income or revenues to pay operating expenses including telecommunications access and toll charges, system maintenance, salaries, training, and any other general operating expenses, provide for replacement of depreciable items, and show repayment of interest and principal for the loan.
(2) A list of property which will be used as collateral to secure repayment of the proposed loan. The applicant shall purchase and own collateral that secures the loan free from liens or security interests and take all actions necessary to perfect a first lien in the collateral that secures the loan. RUS will consider as adequate security a loan guarantee by a telecommunications or electric borrower or by another qualified party. Additional forms of security, including letters of credit, real estate, or any other items will be considered. RUS will determine the adequacy of the security offered.
(3) As applicable, a depreciation schedule covering all assets of the project. Those assets for which a loan is being requested should be clearly indicated.
(4) For each hub and end user site, the applicant must identify and provide reasonable evidence of each source of revenue. If the projection relies on cost sharing arrangements among hub and end user sites, the applicant must provide evidence of agreements made among project participants.
(5) For applicants eligible under § 1703.103(a)(3), an explanation of the economic analysis justifying the rate structure to ensure that the benefit, including cost saving, of the financial assistance is passed through to the other persons receiving telemedicine or distance learning services.
(e)
(f)
(1) The capabilities of the telecommunications terminal equipment, including a description of the specific equipment which will be used to deliver the proposed service. The applicant must document discussions with various technical sources which could include consultants, engineers, product vendors, or internal technical experts, provide detailed cost estimates for operating and maintaining the end user equipment and provide evidence that alternative equipment and technologies were evaluated.
(2) A listing of the proposed purchases or leases of telecommunications terminal equipment, telecommunications transmission facilities, data terminal equipment, interactive video equipment, computer hardware and software systems, and components that process data for transmission via telecommunications, computer network components, communication satellite ground station equipment, or any other
(3) A description of the consultations with the appropriate telecommunications carriers (including other interexchange carriers, cable television operators, enhanced service providers, providers of satellite services, and telecommunications equipment manufacturers and distributors) and the anticipated role of such providers in the proposed telecommunications system.
(4) Results of discussions with local exchange carriers serving the project area addressing the concerns contained in § 1703.141(h).
(5) The capabilities of the telecommunications transmission facilities, including bandwidth, networking topology, switching, multiplexing, standards, and protocols for intra-networking and open systems architecture (the ability to effectively communicate with other networks). In addition, the applicant must explain the manner in which the transmission facilities will deliver the proposed services. For example, for medical diagnostics, the applicant might indicate whether or not a guest or other diagnosticians can join the network from locations off the network. For educational services, indicate whether or not all hub and end-user sites are able to simultaneously hear in real-time and see each other or the instructional material in real-time. The applicant must include detailed cost estimates for operating and maintaining the network, and include evidence that alternative delivery methods and systems were evaluated.
(g)
(1) E.O. 11246, Equal Employment Opportunity, as amended by E.O. 11375 and as supplemented by regulations contained in 41 CFR part 60;
(2) Architectural barriers;
(3) Flood hazard area precautions;
(4) Assistance and Real Property Acquisition Policies Act of 1970;
(5) Drug-Free Workplace Act of 1998 (41 U.S.C. 701);
(6) E.O.s 12549 and 12689, Debarment and Suspension;
(7) Byrd Anti-Lobbying Amendment (31 U.S.C. 1352).
(h)
(2) The applicant may use the “Environmental Questionnaire,” available from RUS, to assist in complying with the requirements of this section.
(i)
(j)
(k)
(l)
(a) Loans will be approved based on availability of funds, the financial feasibility of the project in accordance
(b) RUS will determine, from the information submitted with each application for a loan, whether the application achieves sufficient priority, based on the criteria set forth in the 1996 Act, to receive a loan from funds available for the fiscal year. If such priority is achieved, RUS will process the loan application on a first-in, first-out basis, provided that the total amount of applications on-hand for loans does not exceed 90 percent of the total loan funding available for the fiscal year. At such time as the total amount of applications eligible for loans, if such applications were approved, exceeds 90 percent of amount of loan funding available, RUS will process the remaining applications using the evaluation criteria set forth in § 1703.126.
(c) A loan will not be approved if it is determined that:
(1) The applicant's proposal does not indicate financial feasibility, or is not adequately secured in accordance with the requirements of § 1703.144(d);
(2) The applicant's proposal indicates technical flaws, which, in the opinion of RUS, would prevent successful implementation, or operation of the project; or
(3) Any other aspect of the applicant's proposal fails to adequately address any requirements of this subpart or contains inadequacies which would, in the opinion of RUS, undermine the ability of the project to meet the general purpose of this subpart or comply with policies of the DLT program contained in § 1703.101.
(d) RUS will provide the applicant with a statement of any determinations made with regard to paragraphs (c)(1) through (c)(3) of this section. The applicant will be provided 15 days from the date of the RUS letter to respond, provide clarification, or make any adjustments or corrections to the project. If, in the opinion of the Administrator, the applicant fails to adequately respond to any determinations or other findings made by the Administrator, the loan will not be approved, and the applicant will be notified of this determination. If the applicant does not agree with this finding an appeal may be filed in accordance with § 1703.147.
(a) RUS will accept applications for loans submitted by RUS telecommunications General Field Representatives (GFRs), by Rural Development State Directors, or by applicants themselves. Applications for loans under this subpart may be filed at any time and will be evaluated as received on a non-competitive basis.
(b) Applications submitted to the State Director, Rural Development, in the State serving the headquarters of the project will be evaluated as they are submitted. All applicants must submit an original and two copies of a completed application. The applicant must also submit a copy of the application to the State government point of contact, if one has been designated for the State, at the same time it submits an application to the State Director. The State Director will:
(1) Review each application for completeness in accordance with § 1703.144, and notify the applicant, within 15 working days of receiving the application, of the results of this review, acknowledging a complete application, or citing any information that is incomplete. To be considered for a loan, the applicant must submit any additional information requested to complete the application within 15 working days of the date of the State Director's written response. If the applicant fails to submit such information, the application will be returned to the applicant.
(2) Within 30 days of the determination of a completed application in accordance with paragraph (b)(1) of this section, review the application to determine suitability for financial assistance in accordance with § 1703.145, and other requirements of this subpart. Based on its review, the State Director will work with the applicant to resolve any questions or obtain any additional information. The applicant will be notified, in writing, of any additional information required to allow a financial assistance recommendation and will be
(3) Based on the review in accordance with § 1703.145 and other requirements of this subpart, make a preliminary determination of suitability for financial assistance. A loan recommendation will be prepared by the State Director with concurrence of the RUS telecommunications GFR that addresses the provisions of §§ 1703.144 and 1703.145 and other applicable requirements of this subpart.
(4) If the application is determined suitable for further consideration by RUS, forward an original and one copy of the application with a loan recommendation, signed jointly, to the Assistant Administrator, Telecommunications Program, Rural Utilities Service, Washington DC. The applicant will be notified by letter of this action. Upon receipt of the application from the State Director, RUS will conduct a cursory review of the application and the recommendation. A final determination will be made within 15 days. If the Administrator determines that a loan can be approved, the State Director will be notified and the State Director will notify the applicant. Applications for loans will be processed, and approved loans serviced, in accordance with §§ 1703.105 through 1703.112.
(5) If the State Director determines that the application is not suitable for further consideration by RUS, notify the applicant with the reasons for this determination. The applicant will be offered appeal rights in accordance with § 1703.147.
(c) Applications submitted by RUS telecommunications GFRs or directly by applicants will be evaluated as they are submitted. All applicants must submit an original and two copies of a completed application. The applicant must also submit a copy of the application to the State government point of contact, if one has been designated for the State, at the same time it submits an application to the RUS. RUS will:
(1) Review each application for completeness in accordance with § 1703.144, and notify the applicant, within 15 working days of receiving the application, of the results of this review, acknowledging a complete application, or citing any information that is incomplete. To be considered for a loan, the applicant must submit any additional information requested to complete the application within 15 working days of the date of the RUS written response. If the applicant fails to submit such information, the application will be returned to the applicant.
(2) Within 30 days of the determination of a completed application in accordance with paragraph (c)(1) of this section, review the application to determine suitability for financial assistance in accordance with this subpart. Based on its review, RUS will work with the applicant to resolve any questions or obtain any additional information. The applicant will be notified, in writing, of any additional information required to allow a financial assistance recommendation and will be provided a reasonable period of time to furnish the additional information.
(3) If the application is determined suitable for further consideration by RUS, conduct a review of the application and financial assistance recommendation. A final determination will be made within 15 days. If the Administrator determines that a loan can be approved, the applicant will be notified. Applications will be processed, and approved loans serviced, in accordance with §§ 1703.105 through 1703.112 of subpart D.
(4) If RUS determines that the application is not suitable for further consideration, notify the applicant with the reasons for this determination. The applicant will be offered appeal rights in accordance with § 1703.147 of this subpart.
Any appeal must be made, in writing, within 10 days after the applicant is notified of the determination to deny the application. Appeals shall be submitted to the Administrator, RUS, U.S. Department of Agriculture, 1400 Independence Ave., SW., STOP 1590, Washington, DC 20250-1590. Thereafter, the Administrator will review the appeal to determine whether to sustain, reverse, or modify the original determination. Final determinations will be made after consideration of all appeals. The Administrator's determination
This subpart E sets forth RUS's policies and procedures for making loan deferments of principal and interest payments on direct loans or insured loans made for electric or telephone purposes, but not for loans made for rural economic development purposes, in accordance with subsection (b) of section 12 of the RE Act. Loan deferments are provided for the purpose of promoting rural development opportunities.
It is RUS's policy to encourage borrowers to invest in and promote rural development and rural job creation projects that are based on sound economic and financial analyses. Borrowers are encouraged to use this program to promote economic, business and community development projects that will benefit rural areas.
(a)
(i) In default or near default on interest or principal payments due on loans made or guaranteed under the RE Act;
(ii) A borrower that was in default or near default, but is currently participating in a workout or debt restructuring plan with RUS; or
(iii) Experiencing a financial hardship.
(b)
The deferment of loan payments may be granted to any borrower that is not financially distressed, delinquent on any Federal debt, or in bankruptcy proceedings. However, the deferment of loan payments will not be granted to a borrower during any period in which the Administrator has determined that no additional financial assistance of any nature should be provided to the borrower pursuant to any provision of the RE Act. The determination to suspend eligibility for the deferment of loan payments under this subpart will be based on:
(a) The borrower's demonstrated unwillingness to exercise diligence in repaying loans made by RUS or RTB or guaranteed by RUS that results in the Administrator being unable to find that such loans, would be repaid within the time agreed; or
(b) The borrower's demonstrated unwillingness to meet the requirements in RUS's or RTB's legal documents or regulations.
(a) The deferment must not impair the security of any loans made RUS or RTB, or guaranteed by RUS, pursuant to the RE Act.
(b) At no point in time may the amount of the debt service payments deferred exceed 50 percent of the total cost of a community, business, or economic development project for which a deferment is provided.
(c) A borrower may defer debt service payments only in an amount equal to the investment made by such borrower in a rural development project. The investment must not be made from:
(1) Proceeds of loans made or guaranteed pursuant to the RE Act, or grants made pursuant to the RE Act or section 2331 through section 2335A of the Rural Economic Development Act of 1990 (7 U.S.C. 950aaa
(2) Funds necessary to make timely payments of principal and interest on loans made, guaranteed or lien accommodated pursuant to the RE Act;
(3) Insurance proceeds from mortgaged property;
(4) Damage awards and sale proceeds resulting from eminent domain and similar proceedings involving mortgaged property;
(5) Sale proceeds from mortgaged property sales requiring specific Administrator approval; and
(6) Funds which are restricted by RUS or RTB loan instruments to be held in trust for the Government or to be held for any other specific purpose.
(d) Any investment made in a rural development project prior to the date of the application for a deferment based on such project cannot be used to satisfy the requirements of this section.
(a) Except as otherwise provided in paragraph (b) of this section, the borrower must make a cushion of credit payment equal to the amount of the payment deferred and subject to the following rules:
(1) Cushion of credit payments made prior to the date that an application for deferral has been approved by RUS cannot be used to satisfy the requirements of this section;
(2) Once a cushion of credit payment has been made to satisfy the requirements of paragraph (a) of this section,
(3) The cushion of credit payment must be received by RUS on the date the payment being deferred is due, or within 30 days prior to this date.
(b) A borrower may elect to consolidate in one application filed pursuant to § 1703.311, all of the related deferrals it wishes to receive in a twelve month period following application approval. In such a case, the requirement contained in paragraph (a)(1) of this section may alternatively be satisfied by depositing an amount equal to the aggregate deferrals covered by such application into the cushion of credit account at the time the first cushion of credit payment is due under paragraph (a)(1) of this section.
Funds derived from the deferment of loan payments will not be used:
(a) To fund or assist projects which would, in the judgement of the Administrator, create a conflict of interest or the appearance of a conflict of interest. The borrower must disclose to the Administrator information regarding any potential conflict of interest or appearance of a conflict of interest;
(b) For any purpose not reasonably related to the project as determined by the Administrator;
(c) To transfer existing employment or business activities from one area to another; or
(d) For the borrower's electric or telephone operations, nor for any operations affiliated with the borrower unless the Administrator has specifically informed the borrower in writing that the affiliated operations are part of the approved purposes.
The deferment of loan payments will be made to enable the borrower to provide funding and assistance for rural development and job creation projects. This includes, but is not limited to, the borrower providing financing to local businesses, community development assistance, technical assistance to businesses, and other community, business, or economic development projects that will benefit rural areas.
(a) The total amount of deferments made available for each fiscal year under this program will not exceed 3 percent of the total payments due during fiscal year 1993 from all borrowers on direct loans and insured loans made under the RE Act. For each subsequent fiscal year after 1993, the total amount of deferments will not exceed 5 percent of the total payments due for the year from all borrowers on direct loans and insured loans.
(b) The total amount of annual deferments are subject to limitations established by appropriations Acts.
(a) Deferments made to enable the borrower to provide financing to local businesses will be repaid over a period of 60 months, in equal installments, with payments beginning on the date of the deferment, and continuing in such a manner until the total amount of the deferment is repaid. The deferment payments will be made on either a monthly or quarterly basis depending on the existing repayment terms of the direct loan or insured loan being deferred. The deferment will not accrue interest.
(b) In the case of deferments made to enable the borrower to provide community development assistance, technical assistance to businesses, and for other community, business, or economic development projects not included in paragraph (a) of this section, the deferment will be repaid over a period of 120 months, in equal installments, with payments beginning on the date of the deferment and continuing in such a manner until the total amount of the deferment is repaid. The deferment payments will be made on either a monthly or quarterly basis depending on the existing repayment terms of the direct loan or insured loan being deferred. The deferment will not accrue interest.
(c) The maturity date of a loan may not be extended as a result of a deferment.
(d) If the required payment is not made by the borrower or received by the Administrator when due, the Administrator will reduce the borrower's cushion of credit account established under this subpart in an amount equal to the deferment payment required.
(e) The balance in a borrower's cushion of credit account shall not be reduced by the borrower below the level of the unpaid balance of the payment deferred.
Prospective recipients of funds received from the deferment of loan payments are encouraged to consider the potential environmental impact of their proposed projects at the earliest planning stage and plan development in a manner that reduces, to the extent practicable, the potential to affect the quality of the human environment adversely.
(a) A borrower applying for a deferment must:
(1) Submit a certified board resolution to the Administrator requesting a deferment of principal and interest. The resolution must:
(i) Be signed by the president or vice president of the borrower;
(ii) Contain information on the total amount of deferment requested for each specific project;
(iii) Contain information on the type of project and the length of deferment requested as defined in § 1703.309; and
(iv) Specify which officer of the borrower has been given the authority to certify to those matters required in this section;
(2) Submit certification by the appropriate officer to the Administrator that the proposed project will not violate the limitations set forth in § 1703.306 and disclose all information regarding any potential conflict of interest or appearance of a conflict of interest that would allow the Administrator to make an informed decision;
(3) Submit certification by the appropriate officer to the Administrator that an investment in the rural development project will be made by the borrower in an amount equal to the deferred debt service payment;
(4) Submit certification by the appropriate officer to the Administrator that the amount of the deferment will not exceed 50 percent of the total cost of the project for which the deferment is provided;
(5) Submit certification by the appropriate officer to the Administrator that it will make a cushion of credit payment necessary to satisfy the requirement of § 1703.305(a);
(6) Submit certification by the appropriate officer to the Administrator that it will comply with § 1703.313 and provide documentation showing that its total investments, including the proposed investment, will not exceed the investment limitations specified in 7 CFR part 1717, Subpart N, Investments, Loans and Guarantees by Electric Borrowers, or 7 CFR Part 1744, Post Loan Policies and Procedures Common to Guaranteed and Insured Loans. The documentation must provide a list of each rural development project the borrower has invested in to date, including the investment amounts;
(7) Submit to the Administrator written identification of the direct loan(s) and/or insured loan(s) for which payments are to be deferred;
(8) Submit to the Administrator a written narrative which contains information regarding the proposed rural development or job creation project such as the manner in which the project will promote community, business, or economic development in rural areas, the nature of the project, its location, the primary beneficiaries, and, if applicable, the number and type of jobs to be created; and
(9) Submit to the Administrator a letter of approval from the state regulatory authority, if applicable, granting its approval for the borrower to defer direct loan payment(s) and/or insured loan payment(s) and invest the amount in a rural development project.
(b) The Administrator reserves the right to determine that special circumstances require additional data
(c) The Administrator will decide whether the borrower is eligible for the deferment and will notify the borrower of the decision.
Borrowers shall ensure that funds are invested in the rural development project as approved by RUS. The Administrator reserves the right to review the books and copy records of borrowers receiving loan payment deferments as necessary to ensure that the investments in the rural development project are in accordance with this subpart and the representations and purposes stated in the borrower's completed application. If an audit discloses that the amount deferred was not used for the purposes stated in the completed application, the borrower shall be required to promptly repay the amount deferred and the benefits of the deferment to the borrower will be recaptured by RUS. The borrower is responsible for ensuring that disbursements and expenditures of funds covering the investment in the rural development project are properly supported with certifications, invoices, contracts, bills of sale, cancelled checks, or any other forms of evidence determined appropriate by the Administrator and that such supporting material is available at the borrower's premises for review by the RUS field accountant, borrower's certified public accountant, the Office of Inspector General, the General Accounting Office and any other accountant conducting an audit of the borrower's financial statements for this rural development program.
(a) Investments in a rural economic development project made by an electric borrower under this subpart are subject to the provisions of 7 CFR part 1717, Subpart N, Investments, Loans and Guarantees by Electric Borrowers.
(b) Investments in a rural economic development project made by a telephone borrower under this subpart are subject to the provisions of 7 CFR Part 1744, Post Loan Policies and Procedures Common to Guaranteed and Insured Loans.
7 U.S.C. 901
(a) This part establishes general and pre-loan policies and requirements that apply to both insured and guaranteed loans to finance the construction and improvement of electric facilities in rural areas, including generation, transmission, and distribution facilities.
(b) Additional pre-loan policies, procedures, and requirements that apply specifically to guaranteed and/or insured loans are set forth elsewhere:
(1) For guaranteed loans in 7 CFR part 1712 and RUS Bulletins 20-22, 60-10, 86-3, 105-5, and 111-3, or the successors to these bulletins; and
(2) For insured loans in 7 CFR part 1714 and in RUS Bulletins 60-10, 86-3, 105-5, and 111-3, or the successors to these bulletins.
(c) This part supersedes those portions of the following RUS Bulletins and supplements that are in conflict.
(d) When parts 1710, 1712, and 1714 are published in final form, the bulletins cited in paragraph (b) of this section will be rescinded, in whole or in part, or revised.
(a)
(i) For initial RUS loans made prior to November 1, 1993, the RE Act defined “rural area” to mean any area of the United States not included within the boundaries of any city, village, or borough having a population exceeding 1500. An area determined to be a “rural area” for the purposes of an initial loan made prior to November 1, 1993, shall continue to be considered a “rural area.”
(ii) For initial RUS loans made on or after November 1, 1993, this definition shall apply. In determining the character of the area, RUS will rely on the Bureau of the Census designation.
(i) Places of 2500 or more persons incorporated as cities, villages, boroughs (except in Alaska and New York), and towns (except in the six New England States, New York, and Wisconsin), but excluding the rural portions of “extended cities.”
(ii) Census designated places of 2500 or more persons.
(iii) Other territory, incorporated or unincorporated, included in urbanized areas.
(b)
References in this part to RUS or REA forms or line numbers in RUS or REA forms are based on RUS or REA Form 7 and Form 12 dated December 1992, unless otherwise indicated. These references will apply to corresponding information in future versions of the forms. The terms “RUS form”, “RUS standard form”, “RUS specification”, and “RUS bulletin” have the same meanings as the terms “REA form”, “REA standard form”, “REA specification”, and “REA bulletin”, respectively, unless otherwise indicated.
Consistent with the RE Act and other applicable laws, the Administrator may waive or reduce any requirement imposed by this part or other RUS regulations on an electric borrower, or a lender whose loan is guaranteed by RUS, if the Administrator determines that imposition of the requirement would adversely affect the Government's financial interest.
Information about the availability of RUS forms and publications cited in this part is available from Administrative Services Division, Rural Utilities Service, United States Department of Agriculture, Washington, DC 20250-1500. These RUS forms and publications may be reproduced.
(a) Certain new or revised policies and requirements set forth in this part, which are listed in this paragraph, shall not apply to a pending loan application that has been determined by RUS to be complete as of January 9, 1992, the date of publication of such policies and requirements in the
(1) Paragraph 1710.115(b)—with respect to limiting loan maturities to the expected useful life of the facilities financed;
(2) Section 1710.116—with respect to the requirement to develop and follow an equity development plan;
(3) Paragraph 1710.151(f)—with respect to the borrower providing satisfactory evidence that a state regulatory authority will allow the facilities to be included in the rate base or otherwise allow sufficient revenues to repay the loan;
(4) Paragraphs 1710.250(b), 1710.251(a), and 1710.252(a)—with respect to the requirement that improvements, replacements, and retirements of generation plant be included in a Construction Work Plan; and
(5) Paragraph 1710.300(d)(5)—with respect to the requirement that a borrower's financial forecast include a sensitivity analysis of a reasonable range of assumptions for each of the major variables in the forecast.
(b) Certain provisions of this part apply only to loans made on or after February 10, 1992. These provisions are identified in the individual sections of this part.
(a)
(2) In issuing the regulations, the Administrator is authorized to establish requirements, guided by the practices of private lenders with respect to similar credit risks, to ensure that the security, including the assurance of repayment, for loans made or guaranteed by RUS will remain reasonably adequate. If the regulations are not issued within 180 days of enactment of section 306E, the Administrator may not, until the regulations are issued, require prior approval of, or establish any requirement, restriction, or prohibition, with respect to the operations of any electric borrower that meets the 110 percent ratio.
(3) Nothing in section 306E limits the authority of the Administrator to establish terms and conditions on the use of funds from loans made or guaranteed by RUS, to establish loan feasibility criteria and other requirements for the approval of RUS loans or loan guarantees, such as those set forth in this part, or to take any other action specifically authorized by law.
(4) This section addresses the application of section 306E of the RE Act to RUS operational controls and other requirements that apply in general to RUS borrowers. The application of section 306E to lien accommodations and subordinations is set forth in 7 CFR 1717.860 and 1717.904.
(5) The exemptions granted by this section, 7 CFR 1717.860, and 7 CFR 1717.904 apply only to RUS controls and approval rights. They do not affect the controls and approval rights of other co-mortgagees under the RUS mortgage.
(6) For purposes of this section, the terms “default,” “financed or funded by RUS,” “interchange agreement,” “interconnection agreement,” “loan documents,” “pooling agreement,” “power supply contract,” and “wheeling agreement” have the meanings as set forth in 7 CFR 1717.602.
(b)
(1) For purposes of determining whether a borrower is exempt from approvals, requirements, restrictions, or prohibitions imposed by RUS with respect to borrower operations, i.e., “operational controls,” the ratio normally will be based on data as of December 31. Net worth will be based on the year-end financial and statistical reports submitted by borrowers to RUS, and outstanding loans made or guaranteed by RUS will be based on RUS's records. The financial and statistical reports (Form 7 for distribution
(2) Net worth will be calculated by taking total margins and equities (from Part C of RUS Form 7 for distribution borrowers, or Section B of RUS Form 12a for power supply borrowers) and subtracting assets properly recordable in account 182.2, Unrecovered Plant and Regulatory Study Costs, and account 182.3, Other Regulatory Assets, as defined in 7 CFR part 1767; and
(3) By no later than July 1 of each year, RUS will notify each borrower in writing of its exemption status. If the borrower's net worth to RUS debt ratio exceeds 110 percent based on the most recent year-end data, the borrower will be exempt from the operational controls exempted under paragraph (c) of this section until subsequently notified in writing by RUS that it is no longer exempt.
(c)
(1)
(i) Extensions and additions financed by RUS;
(ii) Construction, procurement, or leasing of generating facilities, regardless of the source of funding, if the combined capacity of the facilities to be built, procured, or leased, including any future facilities included in the planned project, will exceed 25 megawatts in the case of power supply borrowers, or the lesser of 5 megawatts or 30 percent of the borrower's equity in the case of distribution borrowers;
(iii) Acquisition or leasing of existing electric facilities or systems in service, regardless of the source of funding, whose purchase price, or capitalized value in the case of a lease, exceeds 10 percent of the borrower's net utility plant; and
(iv) Construction, procurement, or leasing of electric facilities, regardless of the source of funding, to serve a customer whose annual kWh purchases or maximum annual kW demand in the foreseeable future is projected to exceed 25 percent of the borrower's total kWh sales or maximum kW demand in the year immediately preceding the acquisition or start of construction;
(2)
(3)
(4)
(5)
(6)
(ii)
(iii)
(B) Any amendment to a schedule or exhibit contained in any power supply arrangement subject to RUS approval that merely has the effect of either altering a list of interconnection or delivery points or changing the value of a variable term (but not the formula itself) contained in a formulary rate or charge.
(C) The exemptions under this paragraph (c)(6)(iii) apply regardless of whether the borrower is a seller or purchaser of the services furnished by the contracts or arrangements, and regardless of whether or not a Federal power marketing agency is a party to any of them.
(iv)
(v)
(7)
(8)
(9)
(ii) RUS approval of expenditures for engineering services by a borrower, if such engineering services will not be financed by RUS;
(10)
(11)
(12)
(13)
(i) Such consolidation, merger, conveyance or transfer shall be on such terms as shall fully preserve the lien and security of the mortgage and the rights and powers of the mortgagees;
(ii) The entity formed by such consolidation or with which the borrower is merged or the corporation which acquires by conveyance or transfer the mortgaged property substantially as an entirety shall execute and deliver to the mortgagees a mortgage supplemental in recordable form and containing an assumption by such successor entity of the due and punctual payment of the principal of and interest on all of the outstanding notes and the performance and observance of every covenant and condition of the mortgage;
(iii) Immediately after giving effect to such transaction, no default under the mortgage shall have occurred and be continuing;
(iv) The borrower shall have delivered to the mortgagees a certificate of its general manager or other officer, in form and substance satisfactory to each of the mortgagees, which shall state that such consolidation, merger, conveyance or transfer and such supplemental mortgage comply with this section and that all conditions precedent herein provided for relating to such transaction have been complied with;
(v) The borrower shall have delivered to the mortgagees an opinion of counsel in form and substance satisfactory to each of the mortgagees; and
(vi) The entity formed by such consolidation or with which the borrower is merged or the corporation which acquires by conveyance or transfer the mortgaged property substantially as an entirety shall be an entity:
(A) Having equity equal to at least 27% of its total assets on a pro forma basis after giving effect to such transaction;
(B) Having 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 proceeding calendar years; and
(C) Having net utility plant equal to or greater than 1.0 times its total long-term debt on a pro forma basis;
(14)
(i) The borrower is not in default;
(ii) In the most recent year for which data are available, the borrower achieved a TIER of at least 1.25, DSC of at least 1.25, OTIER of at least 1.1, and ODSC of at least 1.1, in each case based on the average or the best 2 out of the 3 most recent years.
(iii) The sale, lease, or transfer of assets will not reduce the borrower's existing or future requirements for energy or capacity being furnished to the borrower under any wholesale power contract which has been pledged as security to the government;
(iv) Fair market value is obtained for the assets;
(v) The aggregate value of assets sold, leased, or transferred in any 12-month period is less than 10 percent of the borrower's net utility plant prior to the transaction;
(vi) The proceeds of such sale, lease, or transfer, less ordinary and reasonable expenses incident to such transaction, are immediately:
(A) Applied as a prepayment of all notes secured under the mortgage equally and ratably;
(B) In the case of dispositions of equipment, materials or scrap, applied to the purchase of other property useful in the borrower's utility business; or
(C) Applied to the acquisition of construction of utility plant; and
(vii) If the borrower has an RUS-approved wholesale power contract with a power supply borrower (seller), the circumstances of the sale, lease or transfer of capital assets conform with the conditions in such contract under which the seller may not withhold its consent to the sale, lease or transfer;
(15)
(i) After giving effect to the distribution, the borrower's equity will be greater than or equal to 30 percent of its total assets;
(ii) The borrower is current on all payments due on all notes secured under the mortgage;
(iii) The borrower is not otherwise in default under its loan documents; and
(iv) After giving effect to the distribution, the borrower's current and accrued assets will be not less than its current and accrued liabilities.
(d)
(1) Requirements and operational controls contained in the RUS mortgage or loan contract that are necessary to ensure that the security for loans made or guaranteed by RUS is reasonably adequate and that the loans will be repaid, or to accomplish other fundamental purposes of the RE Act. Some of these also represent terms and conditions with respect to the use by borrowers of the proceeds of loans made or guaranteed by RUS. Together, these controls include, but are not limited to, the following:
(i) Area coverage requirements set forth in the loan contract and in § 1710.103;
(ii) Requirement that certain borrowers maintain, on an ongoing basis, a power requirements study and a power requirements study work plan, as set forth in §§ 1710.201 and 1710.202;
(iii) Requirement that borrowers follow RUS construction standards and use RUS accepted materials, as set forth in § 1710.41, § 1710.45, and 7 CFR part 1728;
(iv) Requirement that borrowers maintain, on an ongoing basis, a long-range engineering plan and a construction work plan, as set forth in § 1710.250(b);
(v) Requirement that borrowers set rates for electric service sufficient to maintain certain coverage ratios, as set forth in § 1710.114;
(vi) Certain RUS approvals of retirements of capital credits in excess of amounts specifically authorized in the mortgage;
(vii) RUS approval of borrower investments, loans, guarantees, and other obligations under 7 CFR part 1717, subpart N;
(viii) RUS requirements on accounting, auditing, irregularities, financial reporting, and access to books and records;
(ix) Requirement that borrowers record the mortgage and mortgage amendments;
(x) Requirement that the mortgagor maintain and preserve the priority lien of the mortgage and defend title to the mortgaged property;
(xi) Requirements on maintenance and repair of the mortgaged property;
(xii) Requirements on insurance of the mortgaged property; and
(xiii) Certain RUS approvals of borrower mergers and consolidations; and
(2) Requirements imposed on borrowers pursuant to statute or regulation and not specifically exempted by paragraph (c) of this section. See, for example, §§ 1710.122 through 1710.127.
(e)
(f)
RUS makes insured loans under section 305 of the RE Act.
(a)
(b)
RUS provides financing through 100 percent loan guarantees made under sections 306 and 306A of the RE Act. RUS also provides 90 percent loan guarantees under section 311 of the RE Act to enable borrowers to secure financing from certain private lenders. The loan guarantees are made for a term of up to 35 years, and the interest rate is established at a rate agreed to by the borrower and the lender, with RUS concurrence. The guarantee applies to the repayment of both principal and interest.
RUS makes loans and loan guarantees to finance the construction of electric distribution, transmission and generation facilities, including system improvements and replacements required to furnish and improve electric service in rural areas, and for demand side management, energy conservation programs, and on grid and off grid renewable energy systems. In some circumstances, RUS may finance selected operating expenses of its borrowers. Loans made or guaranteed by the Administrator of RUS will be made in conformance with the Rural Electrification Act of 1936, as amended (7 U.S.C. 901
(a) RUS makes loans to corporations, states, territories, and subdivisions and agencies thereof; municipalities; people's utility districts; and cooperative, nonprofit, limited-dividend, or mutual associations that provide or propose to provide:
(1) The retail electric service needs of rural areas, or
(2) The power supply needs of distribution borrowers under the terms of power supply arrangements satisfactory to RUS.
(b) In making loans, RUS gives preference to states, territories, and subdivisions and agencies thereof; municipalities; people's utility districts; and cooperative, nonprofit, or limited-dividend associations. RUS does not make loans to individual consumers.
(c) For the purpose of determining eligibility of a distribution borrower not in default on the repayment of a loan made or guaranteed under the RE
(1) Be considered a default by the distribution borrower;
(2) Reduce the eligibility of the distribution borrower for assistance under the RE Act; or
(3) Be the cause, directly or indirectly, of imposing any requirement or restriction on the borrower as a condition of the assistance, except such requirements or restrictions as are necessary to implement a debt restructuring agreed on by the power supply borrower and RUS.
(d) For the purpose of determining the eligibility of a distribution borrower, RUS will consider whether the distribution borrower is current on its obligations to its wholesale power supplier under the RUS wholesale power contract.
(e) Nothing in paragraph (c) of this section relieves any distribution borrower that is a member of a power supply borrower in default on its obligations to RUS or operating under a debt restructuring agreement, of requirements set forth in RUS regulations, including, without limitation, § 1710.112(b)(6), or of any terms and conditions that the Administrator may otherwise impose on any borrower as a condition of obtaining a loan or loan guarantee (including, in appropriate cases, member guarantees).
(f) Except as provided in paragraph (g) of this section, former borrowers that have paid off all outstanding loans may reapply for a loan to serve RE Act beneficiary loads accruing from the time the former borrower's complete loan application is received by RUS. The determination of whether an area is rural will be based on the Census designation of the area at the time of the reapplication for a loan, if the area is not served by electric facilities financed by RUS. If the area is served by electric facilities financed by RUS, it will continue to be considered rural.
(g) Former borrowers that have prepaid all, or portions of outstanding insured and direct loans in accordance with RUS regulations must comply with the provisions of 7 CFR part 1786 before being considered eligible to borrow additional funds from RUS.
(a)
(b)
(c)
(d) [Reserved]
(e)
(a) Borrowers shall make a diligent effort to extend electric service to all unserved persons within their service area who:
(1) Desire electric service; and
(2) Meet all reasonable requirements established by the borrower as a condition of service.
(b) If economically feasible and reasonable considering the cost of providing such service and/or the effects on all consumers’ rates, such service shall be provided, to the maximum extent practicable, at the rates and minimum charges established in the borrower's rate schedules, without the payment by such persons, other than seasonal or temporary consumers, of a contribution in aid of construction. A seasonal consumer is one that demands electric service only during certain seasons of the year. A temporary consumer is a seasonal or year-round consumer that demands electric service over a period of less than five years.
(c) Borrowers may assess contributions in aid of construction provided such assessments are consistent with the policy set forth in this section.
(a) To the greatest extent practical, loans are limited to providing and improving electric facilities to serve consumers that are RE Act beneficiaries. When it is determined by the Administrator to be necessary in order to furnish or improve electric service in rural areas, loans may, under certain circumstances, be made to finance electric facilities to serve consumers that are not RE Act beneficiaries.
(b) Loan funds may be approved for facilities to serve non-RE Act beneficiaries only if:
(1) The primary purpose of the loan is to furnish or improve service for RE Act beneficiaries; and
(2) The use of loan funds to serve non-RE Act beneficiaries is necessary and incidental to the primary purpose of the loan.
(a) In States where a borrower is required to obtain approval of a project or its financing from a state regulatory authority, RUS may require that such approvals be obtained, if feasible for the borrower to do so, before the following types of loans are approved by RUS:
(1) Loans requiring an Environmental Impact Statement;
(2) Loans to finance generation and transmission facilities, when the loan request for such facilities is $25 million or more; and
(3) Loans for the purpose of assisting borrowers to implement demand side management and energy conservation programs and on and off grid renewable energy systems.
(b) At minimum, in the case of all loans in states where state regulatory approval is required of the project or its financing, such state approvals will be required before loan funds are advanced.
(c) In cases where state regulatory authority approval has been obtained, but the borrower has failed to proceed with the project in a timely manner according to the schedule contained in the borrower's project design manual, or if there are cost overruns or other developments that threaten loan feasibility or security, RUS may require the borrower to obtain a reaffirmation of the project and its financing from the
(a) Funds from loans made or guaranteed by RUS may be used to finance:
(1)
(ii) The purchase, rehabilitation and integration of existing distribution facilities and associated service territory when the acquisition is an incidental and necessary means of providing or improving service to persons in rural areas who are not receiving adequate central station service, and the borrower is unable to finance the acquisition from other sources. See § 1710.107.
(2)
(ii) The purchase of an ownership interest in new or existing transmission or generation facilities to serve RE Act beneficiaries.
(3)
(4)
(5) Certain costs incurred in demand side management, energy conservation programs and on and off grid renewable energy systems.
(b) In cases of financial hardship, as determined by the Administrator, loans may also be made to finance the following items:
(1) The headquarters office and other headquarters facilities in addition to those cited in paragraph (a)(4) of this section;
(2) General plant equipment, including furniture, office, transportation, data processing and other work equipment; and
(3) Working capital required for the initial operation of a new system.
(c) RUS will not make loans to finance the following:
(1) Electric facilities, equipment, appliances, or wiring located inside the premises of the consumer, except qualifying items included in a loan for demand side management or energy resource conservation programs, or on or off grid renewable energy systems;
(2) Facilities to serve consumers who are not RE Act beneficiaries unless those facilities are necessary and incidental to providing or improving electric service in rural areas (See § 1710.104);
(3) Any facilities or other purposes that a state regulatory authority having jurisdiction will not approve for inclusion in the borrower's rate base, or will not otherwise allow rates sufficient to repay with interest the debt incurred for the facilities or other purposes; and
(4) Any facilities or other specific purposes that were included in a loan made or guaranteed by RUS that the borrower has prepaid or that has been rescinded.
(d) A distribution borrower may request a loan period of up to 4 years. Except in the case of loans for new generating and associated transmission facilities, a power supply borrower may request a loan period of not more than 4 years for transmission and substation facilities and improvements or replacements of generation facilities. The loan period for new generating facilities is determined on a case by case basis. The loan period for DSM activities will be determined in accordance with § 1710.355. The Administrator may approve a loan period shorter than the period requested by the borrower, if in the Administrator's sole discretion, a
(e)(1) If, in the sole discretion of the Administrator, the amount authorized for lending for municipal rate loans, hardship rate loans, and loan guarantees in a fiscal year is substantially less than the total amount eligible for RUS financing, RUS may limit the size of all loans of that type approved during the fiscal year. Depending on the amount of the shortfall between the amount authorized for lending and the loan application inventory on hand for each type of loan, RUS may either reduce the amount on an equal proportion basis for all applicants for that type of loan based on the amount of funds for which the applicant is eligible, or may shorten the loan period for which funding will be approved to less than the maximum of 4 years. All applications for the same type of loan approved during a fiscal year will be treated in the same manner, except that RUS will not limit funding to any borrower requesting an RUS loan or loan guarantee of $1 million or less.
(2) If RUS limits the amount of loan funds approved for borrowers, the Administrator shall notify all electric borrowers early in the fiscal year of the manner in which funding will be limited. The portion of the loan application that is not funded during that fiscal year may, at the borrower's option, be treated as a second loan application received by RUS at a later date. This date will be determined by RUS in the same manner for all affected loans and will be based on the availability of loan funds. The second loan application shall be considered complete except that the borrower must submit a certification from a duly authorized corporate official stating that funds are still needed for loan purposes specified in the original application and must notify RUS of any changes in its circumstances that materially affects the information contained in the original loan application or the primary support documents. See 7 CFR 1710.401(f).
(f)(1) For borrowers having one or more loans approved on or after October 1, 1991, advances of funds will be made only for the primary budget purposes included in the loan as shown on RUS Form 740c as amended and approved by RUS, or on a construction work plan or a construction work plan amendment approved by RUS. Each advance will be charged to the oldest outstanding note(s) having unadvanced funds for the primary budget purpose for which the request for advances was made, regardless of whether such notes are associated with loans approved before or after October 1, 1991, unless any conditions on advances under any of these notes have not been met by the borrower.
(2) For borrowers whose most recent loan was approved before October 1, 1991, advances will be made on the oldest outstanding note having unadvanced funds, unless any conditions on advances under such note have not been met by the borrower.
The maximum amount that will be lent for an acquisition is limited to the value of the property, as determined by RUS. If the acquisition price exceeds this amount, the borrower shall provide the remainder without RUS financial assistance.
(a) RUS encourages its borrowers to consider merging or consolidating with another electric borrower when such action will contribute to greater operating efficiency and financial soundness.
(b) After a merger or consolidation, RUS will give priority consideration per § 1710.119 to the processing of loans for the surviving system to finance the integration and rehabilitation of electric facilities, if necessary, and the improvement or extension of electric service in rural areas. Such priority consideration will also be given in the case of a borrower that has merged or consolidated with an electric system that has not previously received RUS financial assistance, if such system was serving primarily rural residents at the time of the merger or consolidation
(a) Borrowers may request that a loan include funds to reimburse general funds and/or replace interim financing used to finance equipment and facilities that were included in an RUS-approved construction work plan, work plan amendment or other RUS-approved plan, and for which loan funds have not been provided by RUS. Such reimbursement and/or replacement of interim financing may include the direct costs of procurement and construction, as well as the related cost of engineering, architectural, environmental and other studies and plans needed to support the project, when such cost is capitalized as part of the cost of the facilities.
(b) If procurement and/or construction of the equipment and facilities was completed prior to the current loan period, reimbursement, including replacement of interim financing, will be limited, except in cases of extreme financial hardship as determined by the Administrator, to the cost of procurement and construction completed during the period immediately preceding the current loan period, as specified in paragraph (c) of this section. As defined in § 1710.2, the loan period begins on the date shown on page 1 of RUS Form 740c, Cost Estimates and Loan Budget for Electric Borrowers.
(c)(1) The period immediately preceding the current loan period for which reimbursement and replacement of interim financing is authorized under paragraph (b) of this section is as follows:
(i) The number of months agreed to by RUS and the borrower for complete loan applications received by RUS before February 10, 1992;
(ii) 36 months for complete loan applications received from February 10, 1992 through February 10, 1993; or
(iii) 24 months for complete loan applications received after February 10, 1993.
(2) Policies for reimbursement of general funds and interim financing following certain mergers, consolidations, and transfers of systems substantially in their entirety are set forth in 7 CFR 1717.154.
(d) If the reimbursement of general funds and/or replacement of interim financing is for approved expenditures for equipment and facilities whose procurement and/or construction is completed during the current loan period, the time limits of paragraph (c) of this section do not apply.
(a) Except in the case of financial hardship as determined by the Administrator, and following certain mergers, consolidations, and transfers of systems substantially in their entirety as set forth in 7 CFR 1717.154, applicants for a municipal rate loan will be required to obtain a portion of their loan funds from a supplemental source without an RUS guarantee, in the amounts set forth in paragraph (c) of this section. RUS will normally grant a lien accommodation to the supplemental lender. RUS does not require supplemental financing in conjunction with an RUS guaranteed loan. However, if a borrower elects to obtain supplemental financing in conjunction with a guaranteed loan, the granting of RUS's loan guarantee may be conditioned on the borrower's obtaining supplemental financing.
(b) The terms and conditions of supplemental financing and any security offered to the supplemental lender are subject to RUS approval. Generally, supplemental loans must have the same final maturity and be amortized in the same manner as RUS loans made concurrently. Borrowers may elect to repay the loans either in substantially equal periodic installments covering interest and principal, or in periodic installments that include interest and level amortization of principal.
(c)
(ii) All other distribution borrowers must obtain supplemental financing according to their plant revenue ratio (PRR), as defined in § 1710.2, based on the most recent year-end data available on the date of loan approval, as follows:
(iii) If a distribution borrower enters into a merger, consolidation, or transfer of system substantially in its entirety, and the provisions of 7 CFR 1717.154(b) do not apply, required supplemental financing will be determined as follows for loans approved by RUS after December 19, 1996. If one of the merging parties met the criteria in paragraph (c)(1)(i) of this section prior to the effective date of the merger consolidation or transfer, the borrower will be required to obtain supplemental financing equal to 10 percent of any loan funds requested for facilities to serve consumers located in the territory formerly served by the “paragraph (c)(1)(i)” borrower. The required amount of supplemental financing for the rest of the loan will be determined according to the provisions of paragraph (c)(1)(ii) of this section.
(2)
(3)
(ii) If a borrower's supplemental financing requirement as set forth in paragraphs (a), (c)(1), and (c)(2) of this section has not changed between the most recent loan and the loan being considered, then the amount of supplemental financing required for the new loan will be computed as follows:
(iii) If a borrower's supplemental financing requirement as set forth in paragraphs (a), (c)(1), and (c)(2) of this section has changed between the most recent loan and the loan being considered, then the amount of supplemental financing required for the new loan will be the weighted average of the portions otherwise applicable on the two loans and will be computed as follows:
(d) Supplemental financing will not be required in connection with hardship rate loans. Borrowers that qualify for hardship rate loans but elect to take municipal rate loans instead, will be required to obtain supplemental financing pursuant to this section, unless at the time of loan approval, there are no funds remaining available for hardship loans, in which case supplemental financing will not be required.
(a) RUS makes loans or loan guarantees to refinance the outstanding indebtedness of borrowers in the following cases:
(1) Loans or loan guarantees to refinance long-term debt owed by borrowers to the Tennessee Valley Authority fpr credit extended under the terms of the Tennessee Valley Authority Act of 1933, as amended.
(2) Loan guarantees made in accordance with the provisions of section 306A of the RE Act to prepay a loan (or any loan advance thereunder) made by the Federal Financing Bank.
(b) In certain circumstances, RUS may make a loan to replace interim financing obtained for the construction of facilities (See § 1710.109).
(a) RUS will make a loan only if there is reasonable assurance that the loan, together with all outstanding loans and other obligations of the borrower, will be repaid in full as scheduled, in accordance with the mortgage, notes, and loan contracts. The borrower must provide evidence satisfactory to the Administrator that the loan will be repaid in full as scheduled, and that all other obligations of the borrower will be met.
(b) Based on evidence submitted by the borrower and other information, RUS will use the following criteria to evaluate loan feasibility:
(1) Projections of power requirements, rates, revenues, expenses, margins, and other factors for the present system and proposed additions are based on reasonable assumptions and adequate supporting data and analysis, including analysis of a range of assumptions for the significant variables, when required by § 1710.300(d)(5).
(2) Projected revenues from the rates proposed by the borrower are adequate to meet the required TIER and DSC ratios based on the borrower's total costs, including the projected maximum debt service cost of the new loan.
(3) The economics of the borrower's operations and service area are such that consumers can reasonably be expected to pay the proposed rates required to cover all expenses and meet RUS TIER and DSC requirements, and the borrower can reasonably compete with other utilities and other energy sources to prevent substantial load loss while providing satisfactory service to its consumers.
(4) Risks of possible loss of substantial loads from large consumers or from load concentrations in particular industries will not substantially impair loan feasibility.
(5) Risks of loss of portions of the borrower's service territory from annexation or other causes will not substantially impair loan feasibility. If there appears to be a substantial risk, RUS may require additional information from the borrower, such as a summary and analysis of the risk by the borrower; state, county or local planning reports having information on projected growth or expansion plans of local communities; annexation plans of the municipalities in question; and any other relevant information.
(6) In states where rates or investment decisions are subject to approval by state regulatory authorities, there is reasonable expectation that such approvals will be forthcoming to enable repayment of the loan in full according to its terms.
(7) The experience and performance of the system's management is acceptable.
(8) In the case of joint ventures, the borrower has sufficient management control or other contractual safeguards with respect to the construction and operation of the jointly owned facility to ensure that the borrower's interests are protected and the credit risk is minimized.
(9) The borrower has implemented adequate financial and management controls and there are and have been no significant financial or other irregularities.
(10) The borrower's projected capitalization, measured by its equity as a percentage of total assets, is adequate to enable the borrower to meet its financial needs and to provide service consistent with the RE Act. Among the factors to be considered in reviewing the borrower's projected capitalization are the economic strength of the borrower's service territory, the inherent cost of providing service to the territory, the disparity in rates between the borrower and neighboring utilities, the intensity of competition faced by the borrower from neighboring utilities and other power sources, and the relative amount of new capital investment required to serve existing or new loads.
(c) RUS considers a loan to be feasible only if the borrower's electric system is year 2000 compliant, or if the borrower provides RUS with evidence, satisfactory to RUS, that it is taking measures necessary to ensure that its electric system will be year 2000 compliant on or before December 31, 1999. Year 2000 compliant means that product performance and function are not affected by dates before, during, and a reasonable time after the year 2000.
(a) RUS makes loans only if, in the judgment of the Administrator, the security therefor is reasonably adequate and the loan will be repaid according to its terms within the time agreed.
(b) RUS generally requires that borrowers provide it with a first lien on all of the borrower's real and personal property, including intangible personal property and any property acquired after the date of the loan. This lien shall be in the form of a mortgage by the borrower to the Government or a deed of trust between the borrower and a trustee satisfactory to the Administrator, together with such security documents as RUS may deem necessary in a particular case.
(c)(1) When a borrower is unable by reason of preexisting encumbrances, or otherwise, to furnish a first mortgage lien on its entire system the Administrator may accept other forms of security, such as a pledge of revenues, if he or she determines such security is reasonably adequate and the form and nature thereof is otherwise acceptable.
(2) The Administrator, at his or her discretion, may approve the use of an indenture patterned after those indentures commonly used by utilities engaged in private market financing, in lieu of a mortgage as the security instrument for loans to power supply borrowers. The use of an indenture will be by mutual agreement of the borrower and the Administrator. The terms of each indenture and related loan agreement will be negotiated on a case by case basis to best meet the needs of the individual borrower and the Government. The provisions of the indenture and loan contract shall control, notwithstanding any provisions of 7 CFR Chapter XVII which may be in conflict therewith.
(d) In the case of loans that include the financing of electric facilities that are operated as an integral component of a non-RUS financed system (such as generation and transmission facilities co-owned with other electric utilities), the borrower shall, in addition to the mortgage lien on all of the borrower's electric facilities, furnish adequate assurance, in the form of contractual or other security arrangements, that the system will be operated on an efficient and continuous basis. Satisfactory evidence must also be provided that the non-RUS financed system is financially sound and under capable management. Examples of such evidence include financial reports, annual reports, Security and Exchange Commission 10K reports if the system is required to file them, credit reports from Standard and Poor's, Moodys or other recognized
(e) Additional controls on the borrower's financial, investment and managerial activities appear in the loan contract and mortgage required by RUS.
(a)
(b)
(2) The minimum coverage ratios required of power supply borrowers, whether applied on an annual or average basis, are a TIER of 1.05 and DSC of 1.00.
(3) When new loan contracts are executed, the Administrator may, case by case, increase the coverage ratios of distribution and power supply borrowers above the levels cited in paragraphs (b)(1) and (b)(2), respectively, of this section if the Administrator determines that the higher ratios are required to ensure reasonable security for and/or the repayment of loans made or guaranteed by RUS. Also, the Administrator may, case by case, reduce said coverage ratios if the Administrator determines that the lower ratios are required to ensure reasonable security for and/or the repayment of loans made or guaranteed by RUS. Policies for coverage ratios following certain mergers, consolidations, and transfers of systems substantially in their entirety are in 7 CFR 1717.155.
(4) If a distribution borrower has in service or under construction a substantial amount of generation and associated transmission plant financed at a cost of capital substantially higher than the cost of funds under section 305 of the RE Act, then the Administrator may establish, in his or her sole discretion, blended levels for TIER, DSC, OTIER, and ODSC based on the respective shares of total utility plant represented by said generation and associated transmission plant and by distribution and other transmission plant.
(c)
(d)
(2)
(3)
(e)
(2) With respect to any outstanding loan approved by RUS on or after February 10, 1992, 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.
(a) RUS is authorized to make loans and loan guarantees with a final maturity of up to 35 years. The borrower may elect a repayment period for a loan not longer than the expected useful life of the facilities, not to exceed 35 years. Most of the electric facilities financed by RUS have a long useful life, often approximating 35 years. Some facilities, such as load management equipment and Supervisory Control and Data Acquisition equipment, have a much shorter useful life due, in part, to obsolescence. Operating loans to finance working capital required for the initial operation of a new system are a separate class of loans and usually have a final maturity of less than 10 years.
(b) Loans made or guaranteed by RUS for facilities owned by the borrower generally must be repaid with interest within a period, up to 35 years, that approximates the expected useful life of the facilities financed. The expected useful life shall be based on the weighted average of the useful lives that the borrower proposes for the facilities financed by the loan, provided that the proposed useful lives are deemed appropriate by RUS. RUS Form 740c, Cost Estimates and Loan Budget for Electric Borrowers, submitted as part of the loan application must include, as a note, either a statement certifying that at least 90 percent
(c) [Reserved]
(d) The Administrator may approve a repayment period longer than the expected useful life of the facilities financed, up to 35 years, if a longer final maturity is required to ensure repayment of the loan and loan security is adequate.
(e) The final maturity of a loan established pursuant to the provisions of this section shall not be extended as a result of extending loan payments under section 12(a) of the RE Act.
Borrowers are required to comply with 7 CFR part 1794, which sets forth applicable requirements of the National Environmental Policy Act (NEPA), as amended (42 U.S.C. 4321
(a) Generally loans are processed in chronological order based on the date the complete application is received in the Regional office.
(b) The Administrator may give priority to processing loans that are required to meet the following needs:
(1) To restore electric service following a major storm or other catastrophe;
(2) To bring existing electric facilities into compliance with any environmental requirements imposed by Federal or state law that were not in effect at the time the facilities were originally constructed;
(3) To finance the capital needs of borrowers that are the result of a merger, consolidation, or a transfer of a system substantially in its entirety, provided that the merger, consolidation, or transfer has either been approved by RUS or does not need RUS approval pursuant to the borrower's loan documents (See 7 CFR 1717.154); or
(4) To correct serious safety problems, other than those resulting from borrower mismanagement or negligence.
(c) The Administrator may also change the normal order of processing loan applications when it is necessary
Borrowers shall follow all RUS requirements regarding construction work plans, construction standards, approved materials, construction and related contracts, inspection procedures, and bidding procedures.
Borrowers are required to comply with certain requirements with respect to insurance and fidelity coverage as set forth in 7 CFR part 1788.
Borrowers are required to comply with certain regulations on nondiscrimination in program services and benefits and on equal employment opportunity as set forth in RUS Bulletins 20-15 and 20-19 or their successors; 7 CFR parts 15 and 15b; and 45 CFR part 90.
Borrowers are required to comply with certain requirements on debarment and suspension as set forth in 7 CFR part 3017.
Borrowers are required to comply with applicable provisions of 49 CFR part 24, which sets forth the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policy Act of 1970 (Pub. L. 91-646; 84 Stat. 1894), as amended by the Uniform Relocation Act Amendments of 1987 (Pub. L. 100-17; 101 Stat. 246-256) and the Intermodal Surface Transportation Efficiency Act of 1991.
Borrowers are required to comply with certain requirements with respect to restrictions on lobbying activities. See 7 CFR part 3018.
(a) Prior to approval of a loan or advance of funds, a borrower must report to RUS whether or not it is delinquent on any Federal debt, such as Federal income tax obligations or a loan or loan guarantee from another Federal agency. If delinquent, the reasons for the delinquency must be explained, and RUS will take such explanation into consideration in deciding whether to approve the loan or advance of funds.
(b) Applicants for a loan or loan guarantee must also certify that they have been informed of the collection options the Federal government may use to collect delinquent debt.
Borrowers are required to comply with the Drug Free Workplace Act of 1988 (Pub. L. 100-690, title V, subtitle D) and the Act's implementing regulations (7 CFR part 3017) when a borrower receives a Federal grant or enters into a procurement contract awarded pursuant to the provisions of the Federal Acquisition Regulation (title 48 CFR) to sell to a Federal agency property or services having a value of $25,000 or more.
The RE Act and prudent lending practice require that the Administrator make certain findings before approving an electric loan or loan guarantee. The borrower shall provide the evidence determined by the Administrator to be necessary to make these findings.
(a)
(b)
(c)
(d)
(e)
(f)
The following primary support documents and studies must be prepared by the borrower for approval by RUS in order to support a loan application:
(a)
(b)
(c)
(d)
Additional requirements and procedures for obtaining RUS financial assistance are set forth in 7 CFR part 1712 for loan guarantees, and in 7 CFR part 1714 for insured loans.
This subpart contains RUS policies for the preparation, review, approval and use of load forecasts and load forecast work plans. A load forecast is a thorough study of a borrower's electric loads and the factors that affect those loads in order to estimate, as accurately as practicable, the borrower's future requirements for energy and capacity. The load forecast of a power supply borrower includes and integrates the load forecasts of its member systems. An approved load forecast, if required by this subpart, is one of the primary documents that a borrower is required to submit to support a loan application.
(a) The policies, procedures and requirements in this subpart are intended to implement provisions of the loan documents between RUS and the electric borrowers and are also necessary to support approval by RUS of requests for financial assistance.
(b) Notwithstanding any other provisions of this subpart, RUS may require any power supply or distribution borrower to prepare a new or updated load forecast for RUS approval or to maintain an approved load forecast on an ongoing basis, if such documentation is necessary for RUS to determine loan feasibility, or to ensure compliance under the loan documents.
(a) A power supply borrower with a total utility plant of $500 million or more must maintain an approved load forecast that meets the requirements of this subpart on an ongoing basis and provide an approved load forecast in support of any request for RUS financial assistance. The borrower must also maintain an approved load forecast work plan. The borrower's approved load forecast must be prepared pursuant to the approved load forecast work plan.
(b) A power supply borrower that is a member of another power supply borrower that has a total utility plant of $500 million or more must maintain an approved load forecast that meets the requirements of this subpart on an ongoing basis and provide an approved load forecast in support of any request for RUS financial assistance. The member power supply borrower may comply with this requirement by participation in and inclusion of its load forecasting information in the approved load forecast of its power supply borrower. The approved load forecasts must be prepared pursuant to the RUS approved load forecast work plan.
(c) A power supply borrower that has total utility plant of less than $500 million and that is not a member of another power supply borrower with a total utility plant of $500 million or more must provide an approved load forecast that meets the requirements of this subpart in support of an application for any RUS loan or loan guarantee which exceeds $50 million. The borrower is not required to maintain on an ongoing basis either an approved load forecast or an approved load forecast work plan.
(a) A distribution borrower that is a member of a power supply borrower with a total utility plant of $500 million or more must maintain an approved load forecast that meets the requirements of this subpart on an ongoing basis and provide an approved load forecast in support of any request for RUS financial assistance. The distribution borrower may comply with this requirement by participation in and inclusion of its load forecasting information in the approved load forecast of its power supply borrower. The distribution borrower's load forecast must be prepared pursuant to the approved load forecast work plan of its power supply borrower.
(b) A distribution borrower that is a member of a power supply borrower which is itself a member of another power supply borrower that has a total
(c) A distribution borrower that is a member of a power supply borrower with a total utility plant of less than $500 million must provide an approved load forecast that meets the requirements of this subpart in support of an application for any RUS loan or loan guarantee that exceeds $3 million or 5 percent of total utility plant, whichever is greater. The distribution borrower may comply with this requirement by participation in and inclusion of its load forecasting information in the approved load forecast of its power supply borrower. The borrower is not required to maintain on an ongoing basis either an approved load forecast or an approved load forecast work plan.
(d) A distribution borrower with a total utility plant of less than $500 million and that is unaffiliated with a power supply borrower must provide an approved load forecast that meets the requirements of this subpart in support of an application for any RUS loan or loan guarantee which exceeds $3 million or 5 percent of total utility plant, whichever is greater. The borrower is not required to maintain on an ongoing basis either an approved load forecast or an approved load forecast work plan.
(e) A distribution borrower with a total utility plant of $500 million or more must maintain an approved load forecast that meets the requirements of this subpart on an ongoing basis and provide an approved load forecast in support of any request for RUS financing assistance. The borrower must also maintain an approved load forecast work plan. The distribution borrower may comply with this requirement by participation in and inclusion of its load forecasting information in the approved load forecast of its power supply borrower.
(a)
(1) Submitting a new load forecast to RUS for review and approval at least every 36 months, and then submitting updates to the load forecast to RUS for review and approval in each intervening year; or
(2) Submitting a new load forecast to RUS for review and approval not less frequently than every 24 months.
(b)
(a)
(1) The load forecast and supporting documentation;
(2) A memorandum from the borrower's general manager to the board of directors recommending that the board approve the load forecast and its uses; and
(3) A board resolution from the borrower's board of directors approving the load forecast and its uses.
(b)
(1) A narrative describing the borrower's system, service territory, and consumers;
(2) A narrative description of the borrower's load forecast including future load projections, forecast assumptions, and the methods and procedures used to develop the forecast;
(3) Projections of usage by consumer class, number of consumers by class, annual system peak demand, and season of peak demand for the number of years agreed upon by RUS and the borrower;
(4) A summary of the year-by-year results of the load forecast in a format that allows efficient transfer of the information to other borrower planning or loan support documents;
(5) The load impacts of a borrower's demand side management activities, if applicable;
(6) Graphic representations of the variables specifically identified by management as influencing a borrower's loads; and
(7) A database that tracks all relevant variables that might influence a borrower's loads.
(c)
(d)
(e)
(f)
(g)
(a)
(1) Scope of the load forecast. The narrative shall address the overall approach, time periods, and expected internal and external uses of the forecast. Examples of internal uses include providing information for developing
(2) Resources used to develop the load forecast. The discussion shall identify and discuss the borrower personnel, consultants, data processing, methods and other resources used in the preparation of the load forecast. The borrower shall identify the borrower's member and, as applicable, member personnel that will serve as project leaders or liaisons with the authority to make decisions and commit resources within the scope of the current and future work plans.
(3) A comprehensive description of the database used in the study. The narrative shall describe the procedures used to collect, develop, verify, validate, update, and maintain the data. A data dictionary thoroughly defining the database shall be included. The borrower shall make all or parts of the database available or otherwise accessible to RUS in electronic format, if requested.
(4) A narrative for each new load forecast or update of a load forecast discussing the methods and procedures used in the analysis and modeling of the borrower's electric system loads as provided for in the load forecast work plan.
(5) A narrative discussing the borrower's past, existing, and forecast of future electric system loads. The narrative must identify and explain substantive assumptions and other pertinent information used to support the estimates presented in the load forecast.
(6) A narrative discussing load forecast uncertainty or alternative futures that may determine the borrower's actual loads. Examples of economic scenarios, weather conditions, and other uncertainties that borrowers may decide to address in their analysis include:
(i) Most-probable assumptions, with normal weather;
(ii) Pessimistic assumptions, with normal weather;
(iii) Optimistic assumptions, with normal weather;
(iv) Most-probable assumptions, with severe weather;
(v) Most-probable assumptions, with mild weather;
(vi) Impacts of wholesale or retail competition; or
(vii) new environmental requirements.
(7) A summary of the forecast's results on an annual basis. Include alternative futures, as applicable. This summary shall be designed to accommodate the transfer of load forecast information to a borrower's other planning or loan support documents. Computer-generated forms or electronic submissions of data are acceptable. Graphs, tables, spreadsheets or other exhibits shall be included throughout the forecast as appropriate.
(8) A narrative discussing the coordination activities conducted between a power supply borrower and its members, as applicable, and between the borrower and RUS.
(b)
Load forecasts submitted by distribution borrowers that are unaffiliated with a power supply borrower, or by distribution borrowers that are members of a power supply borrower that has a total utility plant less than $500 million and that is not itself a member of another power supply borrower with a total utility plant of $500 million or
(a) The borrower considered all known relevant factors that influence the consumption of electricity and the known number of consumers served at the time the study was developed;
(b) The borrower considered and identified all loads on its system of RE Act beneficiaries and non-RE Act beneficiaries;
(c) The borrower developed an adequate supporting data base and considered a range of relevant assumptions; and
(d) The borrower provided RUS with adequate documentation and assistance to allow for a thorough and independent review.
All load forecasts submitted by power supply borrowers and by distribution borrowers required to maintain an approved load forecast must satisfy the following criteria:
(a) The borrower objectively analyzed all known relevant factors that influence the consumption of electricity and the known number of customers served at the time the study was developed;
(b) The borrower considered and identified all loads on its system of RE Act beneficiaries and non-RE Act beneficiaries;
(c) The borrower developed an adequate supporting database and analyzed a reasonable range of relevant assumptions and alternative futures;
(d) The borrower adopted methods and procedures in general use by the electric utility industry to develop its load forecast;
(e) The borrower used valid and verifiable analytical techniques and models;
(f) The borrower provided RUS with adequate documentation and assistance to allow for a thorough and independent review; and
(g) In the case of a power supply borrower required to maintain an approved load forecast on an ongoing basis, the borrower adequately coordinated the preparation of the load forecast work plan and load forecast with its member systems.
(a) In addition to the approved load forecast required under §§ 1710.202 and 1710.203, any power supply borrower with a total utility plant of $500 million or more and any distribution borrower with a total utility plant of $500 million or more must maintain an approved load forecast work plan. RUS borrowers that are members of a power supply borrower with a total utility plant of $500 million or more must cooperate in the preparation of and submittal of the load forecast work plan of their power supply borrower.
(b) An approved load forecast work plan establishes the process for the preparation and maintenance of a comprehensive database for the development of the borrower's load forecast, and load forecast updates. The approved load forecast work plan is intended to develop and maintain a process that will result in load forecasts that will meet the borrowers' own needs and the requirements of this subpart. An approved work plan represents a commitment by a power supply borrower and its members, or by a large unaffiliated distribution borrower, that all parties concerned will prepare their load forecasts in a timely manner pursuant to the approved load forecast work plan and they will modify the approved load forecast work plan as needed with RUS approval to address changing circumstances or enhance the usefulness of the approved load forecast work plan.
(c) An approved load forecast work plan for a power supply borrower and its members must cover all member systems, including those that are not borrowers. However, only members that are borrowers, including the power supply borrower, are required to follow the approved load forecast work plan in preparing their respective load forecasts. Each borrower is individually responsible for forecasting all its RE Act beneficiary and non-RE Act beneficiary loads.
(d) An approved load forecast work plan must outline the coordination and
(e) An approved load forecast work plan must cover a period of 2 or 3 years depending on the applicable compliance filing schedule elected under § 1710.204.
(f) An approved load forecast work plan must describe the borrower's process and methods to be used in producing the load forecast and maintaining current load forecasts on an ongoing basis.
(g) Approved load forecast work plans for borrowers with residential demand of 50 percent or more of total kWh must provide for a residential consumer survey at least every 5 years to obtain data on appliance and equipment saturation and electricity demand. Any such borrower that is experiencing or anticipates changes in usage patterns shall consider surveys on a more frequent schedule. Power supply borrowers shall coordinate such surveys with their members. Residential consumer surveys may be based on the aggregation of member-based samples or on a system-wide sample, provided that the latter provides for relevant regional breakdowns as appropriate.
(h) Approved load forecast work plans must provide for RUS review of the load forecasts as the load forecast is being developed.
(i) A power supply borrower's work plan must have the concurrence of the majority of the members that are borrowers.
(j) The borrower's board of directors must approve the load forecast work plan.
(k) A borrower may amend its approved load forecast work plan subject to RUS approval. If RUS concludes that the existing approved load forecast work plan will not result in a satisfactory load forecast, RUS may require a new or revised load forecast work plan.
For good cause shown by the borrower, the Administrator may waive any of the requirements applicable to borrowers in this subpart if the Administrator determines that waiving the requirement will not significantly affect accomplishment of RUS' objectives and if the requirement imposes a substantial burden on the borrower. The borrower's general manager must request the waiver in writing.
(a) An ongoing, integrated planning system is needed by borrowers to determine their short-term and long-term needs for plant additions, improvements, replacements, and retirements. The primary components of the system consist of long-range engineering plans, construction work plans (CWPs), CWP amendments, and special engineering and cost studies. Long range engineering plans identify plant investments required over a period of 10 years or more. CWPs specify and document plant requirements for the short-term, usually 2 to 3 years, and special engineering and cost studies are used to support CWPs and to identify and document requirements for specific items or purposes, such as load management equipment, System Control and Data Acquisition equipment, sectionalizing investments, and additions of generation capacity and associated transmission plant.
(b) Generally, all borrowers are required to maintain up-to-date long range engineering plans approved by their boards of directors. Current CWPs approved by the borrower's board must also be developed and maintained for distribution and transmission facilities and for improvements and replacements of generation facilities. All such distribution, transmission or generation facilities must be included in the respective CWPs regardless of the source of financing.
(c) A long range engineering plan specifies and supports the major system additions, improvements, replacements, and retirements needed for an orderly transition from the existing system to the system required 10 or more years in the future. The planned future system should be based on the
(d) A CWP shall include investment cost estimates and supporting engineering and cost studies to demonstrate the need for each proposed facility or activity and the reasonableness of the investment projections and the engineering assumptions used in sizing the facilities. The CWP must be consistent with the borrower's long range engineering plan and both documents must be consistent with the borrower's RUS-approved power requirements study.
(e) Applications for a loan or loan guarantee from RUS (new loans or budget reclassifications) must be supported by a current CWP approved by both the borrower's board of directors and RUS. RUS approval of these plans relates only to the facilities, equipment, and other purposes to be financed by RUS, and means that the plans provide an adequate basis from a planning and engineering standpoint to support RUS financing. RUS approval of the plans does not mean that RUS approves of the facilities, equipment, or other purposes for which the borrower is not seeking RUS financing. If RUS disagrees with a borrower's estimate of the cost of one or more facilities for which RUS financing is sought, RUS may adjust the estimate after consulting with the borrower and explaining the reasons for the adjustment.
(f) Except as provided in paragraph (g) of this section, to be eligible for RUS financing, the facilities, including equipment and other items, included in a CWP must be approved by RUS before the start of construction. This requirement also applies to any amendments to a CWP required to add facilities to a CWP or to make significant physical changes in the facilities already included in a CWP. Provision for funding of “minor projects” under an RUS loan guarantee is permitted on the same basis as that discussed for insured loan funds in 7 CFR part 1721, Post-Loan Policies and Procedures for Insured Electric Loans.
(g) In the case of damage caused by storms and other natural catastrophes, a borrower may proceed with emergency repair work before a CWP or CWP amendment is prepared by the borrower and approved by RUS, without loosing eligibility for RUS financing of the repairs. The borrower must notify the RUS regional office in writing, not later than 45 days after the natural catastrophe, of its preliminary estimates of damages and repair costs. Not later than 120 days after the natural catastrophe, the borrower must submit to RUS for approval, a CWP or CWP amendment detailing the repairs.
(h) A CWP may be amended or augmented when the borrower can demonstrate the need for the changes.
(i) A borrower's CWP or special engineering studies must be supported by a Borrower's Environmental Report, and when necessary by an Environmental Analysis or Environmental Impact Statement, as set forth in 7 CFR 1794 or required by other Federal or state regulations or laws.
(j) All engineering activities required by this subpart must be performed by qualified engineers, who may be staff employees of the borrower or outside consultants.
(k) Upon written request from a borrower, RUS may waive in writing certain requirements with respect to long-range engineering plans and CWPs if RUS determines that such requirements impose a substantial burden on the borrower and that waiving the requirements will not significantly affect the accomplishment of the objectives of this subpart. For example, if a borrower's load is forecast to remain constant or decline during the planning period, RUS may waive those portions of the plans that relate to load growth.
(a) All distribution borrowers must maintain a current CWP approved by their board of directors covering all new construction, improvements, replacements, and retirements of distribution and transmission plant, and
(b) A distribution borrower's CWP shall cover a construction period of between 2 and 4 years, and include all facilities to be constructed which are eligible for RUS financing, whether or not RUS financial assistance will be sought or be available for certain facilities. Any RUS financing provided for the facilities will be limited to a 4 year loan period. The construction period covered by a CWP in support of a loan application shall not be shorter than the loan period requested for financing of the facilities.
(c) The facilities, equipment and other items included in a distribution borrower's CWP may include:
(1) Line extensions required to connect consumers, improve service reliability or improve voltage conditions;
(2) Distribution tie lines to improve reliability of service and voltage regulation;
(3) Line conversions and changes required to improve existing services or provide additional capacity for new consumers;
(4) New substation facilities or additions to existing substations;
(5) Transmission and substation facilities required to support the distribution system;
(6) Distribution equipment required to serve new consumers or to provide adequate and dependable service to existing consumers, including replacement of existing plant facilities;
(7) Residential security lights;
(8) Communications equipment and meters;
(9) Headquarters facilities;
(10) Improvements, replacements, and retirements of generation facilities;
(11) Load management equipment, automatic sectionalizing facilities, and centralized System Control and Data Acquisition equipment. Load management equipment eligible for financing, including the related costs of installation, is limited to capital equipment designed to influence the time and manner of consumer use of electricity, which includes peak clipping and load shifting. To be eligible for financing, such equipment must be owned by the borrower, although it may be located inside or outside a consumer's premises; and
(12) The cost of engineering, architectural, environmental and other studies and plans needed to support the construction of facilities, when such cost is capitalized as part of the cost of the facilities.
(a) All power supply borrowers must maintain a current CWP approved by the borrower's board of directors covering all new construction, improvements, replacements, and retirements of distribution and transmission plant, and improvements, replacements, and retirements of generation plant. Applications for RUS financial assistance for such facilities must be supported by a current, RUS-approved CWP. Construction of new generation capacity need not be included in a CWP but must be specified and supported by specific engineering and cost studies.
(b) Normally a power supply borrower's CWP shall cover a period of 3 to 4 years. While comprehensive CWP's are desired, if there are extenuating circumstances RUS may accept a single-purpose transmission or generation CWP in support of a loan application or budget reclassification. The construction period covered by a CWP in support of a loan application shall not be shorter than the loan period requested for financing of the facilities.
(c) Facilities, equipment, and other items included in a power supply borrower's CWP may include:
(1) Distribution and related facilities as set forth in § 1710.251(c);
(2) Transmission facilities required to deliver the power needed to serve the existing and planned new loads of the borrower and its members, and to improve service reliability, including tie lines for improved reliability of service, line conversions, improvements and replacements, new substations and substation improvements
(3) The borrower's proportionate share of transmission facilities required to tie together the operating systems of supporting power pools and to connect with adjacent power suppliers;
(4) Improvements and replacements of generation facilities; and
(5) The cost of engineering, architectural, environmental and other studies and plans needed to support the construction of facilities, when such cost is capitalized as part of the cost of the facilities.
(d) A CWP for transmission facilities shall normally include studies of load flows, voltage regulation, and stability characteristics to demonstrate system performance and needs.
(a) The construction or purchase of additional generation capacity and associated transmission facilities by a power supply or distribution borrower, including the replacement of existing capacity, shall be supported by comprehensive project-specific engineering and cost studies as specified by RUS. The studies shall cover a period from the beginning of the project to at least 10 years after the start of commercial operation of the facilities.
(b) The studies must include comprehensive economic present-value analyses of the costs and revenues of the available self-generation, load management, energy conservation, and purchased-power options, including assessments of service reliability and financing requirements and risks. Requirements for analyzing purchased-power options are set forth in § 1710.254.
(c) Generally, studies of self-generation, load management, and energy conservation options shall include, as appropriate, analyses of:
(1) Capital and operating costs;
(2) Financing requirements and risks;
(3) System reliability;
(4) Alternative unit sizes;
(5) Alternative types of generation;
(6) Fuel alternatives;
(7) System stability;
(8) Load flows; and
(9) System dispatching.
(d) At the request of a borrower, RUS, in its sole discretion, may waive specific requirements of this section if such requirements imposed a substantial burden on the borrower and if such waiver will not significantly affect the accomplishment of the objectives of this subpart.
(a)
(i) Where no adequate and dependable source of power is available to meet the consumers’ needs; or
(ii) Where the rates offered by other power sources would result in a higher cost of power to the consumers than the cost from facilities financed by RUS, and the amount of the power cost savings that would result from the RUS-financed facilities bears a significant relationship to the amount of the proposed loan.
(2) If a borrower already owns and operates the types of facilities included in a loan request, then a loan for the purposes contained in paragraph (a)(1) of this section, as well as for the construction of transmission facilities by a distribution borrower, will be considered and evaluated by RUS in terms of whether the proposed facilities constitute an effective and economical means of meeting the power requirements of the consumers. A borrower shall contact RUS as soon as practicable in order for RUS to review information submitted by the borrower and advise the borrower, in writing, whether there is a need for the borrower to investigate and seek alternative sources of power. RUS will determine, based on information provided by the borrower or otherwise available, whether there is a need to investigate
(b) Loan requests for the addition of generation capacity, including replacement of existing capacity, will be accepted by RUS when the applicant has completed the requirements established by RUS, in a manner satisfactory to RUS. The investigations of alternative sources of power must be coordinated in advance with RUS. This section applies to RUS financed generation capacity whether owned solely by the borrower, owned on an undivided ownership basis with other utilities or substantially controlled by the borrower.
(c) The applicant may be required to seek and utilize capacity available from RUS borrowers and other organizations before developing plans for additional generation capacity. RUS may require, on a case by case basis, that the applicant, among other things:
(1) Solicit power and energy purchase proposals from all reasonable potential sources of power, such as other electric cooperatives, investor-owned utilities, municipal utility organizations, and Federal and state power authorities.
(2) Solicit proposals from independent power producers, including co-generators, to determine the terms and conditions under which these producers can supply the additional power and energy needs of the applicant, without RUS financial assistance. Such solicitations should be placed in at least three national newspapers or trade publications, and they meet all planning, coordination or other requirements imposed by state authorities, as well as the environmental requirements of RUS.
(d) When solicitations are received in accordance with paragraph (c) of this section, the applicant will evaluate all alternative proposals on an economic, present-value basis, giving consideration to cost-effectiveness, reliability of service, the short-term and long-term financial viability of the supplier, and the financial risk to the borrower and its creditors. The applicant will keep RUS fully informed on these evaluations and provide supporting information and analysis as requested by RUS.
(e) After evaluation of all proposals received in accordance with paragraph (c) of this section, and having informed RUS of the results, the applicant may be required to negotiate final proposals with the entities submitting the best acceptable offers. Contracts requiring RUS approval will either be approved in advance by the Administrator or contain a provision that the contract is not valid until approved, in writing, by the Administrator. The Administrator will approve the contracts in a timely manner provided that the borrower has met all applicable requirements, including, among other matters, evidence that the alternative source of power selected is an economical and effective alternative.
(f) RUS may make independent inquiries with potential power suppliers as to the availability of power to meet borrowers’ needs. Information developed by RUS will be shared with borrowers at their request.
(g) Further details of RUS requirements for financing of generation and bulk transmission facilities are set forth in 7 CFR part 1712.
(h) At the request of a borrower, RUS, in its sole discretion, may waive specific requirements of paragraphs (b) through (e) of this section if such waiver is required to prevent unreasonable delays in obtaining generation capacity that could result in system reliability problems.
(a) RUS encourages borrowers to maintain a current long-range financial forecast. The forecast should be
(b) A borrower must prepare, for RUS review and approval, a long-range financial forecast, approved by its board of directors, in support of its loan application. The forecast must demonstrate that the borrower's system is economically viable and that the proposed loan is financially feasible. Loan feasibility will be assessed based on the criteria set forth in § 1710.112.
(c) The financial forecast and related projections submitted in support of a loan application shall include:
(1) The projected results of future actions planned by the borrower's board of directors;
(2) The financial goals established for margins, TIER, DSC, equity, and levels of general funds to be invested in plant;
(3) A pro forma balance sheet, statement of operations, and general funds summary projected for each year during the forecast period;
(4) A full explanation of the assumptions, supporting data, and analysis used in the forecast, including the methodology used to project loads, rates, revenue, power costs, operating expenses, plant additions, and other factors having a material effect on the balance sheet and on financial ratios such as equity, TIER, and DSC;
(5) Current and projected cash flows;
(6) Projections of future borrowings and the associated interest and principal expenses required to meet the projected investment requirements of the system;
(7) Current and projected kW and kWh energy sales;
(8) Current and projected unit prices of significant variables such as retail and wholesale power prices, average labor costs, and interest;
(9) Current and projected system operating costs, including, but not limited to, wholesale power costs, depreciation expenses, labor costs, and debt service costs;
(10) Current and projected revenues from sales of electric power and energy;
(11) Current and projected non-operating income and expense;
(12) A discussion of the historical experience of the borrower, and in the case of a power supply borrower its member systems as appropriate, with respect to the borrower's market competitiveness as it relates to the rates charged for electricity, competition from other fuels, and other factors. Additional data and analysis may be required by RUS on a case by case basis to assess the probable future competitiveness of those borrowers that have a history of serious competitive problems; and
(13) An analysis of the effects of major factors, such as projected increases in rates charged for electricity, on the ability of the borrower, and in the case of a power supply borrower its member systems, to compete with neighboring utilities and other energy sources.
(d) The following plans, studies and assumptions shall be used in developing the financial forecast:
(1) The RUS-approved CWP;
(2) RUS-approved power requirements data;
(3) The current rate schedules or new rates already approved by the board of directors;
(4) Future plant additions and operating expenses projected at anticipated future cost levels rather than in constant dollars, with the annual rate of inflation for major items specified; and
(5) A sensitivity analysis may be required by RUS on a case-by-case basis taking into account such factors as the number and type of large power loads, projections of future borrowings and the associated interest, projected loads, projected revenues, and the probable future competitiveness of the borrower. When RUS determines that a sensitivity analysis is necessary for distribution borrowers, the variables to be tested will be determined by the General Field Representative in consultation with the borrower and the regional office. The regional office will consult with the Power Supply Division in the case of generation projects for distribution borrowers. For power supply borrowers, the variables to be tested will be determined by the borrower and the Power Supply Division.
(e) The financial forecast shall use the accrual method, as approved by RUS, for analyzing costs and revenues,
(a) Financial forecasts prepared by distribution borrowers shall cover at least a ten-year period, unless a shorter period is authorized by other RUS regulations.
(b) In addition to the requirements set forth in § 1710.300 of this part, financial forecasts prepared by distribution borrowers in support of a loan application shall:
(1) Include expenditures for any maintenance determined to be needed in the current system's operation and maintenance review and evaluation in order to comply with mortgage covenants and prudent utility practice;
(2) Fully explain the basis for the power cost projections used. Generally, the power supplier's most recent forecasted rates shall be used; and
(3) Use RUS Form 325 or computer-generated equivalent reports.
(a) The requirements of this section apply only to financial forecasts submitted by power supply borrowers in support of a loan from RUS. The financial forecast prepared by power supply borrowers shall demonstrate the effects that the addition of generation, transmission and any distribution facilities will have on the power supply borrower's sales, costs, and revenues, and on the cost of power to the member distribution systems.
(b) The financial forecast shall cover a period of 10 years. RUS may request projections for a longer period of time if RUS deems necessary.
(c) Financial forecasts prepared in support of loan applications to finance additional generation capacity shall include a power cost study as set forth in § 1710.303.
(d) In addition to the requirements set forth in § 1710.300, financial forecasts prepared by power supply borrowers shall:
(1) Identify all plans for generation and transmission capital additions and system operating expenses on a year-by-year basis, beginning with the present and running for 10 years, unless a longer period of time has been requested by RUS.
(2) Integrate projections of operation and maintenance expenses associated with existing plant with those of new proposed facilities to determine total costs of system operation as well as the costs of new generation and generation-related facilities;
(3) Provide an in-depth analysis of the regional markets for power if loan feasibility depends to any degree on a borrower's ability to sell surplus power while its system loads grow to meet the planned capacity of a proposed plant;
(4) If not previously submitted, furnish RUS with all material information on operating agreements, ownership agreements, fuel contracts and any other special agreements that affect annual cost projections, as may be required by RUS on a case by case basis; and
(5) Include sensitivity analysis if required by RUS pursuant to § 1710.300(d)(5).
(e) The projections shall be coordinated in advance with RUS so that agreement can be reached on major aspects of the economic studies. These include, but are not limited to, projections of future kW and kWh requirements, RE Act beneficiary loads, electricity prices, revenues from system and off-system power sales, the cost of prospective plant additions, interest and depreciation rates, fuel costs, cost escalation factors, the discount rate, and other factors.
(f) The projections, analysis, and supporting information must be included in a report that will provide RUS with the information needed to:
(1) Understand and compare various power supply plans;
(2) Determine that the facilities to be financed will perform satisfactorily; and
(3) Determine that the overall system is economically viable and the loan is financially feasible and secure.
(a) All applications for financing of additional generation capacity and the associated bulk transmission facilities shall be supported by a power cost study to demonstrate that the proposed generation and associated transmission facilities are the most economical and effective means of meeting the borrower's power requirements. This study usually is a separate study but it may be integrated with the financial forecast required by § 1710.302.
(b) A power cost study shall include the following basic elements:
(1) A study of all reasonably available self-generation, purchased-power, load management, and energy conservation alternatives as set forth in §§ 1710.253 and 1710.254;
(2) A present-value analysis of the costs of the alternatives and their effects on total power costs, covering a period of at least 10 years beyond the projected in-service date of the facilities;
(3) A description of proposed new power-purchase contracts or revisions to existing contracts, and an analysis of the effects on power costs;
(4) Use of sensitivity analyses to determine the vulnerability of the alternatives to a reasonable range of assumptions about fuel costs, failure to achieve projected load growth, changes in operating and financing costs, and other major factors, if the financial forecast is used in support of a loan or loan guarantee that exceeds the smaller of $25 million or 10 percent of the borrower's total utility plant. Individual sensitivity analyses need not be duplicated if they have been included in other materials submitted to RUS; and
(5) Assessment of the financial risks of the various alternatives, especially as between capital-intensive and non-capital-intensive alternatives, under the range of assumptions set forth in paragraph (b)(4) of this section.
(c) Power cost studies must use current, RUS-approved power requirements data, and all major assumptions are subject to RUS approval. Alternative assumptions about projected power requirements may be used, however, in conjunction with the sensitivity analyses required by paragraph (b)(4) of this section.
This subpart sets forth RUS policies and procedures with regard to loans and loan guarantees to RUS borrowers for the purpose of implementing their demand side management (DSM) plans, energy conservation programs, and on-grid and off-grid renewable energy systems. The Administrator reserves the right to determine if loans for purposes under this subpart will be made to a borrower in default under its mortgage and loan contract. As is the case with all other RUS loans, loans for purposes under this subpart will not be made to individuals.
(a) Off-grid renewable energy systems will be considered the same as DSM activities and will qualify for either insured loans or loan guarantees pursuant to § 1710.102.
(b) On-grid renewable energy systems will be treated as a generation resource and will be eligible only for loan guarantees pursuant to § 1710.102. Existing RUS policy with respect to generation resources shall generally apply.
(c) RUS loans for renewable energy systems will be made only for systems utilizing technologies that are proven and commercially available.
This subpart does not replace the energy resource conservation program financed by deferments of loan principal.
(a) RUS will make loans for the purpose of assisting electric borrowers to implement RUS approved demand side management plans. For the purposes of this regulation energy conservation programs are included as a DSM activity.
(b) RUS will treat demand-side and supply-side resources on an equal basis. All requirements applicable to loans for traditional electric facilities will apply to loans for DSM. In addition the requirements set forth in this subpart will apply.
(c) DSM will be considered a distribution loan purpose, eligible for either insured loans or loan guarantees pursuant to § 1710.102.
(d) RUS will conduct its own evaluation, as specified in this subpart, of a borrower's DSM activities before making a determination on the disposition of a borrower's loan application.
(e) RUS loans for DSM activities will be made only for systems utilizing technologies that are proven and commercially available.
(f) In general, RUS will require pilot project testing of DSM activities new to the borrower.
(g) If the borrower's IRP, DSM plan, project construction and/or financing, and/or rate recovery is subject to the approval of state authorities, the borrower must obtain such approvals before RUS will approve a loan for any purpose for which an RUS approved DSM plan or IRP is required under this subpart.
DSM activities that are projected to result in more efficient use of electric system resources and which are consistent with an RUS approved Integrated Resource Plan (IRP) and DSM plan may be eligible for financing. Examples of such DSM activities, which are not mutually exclusive, are as follows:
(a) General information and education;
(b) Purchase and installation of borrower owned or consumer owned equipment or materials, including:
(1) Heating, ventilation, air conditioning;
(2) Building envelope;
(3) Appliances;
(4) Load control;
(5) Lighting and lighting control;
(6) Thermal storage; and
(7) Efficient motors and drives;
(c) Rebates for DSM equipment and facilities;
(d) Fuel switching for dual fuel applications where one of the energy sources is electricity; and
(e) Pilot DSM projects.
(a) Any loan application which includes funds for DSM must include all loan support documents required for a loan for electric facilities, and must demonstrate that requirements for need, loan feasibility and loan security are satisfied. In addition, the application must be supported by an RUS approved IRP, except as provided in § 1710.356(a)(1), and an RUS approved DSM plan.
(b) DSM loans will be made to provide financing for DSM activities planned to be implemented within a two year period.
(a)(1) An RUS approved IRP is required for all loans that include funds for DSM activities, unless the cumulative total of all previous DSM loans and the loan under consideration for that applicant is less than 1 percent of the applicant's total utility plant.
(2) An RUS approved IRP is required for all loans that include funds for on-grid renewable energy systems.
(3) An RUS approved IRP is required for all loans that include funds for off-grid renewable energy systems unless the Administrator determines that an IRP is not needed to determine that the loan is both feasible and secure pursuant to §§ 1710.112 and 1710.113, respectively.
(b)(1) When an IRP is required, a distribution borrower that is a member of a power supply borrower must use the IRP prepared by the power supply borrower for its overall system. This IRP must have been coordinated with all of the member systems and it must have been approved by the board of directors of the power supply borrower. Because of the relationship between the power
(2) A distribution system that is not a member of an RUS financed power supply borrower shall prepare its own IRP. An IRP developed by a distribution borrower that is not a member of a power supply borrower need only address its own system, but shall include an analysis of the effects of its DSM activities on its wholesale power costs.
(c) The IRP shall identify supply side and demand side options and analyze their benefits and costs in order to provide adequate and reliable electric service to consumers at the lowest cost for the system as a whole.
(d) The IRP shall include necessary features for system operation, such as diversity, reliability, dispatchability, and other factors of risk; and it shall take into account the ability to verify energy and cost savings achieved through DSM, energy conservation, and renewable energy systems, and the projected durability of such savings measured over time.
(e) The following elements also included in a DSM plan, pursuant to §§ 1710.357 and 1710.358, shall be included except where RUS determines that they are not necessary:
(1) Load shape objectives;
(2) Wholesale power pricing policy and costs, and their relationship to the proposed DSM activities;
(3) Ownership and costs of DSM related hardware;
(4) Incentive and marketing costs;
(5) Communication and control costs; and
(6) Monitoring methods and costs.
(f) The IRP shall analyze the DSM effects set forth in § 1710.359.
(a) A DSM plan approved by the borrower's board of directors is required in support of a loan that includes funds for DSM activities or for off-grid renewable energy systems. The DSM plan shall address the borrower's existing and proposed activities for the same period covered by the Long-Range Financial Forecast submitted in support of the loan application.
(b)(1) A DSM plan prepared by a member of a power supply borrower must be consistent with the IRP prepared by the power supply borrower.
(2) A DSM plan prepared by a distribution borrower that is not a member of an RUS financed power supply borrower must be consistent with the borrower's own IRP.
(c) The level of detail required in the DSM plan is dependent on several factors, for example:
(1) Size and term of loan;
(2) Financial impact of loan on the borrower;
(3) Probability of realization of the estimated impacts;
(4) Magnitude of the estimated effects; and
(5) Potential effects, if any, on other distribution members of a power supply borrower.
(d) RUS will consider effects of proposed and existing DSM plans on government loan security, rates, revenue requirements, competitiveness, other distribution borrowers, power supply borrowers or other industry recognized tests as applicable.
A DSM plan shall include:
(a) A list of the DSM activities to be financed by the loan including details on implementation such as beginning and completion dates and estimated draw downs of loan funds;
(b) An analysis of the borrower's existing and proposed DSM activities, including sources of financing and projections of the effects of those activities as set forth in § 1710.359;
(c) System specific load research and DSM pilot projects as required by § 1710.353(f);
(d) A benefit/cost and net present value cash flow analysis of each DSM
(1) Identification of objectives, alternatives, and effects;
(2) Simulation of impacts on the system and its consumers, and the probable costs and benefits, including sensitivity/probability and scenario analysis; and
(3) Selection of DSM activities;
(e) An outline of monitoring and reporting procedures to evaluate the performance of the implemented DSM plan;
(f) A narrative discussing the following:
(1) Scope of the DSM plan;
(2) Resources used to develop the DSM plan;
(3) Internal and external data collection and analysis;
(4) Analysis method used to screen and evaluate the projected programs;
(5) Analysis of existing and projected plans; and
(6) Coordination activities with power supplier.
The IRP and the DSM plan shall consider and discuss the expected effects of the borrower's DSM activities. The expected effects to be considered and discussed includes, but are not limited to, the following:
(a) Effects on the utility (supply side effects):
(1) Operations;
(2) Maintenance;
(3) Environmental compliance;
(4) Capacity planning, including deferment of capacity and reliability of capacity;
(5) DSM equipment including purchase, operation and maintenance considerations;
(6) Transmission and distribution effects;
(7) Administrative costs, including administrative and general costs, program costs, DSM planning costs, integration of supply and DSM planning, marketing costs, incentive costs, infrastructure support, monitoring and evaluation costs, bidding costs; and
(8) Revenues and rates;
(b) Effects on consumers (demand side effects):
(1) Equipment purchases;
(2) Operation costs;
(3) Maintenance costs;
(4) Supply voltage quality;
(5) Availability of service and reliability (outages);
(6) Change in benefits received from appliances and housing;
(7) Convenience (availability of equipment, appliances and services);
(8) Change in comfort and air quality levels of buildings; and
(9) Rates, billing level and elasticity;
(c) Effects on competitiveness;
(d) Effects on other member distribution systems of the power supply borrower; and
(e) Effects on power supply borrower.
(a) The borrower may have performed analysis and prepared comparable documentation for other purposes, such as for a state regulatory commission. This information may be acceptable to RUS as an IRP or a DSM plan if the borrower demonstrates that the alternative information meets the goals and objectives of this subpart.
(b) The borrower shall advise RUS of all material information provided to other lenders or other governmental authorities relating to their DSM plans. This information shall be provided to RUS as requested.
(a) The final maturity of loans for purposes under this subpart shall be determined by RUS based on the expected life of needed capital improvements, expected cost recovery periods, the expected life of program benefits, the certainty of these benefits, and matching costs and benefits.
(b) RUS will normally consider final maturities for DSM loans of up to 5 years. Longer loan terms, not to exceed 10 years, for loans for these purposes will be considered if the borrower can
The amount and scope of loans approved by RUS under this subpart are subject to the discretion of RUS. Applications will be evaluated on the merits of the proposals as outlined in the plans specified in this subpart. RUS approval of a loan for purposes under this subpart and/or RUS approval of IRPs and DSM plans does not relieve a borrower of its responsibilities under this subpart or constitute a representation or warranty by RUS to the borrower or any person that its IRP or DSM plan will work as described therein.
(a) Loan funds for on-grid renewable energy systems will be advanced using the same procedure as loans for other electric system facilities.
(b)
(2) The borrower shall maintain accounting and plant records sufficient to document the cost and location of DSM activities and to support loan fund advances and disbursements.
(3) All cost associated with DSM projects related to construction, operations or maintenance, shall be accumulated using the borrower's work order procedure. An individual work order or work orders shall be used to record and control the costs of each DSM project. Daily time and material reports referenced to the DSM activity shall be kept to record labor and materials used as the activity(ies) is completed.
(4) All other disbursements for DSM activities must be properly supported by invoices, contracts, or other forms of evidence required by RUS regulations. All such supporting material shall be available at the borrower's premises for review by the RUS Field Accountant, borrower's certified public accountant and other authorized parties as applicable. Costs of DSM activities related to operations and maintenance should be charged to expense in the month incurred. Departures from this prescribed accounting must be approved by RUS subject to the provisions of 7 CFR 1767.13.
(c) Requirements on advance of funds for all insured electric loans are in 7 CFR part 1721, subpart B.
Cumulative loans DSM activities at the time of loan approval for, including energy conservation programs and off-grid renewable energy systems, shall not exceed the lesser of:
(a) Twenty percent of the borrower's equity at the time of the loan or any time during amortization of the loan; or
(b) An amount approved for such purposes in a final non-appealable order by the applicable regulatory body for inclusion in the borrower's rate base.
(a) Loan applicants that do not have outstanding loans from RUS should write to the Rural Utilities Service Administration, United States Department of Agriculture, Washington, DC 20250-1500. A field or headquarters staff representative may be assigned by RUS to visit the applicant and discuss its financial needs and eligibility. Borrowers that have outstanding loans should contact their assigned RUS general field representative (GFR) or, in the case of a power supply borrower,
(b) Before submitting an application for an insured loan the borrower shall ascertain from RUS the amount of supplemental financing required, as set forth in § 1710.110. If the borrower is applying for either a municipal rate loan subject to the interest rate cap or a hardship rate loan, the application must provide a preliminary breakdown of residential consumers either by county or by census tract. Final data must be included with the application. See § 1710.401(a)(8).
(a)
(1)
(i) The need for flood hazard insurance;
(ii) Breakdown of requested loan funds by state;
(iii) A listing of the counties served by the borrower;
(iv) A listing of threatened actions by third parties that could adversely affect the borrower's financial condition, including annexations or other actions affecting service territory, loads, or rates; and
(v) A listing of pending regulatory proceedings pertaining to the borrower.
(2)
(i) The requested loan amount, loan term, final maturity, and method of amortization (§ 1710.110(b));
(ii) The sources and amounts of any supplemental or other financing;
(iii) Authorization for RUS to release appropriate information to supplemental or other lender(s), and authorization for these lenders to release appropriate information to RUS; and
(iv) For an insured loan, a statement of whether the application is for a municipal rate loan, with or without the interest rate cap, or a hardship loan. If the application is for a municipal rate loan, the board resolution must indicate whether the borrower intends to elect the prepayment option. See 7 CFR 1714.4(c).
(3)
(i)
(ii)
(iii)
(iv)
(4)
(5)
(6)
(7)
(i)
(A) A listing of the counties where the borrower's existing electric facilities and new facilities are or will be located;
(B) A listing and description of all real property owned by the borrower; and
(C) An opinion of the borrower's counsel certifying that the property schedule is complete and adequate for inclusion in a security instrument to be executed by the borrower to secure an RUS loan.
(ii)
(8)
(9)
(10)
(11)
(12)
(i)
(ii)
(13)
(i)
(ii)
(A) Report the borrower's delinquent account to a credit bureau;
(B) Assess additional interest and penalty charges for the period of time that payment is not made;
(C) Assess charges to cover additional administrative costs incurred by the Government to service the borrower's account;
(D) Offset amounts owed directly or indirectly to the borrower under other Federal programs;
(E) Refer the borrower's debt to the Internal Revenue Service for offset against any amount owed to the borrower as an income tax refund;
(F) Refer the borrower's account to a private collection agency to collect the amount due; and
(G) Refer the borrower's account to the Department of Justice for collection.
(14)
(i) The borrower's articles of incorporation currently in effect, as filed with the appropriate state office, setting forth the borrower's corporate purpose; and
(ii) The bylaws currently in effect, as adopted by the borrower's board of directors, setting forth the manner by which the borrower's organization will be governed and regulated.
(15)
(16)
(17)
(ii) A power supply borrower shall submit a schedule of its wholesale rates currently in effect. Any changes in this schedule are subject to RUS approval.
(18)
(b)
(c)
(1) Along with the loan application, the borrower shall submit to RUS a Long-Range Financial Forecast (LRFF), that meets the requirements of subpart G of this part. The forecast shall include any sensitivity analysis or analysis of alternative scenarios required by subpart G of this part, and shall be accompanied by a certified board resolution adopting, and indicating the board of directors’ approval of, the LRFF, and directing management to take whatever steps may be necessary, including the filing for rate increases, to achieve the TIER goals set forth in the LRFF.
(2) Prior to RUS's acceptance of the loan application, the borrower shall submit to RUS and receive approval of:
(i) Power Requirements Study (PRS) that meets the requirements of subpart E of this part, and is accompanied by a certified board resolution adopting, and indicating the board of directors’ approval of, the PRS.
(ii) Construction Work Plan (CWP) and/or related engineering and cost studies that meets the requirements of subpart F of this part, and is accompanied by a certified board resolution adopting, and indicating the board of directors’ approval of, the CWP and/or engineering and cost studies.
(iii) Borrower's Environmental Report (BER), or other environmental information as required by 7 CFR part 1794.
(iv) Demand Side Management Plan and/or Integrated Resource Plan, if required by subpart H of this part.
(d)
(2) To facilitate loan review, RUS urges borrowers to ensure that their applications contain all of the information required by this section before submitting the application to RUS. Borrowers may consult with RUS field representatives and headquarters staff as necessary for assistance in preparing loan applications.
(3) RUS may, in its discretion, return an application to the borrower if the application is not materially complete to the satisfaction of RUS within 10 months of receipt of any of the items listed in paragraph (a) or (b) of this section. RUS will generally advise the borrower in writing at least 2 months prior to returning the application as to
(4) If an application is returned, an application for the same loan purposes will be accepted by RUS if satisfactory evidence is provided that all of the information required by this section will be submitted to RUS within a reasonable time. An application for loan purposes included in an application previously returned to the borrower will be treated as an entirely new application.
(e)
(f)
(g)
Additional requirements for insured electric loans are set forth in 7 CFR part 1714.
(a) The borrower is responsible for ensuring that the loan documents required for supplemental financing pursuant to § 1710.110 are executed in a timely fashion. These documents are subject to RUS approval.
(b) Security. Any security offered by the borrower to a supplemental lender is subject to RUS approval.
(a) A loan is approved when the Administrator signs the administrative findings.
(b) If the loan is not approved, RUS will notify the borrower of the reason.
Following approval of a loan, RUS will forward the loan documents to the borrower for execution, delivery, recording, and filing, as directed by RUS.
7 U.S.C. 901-950(b); Pub. L. 99-591, 100 Stat. 3341; Pub. L. 103-354, 108 Stat. 3178 (7 U.S.C. 6941
The definitions set forth in 7 CFR 1710.2 are applicable to this part, unless otherwise stated. References to specific RUS forms and other RUS documents, and to specific sections of such forms and documents, shall include the corresponding forms, documents, sections and lines in any subsequent revisions of these forms and documents.
(a)
(b)
(a)
(b)
(c)
(a) RUS will publish a schedule of interest rates for municipal rate loans in the
(b) The rate for interest rate terms of 20 years or longer will be the average of the 20 year rates published in the Bond Buyer in the 4 weeks specified in paragraph (d) of this section for the “11-Bond GO Index” of Aa rated general obligation municipal bonds, or the successor to this index.
(c) The rate for terms of less than 20 years will be the average of the rates published in the Bond Buyer in the 4 weeks specified in paragraph (d) of this section in the table of “Municipal Market Data—General Obligation Yields” for Aa rated bonds, or the successor to this table, for obligations maturing in the same year as the interest rate term selected by the borrower.
(d) The interest rates on municipal rate loans shall not exceed the interest rate determined under section 307(a)(3)(A) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1927(a)(3)(A)) for Water and Waste Disposal loans. The method used to determine this rate is set forth in the regulations of the Farmers Home Administration (FmHA) at 7 CFR 1942.17(f) (1) and (4). Pursuant to the FmHA rule, the interest rates are set using as guidance the average of the Bond Buyer Index for the four weeks prior to the first Friday of the last month before the beginning of the quarter. Information about the Bond Buyer is available by writing Bond Buyer, One State
(a)
(1) The initial interest rate term will begin on the date of the advance. All rollover interest rate terms will begin on the first day of a month, and except for the last interest rate term to final maturity, shall end on the last day of a month. All terms except for the initial interest rate term on an advance, and the last term to final maturity shall be in yearly increments.
(2) The following limits apply to the number of advances of funds that may be made to the borrower on any municipal rate loan:
(i) If the loan period is 2 years or less, not more than 6 advances;
(ii) If the loan period is more than 2 years, not more than 8 advances.
(3) For the initial interest rate term of an advance, a letter from an authorized official of the borrower indicating the selection of the term shall accompany the request for the advance.
(4) At the end of any interest rate term, the borrower shall pay all accrued interest and principal balance then due, and either prepay the remaining principal of the advance at face value, or roll over the remaining principal for a new term, provided that no interest rate term may end later than the date of the final maturity.
(i) If the borrower elects to prepay all or part of the remaining principal of the advance at face value, it must notify the Director of the appropriate Regional Division or the Power Supply Division in writing not later than 20 days before the rollover maturity date.
(ii) If the borrower wishes to elect a new interest rate term that is different from the term previously selected, it must notify RUS in writing of the new term not later than 20 days before the end of the current term. The election of the new term shall be addressed to the Director, Financial Operations Division, Rural Utilities Service, Washington, DC 20250-1500.
(iii) If the borrower fails to notify RUS within the timeframes set out in this paragraph of its intention to prepay or elect a different interest rate term, RUS will automatically roll over the remaining principal for the shorter of, and at the interest rate applicable to:
(A) A period equal in length to the term that is expiring; or
(B) The remaining period to final maturity.
(b)
Except as provided in paragraph (c) of this section, the municipal interest rate may not exceed 7 percent on a loan advance to a borrower primarily engaged in providing retail electric service if the borrower meets, at the time of loan approval, either the consumer density test set forth in paragraph (a) of this section, or both the rate disparity test for the interest rate cap and the consumer income test set forth in paragraph (b) of this section.
(a)
(b)(1)
(2)
(i) To qualify under the consumer income test, the borrower must include in its loan application information about the location of its residential consumers. The borrower must provide to RUS, based on the most recent data available at the time of loan application, either the number of consumers in each county it serves or the number of consumers in each census tract it serves. Using the most recently published decennial census data on income from the Bureau of the Census, RUS will compare, on a weighted average basis, the average per capita and median household income of the counties or census tracts served by the borrower with state figures.
(ii) In cases where conditions have substantially changed so that the decennial census data no longer accurately describes the economic conditions of the borrower's consumers, the borrower may provide RUS with more current income data from a reliable source such as a State agency. The Administrator has the sole discretion to determine whether such data submitted by the borrower is sufficient to determine whether the borrower qualifies under the consumer income test.
(3)
(c)
Except as provided in paragraph (d) of this section, the Administrator shall make an insured electric loan for eligible purposes at the 5 percent hardship rate to a borrower primarily engaged in providing retail electric service if the borrower meets, at the time of loan approval, both the rate disparity test for hardship and the consumer income test described in paragraph (a) of this section; or the extremely high rates test set forth in paragraph (b) of this section. A loan at the 5 percent hardship rate may also be made to any borrower pursuant to paragraph (c) of this section who, in the sole discretion of the Administrator, has experienced a severe hardship. The Administrator may not require a loan from a supplemental source in connection with a hardship rate loan.
(a)(1)
(2)
(3)
(b)
(c)
(d)
This section sets out provisions for prepayment of insured electric loans at face value. Provisions for discounted prepayment of RUS loans are set out in 7 CFR part 1786.
(a)
(1)
(2)
(b)
The borrower shall request advances of funds as needed. Advances are subject to RUS approval and must be requested in writing on RUS Form 595 or an RUS approved equivalent. Funds will not be advanced until the Administrator has received satisfactory evidence that the borrower has met all applicable conditions precedent to the advance of funds, including evidence that the supplemental financing required under 7 CFR part 1710 and any concurrent loan guaranteed by RUS are available to the borrower under terms and conditions satisfactory to RUS.
(a) For loans approved on or after February 21, 1995, the fund advance period begins on the date of the loan note and is one year longer than the loan period, but not less than 4 years. For example, the fund advance period for a loan with a 2-year loan period terminates automatically 4 years after the date of the loan note; a loan with a 4-year loan period terminates automatically 5 years after the date of the loan note. The Administrator may extend the fund advance period on any loan if the borrower meets the requirements of paragraph (c) of this section. As defined in 7 CFR 1710.2, the loan period begins on the date shown on page 1 of RUS Form 740c submitted with the loan application.
(b) For loans approved on or after June 1, 1984, and before February 21, 1995, the fund advance period begins on the date of the loan contract, or the most recent amendment thereto, and terminates automatically 4 years from the date of the loan contract, or the most recent amendment thereto, except as provided in paragraph (c) of this section.
(c) The Administrator may agree to an extension of the fund advance period for loans approved on or after June 1, 1984, if the borrower demonstrates to the satisfaction of the Administrator that the loan funds continue to be needed for approved loan purposes (i.e., facilities included in an RUS approved construction work plan). Policies for extension of the fund advance period following certain mergers, consolidations, and transfers of systems substantially in their entirety are set forth in 7 CFR 1717.156.
(1) To apply for an extension, the borrower must send to RUS, at least 120 days before the automatic termination date, the following:
(i) A certified copy of a board resolution requesting an extension of the Government's obligation to advance loan funds;
(ii) Evidence that the unadvanced loan funds continue to be needed for approved loan purposes; and
(iii) Notice of the estimated date for completion of construction.
(2) In the case of financial hardship, as determined by the Administrator, RUS may agree to an extension of the fund advance period even though the borrower has failed to meet the 120-day requirement of paragraph (c)(1) of this section.
(3) If the Administrator approves a request for an extension, RUS will notify the borrower in writing of the extension and the terms and conditions thereof. An extension will be effective only if it is obtained in writing prior to the automatic termination date.
(d) Advances of funds from loans approved before June 1, 1984, are generally made during the first 6 years of the note.
(e) RUS will rescind the balance of any loan funds not advanced to a borrower as of the final date approved for advancing funds.
(a) Except as set forth in paragraph (b) of this section, concurrent loan funds will be advanced in the following order:
(1) 50 percent of the RUS insured loan funds;
(2) 100 percent of the supplemental loan funds;
(3) The remaining amount of the RUS insured loan funds.
(b) At the borrower's request and with RUS approval, all or part of the supplemental loan funds may be advanced before funds in paragraph (a)(1) of this section.
(a) For insured loans approved on or after February 21, 1995:
(1) Amortization of funds advanced during the first 2 years after the date of the note shall begin no later than 2 years from the date of the note. Except as set forth in paragraph (a)(2) of this section, amortization of funds advanced 2 years or more after the date of the note shall begin with the scheduled loan payment billed in the month following the month of the advance.
(2) For advances made 2 years or more after the date of the note, the Administrator may authorize deferral of amortization of principal for a period of up to 2 years from the date of the advance if the Administrator determines that failure to authorize such deferral would adversely affect either the Government's financial interest or the achievement of the purposes of the RE Act.
(b) For insured loans approved before February 21, 1995, amortization of principal shall begin 2 years after the date of the note for advances made during the first and second years of the loan, and 4 years after the date of the note for advances made during the third and fourth years.
(a) A borrower may request rescission of a loan with respect to any funds unadvanced by submitting a certified copy of a resolution by the borrower's board of directors.
(b) RUS may rescind loans pursuant to § 1714.56.
(c) Borrowers who prepay RUS loans at a discounted present value pursuant to 7 CFR part 1786, subpart F, are required to rescind the unadvanced balance of all outstanding electric notes pursuant to 7 CFR 1786.158(j).
7 U.S.C. 901
(a) This subpart establishes RUS policies and procedures for mergers of electric borrowers. These policies and procedures are intended to provide borrowers with the flexibility to negotiate and enter into mergers that offer advantages to the borrowers and to rural communities, and adequately protect the integrity and credit quality of RUS loans and loan guarantees.
(b) Consistent with prudent lending practices, the maintenance of adequate security for RUS loans and loan guarantees, and the objectives of the Rural Electrification Act of 1936, as amended, (7 U.S.C. 901
(c) Pursuant to the loan documents and RUS regulations, certain mergers are subject to RUS approval. See § 1717.615.
(d) Since RUS must take action in order to advance funds and otherwise conduct business with a successor, RUS encourages borrowers to consult RUS early in the process regardless of whether RUS approval of the merger is required. RUS will provide technical assistance and guidance to borrowers to help expedite the processing of their requests and to help resolve potential problems early in the process.
The definitions set forth in 7 CFR 1710.2 are applicable to this subpart unless otherwise stated. In addition, for the purpose of this subpart, the following terms shall have the following meanings:
(1) Sells or intends to sell electric power and energy at retail;
(2) At one time had an outstanding loan made or guaranteed by RUS, or its predecessor the Rural Electrification Administration (REA) for rural electrification; and
(3) Either repaid such loans at face value or prepaid pursuant to 7 CFR part 1786.
(2) A merger where one company is absorbed by another, the former ceasing to exist as a separate business entity, and the latter retaining its own identity and acquiring the assets, liabilities, franchises and powers of the former; or
(3) A transfer of mortgaged property by one company to another where the transferee acquires substantially as an entirety the assets, liabilities, franchises, and powers of the transferor.
In order for RUS to advance funds, send bills, and otherwise conduct business with a successor, the documents listed in this section must be submitted to RUS regardless of the need for RUS approval of the merger. Borrowers are responsible for ensuring that these documents are received by RUS in timely fashion. In cases of mergers that require RUS approval, or cases where borrowers must submit requests for transitional assistance, the documents listed in this section may be combined with the documents required by §§ 1717.157 and/or 1717.160 where appropriate.
(a) Prior to the effective date, borrowers must submit:
(1) A transmittal letter on corporate letterhead signed by the manager of each active borrower that is a party to the proposed merger indicating the borrower's intention to merge and tentative timeframes, including the proposed effective date;
(2) An original certified board resolution from each party to the proposed merger affirming the board's support of the merger;
(3) All documents necessary to evidence the merger pursuant to applicable law. Examples include plan of merger, articles of merger, amended articles of incorporation, bylaws, and notices and filings required by law. These documents may be copies of documents filed elsewhere, unless otherwise specified by RUS; and
(4) A letter addressed to the Administrator from the counsel of at least one of the active borrowers briefly describing the merger and indicating the relevant statutes under which the merger will be consummated.
(b) On or after the effective date, borrowers must submit:
(1) An opinion of counsel from the successor addressing, among other things, any pending litigation, proper authorization and consummation of the merger, proper filing and perfection of RUS’ security interest, and all
(2) A letter signed by the manager of the successor advising RUS of the effective date of the merger; the corporate name, address, and phone number; the names of the officers of the successor; and the taxpayer identification number; and
(3) Evidence of proper filing and perfection of RUS’ security interest, as instructed by RUS, and an executed loan contract.
RUS recognizes that short-term financial stresses can follow even the most beneficial mergers. To help stabilize electric rates, enhance the credit quality of outstanding loans made or guaranteed by the Government, and otherwise ease the transition period before the long-term efficiencies and economies of a merger can be realized, RUS may approve one or more types of transitional assistance to a successor under the conditions set forth in this part.
Requests for transitional assistance in connection with new loans may be submitted to RUS no later than the loan application.
(a)
(2) Loan processing priority is available following any merger where at least one of the merging parties is an active borrower.
(b)
(2) Waiver of supplemental financing may be available if:
(i) All parties to the merger are active distribution borrowers,
(ii) At least one of the merging parties is an active distribution borrower, all merging parties are either active distribution borrowers or former distribution borrowers,
(c)
(2) A longer reimbursement period may be available if:
(i) All parties to the merger are active distribution borrowers,
(ii) At least one of the merging parties is an active distribution borrower, all merging parties are either active distribution borrowers of former distribution borrowers,
Requests for transitional assistance affecting new and preexisting loans must be received by RUS no later than 2 years after the effective date.
(a)
(2) Section 12 deferment may be available following any merger where at least one of the merging parties is an active borrower.
(b)
(1) A phase-in plan for coverage ratios must provide a pro forma level for each ratio during each year of the phase-in period and be supported by a financial forecast covering a period of not less than 10 years from the effective date of the merger. The plan must demonstrate that a minimum TIER level of 1.00 will be achieved in each year, that trends will be generally favorable, that the borrower will achieve the levels required in its loan documents and RUS regulations by the end of the phase-in period, and that these levels will be maintained in subsequent years.
(2) In reviewing phase-in plans for coverage ratios, RUS will review rates, rate disparity, and likely mitigating effects of the proposed phase-in plan.
(3) The borrower is responsible for obtaining approvals of supplemental lenders.
(4) Upon RUS approval of a phase-in plan, the levels in that plan will be substituted for the levels required in the borrower's preexisting loan documents and will be incorporated in any new loan or security documents.
(5) A phase in plan for coverage ratios may be available if:
(i) All parties to the merger are active distribution borrowers,
(ii) At least one of the merging parties is an active distribution borrower, all merging parties are either active distribution borrowers or former distribution borrowers, and the merger is effective after December 19, 1996.
The fund advance period for an insured loan, which is the period during which RUS may advance loan funds to a borrower, terminates automatically after a specific period of time. See 7 CFR 1714.56. If, on the effective date the original fund advance period or the fund advance period as extended pursuant to 7 CFR 1714.56(c), on any preexisting RUS loan to any of the active borrowers involved in a merger has not terminated, such fund advance period shall be automatically lengthened by 2 years. On the borrower's request RUS will prepare documents necessary for the advance of loan funds. RUS will prepare documents for the borrower's
(a) If the merger requires RUS approval, the borrower should, where possible, indicate that it desires transitional assistance at the time it requests approval of the merger. The formal request for transitional assistance must be received by RUS as specified in §§ 1717.155 and 171.156. Documents listed in this section may be combined with the documents required by §§ 1717.152 and/or 1717.160 where appropriate. If the request for transitional assistance is submitted at the same time as a loan application, documents listed in this section may be combined with the loan application documents where appropriate. See 7 CFR part 1710, subpart I. A request for transitional assistance must include:
(1) Transmittal letter(s) formally listing the types of transitional assistance requested. If the request is submitted before the effective date, a transmittal letter must be signed by the manager of each party to the transaction. If the request is submitted on or after the effective date, a transmittal letter must be signed by the manager of the successor. Transmittal letter(s) must be signed originals on corporate letterhead stationery;
(2) Board resolution(s). If the request is submitted before the effective date, a separate board resolution must be submitted from each entity involved in the merger. If the request is submitted on or after the effective date, a board resolution from the successor must be submitted. Each board resolution must be a certified original;
(3) A merger plan, financial forecasts, and any available studies such as net present value analyses showing the anticipated costs and benefits of the merger and likely timeframes for the merger. The merger plan must clearly identify those benefits that cannot be achieved without a merger, and those benefits that can be achieved through other means;
(4) If the transitional assistance requires RUS approval, the type and extent of the mitigation that the transitional assistance is expected to provide; and
(5) Other information that may be relevant.
(b) Borrowers are responsible for ensuring that requests for transitional assistance are complete and sound in form and substance when they are submitted to RUS. After submitting a request, borrowers shall promptly notify RUS of any changes or events that materially affect the request or any information in the request.
(c) In considering whether to approve requests for transitional assistance, RUS will evaluate the costs and benefits of the merger; the type and extent of the likely transitional stress; whether the transitional assistance requested is likely to materially mitigate such stress; and the likely impacts on electric rates and on the security of RUS loans. Review factors applicable to each type of transitional assistance are set forth in §§ 1717.154-1717.156.
In some cases, an active distribution borrower may merge with a borrower that has prepaid RUS debt at a discount pursuant to 7 CFR part 1786, and whose eligibility for future RUS financing is thereby restricted. During the period when the restrictions on future financing are in effect, the successor will be eligible for RUS loans to finance facilities to serve consumers located in the territory that was served by the active distribution borrower immediately prior to the effective date, provided that other requirements for loan eligibility are met.
If a proposed merger requires RUS approval according to RUS regulations and/or the loan documents executed by any of the active borrowers involved, the application must be submitted to RUS not later than 90 days prior to the effective date of the proposed borrower action. A distribution borrower should consult with its assigned RUS general field representative, and a power supply borrower with the Director, Power
An application for RUS approval of a merger must include the documents listed in this section. Documents listed in this section may be combined with the documents required by §§ 1717.152 and/or 1717.157 where appropriate.
(a)
(b)
(c)
(d)
(e)
(f)
(a) Borrowers are responsible for ensuring that their applications for RUS approval of a merger are complete and sound in form and substance when they are submitted to RUS. After submitting an application, borrowers shall promptly notify RUS of any changes or events that materially affect the application or any information in the application.
(b) In reviewing borrower requests for approval of mergers, RUS will consider the likely effects of the action on the ability of the successor to provide reliable electric service at reasonable cost to RE Act beneficiaries and on the security of outstanding RUS loans. Among the factors RUS will consider are whether the proposed merger is likely to:
(1) Contribute to greater operating efficiency and financial soundness;
(2) Mitigate high electric rates and or rate disparity;
(3) Help borrowers to diversify their loads or otherwise hedge risks;
(4) Have beneficial effects on rural economic development in the community served by the borrower, such as diversifying the economic base or alleviating unemployment; and
(5) Provide other benefits consistent with the purposes of the RE Act.
(c) RUS will not approve a merger if, in the sole judgment of the Administrator, such action is likely to have an adverse effect on the credit quality of outstanding loans made or guaranteed by the Government. RUS will thoroughly review each request for approval of such action, including review of the feasibility and security of outstanding Government loans according
(d) RUS will keep the borrowers apprised of the progress of their applications.
This subpart contains regulations of the Rural Utilities Service (RUS) implementing provisions of Section 4 of the RE Act (7 U.S.C. 904) which authorize the Administrator to establish terms and conditions of loans and implementing provisions of the RUS wholesale power contracts and other RUS documents which provide for the establishment of rates to be charged by power supply borrowers for the sale of electric power and energy. This subpart contains the general regulations of RUS for the pre-emption, under certain circumstances, which are not exclusive, of the regulation of a power supply borrower's rates by a state regulatory authority under state law and for the exercise of exclusive jurisdiction over rates by RUS pursuant to the RUS documents.
(a) RUS makes and guarantees loans to borrowers to bring electric service to persons in rural areas. RUS requires, as a condition to making or guaranteeing any loans to power supply borrowers, that the borrower enter into RUS wholesale power contracts with its several members and assign and pledge such contracts as security for the repayment of loans made or guaranteed by RUS and for other loans which, pursuant to the RE Act, RUS has permitted to be secured pursuant to the RUS mortgage. The RUS wholesale power contract requires, among other matters, that the rates charged for power and energy sold thereunder produce revenues sufficient to enable the power supply borrower to make payments on account of all indebtedness of the power supply borrower. The Administrator relies upon the RUS wholesale power contracts together with other RUS documents to find and certify, as required in section 4 of the RE Act (7 U.S.C. 904), that the security for the loan is reasonably adequate and the loan will be repaid within the time agreed.
(b) RUS requires power supply borrowers to take such actions as may be necessary to charge rates for the sale of electric power and energy which are sufficient to pay the principal and interest on loans made or guaranteed by RUS in a timely manner and to meet the requirements of the RUS wholesale power contract and other RUS documents.
(c) With respect to power supply borrowers which are not subject to rate regulation by a state regulatory authority, RUS requires that such borrowers establish rates and obtain RUS approval of such rates as required by the terms of the RUS wholesale power contract and other RUS documents.
(d) With respect to power supply borrowers which are subject to regulation by a state regulatory authority, RUS does not make or guarantee a loan for the construction, operation or enlargement of any generating plant or transmission facility unless the consent of the state regulatory authority having jurisdiction in the premises is first obtained.
(e) Pursuant to applicable provisions of state law state regulatory authorities regulate many aspects of a power supply borrowers business activities, including such matters as the setting of wholesale electric rates, the borrowing of money, and the mortgaging of property. A state regulatory authority's jurisdiction over the rates charged by a power supply borrower shall be pre-empted where the Administrator has determined that such jurisdiction has compromised Federal interests, including without limitation, the ability of the borrower to repay its secured loans in accordance with the terms of the RUS documents. Thereupon, RUS shall, pursuant to the RUS documents, exercise exclusive jurisdiction over the rates charged by a power supply borrower.
(a)
(b)
(a) Pursuant to the terms of the RUS documents each power supply borrower shall establish and adjust rates for the sale of electric power and energy in such a manner as to assure that the borrower will be able to make required payments on secured loans.
(b) Pursuant to the terms of the RUS wholesale power contract, the Board of Directors or Board of Trustees of the power supply borrower shall review rates not less frequently than once each calendar year and revise its rates as therein set forth.
(c) Pursuant to the terms of the RUS mortgage, each power supply borrower must design its rates as therein set forth and must give 90 days prior notice to RUS of any proposed change in its general rate structure.
(a) In the event that rate revisions required by the terms of the RUS wholesale power contract or other RUS documents may be subject to the approval of a state regulatory authority, the power supply borrower shall seek such required approval in a timely manner.
(b) RUS recognizes the need of state regulatory authorities for documents, information and records for use in connection with an application for rate approval and will consider any reasonable request by a borrower or a state regulatory authority for such documents, information and records. The failure of RUS to provide requested documents, information or records shall not limit any rights of RUS including the right with respect to pre-emption of the state regulatory authority as provided in this subpart.
(c) In the event that the state regulatory authority shall fail to act favorably upon the borrower's application for rate increases required by terms of the RUS wholesale power contract or other RUS documents, the borrower shall pursue such legal and administrative appeals as may be available to it, unless RUS shall approve otherwise in writing.
(a)
(b)
(1) Notify the borrower and the state regulatory authority in writing of the determination, indicating the jurisdiction of the state regulatory authority over the rates of the borrower has been pre-empted pursuant to this part and the borrower shall henceforth establish its rates in accordance with the term of the RUS documents.
(2) publish a notice in the
(a) Upon the publication in the
(b) So long as the state regulatory authority shall be pre-empted hereunder, RUS shall be considered the
(c) If a borrower, which is subject to exclusive RUS rate jurisdiction, shall fail to establish rates in accordance with terms of the RUS wholesale power contract and other RUS documents in a timely fashion, RUS may proceed to exercise any and all rights and remedies available pursuant under the RUS documents or otherwise.
(d) The jurisdiction of the state regulatory authority over the rates of the borrower shall continue to be pre-empted hereunder until the Administrator shall in writing approve the resumption of jurisdiction by the state regulatory authority and publish in the
A state regulatory authority which has been pre-empted as provided in this subpart may continue to exercise jurisdiction, pursuant to applicable provisions of state law, over all other business affairs of the power supply borrower and over the rates of its distribution members: Provided, however, that the state regulatory authority shall treat any RUS approved rate for the power supply borrower as fair and reasonable and shall not in any manner, directly or indirectly, prevent or impede the distribution member from recovering the costs of paying the RUS approved rates to the power supply borrower.
Borrowers may request and RUS may approve rates which do not conform with the requirements of the RUS wholesale power contract and other RUS documents if RUS determines, in its sole discretion, that such approval is in the interests of RUS. If RUS approval is granted prior to pre-emption hereunder, and if the state regulatory authority shall have approved such rates, then, so long as RUS's approval of the nonconforming rates remains in effect, the jurisdiction of the state regulatory authority over the rates of the borrower shall not be pre-empted hereunder.
This subpart addresses pre-emption of state law and state regulatory authority in only those specific circumstances herein described. Nothing in this subpart waives, limits, or otherwise affects the explicit pre-emption or pre-emption, which is implicit and shall occur pursuant to the RE Act as a matter of law, of state law or action of a state regulatory authority where such state law or such action compromises Federal interests, including the ability of any borrower, including power supply borrowers, to repay loans made or guaranteed by RUS.
This subpart contains regulations of the Rural Utilities Service (RUS) implementing provisions of section 4 of the RE Act (7 U.S.C. 904) which authorizes the Administrator to establish terms and conditions of loans, and provisions of the RUS documents which provide for the establishment of rates for electric service to be charged by RUS electric borrowers. This subpart contains the general regulations of RUS for the pre-emption of the regulation by a State Regulatory Authority under State law of an RUS borrower's rates and for the exercise by RUS, pursuant to the RUS documents, of exclusive jurisdiction over rates of a borrower by or against whom a case under the Bankruptcy Code of 1978, as amended, has commenced.
(a) RUS makes and guarantees loans to borrowers to bring electric service to persons in rural areas. To accomplish this objective, RUS normally requires, as a condition to making or guaranteeing any loans to an electric borrower, that the borrower execute and deliver the RUS documents in the form prescribed by RUS. The RUS mortgage secures repayment of the loans made or guaranteed by RUS and other loans which, pursuant to the RE Act, RUS has permitted to be secured pursuant to the RUS mortgage. The Administrator relies upon the RUS mortgage together with other RUS documents to find and certify, as required by section 4 of the RE Act (7 U.S.C. 904), that the security for the loan is reasonably adequate and the loan will be repaid within the time agreed.
(b) RUS requires borrowers to take such actions as may be necessary to establish rates for electric service which are sufficient to pay the principal of and interest on the loans made or guaranteed by RUS in a timely manner and to meet the requirements of the RUS documents.
(c) With respect to borrowers whose rates are not regulated by a State Regulatory Authority, RUS requires that such borrowers establish rates and to obtain RUS approval of such rates as required by the RUS documents.
(d) To protect Federal interests, including without limitation the ability of the borrower to repay RUS loans, RUS's policy is to exercise, pursuant to the RUS documents, exclusive jurisdiction over the rates for electric service charged by a borrower by or against whom a case under the Bankruptcy Code of 1978, as amended, has commenced.
(a)
(b)
Each borrower shall establish and adjust rates for electric service as set forth in the RUS documents to assure that the borrower will be able to make required payments on secured loans and to otherwise meet the terms of the RUS documents.
State Regulatory Authority jurisdiction over an RUS borrower's rates shall be pre-empted by the RE Act and RUS shall have exclusive jurisdiction over the borrower's rates:
(a) On October 19, 1990, with respect to any borrower by or against whom a case under the Bankruptcy Code of 1978, as amended, was commenced prior to and remains outstanding on October 19, 1990; and
(b) With respect to all other borrowers, upon the filing of a petition by or against the borrower commencing a case under the Bankruptcy Code of 1978, as amended.
(a) Upon the pre-emption of State Regulatory Authority as provided in this subpart, RUS will exercise exclusive jurisdiction over the rates of the borrower pursuant to the terms of the RUS documents.
(b) So long as the State Regulatory Authority shall be pre-empted hereunder, RUS shall be considered the governmental regulatory body with jurisdiction over rates for all purposes, including for the purposes of the RUS documents and for the purposes of section 1129(a)(6) of the Bankruptcy Code of 1978, as amended (11 U.S.C. 1129(a)(6)).
(c) RUS shall, pursuant to the terms of the RUS documents, exercise exclusive jurisdiction over the rates of the borrower until the Administrator shall in writing approve the resumption of jurisdiction by the State Regulatory Authority. The Administrator shall approve resumption only after determining that such jurisdiction shall be exercised in a manner consistent with Federal interests.
This subpart addresses pre-emption of State law and State Regulatory Authority upon the filing of a petition by or against the borrower commencing a case under the Bankruptcy Code of 1978, as amended. Nothing in this subpart waives, limits, or otherwise affects the explicit pre-emption or pre-emption, which is implicit and shall occur pursuant to the RE Act as a matter of law, of State law or action of a State Regulatory Authority where such State law or such action compromises Federal interests, including the ability of any borrower to repay loans made or guaranteed by RUS.
(a)
(b)
(c)
(a) The approvals and exceptions to controls conveyed by this subpart apply only to controls and approval rights normally included in RUS loan documents dated prior to January 29, 1996. They do not apply to special controls and approval requirements included in loan documents or other agreements executed between a borrower and RUS that relate to individual problems or circumstances specific to an individual borrower.
(b) The approvals and exceptions to controls granted by RUS in this subpart shall not in any way affect the rights of other co-mortgagees under the mortgage or their loan contracts.
Terms used in this subpart that are not defined in this section have the meanings set forth in 7 CFR part 1710. In addition, for the purposes of this subpart:
(a)
(1) Construction, procurement, or leasing of generating facilities if the combined capacity of the facilities to be built, procured, or leased, including any future facilities included in the planned project, will exceed the lesser of 5 megawatts or 30 percent of the borrower's equity;
(2) Acquisition or leasing of existing electric facilities or systems in service whose purchase price, or capitalized value in the case of a lease, exceeds 10 percent of the borrower's net utility plant; and
(3) Construction, procurement, or leasing of electric facilities to serve a customer whose annual kWh purchases or maximum annual kW demand in the foreseeable future is projected to exceed 25 percent of the borrower's total kWh sales or maximum kW demand in the year immediately preceding the acquisition or start of construction.
(b)
(c)
(a) All borrowers are required to maintain up-to-date long-range engineering plans and construction work
(b) Applications for financing from RUS must be supported by a long-range engineering plan and CWP approved by RUS.
(c) RUS approval is not required for long-range engineering plans and CWPs if the borrower does not intend to seek RUS financing for any of the facilities, equipment or other purposes included in those plans. However, if requested by RUS, a borrower must provide an informational copy of such plans to RUS.
All borrowers, regardless of the source of funding, are required to comply with applicable RUS requirements with respect to system design, construction standards, and the use of RUS accepted materials. Borrowers must comply with applicable RUS requirements with respect to plans and specifications only if the construction or procurement will be financed by RUS. These requirements are set forth in other RUS regulations, especially in 7 CFR parts 1724 and 1728.
All borrowers are encouraged to use the standard forms of contracts promulgated by RUS for construction, materials, equipment, engineering services, and architectural services, regardless of the source of funding for such construction and services. Borrowers are required to use these standard forms of contracts only if the construction, procurement or services are financed by RUS, and only to the extent required by RUS regulations. RUS requirements with respect to such standard forms of contract are set forth in 7 CFR part 1724 for architectural and engineering services, and in 7 CFR part 1726 for construction, materials, and equipment.
Borrowers must follow RUS requirements regarding bidding for contracts for construction, materials, and equipment only if financing of the construction or procurement will be provided by RUS. These requirements are set forth in 7 CFR part 1726.
(a)
(b)
(c)
(2) Any amendment to a schedule or exhibit contained in any power supply arrangement subject to RUS approval, which merely has the effect of either altering a list of interconnection or delivery points or changing the value of a variable term (but not the formula itself) contained in a formulary rate or charge is deemed approved.
(3) The provisions of this paragraph (c) apply regardless of whether the borrower is a seller or purchaser of the services furnished by the contracts or arrangements, and regardless of whether or not a Federal power marketing agency is a party to any of them.
(d)
(e)
(a) If a borrower's mortgage or loan contract grants RUS the unconditioned right to approve the employment and/or the employment contract of the general manager of the borrower's system, such approval is hereby granted provided that the borrower is in compliance with all provisions of its loan documents and any other agreements with RUS.
(b) If a borrower is in default with respect to any provision of its loan documents or any other agreement with RUS:
(1) Such borrower, if directed in writing by RUS, shall replace its general manager within 30 days after the date of such written notice; and
(2) Such borrower shall not hire a general manager without prior written approval by RUS.
If a borrower's mortgage or loan contract requires the borrower to obtain approval from RUS for compensation provided to members of the borrower's board of directors, such requirement is hereby waived.
(a) If a borrower's mortgage or loan contract requires the borrower to obtain approval from RUS before incurring expenses for legal, accounting, supervisory (other than for the management and operation of the borrower's electric system, see § 1717.608(d)), or other similar services, such approval is hereby granted. However, while expenditures for accounting do not require RUS approval, the selection of a certified public accountant by the borrower to prepare audited reports required by RUS remains subject to RUS approval.
(b) If a borrower's mortgage or loan contract requires the borrower to obtain approval from RUS before incurring expenses for engineering services, such approval is hereby granted if such services will not be financed by RUS. Approval requirements with respect to engineering services financed by RUS are set forth in other RUS regulations.
If a borrower's mortgage or loan contract gives RUS the authority to approve the bank or other depositories used by the borrower, such approval is hereby granted. However, without the prior written approval of RUS, a borrower shall not deposit funds from loans made or guaranteed by RUS in any bank or other depository that is not insured by the Federal Deposit Insurance Corporation or other Federal agency acceptable to RUS, or in any account not so insured.
If a borrower's mortgage or loan contract requires the borrower to obtain approval from RUS before purchasing data processing equipment or system control equipment, such approval is hereby granted if the equipment will not be financed by RUS.
If a distribution borrower is required by its loan documents to notify RUS in writing of proposed changes in electric rates more than 30 days prior to the effective date of such rates, the required notification period shall be 30 days. Moreover, such notification shall be required only upon the request of RUS.
A distribution or power supply borrower may without the prior approval
(a) Such consolidation, merger, conveyance or transfer shall be on such terms as shall fully preserve the lien and security of the RUS mortgage and the rights and powers of the mortgagees;
(b) The entity formed by such consolidation or with which the borrower is merged or the corporation which acquires by conveyance or transfer the mortgaged property substantially as an entirety shall execute and deliver to the mortgagees a mortgage supplemental in recordable form and containing an assumption by such successor entity of the due and punctual payment of the principal of and interest on all of the outstanding notes and the performance and observance of every covenant and condition of the mortgage;
(c) Immediately after giving effect to such transaction, no default under the mortgage shall have occurred and be continuing;
(d) The borrower shall have delivered to the mortgagees a certificate of its general manager or other officer, in form and substance satisfactory to each of the mortgagees, which shall state that such consolidation, merger, conveyance or transfer and such supplemental mortgage comply with this section and that all conditions precedent herein provided for relating to such transaction have been complied with;
(e) The borrower shall have delivered to the mortgagees an opinion of counsel in form and substance satisfactory to each of the mortgagees; and
(f) The entity formed by such consolidation or with which the borrower is merged or the corporation which acquires by conveyance or transfer the mortgaged property substantially as an entirety shall be an entity having:
(1) Equity equal to at least 27% of its total assets on a pro forma basis after giving effect to such transaction;
(2) A pro forma TIER of not less than 1.25 and a pro forma DSC of not less than for each of the two preceding calendar years; and
(3) Net utility plant equal to or greater than 1.0 times its total long-term debt on a pro forma basis.
A distribution borrower may without the prior approval of RUS sell, lease, or transfer any capital asset if the following conditions are met:
(a) The borrower is not in default;
(b) In the most recent year for which data are available, the borrower achieved a TIER of at least 1.25, DSC of at least 1.25, OTIER of at least 1.1, and ODSC of at least 1.1 in each case based on the average or the best 2 out of the 3 most recent years;
(c) The sale, lease, or transfer of assets will not reduce the borrower's existing or future requirements for energy or capacity being furnished to the borrower under any wholesale power contract which has been pledged as security to the government;
(d) Fair market value is obtained for the assets;
(e) The aggregate value of assets sold, leased, or transferred in any 12-month period is less than 10 percent of the borrower's net utility plant prior to the transaction;
(f) The proceeds of such sale, lease, or transfer, less ordinary and reasonable expenses incident to such transaction, are immediately:
(1) Applied as a prepayment of all notes secured under the mortgage equally and ratably;
(2) In the case of dispositions of equipment, materials or scrap, applied to the purchase of other property useful in the borrower's utility business; or
(3) Applied to the acquisition of construction of utility plant.
If a distribution or power supply borrower is required by its loan documents to obtain prior approval from RUS before declaring or paying any dividends,
(a) After giving effect to the distribution, the borrower's equity will be greater than or equal to 30 percent of its total assets;
(b) The borrower is current on all payments due on all notes secured under the mortgage;
(c) The borrower is not otherwise in default under its loan documents; and
(d) After giving effect to the distribution, the borrower's current and accrued assets will be not less than its current and accrued liabilities.
7 U.S.C. 901-950b; Pub.L. 103-354, 108 Stat. 3178 (7 U.S.C. 6941
This subpart sets forth general regulations for implementing and interpreting provisions of the RUS mortgage and loan contract regarding investments, loans, and guarantees made by electric borrowers, as well as the provisions of the Rural Electrification Act of 1936, as amended, including section 312 (7 U.S.C. 901
(a)
(b)
As used in this subpart:
Subsidiary means a company which is controlled by the borrower through ownership of voting stock, and is further defined in 7 CFR 1767.10.
Any borrower not in compliance with all provisions of its mortgage, loan contract, or any other agreements with RUS must, unless the borrower's mortgage, loan contract, or other agreement with RUS specifically provides otherwise with respect to such a borrower:
(a) Obtain prior written approval from the Administrator to invest its own funds or to make loans or guarantees regardless of the aggregate amount of such investments, loans, or guarantees; and
(b) If requested by the Administrator, restructure or reduce the amount of its investments, loans, and guarantees to a level determined by the Administrator, in his or her sole discretion, to be in the financial interest of the government with respect to loan security and/or repayment. If the borrower does not so restructure or reduce its portfolio within a reasonable period of time determined by the Administrator, which shall not exceed 12 months from the date the borrower was notified of the required action, then, upon written notice from RUS, the borrower shall be in default of its RUS loan contract and mortgage.
(a) A borrower in compliance with all provisions of its RUS mortgage, RUS loan contract, and any other agreements with RUS may, without prior written approval of the Administrator, invest its own funds or make loans or guarantees not in excess of 15 percent of its total utility plant without regard to any provision contained in any RUS mortgage or RUS loan contract to the effect that the borrower must obtain prior approval from RUS, provided, however, that the borrower may not, without the prior written approval of the Administrator, make such investments, loans, and guarantees to extend, add to, or modify its electric system. Moreover, funds necessary to
(b) RUS will not consider requests from borrowers to exclude investments, loans, or guarantees made below the 15 percent level. (Categorical exclusions are set forth in § 1717.655.)
(a) In calculating the amount of investments, loans and guarantees permitted under this subpart, there is excluded from the computation any investment, loan or guarantee of the type which by the terms of the borrower's RUS mortgage or RUS loan contract the borrower may make in unlimited amounts without RUS approval.
(b) Furthermore, the borrower may make unlimited investments, without prior approval of the Administrator, in:
(1) Securities or deposits issued, guaranteed or fully insured as to payment by the United States Government or any agency thereof;
(2) Capital term certificates, bank stock, or other similar securities of the supplemental lender which have been purchased as a condition of membership in the supplemental lender, or as a condition of receiving financial assistance from such lender, as well as any other investment made in, or loans made to, the National Rural Utilities Cooperative Finance Corporation, the Saint Paul Bank for Cooperatives, and CoBank, ACB;
(3) Patronage capital allocated from an electric power supply cooperative of which the borrower is a member; and
(4) Patronage capital allocated from an electric distribution cooperative to a power supply borrower.
(c) Without prior approval of the Administrator, the borrower may also:
(1) Invest or lend funds derived directly from:
(i) Grants which the borrower in not obligated to repay, regardless of the source or purpose of the grant; and
(ii) Loans received from or guaranteed by any Federal, State or local government program designed to promote rural economic development, provided that the borrower uses the loan proceeds for such purpose;
(2) Make loans guaranteed by an agency of USDA, up to the amount of principal whose repayment, with interest, is fully guaranteed; and
(3)(i) Make unlimited investments in and unlimited loans to finance the following community infrastructure that serves primarily consumers located in rural areas as defined in 7 CFR 1710.2, and guarantee debt issued for the construction or acquisition of such infrastructure, up to an aggregate amount of such guarantees not to exceed 20 percent of the borrower's equity:
(A) Water and waste disposal systems;
(B) Solid waste disposal systems;
(C) Telecommunication and other electronic communication systems; and
(D) Natural gas distribution systems.
(ii) In each of the four cases in paragraph (c)(3)(i) of this section, if the system is a component of a larger organization other than the borrower itself (e.g., if it is a component of a subsidiary of the borrower or a corporation independent of the borrower), to be eligible for the exemption the borrower must certify annually that a majority of the gross revenues of the larger organization during the most recent fiscal year came from customers of said system who were located in a rural area.
(d) Also excluded from the calculation of investments, loans and guarantees made by the borrower are:
(1) Amounts properly recordable in Account 142 Customer Accounts Receivable, and Account 143 Other Accounts Receivable;
(2) Any investment, loan, or guarantee that the borrower is required to make by an agency of USDA, for example, as a condition of obtaining financial assistance for itself or any other person or organization;
(3) Investments included in an irrevocable trust for the purpose of funding post-retirement benefits of the borrower's employees;
(4) Reserves required by a reserve bond agreement or other agreement legally binding on the borrower, that are dedicated to making required payments on debt secured under the RUS
(5) Investments included in an irrevocable trust approved by RUS and dedicated to the payment of decommissioning costs of nuclear facilities of the borrower.
(e) Grandfathered exclusions. All amounts of individual investments, loans, and guarantees excluded by RUS as of February 16, 1995 shall remain excluded. Such exclusions must have been based on the RUS mortgage, RUS loan contract, regulations, bulletins, memoranda, or other written notice from RUS. Profits, interest, and other returns earned (regardless of whether or not they are reinvested) on such investments, loans and guarantees after February 16, 1995 shall be excluded only if they are eligible for exclusion under paragraphs (a) through (d) of this section. Any new commitments of money to such investments, loans and guarantees shall likewise be excluded only if they are eligible under paragraphs (a) through (d) of this section.
(f) Any investment, loan or guarantee made by a borrower that is not excluded under this section or under § 1717.657(d) shall be included in the aggregate amount of investments, loans and guarantees made by the borrower, regardless of whether RUS has specifically approved the investment, loan or guarantee under § 1717.657(c), or has approved a related transaction (e.g., a lien accommodation).
(a) Any distribution or power supply borrower that meets all of the following criteria is exempted from the provisions of the RUS mortgage and loan contract that require RUS approval of investments, loans, and guarantees, except investments, loans, and guarantees made to extend, add to, or modify the borrower's electric system:
(1) The borrower is in compliance with all provisions of its RUS mortgage, RUS loan contract, and any other agreements with RUS;
(2) The average revenue per kWh for residential service received by the borrower during the two most recent calendar years does not exceed 130 percent of the average revenue per kWh for residential service during the same period for all residential consumers located in the state or states served by the borrower. This criterion applies only to distribution borrowers and does not apply to power supply borrowers. If a borrower serves customers in more than one state, the state average revenue per kWh will be based on a weighted average using the kWh sales by the borrower in each state as the weight. The calculation will be based on the two most recent calendar years for which both borrower and state-wide data are available. If a borrower fails to qualify for an exemption based solely on its failure to meet this criterion on rate disparity, at the borrower's request the Administrator may, at his or her sole discretion, exempt the borrower if he or she finds that the borrower's strengths with respect to the other criteria are sufficient to offset any weakness due to rate disparity;
(3) In the most recent calendar year for which data are available, the borrower achieved an operating TIER of at least 1.0 and an operating DSC of at least 1.0, in each case based on the average of the two highest ratios achieved in the three most recent calendar years;
(4) The borrower's ratio of net utility plant to long-term debt is at least 1.1, based on year-end data for the most recent calendar year for which data are available; and
(5) The borrower's equity is equal to at least 27 percent of its total assets, based on year-end data for the most recent calendar year for which data are available.
(b) While borrowers meeting the criteria in paragraph (a) of this section are exempt from RUS approval of investments, loans and guarantees, they are nevertheless subject to the record-keeping, reporting, and other requirements of § 1717.658.
(c) Any borrower exempt under paragraph (a) of this section that ceases to meet the criteria for exemption shall, upon written notice from RUS, no longer be exempt and shall be subject to the provisions of this subpart applicable to non-exempt borrowers. A borrower may regain its exemption if it subsequently meets the criteria in
(d)(1) A borrower that loses its exemption and is not in compliance with all provisions of its mortgage, loan contract, or any other agreement with RUS may be required to restructure or reduce its portfolio of investments, loans and guarantees as provided in § 1717.653(b). If the borrower's portfolio exceeds the 15 percent level, the borrower will be required to restructure or reduce its portfolio to the 15 percent level or below. For example, if the borrower's mortgage or loan contract has an approval threshold, the borrower may be required to reduce its portfolio to that level, which in many cases is 3 percent of total utility plant.
(2) A borrower that loses its exemption but is in compliance with all provisions of its mortgage, loan contract, and any other agreements with RUS will be required, if its investments, loans and guarantees exceed the 15 percent level, to restructure or reduce its portfolio to the 15 percent level, unless the Administrator, in his or her sole discretion, determines that such action would not be in the financial interest of the government with respect to loan security and/or repayment. (Such borrower is eligible to ask RUS to exclude a portion of its investments under the conditions set forth in § 1717.657(d).)
(3) If a borrower required to reduce or restructure its portfolio does not fully comply within a reasonable period of time determined by the Administrator, which shall not exceed 12 months from the date the borrower was notified of its loss of exemption, then, upon written notice from RUS, the borrower shall be in default of its RUS loan contract and/or RUS mortgage.
(e) By no later than July 1 of each year, RUS will provide written notice to any borrowers whose exemption status has changed as a result of more recent data being available for the qualification criteria set forth in paragraph (a) of this section, or as a result of other reasons, such as corrections in the available data. An explanation of the reasons for any changes in exemption status will also be provided to the borrowers affected.
(a)
(2) Nothing in this section shall in any way affect the Administrator's authority to exercise approval rights over investments, loans, and guarantees made by a borrower that is not in compliance with all provisions of its mortgage, loan contract and any other agreements with RUS.
(b)
(c)
(i) Satisfactory evidence has been provided that the borrower is in compliance with all provisions of its RUS mortgage, RUS loan contract, and any other agreements with RUS;
(ii) The borrower is not in financial workout and has not had its government debt restructured;
(iii) The borrower has equity equal to at least 5 percent of its total assets; and
(iv) After approval of the investment, loan or guarantee, the aggregate of the borrower's investments, loans and guarantees will not exceed 20 percent of the borrower's total utility plant.
(2) Borrower requests for approval to exceed the 15 percent level will be considered on a case by case basis. The requests must be made in writing.
(3) In considering borrower requests, the Administrator will take the following factors into consideration:
(i) The repayment of all loans secured under the RUS mortgage will continue to be assured, and loan security must continue to be reasonably adequate, even if the entire investment or loan is lost or the borrower is required to perform for the entire amount of the guarantee. These risks will be considered along with all other risks facing the borrower, whether or not related to the investment, loan or guarantee;
(ii) In the case of investments, the investment must be made in an entity separate from the borrower, such as a subsidiary, whereby the borrower is protected from any liabilities incurred by the separate entity, unless the borrower demonstrates to the satisfaction of the Administrator that making the investment directly rather than through a separate entity will present no substantial risk to the borrower in addition to the possibility of losing all or part of the original investment;
(iii) The borrower must be economically and financially sound as indicated by its costs of operation, competitiveness, operating TIER and operating DSC, physical condition of the plant, ratio of equity to total assets, ratio of net utility plant to long-term debt, and other factors; and
(iv) Other factors affecting the security and repayment of government debt, as determined by the Administrator on a case by case basis.
(4) If the Administrator approves an investment, loan or guarantee, such investment, loan or guarantee will continue to be included when calculating the borrower's ratio of aggregate investments, loans and guarantees to total utility plant.
(d)
(1) The borrower will not be in default of the RUS loan contract or RUS mortgage with respect to required approval of investments, loans and guarantees, provided that the borrower had not made additional net investments, loans or guarantees without approval after reaching the 15 percent level; and
(2) At the request of the borrower, the Administrator in his or her sole discretion may decide to exclude up to the amount of net profits or margins earned on the borrower's investments, loans and guarantees during the past 10 calendar years, if the Administrator determines that such exclusion will not increase loan security risks. The borrower must provide documentation satisfactory to the Administrator as to the current status of its investments, loans and guarantees and the net profits earned during the past 10 years. Any exclusion approved by the Administrator may or may not reduce the level of investments, loans and guarantees to or below the 15 percent level. If such exclusion does not reduce the level to or below the 15 percent level, RUS will notify the borrower in writing that it must reduce or restructure its investments, loans and guarantees to a level of not more than 15 percent of total utility plant. If the borrower does not come within the 15 percent level within a reasonable period of time determined by the Administrator, which shall not exceed 12 months from the date the borrower was notified of the required action, then, upon written notice from RUS, the borrower shall be in default of its RUS loan contract and mortgage.
(a) Every borrower shall maintain accurate records concerning all investments, loans and guarantees made by it. Such records shall be kept in a manner that will enable RUS to readily determine:
(1) The nature and source of all income, expenses and losses generated from the borrower's loans, guarantees and investments;
(2) The location, identity and lien priority of any loan collateral resulting from activities permitted by this subpart; and
(3) The effects, if any, which such activities may have on the feasibility of loans made, guaranteed or lien accommodated by RUS.
(b) In determining the aggregate amount of investments, loans and guarantees made by a borrower, the borrower shall use the recorded value of each investment, loan or guarantee as reflected on its books and records for the next preceding end-of-month, except for the end-of-year report which shall be based on December 31 information. Every borrower shall also report annually to RUS, in the manner and on the form specified by the Administrator, the current status of each investment, outstanding loan and outstanding guarantee which it has made pursuant to this subpart.
(c) The records of borrowers shall be subject to the auditing procedures prescribed in part 1773 of this chapter. RUS reserves the right to review the financial records of any subsidiaries of the borrower to determine if the borrower is in compliance with this subpart, and to ascertain if the debts, guarantees (as defined in this subpart), or other obligations of the subsidiaries could adversely affect the ability of the borrower to repay its debts to the Government.
(d) RUS will monitor borrower compliance with this subpart based primarily on the annual financial and statistical report submitted by the borrower to RUS and the annual auditor's report on the borrower's operations. However, RUS may inspect the borrower's records at any time during the year to determine borrower compliance. If a borrower's most recent annual financial and statistical report shows the aggregate of the borrower's investments, loans and guarantees to be below the 15 percent level, that in no way relieves the borrower of its obligation to comply with its RUS mortgage, RUS loan contract, and this subpart with respect to Administrator approval of any additional investment, loan or guarantee that would cause the aggregate to exceed the 15 percent level.
(a) Nothing in this subpart shall affect any provision, covenant, or requirement in the RUS mortgage, RUS loan contract, or any other agreement between a borrower and RUS with respect to any matter other than the prior approval by RUS of investments, loans, and guarantees by the borrower, such matters including, without limitation, extensions, additions, and modifications of the borrower's electric system. Also, nothing in this subpart shall affect any rights which supplemental lenders have under the RUS mortgage, or under their loan contracts or other agreements with their borrowers, to limit investments, loans and guarantees by their borrowers to levels below 15 percent of total utility plant.
(b) RUS will require that any electric loan made or guaranteed by RUS after October 23, 1995 shall be subject to a provision in the loan contract or mortgage restricting investments, loans and guarantees by the borrower substantially as follows: The borrower shall not make any loan or advance to, or make any investment in, or purchase or make any commitment to purchase any stock, bonds, notes or other securities of, or guaranty, assume or otherwise become obligated or liable with respect to the obligations of, any other person, firm or corporation, except as permitted by the RE Act and RUS regulations.
(c) RUS reserves the right to change the provisions of the RUS mortgage and loan contract relating to RUS approval of investments, loans and guarantees made by the borrower, on a case-by-case basis, in connection with providing additional financial assistance to a borrower after October 23, 1995.
(a)
(2) This subpart and subpart S of this part apply only to debt to be secured under the mortgage, the issuance of which is subject to the approval of the Rural Utilities Service (RUS) by the terms of the borrower's mortgage with respect to the issuance of additional debt or the refinancing or refunding of debt. If RUS approval is not required under such terms of the mortgage itself, a lien accommodation is not required. If the loan contract or other agreement between the borrower and RUS requires RUS approval with respect to the issuance of debt or making additions to or extensions of the borrower's system, such required approvals do not by themselves result in the need for a lien accommodation.
(b)
(2) It is also the policy of RUS to provide effective and timely assistance to borrowers in promoting rural development by subordinating RUS's lien for financially sound rural development investments under the conditions set forth in § 1717.858.
(c)
(1) The value of the added assets compared with the amount of new debt to be secured;
(2) The value of the assets already pledged under the mortgage, and any effects of the proposed transaction on the value of those assets;
(3) The ratio of the total outstanding debt secured under the mortgage to the value of all assets pledged as security under the mortgage;
(4) The borrower's ability to repay debt owed to the Government, as indicated by the following factors:
(i) Revenues, costs (including interest, lease payments and other debt service costs), margins, Times Interest Earned Ratio (TIER), Debt Service Coverage (DSC), and other case-specific economic and financial factors;
(ii) The variability and uncertainty of future revenues, costs, margins, TIER, DSC, and other case-specific economic and financial factors;
(iii) Future capital needs and the ability of the borrower to meet those needs at reasonable cost;
(iv) The ability of the borrower's management to manage and control its system effectively and plan for future needs; and
(5) Other factors that may be relevant in individual cases, as determined by RUS.
(d)
(e)
(f)
(2) RUS “Buy American” requirements shall not apply.
(g)
(i) Remit loan advances to a separate subaccount of the Cash-Construction Fund-Trustee Account;
(ii) Obtain a certification from a registered professional engineer, for each year during which funds from the separate subaccount are utilized by the borrower, that all materials and equipment purchased and facilities constructed during the year from said funds comply with RUS safety and performance standards, as required by paragraph (f) of this section, and are included in an CWP or CWP amendment approved by the borrower's board of directors;
(iii) Obtain an auditor's certification from a Certified Public Accountant, for each year during which funds are advanced to or remitted from the separate subaccount, certifying:
(A) The amount of loan funds advanced to and remitted from the separate subaccount during the period of review;
(B) That based on the auditor's review of construction work orders and other records, all moneys disbursed from the separate subaccount during the period of review were used for purposes contemplated in the loan agreement and the lien accommodation; and
(iv) Immediately notify RUS in writing if the lender is unable to obtain the certifications cited in paragraphs (g)(1)(ii) and (g)(1)(iii) of this section.
(2) The measures listed in paragraph (g)(1) of this section will normally be sufficient to meet the lender's responsibility provided that additional measures are not reasonably required based on the particular circumstances of an individual case. Should a lender fail to carry out its responsibility in the manner described in this paragraph (g) or in another manner acceptable to RUS, RUS may disqualify such lender from participation in advance approval under § § 1717.854 and 1717.857 and condition the lender's receipt of a lien accommodation or subordination upon the lender providing satisfactory evidence that it will fulfill its responsibility under this paragraph (g).
(h)
(2) To the extent that provisions in a borrower's loan contract or mortgage in favor of RUS may be inconsistent with paragraphs (g)(1) and (h)(1) of this section, paragraphs (g)(1) and (h)(1) of this section are intended to constitute
(i)
(1) The borrower must provide RUS with a certification by the project architect that the buildings will be designed and constructed in compliance with Section 504 of the Rehabilitation Act of 1973 as amended (29 U.S.C. 794), as applicable under that Act, and that the facilities will be readily accessible to and usable by persons with handicaps in accordance with the Uniform Federal Accessibility Standards (UFAS), (Appendix A to 41 CFR part 101.19, subpart 101-19.6). The certification must be included in the borrower's application for a lien accommodation or subordination. In addition to these requirements, building construction may also be subject to requirements of The Americans with Disabilities Act (42 U.S.C. 12101
(2) The borrower must comply with RUS's seismic safety requirements set forth in 7 CFR part 1792, subpart C.
(j)
(k)
(l)
(m)
(n)
Terms used in this subpart have the meanings set forth in 7 CFR 1710.2. References to specific RUS forms and other RUS documents, and to specific sections or lines of such forms and documents, shall include the corresponding forms, documents, sections and lines in any subsequent revisions of these forms and documents. In addition to the terms defined in 7 CFR 1710.2, the following terms have the following meanings for the purposes of this subpart:
(a)
(1) The acquisition, construction, improvement, modification, and replacement (less salvage value) of systems, equipment, and facilities, including real property, used to supply electric and/or steam power to:
(i) RE Act beneficiaries; and/or
(ii) End-user customers of the borrower who are not beneficiaries of the RE Act. Such systems, equipment, and facilities include those listed in 7 CFR 1710.251(c) and 1710.252(c), as well as others that are determined by RUS to be an integral component of the borrower's system of supplying electric and/or steam power to consumers, such as, for example, coal mines, coal handling facilities, railroads and other transportation systems that supply fuel for generation, programs of demand side management and energy conservation, and on-grid and off-grid renewable energy systems;
(2) The purchase, rehabilitation and integration of existing distribution facilities, equipment and systems, and associated service territory;
(3) The following types of community infrastructure substantially located within the electric service territory of the borrower: water and waste disposal systems, solid waste disposal systems, telecommunication and other electronic communications systems, and natural gas distribution systems;
(4) Front-end costs, when and as the borrower has obtained a binding commitment from the non-RUS lender for the financing required to complete the procurement or construction of the facilities;
(5) Transaction costs included as part of the cost of financing assets or refinancing existing debt, provided, however, that the amount of transaction costs eligible for lien accommodation or subordination normally shall not exceed 5 percent of the principal amount of financing or refinancing provided, net of all transaction costs;
(6) The refinancing of existing debt secured under the mortgage;
(7) Interest during construction of generation and transmission facilities if approved by RUS, case by case, depending on the financial condition of the borrower, the terms of the financing, the nature of the construction, the treatment of these costs by regulatory authorities having jurisdiction, and such other factors deemed appropriate by RUS; and
(8) Lien subordinations for certain rural development investments, as provided in § 1717.858.
(b)
(1) Working capital, including operating funds, unless in the judgment of RUS the working capital is required to ensure the repayment of RUS loans and/or other loans secured under the mortgage;
(2) Facilities, equipment, appliances, or wiring located inside the premises of the consumer, except:
(i) Certain load-management equipment (see 7 CFR 1710.251(c));
(ii) Renewable energy systems and RUS-approved programs of demand side management and energy conservation; and
(iii) As determined by RUS on a case by case basis, facilities included as part of certain cogeneration projects to furnish electric and/or steam power to end-user customers of the borrower;
(3) Investments in a lender required of the borrower as a condition for obtaining financing; and
(4) Debt incurred by a distribution or power supply borrower to finance facilities, equipment or other assets that are not part of the borrower's electric system or one of the four community
(c)
(a)
(1) The maturity of the loan or bond used to finance facilities or other capital assets must not exceed the weighted average of the expected remaining useful lives of the assets being financed;
(2) The loan or bond must have a maturity of not less than 5 years, except for loans or bonds used to refinance debt that has a remaining maturity of less than 5 years;
(3) The principal of the loan or bond must be amortized at a rate that will yield a weighted average life not greater than the weighted average life that would result from level payments of principal and interest; and
(4) The loan, or any portion of the loan, may bear either a variable (set annually or more frequently) or a fixed interest rate.
(b)
(a)
(b)
(c)
(1) The borrower has achieved a TIER of at least 1.25 and a DSC of at least 1.25 for each of 2 calendar years immediately preceding, or any 2 consecutive 12 month periods ending within 180 days immediately preceding, the issuance of the debt;
(2) The ratio of the borrower's equity, less deferred expenses, to total assets, less deferred expenses, is not less than 27 percent, after adding the principal amount of the proposed loan to the total assets of the borrower;
(3) The borrower's net utility plant as a ratio to its total outstanding long-term debt is not less than 1.0, after
(4) There are no actions or proceedings against the borrower, pending or overtly threatened in writing before any court, governmental agency, or arbitrator that would materially adversely affect the borrower's operations and/or financial condition;
(5) The borrower is current on all debt payments and all other financial obligations, and is not in default under the RUS mortgage, the RUS loan contract, the borrower's wholesale power contract, any debt restructuring agreement, or any other agreement with RUS;
(6) The borrower has:
(i) Submitted the annual auditor's report, report on compliance, report on internal controls, and management letter in accordance with 7 CFR part 1773;
(ii) Received an unqualified opinion in the most recent auditor's report;
(iii) Resolved all material findings and recommendations made in the most recent Loan Fund and Accounting Review;
(iv) Resolved all material findings and recommendations made in the most recent financial statement audit, including those material findings and recommendations made in the report on internal control, report on compliance, and management letter;
(v) Resolved all outstanding material accounting issues with RUS; and
(vi) Resolved any significant irregularities to RUS's satisfaction; and
(7) If the borrower has a power supply contract with a power supply borrower, the power supply borrower is current on all debt payments and all other financial obligations, and is not in default under the RUS mortgage, the loan contract, any debt restructuring agreement, or any other agreement with RUS.
(d)
Applications for a lien accommodation or subordination that meet the requirements of § 1717.854 must include the following information and documents:
(a) A certification by an authorized official of the borrower that the borrower and, as applicable, the loan are in compliance with all conditions set forth in § 1717.854(c) and all applicable provisions of §§ 1717.852 and 1717.853;
(b) A resolution of the borrower's board of directors requesting the lien accommodation or subordination and including the amount and maturity of the proposed loan, a general description of the facilities or other purposes to be financed, the name and address of the lender, and an attached term sheet summarizing the terms and conditions of the proposed loan;
(c) The borrower's financial and statistical report, the data in which shall not be more than 60 days old when the complete application is received by RUS;
(d) Draft copy of any new mortgage or mortgage amendment (supplement) required by RUS or the lender, unless RUS has notified the borrower that it wishes to prepare these documents itself;
(e) A copy of the loan agreement, loan note, bond or other financing instrument, unless RUS has notified the borrower that these documents need not be submitted;
(f) Borrower's environmental report and/or other environmental documentation, if required by 7 CFR part 1794;
(g) RUS Form 740c, Cost Estimates and Loan Budget for Electric Borrowers, and RUS Form 740g, Application for Headquarters Buildings;
(h) A CWP or CWP amendment covering the proposed project, in accordance with 7 CFR part 1710, subpart F, and subject to RUS approval, and a resolution of the borrower's board of directors adopting the CWP;
(i) The certification by the project architect for any buildings to be constructed, as required by § 1717.850(i);
(j) A certification by an authorized official of the borrower that flood hazard insurance will be obtained for the full value of any buildings, or other facilities susceptible to damage if flooded, that will be located in a flood hazard area;
(k) Form AD-1047, Certification Regarding Debarment, Suspension, and Other Responsibility Matters—Primary Covered Transactions, as required by 7 CFR part 3017;
(l) A report by the borrower stating whether or not it is delinquent on any Federal debt, and if delinquent, the amount and age of the delinquency and the reasons therefor; and a certification, if not previously provided, that the borrower has been informed of the Government's collection options;
(m) The written acknowledgement from a registered engineer or architect regarding compliance with seismic provisions of applicable model codes for any buildings to be constructed, as required by 7 CFR 1792.104; and
(n) Other information that RUS may require to determine whether all of the applicable provisions of this subpart have been met.
Applications for a lien accommodation or subordination for 100 percent private financing for eligible purposes that do not meet the requirements of § 1717.854 must include the following information and documents:
(a) A certification by an authorized official of the borrower that:
(1) The borrower and, as applicable, the loan are in compliance with all applicable provisions of §§ 1717.852 and 1717.853; and
(2) There are no actions or proceedings against the borrower, pending or overtly threatened in writing before any court, governmental agency, or arbitrator that would materially adversely affect the borrower's operations and/or financial condition. If this certification cannot be made, the application must include:
(i) An opinion of borrower's counsel regarding any actions or proceedings against the borrower, pending or overtly threatened in writing before any court, governmental agency, or arbitrator that would materially adversely affect the borrower's operations and/or financial condition. The opinion shall address the merits of the claims asserted in the actions or proceedings, and include, if appropriate, an estimate of the amount or range of any potential loss; and
(ii) A certification by an authorized official of the borrower as to the amount of any insurance coverage applicable to any loss that may result from the actions and proceedings addressed in the opinion of borrower's counsel;
(b) The information and documents set forth in § 1717.855 (b) through (n);
(c) A long-range financial forecast providing financial projections for at least 10 years, which demonstrates that the borrower's system is economically viable and that the proposed loan is financially feasible, and a resolution of the borrower's board of directors adopting the long-range financial forecast. The financial forecast must comply with the requirements of 7 CFR part 1710 subpart G. RUS may, in its sole discretion, waive the requirement of this paragraph that a long range financial forecast be provided, if:
(1) The borrower is current on all of its financial obligations and is in compliance with all requirements of its mortgage and loan agreement with RUS;
(2) In RUS's judgment, granting a lien accommodation or subordination for the proposed loan will not adversely affect the repayment and security of outstanding debt of the borrower owed to or guaranteed by RUS;
(3) The borrower has achieved the TIER and DSC and any other coverage ratios required by its mortgage or loan contract in each of the two most recent calendar years; and
(4) The amount of the proposed loan does not exceed the lesser of $10 million or 10 percent of the borrower's current net utility plant;
(d) [Reserved]
(e) As applicable to the type of facilities being financed, a CWP, related engineering and cost studies, a power cost study, and a resolution of the borrower's board of directors adopting these documents. These documents must meet the requirements of 7 CFR part 1710, subpart F and, as applicable, subpart G;
(f) Unless the requirement has been waived in writing by RUS, a current, RUS-approved power requirements study, which must meet the requirements of 7 CFR part 1710, subpart E, to the same extent as if the loan were being made by RUS, and a resolution of the borrower's board of directors adopting the study; and
(g) A discussion of the borrower's compliance with RUS requirements on accounting, financial reporting, record keeping, and irregularities (see § 1717.854(c)(5)). RUS will review the case and determine the effect of any noncompliance on the feasibility and security of RUS's loans, and whether the requested lien accommodation or subordination can be approved.
(a)
(1) The refinancing is a current refunding and does not involve interest rate swaps, forward delivery contracts, or similar features;
(2) The principal amount of the refinancing loan does not exceed the sum of the outstanding principal amount of the debt being refinanced plus the amount of transactions costs included in the refinancing loan that are eligible for lien accommodation or subordination under § 1717.852(a)(4);
(3) The weighted average life of the refinancing loan is not greater than the weighted average remaining life of the loan being refinanced; and
(4) The present value of the cost of the refinancing loan, including all transaction costs and any required investments in the lender, is less than the present value of the cost of the loan being refinanced, as determined by a method acceptable to RUS. The discount rate used in the present value analysis shall be equal to either:
(i) The current rate on Treasury securities having a maturity equal to the weighted average life of the refunding loan, plus one-eighth percent, or
(ii) A rate approved by RUS based on documentation provided by the borrower as to its marginal long-term borrowing cost.
(b)
(c)
(1) A certification by an authorized official of the borrower that the application meets the requirements of paragraph (a) of this section and all applicable provisions of §§ 1717.852 and 1717.853;
(2) Documentation and analysis demonstrating that the application meets the qualification criteria set forth in paragraph (a) of this section;
(3) A resolution of the borrower's board of directors requesting the lien accommodation or subordination and including the amount and maturity of the proposed loan, a general description of the debt to be refinanced, the name and address of the lender, and an attached term sheet summarizing the terms and conditions of the proposed loan;
(4) The borrower's financial and statistical report, the data in which shall not be more than 60 days old when the complete application is received by RUS;
(5) Draft copy of any new mortgage or mortgage amendment (supplement) required by RUS or the lender, unless RUS has notified the borrower that it wishes to prepare these documents itself;
(6) A copy of the loan agreement, loan note, bond or other financing instrument, unless RUS has notified the borrower that these documents need not be submitted;
(7) Form AD-1047, Certification Regarding Debarment, Suspension, and Other Responsibility Matters—Primary Covered Transactions, as required by 7 CFR part 3017;
(8) A report by the borrower stating whether or not it is delinquent on any Federal debt, and if delinquent, the amount and age of the delinquency and the reasons therefor; and a certification, if not previously provided, that the borrower has been informed of the Government's collection options; and
(9) Other information, documents and opinions that RUS may require to determine whether all of the applicable provisions of this subpart have been met.
(d)
(1) The information and documents set forth in paragraphs (c)(3) through (9) of this section;
(2) A complete description of the refinancing loan and the outstanding debt to be refinanced;
(3) An analysis comparing the refinancing loan with the loan being refinanced as to the weighted average life and the net present value of the costs of the two loans; and
(4) If the present value of the cost of the refinancing loan is greater than the present value of the cost of the debt being refinanced, financial forecasts for at least 5 years comparing the borrower's debt service and other costs, revenues, margins, cash flows, TIER, and DSC, with and without the proposed refinancing.
(e)
(f)
(a)
(b)
(1) The borrower must be current on all of its financial obligations and be in compliance with all provisions of its mortgage and loan agreement with RUS; and
(2) In the judgment of RUS, the borrower must be able to repay all of its outstanding debt, and the security forall outstanding loans made to the borrower by RUS, including loans guaranteed by RUS, must be adequate, after taking into account the proposed subordination or release of lien.
(c)
(1) A resolution of the borrower's board of directors requesting the lien subordination or release of lien;
(2) A certification by an authorized official of the borrower that the borrower is current on all of its financial obligations and is in compliance with all provisions of its mortgage and loan agreement with RUS;
(3) A description of the facilities or other purposes to be financed and the projected effects on economic development and employment in rural areas;
(4) The borrower's financial and statistical report, the data in which shall not be more than 60 days old when the complete application is received by RUS;
(5) If requested by RUS, a long-range financial forecast providing financial projections for at least 10 years, in form and substance satisfactory to RUS, which demonstrates that the borrower's system is economically viable and that the borrower will be able to repay all of its outstanding debt and meet all other financial obligations;
(6) A discussion of the borrower's compliance with RUS requirements on accounting, financial reporting, record keeping, and irregularities (see § 1717.854(c)(5)). RUS will review the case and determine the effect of any noncompliance on the feasibility and security of RUS's loans, and whether the requested lien subordination or release of lien can be approved;
(7) If any buildings are to be constructed with the proceeds of the loan to be made to the subsidiary:
(i) A certification by the project architect that the buildings will be designed and constructed in compliance with Section 504 of the Rehabilitation Act of 1973 as amended (29 U.S.C. 794), as applicable under that Act, and that the facilities will be readily accessible to and usable by persons with handicaps in accordance with the Uniform Federal Accessibility Standards; and
(ii) A written acknowledgement from a registered engineer or architect regarding compliance with seismic provisions of applicable model codes, as required by 7 CFR 1792.104;
(8) A certification by an authorized official of the borrower that flood hazard insurance will be obtained for the full value of any buildings, or other facilities susceptible to damage if flooded, that will be located in a flood hazard area;
(9) Form AD-1047, Certification Regarding Debarment, Suspension, and Other Responsibility Matters—Primary Covered Transactions, as required by 7 CFR part 3017;
(10) A report by the borrower stating whether or not it is delinquent on any Federal debt, and if delinquent, the amount and age of the delinquency and the reasons therefor; and a certification, if not previously provided, that the borrower has been informed of the Government's collection options; and
(11) Other information that RUS may require to determine whether all of the applicable provisions of this subpart have been met.
(a)
(2) It is recommended that borrowers consult with RUS staff before submitting their applications to determine whether they will likely qualify for advance approval or normal review, and to obtain answers to any questions about the information and documents required for the application.
(3) A borrower shall, after submitting an application, promptly notify RUS of any changes that materially affect the information contained in its application.
(4) After submitting an application and having been notified by RUS of additional information and documents and other changes needed to complete the application, if the required information and documents are not supplied to RUS within 30 calendar days of the borrower's receipt of the notice, RUS may return the application to the borrower. The borrower may resubmit the application when the required additional information and documents are available.
(5) Timeframes. The timeframes for review of applications set forth in this section are based on the following conditions:
(i) The types of lien accommodations or subordinations requested are of the “standard” types that RUS has approved previously, i.e., the so-called Type I, II and III lien accommodations. Future revisions of the RUS mortgage may result in other “standard” types of lien accommodations and lien subordinations acceptable to RUS. Requests for lien accommodations or subordinations that are substantially different than the “standard” types previously approved by RUS may require additional time for review and action;
(ii) The requested lien accommodation or subordination does not require the preparation of an environmental assessment or an Environmental Impact Statement. Preparation of these documents often will require additional time beyond the timeframes cited in this section; and
(iii) The timeframes set forth in this section, except for paragraph (b)(4) of this section, which deals only with approval of a new mortgage or mortgage amendment, include RUS review and/or approval of a loan contract, if required as part of the application, and required supporting documents, such as a CWP.
(b)
(2) If no additional or amended information is needed for RUS to complete its review of the application once it is received in the Washington Office, RUS will, within 45 calendar days of receiving the application in the Washington Office, either:
(i) Approve the lien accommodation or subordination if the borrower has demonstrated satisfactorily to RUS that all requirements of this subpart applicable to advance approval have been met, and send written notice to the borrower. RUS's approval, in this case and all other cases, will be conditioned upon execution and delivery by the borrower of a satisfactory security
(ii) If all requirements have not been met, so notify the borrower in writing. The application will be returned to the borrower unless the borrower requests that it be reconsidered under the requirements and procedures for normal review set forth in paragraph (c) of this section and in § 1717.856; or
(iii) Send written notice to the borrower explaining why a decision cannot be made at that time and giving the estimated date when a decision is expected.
(3) If additional or amended information is needed after the application is received in the Washington Office, RUS will so notify the borrower in writing within 15 calendar days of receiving the application in the Washington Office. If RUS subsequently becomes aware of other deficiencies in the application, additional written notice will be sent to the borrower. Within 30 calendar days of receiving all of the information required by RUS to complete its review, RUS will act on the application as described in paragraphs (b)(2)(i) through (b)(2)(iii) of this section.
(4) If a new mortgage or mortgage amendment is required, within 30 days of receiving such documents satisfactory to RUS, including required execution counterparts, RUS will execute the documents and send them to the borrower, along with instructions pertaining to recording of the mortgage, an opinion of borrower's counsel, and other matters. RUS will promptly notify the borrower upon receiving satisfactory evidence that the borrower has complied with said instructions.
(c)
(ii) If no additional or amended information is needed for RUS to complete its review of the application once it is received in the Washington office, RUS will, within 90 calendar days of receiving the application in the Washington office, send written notice to the borrower either approving the request, disapproving the request, or explaining why a decision cannot be made at that time and giving the estimated date when a decision is expected.
(iii) If additional or amended information is needed after the application is received in the Washington Office, RUS will so notify the borrower in writing within 15 calendar days of receiving the application in the Washington Office. If RUS subsequently becomes aware of other deficiencies in the application, additional written notice will be sent to the borrower. Within 90 calendar days of receiving all of the information required by RUS to complete its review, RUS will act on the application as described in paragraph (c)(1)(ii) of this section.
(iv) If a new mortgage or mortgage amendment is required, the procedures and timeframes of paragraph (b)(4) of this section will apply.
(2)
(ii) Within 30 calendar days of receiving the borrower's application containing the information and documents required by § 1717.856, RUS will send written notice to the borrower of any deficiencies in its application as to completeness and acceptable form and substance. Additional written notices may be sent to the borrower if RUS subsequently becomes aware of other deficiencies in the borrower's application.
(iii) Within 90 calendar days of receiving all of the information required by RUS to complete its review, RUS will act on the application as described in paragraph (c)(1)(ii) of this section.
(iv) If a new mortgage or mortgage amendment is required, these documents will be reviewed and executed pursuant to the procedures and timeframes of paragraph (b)(4) of this section.
(d)
(1)
(ii) Within 15 calendar days of receiving all of the required information and documents, in form and substance satisfactory to RUS, RUS will either:
(A) Approve the lien accommodation or subordination if the borrower has demonstrated satisfactorily to RUS that all requirements of § 1717.857(a) and (c) have been met, and send written notice to the borrower;
(B) If all requirements have not been met, so notify the borrower in writing. The application will be returned to the borrower unless the borrower requests that it be reconsidered under the requirements and procedures for normal review set forth in paragraph (d)(2) of this section and in § 1717.857; or
(C) Send written notice to the borrower explaining why a decision cannot be made at that time and giving the estimated date when a decision is expected.
(iii) If a new mortgage or mortgage amendment is required, these documents will be reviewed and executed pursuant to the procedures and timeframes of paragraph (b)(4) of this section.
(2)
(ii) Within 30 calendar days of receiving all of the required information and documents, in form and substance satisfactory to RUS, RUS will notify the borrower in writing either approving the request, disapproving the request, or explaining why a decision cannot be made at that time and giving the estimated date when a decision is expected. If the proposed refinancing involves complicated transactions such as interest rate swaps or forward delivery contracts, additional time may be required for RUS review and final action.
(iii) If a new mortgage or mortgage amendment is required, these documents will be reviewed and executed pursuant to the procedures and timeframes of paragraph (b)(4) of this section.
(e)
(2) The GFR will work with the borrower to ensure that all components of the application are assembled. Once the application is satisfactory to the GFR, it will be sent promptly to the Washington Office for further review and action. After the application is received in the Washington Office, if additional or amended information is needed for RUS to complete its review, RUS will so notify the borrower in writing within 15 calendar days of receiving the application.
(3) Applications from power supply borrowers containing the information and documents required by § 1717.858(c) will be reviewed in the Washington office and the borrower given written notice within 30 calendar days of receiving the application of any deficiencies as to completeness and acceptable form and substance. Additional written notices may be sent to the borrower if RUS subsequently becomes aware of other deficiencies in the borrower's application.
(4) Within 60 calendar days of receiving in the Washington office all of the required information and documents, in form and substance satisfactory to RUS, RUS will give written notice to the borrower either approving the request, disapproving the request, or explaining why a decision cannot be made at that time and giving the estimated date when a decision is expected.
(5) If a new mortgage or mortgage amendment is required, these documents will be reviewed and executed pursuant to the procedures and timeframes of paragraph (b)(4) of this section.
(a)
(b)
(2) Net worth shall be calculated by taking total margins and equities (Line 33 of Part C of RUS Form 7 for distribution borrowers, or Line 34 of Section B of RUS Form 12a for power supply borrowers) and subtracting assets properly recordable in account 182.2, Unrecovered Plant and Regulatory Study Costs, and account 182.3, Other Regulatory Assets, as defined in 7 CFR part 1767.
(c)
(2) The application must include the following:
(i) A resolution of the borrower's board of directors requesting the lien accommodation and including the amount and maturity of the proposed loan, a general description of the facilities or other purposes to be financed, the name and address of the lender, and an attached term sheet summarizing the terms and conditions of the proposed loan;
(ii) A certification by an authorized official of the borrower that the borrower is in compliance with all requirements of its mortgage, loan agreement with RUS, and any other agreement
(iii) The borrower's financial and statistical report, the data in which shall not be more than 60 days old when the complete application is received by RUS;
(iv) Draft copy of any new mortgage or mortgage amendment (supplement) required by RUS or the lender, unless RUS has notified the borrower that it wishes to prepare these documents itself;
(v) A copy of the loan agreement, loan note, bond or other financing instrument, unless RUS has notified the borrower that these documents need not be submitted. These documents will not be subject to RUS approval, but may be reviewed to determine whether they contain any provisions that would result in the security, including assurance of repayment, for loans made or guaranteed by RUS no longer being reasonably adequate;
(vi) The following certifications and reports required by law:
(A) The certification by the project architect for any buildings to be constructed, as required by 7 CFR 1717.850(i);
(B) A certification by an authorized official of the borrower that flood hazard insurance will be obtained for the full value of any buildings, or other facilities susceptible to damage if flooded, that will be located in a flood hazard area;
(C) Form AD-1047, Certification Regarding Debarment, Suspension, and Other Responsibility Matters—Primary Covered Transactions, as required by 7 CFR part 3017;
(D) A report by the borrower stating whether or not it is delinquent on any Federal debt, and if delinquent, the amount and age of the delinquency and the reasons therefor; and a certification, if not previously provided, that the borrower has been informed of the Government's collection options; and
(E) The written acknowledgement from a registered engineer or architect regarding compliance with seismic provisions of applicable model codes for any buildings to be constructed, as required by 7 CFR 1792.104. All other elements of an application listed in § 1717.855, § 1717.856, and § 1717.858(c) not listed in this paragraph (c) are exempted.
(3) Applications from distribution borrowers are submitted to the general field representative (GFR), while applications from power supply borrowers are submitted to the RUS Power Supply Division, or its successor, in Washington, DC. When an application is satisfactory to the GFR, it will be sent promptly to the Washington office. If Washington office staff determine that an application is incomplete, the borrower will be promptly notified in writing about the deficiencies. When the application is complete, and if the security, including assurance of repayment, of loans made or guaranteed by RUS will remain reasonably adequate after granting the lien accommodation or subordination, the borrower and the lender will be promptly notified in writing that the lien accommodation or subornation has been approved, subject to the conditions cited in paragraph (c)(1) of this section.
(d)
(e)
Applications for a lien accommodation for supplemental financing required by 7 CFR 1710.110 must meet the same requirements as an RUS insured loan. The justification and documentation materials submitted as part of the borrower's application for an insured loan also serve as the justification and documentation of the request for a lien accommodation for the required supplemental loan. Unless early approval under § 1717.901 is requested by a borrower, these applications will be processed during the same time as RUS's review of the borrower's application for the concurrent insured loan.
(a)
(1) The required supplemental loan meets the requirements for an insured loan, as set forth in 7 CFR part 1710, subparts A through G, and other RUS regulations pertaining to required supplemental loans;
(2) The borrower has demonstrated the ability to obtain the funds that would be needed to complete other portions of the project, if the portion to be constructed with private loan funds could not be used productively without completion of such other portions, in the event concurrent RUS insured loan funds are not forthcoming. Such evidence may include financial records demonstrating the availability of general funds, and/or a written commitment from the private lender to provide a loan for the remaining amount of financing required, with such commitment being conditioned upon the availability of a lien accommodation from RUS; and
(3) An authorized official of the borrower has requested early approval of the lien accommodation and explained the reasons therefor, and has certified that the funds are needed and will be drawn down before funds from the concurrent insured loan are expected to be available, assuming that the insured loan is approved.
(b)
(2) If a mortgage or mortgage amendment is required, RUS will consult with the other mortgagees as to who will prepare the documents. Within 30 days of obtaining the documents satisfactory to RUS, including required execution counterparts, RUS will execute the documents and send them to the borrower, along with instructions pertaining to recording of the mortgage, an opinion of borrower's counsel, and
(c)
Supplemental loans required by 7 CFR 1710.110 are subject to the same post-loan requirements as insured RUS loans regarding accepted materials, construction standards, contracting and procurement procedures, standard forms of contracts, RUS approval of the advance of loan funds, and other matters.
It is the intent of this subpart that any failure on the part of RUS to comply with any provisions of this subpart, including without limitation, those provisions setting forth specified timeframes for action by RUS on applications for lien accommodations or lien subordinations, shall not give rise to liability of any kind on the part of the Government or any employees of the Government including, without limitation, liability for damages, fees, expenses or costs incurred by or on behalf of a borrower, private lender or any other party.
(a)
(b)
(c)
(d)
(1) The applicable requirements listed in 7 CFR 1710.7(d); and
(2) The requirements set forth in § 1717.901(a) when a borrower requests early approval of a lien accommodation.
(e)
(a) Section 331(b) of the Consolidated Farm and Rural Development Act (Con Act), as amended on April 4, 1996 by Public Law 104-127, 110 Stat. 888 (7 U.S.C. 1981), grants authority to the Secretary of Agriculture to compromise, adjust, reduce, or charge-off debts or claims arising from loans made or guaranteed under the Rural Electrification Act of 1936, as amended (RE Act). Section 331(b) of the Con Act also authorizes the Secretary of Agriculture to adjust, modify, subordinate, or release the terms of security instruments, leases, contracts, and agreements entered into or administered by the Rural Utilities Service (RUS). The Secretary, in 7 CFR 2.47, has delegated authority under section 331(b) of the Con Act to the Administrator of the RUS, with respect to loans made or guaranteed by RUS.
(b) This subpart sets forth the policy and standards of the Administrator of RUS with respect to the settlement of debts and claims arising from loans made or guaranteed to rural electric borrowers under the RE Act. Nothing in this subpart limits the Administrator's authority under section 12 of the RE Act.
Terms used in this subpart that are not defined in this section have the meanings set forth in 7 CFR part 1710. In addition, for the purposes of this subpart:
(a) It is the policy of the Administrator that, wherever possible, all debt owed to the government, including but not limited to principal and interest, shall be collected in full in accordance with the terms of the borrower's loan documents.
(b) Nothing in this subpart by itself modifies, reduces, waives, or eliminates any obligation of a borrower
(c) The Administrator's authority to settle debts and claims will apply to cases where a borrower is unable to pay its debts and claims in accordance with their terms, as further defined in § 1717.1204(b)(1), and where settlement will maximize, on a present value basis, the recovery of debts and claims owed to the government.
(d) In structuring settlements and determining the capability of the borrower to repay debt and the amount of debt recovery that is possible, the Administrator will consider, among other factors, the RE Act, the National Energy Policy Act of 1992 (Pub. L. 102-486, 106 Stat. 2776), the policies and regulations of the Federal Energy Regulatory Commission, state legislative and regulatory actions, and other market and nonmarket forces as to their effects on competition in the electric utility industry and on rural electric systems in particular. Other factors the Administrator will consider are set forth in more detail in § 1717.1204.
(a) The Attorney General will be notified by the Administrator whenever the Administrator intends to use his or her authority under section 331(b)of the Con Act to settle a debt or claim.
(b) If an outstanding claim has been referred in writing to the Attorney General, the Administrator will not use his or her own authority to settle the claim without the approval of the Attorney General.
(c) If an application for additional debt relief is received from a borrower whose debt has been settled in the past under the authority of the Attorney General, the Administrator will promptly notify the Attorney General before proceeding to consider the application.
(a)
(b)
(2) In its application to RUS for debt settlement, the borrower must provide, in form and substance satisfactory to RUS, an in-depth analysis supporting the borrower's contention that it is unable or will not be able to meet its financial obligations as described in paragraph (b)(1) of this section. The analysis must include:
(i) An explanation and analysis of the causes of the borrower's inability to meet its financial obligations;
(ii) A thorough review and analysis of the opportunities available or potentially available to the borrower to reduce administrative overhead and other costs, improve efficiency and effectiveness, and expand markets and revenues, including but not limited to opportunities for sharing services, merging, and/or consolidating, raising rates when appropriate, and renegotiating supplier and service contracts. In the case of a power supply borrower, the study shall include such opportunities among the members of the borrower, unless the Administrator waives this requirement;
(iii) Documentation of the actions taken, in progress, or planned by the borrower (and its member systems, if applicable) to take advantage of the opportunities cited in paragraph (b)(2)(ii) of this section; and
(iv) Other analyses and documentation prescribed by RUS on a case by case basis.
(3) RUS may require that an independent consultant provide an analysis of the efficiency and effectiveness of the borrower's organization and operations, and those of its member systems in the case of a power supply borrower. The following conditions will apply:
(i) RUS will select the independent consultant taking into account, among other matters, the consultant's experience and expertise in matters relating to electric utility operations, finance, and restructuring;
(ii) The contract with the consultant shall be to provide services to RUS on such terms and conditions as RUS deems appropriate. The consultant's scope of work may include, but shall not be limited to, an analysis of the following:
(A) How to maximize the value of the government's collateral, such as through mergers, consolidations, or sales of all or part of the collateral;
(B) The viability of the borrower's system, taking into account such matters as system size, service territory and markets, asset base, physical condition of the plant, operating efficiency, competitive pressures, industry trends, and opportunities to expand markets and improve efficiency and effectiveness;
(C) The feasibility and the potential benefits and risks to the borrower and the government of corporate restructuring, including aggregation and disaggregation;
(D) In the case of a power supply borrower, the retail rate mark-up by member systems and the potential benefits to be achieved by member restructuring through mergers, consolidations, shared services, and other alliances;
(E) The quality of the borrower's management, management advisors, consultants, and staff;
(F) Opportunities for reducing overhead and other costs, for expanding markets and revenues, and for improving the borrower's existing and prospective contractual arrangements for the purchase and sale of power, procurement of supplies and services, and the operation of plant and facilities;
(G) Opportunities to achieve efficiency gains and increased revenues based on comparisons with benchmark electric utilities; and
(H) The accuracy and completeness of the borrower's analysis provided under paragraph (b)(2) of this section;
(iii) RUS and, as appropriate, other creditors, will determine the extent to which the borrower and third parties (including the members of a power supply borrower) will be required to participate in funding the costs of the independent consultant;
(iv) The borrower will be required to make available to the consultant all corporate documents, files, and records, and to provide the consultant with access to key employees. The borrower will also normally be required to provide the consultant with office space convenient to the borrower's operations and records; and
(v) All analyses, studies, opinions, memoranda, and other documents and information produced by the independent consultant shall be provided to RUS on a confidential basis for consideration in evaluating the borrower's application for debt settlement. Such documents and information may be made available to the borrower and other appropriate parties if authorized in writing by RUS.
(4) The borrower may be required to employ a temporary or permanent manager acceptable to the Administrator, to manage the borrower's operations to ensure that all actions are taken to avoid or minimize the need for debt settlement. The employment could be on a temporary basis to manage the system during the time the debt settlement is being considered, and possibly for some time after any debt settlement, or it could be on a permanent basis.
(5) The borrower must submit, at a time determined by RUS, a resolution of its board of directors requesting debt
(c)
(i) Reamortization of debt;
(ii) Extension of debt maturity, provided that the maturity of the borrower's outstanding debt after settlement shall not extend more than 10 years beyond the latest maturity date prior to settlement;
(iii) Reduction of the interest rate charged on the borrower's debt, provided that the interest rate on any portion of the restructured debt shall not be reduced to less than 5 percent, unless the Administrator determines that reducing the rate below 5 percent would maximize debt recovery by the government;
(iv) Forgiveness of interest accrued, penalties, and costs incurred by the government to collect the debt; and
(v) With the concurrence of the Under Secretary for Rural Development, forgiveness of loan principal.
(2) In the event that RUS has, under section 306 of the RE Act, guaranteed loans made by the Federal Financing Bank or other third parties, the Administrator may restructure the borrower's obligations by: acquiring and restructuring the guaranteed loan; restructuring the loan guarantee obligation; restructuring the borrower's reimbursement obligations; or by such means as the Administrator deems appropriate, subject to such consents and approvals, if any, that may be required by the third party lender.
(d)
(e)
(f)
(2) RUS may use such methods, analyses, and assessments as the Administrator deems appropriate to determine the value of the borrower's system.
(g)
(h)
(i)
(j)
(1) The borrower may be required to undertake a corporate restructuring and/or sell a portion of its plant, facilities, or other assets
(2) The borrower may be required to replace senior management and/or hire outside experts acceptable to the Administrator. Such changes may include a commitment by the borrower's board of directors to restructure and/or obtain new membership to improve board oversight and leadership;
(3) The borrower may be required to agree to:
(i) Controls by RUS on the general funds of the borrower, as well as on any investments, loans or guarantees by the borrower, notwithstanding any limitations on RUS’ control rights in the borrower's loan documents or RUS regulations; and
(ii) Requirements deemed necessary by RUS to perfect and protect its lien on cash deposits, securities, equipment, vehicles, and other items of real or non-real property; and
(4) In the case of a power supply borrower, the borrower may be required to obtain credit support from its member systems, as well as pledges and action plans by the members to change their operations, management, and organizational structure (e.g., shared services, mergers, or consolidations) in order to reduce operating costs, improve efficiency, and/or expand markets and revenues.
(k)
(l)
(m)
Pursuant to section 331(b) of the Con Act, the Administrator, at his or her sole discretion, may waive or otherwise reduce conditions and requirements imposed on a borrower by its loan documents if the Administrator determines that such action will contribute to enhancement of the government's recovery of debt. Such waivers or reductions in conditions and requirements under this section shall not include the exercise of any of the debt settlement measures set forth in § 1717.1204(c), which are subject to all of the requirements of said § 1717.1204.
In considering any future loan requests from a borrower whose debt has been settled in whole or in part (including the surviving entity of merged or consolidated borrowers, where at least one of said borrowers had its debts settled), it will be presumed that credit support for the full amount of the requested loan will be required. Such support may be in a number of forms, provided that they are acceptable to the Administrator on a case by case basis. They may include, but need not be limited to, equity infusions and guarantees of debt repayment, either from the applicant's members (in the case of a power supply borrower), or from a third party.
Nothing in this subpart affects the obligations of RUS under loan guarantee commitments it has made to the Federal Financing Bank or other lenders.
Nothing in this subpart limits, modifies, or otherwise affects the rights of the government under loan documents executed with borrowers, or under law or equity.
7 U.S.C. 901
Unless otherwise indicated, terms used in this subpart are defined as set forth in 7 CFR 1710.2.
(a) Adequate loan security must be provided for loans made or guaranteed by RUS. The loans are required to be secured by a first mortgage lien on most of the borrower's assets substantially in the form set forth in appendix A of this subpart. At the discretion of RUS, this model form of mortgage may be adapted to satisfy different legal requirements among the states and individual differences in lending circumstances, provided that such adaptations are consistent with the policies set forth in this subpart.
(b) Some borrowers, such as certain public power districts, may not be able to provide security in the form of a first mortgage lien on their assets. In these cases RUS will consider accepting other forms of security, such as resolutions and pledges of revenues.
(c) RUS may require supplemental and amending mortgages to protect its security, or in connection with additional loans.
(d) RUS may also require such other security instruments (such as loan contracts, security agreements, financing
(e) All distribution borrowers that receive a loan or loan guarantee from RUS on or after August 17, 1995 will be required to enter into a mortgage with RUS that meets the requirements of this subpart. The concurrence of any other lenders secured under the borrower's existing mortgage may be required before the borrower can enter into a new mortgage.
Nothing contained in this subpart amends, invalidates, terminates or rescinds any existing mortgage entered into between the borrower and RUS and any other mortgagees.
Nothing contained in this subpart is intended to alter or affect any other mortgagee's rights under an existing mortgage.
Single copies of the model mortgage (RUS Informational Publication 1718 B) are available from the Administrative Services Division, Rural Utilities Service, United States Department of Agriculture, Washington, DC 20250-1500. This document may be reproduced.
RESTATED MORTGAGE AND SECURITY AGREEMENT, dated as of
WHEREAS, the Mortgagor, the Government and
WHEREAS, the Mortgagor deems it necessary to borrow money for its corporate purposes and to issue its promissory notes and other debt obligations therefor from time to time in one or more series, and to mortgage and pledge its property hereinafter described or mentioned to secure the payment of the same;
WHEREAS, the Mortgagor desires to enter into this Mortgage pursuant to which all secured debt of the Mortgagor hereunder shall be secured on parity;
WHEREAS, this Mortgage restates and consolidates the Original Mortgage while preserving the priority of the Lien under the Original Mortgage securing the payment of Mortgagor's outstanding obligations secured under the Original Mortgage, which indebtedness is described more particularly by listing the Original Notes in Schedule “A” hereto; and
WHEREAS, all acts necessary to make this Mortgage a valid and binding legal instrument for the security of such notes and obligations, subject to the terms of this Mortgage, have been in all respects duly authorized;
NOW, THEREFORE, THIS MORTGAGE WITNESSETH: That to secure the payment of the principal of (and premium, if any) and interest on the Original Notes and all Notes issued hereunder according to their tenor and effect, and the performance of all provisions therein and herein contained, and in
A. all of those fee and leasehold interests in real property set forth in Schedule “B” hereto, subject in each case to those matters set forth in such Schedule;
B. all of the Mortgagor's interest in fixtures, easements, permits, licenses and rights-of-way comprising real property, and all other interests in real property, comprising any portion of the Utility System (as herein defined) located in the Counties listed in Schedule “B” hereto;
C. all right, title and interest of the Mortgagor in and to those contracts of the Mortgagor (i) relating to the ownership, operation or maintenance of any generation, transmission or distribution facility owned, whether solely or jointly, by the Mortgagor, (ii) for the purchase of electric power and energy by the Mortgagor and having an original term in excess of 3 years, (iii) for the sale of electric power and energy by the Mortgagor and having an original term in excess of 3 years, and (iv) for the transmission of electric power and energy by or on behalf of the Mortgagor and having an original term in excess of 3 years, including in respect of any of the foregoing, any amendments, supplements and replacements thereto;
D. all the property, rights, privileges, allowances and franchises particularly described in the annexed Schedule “B” are hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length; and
ALSO ALL OTHER PROPERTY, real estate, lands, easements, servitudes, licenses, permits, allowances, consents, franchises, privileges, rights of way and other rights in or relating to real estate or the occupancy of the same; all power sites, storage rights, water rights, water locations, water appropriations, ditches, flumes, reservoirs, reservoir sites, canals, raceways, waterways, dams, dam sites, aqueducts, and all other rights or means for appropriating, conveying, storing and supplying water; all rights of way and roads; all plants for the generation of electric and other forms of energy (whether now known or hereafter developed) by steam, water, sunlight, chemical processes and/or (without limitation) all other sources of power (whether now known or hereafter developed); all power houses, gas plants, street lighting systems, standards and other equipment incidental thereto; all telephone, radio, television and other communications, image and data transmission systems, air conditioning systems and equipment incidental thereto, water wheels, waterworks, water systems, steam and hot water plants, substations, lines, service and supply systems, bridges, culverts, tracks, ice or refrigeration plants and equipment, offices, buildings and other structures and the equipment thereto all machinery, engines, boilers, dynamos, turbines, electric, gas and other machines, prime movers, regulators, meters, transformers, generators (including, but not limited to, engine-driven generators and turbogenerator units), motors, electrical, gas and mechanical appliances, conduits, cables, water, steam, gas or other pipes, gas mains and pipes, service pipes, fittings, valves and connections, pole and transmission lines, towers, overhead conductors and devices, underground conduits, underground conductors and devices, wires, cables, tools, implements, apparatus, storage battery equipment, and all other fixtures and personalty; all municipal and other franchises, consents, certificates or permits; all emissions allowances; all lines for the transmission and distribution of electric current and other forms of energy, gas, steam, water or communications, images and data for any purpose including towers, poles, wires, cables, pipes, conduits, ducts and all apparatus for use in connection therewith, and (except as hereinbefore or hereinafter expressly excepted) all the right, title and interest of the Mortgagor in and to all other property of any kind or nature appertaining to and/or used and/or occupied and/or employed in connection with any property hereinbefore described, but in all circumstances excluding Excepted Property;
All other property, real, personal or mixed, of whatever kind and description and wheresoever situated, including without limitation goods, accounts, money held in a trust account pursuant hereto or to a Loan Agreement, and general intangibles now owned or which may be hereafter acquired by
Also any Excepted Property that may, from time to time hereafter, by delivery or by writing of any kind, be subjected to the lien hereof by the Mortgagor or by anyone in its behalf; and any Mortgagee is hereby authorized to receive the same at any time as additional security hereunder for the benefit of all the Mortgagees. Such subjection to the lien hereof of any Excepted Property as additional security may be made subject to any reservations, limitations or conditions which shall be set forth in a written instrument executed by the Mortgagor or the person so acting in its behalf or by such Mortgagee respecting the use and disposition of such property or the proceeds thereof.
Together with (subject to the rights of the Mortgagor set forth on Section [5.01]) all and singular the tenements, hereditaments and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and all the tolls, earnings, rents, issues, profits, revenues and other income, products and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, and all other property of any nature appertaining to any of the plants, systems, business or operations of the Mortgagor, whether or not affixed to the realty, used in the operation of any of the premises or plants or the System, or otherwise, which are now owned or acquired by the Mortgagor, and all the estate, right, title and interest of every nature whatsoever, at law as well as in equity, of the Mortgagor in and to the same and every part thereof (other than Excepted Property with respect to any of the foregoing).
There is, however, expressly excepted and excluded from the lien and operation of this Mortgage the following described property of the Mortgagor, now owned or hereafter acquired (herein sometimes referred to as “Excepted Property”):
A. all shares of stock, securities or other interests of the Mortgagor in the National Rural Utilities Cooperative Finance Corporation, the National Bank for Cooperatives and the St. Paul Bank for Cooperatives other than any stock, securities or other interests that are specifically described in Subclause D of Granting Clause First as being subjected to the lien hereof;
B. all rolling stock (except mobile substations), automobiles, buses, trucks, truck cranes, tractors, trailers and similar vehicles and movable equipment, and all tools, accessories and supplies used in connection with any of the foregoing;
C. all vessels, boats, ships, barges and other marine equipment, all airplanes, airplane engines and other flight equipment, and all tools, accessories and supplies used in connection with any of the foregoing;
D. all office furniture, equipment and supplies that is not data processing, accounting or other computer equipment or software;
E. all leasehold interests for office purposes;
F. all leasehold interests of the Mortgagor under leases for an original term (including any period for which the Mortgagor shall have a right of renewal) of less than five (5) years;
G. all timber and crops (both growing and harvested) and all coal, ore, gas, oil and other minerals (both in place or severed);
H. the last day of the term of each leasehold estate (oral or written) and any agreement therefor, now or hereafter enjoyed by the Mortgagor and whether falling within a general or specific description of property herein: PROVIDED, HOWEVER, that the Mortgagor covenants and agrees that it will hold each such last day in trust for the use and benefit of all of the Mortgagees and Noteholders and that it will dispose of each such last day from time to time in accordance with such written order as the Mortgagee in its discretion may give;
I. all permits, licenses, franchises, contracts, agreements, contract rights and other rights not specifically subjected or required to be subjected to the lien hereof by the express provisions of this Mortgage, whether now owned or hereafter acquired by the Mortgagor, which by their terms or by reason of applicable law would become void or voidable if mortgaged or pledged hereunder by the Mortgagor, or which cannot be granted, conveyed, mortgaged, transferred or assigned by this Mortgage without the consent of other parties whose consent has been withheld, or without subjecting any Mortgagee to a liability not otherwise contemplated by the provisions of this Mortgage, or which otherwise may not be, hereby lawfully and effectively granted, conveyed, mortgaged, transferred and assigned by the Mortgagor; and
J. the property identified in Schedule “C” hereto.
PROVIDED, HOWEVER, that (i) if, upon the occurrence of an Event of Default, any
However, pursuant to Granting Clause Third, the Mortgagor may subject to the lien of this Mortgage any Excepted Property, whereupon the same shall cease to be Excepted Property.
TO HAVE AND TO HOLD all said property, rights, privileges and franchises of every kind and description, real, personal or mixed, hereby and hereafter (by supplemental mortgage or otherwise) granted, bargained, sold, aliened, remised, released, conveyed, assigned, transferred, mortgaged, encumbered, hypothecated, pledged, setover, confirmed, or subjected to a continuing security interest and lien as aforesaid, together with all the appurtenances thereto appertaining (said properties, rights, privileges and franchises, including any cash and securities hereafter deposited with any Mortgagee ((other than any such cash, if any, which is specifically stated herein not to be deemed part of the Mortgaged Property)), being herein collectively called the “Mortgaged Property”) unto the Mortgagees and the respective assigns of the Mortgagees forever, to secure equally and ratably the payment of the principal of (and premium, if any) and interest on the Notes, according to their terms, without preference, priority or distinction as to interest or principal (except as otherwise specifically provided herein) or as to lien or otherwise of any Note over any other Note by reason of the priority in time of the execution, delivery or maturity thereof or of the assignment or negotiation thereof, or otherwise, and to secure the due performance of all of the covenants, agreements and provisions herein and in the Loan Agreements contained, and for the uses and purposes and upon the terms, conditions, provisos and agreements hereinafter expressed and declared.
SUBJECT, HOWEVER, to Permitted Encumbrances (as defined in Section 1.01).
Section 1.01.
(1) as to the property specifically described in Granting Clause First, the restrictions, exceptions, reservations, conditions, limitations, interests and other matters which are set forth or referred to in such descriptions and each of which fits one or more of the clauses of this definition, PROVIDED, such matters do not in the aggregate materially detract from the value of the Mortgaged Property taken as a whole and do not materially impair the use of such property for the purposes for which it is held by the Mortgagor;
(2) liens for taxes, assessments and other governmental charges which are not delinquent;
(3) liens for taxes, assessments and other governmental charges already delinquent which are currently being contested in good faith by appropriate proceedings; PROVIDED the Mortgagor shall have set aside on its books adequate reserves with respect thereto;
(4) mechanics’, workmen's, repairmen's, materialmen's, warehousemen's and carriers’ liens and other similar liens arising in the ordinary course of business for charges which are not delinquent, or which are being contested in good faith and have not proceeded to judgment; PROVIDED the Mortgagor shall have set aside on its books adequate reserves with respect thereto;
(5) liens in respect of judgments or awards with respect to which the Mortgagor shall in good faith currently be prosecuting an appeal or proceedings for review and with respect to which the Mortgagor shall have secured a stay of execution pending such appeal or proceedings for review; PROVIDED the Mortgagor shall have set aside on its books adequate reserves with respect thereto;
(6) easements and similar rights granted by the Mortgagor over or in respect of any Mortgaged Property, PROVIDED that in the opinion of the Board or a duly authorized officer of the Mortgagor such grant will not impair the usefulness of such property in the conduct of the Mortgagor's business and will not be prejudicial to the interests of the Mortgagees, and similar rights granted by any predecessor in title of the Mortgagor;
(7) easements, leases, reservations or other rights of others in any property of the Mortgagor for streets, roads, bridges, pipes, pipe lines, railroads, electric transmission and distribution lines, telegraph and telephone lines, the removal of oil, gas, coal or other minerals and other similar purposes, flood rights, river control and development rights, sewage and drainage rights, restrictions against pollution and zoning laws and minor defects and irregularities in the record evidence of title, PROVIDED that such easements, leases, reservations, rights, restrictions, laws, defects and irregularities do not materially affect the marketability of title to such property and do not in the aggregate materially impair the use of the Mortgaged Property taken as a whole for the purposes for which it is held by the Mortgagor;
(8) liens upon lands over which easements or rights of way are acquired by the Mortgagor for any of the purposes specified in Clause [(7)] of this definition, securing indebtedness neither created, assumed nor guaranteed by the Mortgagor nor on account of which it customarily pays interest, which liens do not materially impair the use of such easements or rights of way for the purposes for which they are held by the Mortgagor;
(9) leases existing at the date of this instrument affecting property owned by the Mortgagor at said date which have been previously disclosed to the Mortgagees in writing and leases for a term of not more than two years (including any extensions or renewals) affecting property acquired by the Mortgagor after said date;
(10) terminable or short term leases or permits for occupancy, which leases or permits expressly grant to the Mortgagor the right to terminate them at any time on not more than six months’ notice and which occupancy does not interfere with the operation of the business of the Mortgagor;
(11) any lien or privilege vested in any lessor, licensor or permittor for rent to become due or for other obligations or acts to be performed, the payment of which rent or performance of which other obligations or acts is required under leases, subleases, licenses or permits, so long as the payment of such rent or the performance of such other obligations or acts is not delinquent;
(12) liens or privileges of any employees of the Mortgagor for salary or wages earned but not yet payable;
(13) the burdens of any law or governmental regulation or permit requiring the Mortgagor to maintain certain facilities or perform certain acts as a condition of its occupancy of or interference with any public lands or any river or stream or navigable waters;
(14) any irregularities in or deficiencies of title to any rights-of-way for pipe lines, telephone lines, telegraph lines, power lines or appurtenances thereto, or other improvements thereon, and to any real estate used or to be used primarily for right-of-way purposes, PROVIDED that in the opinion of counsel for the Mortgagor, the Mortgagor shall have obtained from the apparent owner of the lands or estates therein covered by any such right-of-way a sufficient right, by the terms of the instrument granting such right-of-way, to the use thereof for the construction, operation or maintenance of the lines, appurtenances or improvements for which the same are used or are to be used, or PROVIDED that in the opinion of counsel for the Mortgagor, the Mortgagor has power under eminent domain, or similar statutes, to remove such irregularities or deficiencies;
(15) rights reserved to, or vested in, any municipality or governmental or other public authority to control or regulate any property of the Mortgagor, or to use such property in any manner, which rights do not materially impair the use of such property, for the purposes for which it is held by the Mortgagor;
(16) any obligations or duties, affecting the property of the Mortgagor, to any municipality or governmental or other public authority with respect to any franchise, grant, license or permit;
(17) any right which any municipal or governmental authority may have by virtue of any franchise, license, contract or statute to purchase, or designate a purchaser of or order the sale of, any property of the Mortgagor upon payment of cash or reasonable compensation therefor or to terminate any franchise, license or other rights or to regulate the property and business of the Mortgagor; PROVIDED, HOWEVER, that nothing in this clause 17 is intended to waive any claim or rights that the Government may otherwise have under Federal laws;
(18) as to properties of other operating electric companies acquired after the date of this Mortgage by the Mortgagor as permitted by Section [3.10] hereof, reservations and other matters as to which such properties may be subject as more fully set forth in such Section;
(19) any lien required by law or governmental regulations as a condition to the transaction of any business or the exercise of any privilege or license, or to enable the Mortgagor to maintain self-insurance or to participate in any fund established to cover any insurance risks or in connection with workmen's compensation, unemployment insurance, old age pensions or other social security, or to share in the privileges or benefits required for companies participating in such arrangements; PROVIDED, HOWEVER, that nothing in this clause 19 is intended to waive any claim or rights that the Government may otherwise have under Federal laws;
(20) liens arising out of any defeased mortgage or indenture of the Mortgagor;
(21) the undivided interest of other owners, and liens on such undivided interests, in property owned jointly with the Mortgagor as well as the rights of such owners to such property pursuant to the ownership contracts;
(22) any lien or privilege vested in any lessor, licensor or permittor for rent to become due or for other obligations or acts to be performed, the payment of which rent or the performance of which other obligations or acts is required under leases, subleases, licenses or permits, so long as the payment of such rent or the performance of such other obligations or acts is not delinquent;
(23) purchase money mortgages permitted by Section [3.08]; and
(24) the Original Mortgage.
(1) acquired (including acquisition by merger, consolidation, conveyance or transfer) or constructed by the Mortgagor after the date hereof, including property in the process of construction, insofar as not reflected on the books of the Mortgagor with respect to periods on or prior to the date hereof, and
(2) used or useful in the utility business of the Mortgagor conducted with the properties described in the Granting Clauses of this Mortgage, even though separate from and not physically connected with such properties.
“Property Additions” shall also include:
(3) easements and rights-of-way that are useful for the conduct of the utility business of the Mortgagor, and
(4) property located or constructed on, over or under public highways, rivers or other public property if the Mortgagor has the lawful right under permits, licenses or franchises granted by a governmental body having jurisdiction in the premises or by the law
“Property Additions” shall NOT include:
(a) good will, going concern value, contracts, agreements, franchises, licenses or permits, whether acquired as such, separate and distinct from the property operated in connection therewith, or acquired as an incident thereto, or
(b) any shares of stock or indebtedness or certificates or evidences of interest therein or other securities, or
(c) any plant or system or other property in which the Mortgagor shall acquire only a leasehold interest, or any betterments, extensions, improvements or additions (other than movable physical personal property which the Mortgagor has the right to remove), of, upon or to any plant or system or other property in which the Mortgagor shall own only a leasehold interest unless (i) the term of the leasehold interest in the property to which such betterment, extension, improvement or addition relates shall extend for at least 75% of the useful life of such betterment, extension, improvement or addition and (ii) the lessor shall have agreed to give the Mortgagee reasonable notice and opportunity to cure any default by the Mortgagor under such lease and not to disturb any Mortgagee's possession of such leasehold estate in the event any Mortgagee succeeds to the Mortgagor's interest in such lease upon any Mortgagee's exercise of any remedies under this Mortgage so long as there is no default in the performance of the tenant's covenants contained therein, or
(d) any property of the Mortgagor subject to the Permitted Encumbrance described in clause [(23)] of the definition thereof.
(1) an opinion of counsel to the effect that the Mortgagor has title, whether fairly deducible of record or based upon prescriptive rights (or, as to personal property, based on such evidence as counsel shall determine to be sufficient), as in the opinion of counsel is satisfactory for the use thereof in connection with the operations of the Mortgagor, and counsel in giving such opinion may disregard any irregularity or deficiency in the record evidence of title which, in the opinion of such counsel, can be cured by proceedings within the power of the Mortgagor or does not substantially impair the usefulness of such property for the purpose of the Mortgagor and may base such opinion upon counsel's own investigation or upon affidavits, certificates, abstracts of title, statements or investigations made by persons in whom such counsel has confidence or upon examination of a certificate or guaranty of title or policy of title insurance in which counsel has confidence; or
(2) a mortgagee's policy of title insurance in the amount of the cost to the Mortgagor of the land included in Property Additions, as such cost is determined by the Mortgagor in accordance with the Accounting Requirements, issued in favor of the Mortgagees by an entity authorized to insure title in the states where the subject property is located, showing the Mortgagor as the owner of the subject property and insuring the lien of this Mortgage; and with respect to any
SECTION 1.02.
a. Accounting terms not referred to above are used in this Mortgage in their ordinary sense and any computations relating to such terms shall be computed in accordance with the Accounting Requirements.
b. Any reference to “directors” or “board of directors” shall be deemed to mean “trustees” or “board of trustees,” as the case may be.
SECTION 1.03.
a. In the case of any Notes that have been guaranteed or insured as to payment by RUS, as to such Notes RUS shall be considered to be the Noteholder, exclusively, regardless of whether such Notes are in the possession of RUS.
b. In the case of any prior approval rights conferred upon RUS by Federal statutes, including (without limitation) Section 7 of the Rural Electrification Act of 1936, as amended, with respect to the sale or disposition of property, rights, or franchises of the Mortgagor, all such statutory rights are reserved except to the extent that they are expressly modified or waived in this Mortgage.
SECTION 1.04.
SECTION 1.05
As to the Mortgagor:
As to the Mortgagee:
Rural Utilities Service,
United States Department of Agriculture,
Washington, DC 20250-1500
SECTION 2.01.
(1) As evidenced by a certificate of an Independent certified public accountant sent to each Mortgagee on or before the first advance of proceeds from such Additional Notes:
(i) The Mortgagor shall have achieved for each of the two calendar years immediately preceding the issuance of such Additional Notes, a TIER of not less than 1.25 and a DSC of not less than 1.25;
(ii) After taking into account the effect of such Additional Notes on the Total Long Term Debt of the Mortgagor, the ratio of the Mortgagor's Net Utility Plant to its Total Long Term Debt shall be greater than or equal to 1.0 on a pro forma basis;
(iii) After taking into account the effect of such Additional Notes on the Total Assets of such Mortgagor, the Mortgagor shall have Equity greater than or equal to 27 percent of Total Assets on a pro forma basis; and
(iv) The sum of the aggregate principal amount of such Additional Notes (if any) that are not related to the Electric System if added to the aggregate outstanding principal amount of all the existing Notes (if any) that are not related to the Electric System will not exceed 30% of the Mortgagor's Equity on a pro forma basis.
(2) No Event of Default has occurred and is continuing hereunder, or any event which with the giving of notice or lapse of time or both would become an Event of Default has occurred and is continuing.
(3) The Eligible Property Additions being constructed, acquired, procured or replaced are part of the Mortgagor's Utility System.
(4) The Borrower's general manager or other duly authorized officer shall send to each of the Mortgagees a certificate in substantially the form attached hereto as [Exhibit A] on or before the date of the first advance of proceeds from such Additional Notes.
(b) For purposes of this section:
(1) “Eligible Property Additions” shall mean Property Additions acquired or whose construction was completed not more than 5 years prior to the issuance of the Additional Notes and Property Additions acquired or whose construction is started and/or completed not more than 4 years after issuance of the Additional Notes, but shall exclude any Property Additions financed by any other debt secured under the Mortgage at the time additional Notes are issued;
(2) Notes are considered to be “issued” on, and the date of “issuance” shall be, the date on which they are executed by the Mortgagor; and
(3) For purposes of calculating the pro forma ratios in subparagraphs (a)(1)(ii) and (iii), the values for Total Long Term Debt and Total Assets before debt issuance and the values for Equity and Net Utility Plant shall be the most recently available end-of-month figures preceding the issuance of the Additional Notes, but in no case for a month ending more than 180 days preceding such issuance.
SECTION 2.02.
SECTION 2.03.
SECTION 2.04.
SECTION 2.05.
(b) In the event that the Mortgagor subsequently issues Additional Notes pursuant to Sections [2.01] or [2.02] to any existing Mortgagee and that Mortgagee desires further assurance that such Additional Notes will be secured by the lien of the Mortgage, an instrument substantially in the form of the supplemental mortgage attached as Exhibit B may be used.
(c) In the event that the Mortgagor issues Additional Notes pursuant to Section [2.03] to either an existing Mortgagee or a new lender, in either case with the prior written consent of each Mortgagee, then an instrument substantially in the form of the supplemental mortgage attached as Exhibit B may also be used.
SECTION 3.01.
SECTION 3.02.
(b) At the time of the execution and delivery of this instrument, the Mortgagor lawfully owns and is possessed of the personal property specifically described in Granting Clauses [First and Second], subject to no mortgage, lien, charge or encumbrance except as stated therein, and has full power and lawful authority to mortgage, assign, transfer, deliver, pledge and grant a continuing security interest in said property and, including any proceeds thereof, in the manner and form aforesaid.
(c) The Mortgagor hereby does and will forever warrant and defend the title to the property specifically described in Granting Clause First against the claims and demands of all persons whomsoever, except Permitted Encumbrances.
SECTION 3.03.
(b) The Mortgagor will cause this Mortgage and all Supplemental Mortgages and other instruments of further assurance, including all financing statements covering security interests in personal property, to be promptly recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law fully to preserve and protect the rights of all of the Mortgagees and Noteholders hereunder to all property comprising the Mortgaged Property. The Mortgagor will furnish to each Mortgagee:
(1) promptly after the execution and delivery of this instrument and of each Supplemental Mortgage or other instrument of further assurance, an Opinion of Counsel stating that, in the opinion of such Counsel, this instrument and all such Supplemental Mortgages and other instruments of further assurance have been properly recorded, registered and filed to the extent necessary to make effective the lien intended to be created by this Mortgage, and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of all of the Mortgagees and Noteholders hereunder, or stating that, in the opinion of such Counsel, no such action is necessary to make the lien effective; and
(2) within 30 days after
SECTION 3.04.
(b) The Mortgagor shall defend, indemnify, and hold harmless each Mortgagee, its successors and assigns, from and against any and all liabilities, losses, damages, costs, expenses (including but not limited to reasonable attorneys’ fees and expenses), causes of actions, administrative proceedings, suits, claims, demands, or judgments of any nature arising out of or in connection with any matter related to the Mortgage Property and any Environmental Law, including but not limited to:
(1) the past, present, or future presence of any hazardous substance, contaminant, pollutant, or hazardous waste on or related to the Mortgaged Property;
(2) any failure at any time by the undersigned to comply with the terms of any order related to the Mortgaged Property and issued by any federal, state, or municipal department or agency (other than RUS) exercising its authority to enforce any Environmental Law; and
(3) any lien or claim imposed under any Environmental Law related to clause (1).
(c) Within 10 (ten) business days after receiving knowledge of any liability, losses, damages, costs, expenses (including but not limited to reasonable attorneys’ fees and expenses), cause of action, administrative proceeding, suit, claim, demand, judgment, lien, reportable event including but not limited to the release of a hazardous substance, or potential or actual violation or non-compliance arising out of or in connection with the Mortgaged Property and any Environmental Law, the Mortgagor shall provide each Mortgagee with written notice of such matter. With respect to any matter upon which it has provided such notice, the Mortgagor shall immediately take any and all appropriate actions to remedy, cure, defend, or otherwise affirmatively respond to the matter.
SECTION 3.05.
SECTION 3.06.
SECTION 3.07.
SECTION 3.08.
(1) Additional Notes issued in compliance with Article II hereof;
(2) Purchase money indebtedness in non-Utility System property, in an amount not exceeding 10% of Net Utility Plant;
(3) Restricted Rentals in an amount not to exceed 5% of Equity during any 12 consecutive calendar month period;
(4) Unsecured lease obligations incurred in the ordinary course of business except Restricted Rentals;
(5) Debt represented by dividends declared but not paid; and
(6) Subordinated Indebtedness approved by each Mortgagee.
PROVIDED, However, that the Mortgagor may incur Permitted Debt without the consent of the Mortgagee only so long as there exists no Event of Default hereunder and there has been no continuing occurrence which with the passage of time and giving of notice could become an Event of Default hereunder.
PROVIDED, FURTHER, by executing this Mortgage any consent of RUS that the Mortgagor would otherwise be required to obtain under this Section is hereby deemed to be given or waived by RUS by operation of law to the extent, but only to the extent, that to impose such a requirement of RUS consent would clearly violate existing federal laws or government regulations.
SECTION 3.09.
SECTION 3.10.
SECTION 3.11.
SECTION 3.12.
(b) If in the sole judgement of any Mortgagee, the Mortgaged Property is not being maintained and repaired in accordance with paragraph (a) of this section, such Mortgagee may send to the Mortgagor a written report of needed improvements and the Mortgagor will upon receipt of such written report promptly undertake to accomplish such improvements.
(c) The Mortgagor further agrees that upon reasonable written request of any Mortgagee, which request together with the requests of any other Mortgagees shall be made no more frequently than once every three years, the Mortgagor will supply promptly to each Mortgagee a certification (hereinafter called the “Engineer's Certification”), in form satisfactory to the requestor, prepared by a professional engineer, who shall be satisfactory to the Mortgagees, as to the condition of the Mortgaged Property. If in the sole judgment of any Mortgagee the Engineer's Certification discloses the need for improvements to the condition of the Mortgaged Property or any other operations of the Mortgagor, such Mortgagee may send to the Mortgagor a written report of such improvements and the Mortgagor will upon receipt of such written report promptly undertake to accomplish such of these improvements as are required by such Mortgagee.
SECTION 3.13.
(b) The foregoing insurance coverage shall be obtained by means of bond and policy forms approved by regulatory authorities having jurisdiction, and, with respect to insurance upon any part of the Mortgaged Property, shall provide that the insurance shall be payable to the Mortgagees as their interests may appear by means of the standard mortgagee clause without contribution. Each policy or other contract for such insurance shall contain an agreement by the insurer that, notwithstanding any right of cancellation reserved to such insurer, such policy or contract shall continue in force for at least 30 days after written notice to each Mortgagee of cancellation.
(c) In the event of damage to or the destruction or loss of any portion of the Mortgaged Property which is used or useful in the Mortgagor's business and which shall be covered by insurance, unless each Mortgagee shall otherwise agree, the Mortgagor shall replace or restore such damaged, destroyed or lost portion so that such Mortgaged Property shall be in substantially the same condition as it was in prior to such damage, destruction or loss, and shall apply the proceeds of the insurance for that purpose. The Mortgagor shall replace the lost portion of such Mortgaged Property or shall commence such restoration promptly after such damage, destruction or loss shall have occurred and shall complete such replacement or restoration as expeditiously as practicable, and shall pay or cause to be paid out of the proceeds of such insurance all costs and expenses in connection therewith.
(d) Sums recovered under any policy or fidelity bond by the Mortgagor for a loss of funds advanced under the Notes or recovered by any Mortgagee or any Noteholder for any loss under such policy or bond shall, unless
SECTION 3.14.
SECTION 3.15.
SECTION 3.16.
(b) If any part of the Mortgaged Property shall be taken by eminent domain, each Mortgagee shall release the property so taken from the Mortgaged Property and shall be fully protected in so doing upon being furnished with:
(1) A certificate of a duly authorized officer of the Mortgagor requesting such release, describing the property to be released and stating that such property has been taken by eminent domain and that all conditions precedent herein provided or relating to such release have been complied with; and
(2) an opinion of counsel to the effect that such property has been lawfully taken by exercise of the right of eminent domain, that the award for such property so taken has become final and that all conditions precedent herein provided for relating to such release have been complied with.
SECTION 3.17.
SECTION 3.18.
SECTION 3.19.
SECTION 3.20.
SECTION 4.01.
(a) default shall be made in the payment of any installment of or on account of interest on or principal of (or premium, if any associated with) any Note or Notes for more than five (5) Business Days after the same shall be required to be made;
(b) default shall be made in the due observance or performance of any other of the covenants, conditions or agreements on the part of the Mortgagor, in any of the Notes, Loan Agreements or in this Mortgage, and such default shall continue for a period of thirty (30) days after written notice specifying such default and requiring the same to be remedied and stating that such notice is a “Notice of Default” hereunder shall have been given to the Mortgagor by any Mortgagee; PROVIDED, HOWEVER that in the case of a default on the terms of a Note or Loan Agreement of a particular Mortgagee, the “Notice of Default” required under this paragraph may only be given by that Mortgagee;
(c) the Mortgagor shall file a petition in bankruptcy or be adjudicated a bankrupt or insolvent, or shall make an assignment for the benefit of its creditors, or shall consent to the appointment of a receiver of itself or of its property, or shall institute proceedings for its reorganization or proceedings instituted by others for its reorganization shall not be dismissed within sixty (60) days after the institution thereof;
(d) a receiver or liquidator of the Mortgagor or of any substantial portion of its property shall be appointed and the order appointing such receiver or liquidator shall not be vacated within sixty (60) days after the entry thereof;
(e) the Mortgagor shall forfeit or otherwise be deprived of its corporate charter or franchises, permits, easements, or licenses required to carry on any material portion of its business;
(f) a final judgment for an amount of more than $
(g) any material representation or warranty made by the Mortgagor herein, in the Loan Agreements or in any certificate or financial statement delivered hereunder or thereunder shall prove to be false or misleading in any material respect at the time made.
SECTION 4.02.
(a) If an Event of Default described in Section [4.01(a)] has occurred and is continuing, any Mortgagee upon which such default has occurred may declare the principal of all its Notes secured hereunder to be due and payable immediately by a notice in writing to the Mortgagor and to the other Mortgagees (failure to provide said notice to any other Mortgagee shall not affect the validity of any acceleration of the Note or Notes by such Mortgagee), and upon such declaration, all unpaid principal (and premium, if any) and accrued interest so declared shall become due and payable immediately, anything contained herein or in any Note or Notes to the contrary notwithstanding.
(b) If any other Event of Default shall have occurred and be continuing, any Mortgagee
(c) Upon receipt of actual knowledge of or any notice of acceleration by any Mortgagee, any other Mortgagee may declare the principal of all of its Notes to be due and payable immediately by a notice in writing to the Mortgagor and upon such declaration, all unpaid principal (and premium, if any) and accrued interest so declared shall become due and payable immediately, anything contained herein or in any Note or Notes or Loan Agreements to the contrary notwithstanding.
(d) If after the unpaid principal of (and premium, if any) and accrued interest on any of the Notes shall have been so declared to be due and payable, all payments in respect of principal and interest which shall have become due and payable by the terms of such Note or Notes (other than amounts due as a result of the acceleration of the Notes) shall be paid to the respective Mortgagees, and (i) all other defaults under the Loan Agreements, the Notes and this Mortgage shall have been made good or cured to the satisfaction of the Mortgagees representing at least 80% of the aggregate unpaid principal balance of all of the Notes then Outstanding, (ii) proceedings to foreclose the lien of this Mortgage have not been commenced, and (iii) all reasonable expenses paid or incurred by the Mortgagees in connection with the acceleration shall have been paid to the respective Mortgagees, then in every such case such Mortgagees representing at least 80% of the aggregate unpaid principal balance of all of the Notes then Outstanding may by written notice to the Mortgagor, for purposes of this Mortgage, annul such declaration and waive such default and the consequences thereof, but no such waiver shall extend to or affect any subsequent default or impair any right consequent thereon.
SECTION 4.03.
(a) take immediate possession of the Mortgaged Property, collect and receive all credits, outstanding accounts and bills receivable of the Mortgagor and all rents, income, revenues, proceeds and profits pertaining to or arising from the Mortgaged Property, or any part thereof, whether then past due or accruing thereafter, and issue binding receipts therefor; and manage, control and operate the Mortgaged Property as fully as the Mortgagor might do if in possession thereof, including, without limitation, the making of all repairs or replacements deemed necessary or advisable by such Mortgagee in possession;
(b) proceed to protect and enforce the rights of all of the Mortgagees by suits or actions in equity or at law in any court or courts of competent jurisdiction, whether for specific performance of any covenant or any agreement contained herein or in aid of the execution of any power herein granted or for the foreclosure hereof or hereunder or for the sale of the Mortgaged Property, or any part thereof, or to collect the debts hereby secured or for the enforcement of such other or additional appropriate legal or equitable remedies as may be deemed necessary or advisable to protect and enforce the rights and remedies herein granted or conferred, and in the event of the institution of any such action or suit the Mortgagee instituting such action or suit shall have the right to have appointed a receiver of the Mortgaged Property and of all proceeds, rents, income, revenues and profits pertaining thereto or arising therefrom, whether then past due or accruing after the appointment of such receiver, derived, received or had from the time of the commencement of such suit or action, and such receiver shall have all the usual powers and duties of receivers in like and similar cases, to the fullest extent permitted by law, and if application shall be made for the appointment of a receiver the Mortgagor hereby expressly consents that the court to which such application shall be made may make said appointment; and
(c) sell or cause to be sold all and singular the Mortgaged Property or any part thereof, and all right, title, interest, claim and demand of the Mortgagor therein or thereto, at public auction at such place in any county (or its equivalent locality) in which the property to be sold, or any part thereof, is located, at such time and upon such terms as may be specified in a notice of sale, which shall state the time when and the place where the sale is to be held, shall contain a brief general description of the property to be sold, and shall be given by mailing a copy thereof to the Mortgagor at least fifteen (15) days prior to the date fixed for such sale and by publishing the same once in each week for two successive calendar weeks prior to the date of such sale in a newspaper of general circulation published in said locality or, if no such newspaper is published in such locality, in a newspaper of general circulation in such locality, the first such publication to be not less than fifteen (15) days nor more than thirty (30) days prior to the date fixed for such sale. Any sale to be made under this subparagraph (c) of this Section [4.03] may be
(d) In the event that a Mortgagee proceeds to enforce remedies under this Section, any other Mortgagee may join in such proceedings. In the event that the Mortgagees are not in agreement with the method or manner of enforcement chosen by any other Mortgagee, the Mortgagees representing a majority of the aggregate unpaid principal balance on the then Outstanding Notes may direct the method and manner in which remedial action will proceed.
SECTION 4.04.
SECTION 4.05.
SECTION 4.06.
SECTION 4.07.
SECTION 5.01.
SECTION 5.02.
SECTION 5.03.
SECTION 6.01.
SECTION 6.02.
SECTION 6.03.
SECTION 6.04.
SECTION 6.05.
SECTION 6.06.
IN WITNESS WHEREOF,
Executed by the Mortgagor in the presence of:
Executed by the United States of America, Mortgagee, in the presence of:
Executed by the above-named Mortgagee in the presence of:
1. The Maximum Debt Limit is
2. The Original Mortgage as described in the [first] WHEREAS clause above is
3. The outstanding secured indebtedness described in the [fourth] WHEREAS clause above as evidenced by the Original Notes is as follows:
[Note this requires computation of principal balances, not merely a toting up of the original face amounts of the notes. Alternative approaches may be used by the parties where legally effective and mutually agreeable.]
The fee and leasehold interests in real property referred to in Section Subclause (a) of Granting Clause One are
The counties referred to in Subclause (B) of Granting Clause One are
On this
IN WITNESS whereof, I have hereunto set my hand and official seal the day and year last above written.
My commission expires:
The foregoing instrument was acknowledged before me this
My Commission expires:
BEFORE ME, a Notary Public, in and for the Commonwealth of Virginia, appeared in person
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this
My commission expires:
On behalf on
1. I am the Manager of the Borrower and have been duly authorized to deliver this certificate in connection with the Additional Note or Notes to be issued on or about
2. No Event of Default has occurred and is continuing under the Mortgage, or any event which with the giving of notice or lapse of time or both would become an Event of Default has occurred and is continuing.
3. The Additional Notes described in paragraph 1 are for the purpose of funding Property Additions being constructed, acquired, procured or replaced that are or will become part of the Borrower's Utility System.
4. The Property Additions referred to in paragraph 3 are Eligible Property Additions, i.e. Property Additions acquired or whose construction was completed not more than 5 years prior to the issuance of additional Notes and Property Additions acquired or whose construction is started and/or completed not more than 4 years after issuance of the additional Notes, but shall exclude any Property Additions financed by any other debt secured under the Mortgage at the time additional Notes are issued.
5. I have reviewed the certificate of the Independent certified public accountant also being delivered to each of the Mortgagees pursuant to Section [2.01] in connection with the aforesaid Additional Note or Notes and concur with the conclusions expressed therein.
6. Capitalized terms that are used in this certificate but are not defined herein have the meanings defined in the Mortgage.
Supplemental Mortgage and Security Agreement, dated as of
Whereas, the Mortgagor, the Government and
Whereas, the Mortgagor deems it necessary to borrow money for its corporate purposes and to issue its promissory notes and other debt obligations therefor, and to mortgage and pledge its property hereinafter described or mentioned to secure the payment of the same, and to enter into this Supplemental Mortgage pursuant to which all secured debt of the Mortgagor hereunder shall be secured on parity, and to add
Whereas, the RUS Mortgage, as supplemented hereby, preserves the priority of the Original Mortgage for the pro rata benefit of all the Mortgagees and secures the payment of all of the Mortgagor's outstanding indebtedness as listed in the Instruments Recital of Schedule “A”; and
Whereas, all acts necessary to make this Supplemental Mortgage a valid and binding legal instrument for the security of such notes and obligations, subject to the terms of the RUS Mortgage, have been in all respects duly authorized:
Now, Therefore, This Supplemental Mortgage Witnesseth: That to secure the payment of the principal of (and premium, if any) and interest on all Notes issued hereunder according to their tenor and effect, and the performance of all provisions therein and herein contained, and in consideration of the covenants herein contained and the purchase or guarantee of Notes by the guarantors or holders thereof, the Mortgagor has mortgaged, pledged and granted a continuing security interest in, and by these presents does hereby grant, bargain, sell, alienate, remise, release, convey, assign, transfer, hypothecate, pledge, set over and confirm, pledge and grant a continuing security interest in for the purposes hereinafter expressed [other language may be required under various state laws], unto the Mortgagees all property, rights, privileges and franchises of the Mortgagor of every kind and description,
A. All of those fee and leasehold interests in real property set forth in Schedule “B” hereto, subject in each case to those matters set forth in such Schedule; and
B. All of those fee and leasehold interests in real property set forth in Schedule “B” of the Original Mortgage or in any restatement, amendment or supplement thereto, subject in each case to those matters set forth in such Schedule; and
C. All of the kinds, types or items of property, now owned or hereafter acquired, described as Mortgaged Property in the Original Mortgage or in any restatement, amendment to supplement thereto as Mortgaged Property.
It is Further Agreed and Covenanted That the Original Mortgage, as previously restated, amended or supplemented, and this Supplement shall constitute one agreement and the parties hereto shall be bound by all of the terms thereof and, without limiting the foregoing.
1. All capitalized terms not defined herein shall have the meaning given in Article I of the Original Mortgage.
2. This Supplemental Mortgage is one of the Supplemental Mortgages contemplated by Article II of the Original Mortgage.
In Witness Whereof,
1. The Maximum Debt Limit is
2. The Original Mortgage as described in the first WHEREAS clause above is
3. The outstanding secured indebtedness described in the third WHEREAS clause above is
The fee and leasehold interests in real property referred to in clause A of the granting clause are
(a)
(b)
(c)
(d)
(a)
(b)
For the purposes of this subpart:
Loan contracts executed pursuant to this subpart shall contain such provisions as RUS determines are appropriate to further the purposes of the RE Act and to ensure that the security for the loan will be reasonably adequate and that the loan will be repaid according to the terms of the promissory note. Such loan contracts will contain provisions addressing, but not necessarily limited to, the following matters:
(a) Description of the purpose of the loan;
(b) Specification of the interest to be charged on the loan, including the method for determining the interest rate if it is not fixed for the entire term of the loan;
(c) Specification of the method for repaying the loan principal, including the final maturity of the loan;
(d) The conditions under which the loan may be prepaid before its maturity date, including but not limited to requirements regarding the prepayment of loans made concurrently by RUS and another secured lender;
(e) The method for making scheduled payments on the loan;
(f) Accounting principles and system of accounts, and RUS authority to approve the accountant used by the borrower;
(g) The method and time period for advancing loan funds and the conditions precedent to the advance of funds;
(h) Representations and warranties by the borrower as a condition of obtaining the loan, including but not limited to: the legal authority of the borrower to enter into the loan contract and operate its system; that the loan documents will be a legal, valid and binding obligation of the borrower enforceable according to their terms; compliance of the borrower in all material respects with all federal, state, and local laws, regulations, codes, and orders; existence of any pending or threatened legal actions that could have a material adverse effect on the borrower's ability to perform its obligations under the loan documents; the
(i) Representations, warranties, and covenants with respect to environmental matters;
(j) Reports and notices required to be submitted to RUS, including but not limited to: annual financial statements; notice of defaults; notice of litigation; notice of orders or other directives received by the borrower from regulatory authorities; notice of any matter that has resulted in or may result in a material adverse change in the condition or operations of the borrower; and such other information regarding the condition or operations of the borrower as RUS may reasonably require;
(k) Annual written certification that the borrower is in compliance with its loan contract, note, mortgage, and any other agreement with RUS, or if there has been a default in the fulfillment of any obligation under said agreements, specifying each such default and the nature and status thereof;
(l) Requirement that the borrower design and implement rates for utility services to meet certain minimum coverage of interest expense and/or debt service obligations;
(m) Requirement that the borrower maintain and preserve its mortgaged property in compliance with prudent utility practice and all applicable laws, which may include certain specific actions and certifications set forth in the borrower's loan contract or mortgage;
(n) Requirement that the borrower plan, design and construct its electric system according to standards and other requirements established by RUS, and if directed by the Administrator, that the borrower follow RUS planning, design and construction standards and requirements for other utility systems constructed by the borrower;
(o) Limitations on extensions and additions to the borrower's electric system without approval by RUS;
(p) Limitations on contracts and contract amendments that the borrower may enter into without approval by RUS;
(q) Limitations of the transfer of mortgaged property by the borrower;
(r) Limitations on dividends, patronage refunds, and cash distributions paid by the borrower;
(s) Limitations on investments, loans, and guarantees made by the borrower;
(t) Authority of RUS to approve a new general manager and to require that an existing general manager be replaced if the borrower is in default under its mortgage, loan contract, or any other agreements with RUS;
(u) Description of events of default under the loan contract and the remedies available to RUS;
(v) Applicability of state and federal laws;
(w) Severability of the individual provisions of the loan documents;
(x) Matters relating to the assignment of the loan contract;
(y) Requirements relating to federal laws and regulations, including but not limited to the following matters: area coverage for electric service; civil rights and equal employment opportunity; access to buildings and other matters relating to the handicapped; design and construction standards relating to earthquakes; the National Environmental Policy Act of 1969 and other environmental laws and regulations; flood hazard insurance; debarment and suspension from federal assistance programs; and delinquency on federal debt; and
(z) Special requirements applicable to individual loans, and such other provisions as RUS may require to ensure loan repayment and reasonably adequate loan security.
Single copies of the model loan contract (RUS Informational Publication 1718 C) are available from the Rural Utilities Service, United States Department of Agriculture, Washington, DC 20250-1533. This document may be reproduced.
AGREEMENT, dated
The Borrower has applied to RUS for a loan for the purpose(s) set forth in Schedule 1 hereto.
RUS is willing to make such a loan to the Borrower pursuant to the Rural Electrification Act of 1936, as amended, on the terms and conditions stated herein.
THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto agree and bind themselves as follows:
Capitalized terms that are not defined herein shall have the meanings as set forth in the Mortgage. The terms defined herein include the plural as well as the singular and the singular as well as the plural.
“Act” shall mean the Rural Electrification Act of 1936, as amended.
“Advance” or “Advances” shall mean advances by RUS to Borrower pursuant to the terms and conditions of this Agreement.
“Agreement” shall mean this Loan Contract together with all schedules and exhibits and also any subsequent supplements or amendments.
“Business Day” shall mean any day that RUS is open for business.
“Contemporaneous Loan” shall mean any loan which the Borrower has used to satisfy RUS Regulations or loan conditions requiring that supplemental financing be obtained in order to obtain a loan from RUS. Any loan used to refinance or refund a Contemporaneous Loan is also considered to be a Contemporaneous Loan.
“Coverage Ratios” shall mean, collectively, the following financial ratios: (i) TIER of 1.25; (ii) Operating TIER of 1.1; (iii) DSC of 1.25; and Operating DSC of 1.1.
“Debt Service Coverage Ratio” (“DSC”) shall have the meaning provided in the Mortgage.
“Distributions” shall mean for the Borrower to, in any calendar year, declare or pay any dividends, or pay or determine to pay any patronage refunds, or retire any patronage capital or make any other Cash Distributions, to its members, stockholders or consumers; provided, however, that for the purposes of this Agreement a “Cash Distribution” shall be deemed to include any general cancellation or abatement of charges for electric energy or services furnished by the Borrower, but not the repayment of a membership fee upon termination of a membership or the rebate of an abatement of wholesale power costs previously incurred pursuant to an order of a state regulatory authority or a wholesale power cost adjustment clause or similar power pricing agreement between the Borrower and a power supplier.
“Electric System” shall have the meaning as defined in the Mortgage.
“Equity” shall mean the Borrower's total margins and equities computed pursuant to RUS Accounting Requirements but excluding any Regulatory Created Assets.
“Event of Default” shall have the meaning as defined in Section [7.1].
“Independent” when used with respect to any specified person or entity means such a person or entity who (1) is in fact independent, (2) does not have any direct financial interest or any material indirect financial interest in the Borrower or in any affiliate of the Borrower and (3) is not connected with the Borrower as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.
“Interest Expense” shall mean the interest expense of the Borrower computed pursuant to RUS Accounting Requirements.
“Loan” shall mean the loan described in Article III which is being made pursuant to the RUS Commitment in furtherance of the objectives of the Act.
“Loan Documents” shall mean, collectively, this Agreement, the Mortgage and the Note.
“Long-Term Debt” shall mean the total of all amounts included in the long-term debt of the Borrower pursuant to RUS Accounting Requirements.
“Maturity Date” shall have the meaning as defined in the Note.
“Monthly Payment Date” shall have the meaning as defined in the Note.
“Mortgage” shall have the meaning as described in Schedule 1 hereto.
“Mortgaged Property” shall have the meaning as defined in the Mortgage.
“Net Utility Plant” shall mean the amount constituting the Total Utility Plant of the Borrower, less depreciation, computed in accordance with RUS Accounting Requirements.
“Note” shall mean a promissory note executed by the Borrower in the form of exhibit A hereto, and any note executed and delivered to RUS to refund, or in substitution for such a note.
“Operating DSC” or “ODSC” shall mean Operating Debt Service Coverage calculated as:
“Operating TIER” or “OTIER” shall mean Operating Times Interest Earned Ratio calculated as:
“Payment Notice” shall mean a notice furnished by RUS to Borrower that indicates the precise amount of each payment of principal and interest and the total amount of each payment.
“Permitted Debt” shall have the meaning as defined in section [6.13].
“Prior Loan Contracts” shall have the meaning as defined in section 9.15.
“Regulatory Created Assets” shall mean the sum of any amounts properly recordable as unrecovered plant and regulatory study costs or as other regulatory assets, computed pursuant to RUS Accounting Requirements.
“RUS Accounting Requirements” shall mean any system of accounts prescribed by RUS Regulations as such RUS Accounting Requirements exist at the date of applicability thereof.
“RUS Commitment” shall have the meaning as defined in schedule 1 hereto.
“RUS Regulations” shall mean regulations of general applicability published by RUS from time to time as they exist at the date of applicability thereof, and shall also include any regulations of other Federal entities which RUS is required by law to implement.
“Special Construction Account” shall have the meaning as defined in section 5.21.
“Subsidiary” shall mean a corporation that is a subsidiary of the Borrower and subject to the Borrower's control, as defined by RUS Accounting Requirements.
“Termination Date” shall have the meaning as defined in the Note.
“Times Interest Earned Ratio” (“TIER”) shall have the meaning provided in the Mortgage.
“Total Assets” shall mean an amount constituting the total assets of the Borrower as computed pursuant to RUS Accounting Requirements, but excluding any Regulatory Created Assets.
“Total Utility Plant” shall mean the amount constituting the total utility plant of the Borrower computed in accordance with RUS Accounting Requirements.
“Utility System” shall have the meaning as defined in the Mortgage.
To induce RUS to make the Loan, and recognizing that RUS is relying hereon, the Borrower represents and warrants as follows:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
RUS agrees to make, and the Borrower agrees to request, on the terms and conditions of this Agreement, Advances from time to time in an aggregate principal amount not to exceed the RUS Commitment. On the Termination Date, RUS may stop advancing funds and limit the RUS Commitment to the amount advanced prior to such date. The obligation of the Borrower to repay the Advances shall be evidenced by the Note in the principal amount of the unpaid principal amount of the Advances from time to time outstanding. The Borrower shall give RUS written notice of the date on which each Advance is to be made.
The Note shall be payable and bear interest as follows:
(a)
(b)
(c)
(d)
The Borrower has no right to prepay the Note in whole or in part except such rights, if any, as are expressly provided for in the Note. However, prepayment of the Note (and any penalties) shall be mandatory under Section [5.3] hereof if the Borrower has used a Contemporaneous Loan in order to qualify for the RUS Commitment, and later prepays the Contemporaneous Loan.
The obligation of RUS to make any Advance hereunder is subject to satisfaction of each of the following conditions precedent on or before the date of such Advance:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
The obligation of RUS to make any Advance hereunder is also subject to satisfaction, on or before the date of such Advance, of each of the special conditions, if any, listed in Schedule 1 hereto.
Unless otherwise agreed to in writing by RUS, while this Agreement is in effect, whether or not any Advance is outstanding, the Borrower agrees to duly observe each of the affirmative covenants contained in this Article:
(a)
(b)
If the Borrower shall at any time prepay in whole or in part the Contemporaneous Loan described on Schedule 1, the Borrower shall prepay the RUS Note correspondingly in order to maintain the ratio that the Contemporaneous Loan bears to the RUS Commitment. If the RUS Note calls for a prepayment penalty or premium, such amount shall be paid but shall not be used in computing the amount needed to be paid to RUS under this section to maintain such ratio. In the case of Contemporaneous Loans and RUS Notes existing prior to the date of this Agreement under previous agreements, prepayments shall be treated as if governed by this section. Provided, however, in all cases prepayments associated with refinancing or refunding a Contemporaneous Loan pursuant to Article II of the Mortgage are not considered to be prepayments for purposes of this Agreement if they satisfy each of the following requirements:
(a)
(b)
(a)
(b) The average Coverage Ratios achieved by the Borrower in the 2 best years out of the 3 most recent calendar years must be not less than any of the following:
(c)
(d)
(e)
(f)
(g)
The Borrower shall adopt as its depreciation rates only those which have been previously approved for the Borrower by RUS.
The Borrower shall maintain and preserve its Utility System in compliance in all material respects with the provisions of the Mortgage, RUS Regulations and all applicable laws.
The Borrower shall at all times keep, and safely preserve, proper books, records and accounts in which full and true entries shall be made of all of the dealings, business and affairs of the Borrower and its Subsidiaries, in accordance with any applicable RUS Accounting Requirements.
The Borrower shall afford RUS, through its representatives, reasonable opportunity, at all times during business hours and upon prior notice, to have access to and the right to inspect the Utility System, any other property encumbered by the Mortgage, and any or all books, records, accounts, invoices, contracts, leases, payrolls, canceled checks, statements and other documents and papers of every kind belonging to or in the possession of the Borrower or in anyway pertaining to its property or business, including its Subsidiaries, if any, and to make copies or extracts therefrom.
(a) The Borrower shall make diligent effort to extend electric service to all unserved persons within the service area of the Borrower who (i) desire such service and (ii) meet all reasonable requirements established by the Borrower as a condition of such service.
(b) If economically feasible and reasonable considering the cost of providing such service and/or the effects on consumers’ rates, such service shall be provided, to the maximum extent practicable, at the rates and minimum charges established in the Borrower's rate schedules, without the payment of such persons, other than seasonal or temporary consumers, of a contribution in aid of construction. A seasonal consumer is one that demands electric service only during certain seasons of the year. A temporary consumer is a seasonal or year-round consumer that demands electric service over a period of less than five years.
(c) The Borrower may assess contributions in aid of construction provided such assessments are consistent with this section.
In acquiring real property, the Borrower shall comply in all material respects with the provisions of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (the “Uniform Act”), as amended by the Uniform Relocation Act Amendments of 1987, and 49 CFR part 24, referenced by 7 CFR part 21, to the extent the Uniform Act is applicable to such acquisition.
The Borrower shall use or cause to be used in connection with the expenditures of funds advanced on account of the Loan only such unmanufactured articles, materials, and supplies as have been mined or produced in the United States or any eligible country, and only such manufactured articles, materials, and supplies as have been manufactured in the United States or any eligible country substantially all from articles, materials, and supplies mined, produced or manufactured, as the case may be, in the United States or any eligible country, except to the extent RUS shall determine that such use shall be impracticable or that the cost thereof shall be unreasonable. For purposes of this section, an “eligible country” is any country that applies with respect to the United States an agreement ensuring reciprocal access for United States products and services and United States suppliers to the markets of that country, as determined by the United States Trade Representative.
The Borrower shall prepare and use power requirements studies of its electric loads and future energy and capacity requirements in conformance with RUS Regulations.
The Borrower shall develop, maintain and use up-to-date long-range engineering plans and construction work plans in conformance with RUS Regulations.
The Borrower shall use design standards, construction standards, and lists of acceptable materials in conformance with RUS Regulations.
The Borrower shall submit plans and specifications for construction to RUS for review and approval, in conformance with RUS Regulations, if the construction will be financed in whole or in part by a loan made or guaranteed by RUS.
The Borrower shall use the standard forms of contracts promulgated by RUS for construction, procurement, engineering services and architectural services in conformance with RUS Regulations, if the construction, procurement, or services are being financed in whole or in part by a loan being made or guaranteed by RUS.
The Borrower shall follow RUS contract bidding procedures in conformance with RUS Regulations when contracting for construction or procurement financed in whole or in part by a loan made or guaranteed by RUS.
(a)
(b)
(c)
The Borrower shall cause to be prepared and furnished to RUS a full and complete annual report of its financial condition and of its operations in form and substance satisfactory to RUS, audited and certified by Independent certified public accountants satisfactory to RUS and accompanied by a report of such audit in form and substance satisfactory to RUS. The Borrower shall also furnish to RUS from time to time such other reports concerning the financial condition or operations of the Borrower, including its Subsidiaries, as RUS may reasonably request or RUS Regulations require.
The Borrower shall furnish to RUS:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
The Borrower shall hold all moneys advanced to it by RUS hereunder in trust for RUS and shall deposit such moneys promptly after the receipt thereof in a bank or banks which meet the requirements of Section [6.7] of this Agreement. Any account (hereinafter called “Special Construction Account”) in which any such moneys shall be deposited shall be insured by the Federal Deposit Insurance Corporation or other federal agency acceptable to RUS and shall be designated by the corporate name of the Borrower followed by the words “Trustee, Special Construction Account.” Moneys in any Special Construction Account shall be used solely for the construction and operation of the Utility System and may be withdrawn only upon checks, drafts, or orders signed on behalf of the Borrower and countersigned by an executive officer thereof.
The Borrower also agrees to comply with any additional affirmative covenant(s) identified in Schedule 1 hereto.
Unless otherwise agreed to in writing by RUS, while this Agreement is in effect, whether or not any Advance is outstanding hereunder, the Borrower shall duly observe each of the negative covenants set forth in this Article.
(a) The Borrower shall not extend or add to its Electric System either by construction or acquisition without the prior written approval of RUS if the construction or acquisition is financed or will be financed, in whole or in part, by a RUS loan or loan guarantee.
(b) The Borrower shall not extend or add to its Electric System with funds from other sources without prior written approval of RUS in the case of:
(1) Generating facilities if the combined capacity of the facilities to be built, procured, or leased, including any future facilities included in the planned project, will exceed the lesser of 5 Megawatts or 30 percent of the Borrower's Equity;
(2) Existing electric facilities or systems in service whose purchase price, or capitalized value in the case of a lease, exceeds ten percent of the Borrower's Net Utility Plant; and
(3) Any project to serve a customer whose annual Kwh purchases or maximum annual Kw demand is projected to exceed 25 percent of the Borrower's total Kwh sales or maximum Kw demand in the year immediately preceding the acquisition or start of construction of facilities.
The Borrower shall not change its principal place of business or keep property in a county not shown on a schedule to the Mortgage if the change would cause the lien in favor of RUS to become unperfected or fail to become perfected, as the case may be, unless, prior thereto, the Borrower shall have taken all steps required by law in order to assure that the lien in favor of RUS remains or becomes perfected, as the case may be, and, in either event, such lien has the priority accorded by the Mortgage.
At any time any Event of Default, or any occurrence which with the passage of time or giving of notice would be an Event of Default, occurs and is continuing the Borrower shall not employ any general manager of the Utility System or the Electric System or any person exercising comparable authority to such a manager unless such employment shall first have been approved by RUS. If any Event of Default, or any occurrence which with the passage of time or giving of notice would be an Event of Default, occurs and is continuing and RUS requests the Borrower to terminate the employment of any such manager or person exercising comparable authority, or RUS requests the Borrower to terminate any contract for operating the Utility System or the Electric System, the Borrower shall do so within thirty (30) days after the date of such notice. All contracts in respect of the employment of any such manager or person exercising comparable authority, or for the operation of the Utility System or the Electric System, shall contain provisions to permit compliance with the foregoing covenants.
Without the prior approval of RUS in writing, the Borrower shall not enter into any of the following contracts:
(a)
(b)
(c)
(d)
(e)
(f)
(a) The Borrower shall not consolidate with, or merge, or sell all or substantially all of its business or assets, to another entity or person except to the extent it is permitted to do so under the Mortgage. The exception contained in this paragraph (a) is subject to the additional limitation set forth in paragraph (b) of this section.
(b) The Borrower shall not, without the written approval of the Administrator, voluntarily or involuntarily sell, convey or dispose of any portion of its business or assets (including, without limitation, any portion of its franchise or service territory) to another entity or person if such sale, conveyance or disposition could reasonably be expected to reduce the Borrower's existing or future requirements for energy or capacity being furnished to the Borrower under any wholesale power contract which has been pledged as security to RUS.
Without the prior written approval of RUS, the Borrower shall not place the proceeds of the Loan or any loan which has been made or guaranteed by RUS in the custody of any bank or other depository that is not insured by the Federal Deposit Insurance Corporation or other federal agency acceptable to RUS.
Without the prior written approval of RUS, the Borrower shall not in any calendar year make any Distributions (exclusive of any Distributions to the estates of deceased natural patrons) to its members, stockholders or consumers except as follows:
(a) Equity above 30%. If, after giving effect to any such Distribution, the Equity of the Borrower shall be greater than or equal to 30% of its Total Assets; or
(b) Equity above 20%. If, after giving effect to any such Distribution, the aggregate of all Distributions made during the calendar year when added to such Distribution shall be less than or equal to 25% of the prior year's margins.
Provided however, that in no event shall the Borrower make any Distributions if there is unpaid when due any installment of principal of (premium, if any) or interest on its Notes, if the Borrower is otherwise in default hereunder or if, after giving effect to any such Distribution, the Borrower's current and accrued assets would be less than its current and accrued liabilities.
The Borrower shall not make any loan or advance to, or make any investment in, or
The Borrower shall not file with or submit for approval of regulatory bodies any proposed depreciation rates which are inconsistent with RUS Regulations.
The Borrower shall not, without approval in writing by RUS, use any Advance to construct any facilities which shall involve any district, site, building, structure or object which is included in, or eligible for inclusion in, the National Register of Historic Places maintained by the Secretary of the Interior pursuant to the Historic Sites Act of 1935 and the National Historic Preservation Act of 1966.
Without the prior written approval of RUS, the Borrower shall not decrease its rates if it has failed to achieve all of the Coverage Ratios for the calendar year prior to such reduction.
Except as expressly permitted by Article II of the Mortgage and subject to the further limitations expressed in the next section, the Borrower shall not incur, assume, guarantee or otherwise become liable in respect of any debt for borrowed money and Restricted Rentals (including Subordinated Indebtedness) other than the following: (“Permitted Debt”)
(a) Additional Notes issued in compliance with Article II of the Mortgage;
(b) Purchase money indebtedness in non-Utility System property, in an amount not exceeding 10% of Net Utility Plant;
(c) Restricted Rentals in an amount not to exceed 5% of Equity during any 12 consecutive calendar month period;
(d) Unsecured lease obligations incurred in the ordinary course of business except Restricted Rentals;
(e) Unsecured indebtedness for borrowed money, except when the aggregate amount of such indebtedness exceeds 15% of Net Utility Plant and after giving effect to such unsecured indebtedness the Borrower's Equity is less than 30% of its Total Assets;
(f) Debt represented by dividends declared but not paid; and
(g) Subordinated Indebtedness approved by RUS.
PROVIDED, However, that the Borrower may incur Permitted Debt without the consent of RUS only so long as there exists no Event of Default hereunder and there has been no continuing occurrence which with the passage of time and giving of notice could become an Event of Default hereunder.
PROVIDED, FURTHER, by executing this Agreement any consent of RUS that the Borrower would otherwise be required to obtain under this Section is hereby deemed to be given or waived by RUS by operation of law to the extent, but only to the extent, that to impose such a requirement of RUS consent would clearly violate federal laws or RUS Regulations.
(a) The Borrower shall not issue any Additional Notes under the Mortgage to finance Eligible Property Additions without the prior written consent of RUS unless the following additional requirements are met in addition to the requirements set forth in the Mortgage for issuing Additional Notes:
(1) The weighted average life of the loan evidenced by such Notes does not exceed the weighted average of the expected remaining useful lives of the assets being financed;
(2) The principal of the loan evidenced by such Notes is amortized at a rate that shall yield a weighted average life that is not greater than the weighted average life that would result from level payments of principal and interest; and
(3) The principal of the loan being evidenced by such Notes has a maturity of not less than 5 years.
(b) The Borrower shall not issue any Additional Notes under the Mortgage to refund or refinance Notes without the prior written consent of RUS unless, in addition to the requirements set forth in the Mortgage for issuing Refunding or Refinancing Notes, the weighted average life of any such Refunding or Refinancing Notes is not greater than the weighted average remaining life of the Notes being refinanced.
(c) Any request for consent from RUS under this section, shall be accompanied by a certificate of the Borrower's manager substantially in the form attached to this Agreement as Exhibit C-1 in the case of Notes being issued under Section [2.01] of the Mortgage and C-2 in the case of Notes being issued under Section [2.02] of the Mortgage.
The Borrower shall not materially breach any obligation to be paid or performed by the Borrower on any contract, or take any action which is likely to materially impair the value of any contract, which has been
The Borrower also agrees to comply with any additional negative covenant(s) identified in Schedule 1 hereto.
The following shall be Events of Default under this Agreement:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Upon the occurrence of an Event of Default, then RUS may pursue all rights and remedies available to RUS that are contemplated by this Agreement or the Mortgage in the manner, upon the conditions, and with the effect provided in this Agreement or the Mortgage, including, but not limited to, a suit for specific performance, injunctive relief or damages. Nothing herein shall limit the right of RUS to pursue all rights and remedies available to a creditor following the occurrence of an Event of Default listed in Article VII hereof. Each right, power and remedy of RUS shall be cumulative and concurrent, and recourse to one or more rights or remedies shall not constitute a waiver of any other right, power or remedy.
In addition to the rights, powers and remedies referred to in the immediately preceding section, RUS may, in its absolute discretion, suspend making Advances hereunder if (i) any Event of Default, or any occurrence which with the passage of time or giving of notice would be an Event of Default, occurs and is continuing; (ii) there has occurred a change in the business or condition, financial or otherwise, of the Borrower which in the opinion of RUS materially and adversely affects the Borrower's ability to meet its obligations under the Loan Documents, or (iii) RUS is authorized to do so under RUS Regulations.
All notices, requests and other communications provided for herein including, without limitation, any modifications of, or waivers, requests or consents under, this Agreement shall be given or made in writing (including, without limitation, by telecopy) and delivered to the intended recipient at the “Address for Notices” specified below; or, as to any party, at such other address as shall be designated by such party in a notice to each other party. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telecopier or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as provided for herein. The Address for Notices of the respective parties are as follows:
To the extent allowed by law, the Borrower shall pay all costs and expenses of RUS, including reasonable fees of counsel, incurred in connection with the enforcement of the Loan Documents or with the preparation for such enforcement if RUS has reasonable grounds to believe that such enforcement may be necessary.
If payment of any amount due hereunder is not received at the United States Treasury in Washington, DC, or such other location as RUS may designate to the Borrower within five (5) Business Days after the due date thereof or such other time period as RUS may prescribe from time to time in its policies of general application in connection with any late payment charge (such unpaid amount being herein called the “delinquent amount”, and the period beginning after such due date until payment of the delinquent amount being herein called the “late-payment period”), the Borrower shall pay to RUS, in addition to all other amounts due under the terms of the Note, the Mortgage and this Agreement, any late-payment charge as may be fixed by RUS Regulations from time to time on the delinquent amount for the late-payment period.
To the extent permitted by law, the Borrower agrees to pay all expenses of RUS (including the fees and expenses of its counsel) in connection with the filing or recordation of all financing statements and instruments as may be required by RUS in connection with this Agreement, including, without limitation, all documentary stamps, recordation and transfer taxes and other costs and taxes incident to recordation of any document or instrument in connection herewith. Borrower agrees to save harmless and indemnify RUS from and against any liability resulting from the failure to pay any required documentary stamps, recordation and transfer taxes, recording costs, or any other expenses incurred by RUS in connection with this Agreement. The provisions of this subsection shall survive the execution and delivery of this Agreement and the payment of all other amounts due hereunder or due on the Note.
No failure on the part of RUS to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise by RUS of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.
EXCEPT TO THE EXTENT GOVERNED BY APPLICABLE FEDERAL LAW, THE LOAN DOCUMENTS SHALL BE DEEMED TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE [IN WHICH THE BORROWER IS INCORPORATED].
If any payment to be made by the Borrower hereunder shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing any interest in respect of such payment.
The Borrower may elect not to borrow the RUS Commitment in which event RUS shall release the Borrower from its obligations hereunder, provided the Borrower complies with such terms and conditions as RUS may impose for such release and provided also that if the Borrower has any remaining obligations to RUS for loans made or guaranteed by RUS under any Prior Loan Contracts, RUS may, under Section [9.15] of this Loan Contract, withhold such release until all such obligations have been satisfied and discharged.
This Agreement shall be binding upon and inure to the benefit of the Borrower and RUS and their respective successors and assigns,
Subject to RUS Regulations, this Agreement and the other Loan Documents are intended by the parties to be a complete and final expression of their agreement. However, RUS reserves the right to waive its rights to compliance with any provision of this Agreement and the other Loan Documents. No amendment, modification, or waiver of any provision hereof or thereof, and no consent to any departure of the Borrower herefrom or therefrom, shall be effective unless approved in writing by RUS in the form of either a RUS Regulation or other writing signed by or on behalf of RUS, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
The headings and sub-headings contained in the titling of this Agreement are intended to be used for convenience only and do not constitute part of this Agreement.
If any term, provision or condition, or any part thereof, of this Agreement or the Mortgage shall for any reason be found or held invalid or unenforceable by any governmental agency or court of competent jurisdiction, such invalidity or unenforceability shall not affect the remainder of such term, provision or condition nor any other term, provision or condition, and this Agreement, the Note, and the Mortgage shall survive and be construed as if such invalid or unenforceable term, provision or condition had not been contained therein.
Upon the occurrence and during the continuance of any Event of Default, RUS is hereby authorized at any time and from time to time, without prior notice to the Borrower, to exercise rights of setoff or recoupment and apply any and all amounts held or hereafter held, by RUS or owed to the Borrower or for the credit or account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing hereunder or under the Note. RUS agrees to notify the Borrower promptly after any such setoff or recoupment and the application thereof, provided that the failure to give such notice shall not affect the validity of such setoff, recoupment or application. The rights of RUS under this section are in addition to any other rights and remedies (including other rights of setoff or recoupment) which RUS may have. Borrower waives all rights of setoff, deduction, recoupment or counterclaim.
Each Schedule and Exhibit attached hereto and referred to herein is each an integral part of this Agreement.
It is understood and agreed that with respect to all loan agreements previously entered into by and between RUS and the Borrower (hereinafter being referred to as “Prior Loan Contracts”) the Borrower shall be required, after the date hereof, to meet affirmative and negative covenants as set forth in this Agreement rather than those set forth in the Prior Loan Contracts. In addition, any remaining obligation of RUS to make additional advances on promissory notes of the Borrower that have been previously delivered to RUS under Prior Loan Contracts shall, after the date hereof, be subject to the conditions set forth in this Agreement. In the event of any conflict between any provision set forth in a Prior Loan Contract and any provision in this Agreement, the requirements as set forth in this Agreement shall apply. Nothing in this section shall, however, eliminate or modify any special condition, special affirmative covenant or special negative covenant, if any, unless specifically agreed to in writing by RUS.
In the case of any consent, approval or waiver from RUS that is required under this Agreement or any other Loan Document, such consent, approval or waiver must be in writing and signed by an authorized RUS representative to be effective. As used in this section, “authorized RUS representative” means the Administrator of RUS, and also means a person to whom the Administrator has officially delegated specific or general authority to take the action in question.
This Agreement shall remain in effect until one of the following two events has occurred:
(a) The Borrower and RUS replace this Agreement with another written agreement; or
(b) All of the Borrower's obligations under the prior loan contracts and this Agreement have been discharged and paid.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
1. The purpose of this loan is
2. The Mortgage shall mean the Restated Mortgage and Security Agreement, dated as of
3. The governmental authority referred to in Section [2.1(c)] is
4. The exception being taken to the representations in Section [2.1(e)] concerning material compliance with laws is as follows:
5. The litigation referred to in Section [2.1(f)] is described as follows:
6. The date of the Borrower's financial information referred to in Section [2.1(h)] is
7. The principal place of business of the Borrower referred to in Section [2.1(i)] is
8. All of the property of the Borrower is located in the counties of
9. The subsidiary (or subsidiaries) referred to in Section [2.1(k)] is (are):
10. The Contemporaneous Loan referred to in Section [5.3] is described as follows:
11. The RUS Commitment referred to in the definitions means a loan in the principal amount of $
12. Amortization of Advance shall be based upon the method indicated below:
13. The SPECIAL condition(s) referred to in Section [4.2] is (are):
14. The additional AFFIRMATIVE covenant(s) referred to in Section [5.22] is (are) as follows:
16. The address of the Borrower referred to in Section [9.1]. is
The Existing Liens referred to in Section [2.1(g)] are as follows:
The additional contracts referred to in Section [6.5(f)] are described as follows:
During the performance of this contract, the contractor agrees as follows:
(a) The contractor shall not discriminate against any employee or applicant for employment because of race, color, religion, sex or national origin. The contractor shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment without regard to their race, color, religion, sex or national origin. Such action shall include, but not be limited to the following: employment, upgrading, demotion or transfer, recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided setting forth the provisions of this nondiscrimination clause.
(b) The contractor shall, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants shall receive consideration for employment without regard to race, color, religion, sex or national origin.
(c) The contractor shall send to each labor union or representative of workers with which he has a collective bargaining agreement or other contract or understanding, a notice to be provided advising the said labor union or workers’ representative of the contractor's commitments under this section, and shall post copies of the notice in conspicuous places available to employees and applicants for employment.
(d) The contractor shall comply with all provisions of Executive Order 11246 of September 24, 1965, and of the rules, regulations and relevant orders of the Secretary of Labor.
(e) The contractor shall furnish all information and reports required by Executive Order 11246 of September 24, 1965, and by the rules, regulations and orders of the Secretary of Labor, or pursuant thereto, and shall permit access to his books, records and accounts by the administering agency and the Secretary of Labor for purposes of investigation to ascertain compliances with such rules, regulations and orders.
(f) In the event of the contractor's noncompliance with the non-discrimination clauses of this contract or with any of the said rules, regulations or orders, this contract may be cancelled, terminated or suspended in whole or in part and the contractor may be declared ineligible for further Government contracts or federally assisted construction contracts in accordance with procedures authorized in Executive Order 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in said Executive Order or by rule, regulation or order of the Secretary of Labor, or as otherwise provided by law.
(g) The contractor shall include the provisions of paragraphs (a) through (g) in every subcontract or purchase order unless exempted by rules, regulations or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order 11246, dated September 24, 1965, so that such provisions shall be binding upon each subcontractor or vendor. The contractor shall take such action with respect to any subcontract or purchase order as the administering agency may direct as a means of enforcing such provisions, including sanctions for noncompliance: Provided, however, that in the event a contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the agency, the contractor may request the United States to enter into such litigation to protect the interests of the United States.
On behalf on
(a) The weighted average life of the loan evidenced by such Notes (
(b) The principal of the loan evidenced by such Notes shall either be [check one and provide evidence in the second case]:
(c) The principal of the loan evidenced by such Notes has a maturity of not less than 5 years.
On behalf on
7 U.S.C. 901
(a)
(b)
(c)
(1) If applicable, state that the project is a categorical exclusion of a type described in § 1794.21(b), which normally does not require preparation of an Environmental Report (ER); or
(2) If applicable, state that the project is a categorical exclusion of a type that normally requires an ER and then:
(i) Submit the ER with the request for funds to be approved for advance, or
(ii) If applicable, certify that it has analyzed the minor project with respect to a comprehensive service area environmental map and data base collected and used in preparing the ER for its RUS-approved borrower's CWP, and that on the basis of that information, the minor project will not be located in an environmentally sensitive area or location.
(d)
7 U.S.C. 901
(a) The policies, procedures and requirements in this part implement certain provisions of the standard form of loan documents between the Rural Utilities Service (RUS) and its electric borrowers.
(b) All borrowers, regardless of the source of financing, shall comply with RUS’ requirements with respect to design, construction standards, and the use of RUS accepted material on their electric systems.
(c) Borrowers are required to use RUS contract forms only if the facilities are financed by RUS.
The Administrator may waive, for good cause on a case-by-case basis, requirements and procedures of this part.
Terms used in this part have the meanings set forth in § 1710.2 of this chapter. References to specific RUS forms and other RUS documents, and to specific sections or lines of such forms and documents, shall include the corresponding forms, documents, sections and lines in any subsequent revisions of these forms and documents. In addition to the terms defined in § 1710.2 of this chapter, the following terms have the following meanings for the purposes of this part:
The borrower shall ensure that:
(a) All selected architects and engineers meet the applicable registration and licensing requirements of the States in which the facilities will be located;
(b) All selected architects and engineers are familiar with RUS standards and requirements; and
(c) All selected architects and engineers have had satisfactory experience with comparable work.
(a)
(b)
(c)
(a) Borrowers shall ensure that all architects and engineers working under contract with the borrower have insurance coverage as required by part 1788 of this chapter.
(b) Borrowers shall also ensure that all architects and engineers working under contract with the borrower have insurance coverage for Errors and Omissions (Professional Liability Insurance) in an amount at least as large as the amount of the architectural or engineering services contract but not less than $500,000.
Borrowers shall comply with the requirements on debarment and suspension in connection with procurement activities as set forth in part 3017 of this title, particularly with respect to lower tier transactions, e.g., procurement contracts for goods or services.
Borrowers shall comply with the restrictions and requirements in connection with procurement activities as set forth in part 3018 of this title.
Borrowers shall comply with the requirements of part 1794 of this chapter, Environmental Policies and Procedures for Electric and Telephone Borrowers.
The standard loan agreement between RUS and its borrowers provides that, in accordance with applicable RUS regulations in this chapter, the borrower shall use standard forms of contracts promulgated by RUS for construction, procurement, engineering services, and architectural services financed by a loan made or guaranteed by RUS. This part implements these provisions of the RUS loan agreement. Subparts A through E of this part prescribe when and how borrowers are required to use RUS standard forms of contracts for engineering and architectural services. Subpart F of this part prescribes the procedures that RUS follows in promulgating standard contract forms and identifies those contract forms that borrowers are required to use for engineering and architectural services.
The provisions of this section apply to all borrower electric system facilities regardless of the source of financing.
(a) Each borrower shall select a qualified architect to perform the architectural services required for the design and construction management of headquarters facilities. The selection of the architect is not subject to RUS approval unless specifically required by RUS on a case by case basis. Architect's qualification information need not be submitted to RUS unless specifically requested by RUS on a case by case basis.
(b) The architect retained by the borrower shall not be an employee of the building supplier or contractor, except in cases where the building is prefabricated and pre-engineered.
(c) The architect's duties are those specified under the Architectural Services Contract and under subpart E of this part, and, as applicable, those duties assigned to the “engineer” for competitive procurement procedures in part 1726 of this chapter.
(d) If the facilities are RUS financed, the borrower shall submit or require the architect to submit one copy of each construction progress report to RUS upon request.
(e) Additional information concerning RUS requirements for electric borrowers’ headquarters facilities are set forth in subpart E of this part. See also RUS Bulletin 1724E-400, Guide to Presentation of Building Plans and Specifications, for additional guidance. This bulletin is available from Program Development and Regulatory Analysis, Rural Utilities Service, U.S. Department of Agriculture, Stop 1522, 1400 Independence Ave., SW., Washington, DC 20250-1522.
The provisions of this section apply only to RUS financed electric system facilities.
(a) RUS Form 220, Architectural Services Contract, must be used by electric borrowers when obtaining architectural services.
(b) The borrower shall ensure that the architect furnishes or obtains all architectural services related to the design and construction management of the facilities.
(c) Reasonable modifications or additions to the terms and conditions in the RUS contract form may be made to define the exact services needed for a specific undertaking. Such modifications or additions shall not relieve the architect or the borrower of the basic responsibilities required by the RUS contract form, and shall not alter any terms and conditions required by law. All substantive changes must be approved by RUS prior to execution of the contract.
(d) Architectural services contracts are not subject to RUS approval and need not be submitted to RUS unless specifically requested by RUS on a case by case basis.
(e)
The provisions of this section apply to all borrower electric system facilities regardless of the source of financing.
(a) Each borrower shall select one or more qualified persons to perform the engineering services involved in the planning, design, and construction management of the system.
(b) Each borrower shall retain or employ one or more qualified engineers to inspect and certify all new construction in accordance with § 1724.32. The engineer must not be the borrower's manager.
(c) The selection of the engineer is not subject to RUS approval unless specifically required by RUS on a case by case basis. Engineer's qualification information need not be submitted to RUS unless specifically requested by RUS on a case by case basis.
(d) The engineer's duties are specified under the Engineering Services Contract and under part 1726 of this chapter. The borrower shall ensure that the engineer executes all certificates and other instruments pertaining to the engineering details required by RUS.
(e) Additional requirements related to appropriate seismic safety measures are contained in part 1792, subpart C, of this chapter, Seismic Safety of Federally Assisted New Building Construction.
(f) If the facilities are RUS financed, the borrower shall submit or require the engineer to submit one copy of each construction progress report to RUS upon RUS’ request.
The provisions of this section apply only to RUS financed electric system facilities.
(a) RUS contract forms for engineering services shall be used. Reasonable modifications or additions to the terms and conditions in the RUS contract form may be made to define the exact services needed for a specific undertaking. Any such modifications or additions shall not relieve the engineer or the borrower of the basic responsibilities required by the RUS contract form, and shall not alter any terms and conditions required by law. All substantive changes to the RUS contract form shall be approved by RUS prior to execution of the contract.
(b) RUS Form 236, Engineering Service Contract—Electric System Design and Construction, shall be used for all distribution, transmission, substation, and communications and control facilities. These contracts are not subject to RUS approval and need not be submitted to RUS unless specifically requested by RUS on a case by case basis.
(c) RUS Form 211, Engineering Service Contract for the Design and Construction of a Generating Plant, shall be used for all new generating units and repowering of existing units. These contracts require RUS approval.
(d) Any amendments to RUS approved engineering services contracts require RUS approval.
(e)
The provisions of this section apply to all borrower electric system facilities regardless of the source of financing.
(a) The borrower shall ensure that all field inspection and related services are performed within 6 months of the completion of construction, and are
(1) The inspection by the subordinate is satisfactory to the borrower;
(2) This practice is acceptable under applicable requirements of the States in which the facilities are located;
(3) The subordinate is experienced in making such inspections;
(4) The name of the person making the inspection is included in the certification; and
(5) The licensed engineer signs such certification which appears on the inventory of work orders.
(b) The inspection shall include a representative and sufficient amount of construction listed on each RUS Form 219, Inventory of Work Orders (or comparable form), being inspected to assure the engineer that the construction is acceptable. Each work order that was field inspected shall be indicated on RUS Form 219 (or comparable form.) The inspection services shall include, but not be limited to, the following:
(1) Determination that construction conforms to RUS specifications and standards and to the requirements of the National Electrical Safety Code (NESC), State codes, and local codes;
(2) Determination that the staking sheets or as-built drawings represent the construction completed and inspected;
(3) Preparation of a list of construction clean-up notes and staking sheet discrepancies to be furnished to the owner to permit correction of construction, staking sheets, other records, and work order inventories;
(4) Reinspection of construction corrected as a result of the engineer's report;
(5) Noting, initialing, and dating the staking or structure sheets or as-built drawings and noting the corresponding work order entry for line construction; and
(6) Noting, initialing, and dating the as-built drawings or sketches for generating plants, substations, and other major facilities.
(c)
I hereby certify that sufficient inspection has been made of the construction reported by this inventory to give me reasonable assurance that the construction complies with applicable specifications and standards and meets appropriate code requirements as to strength and safety. This certification is in accordance with acceptable engineering practice.
(2) A certification must also include the name of the inspector, name of the firm, signature of the licensed engineer, the engineer's State license number, and the date of signature.
Borrowers shall have ongoing, integrated planning to determine their short-term and long-term needs for plant additions, improvements, replacements, and retirements for their electric systems. The primary components of the planning system consist of long-range engineering plans and construction work plans. Long-range engineering plans identify plant investments required over a long-range period, 10 years or more. Construction work plans specify and document plant requirements for a shorter term, 2 to 4 years. Long-range engineering plans and construction work plans shall be in accordance with part 1710, subpart F, of this chapter. See also RUS Bulletins 1724D-101A, Electric System Long-Range Planning Guide, and 1724D-101B, System Planning Guide, Construction Work Plans, for additional guidance. These bulletins are available from Program Development and Regulatory Analysis, Rural Utilities Service, U.S. Department of Agriculture, Stop 1522, 1400 Independence Ave., SW., Washington, DC 20250-1522.
The provisions of this section apply to all borrower electric system facilities regardless of the source of financing.
(a) A borrower shall ensure that its electric system, including all electric distribution, transmission, and generating facilities, is designed, constructed, operated, and maintained in accordance with all applicable provisions of the most current and accepted criteria of the National Electrical Safety Code (NESC) and all applicable and current electrical and safety requirements of any State or local governmental entity. Copies of the NESC may be obtained from the Institute of Electrical and Electronic Engineers, Inc., 445 Hoes Lane, Piscataway, NJ 08855. This requirement applies to the borrower's electric system regardless of the source of financing.
(b) Any electrical standard requirements established by RUS are in addition to, and not in substitution for or a modification of, the most current and accepted criteria of the NESC and any applicable electrical or safety requirements of any State or local governmental entity.
(c) Overhead distribution circuits shall be constructed with not less than the Grade C strength requirements as described in Section 26, Strength Requirements, of the NESC when subjected to the loads specified in NESC Section 25, Loadings for Grades B and C. Overhead transmission circuits shall be constructed with not less than the Grade B strength requirements as described in NESC Section 26.
The provisions of this section apply to all borrower electric system facilities regardless of the source of financing.
(a)
(b)
(2) Design data consists of all significant design features, including, but not limited to, transmission line design data summary, general description of terrain, right-of-way calculations, discussion concerning conductor and structure selection, conductor sag and tension information, design clearances, span limitations due to clearances, galloping or conductor separation, design loads, structure strength limitations, insulator selection and design, guying requirements, and vibration considerations. For lines composed of steel or concrete poles, or steel towers, in which load information will be used to purchase the structures, the design data shall also include loading trees, structure configuration and selection, and a discussion concerning foundation selection.
(3) Line design data for uprating transmission lines to higher voltage levels or capacity must be approved by RUS.
(4) Transmission line design data which has received RUS approval in connection with a previous transmission line construction project for a particular borrower is considered approved by RUS for that borrower, provided that:
(i) The conditions on the project fall within the design data previously approved; and
(ii) No significant NESC revisions have occurred.
(c)
(2) Design data consists of all significant design features, including, but not limited to, a discussion of site considerations, oil spill prevention measures, design considerations covering voltage, capacity, shielding, clearances, number of low and high voltage phases, major equipment, foundation design parameters, design loads for line support structures and the control house, seismic considerations, corrosion, grounding, protective relaying, and AC and DC auxiliary systems. Reference to applicable safety codes and construction standards are also to be included.
(3) Substation design data which has received RUS approval in connection with a previous substation construction project for a particular borrower is considered approved by RUS for that borrower, provided that:
(i) The conditions on the project fall within the design data previously approved; and
(ii) No significant NESC revisions have occurred.
(d)
(2) For all new generation units and for all repowering projects, the design outline shall be approved by RUS, unless RUS determines that a design outline is not needed for a particular project.
(3) The design outline will include all significant design criteria. During the early stages of the project, RUS will, in consultation with the borrower and its consulting engineer, identify the specific items which are to be included in the design outline.
(e)
(i) Section 504 of the Rehabilitation Act of 1973, (29 U.S.C. 794), which states that no qualified individual with a handicap shall, solely by reason of their handicap, be excluded from participation in, be denied the benefits of, or be subject to discrimination under any program or activity receiving Federal financial assistance. The Uniform Federal Accessibility Standards (41 CFR part 101-19, subpart 101-19.6, appendix A) are the applicable standards for all new or altered borrower buildings, regardless of the source of financing.
(ii) The Architectural Barriers Act of 1968 (42 U.S.C. 4151), which requires that buildings financed with Federal funds are designed and constructed to be accessible to the physically handicapped.
(iii) The Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 7701
(2) The borrower shall provide evidence, satisfactory in form and substance to the Administrator, that each building will be designed and built in compliance with all Federal, State, and local requirements.
(f)
(2) The performance considerations for a new or replacement master system must be approved by RUS. A master system includes the main controller and related equipment at the main control point. Performance considerations include all major system features and their justification, including, but not limited to, the objectives of the system, the types of parameters to be controlled or monitored, the communication media, alternatives considered, and provisions for future needs.
The provisions of this section apply to all borrower electric system facilities regardless of the source of financing.
(a)
(i) Structures are designed and constructed in accordance with “Suggested Practices for Raptor Protection on Powerlines: The State of the Art in 1996” (Suggested Practices for Raptor Protection); and,
(ii) Structures are in accordance with the NESC and applicable State and local regulations.
(2) Any deviation from the RUS construction standards for the purpose of raptor protection, which is not in accordance with the Suggested Practices for Raptor Protection, must be approved by RUS prior to construction. “Suggested Practices for Raptor Protection on Powerlines: The State of the Art in 1996,” published by the Edison Electric Institute/Raptor Research Foundation, is hereby incorporated by reference. This incorporation by reference is approved by the Director of the Office of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of this publication may be obtained from the Raptor Research Foundation, Inc., c/o Jim Fitzpatrick, Treasurer, Carpenter Nature Center, 12805 St. Croix Trail South, Hastings, Minnesota 55033. It is also available for inspection during normal business hours at RUS, Electric Staff Division, 1400 Independence Avenue, SW., Washington, DC, Room 1246-S, and at the Office of the Federal Register, 800 North Capitol Street, NW., Suite 700, Washington, DC.
(b)
(c)
(2) It is permissible to lower the transformer and associated neutral attachment up to two feet (0.6 m) to provide adequate clearance between the cutouts and single-phase, conventional distribution transformers.
(3) It is permissible to lower the neutral attachment on standard construction pole-top assemblies an additional distance of up to six feet (2 m) for the purpose of performing construction and future line maintenance on these assemblies from bucket trucks designed for such work.
The provisions of this section apply to all borrower electric system facilities regardless of the source of financing.
(a)
(2) Plans and specifications for distribution, transmission, or generating facilities must be based on a construction work plan (as amended, if applicable), engineering study or construction program which has been approved by RUS if financing for the facilities will at any time be requested from RUS.
(b)
(i)
(ii)
(iii)
(iv)
(A) A plot plan showing the location of the proposed building plus paving and site development;
(B) A one line drawing (floor plan and elevation view), to scale, of the proposed building with overall dimensions shown; and
(C) An outline specification including materials to be used (type of frame, exterior finish, foundation, insulation, etc.); and
(v)
(2) For contract work, the appropriate standard RUS construction contract form shall be used as required by part 1726 of this chapter.
The provisions of this section apply only to RUS financed electric system facilities.
(a) For any contract subject to RUS approval in accordance with part 1726 of this chapter, the borrower shall obtain RUS approval of the plans and specifications, as part of the proposed bid package, prior to requesting bids. RUS may require approval of other plans and specifications on a case by case basis.
(b)
(c)
(2) Unless RUS approval is required by paragraph (a) of this section, plans and specifications for transmission construction which use previously approved design data and standard structures do not require RUS approval. Plans and specifications for related work, such as right-of-way clearing, equipment, and materials, do not require RUS approval unless required by paragraph (a) of this section.
(d)
(A) The substation design has been previously approved by RUS; and
(B) No significant NESC revisions have occurred.
(ii) The borrower shall notify RUS in writing that a previously approved design will be used, including identification of the previously approved design.
(2) Unless RUS approval is required by paragraph (a) of this section, plans and specifications for substation modifications and for substations using previously approved designs do not require RUS approval.
(e)
(2) The borrower shall obtain RUS approval, prior to issuing invitations to bid, of the terms and conditions for all generating plant equipment or construction contracts which will cost $1,500,000 or more. Unless RUS approval is required by paragraph (a) of this section, plans and specifications for generating plant equipment and construction do not require RUS approval.
(f)
(2) Unless RUS approval is required by paragraph (a) of this section, plans and specifications for headquarters buildings do not require RUS approval. The borrower shall submit two copies of RUS Form 740g, Application for Headquarters Facilities. This form is available from Program Development and Regulatory Analysis, Rural Utilities Service, United States Department of Agriculture, Stop 1522, 1400 Independence Ave., SW., Washington, DC 20250-1522. The application must show floor area and estimated cost breakdown between office building space and space for equipment warehousing and service facilities, and include a one line drawing (floor plan and elevation view), to scale, of the
(g)
(2) The borrower shall obtain RUS approval, prior to issuing invitations to bid, of the terms and conditions for communications and control facilities contracts which will cost $500,000 or more. Unless RUS approval is required by paragraph (a) of this section, plans and specifications for communications and control facilities do not require RUS approval.
(h) Terms and conditions include the RUS standard form of contract, general and special conditions, and any other non-technical provisions of the contract. Terms and conditions which have received RUS approval in connection with a previous contract for a particular borrower are considered approved by RUS for that borrower.
(a) The provisions of this section apply only to RUS financed electric system facilities.
(1)(i) Any borrower that owns or operates a RUS financed dam must utilize the“Federal Guidelines for Dam Safety,”(Guidelines), as applicable. A dam, as more fully defined in the Guidelines, is generally any artificial barrier which either:
(A) Is 25 feet (8 m) or more in height; or
(B) Has an impounding capacity at maximum water storage elevation of 55 acre-feet (68,000 m
(ii) The“Federal Guidelines for Dam Safety,”FEMA 93, June, 1979, published by the Federal Emergency Management Agency (FEMA), is hereby incorporated by reference. This incorporation by reference is approved by the Director of the Office of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of the“Federal Guidelines for Dam Safety”may be obtained from the Federal Emergency Management Agency, Mitigation Directorate, PO Box 2012, Jessup, MD 20794. It is also available for inspection during normal business hours at RUS, Electric Staff Division, 1400 Independence Avenue, SW., Washington, DC, Room 1246-S, and at the Office of the Federal Register, 800 North Capitol Street, NW., Suite 700, Washington, DC.
(2) The borrower shall evaluate the hazard potential of its dams in accordance with Appendix E of the U.S. Army Corps of Engineers Engineering and Design Dam Safety Assurance Program, ER 1110-2-1155, July 31, 1995. A summary of the hazard potential criteria is included for information as Appendix A to this subpart. The U.S. Army Corps of Engineers Engineering and Design Dam Safety Assurance Program, ER 1110-2-1155, July 31, 1995, published by the United States Army Corps of Engineers, is hereby incorporated by reference. This incorporation by reference is approved by the Director of the Office of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of the U. S. Army Corps of Engineers Engineering and Design Dam Safety Assurance Program may be obtained from the U. S. Army Corps of Engineers, Publications Depot, 2803 52nd Ave., Hyattsville, MD 20781. It is also available for inspection during normal business hours at RUS, Electric Staff Division, 1400 Independence Avenue, SW., Washington, DC, Room 1246-S, and at the Office of the Federal Register, 800 North Capitol Street, NW., Suite 700, Washington, DC.
(3) For high hazard potential dams, the borrower must obtain an independent review of the design and critical features of construction. The reviewer must have demonstrated experience in the design and construction of dams of a similar size and nature. The reviewer must be a qualified engineer not involved in the original design of
(4) The independent review of design must include, but not necessarily be limited to, plans, specifications, design calculations, subsurface investigation reports, hydrology reports, and redesigns which result from encountering unanticipated or unusual conditions during construction.
(5) The independent review of construction shall include:
(i)
(ii)
(6) If the reviewer disagrees with any aspect of the design or construction which could affect the safety of the dam, then the borrower must meet with the design engineer and the reviewer to resolve the disagreements.
(7)
(b)(1) For more information and guidance, the following publications regarding dam safety are available from FEMA:
(i)“Emergency Action Planning Guidelines for Dams,”FEMA 64.
(ii)“Federal Guidelines for Earthquake Analysis and Design of Dams,”FEMA 65.
(iii)“Federal Guidelines for Selecting and Accommodating Inflow Design Floods for Dams,”FEMA 94.
(iv)“Dam Safety: An Owner's Guidance Manual,”FEMA 145, August, 1987.
(2) These publications may be obtained from the Federal Emergency Management Agency, Mitigation Directorate, PO Box 2012, Jessup, MD 20794.
The source for this appendix is U.S. Army Corps of Engineers Engineering and Design Dam Safety Assurance Program, ER 1110-2-1155, Appendix E. Appendix E is available from the address listed in § 1724.55(a)(2).
(a)
(b)
(a)
(b)
(c)
(d)
(e)
(a)
(b)
RUS may, from time to time, undertake to promulgate new contract forms or revise or eliminate existing contract forms. In so doing, RUS shall publish notice of rulemaking in the
(a)
(b)
(c)
(2) RUS Form 220, Rev. 6-98, Architectural Services Contract. This form is used for architectural services for building construction.
(3) RUS Form 236, Rev. 6-98, Engineering Service Contract—Electric System Design and Construction. This form is used for engineering services for distribution, transmission, substation, and communications and control facilities.
(d)
(2) RUS Form 215, Rev. 5-67, Engineering Service Contract—System Planning. This form is used for engineering services for system planning.
(3) RUS Form 234, Rev. 3-57, Final Statement of Engineering Fee. This form is used for the closeout of engineering services contracts.
(4) RUS Form 241, Rev. 3-56, Amendment of Engineering Service Contract. This form is used for amending engineering service contracts.
(5) RUS Form 244, Rev. 12-55, Engineering Service Contract—Special Services. This form is used for miscellaneous engineering services.
(6) RUS Form 258, Rev. 4-58, Amendment of Engineering Service Contract—Additional Project. This form is used for amending engineering service contracts to add an additional project.
(7) RUS Form 284, Rev. 4-72, Final Statement of Cost for Architectural Service. This form is used for the closeout of architectural services contracts.
(8) RUS Form 297, Rev. 12-55, Engineering Service Contract—Retainer for Consultation Service. This form is used
(9) RUS Form 459, Rev. 9-58, Engineering Service Contract—Power Study. This form is used for engineering services for power studies.
7 U.S.C. 901
The policies, procedures and requirements included in this part are intended to implement provisions of the standard form of loan documents between the Rural Utilities Service (RUS) and its electric borrowers. Unless prior written approval is received from RUS, borrowers are required to comply with RUS policies and procedures as a condition to RUS providing loans, loan guarantees, or reimbursement of general funds for the construction and improvement of electric facilities. Requirements relating to RUS approval of plans and specifications, duties and responsibilities of the engineer and architect, and engineering and architectural services contracts, are contained in other RUS regulations. The terms “RUS form”, “RUS standard form”, “RUS specification”, “and RUS bulletin” have the same meanings as the terms “REA form”, “REA standard form”, “REA specification”, “and REA bulletin”, respectively, unless otherwise noted.
Each borrower is responsible for the planning, design, construction, operation and maintenance of its electric system. RUS, as a secured lender, has a legitimate interest in accomplishing RUS's programmatic objectives, and in assuring that the costs of construction, materials, and equipment are reasonable and economical and that the property securing the loans is constructed adequately to serve the purposes for which it is intended.
The requirements of this part apply to the procurement of materials and equipment for use by electric borrowers in their electric systems and to the construction of their electric systems if such materials, equipment, and construction are financed, in whole or in part, with loans made or guaranteed by RUS, including reimbursable projects. In order for general fund expenditures for procurement or construction to be eligible for reimbursement from loan funds, the borrower must comply with the procedures required by this part. In the case of jointly owned projects, RUS will determine on a case by case basis the applicability of the requirements of this part.
The Administrator may waive, for good cause on a case by case basis, certain requirements and procedures of this part. RUS reserves the right, as a condition of providing loans, loan guarantees, or other assistance, to require any borrower to make any specification, contract, or contract amendment subject to the approval of the Administrator.
Terms used in this part have the meanings set forth in 7 CFR 1710.2. References to specific RUS forms and other RUS documents, and to specific sections or lines of such forms and documents, shall include the corresponding forms, documents, sections and lines in any subsequent revisions of these forms and documents. In addition to the terms defined in 7 CFR 1710.2, the following terms have the following meanings for the purposes of this part:
The borrower must ensure that all materials and equipment financed with loans made or guaranteed by RUS complies with the “Buy American” provisions of the Rural Electrification Act of 1938 (7 U.S.C. 903 note), as amended by the North American Free Trade Agreement Implementation Act (107 Stat 2129). When a “Buy American” certificate is required by this part, this must be on RUS Form 213.
Borrowers are required to comply with certain requirements on debarment and suspension in connection with procurement activities as set forth in part 3017 of this title, particularly with respect to lower tier transactions, e.g., procurement contracts for goods or services.
Borrowers are required to comply with certain restrictions and requirements in connection with procurement activities as set forth in part 3018 of this title.
Borrowers must consult with RUS prior to entering into any contract for material, equipment, or construction if a construction work plan, general funds, loan or loan guarantee for the proposed work has not been approved. While the RUS staff will work with the borrower in such circumstances, nothing contained in this part is to be construed as authorizing borrowers to enter into any contract before the availability of funds has been ascertained by the borrower and all the requirements of part 1794 of this chapter, Environmental Policies and Procedures for Electric and Telephone Borrowers, have been fulfilled.
RUS borrowers’ procurement is not subject to the provisions of the Federal Acquisition Regulation (48 CFR chapter 1); however, since borrowers receive the benefit of Federal financial assistance borrowers must use competitive procurement to the greatest extent practical. The borrower must use competitive procurement for obtaining all goods or services when a RUS loan or loan guarantee is involved except:
(a) As specifically provided for in subparts B through F of this part; or
(b) A waiver is granted.
All materials, equipment, and construction must meet the minimum requirements of all applicable RUS standards and specifications. (See Part 1728, Electric Standards and Specifications for Materials and Construction, of this chapter, which is applicable regardless of the source of funding.) The materials and equipment must be year 2000 compliant, as defined in 7 CFR 1710.112 (c).
The borrower shall purchase only new materials and equipment unless otherwise approved by RUS, on a case by case basis, prior to the purchase.
The borrower is generally responsible for determining whether construction will be by contract or force account. If construction is by contract, the borrower must determine whether materials will be supplied by the contractor or will be furnished by the borrower. RUS reserves the right to require contract construction in lieu of force account construction on a case by case basis.
(a)
(b)
(a)
(b)
(2)
(3)
(ii) The borrower must make a contract amendment subject to RUS approval if the underlying contract was made subject to RUS approval and the total amended contract price exceeds 120 percent of the original contract price (excluding any escalation provision contained in the contract).
(iii) Contract amendments, except as provided in paragraph (b)(3)(ii) of this section, are not subject to RUS approval and need not be submitted to RUS unless specifically requested by RUS on a case by case basis.
The contractor or supplier may use RUS Form 282, Subcontract, for subcontracts on construction, material or equipment contracts. Subcontracts are not subject to RUS approval and need not be submitted to RUS unless specifically requested by RUS on a case by case basis.
Certain RUS contract forms contain a provision concerning payment of interest on overdue accounts. Prior to issuing the invitation to bidders, the borrower must insert an interest rate equal to the lowest “Prime Rate” listed in the “Money Rates” section of the Wall Street Journal on the date such invitation to bid is issued. If no prime rate is published on that date, the last such rate published prior to that date must be used. The rate must not, however, exceed the maximum rate allowed by any applicable state law.
(a) RUS Form 168b, Contractor's Bond, shall be used when a contractor's bond is required by RUS Forms 200, 201, 203, 257, 764, 786, 790, 792, 830, or 831 unless the contractor's surety has accepted a Small Business Administration guarantee and the contract is for $1 million or less.
(b) RUS Form 168c, Contractor's Bond, shall be used when a contractor's bond is required by RUS Form 200, 201, 203, 257, 764, 786, 790, 792, 830, or 831 and the contractor's surety has accepted a Small Business Administration guarantee and the contract is for $1 million or less.
(c) Surety companies providing contractor's bonds shall be listed as acceptable sureties in the U.S. Department of the Treasury Circular No. 570, Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies. Copies of the circular and interim changes may be obtained directly from the Government Printing Office (202) 512-1800. Interim changes are published in the
(a)
(b)
(c)
(1) A bid tabulation and evaluation and, if applicable, a written recommendation of the architect or engineer.
(2) For awards made under the informal competitive bidding procedure or the multiparty negotiation procedure, a written recommendation of the contracting committee (See §§ 1726.202 and 1726.203).
(3) Three copies of an executed contractor's bond on RUS approved bond forms as required in the contract form (at least one copy of which must be an original signed in ink) and one copy of the bid bond or facsimile of the certified check.
(4) A certification by the borrower or chairperson of the contracting committee, as applicable, that the appropriate bidding procedures were followed as required by this part.
(5) A certified copy of the board resolution awarding the contract.
(6) Evidence of clear title to the site for substations and headquarters construction contracts, if not previously submitted.
(7) Documentation that all reasonable measures were taken to assure competition if fewer than three bids were received.
(d)
(1) A certified copy of the board resolution approving the amendment; and
(2) A bond extension, where necessary.
(e)
(2) For contracts not subject to RUS approval (except for generation projects), loan or loan guarantee funds will normally be encumbered using RUS Form 219, Inventory of Work Orders, after closeout of the contracts. In cases where the borrower can show good cause for a need for immediate cash, the borrower may request encumbrance of loan or loan guarantee funds based on submittal of a copy of the executed contract, provided it meets all applicable RUS requirements.
(3) For generation project contracts not subject to RUS approval, the borrower must submit to RUS the following documentation:
(i) A brief description of the scope of the contract, including contract identification (name, number, etc.);
(ii) Contract date;
(iii) Contractor's name;
(iv) Contract amount;
(v) Bidding procedure used;
(vi) Borrower certification that:
(A) The board of directors approved the contract;
(B) The bidding procedures and contract award for each contract were in conformance with the requirements of Part 1726, Electric System Construction Policies and Procedures;
(C) If a RUS approved form of contract is required by this part, the terms and conditions of the RUS approved form of contract have not been altered;
(D) If RUS has approved plans and specifications for the contract, the contract was awarded on the basis of those plans and specifications; and
(E) No restriction has been placed on the borrower's right to assign the contract to RUS or its successors.
(4)
(ii) For amendments not subject to RUS approval (except generation projects), loan or loan guarantee funds will normally be encumbered using RUS Form 219, Inventory of Work Orders, after closeout of the contracts. In cases where the borrower can justify a need for immediate cash, the borrower may request encumbrance of loan or loan guarantee funds based on submittal of a copy of the executed amendment, providing it meets all applicable RUS requirements.
(iii) For each generation project contract amendment not subject to RUS approval, the borrower must submit to RUS the following information and documentation:
(A) The contract name and number;
(B) The amendment number;
(C) The amendment date;
(D) The dollar amount of the increase or the decrease of the amendment;
(E) Borrower certification that:
(
(
(
Unless otherwise indicated, the borrower shall make all contracts and amendments that are subject to RUS approval effective only upon RUS approval.
The collection of information requirements in this part have been approved by the Office of Management and Budget and assigned OMB control number 0572-0107.
(a)
(2) The borrower may, in its discretion, use RUS Form 173, Materials Contract, RUS Form 198, Equipment Contract, or a written purchase order for purchases of equipment of less than $500,000 and for all materials.
(b)
(c)
(d)
(a)
(1) The borrower may use RUS Form 790, Distribution Line Extension Construction Contract (Labor and Materials), or RUS Form 792, Distribution Line Extension Construction Contract (Labor only) under the following circumstances:
(i) For contracts for which the borrower supplies all materials and equipment; or
(ii) For non-site specific construction contracts accounted for under the work order procedure; or
(iii) If neither paragraph (a)(1)(i) or (a)(1)(ii) of this section are applicable, the borrower may use RUS Form 790 or 792 for contracts, up to a cumulative total of $250,000 or one percent of NUP, whichever is greater, per calendar year of distribution line construction, exclusive of the cost of owner furnished materials and equipment
(2) The borrower must use RUS Form 830, Electric System Construction Contract (Labor and Materials), for all other distribution line construction. Where distribution lines are being constructed incidental to transmission line construction, the borrower must use RUS Form 831, Electric Transmission Construction Contract.
(3) The borrower must use RUS Form 201, Right-of-Way Clearing Contract, for new distribution line construction right-of-way clearing when done separately from work performed under RUS Form 830.
(b)
(2) In addition to the cumulative total stipulated in paragraph (b)(1) of this section, a borrower may use Multiparty Unit Price Quotations to award contracts in amounts of up to a cumulative total of $350,000 or 1.5 percent of NUP, whichever is greater, per calendar year of distribution line construction (including minor modifications or improvements), exclusive of the cost of owner furnished materials and equipment.
(3) The borrower shall use formal competitive bidding for all other distribution line contract construction. The amount of contracts bid using the formal competitive bidding procedure do not apply to the cumulative total stipulated in paragraph (b)(1) of this section.
(4) An amendment which increases the scope of the contract by adding a project is not considered competitively bid, therefore, the amount of that amendment does apply to the cumulative total stipulated in paragraph (b)(1) of this section.
(c)
As used in this part, “substations” includes substations, switching stations, metering points, and similar facilities.
(a)
(2) The borrower may, in its discretion, use RUS Form 173, Materials Contract, RUS Form 198, Equipment Contract, or a written purchase order for purchases of equipment of less than $500,000 and for all materials.
(b)
(c)
(d)
(a)
(2) The borrower must use RUS Form 831, Electric Transmission Construction Contract, for construction of transmission lines (except for minor modifications or improvements).
(3) The borrower must use RUS Form 203, Transmission System Right-of-Way Clearing Contract, for new transmission line construction right-of-way clearing when right-of-way clearing is performed separately from work performed under RUS Form 831.
(b)
(2) The borrower shall use formal competitive bidding for all other contract construction, including all contracts requiring RUS approval. The amount of contracts bid using the formal competitive bidding procedure do not apply to the cumulative total stipulated in paragraph (b)(1) of this section.
(3) An amendment which increases the scope of the contract by adding a project is not considered competitively bid, therefore, the amount of that amendment does apply to the cumulative total stipulated in paragraph (b)(1) of this section.
(c)
This section covers the construction of all portions of a generating plant, including plant buildings and the generator step-up transformer. Generally, the transmission switchyard will be covered under this section during initial construction of the plant. Subpart C of this part covers subsequent modifications to transmission switchyards. Warehouses and equipment service type buildings are covered under subpart E of this part.
(a)
(2) The borrower must use RUS Form 200, Construction Contract—Generating, for generating project construction contracts in the amount of $1,500,000 or more and for any generating project construction contract requiring RUS approval.
(3) The borrower may, in its discretion, use other contract or written purchase order forms for those contracts in amounts of less than $1,500,000 and that do not require RUS approval.
(b)
(c)
(2) If the amount of the contract is $1,500,000 or more or if the contract requires RUS approval, the borrower must use formal or informal competitive bidding to award the contract.
(3) Where formal or informal competitive bidding is not applicable, or does not result in a responsive bid, multiparty negotiation may be used only after RUS approval is obtained.
(d)
(1)
(2)
(3)
This section includes headquarters buildings such as warehouses and equipment service type buildings. Generating plant buildings are covered under subpart D of this part.
(a)
(b)
(c)
This section covers items such as office furniture and equipment; transportation equipment and accessories, including mobile radio systems, stores and shop equipment, laboratory equipment, tools and test equipment.
(a)
(b)
(c)
This section covers the purchase of microwave and power line carrier communications systems, load control, and supervisory control and data acquisition (SCADA) systems. Mobile radio systems are covered as general plant materials in § 1726.175.
(a)
(b)
(2)
(ii) The borrower must use multiparty negotiation for all other communications and control facilities contract construction, including all contracts requiring RUS approval. The amount of contracts bid using the multiparty negotiation procedure do not apply to the cumulative total stipulated in paragraph (b)(2)(i) of this section.
(iii) An amendment which increases the scope by adding a project is not considered competitively bid, therefore, the amount of that amendment does apply to the cumulative total stipulated in paragraph (b)(2)(i) of this section.
(3)
The borrower must use the procedures described in this subpart where such procedures are required under subparts B through F of this part. The borrower must ensure that arrangements prior to announcement of the award of the contract are such that all bidders are treated fairly and no bidder is given an unfair advantage over other bidders.
Formal competitive bidding is used for distribution, transmission, and headquarters facilities, and may be used for generation facilities. The borrower must use the following procedure for formal competitive bidding:
(a)
(b)
(c)
(d)
(e)
(f)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(g)
(h)
(i)
(1) Resolve to award the contract to the lowest evaluated responsive bidder; or
(2) Reject all bids.
(j)
Informal competitive bidding may be used for equipment purchases and generation construction. The borrower must use the following procedure for informal competitive bidding:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(1)
(2)
(h)
(i)
(1) Resolve to award the contract to the lowest evaluated responsive bidder; or
(2) Reject all bids.
(j)
Multiparty negotiation may only be used where permitted under subpart F of this part or where prior RUS approval has been obtained. The borrower must use the following procedure for multiparty negotiation:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(1)
(2)
(h)
(i)
(1) Resolve to award the contract to the selected bidder; or
(2) Reject all bids.
(j)
The borrower or its engineer must contact a sufficient number of suppliers or contractors to assure competition and so that at least three bids will be received. On the basis of written unit price quotations, the borrower will select the supplier or contractor based on the lowest evaluated cost.
The borrower or its engineer must contact a sufficient number of suppliers or contractors to assure competition and so that at least three bids will be received. On the basis of written lump sum quotations, the borrower will select the supplier or contractor based on the lowest evaluated cost.
RUS provides standard contract forms for procurement of materials, equipment, and construction, for contract amendments and subcontracts, and various related forms for use by
(a)
(b)
(1) Insert new paragraphs in the Notice and Instructions to Bidders as follows:
“Proposals are invited on the basis of firm prices (or prices with a stated maximum percentage escalation) or on the basis of nonfirm prices to be adjusted as provided for below or on both bases. The owner may award the contract on either basis.
A proportion of
(2) Insert the following in the contract documents under the “Proposal” section:
(3) For equipment that uses a large quantity of insulating oil, the borrower may insert the following in the contract documents under the “Proposal” section:
“The price for insulating oil shall be adjusted upward or downward based on the change in the Bureau of Labor Statistics Refined Petroleum Rate (057) from the month in which the bids are opened to the month in which the oil is purchased by the equipment supplier. Contracts shall be evaluated based on an estimated cost of
(c)
(1) Insert new paragraphs in the “Notice and Instructions” to Bidders as follows:
“Proposals are invited on the basis of firm prices (or prices with a stated maximum percentage escalation) or on the basis of nonfirm prices to be adjusted as provided for below or on both bases. The owner may award the contract on either basis.
A proportion of
(2) Insert the following in the contract documents under the “Proposal” section:
This section applies only to transmission equipment purchases and generation contracts. Where the borrower anticipates difficulty in obtaining responsive bids on RUS standard contract forms due to a lack of limitation with respect to special and consequential damages, and where the borrower believes that such a modification will encourage competition through the receipt of an alternative bid which limits the bidder's liability for special and consequential damages, the borrower may make the following approved phrase modifications in the RUS standard contract form on which the borrower solicits bids:
(a) Insert new paragraphs in the “Notice and Instructions to Bidders” as follows:
“Proposals are invited on the basis of alternative Liability Clauses Numbers 1 and 2. The Owner will determine on which Liability Clause basis the award will be made. Any other liability clauses in the proposal or any other modifications will be considered not responsive and unacceptable. These Liability Clauses are defined as follows:
‘Except for the Seller's willful delay or refusal to perform the contract in accordance with its terms, the Seller's liability to the Owner for special or consequential damages on account of breach of this contract shall not exceed in total an amount equal to
(b) Insert the following in the contract documents under the “Proposal” section:
(c) Insert the following in the acceptance section of the standard contract form:
“This contract is based on Liability Clause Number
(d) In RUS Form 200, the word “Bidder” would replace the word “Seller” in the Liability Clause in paragraph (a) of this section.
When construction is to be performed over an extended period of time, but large quantities of material are to be purchased by the contractor at the beginning of the project (e.g., cable for URD installations), the borrower may allow alternative bids providing for payment to the contractor of 90 percent of the cost of such materials within 30 days of delivery of those materials at the job site. The borrower will retain the right to award the contract with or without the alternative payment provision, however, the contract still must be awarded on the basis of the lowest evaluated responsive bid for the alternative accepted.
It will be necessary for borrowers to make certain modifications to various RUS contract forms to implement the provisions of this part. If a RUS approved form of contract is required to be used by this part and private bid opening is permitted by this part, the “Notice and Instructions to Bidders” of the contract form may be modified accordingly. Other modifications are needed to indicate that certain provisions related to RUS approval are not applicable under specified circumstances. These modifications are as follows:
(a)
(b)
(c)
(1) Change Section 5(e) of the “Equipment Contract” to read as follows:
“(e) Each and all of the covenants and agreements herein contained shall extend to and be binding upon the successors and assigns of the parties hereto provided, however, the Seller shall not assign this contract or any part hereof without approval in writing of the Purchaser, and further the Seller shall not enter into any contract with any person, firm or corporation for the performance of the Seller's obligations hereunder, or any part thereof, without the approval in writing of the Purchaser.”
(2) Delete Section 5(f) of the “Equipment Contract.”
(d)
(1)
(2)
(3)
“Nonassignment of Contract. Except as provided in Section 8 of this Article, the Bidder will not assign this Contract, or any interest in any funds that may become due hereunder, or enter into any contract with any person, firm or corporation, for the performance of the Bidder's obligations hereunder, or any part hereof without the approval in writing of the Owner and the Surety or Sureties, if any.”
(4)
(5)
(e)
(f)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(g)
“(The Administrator of RUS is hereby authorized to approve this amendment either in whole or in part and to delete such items as do not meet his approval.)”
(h)
(i)
(1)
(2)
(3)
(j)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(k)
(1)
(2)
(3)
(4)
(5)
(6)
(l)
(m)
(n)
(o)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(a) As an alternative to the indemnification provision required in RUS standard construction contract forms in those jurisdictions requiring specific language concerning the requirement that the indemnitor indemnify the indemnitee for the indemnitee's own negligence, the borrower may add the words “otherwise this provision shall apply to any alleged negligence or condition caused by the Owner” so that the first paragraph reads as follows:
“i. To the maximum extent permitted by law, Bidder shall defend, indemnify, and hold harmless Owner and Owner's directors, officers, and employees from all claims, causes of action, losses, liabilities, and expenses (including reasonable attorney's fees) for personal loss, injury, or death to persons (including but not limited to Bidder's employees) and loss, damage to or destruction of Owner's property or the property of any other person or entity (including but not limited to Bidder's property) in any manner arising out of or connected with the Contract, or the materials or equipment supplied or services performed by Bidder, its subcontractors and suppliers of any tier. But nothing herein shall be construed as making Bidder liable for any injury, death, loss, damage, or destruction caused by the sole negligence of Owner, otherwise this provision shall apply to any negligence or condition caused by the Owner.”
(b) As an alternative to the indemnification provision required in RUS standard construction contract forms in those jurisdictions that have a legal prohibition against one party indemnifying another for the other's negligence, the borrower may replace the words “defend, indemnify, and hold harmless” with the words “ shall pay on behalf of” so that the first paragraph reads as follows:
“i. To the maximum extent permitted by law, Bidder shall pay on behalf of Owner and Owner's directors, officers, and employees from all claims, causes of action, losses, liabilities, and expenses (including reasonable attorney's fees) for personal loss, injury, or death to persons (including but not limited to Bidder's employees) and loss, damage to or destruction of Owner's property or the property of any other person or entity (including but not limited to Bidder's property) in any manner arising out of or connected with the Contract, or the materials or equipment supplied or services performed by Bidder, its subcontractors and suppliers of any tier. But nothing herein shall be construed as making Bidder liable for any injury, death, loss, damage, or destruction caused by the sole negligence of Owner, otherwise this provision shall apply to any negligence or condition caused by the Owner.”
(c) If the alternative indemnification provision in paragraph (a) or (b) of this section is chosen by the borrower, the
(d) In RUS Forms 201, 790, and 792, the word “Contractor” would replace the word “Bidder” in the alternative indemnification clause in paragraph (a) or (b) of this section.
(e) In RUS Form 786, the word “Seller” would replace the word “Bidder” and the word “Purchaser” would replace the word “Owner” in the alternative indemnification clause in paragraph (a) or (b) of this section.
(a)
(b)
(a)
(b)
(c)
(d)
(e)
(a)
(b)
RUS may, from time to time, undertake to promulgate new contract forms or revise or eliminate existing contract forms. In so doing, RUS shall publish notice of rulemaking in the
(a)
(b)
(c)
(2) RUS Form 168c, Rev. 2-95, Contractor's Bond (less than $1 million). This form is used in lieu of RUS Form 168b to obtain a surety bond when contractor's surety has accepted a Small Business Administration guarantee. This form is available from RUS.
(3) RUS Form 180, Rev. 2-95, Construction Contract Amendment. This form is used to amend distribution line construction contracts. This form is available from RUS.
(4) RUS Form 181, Rev. 2-95, Certificate of Completion, Contract Construction for Buildings. This form is used for the closeout of RUS Form 257. This form is available from RUS.
(5) RUS Form 187, Rev. 2-95, Certificate of Completion, Contract Construction. This form is used for the closeout of and is included in RUS Forms 200, 203, 764, 786, 830, and 831.
(6) RUS Form 198, Rev. 2-95, Equipment Contract. This form is used for equipment purchases. This form is available from RUS.
(7) RUS Form 200, Rev. 2-95, Construction Contract—Generating. This form is used for generating plant construction or for the furnishing and installation of major items of equipment. This form is available from RUS.
(8) RUS Form 201, Rev. 2-95, Right-of-Way Clearing Contract. This form is used for distribution line right-of-way clearing work which is to be performed separate from line construction. This form is available from RUS.
(9) RUS Form 203, Rev. 2-95, Transmission System Right-of-Way Clearing Contract. This form is used for transmission right-of-way clearing work which is to be performed separate from line construction. This form is available from RUS.
(10) RUS Form 213, Rev. 2-95, Certificate (“Buy American”). This form is used to document compliance with the “Buy American” requirement. This form is available from RUS.
(11) RUS Form 224, Rev. 2-95, Waiver and Release of Lien. This form is used for the closeout of and is included in RUS Forms 200, 203, 764, 786, 830, and 831.
(12) RUS Form 231, Rev. 2-95, Certificate of Contractor. This form is used for the closeout of and is included in RUS Forms 200, 203, 764, 786, 830, and 831.
(13) RUS Form 238, Rev. 2-95, Construction or Equipment Contract Amendment. This form is used to amend contracts except distribution line construction contracts. This form is available from RUS.
(14) RUS Form 251, Rev. 2-95, Material Receipt. This form is used to document receipt of owner furnished materials and is included in RUS Forms 764, 830, and 831. Electronic reproduction is acceptable for RUS Form 251.
(15) RUS Form 254, Rev. 2-95, Construction Inventory. This form is used for the closeout of RUS Forms 203, 764, 830, and 831. This form is available from RUS. Electronic reproduction is acceptable for RUS Form 254.
(16) RUS Form 257, Rev. 2-95, Contract to Construct Buildings. This form is used to construct headquarters buildings and other structure construction. This form is available from GPO.
(17) RUS Form 307, Rev. 2-95, Bid Bond. This form is used to obtain a bid bond and is included in RUS Forms 200, 203, 257, 764, 830, and 831.
(18) RUS Form 764, Rev. 2-95, Substation and Switching Station Erection Contract. This form is used to construct substations and switching stations. This form is available from RUS.
(19) RUS Form 786, Rev. 2-95, Electric System Communications and Control Equipment Contract. This form is used for delivery and installation of equipment for system communications. This form is available from RUS.
(20) RUS Form 790, Rev. 2-95, Distribution Line Extension Construction Contract (Labor and Materials). This form is used for limited distribution construction accounted for under work order procedure. This form is available from GPO.
(21) RUS Form 792, Rev. 2-95, Distribution Line Extension Construction
(22) RUS Form 792b, Rev. 2-95, Certificate of Construction and Indemnity Agreement. This form is used for the closeout of and is included in RUS Forms 201, 790, 792.
(23) RUS Form 792c, Rev. 2-95, Supplemental Contract for Additional Project. This form is used to amend other contracts and is included in RUS Forms 201, 790, 792.
(24) RUS Form 830, Rev. 2-95, Electric System Construction Contract (Labor and Materials). This form is used for distribution and transmission line project construction. This form is available from GPO.
(25) RUS Form 831, Rev. 2-95, Electric Transmission Construction Contract (Labor and Materials). This form is used for transmission line project construction. This form is available from GPO.
(d)
(2) RUS Form 173, Rev. 3-55, Materials Contract. This form is used for distribution, transmission, and general plant material purchases. This form is available from RUS.
(3) RUS Form 274, Rev. 6-81, Bidder's Qualifications. This form is used to document bidder's qualifications. This form is available from RUS.
(4) RUS Form 282, Rev. 11-53, Subcontract. This form is used for subcontracting. This form is available from RUS.
(5) RUS Form 458, Rev. 3-55, Materials Contract. This form is used to obtain generation plant material and equipment purchases not requiring acceptance tests at the project site. This form is available from RUS.
As needed, a final contract amendment will be prepared and processed in accordance with § 1726.24(b) prior to or in conjunction with the closeout of the contract.
This section is applicable to contracts executed on RUS Form 173.
(a)
(b)
(c)
This section is applicable to contracts executed on RUS Form 198.
(a)
(b)
(i) Certification by the project engineer in accordance with paragraph (a) of this section.
(ii) All guarantees or warranties.
(iii) A “Buy American” certificate, RUS Form 213, from the supplier or manufacturer.
(2) Closeout documents for materials contracts need not be submitted to RUS unless specifically requested by RUS.
(c)
This section is applicable to contracts executed on RUS Forms 200, 203, 257, 764, 786, 830, and 831.
(a)
(b)
(c)
(i) RUS Form 181, Certificate of Completion, Contract Construction for Buildings (for contracts executed on RUS Form 257), or RUS Form 187, Certificate of Completion, Contract Construction (for contracts executed on all other forms under this section).
(ii) RUS Form 213, “Buy American” certificate.
(iii) RUS Form 224, Waiver and Release of Lien, from each manufacturer, supplier, and contractor which has furnished material or services or both in connection with the construction.
(iv) RUS Form 231, Certificate of Contractor.
(v) RUS Form 254, Construction Inventory, including all supporting documents, such as RUS Forms 254a-c, construction change orders, and amendments for contracts executed on RUS Forms 203, 764, 830 or 831.
(vi) Certification by the project architect or engineer in accordance with § 1726.403(a), if applicable.
(vii) Final design documents, as outlined in part 1724 of this chapter.
(2)
(ii) For contracts subject to RUS approval, the borrower will submit the following closeout documents for RUS approval (through the GFR except for generation projects):
(A) RUS Form 181, Certificate of Completion, Contract Construction for Buildings (for contracts executed on RUS Form 257), or RUS Form 187, Certificate of Completion, Contract Construction (for contracts executed on all other forms under this section).
(B) RUS Form 231, Certificate of Contractor.
(C) RUS Form 254, Construction Inventory, including all supporting documents, such as RUS Forms 254a-c and construction change orders, for contracts executed on RUS Forms 203, 764, or 831.
(iii) For contracts not subject to RUS approval, the closeout is not subject to RUS approval. The borrower will send one copy of RUS Form 181 or RUS Form 187 (as applicable) to RUS for information prior to or in conjunction with the applicable RUS Form 219, Inventory of Work Orders. The remaining closeout documents need not be sent to RUS unless specifically requested by RUS.
(d)
(2)(i) Upon receipt of final payment by the contractor, the borrower will obtain from the contractor a certification of receipt of final payment in the following form:
“The undersigned acknowledges receipt of the final contract payment of $
(ii) The certification in paragraph (d)(2)(i) of this section is to be executed for the contractor by: the sole owner, a partner, or an officer of the corporation. Where this certification is executed for the corporation by a person other than the president, a certified copy of the authorization from the corporate board must be included with the certification. This certification is not a replacement for itemized invoices.
This section is applicable to contracts executed on RUS Forms 201, 790, and 792.
(a)
(b)
(c)
(i) RUS Form 792b, Certificate of Contractor and Indemnity Agreement
(ii) RUS Form 213, “Buy American” certificate.
(iii) Certification by the project engineer in accordance with paragraph (a) of this section, if applicable.
(iv) Final design documents, as outlined in part 1724 of this chapter.
(2)
(ii) For contracts not subject to RUS approval, the closeout is not subject to RUS approval and the closeout documents need not be sent to RUS unless specifically requested by RUS.
Upon completion of the contract closeout, the borrower shall complete RUS Form 219, Inventory of Work Orders, in accordance with part 1717, Post-Loan Policies and Procedures Common to Insured and Guaranteed Electric Loans, of this chapter.
7 U.S.C. 901
(a) The requirements of this part are based on contractual provisions between RUS and the organizations which receive financial assistance from RUS.
(b) RUS will establish certain specifications and standards for materials, equipment, and construction units that will be acceptable for RUS financial assistance for the electric program. Materials and equipment purchased by the electric borrowers or accepted as contractor-furnished material must conform to RUS standards and specifications where they have been established and, if included in RUS Bulletin 43-5, “List of Materials Acceptable for Use on Systems of RUS Electrification Borrowers” (List of Materials
(a)
(b)
(c)
(a)
(b)
(c)
(d)
(i) Accept an item for listing without conditions (domestic items only),
(ii) Reject an item (domestic or nondomestic),
(iii) Accept an item for listing with conditions (domestic items only),
(iv) Table an item for a time period sufficient to allow the sponsor to be notified and furnish additional information (domestic or nondomestic),
(v) Grant technical acceptance with or without conditions for a period of one year from the date of notification by RUS (nondomestic items only).
(2) All committee decisions regarding the actions listed above must be unanimous. If the vote is not unanimous, the item shall be referred to Technical Standards Committee “B.” Written notice of Technical Standards Committee “A's” decision, stating the basis for the decision, will be provided to the sponsor.
(3) Items accepted without conditions by the Technical Standards Committees will be considered to be accepted on a general basis. No restrictions as to quantity or application will be placed on items which have received general acceptance. Items accepted subject to certain conditions, such as limited use to gain service experience, or limited use appropriate to certain areas and conditions, will be considered to be accepted on a conditional basis. The conditions will be cited as a part of the listing provided for in § 1728.60, or as part of the technical acceptance for nondomestic items.
(e)
(f)
(g)
(h)
(a)
(b)
(c)
(d)
(a)
(b)
(c)
(d)
(e)
(1) Order the immediate removal of the item from the listing, or technical acceptance,
(2) Condition the item's continued listing, or technical acceptance,
(3) Recommend a basis of settlement which will adequately protect the interest of the Government, or
(4) Delay the effectiveness of its decision for a time period sufficient to allow the sponsor to appeal to Technical Standards Committee “B.”
(f)
(g)
(h)
(1) Order the immediate removal of the item from listing, or technical acceptance,
(2) Condition the item's continued listing, or technical acceptance,
(3) Recommend a basis of settlement which adequately protects the interests of the Government, or
(4) Delay the effectiveness of its decision for a time period sufficient to allow the sponsor to appeal to the Administrator of RUS.
(i)
(j)
(1) Order the immediate removal of the item from the listing, or technical acceptance,
(2) Condition its continued listing, or technical acceptance, or
(3) Recommend a basis of settlement which adequately protects the interests of the Government.
(a)
(b)
(c)
(a)
(b)
(c)
(2) RUS will also determine, on a case-by-case basis, whether to allow use of an unlisted item in emergency situations and for experimental use or to meet a specific need. For purposes of this part 1728, an emergency shall mean a situation wherein the supply of listed material and equipment from the industry is not readily available, or the standard designs are not applicable to the borrower's specific problem under consideration.
(3) RUS will make arrangements for test or experimental use of newly developed items requiring limited trial use. RUS, working with the borrower and the manufacturer, will establish test locations for the items to facilitate installation and observation.
(a) The following electric bulletins have been approved for incorporation by reference by the Director of the Office of the Federal Register. The bulletins containing construction standards (50-3 to 50-6 and 1728F-803 to 1728F-811), may be purchased from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. The bulletins containing specifications for materials and equipment (50-15 to 50-99 and 1728F-700) may be obtained from the Rural Utilities Service, Program Development and Regulatory Analysis, Stop 1522, Room 4028-S, Washington, DC 20250-1522. The terms “RUS form”, “RUS standard form”, “RUS specification”, and “RUS bulletin” have the same meanings as the terms “REA form”, “REA standard form”, “REA specification”, and “REA bulletin”, respectively unless otherwise indicated. The bulletins are available for inspection at the Office of the Federal Register, 800 North Capitol Street, NW, Suite 700, Washington, DC. These materials are incorporated as they exist on the date of the approval and a notice of any change in these materials will be published in the
(b)
(a)
(2) Each RUS electric borrower shall require each contractor to agree in writing to furnish only materials produced in accordance with the specification in this section.
(3) This specification describes the minimum acceptable quality of wood distribution crossarms and transmission crossarms (hereinafter called crossarms) that are purchased by or for RUS borrowers. Where there is conflict between this specification and any other specification referred to in this section, this specification shall govern.
(4) Various requirements relating to quality control and inspection are contained in § 1728.202 of this part, RUS Specification for Quality Control and Inspection of Timber Products. Section 1728.201 of this part and the American National Standards Institute (ANSI) 05.2, 1983, American National Standard for Wood Products—Structural Glued Laminated Timber for Utility Structures, shall be followed exactly and shall not be interpreted or subjected to judgment by the quality control person or an independent inspector.
(5) The borrower shall purchase from producers only material that meets the requirements of this specification. Each purchaser shall use a written purchase order to purchase material for use in RUS financed systems in order to insure compliance with the standards and specifications of this part. The written purchase order shall contain a provision that specifically requires the producer to comply with the provisions of this part. The purchase order shall contain a provision that specifically requires the producer to make the treating plant, and storage areas available, during normal business hours, in order for representatives of either the purchaser or RUS to inspect such to determine compliance with the standards and specifications of this part.
(6) The borrower shall insure that the producer provides the inspectors with full information (drawings, etc.) relating to the requirements contained in purchase order which is supplementary to this specification.
(7) The borrower shall insure that the producer maintains, or has access to, adequate laboratory facilities at or very near the treating plant. All chemical tests, assays or analyses associated with the treatment shall be independently performed in this laboratory by both the quality control designee and the borrower's inspector. If acceptable to RUS on a case-by-case basis, the producer may use a central laboratory.
(8) Inspection and treatment of all timber products produced under this specification should be performed after receipt of the order from the purchaser, except as provided for reserve treated stock.
(9) The borrower shall insure that each inspection agency maintains its own central laboratory with qualified staff capable of completely analyzing
(10) The testing and inspection of the lamination process shall be in accordance with American Institute of Timber Construction (AITC) 200-83, Inspection Manual.
(11) With the exception of reserve treated stock, all invoices for treated timber products shall be accompanied, in duplicate, by a copy of the producer's Certificate of Compliance and a copy of either the Independent Inspection Report or a Quality Assurance Plan Certificate. The certificate shall be presented to the purchaser with the invoice. For reserve treated stock, inspection reports shall be available from the inspection agency. When shipped from reserve stock, the invoice shall bear an endorsement and a further certification by the producer that the material meets the requirements of this specification and any supplementary requirements cited in the purchase order under which it is purchased.
(12) Crossarms shall be warranted to conform to this specification. If any crossarm is determined to be defective or does not conform to this specification within 1 year after shipment to the borrower, it shall be replaced as promptly as possible by the producer. In the event of failure to do so, the purchaser may make such replacement and the cost of the crossarm, at destination, recoverable from the producer.
(b)
(c)
(1) West Coast Lumber Inspection Bureau, Standard No. 17, Grading Rules for West Coast Lumber, September 1, 1991, available from West Coast Lumber Inspection Bureau, P.O. Box 23145, Portland, Oregon 97223, telephone (503) 639-0651, Fax (503) 684-8928.
(2) Southern Pine Inspection Bureau, Standard Grading Rules for Southern
(i) Southern Pine Inspection Bureau, Special Product Rules for Structural, Industrial, and Railroad-Freight Car Lumber, October 15, 1991, available from Southern Pine Inspection Bureau, 4709 Scenic Highway, Pensacola, Florida 32504, telephone (904) 434-2611.
(ii) [Reserved]
(3) American Wood Preservers’ Association (AWPA), Book of Standards, 1991 edition, available from AWPA, P.O. Box 286, Woodstock, Maryland 21163-0286.
(i) A1-91, Standard Methods for Analysis of Creosote and Oil-Type Preservatives.
(ii) A2-91, Standard Methods for Analysis of Waterborne Preservatives and Fire-Retardant Formulations.
(iii) A3-91, Standard Methods for Determining Penetration of Preservatives and Fire Retardants.
(iv) A5-91, Standard Methods for Analysis of Oil-Borne Preservatives.
(v) A6-89, Method for the Determination of Oil-Type Preservatives and Water in Wood.
(vi) A7-75, Standard Wet Ashing Procedure for Preparing Wood for Chemical Analysis.
(vii) A9-90, Standard Method for Analysis of Treated Wood and Treating Solutions by X-Ray Spectroscopy.
(viii) A11-83, Standard Method for Analysis of Treated Wood and Treating Solutions by Atomic Absorption Spectroscopy.
(ix) C1-91, All Timber Products—Preservative Treatment by Pressure Processes.
(x) C4-91, Poles—Preservative Treatment by Pressure Processes.
(xi) C8-91, Western Red Cedar and Alaska Yellow Cedar Poles—Preservative Treatment by the Full-Length Thermal Process.
(xii) C10-91, Lodgepole Pine Poles—Preservative Treatment by the Full-Length Thermal Process.
(xiii) C12-90, Western Larch Poles—Full-Length Preservative Treatment by Thermal Process.
(xiv) M1-90, Standard for the Purchase of Treated Wood Products.
(xv) M2-91, Standard for Inspection of Treated Timber Products.
(xvi) M3-81, Standard Quality Control Procedures for Wood Preserving Plants.
(xvii) M4-91, Standard for the Care of Preservative-Treated Wood Products.
(xviii) P1/P13-91, Standard for Coal Tar Creosote for Land and, Fresh Water and Marine (Coastal Water Use).
(xix) P5-91, Standards for Waterborne Preservatives.
(xx) P8-91, Standards for Oil-Borne Preservatives.
(xxi) P9-91, Standards for Solvents and Formulations for Organic Preservative Systems.
(4) American Institute of Timber Construction (AITC) 200-83, Inspection Manual, 1987 edition, available from AITC, 333 West Hampden Avenue, Englewood, Colorado 80110, telephone (303) 761-3212.
(5) American National Standards Institute (ANSI) 05.2-1983, American National Standard for Wood Products—Structural Glued Laminated Timber for Utility Structures, available from ANSI, 1430 Broadway, New York, New York 10018.
(6) American Society for Testing and Materials (ASTM) D9-87 (1992), Standard Terminology Relating to Wood, available from ASTM, 1916 Race Street, Philadelphia, PA 19103-1187, telephone number (215) 299-5585.
(d)
(1) The borrower has the prerogative to contract directly with the inspection agency for service. The borrower should, where practical, select the inspection agency so that continual employment is dependent only on performance acceptable to the borrower and in accordance with this specification. The selected inspection agency shall not subcontract the service to any other inspection agency without the prior written consent by the borrower.
(2) The producer shall not be a party to the selection of the inspection agency by the borrower and shall not interfere with the work of the inspector, except to provide notification of the readiness of material for inspection. To obtain the inspection services for reserve stock, the producer may deal directly with the inspection agency. Under the Independent Inspection Plan, the producer shall not treat material before it has been properly inspected in the white, as evidenced by the inspector's hammer mark.
(3) The methods of inspection described in this section and in § 1728.202 of this part shall be used no matter which plan crossarms are produced under, i.e., Independent Inspection Plan, or Quality Assurance Plans, as described in this section. The number of crossarms actually inspected by monitors of quality control under a Quality Assurance Plan may vary from the number of crossarms inspected under the Independent Inspection Plan.
(e)
(f)
(i) Douglas-fir which conforms to the applicable crossarm provisions of paragraphs 170 and 170a, or the applicable transmission arm provisions of paragraphs 169 and 169a of the 1991 Standard Grading Rules for West Coast Lumber No. 17. All references to Douglas-fir shall be of coastal origin;
(ii) Southern Yellow Pine which conforms to the provisions of Dense Industrial Crossarm 65, as described in paragraph 31.2 in Southern Pine Inspection Bureau 1991 Special Product Rules for Southern Pine; or
(iii) Laminated wood crossarms shall conform to ANSI 05.2-1983, and have at least the same load carrying capacity as the solid sawn arm it replaces. The load carrying capacity of the laminated arms shall be determined by one of the procedures outlined in ANSI 05.2.
(2) Borrowers may use alternative wood crossarms that are listed in RUS Bulletin 1728C-100, List of Materials Acceptable for Use on Systems of RUS Electrification Borrowers.
(3)
(i) Slightly decayed knots are permitted, except on the top face, provided the decay extends no more than 3/4 of an inch (1.91 cm) into the knot and provided the cavities will drain water when the arm is installed. For knots to be considered well spaced, the sum of the sizes of all knots in any 6 inches (15.24 cm) of length of a piece shall not exceed twice the size of the largest knot permitted. More than one knot of maximum permissible size shall not be in the same 6 inches (15.24 cm) of length. Slightly decayed, firm, or sound “Pin knots” (3/8 of an inch (0.95 cm) or less) are not considered in size, spacing, or zone considerations.
(ii) Knots are subject to the following limits on size and location:
(iii) Knot clusters shall be prohibited unless the entire cluster, measured on the worst face, is equal to or less than the round knot allowed at the specific location.
(iv) Spike knots shall be prohibited in deadend arms. Any spike knot across the top face shall be limited to the equivalent displacement of a knot 3/8 of an inch (0.95 cm) deep on one face and the maximum round knot for its particular location on the worst face, with a maximum width of 1 inch (2.54 cm) measured at the midpoint of the spiked section. Elsewhere across the bottom or side faces, spike knots shall not exceed 1/2 the equivalent displacement of a round knot permitted at that location, provided that the depth of the knot on the worst face shall not exceed the maximum round knot allowed at that location.
(v) Loose knots and knot holes shall drain water when the arm is normally installed. In the center section, upper half, they shall not be greater than 1/2 the dimensions of round knots. Elsewhere, they shall not be greater than the round knot dimension. They shall be prohibited in deadend arms.
(vi) All knots except those “spike” knots intersecting a corner shall be measured on the least diameter of the knot.
(vii) A knot shall be considered to occupy a specific zone or section if the center of the knot (i.e. pith of knot) is within the zone or on the zone's boundary.
(viii) If a round or oval knot appears on two faces and is in two zones, each face shall be judged independently. When this does not occur, average the least dimension showing on both faces. Knots which occur on only one face of a free of heart center (FOHC) arm shall be permitted to be 25 percent larger than the stated size.
(ix)
(x) Knots which have a maximum of 5/8 inch (1.59 cm) diameter may intersect pin holes in the center section. One inch (2.54 cm) diameter knots may intersect pin holes elsewhere.
(4)
(ii) Shakes shall be prohibited.
(iii)
(iv) Compression wood shall be prohibited on any face. It is permitted if wholly enclosed in the arm, more than six annual rings from the surface, and not over 3/8 of an inch (0.95 cm) in width.
(v) Insect holes larger than 3/32 of an inch (0.24 cm) shall be prohibited. Pin holes (i.e. holes not over 1/16 of an inch (0.16 cm) diameter) shall be allowed if scattered and not exceeding 10 percent of the arm girth.
(vi) Wane shall be allowed on one edge, limited to approximately 1 inch (2.54 cm), measured across the corner. Outside of the top center section, an aggregate length not to exceed 2 feet may have wane up to 1-1/2 inches (3.81 cm) on an occasional piece on one or both edges. Bark shall be removed.
(vii) Prior to preservative treatment, crook, bow, or twist shall not exceed 1/2 of an inch (1.27 cm) in 8 foot arms (2.4 m) and 5/8 of an inch (1.59 cm) in 10 foot (3.0 m) arms.
(g)
(2) Lamination techniques shall comply with ANSI 05.2-1983.
(3) Pin and bolt holes shall be smoothly bored without undue splintering where drill bits break through the surface. The center of any hole shall be within 1/8 of an inch (0.32 cm) of the center-line locations on the face in which it appears. The holes shall be perpendicular to the starting and finishing faces.
(4)
(5)
(6)
(h)
(2) Moisture content levels shall be measured at about 1/4 the length and at a depth of about 1/5 the crossarm's thickness. Additionally, the moisture content gradient between the shell (i.e. 1/4 of an inch (0.64 cm) deep) and the core (i.e. about 1 inch (2.54 cm) deep) shall not exceed 5 percentage points.
(3) A minimum of at least 20 solid sawn crossarms per treating charge shall be measured to verify moisture content and shall be duly recorded by the quality control designee or independent inspector.
(4) The moisture content of lumber used in laminating shall, at the time of gluing, be within the range of 8 to 12 percent, inclusive.
(i)
(i) Creosote which conforms to the requirements of AWPA Standard P1 when analyzed in accordance with the methods in AWPA Standard A1, sections 2, 3, 4, either 5 or 9, and 6;
(ii) Pentachlorophenol which contains not less than 95 percent chlorinated phenols and conforms to AWPA Standard P8 when analyzed in
(iii) Waterborne preservatives, which may only be one of the following:
(A) Ammoniacal Copper Arsenates (ACA) and Ammoniacal Copper Zinc Arsenate (ACZA) which shall meet the requirements of AWPA Standard P5, when analyzed in accordance with methods in AWPA Standards A2, A9, or A11; and
(B) Chromated Copper Arsenates (CCA) which shall meet the requirements of one of the formulations given in AWPA Standard P5, sections 4, 5 or 6, and 10. Tests to establish conformity shall be made in accordance with AWPA Standards A2, A9, or A11.
(1) The pH of treating solutions of the waterborne preservatives shown in AWPA Standard P5, section 10, shall be determined in accordance with AWPA Standard A2, section 8.
(2) Waterborne preservatives are available either as oxides, which form non-ionizing chemical compounds in the wood, or as salts, which leave ionizing compounds as well as non-ionizing compounds in the wood. Salt formulations of a waterborne preservative are more corrosive to metal than the oxide formulation and may cause surface deposits. Unless otherwise specified in the purchase order, the oxide formulations of waterborne preservatives shall be supplied.
(3) Douglas-fir crossarms shall not be treated with CCA preservatives.
(4) Materials treated with waterborne preservatives shall be free of visible surface deposits.
(iv) Copper Naphthenate (CuN) concentrate used to prepare wood preserving solutions shall contain not less than 6 percent nor more than 8 percent copper in the form of Copper Naphthenate and shall conform to AWPA Standard P8 when analyzed in accordance with AWPA Standard A5. The hydrocarbon solvents for introducing the preservative into the wood shall meet the requirements of AWPA Standard P9 Type A.
(2) [Reserved]
(j)
(2) These materials may be further conditioned by steaming, or by heating in hot oil (Douglas-fir), within the following limits:
(3) A final steam or hot oil bath may be used only to meet cleanliness requirements of paragraph (k) of this section. Total duration of the final steam bath shall not exceed 2 hours and the temperature shall not exceed 240 degrees Fahrenheit (115.6C).
(k)
(2)
(3) Penetration by the preservative, as determined in accordance with AWPA Standard A3, shall be 100 percent of the sapwood in crossarms. In the heartwood of Douglas-fir crossarms, the penetration shall be not less than 3 inches (7.62 cm) longitudinally from the edge of holes and ends, and at least 3/16 inch (0.45 cm) from the surface of any face.
(4) Retention of preservative in the outer 6/10 of an inch (1.52 cm) for Douglas-fir and one inch (2.54 cm) for Southern Yellow Pine assay zones at the treating plant shall be not less than:
(5) Cleanliness of lengthwise surfaces of all crossarms shall be free from tarry, greasy, or sticky material, and from oil exudation and pentachlorophenol crystallization (blooming).
(6) Re-treatment of materials which do not meet the penetration and retention requirements of this specification may be done only twice. Initial treatment steaming time plus re-treatment steaming time, combined, shall not exceed time allowed in paragraph (i) of this section.
(l)
(2) The letters and figures shall be not less than 1/2 of an inch (1.27 cm) in height. The top of the brand shall be oriented to the top of the arm.
(3) The brand or die-stamp shall include:
(i) The manufacturer's identification symbol;
(ii) Month and year of manufacture;
(iii) Species of timber such as DF for Douglas-fir and SP for Southern Yellow Pine; and
(iv) The preservative notated with a C for creosote, P for penta, S for salts, or N for Copper Naphthenate.
(4) An example is:
(5) The brand or stamp shall be placed on either of the wide surfaces of the arms, oriented with letters right side up towards the top of the arm and preferably about 1 foot (30.48 cm) from the midpoint of the arm.
(6) The mark should be approximately the same location on each type of crossarm of each producer.
(7) Brands, inspection marks, or quality assurance marks shall be removed from arms that do not meet these specifications
(m)
(2) RUS shall acknowledge, by letter, each notification of intent to treat material for reserve stock under the RUS specification.
(3) RUS's letter acknowledging the plant's advance notice of intent to treat material for reserve treated stock for the calendar year in question shall be evidence of compliance with the notification requirements.
(4) Producers shall notify RUS of:
(i) The locations of all storage or distribution yards where reserve treated stock will be maintained;
(ii) The designation of the RUS-approved plan;
(iii) The name of the selected inspection agency, where applicable; and
(iv) Any changes that occur during the year.
(5) Crossarms treated with oil-borne preservatives which have been held in storage for more than 1 year before shipment to the borrower, shall be reassayed before shipment and shall be re-treated if found nonconforming for retention on orders placed in accordance with this section.
(6) The crossarms shall meet the assay after re-treatment in accordance with paragraph (k) of this section.
(7) Crossarms which are held in storage after final acceptance shall be stacked in piles or on skids in such a manner as to assure good ventilation. The stacks shall be covered or stored indoors for protection from the sun and weather to reduce checking, bending, and loss of preservative.
(8) Borrowers or their contractors shall not purchase reserve treated stock from plants that fail to comply with the notification requirements.
(n)
(2) Purchase orders shall indicate the type required.
(3) Crossarms shall be furnished in accordance with the details of these drawings or in accordance with drawings attached to the purchase order
(4) Technical drawings for transmission crossarms are published in RUS Bulletin 1728F-T805B (formerly 50-1), Electric Transmission Specifications and Drawings, 115kV through 230kV, and RUS Bulletin 1728F-T805A (formerly 50-2), Electric Transmission Specification and Drawings, 34.5kV through 69kV.
(5) Appropriate drawings for transmission arms are to be specified and included with purchase orders.
(o)
(2) Using the average shrinkage allowances for Douglas-fir and Southern Yellow Pine as 1 percent size change for each four point moisture content change below the fiber saturation point, calculations can be made to determine if the arm met the minimum size at time of manufacture, when the arm was to meet the average moisture content.
(a)
(b)
(1) American Wood-Preservers’ Association (AWPA), Book of Standards, 1991 edition, available from AWPA, P.O. Box 286, Woodstock, Maryland 21163-0286.
(i) A1-91, Standard for Coal Tar Creosote for Land and Fresh Water Use.
(ii) A2-91, Standard Methods for Analysis of Waterborne Preservatives and Fire-Retardant Formulations.
(iii) A3-91, Standard Methods for Determining Penetration of Preservatives and Fire Retardants.
(iv) A5-91, Standard Methods for Analysis of Oil-Borne Preservatives.
(v) A6-89, Method for the Determination of Water and Oil-Type Preservatives in Wood.
(vi) A7-75, Wet ashing Procedure for Preparing Wood for Chemical Analysis.
(vii) A9-90, Standard Method for Analysis of Treated Wood and Treating Solutions by X-Ray Emission Spectroscopy.
(viii) A11-83, Analysis of Treated Wood and Treating Solutions by Atomic Absorption Spectroscopy.
(ix) C1-91, Standard for Preservative Treatment by Pressure Processes All Timber Products.
(x) C4-91, Standard for the Preservative Treatment of Poles by Pressure Processes.
(xi) C8-91, Standard for the Full-Length Thermal Process Treatment of Western Red Cedar Poles.
(xii) C10-91, Lodgepole Pine Poles—Preservative Treatment by the Full-Length Thermal Process.
(xiii) C12-90, Western Larch Poles—Full-Length preservative Treatment by Thermal Process.
(xiv) M1-90, Standard for the Purchase and Preservation of Forest Products.
(xv) M2-91, Standard Instructions for the Inspection of Preservative Treatment of Wood.
(xvi) M3-81, Standard Quality Control Procedures for Wood Preserving Plants.
(xvii) M4-91, Standard for the Care of Preservative-Treated Wood Products.
(xviii) P1/P13-91, Standard for Coal Tar Creosote for Land and, Fresh Water and Marine (Coastal Water Use).
(xix) P5-91, Standards for Water-Borne Preservatives.
(xx) P8-91, Standards for Oil-Borne Preservatives.
(xxi) P9-91, Standards for Solvents for Organic Preservative Systems.
(2) American Institute of Timber Construction (AITC) 200-83, Inspection Manual, 1987 edition, available from AITC, 333 West Hampden Avenue, Englewood, Colorado 80110.
(3) American National Standards Institute (ANSI) 05.2-1983, American National Standard for Wood Products—Structural Glued Laminated Timber for Utility Structures, available from ANSI, 1430 Broadway, New York, New York 10018.
(4) American National Standards Institute/American Institute of Timber Construction (ANSI/AITC) A190.1-1983, American National Standard for Wood Products—Structural Glued Laminated Timber, available from ANSI, 1430 Broadway, New York, New York 10018.
(5) American Society for Testing and Materials (ASTM) D9-87 (1992), Standard Terminology Relating to Wood, available from ASTM, 1916 Race Street,
(c)
(2) Ultimate quality control is the responsibility of the producer's management; however, a member of the producer's staff shall be designated quality control designee and charged with the responsibility for the exercise of proper quality control procedures. The requirements in American Wood Preservers’ Association (AWPA) Standard M3, covering records, adequate laboratory, plant gauges, and other plant facilities including proper storage, shall be followed.
(3) The methods of inspection described in this section shall be used no matter which plan timber products are purchased under, i.e., Insured Warranty Plan, Independent Inspection Plan, or Quality Assurance Plans as described in § 1728.201 of this part or RUS Bulletin 1728F-700. The number of poles and crossarms actually inspected by monitors for quality control under a Quality Assurance Plan or the Insured Warranty Plan may vary from the number of poles and crossarms inspected under the Independent Inspection Plan. Under the Independent Inspection Plan, each pole and a sample number of crossarms shall be inspected.
(4) Under the Independent Inspection Plan, the RUS borrower should designate in the purchase order which inspection agency it has selected. Unless the RUS borrower contracts for inspection as a separate transaction, the treating company shall obtain the services of the RUS borrower's designated inspection agency. For reserve treated stock for purchase under the Independent Inspection Plan, the treating company shall obtain the services of an inspection agency. Selection of and changes in inspection agencies for reserve treated stock shall be promptly reported to the Director, Electric Staff Division, Rural Utilities Service, Washington, DC 20250-1500, in accordance with RUS Bulletin 1728F-700, and § 1728.201.
(5) Individual inspectors in the employ of Independent Inspection Agencies shall be experienced and competent. The inspector shall perform all phases of the inspection personally and in the proper sequence. The primary responsibility of the inspector is to determine, for the borrower, by careful inspection and verification, that the timber products, preservative, and treatment meet the requirements of RUS Bulletin 1728F-700 and Bulletin 1728H-701 and that the methods, storage facilities, and production equipment conform to applicable RUS specifications. For details of the recommended inspector's qualifications see appendix A of this section.
(6) Laminated materials for use on RUS borrower systems shall follow manufacturing and quality control requirements as specified in ANSI 05.2—1983, American National Standard for Wood Products—Structural Glued Laminated Timber for Utility Structures, and ANSI/AITC A190.1-1983, American National Standard for Wood Products—Structural Glued Laminated Timber. The product shall be marked and certified.
(i) Laminated material shall be inspected by a qualified inspection and testing agency.
(ii) Quality control of material shall be performed to determine conformance with § 1728.201 of this part and AITC 200-83, Inspection Manual.
(d)
(1) Poles can be purchased under any of the three purchase plans. These plans are Insured Warranty Plan, Independent Inspection Plan, or a Quality Assurance Plan. Under the Independent Inspection Plan, all poles in a lot shall
(i) Ample space and assistance shall be provided by the treating plant for handling and turning to insure that the surfaces of all items can be adequately inspected.
(ii) Under the Independent Inspection Plan, all poles shall be inspected for conformance to the requirements of RUS Bulletin 1728F-700. If a pole is rejected and the cause of rejection is corrected, the rejected pole may be offered again for inspection as new material.
(iii) Dimensions, length, and circumference shall be measured by a standard steel pole tape to determine that they are in agreement with the details for class and length in the brand and butt stamp. If it is obvious by visual comparison with a measured pole that the brand information is correct, individual poles need not be measured. Pole circumference dimensions made prior to treatment shall govern acceptance. Reduction in dimension due to treatment and shipping shall be not more than 2 percent below the minimum for the pole class.
(iv) If 15 percent of the poles in a lot offered for inspection are defective, the inspector shall terminate the inspection. Re-examination of an entire lot by plant quality control shall be required when the number of rejected poles equals or exceeds 15 percent of the lot inspected. All defective or nonconforming poles either shall be removed from the lot or marked out.
(v) Poles in a lot inspected for decay shall be of the same seasoning condition. If the independent inspector suspects that decay has occurred, he shall cut a slice from both ends for closer examination. If 5 percent of the inspected poles in a lot shows evidence of decay, the entire lot shall be unconditionally rejected without further sorting.
(vi) Moisture content, when limited by the purchaser, as stated on the borrower's purchase order, shall be measured by calibrated electric moisture meter. Calibration of the meter shall include not only the zero settings for the X and Y readings, but also two resistance standards for 12 and 22 percent moisture content.
(vii) Material failing to conform for moisture content may be retested upon request after a recalibration of the instrument. The results of the second test shall govern disposition of the lot.
(viii) Re-examination for any mechanical damage or deterioration and for original acceptance shall be conducted on timber products not treated within 10 days after original inspection.
(2) Crossarms can be purchased only under either of two purchase plans. These plans are the Independent Inspection Plan or Quality Assurance Plans. Under the Independent Inspection Plan, crossarms are to be inspected prior to manufacture, during manufacture, and after treatment. Under a Quality Assurance Plan, crossarms are monitored according to the terms of the quality assurance program acceptable to RUS.
(i) Inspection prior to treatment shall include:
(A) Surface inspection of all ends of all arms. This is usually done on the stacks of arms prior to manufacture. Particular attention shall be paid to defects commonly found in the ends, such as compression wood, red heart and other forms of decay, shakes, splits, through checks, scantiness, honeycomb, and low density, determined by rings per inch (centimeter) and percent of summerwood. Whenever the number of nonconforming arms is found to exceed 0.5 percent of the lot or one arm, whichever is greater, the entire lot shall be rejected for excess number of defective ends. After the producer has removed or marked out the defective material, the arms may be resubmitted for inspection.
(B) Surface inspection of the lengthwise sides performed on a random representative sample. The sample size shall equal 20 percent of a lot size or 200 arms, whichever is smaller. The inspector shall examine side surfaces as they are slowly rotated. When necessary, the rotation may be stopped for closer inspection. Whenever the number of nonconforming arms is found to exceed 2 percent of the sample size, the entire lot shall be rejected. After the producer has removed or marked out
(C) Check of moisture content of the random sample by a calibrated moisture meter.
(D) Check of crossarm dimensions of the random sample measured after surfacing.
(ii) Inspection during manufacture shall consist of:
(A) Checking bolt and insulator pin holes for squareness and excessive splintering;
(B) Checking brands for completeness, location, and legibility; and
(C) Checking arms for conformance.
(iii) Under the Independent Inspection Plan, there shall be a final inspection during and after treatment for preservative retention and penetration and for damage.
(3) Structural glued laminated timber shall be tested and inspected in accordance with AITC 200-83, Inspection Manual. Grade of lumber shall be inspected by a qualified grader for specified quality, and so marked, in accordance with grading rules of the American Lumber Standards. Adhesives used for all structural arms shall meet requirements of ANSI 05.2-83, paragraph 5.2. Melamine urea adhesives shall not be used. End joint spacings and limitations shall be in accordance with ANSI 05.2-83.
(e)
(i) Each occasional charge, all material treated in a cylinder at one time, shall be analyzed.
(ii) The first charge and one of every five charges randomly selected in consecutive charges shall be analyzed.
(2) Solutions of waterborne preservatives shall be analyzed for components in accordance with AWPA Standards A2, A9, or A11, and shall meet the requirements of P5 for composition. AWPA A2 shall be used as a referee method.
(3) Pentachlorophenol shall contain not less than 95 percent chlorinated phenols and conform to AWPA Standard P8 in hydrocarbon solvent AWPA P9 Type A.
(4) Copper Naphthenate in hydrocarbon solvent (AWPA P9 Type A) shall contain not less than 6 percent nor more than 8 percent copper in the form of Copper Naphthenate and conform to AWPA Standard P8 when analyzed in accordance with AWPA Standard A5.
(f)
(2) Under the Independent Inspection Plan, the inspector shall be present during the treatment procedure, except at times when it may be impractical, such as during late night or early morning treatments. At such times, temperature, pressure, and vacuum data shall be taken from the recording charts.
(3) Recording instruments shall be checked with indicating gauges and thermometers. Inaccuracies shall be referred to the treating company for prompt correction. In the event of an inaccuracy, indicating possible damage to the material, the inspector shall reject the charge.
(g)
(i) Western red and northern white cedars and western larch poles shall be bored at any point of the periphery approximately 6-12 inches (15.24-30.48 cm) above ground line and all other species approximately 1 foot (30.48 cm) above or below the brand.
(ii) Penetration shall be determined in accordance with AWPA Standard A3. Chrome Azurol S and Penta-Check shall be used to determine penetration of copper containing preservatives and penta, respectively.
(iii)
(B) Retention samples shall be taken from 20 poles in charges of 20 or more poles.
(C) Retention samples for Alaska yellow, western red, and northern white cedars shall be comprised of a minimum of 30 assay zones for creosote and waterborne preservatives. For penta charges of fewer than 30 poles, the sample shall contain the assay zone from each pole in the lot.
(D) Retention samples shall be comprised of borings, representative of pole volumes for each class and length in the charge. Further selection and marking of poles of mixed seasoning, volume, and location on the tram shall be made as illustrated in the following table:
(iv) When material in a lot consists of fewer pieces than the designated minimum number of samples for assay, additional borings shall be taken so as to make up at least the minimum sample, and in such manner that the sample is representative of the lot of material with respect to any variations in size, seasoning condition, or other features that might affect the results of treatment.
(v) Analyses for preservative retention shall be performed.
(A) Creosote shall be analyzed by AWPA Standard A6.
(B) Penta shall be analyzed by AWPA Standard A5 or A9. Copper pyridine method is required when timber may have been in contact with salt water and for all species native to the Pacific coast region, unless the raw material invoice specifically states that the material either has not been in contact with salt water or has been shown by analysis to have contained no additional chlorides before treating.
(C) Copper Naphthenate shall be analyzed by tests in accordance with AWPA Standards A5 or A9.
(D) Waterborne preservatives shall be analyzed by tests in accordance with AWPA Standards A2, A7, A9, or A11.
(E) Prior to unloading a tram, the inspectors may take their own samples and analyze them concurrently with the quality control designee, but each shall work independently, and quality control data shall be presented before acceptance of the charge.
(vi)
(
(
(
(B) Group B poles consist of poles with circumference greater than 37.5 inches (95.25 cm) at 6 feet (1.8 m) from the butt.
(
(
(vii) All holes (nominal 0.2 of an inch (0.05 cm) diam. bit) shall be promptly filled with treated, tight-fitting wood plugs.
(2) Under the Independent Inspection Plan, all treating charges of crossarms shall be tested for retention and penetration. Plant quality control inspectors and independent inspectors shall do their analyses
(i) The penetration and retention sample shall consist of 20 (48 for creosote) outer 6/10 of an inch (1.52 cm) for Douglas-fir and 1 inch (2.54 cm) for Southern Yellow Pine zones from borings taken from any face except the top face at a location as close to the end as possible being at least 3 inches (7.62 cm) from the end of the arm and no closer than 3 inches from the edge of any holes. For laminated material, borings shall be taken from laminates on a random basis.
(ii) Penetration shall be tested by taking not less than 20 borings from 20 crossarms in each charge, determined in accordance with AWPA Standard A3. Chrome Azurol S and Penta-Check shall be used to determine penetration of copper containing preservatives and penta, respectively.
(3) Laminated material shall be checked for any evidence of delamination due to treatment and for the identifying quality stamp of AITC or American Plywood Association (APA).
(4) When x-ray fluorescence (XRF) instruments are used to analyze preservative or retention, Periodic Instrument Checks (PIC) shall be made by the treating plant and any outside inspection agency using the treating plant's instrument or its own. Appendix B of this section outlines a recommended procedure.
(5) At a minimum, treating plants shall perform the PIC weekly and record the results in the instrument's log, which shall be stored with the instrument. Independent inspection agencies shall use their own samples to perform the PIC on treater's instrument once per visit, not to exceed one PIC per week. Inspection agencies shall record their results in the instrument's log and state the date of its latest PIC on all treating reports.
(6) XRF instruments shall be accurate and reliable, and they shall generate reproducible results. Instruments shall have thorough instructions which should include recommendations on drying techniques, equipment, and density calculations. These drying recommendations shall be followed when using these instruments.
(h)
(i)
(i) The total pieces in the lot, number of and causes for rejection;
(ii) The conditioning of the material prior to treatment;
(iii) The analyses of preservative identified by the analyst's signature or certification;
(iv) The details of treatment; and
(v) The results of treatment. These results shall include the following:
(A) The depth of penetration for retention sample and a summary of all poles rejected for insufficient penetration;
(B) Worksheets for retention analyses, each identified by quality control designee and independent inspector;
(C) The number of pieces offered and rejected, together with the cause(s) for rejection;
(D) The date of latest Periodic Instrument Check.
(2) On each inspection report the independent inspector and the plant quality control designee shall certify, in writing, that the material listed on the report has been inspected before,
(3) Each inspector or inspection agency shall retain for a period of 1 year a copy or transcript of each report of inspection, together with laboratory worksheets covering retention by assay and preservative analyses for the purchaser, and on request shall furnish a copy or transcript of any of these reports to the Director, Electric Staff Division, Rural Utilities Service, Washington, DC 20250-1500.
(j)
(k)
(a) Inspection agencies should see that inspectors assigned to the inspection of timber products and treatment for RUS borrowers are competent and experienced.
(b)
(1) Three years’ experience as an inspector of timber and the preservative treatment of timber.
(2) Three years’ experience in timber treating plant quality control work.
(3) Under the direct supervision of an experienced, well-qualified inspector, who has performed the following:
(i) Inspected at least 2,500 poles and/or crossarms “in the white.”
(ii) Checked preservative penetration results on at least 500 poles and crossarms.
(iii) Made at least 35 wood assays for preservative retention.
(iv) Made at least 25 analyses of each type preservative used on material the person is assigned to inspect.
(v) In both (b)(1) and (b)(2) of this appendix A, the experience should be not less than that required in (b)(3)(i), (b)(3)(ii), (b)(3)(iii), and (b)(3)(iv).
(4) Inspectors experienced in the inspections of one product, such as poles, should not be qualified to inspect another product, such as crossarms, until the above experience is gained.
(5) The inspector should be especially well informed in wood preservation and the operation of a timber treating plant, and be competent in preservative analysis and other laboratory work.
(6) In all cases, an inspector should be thoroughly instructed in the application of RUS specifications and the standards pertaining thereto before being permitted to independently inspect timber products and the treatments applied to them. Knowledge of these specifications and standards, as well as the inspector's proficiency, may be checked routinely by members of the RUS staff.
(a)
(b)
(1)
(2)
(ii) Record any user correction factors.
(iii) Stabilize and standardize the instrument.
(iv) Run the salt solution five times using the PENTA-OIL calibration mode.
(v) Record the average and standard deviation of the values for percent penta. The average value will now be considered the nominal value.
(3)
(c)
American Wood Preservers’ Association, P.O. Box 286, Woodstock, Maryland 21163, Phone: (410) 456-3169.
7 U.S.C. 901
(a) This part contains the policies and procedures of the Rural Utilities Service (RUS) related to electric borrowers’ operation and maintenance practices and RUS’ review and evaluation of such practices.
(b) The policies and procedures included in this part apply to all electric borrowers (both distribution borrowers and power supply borrowers) and are intended to clarify and implement certain provisions of the security instrument and loan contract between RUS and electric borrowers regarding operations and maintenance. This part is not intended to waive or supersede any provisions of the security instrument and loan contract between RUS and electric borrowers.
(c) The Administrator may waive, for good cause, on a case by case basis, certain requirements and procedures of this part.
It is RUS policy to require that all property of a borrower be operated and maintained properly in accordance with the requirements of each borrower's loan documents. It is also RUS policy to provide financial assistance only to borrowers whose operations and maintenance practices and records are satisfactory or to those who are taking corrective actions expected to make their operations and maintenance practices and records satisfactory to RUS.
(a) Persons wishing to obtain forms referred to in this part should contact: Program Support and Regulatory Analysis, Rural Utilities Service, U.S. Department of Agriculture, Stop 1522, 1400 Independence Ave., SW., Washington, DC 20250-1522, telephone (202) 720-8674. Borrowers or others may reproduce any of these forms in any number required.
(b) Documents required to be submitted to RUS under this part are to be sent to the office of the borrower's assigned RUS General Field Representative (GFR) or such other office as designated by RUS.
Terms used in this part have the meanings set forth in 7 CFR Part 1710.2. References to specific RUS forms and other RUS documents, and to specific sections or lines of such forms and documents, shall include the corresponding forms, documents, sections and lines in any subsequent revisions of these forms and documents. In addition to the terms defined in 7 CFR Part 1710.2, the term
Each distribution borrower and power supply borrower shall operate and maintain its system in compliance with Prudent Utility Practice, in compliance with its loan documents, and in compliance with all applicable laws, regulations and orders, shall maintain its systems in good repair, working order and condition, and shall make all needed repairs, renewals, replacements, alterations, additions, betterments and improvements, in accordance with applicable provisions of the borrower's security instrument. Each borrower is responsible for on-going operations and maintenance programs, for maintaining records of the physical and electrical condition of its electric system and for the quality of services provided to its customers. The borrower is also responsible for all necessary inspections and tests of the component parts of its system, and for maintaining records of such inspections and tests. Each borrower shall budget sufficient resources to operate and maintain its system in accordance with the requirements of this part. For portions of the borrower's system that are not operated by the borrower, if any, the borrower is responsible for ensuring that the operator is operating and maintaining the system properly in accordance with the operating agreement.
(a) Each borrower shall conduct all necessary inspections and tests of the component parts of its electric system, and maintain adequate records of such inspections and tests.
(b) The frequency of inspection and testing will be determined by the borrower in conformance with applicable laws, regulations, national standards, and Prudent Utility Practice. The frequency of inspection and testing will be determined giving due consideration to the type of facilities or equipment, manufacturer's recommendations, age, operating environment and hazards to which the facilities are exposed, consequences of failure, and results of previous inspections and tests. The records of such inspections and tests will be retained in accordance with applicable regulatory requirements and Prudent Utility Practice. The retention period should be of a sufficient time period to identify long-term trends. Records must be retained at least until the applicable inspections or tests are repeated.
(c) Inspections of facilities must include a determination of whether the facility complies with the National Electrical Safety Code, National Electrical Code (as applicable), and applicable State or local regulations. Any serious or life-threatening deficiencies shall be promptly repaired, disconnected, or isolated in accordance with applicable codes or regulations. Any other deficiencies found as a result of such inspections and tests are to be recorded and those records are to be maintained until such deficiencies are corrected or for the retention period required by paragraph (b) of this section, whichever is longer.
(a) Each borrower shall periodically analyze in writing its operations and maintenance policies, practices, and procedures to determine if they are appropriate and if they are being followed. The records of inspections and tests are also to be reviewed and analyzed to identify any trends which could indicate deterioration in the physical condition or the operational effectiveness of the system or suggest a need for changes in operations or maintenance practices. For portions of the borrower's system that are not operated by the borrower, if any, the borrower's written analysis would also include a review of the operator's performance under the operating agreement.
(b) When a borrower's operations and maintenance policies, practices, and procedures are to be reviewed and evaluated by RUS, the borrower shall:
(1) Conduct the analysis required by paragraph (a) of this section not more than 90 days prior to the scheduled RUS review;
(2) Complete RUS Form 300, Review Rating Summary, and other related
(3) Make available to RUS the borrower's completed RUS Form 300 (including a written explanation of the basis for each rating) and records related to the operations and maintenance of the borrower's system.
(c) For those facilities not included on the RUS Form 300 (e.g., generating plants), the borrower shall prepare and complete an appropriate supplemental form for such facilities.
RUS Form 300 in Appendix A shall be used when required by this part.
RUS will initiate and conduct a periodic review and evaluation of the operations and maintenance practices of each borrower for the purpose of assessing loan security and determining borrower compliance with RUS policy as outlined in this part. This review will normally be done at least once every three years. The borrower will make available to RUS the borrower's policies, procedures, and records related to the operations and maintenance of its complete system. Reports made by other inspectors (e.g., other Federal agencies, State inspectors, etc.) will also be made available, as applicable. RUS will not duplicate these other reviews but will use their reports to supplement its own review. RUS may inspect facilities, as well as records, and may also observe construction and maintenance work in the field. Key borrower personnel responsible for the facilities being inspected are to accompany RUS during such inspections, unless otherwise determined by RUS. RUS personnel may prepare an independent summary of the operations and maintenance practices of the borrower. The borrower's management will discuss this review and evaluation with its Board of Directors.
(a) For any items on the RUS Form 300 rated unsatisfactory (i.e., 0 or 1) by the borrower or by RUS, the borrower shall prepare a corrective action plan (CAP) outlining the steps (both short term and long term) the borrower will take to improve existing conditions and to maintain an acceptable rating. The CAP must include a time schedule and cost estimate for corrective actions, and must be approved by the borrower's Board of Directors. The CAP must be submitted to RUS for approval within 90 days after the completion of RUS’ evaluation noted in § 1730.24.
(b) The borrower must periodically report to RUS in writing progress under the CAP. This report must be submitted to RUS every six months until all unsatisfactory items are corrected unless RUS prescribes a different reporting schedule.
Where provided for in the borrower's loan documents, RUS may require the borrower to provide an “Engineer's Certification” as to the condition of the borrower's system (including, but not limited to, all mortgaged property.) Such certification shall be in form and substance satisfactory to RUS and shall be prepared by a professional engineer satisfactory to RUS. If RUS determines that the Engineer's Certification discloses a need for improvements to the condition of its system or any other operations of the borrower, the borrower shall, upon notification by RUS, promptly undertake to accomplish such improvements.
Ratings on form are:
Rating:
Rating:
Rating:
Rating:
Rating:
Rating:
For Previous 2 Years:
For Present Year:
For Future 3 Years:
14. Budgeting:
15. Date Discussed with Board of Directors
7 U.S.C. 901
(a) Subparts A through E of this part set forth the general policies, types of loans and loan requirements under the Telephone loan program.
(b) The standard RUS security documents (see 7 CFR 1744 subpart D or
(c) Subparts F through J of this part also detail RUS's requirements with respect to mergers and acquisitions involving RUS loan funds.
(1) Federal government securities purchased in the name of the borrower;
(2) Other securities issued by an institution whose senior unsecured debt obligations are rated in any of the top three categories by a nationally recognized rating organization; or
(3) Cash.
(2) Comparable service provided through a system of switches, transmission equipment, or other facilities (or combination thereof) by which a subscriber can originate and terminate a telecommunications service.
(1) Message telegram service;
(2) Community antenna television system services or facilities other than those intended exclusively for educational purposes; or
(3) Radio broadcasting services or facilities within the meaning of section 3(o) of the Communications Act of 1934, as amended.
Single copies of RUS forms and publications cited in this part are available from Program Support Regulatory Analysis, Rural Utilities Service, STOP 1522, 1400 Independence Ave., SW., Washington, DC 20250-1522. These RUS forms and publications may be reproduced. The terms “RUS form”, “RUS standard form”, and “RUS specification” have the same meanings as the terms “REA form” “REA standard form”, and “REA specification”, respectively, unless otherwise indicated.
(a) The Rural Utilities Service (RUS) makes loans to furnish and improve telephone service in rural areas. Loans made or guaranteed by the Administrator of RUS will be made in conformance with the Rural Electrification Act of 1936 (RE Act), as amended (7 U.S.C. 901
(b) RUS will not make hardship loans, RUS cost-of-money loans, or RTB loans for any wireline local exchange service or similar fixed-station voice service that, in RUS' opinion, is inconsistent with the borrower achieving the requirements stated in the State's telecommunication modernization plan within the time frame stated in the plan (see 7 CFR part 1751, subpart B), unless RUS has determined that achieving the requirements as stated in such plan is not technically or economically feasible.
(c) A borrower receiving a loan to provide mobile telecommunications services or special telecommunications services shall be considered to be participating in the state telecommunications plan (TMP) with respect to the particular loan so long as the loan funds are not used in a manner that, in RUS' opinion, is inconsistent with the borrower achieving the goals set forth in the plan, except that a borrower must comply with any portion of a TMP made applicable to the borrower by a state commission with jurisdiction.
(d) RUS will not deny or reduce a loan or an advance of loan funds based on a borrower's level of general funds.
(e) No fees or charges are assessed for any type of loan or guarantee provided by RUS or the Rural Telephone Bank (RTB).
(f) The Administrator may use consultants funded by the borrower for financial, legal, engineering, and other technical advice in connection with the review of a borrower's loan application.
Borrowers must make adequate telephone service available to the widest practical number of rural subscribers during the life of the loan. Both the nature of the service area and the cost per subscriber must be fully considered. The borrower must seek to provide service to all interested potential subscribers in the service area. Borrowers are not required to extend service in situations where the costs would be exorbitant. The loan contract shall contain appropriate provisions to effect this requirement. See 7 CFR 1737.11(a), Preapplication Determinations: Area to be Served.
(a) In states having a state regulatory body with authority to regulate
(b) In states where there is no such regulatory body, a loan will not be made unless the Administrator determines that no duplication of lines, facilities, or systems already providing reasonably adequate services shall result from such a loan.
(c) RUS shall consider the following criteria for any wireline local exchange service or similar fixed-station voice service provided by a local exchange carrier (LEC) in determining whether such service is reasonably adequate:
(1) The LEC is providing area coverage as described in § 1735.11.
(2) The LEC is providing all one-party service or, if the State commission has mandated a lower grade of service, the LEC is eliminating that service in accordance with the requirements of the Telecommunications Act of 1996, 47 U.S.C. 151
(3) The LEC's network is capable of providing transmission and reception of data at a rate of at least 1,000,000 bits per second(1 Mbps) with reasonable modification to any subscriber who requests it.
(4) The LEC makes available custom calling features (at a minimum, call waiting, call forwarding, abbreviated dialing, and three-way calling).
(5) The LEC is able to provide E911 service to all subscribers, when requested by the government entity responsible for this service.
(6) The LEC is able to offer local service with blocked toll access to those subscribers who request it.
(7) The LEC's network is capable of accommodating Internet access at speeds of at least 28,800 bits per second (28.8 Kbps) via modem dial-up from any subscriber location.
(8) There is an absence of frequent service interruptions.
(9) The LEC is interconnected with the public switched network.
(10) No Federal or State regulatory commission having jurisdiction has determined that the quality, availability, or reliability of the service provided is inadequate.
(11) Services are provided at reasonably affordable rates.
(12) Any other criteria the Administrator determines to be applicable to the particular case.
(d) RUS shall consider the following criteria for any of mobile telecommunications service in determining whether such service is reasonably adequate:
(1) The extent to which area coverage is being provided as described in 7 CFR 1735.11.
(2) Clear and reliable call transmission is provided with sufficient channel availability.
(3) The mobile telecommunications service signal strength is at least −85dBm (decibels expressed in miliwatts).
(4) The mobile telecommunications service is interconnected with the public switched network.
(5) Mobile 911 service is available to all subscribers, when requested by the local government entity responsible for this service.
(6) No Federal or State regulatory commission having jurisdiction has determined that the quality, availability, or reliability of the service provided is inadequate.
(7) Mobile telecommunications service is not provided at rates which render the service unaffordable to a significant number of rural persons.
(8) Any other criteria the Administrator determines to be applicable to the particular case.
(e) RUS does not consider mobile telecommunications service a duplication of existing wireline local exchange service or similar fixed-station voice service. RUS may finance mobile telecommunications systems designed to provide eligible services in rural areas under the Rural Electrification Act even though the services provided by the system may incidentally overlap services of existing mobile telecommunications providers.
(f) RUS shall consider the following criteria for any provider of a specialized telecommunications service in determining whether such service is reasonably adequate:
(1) The provider of a specialized telecommunications service is providing area coverage as described in § 1735.11.
(2) An adequate signal strength is provided throughout the largest practical portion of the service area.
(3) There is an absence of frequent service interruptions.
(4) The quality and variety of service provided is comparable to that provided in nonrural areas.
(5) The service provided complies with industry standards.
(6) No Federal, State, or local regulatory commission having jurisdiction has determined that the quality, availability, or reliability of the service provided is inadequate.
(7) Services are provided at reasonably affordable rates.
(8) Any other criteria the Administrator determines to be applicable to the particular case.
(a) When it is determined by the Administrator to be necessary in order to furnish or improve telephone service in rural areas, loans may be made for the improvement, expansion, construction, acquisition, and operation of telephone lines, facilities, or systems without regard to their geographical location.
(b) To the greatest extent practical, loans are limited to providing telephone facilities that serve subscribers in rural areas. In order to furnish and improve service to rural subscribers it may at times be necessary to provide loan funds to finance telephone facilities which (1) will also serve nonrural subscribers, or (2) are located in nonrural areas. Loans may be approved to finance such facilities if the Administrator determines, on a case-by-case basis, that (i) the primary purpose of the loan is to provide service to rural areas and (ii) the financing of facilities for nonrural subscribers is necessary and incidental to furnishing or improving telephone service in rural areas.
(c) Loan funds may be approved for facilities to serve nonrural subscribers only if (1) the principal purpose of the loan is to furnish and improve rural service and (2) the use of loan funds to serve nonrural subscribers is necessary and incidental to the principal purpose of the loan. The following are examples of purposes for which such loans may be made (such loans are not limited to these examples):
(1) In the case of construction of a new system, if the loan would not be economically feasible and self-liquidating unless the nonrural as well as the rural portions of the telephone service area are included in the proposed system, the loan may include funds for both portions.
(2) Where the acquisition of an existing system located in and serving a nonrural area is necessary to serve as the nucleus of an expanded system to furnish area coverage service in rural areas, the loan may include funds to finance the acquisition.
(3) When a system is being converted to modern service for rural subscribers, the loan may include funds for the conversion of the nonrural facilities, if the rural service will be improved as a result of such nonrural improvements and it is impractical to finance and serve the nonrural and rural areas separately.
(4) A loan may include funds to serve nonrural subscribers located in community centers frequently called by the rural subscribers if the construction to serve such nonrural subscribers will be incidental to, and contribute substantially to, the provision of adequate service for the rural subscribers.
(d) RUS may also approve financing for facilities to serve nonrural areas if, at the time financing was first approved by RUS:
(1) The nonrural area had a population of 1,500 or less when first financed by RUS and that financing was approved prior to November 1, 1993; or
(2) The nonrural area had a population of 5,000 or less when first financed by RUS and that financing was approved on or after November 1, 1993.
(a) RUS makes loans to:
(1) Entities providing, or who may hereafter provide, telephone service in rural areas;
(2) Public bodies providing telephone service in rural areas as of October 28, 1949; and
(3) Cooperative, nonprofit, limited dividend or mutual associations.
(b) RUS does not make loans to individuals.
(c) RUS gives preference to those borrowers (including initial loan applicants) already providing telephone service in rural areas, and to cooperative, nonprofit, limited dividend, or mutual associations. To be eligible for a loan, a borrower:
(1) Must have sufficient authority to carryout the purposes of the RE Act; and
(2) Must be incorporated or a limited liability company.
Borrowers are required to comply with certain regulations on nondiscrimination and equal employment opportunity. See RUS Bulletin 320-19 and RUS Bulletin 320-15, respectively.
Recognizing plant costs, the borrower's cost of system design, and RUS's administrative costs, RUS will not consider applications for loans of less than $50,000.
(a) RUS makes hardship and guaranteed loans to finance the improvement, expansion, construction, acquisition, and operation of systems or facilities (including station apparatus owned by the borrower, headquarters facilities, and vehicles not used primarily in construction) to furnish and improve telephone service in rural areas, except as noted under paragraph (c) of this section.
(b) RUS makes concurrent RUS cost-of-money and RTB loans to finance the improvement, expansion, construction, and acquisition of systems or facilities (excluding station apparatus owned by the borrower, headquarters facilities, and vehicles not used primarily in construction) to furnish and improve telephone service in rural areas, except as noted under paragraph (c) of this section.
(c) RUS will not make any type of loan to finance the following items:
(1) Station apparatus (including PBX and key systems) not owned by the borrower and any associated inside wiring;
(2) Certain duplicative facilities, see § 1735.12;
(3) Facilities to provide service other than 1-party; and
(4) System designs or facilities to provide service that cannot withstand or are not designed to minimize damage caused by storms and other natural catastrophes, including, but not limited to hurricanes, floods, tornadoes, mudslides, lightning, windstorms, hail, fire, and smoke, unless an alternate design or facility for modern telecommunications is more economically or technically feasible. Economic and technical feasibility will be determined using total long range economic costs and risk analysis.
(d) Generally, RUS will not make a loan to another entity to provide the same telecommunications service in an area served by an incumbent RUS telecommunications borrower providing such service. RUS may, however, consider an application for a loan to provide the same type of service being provided by an incumbent RUS borrower if the Administrator determines that the incumbent borrower is unable to meet its obligations to the government, including the obligation to provide service set forth in its loan documents and to repay its loans.
(e) If an unadvanced loan, or portion thereof, is rescinded, a new loan shall not be made for the same purposes as in the rescinded loan, except as provided in § 1735.47.
If determined by the Administrator to be necessary for loan security, a borrower applying for an initial loan shall increase its net worth as a percentage of assets to the highest level recorded,
RUS does not make loans for the sole purpose of merging or consolidating telephone organizations. After a merger or consolidation, RUS will consider making loans to the telephone system to finance the improvement or extension of telephone service in rural areas. See RUS Bulletins 320-4, 321-2, 325-1, and 326-1.
(a) RUS finances the acquisition by a borrower of another system, lines, or facilities only when the acquisition is necessary and incidental to furnishing or improving rural telephone service. See 7 CFR 1735.13.
(b) RUS determines the amount it will lend for each acquisition. If the acquisition price exceeds this amount, the borrower shall provide the remainder.
(c) For additional policies on acquisitions, see subpart F through J of this part.
(a) Hardship loans and guaranteed loans may include funds to refinance outstanding indebtedness of corporations furnishing telephone service when such refinancing is necessary and incidental to furnishing or improving telephone service in rural areas. Refinancing may not constitute more than 40 percent of the loan.
(b) Loans for refinancing are not made solely to enable borrowers to obtain a lower interest rate or a longer amortization period. RUS requires borrowers, to the greatest extent possible, to liquidate outstanding indebtedness through the use of nonloan funds.
(c) If deemed necessary by RUS to provide itself with adequate security, RUS will consider loans for refinancing outstanding indebtedness secured by a lien on property offered as security for the loan, if the property covered by the lien is integral to the operation of the system.
(d) RUS will consider loans for refinancing when the borrower would otherwise be unable to meet payments on both the outstanding indebtedness and the loan as they become due.
(e) RUS may consider loans for refinancing in other situations.
(a) RUS makes loans only if, in the judgment of the Administrator, the security therefor is reasonably adequate and the loan will be repaid within the time agreed. See 7 CFR 1735.18 and 7 CFR 1735.51.
(b) RUS generally requires that borrowers provide it with a first lien on all of the borrower's property. See 7 CFR 1735.46.
(c) In the case of loans that include the financing of telephone facilities that do not constitute self-contained operating systems or units (such as lines switched by other systems), the borrower shall, in addition to the mortgage lien on all of the borrower's telephone facilities, furnish adequate assurance, in the form of contractual or other security arrangements, that continuous and efficient telephone service will be rendered.
(d) The borrower shall provide RUS with a satisfactory Area Coverage Survey. See 7 CFR 1737.30 and 1737.31.
(e) RUS makes loans only if the borrower's entire system, including the facilities to be constructed with the proceeds of the loan, is economically feasible, as determined by RUS. In addition, RUS considers a system to be feasible only if the system, in addition to being feasible in all other respects, is year 2000 compliant or if the borrower provides RUS with a certification, satisfactory to RUS, that the system will be year 2000 compliant at a reasonable time before December 31, 1999.
(f) For purposes of determining compliance with TIER requirements, unless a borrower whose existing mortgage contains TIER maintenance requirements notifies RUS in writing differently, RUS will apply the requirements described in paragraph (g) of this section to the borrower regardless of the provisions of the borrower's existing mortgage.
(g) For loans approved after October 6, 1997 loan contracts and mortgages covering hardship loans, RUS cost-of-money loans, RTB loans, and guaranteed loans will contain a provision requiring the borrower to maintain a TIER of at least 1.0 during the Forecast Period. At the end of the Forecast Period, the borrower shall be required to maintain, at a minimum, a TIER at least equal to the projected TIER determined by the feasibility study prepared in connection with the loan, but at least 1.0 and not greater than 1.5.
(h) Nothing in this section shall affect any rights of supplemental lenders under the RUS mortgage, or other creditors of the borrower, to limit a borrower's TIER requirement to a level above that established in paragraph (g) of this section.
(i) A borrower will not be required to raise its TIER as a condition for receiving a loan. Additional financial, investment, and managerial controls appear in the loan contract and mortgage required by RUS.
(a) RUS makes hardship loans under section 305(d)(1) of the RE Act. These loans bear interest at a rate of 5 percent per year. To qualify for a hardship loan on or after November 1, 1993, a borrower must meet each of the following requirements:
(1) The average number of proposed subscribers per mile of line in the service area of the borrower is not more than 4;
(2) The borrower has a projected TIER (including the proposed loan or loans) of at least 1.0, but not greater than 3.0, as determined by the feasibility study prepared in connection with the loan, see 7 CFR part 1737, subpart H; and
(3) The Administrator has approved and the borrower is participating in a telecommunications modernization plan for the state, see 7 CFR part 1751, subpart B.
(b)(1) Hardship loan funds shall not be used to finance facilities located in any exchange of the borrower that has:
(i) More than 1,000 existing subscribers; and
(ii) An average number of proposed subscribers per mile of line greater than 17.
(2) Those facilities may, however, be financed with concurrent RUS cost-of-money and RTB loans or a guaranteed loan if the borrower is eligible for such financing.
(c) The Administrator may waive the TIER requirement in paragraph (a)(2) of this section in any case in which the Administrator determines, and sets forth the reasons therefor in writing, that the requirement would prevent emergency restoration of the telephone system of the borrower or result in severe hardship to the borrower.
(d) In order to fairly and equitably approve hardship loans to ensure that borrowers most in need receive hardship financing first, RUS will prioritize for approval all applications qualifying for hardship loans. The criteria in this paragraph will be used by the Administrator to rank, from high to low, applications that have been determined to qualify for hardship financing. Subject to the availability of funds, applications receiving the highest number of points will be selected for loan approval each fiscal year quarter (the application with the most points will be approved first, the second highest next, etc.) The following ranking methodology and loan approval conditions apply:
(1)
(i)
(ii)
(iii)
(iv)
(A) Providing digital switching capabilities where those capabilities did not previously exist; and/or
(B) Upgrading to equal access; and/or
(C) Conversion of service to 1-party making an entire exchange all 1-party service.
(v)
(vi)
(2)
(e)
(1) Expedite restoration of service outages due to natural disasters; or
(2) Maximize the use of all available hardship funds appropriated for loans in that fiscal year.
(f) On request of any borrower who is eligible for a hardship loan for which funds are not available, the borrower shall be considered to have applied for concurrent RUS cost-of-money and RTB loans under sections 305 and 408, respectively, of the RE Act.
(g) Hardship loans may be made simultaneously with concurrent RUS cost-of-money and RTB loans or guaranteed loans.
(a) RUS makes cost-of-money loans, under section 305(d)(2) of the RE Act, concurrently with RTB loans made under section 408 of the RE Act. To qualify for concurrent RUS cost-of-money and RTB loans on or after November 1, 1993, a borrower must meet each of the following requirements:
(1) The average number of proposed subscribers per mile of line in the service area of the borrower is not more than 15, or the borrower has a projected TIER (including the proposed loans) of at least 1.0, but not greater than 5.0, as determined by the feasibility study prepared in connection with the loans, see 7 CFR part 1737, subpart H; and
(2) The Administrator has approved and the borrower is participating in a telecommunications modernization plan for the state, see 7 CFR part 1751, subpart B.
(b) The loan amounts from each program (RUS cost-of-money and RTB, including amounts for class B stock) will be proportionate to the total amount of funds appropriated for the fiscal year for RUS cost-of-money loans and RTB loans. To determine the RUS cost-of-money portion, the total loan amount will be multiplied by the ratio of RUS cost-of-money funds appropriated for the fiscal year to the sum of RUS cost-of-money and RTB funds appropriated for the fiscal year in which the loan is approved. The same method would be used to calculate the RTB portion (see 7 CFR 1610.6(b)). If during the fiscal year the amount of funds appropriated changes, the ratio will be adjusted accordingly and applied only to those loans approved afterwards.
(c) The RUS cost-of-money loan shall bear interest as described in paragraphs (c)(1) and (c)(2) of this section (the actual rate of interest on the RTB loan shall be determined as provided in 7 CFR 1610.10):
(1) Each advance of funds included in RUS cost-of-money loans shall bear interest at a rate (the “Cost of Money Interest Rate”) equal to the current cost of money to the Federal Government for loans of a similar maturity. The Cost of Money Rate is determined when the funds are advanced to the borrower but cannot exceed 7 percent per year.
(2) RUS shall use the Federal Treasury Statistical Release (the “Statistical Release”) issued by the United States Treasury to determine the interest rate for each advance of RUS cost-of-money loan funds. Generally, the Statistical Release is issued each Monday to cover the preceding week. RUS shall determine the Cost of Money Interest Rate as follows:
(i) Each advance shall bear the interest rate stated in the applicable Statistical Release for Treasury constant maturities with a maturity similar to that of the advance.
(ii) RUS shall determine the interest rate for an advance bearing a maturity other than those stated in the applicable Statistical Release by straight-line interpolation between the next higher and next lower stated maturities.
(iii) The first Statistical Release published after the date of an advance shall apply to that advance.
(iv) If the interest rate determined under paragraph (c)(2)(i) or (c)(2)(ii) of this section is higher than 7 percent, then the advance shall bear interest at the rate of 7 percent per year.
(v) Advances with maturities greater than 30 years shall bear interest at the rate stated in the applicable Statistical Release for 30-year maturities.
(vi) RUS may use an alternative method to determine the Cost of Money Interest Rate if the Treasury ceases to issue the Statistical Release or changes its format or frequency of issue so that it is no longer appropriate for use in the manner described in paragraph (c)(2) of this section. In this eventuality, RUS shall immediately notify all borrowers with unadvanced RUS cost-of-money loan funds. RUS may, with the borrower's consent, determine the Cost of Money Interest Rate on a case-by-case basis for subsequent advances of RUS cost-of-money loan funds but may also decide, in its discretion, that it is unable to continue advancing funds until an alternative method is in effect.
(vii) Refer to § 1735.43(a) for additional information on maturities of RUS loans.
(viii) RUS shall provide borrowers with prompt written confirmation of the Cost of Money Interest Rate borne
(d) Generally, no more than 10 percent of lending authority from appropriations in any fiscal year for RUS cost-of-money and RTB loans may be loaned to a single borrower. RUS will publish by notice in the
(e) On request of any borrower who is eligible for concurrent RUS cost-of-money and RTB loans for which funds are not available, the borrower shall be considered to have applied for a loan guarantee under section 306 of the RE Act.
(f) Concurrent RUS cost-of-money and RTB loans may be made simultaneously with hardship loans or guaranteed loans.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(1) Determining that all prerequisites to each advance of loan funds by the lender under the terms of the contract of guarantee, all financing documents, and all related security instruments have been fulfilled. Such determinations may be met by obtaining RUS approval of each advance.
(2) Billing and collecting loan payments from the borrower.
(3) Notifying the Administrator promptly of any default in the payment of principal and interest on the loan and submitting a report, as soon as possible thereafter, setting forth its views as to the reasons for the default, how long it expects the borrower will be in default, and what corrective actions the borrower states it is taking to achieve a current debt service position.
(4) Notifying the Administrator of any known violations or defaults by the borrower under the lending agreement, contract of guarantee, or related security instruments, or conditions of which the lender is aware which might lead to nonpayment, violation, or other default.
(k)
(l)
After June 10, 1991, and prior to November 1, 1993, RUS made certain variable rate loans at interest rates less than 5 percent but not less than 2 percent. For those borrowers that received variable rate loans, this section describes the method by which interest rates are adjusted. The interest rate used in determining feasibility is the rate charged to the borrower until the end of the Forecast Period for that loan. At the end of the Forecast Period, the interest rate for the loan may be annually adjusted by the Administrator upward to a rate not greater than 5 percent, or downward to a rate not less than the rate determined in the feasibility study on which the loan was based, based on the borrower's ability to pay debt service and maintain a minimum TIER of 1.0. Downward and upward adjustments will be rounded down to the nearest one-half or whole percent. To make this adjustment, projections set forth in the loan
Terms and conditions of loans are set forth in a mortgage, note, and loan contract. Provisions of the mortgage and loan contract are implemented by provisions in RUS Bulletins and Regulations. Forms of the mortgage, note, and loan contract can be obtained from RUS.
Loans are represented by one or more notes. Interest accrues only on funds advanced. There are no loan commitment fees or charges. See RUS Bulletin 320-12 for additional information. This CFR part supersedes those portions of RUS Bulletin 320-12 “Loan Payments and Statements” with which it is in conflict.
(a) Except as described in this paragraph (a), RUS loans approved after October 6, 1997 must be repaid with interest within a period that, rounded to the nearest whole year, equals the expected composite economic life of the facilities to be financed, as calculated by RUS; expected composite economic life means the depreciated life plus three years. The expected composite economic life shall be based on the depreciation rates for the facilities financed by the loan. In states where the borrower must obtain state regulatory commission approval of depreciation rates, the depreciation rates used shall be the rates currently approved by the state commission or rates for which the borrower has received state commission approval. In cases where a state regulatory commission does not approve depreciation rates, the expected composite economic life shall be based on the most recent median depreciation rates published by RUS for all borrowers (see 7 CFR 1737.70). Borrowers may request a repayment period that is longer or shorter than the expected composite economic life of the facilities financed. If the Administrator determines that a repayment period based on the expected composite economic life of the facilities financed is likely to cause the borrower to experience hardship, the Administrator may agree to approve a period longer than requested. A shorter period may be approved as long as the Administrator determines that the loan remains feasible.
(b) Borrowers with RTB loans approved after October 6, 1997 with a maturity that exceeds the expected composite economic life of the facilities to be financed by the loan by a period of more than three years, release of funds included in the loan shall be conditioned upon the borrower establishing and maintaining, pursuant to a plan approved by RUS, a funded reserve in such an amount that the balance of the reserve plus the value of the facilities less depreciation shall at all times be at least equal to the remaining principal payments on the loan. Funding of the reserve must begin within one year of approval of release of funds and must continue regularly over the expected composite economic life of the facilities financed.
(c) Borrowers that have demonstrated to the satisfaction of the Administrator an inability to maintain the funded reserve or net plant to secured debt ratio requirements, if any, contained in their mortgage, may elect
(d) A borrower qualifying under paragraph (c) of this section shall not be required to pay a prepayment premium on such portion of the payments under its new notes as exceeds the payments required under the notes being replaced.
(e) To apply for refunding notes, borrowers must send to the Area Office the following:
(1) A certified copy of a board resolution requesting an amendment of loan payment requirements and that certain notes be replaced;
(2) If applicable, evidence of approval by the regulatory body with jurisdiction over the telecommunications service provided by the borrower to issue refunding notes; and
(3) Such other documents as may be required by the RUS.
(f) Principal and interest will be repaid in accordance with the terms of the notes. Generally, interest is payable each month as it accrues. Principal payments on each note generally are scheduled to begin 2 years after the date of the note. After this deferral period, interest and principal payments on all funds advanced during this 2-year period are scheduled in equal monthly installments. Principal payments on funds advanced 2 years or more after the date of the note will begin with the first billing after the advance. The interest and principal payments on each of these advances will be scheduled in equal monthly installments. This CFR part supersedes those portions of RUS Bulletin 320-12, “Loan Payments and Statements” with which it is in conflict.
The loan documents normally provide that RUS insured loans may be repaid in full at any time without prepayment premiums. Depending upon the lender, there may be prepayment premiums on loans guaranteed by RUS. See 7 CFR part 1610 for prepayment premiums on RTB loans. See RUS Bulletin 320-12 for additional information. This CFR part supersedes those portions of RUS Bulletin 320-12, “Loan Payments and Statements”, with which it is in conflict.
RUS may extend the time of payment of principal or interest on a loan. Under section 12 of the Rural Electrification Act, as amended, this extension may be up to 5 years after such payment is due. Under section 236 of the Disaster Relief Act of 1970 (Pub. L. 91-606) payment may be deferred by the Secretary of Agriculture as long as necessary in disaster situations so long as the final maturity date is not later than 40 years after the date of the loan. See RUS Bulletin 320-2 for additional information.
(a) Loans are to be repaid according to their terms. RUS generally obtains a first lien on all assets of the borrower. This lien shall be in the form of a mortgage by the borrower to the Government or a deed of trust made by and between the borrower and a trustee, satisfactory to the Administrator, together with such security agreements, financing statements, or other security documents as RUS may deem
(b) Loan security documents of borrowers with loans approved after October 6, 1997 will provide limits on allowable cash distributions in any calendar year as follows:
(1) No more than 25 percent of the prior calendar year's net earnings or margins if the borrower's net worth is at least 1 percent of its total assets after the distribution is made;
(2) No more than 50 percent of the prior calendar year's net earnings or margins if the borrower's net worth is at least 20 percent of its total assets after the distribution is made;
(3) No more than 75 percent of the prior calendar year's net earnings or margins if the borrower's net worth is at least 30 percent of its total assets after the distribution is made; or
(4) No limit on distributions if the borrower's net worth is at least 40 percent of its total assets after the distribution is made.
(c) Borrowers that have not received a loan after October 6, 1997 may request the Administrator to apply these requirements to them. Borrowers may request in writing that RUS substitute the new requirements described in paragraphs (b)(1) through (b)(4) of this section. Upon request by the borrower, the provisions of the borrower's loan documents restricting cash distributions or investments shall not be enforced to the extent that such provisions are inconsistent with this section.
(d) Rural development investments meeting the criteria set forth in 7 CFR part 1744, subpart D, will not be counted against a borrower's allowable cash distributions in any calendar year (7 U.S.C. 926).
(e) References to a borrower's mortgage in this section include deeds of trust and any other loan document applying the same requirements to a borrower.
(f) This section does not limit the rights of any parties to the mortgage other than RUS or RTB.
(a) Rescission of a loan may be requested by a borrower at any time. To rescind a loan, the borrower must demonstrate to RUS that:
(1) The purposes of the loan being rescinded have been completed;
(2) Sufficient funds are available from sources other than RUS, RTB or FFB to complete the purposes of the loan being rescinded; or
(3) The purposes of the loan are no longer required to extend or improve telephone service in rural areas.
(b) Borrowers submitting loan applications containing purposes previously covered by a loan that has been rescinded shall include in the application an explanation, satisfactory to RUS, of the change of conditions since the rescission that re-establishes the need for those purposes.
(c) RUS shall not initiate the rescission of a loan unless all of the purposes for which telephone loans have been made to the borrower under the Act have been accomplished with funds provided under the Act.
The RE Act requires that the Administrator make certain findings to approve a telephone loan or loan guarantee. The borrower shall provide the evidence determined by the Administrator to be necessary to make these
(a)
(1) Self-liquidation of the loan within the loan amortization period; this requires that there be sufficient revenues from the borrower's system, in excess of operating expenditures (including maintenance and replacement), to repay the loan with interest.
(2) Reasonable assurance of achieving the telephone market projections upon which the loan is based.
(3) Economic feasibility (based on projected revenues, expenses, net income, maximum debt service, and rate of return on investment) for the proposed system using local service rate schedules appropriate for the area served.
(4) Impact of the proposed loan and construction on the ratio of the borrower's secured debt to assets.
(5) Projected growth in the borrower's equity.
(6) Satisfactory experience and reputation of the system's principal owners and manager.
(7) A first lien on the borrower's total system or other adequate security.
(8) Fair market value of the borrower's assets as represented in its financial reports to RUS.
(9) Appropriate financial and managerial controls included in the loan documents.
(10) Other factors determined to be relevant by RUS.
(b)
(c)
(a)
(b)
(a) The standard form of RUS mortgage contains certain provisions concerning mergers and acquisitions:
(1) Article II, section 4(a) requires the borrower to obtain the written approval of the majority noteholders before taking any action to reorganize, or to consolidate with or merge into any other corporation.
(2) Article II, section 4(b), if made applicable, provides certain exceptions to the requirements of section 4(a).
(b) Similar provisions are contained in other forms of documents executed by borrowers that have not entered into the standard form of mortgage.
(c) Mortgages and loan contracts may contain other provisions concerning mergers and acquisitions.
(a) If a borrower is required by the terms of its mortgage or loan contract to obtain RUS approval of a merger or acquisition, the borrower shall request RUS approval and shall provide RUS with such data as RUS may request.
(b) If loan funds are requested, the borrower shall comply with subpart G of this part. If no additional loan funds are involved, the borrower shall comply with subpart H of this part.
(c) In considering whether to approve the request, RUS will take into account, among other matters:
(1) Whether the operation, management, and the economic and loan-repayment feasibility characteristics of the proposed system are satisfactory;
(2) Whether the merger or acquisition may result in any relinquishment, impairment, or waiver of a right or power of the Government;
(3) Whether the proposed merger or acquisition is in the best interests of the Government as note holder; and
(4) Whether the proposed purchase price and terms of an acquisition are reasonable, regardless of the source of funds used to pay for the purchase. RUS will consider the purchase price unreasonable if, in RUS's opinion, it will endanger financial feasibility.
(a) If a proposal is unsatisfactory to RUS, then RUS shall inform the borrower in writing of those features it considers objectionable and, as appropriate, recommend corrective action.
(b) If a proposal is satisfactory to RUS, then RUS shall inform the borrower in writing of its approval and any conditions of such approval. Among the conditions of approval are the following:
(1) RUS shall require a compensating benefit in return for any relinquishment, impairment, or waiver of its rights or powers.
(2) If the survivor is an affiliate of another company, RUS shall require any investments in, advances to, accounts receivable from, and accounts payable to the affiliated company contrary to mortgage provisions shall be eliminated in a manner satisfactory to the Administrator.
(3) RUS requires that the borrower agree not to extend credit to, perform services for, or receive services from any affiliated company unless specifically authorized in writing by the Administrator or pursuant to contracts satisfactory in form and substance to the Administrator.
(4) RUS may require the borrower to execute additional mortgages, loan agreements, and associated documentation.
(a) See 7 CFR part 1735 and 1737 for RUS's general loan policies and requirements.
(b) RUS will finance an acquisition by a borrower only when the acquisition is necessary and incidental to furnishing or improving rural telephone service and the service area is eligible for RUS assistance.
(c) RUS does not make loans for the sole purpose of merging or consolidating telephone organizations. After a merger or consolidation, RUS will consider making loans to the telephone system to finance the improvement or extension of telephone service in rural areas.
(d) Generally, RUS will not make a loan for the acquisition of an existing borrower unless, in addition to all other requirements, such acquisition
(e) In determining the amount it will lend for each acquisition, RUS shall place a valuation on all telephone facilities that are to be acquired with loan funds. RUS may consider fair market value, the original cost less depreciation of the facilities, income generating potential, any improvement in the financial strength of the borrower as a result of the acquisition, and any other factors deemed relevant by RUS to determine the reasonableness of the acquisition price and the amount of loan funds RUS will provide for an acquisition. RUS shall not consider the acquisition price reasonable or approve a loan if, in the Administrator's opinion, the acquisition price will endanger financial feasibility. If the acquisition price exceeds the amount RUS will lend, the borrower provides the remainder.
(f) When a borrower intends to request RUS loan funds for an acquisition, it shall present a proposal in writing to the Area Office as soon as possible. The borrower must either obtain RUS approval prior to making any binding commitments with the seller or make the commitments subject to RUS's approval. Failure to comply with these requirements will disqualify the borrower from obtaining an RUS loan for the acquisition unless the Administrator determines there were extenuating circumstances.
Loan funds may be approved for the acquisition and improvement of facilities to serve nonrural subscribers only if the principal purpose of the loan is to furnish and improve rural service and only if the use of loan funds to serve nonrural subscribers is necessary and incidental to the principal purpose of the loan. For example, when the acquisition of an existing system located in and serving a nonrural area is necessary to serve as the nucleus of an expanded system to furnish area coverage service in rural areas, the loan may include funds to finance the acquisition. Approval for the use of loan funds in these circumstances shall be made only on a case by case basis by the Administrator.
When borrowers are seeking RUS financing, acquisition agreements between the borrower and the seller must be in form and substance satisfactory to RUS and shall be expressly conditioned on approval of the agreement by RUS and on obtaining an RUS loan. Normally, the acquisition agreement will not be approved by RUS until the loan has been approved.
When loan funds are requested for an acquisition, details of the proposed acquisition shall be included in the Loan Design. See 7 CFR part 1737.
(a) RUS will not approve any acquisition, other than of toll facilities (see subpart J of this part), financed in whole or in part with loan funds until the borrower submits the following data to the GFR:
(1) For any nonborrowers involved, their most recent balance sheets, operating statements, detail of plant accounts, reports to the state commission, and audits, if available.
(2) Completed RUS Form 507, “Report on Telephone Acquisition,” which provides system data, including the type of purchase and purchase price, a system description, and data by exchange. See § 1735.3 for information on obtaining copies of this form.
(3) A map (such as a road map) showing county lines, the boundaries of the proposed acquisition and the borrower's existing service territory, and the names of other telephone companies serving adjoining areas.
(4) A brief statement of the plans for incorporating the acquired facilities into the borrower's existing system.
(5) The number of subscribers currently receiving service in the area to be acquired and the number of new subscribers that will be served over the next 5 years as a result of the acquisition.
(6) The proposed purchase price.
(7) Two copies of any options, bills of sale, or deeds, and four copies of any acquisition agreements. All of these
(8) An appraisal by the borrower's consulting engineer or other qualified person of the physical plant to be acquired. The appraisal shall include the following:
(i) Inspection of each central office, noting the age and condition of the switch and associated equipment, and the extent and quality of maintenance of the equipment and premises.
(ii) Inspection of the outside plant, noting the general age and condition of cable and wire, poles and related hardware, pedestals, and subscriber drops. Any joint use or ownership shall be explained.
(iii) Inspection of miscellaneous items such as commercial office facilities, vehicles, furniture, tools and work equipment, and materials and supplies in stock, noting age and condition.
(iv) Inspection of all buildings and other structures (such as radio towers), noting age and condition.
(v) Detailed description of all real estate including the present market value that local real estate dealers, bankers, insurance agents, etc., place on the property.
(vi) Any widely accepted method, approved by RUS, may be used to estimate the condition of the facilities in paragraphs (a)(8)(i) through (a)(8)(iv) of this section. The “percent condition” method is recommended, but is not required.
(9) Copies of deeds to real estate to be acquired, with an explanation of the proposed use of the land.
(10) Copies of leases to be acquired.
(11) Copies of any existing mortgages with parties other than RUS, indentures, deeds of trust, or other security documents or financing agreements relating to the property to be acquired and any contracts or other rights or obligations to be assumed as part of the acquisition.
(12) A list of all counties in which the proposed system will have facilities.
(13) If the borrower is a cooperative-type organization, a description of its plans for taking subscribers in as members, membership fees, equity payments required because of the acquisition, and extent of membership support.
(14) A certification, signed by the president of the borrower, that the borrower is participating in the State's telecommunications modernization plan (for information concerning the plan, see 7 CFR part 1751, subpart B). This certification is not required if the borrower is seeking a guaranteed loan.
(15) Any other data deemed necessary by the Administrator for an evaluation of the acquisition.
(b) For stock acquisitions, the borrower shall submit the following in addition to the items listed in (a) of this section:
(1) A list of all stockholders of the company to be acquired and the number of shares each owns.
(2) Guarantees and indemnifications to be obtained from the sellers of the stock.
(a) A borrower may submit a written request for RUS approval of interim financing if it is necessary to close an acquisition before the loan to finance the acquisition is approved. Loan funds shall not be used to reimburse acquisition costs unless RUS has granted approval of interim financing prior to the closing of the acquisition.
(b) RUS will approve interim financing of acquisitions only in cases where loan funds cannot be made available in time for the closing.
(c) RUS will not approve interim financing unless the following information is acceptable:
(1) A written request for approval of interim financing, including a brief description of the acquisition, an explanation of the urgency of proceeding with the acquisition, and the source of funds to be used.
(2) A completed RUS Form 490, “Application for Telephone Loan or Loan Guarantee.” See 7 CFR part 1737.
(3) The portions of the Loan Design that cover the proposed acquisition, including cost estimates and information
(4) The information required in § 1735.74 (a)(1) through (a)(8), (a)(14) and (b)(1).
(5) Any other data deemed necessary by the Administrator to approve the interim financing of the acquisition.
(d) Furthermore, RUS will not approve interim financing if, in RUS's judgment, the proposed acquisition will not qualify for RUS financing or the proposed interim financing presents unacceptable loan security risks to RUS.
(e) Because RUS approval of interim financing is not a commitment to make a loan, RUS will not approve interim financing unless the borrower is prepared to assume responsibility for financing all obligations incurred.
(f) If the borrower plans to proceed with the closing after receiving RUS approval of interim financing, it must first receive preliminary approval from RUS. See § 1735.90
(g) See 7 CFR part 1737 for regulations on interim financing for construction.
(h) See 7 CFR part 1744, subpart B for conditions under which RUS will provide shared first lien and/or a lien accommodation for non-RUS lenders.
A borrower shall not use RUS loan funds to acquire any stock or any telephone plant of an affiliate.
(a) RUS will not approve the advance of loan funds until the borrower has fulfilled all loan contract provisions to the extent deemed necessary by RUS.
(b) The first advance of loan funds pursuant to the loan contract normally shall provide funds needed for the acquisition. Unless the borrower has received approval of interim financing, it must submit the requisition in time for the advance to be made by the closing date.
(c) After the borrower has closed the acquisition, it shall furnish RUS all documents necessary to demonstrate to RUS's satisfaction that the transaction has been closed.
(d) Advances for improvements or expansion of the acquired facilities will not be approved until RUS has determined that the transaction has been closed and the borrower has obtained satisfactory title to the acquired facilities.
(e) See 7 CFR part 1737 (or RUS Bulletin 320-4) for additional requirements for releases of loan funds and 7 CFR part 1744, subpart C for additional requirements for requisitions and advances.
When a borrower is not requesting loan funds for an acquisition or merger, the borrower shall first notify RUS and submit for review by RUS the documents and information listed in (a) through (l) of this section required by RUS.
(a) For any nonborrowers involved, their most recent balance sheets, operating statements, detail of plant accounts, reports to the state commission, and audits, if available.
(b) Completed RUS Form 507, “Report on Telephone Acquisition.”
(c) A map (such as a road map) showing county lines, the boundaries of the proposed acquisition and the borrower's existing service territory, and the names of other telephone companies serving adjoining areas.
(d) A brief statement of the plans for incorporating the acquired facilities into the borrower's existing system.
(e) The number of subscribers currently receiving service in the areas involved in the acquisition or merger and the number of new subscribers that will be served over the next 5 years as a result of the acquisition or merger.
(f) Copies of deeds of real estate to be acquired, with an explanation of the proposed use of the land.
(g) Copies of security documents of any other lenders involved and any contracts or other rights of obligations to be assumed by the survivor.
(h) A list of all counties in which the proposed system will have facilities.
(i) If Article II, section 4(b) of the standard mortgage has not been made applicable, plans for operating the unified system.
(j) In the case of a merger, the proposed articles of merger that are to be used.
(k) In the case of an acquisition, the proposed purchase price, plus two copies of any options, bills of sale, or deeds, and two copies of any acquisition agreements. All of these documents are subject to RUS approval. If the acquisition agreement is approved by RUS, two copies of it shall be returned to the borrower.
(l) Any other data deemed necessary by the Administrator for an evaluation of the acquisition or merger.
(a) In cases where the borrower's schedule for completion of the proposed action leaves insufficient time for RUS to prepare and process the required documentation, including new mortgages and replacement notes, the borrower may request RUS to give preliminary approval to the acquisition or merger. However, the borrower may not obtain additional loan funds until the documentation is completed to RUS's satisfaction.
(b) Consideration of preliminary approvals generally will not be practicable in cases in which compensating benefits are required.
(c) RUS will not give preliminary approval when the lien of the mortgage on after-acquired property may be affected.
(d) Before RUS will grant preliminary approval, the borrower shall submit:
(1) Merger or acquisition documents required by state law;
(2) Acquisition agreements covering the transaction;
(3) Any required franchises, licenses, and permits;
(4) All required regulatory body approvals;
(5) All required corporate actions;
(6) Leases, contracts, and evidence of titles to be assigned to the purchaser; and
(7) The latest audited financial statements for any nonborrowers involved.
(e) If the information in (d) of this section is acceptable to RUS, the borrower may proceed with the closing.
Telephone facilities to be acquired must be located so that they can be efficiently operated by the borrower and provide adequate security for the RUS loan.
(a) Proper accounting shall be applied to all acquisitions and mergers, as required by the regulatory commission having jurisdiction, or in the absence of such a commission, as required by RUS based on Generally Accepted Accounting Principles or other accounting conventions as deemed necessary by RUS.
(b) If RUS determines that the plant accounts are not properly depreciated, the borrower should adjust its depreciation rates. Depending upon the characteristics of the case, commission jurisdiction and requirements, and similar factors, one of the following actions shall be taken:
(1) In states where commission approval of depreciation rates is required, a covenant shall be included in the loan contract that requires the borrower to:
(i) Have the consulting engineer make an original cost less depreciation inventory and appraisal of retained plant as part of the final inventory, and
(ii) Request commission approval of adjustments to its records on the basis of this inventory.
(2) In states where commission approval is not required, informal discussions between RUS and the borrower may be undertaken to reach satisfactory voluntary adjustments. If this does not resolve the situation to RUS's satisfaction, a covenant similar to that in paragraph (b)(1)(i) of this section shall be included in the loan contract and the borrower shall agree to submit evidence satisfactory to the Administrator that it has adjusted its records on the basis of the inventory.
Substitute notes may be required in the case of an acquisition or merger, regardless of the source of funds.
(a) Legal documents relating to the acquisition or merger, including copies of required franchises, commission orders, permits, licenses, leases, title evidence, corporate proceedings, and contracts to be assigned to the purchaser shall be forwarded to the Area Office prior to closing.
(b) The Administrator will not give final approval to any acquisition or merger until all RUS requirements relating to the transactions are satisfied.
(c) Following the Administrator's final approval of the proposal, the Area Office shall inform the borrower in writing of the necessary legal and other actions required for the advance of loan funds to finance the acquisition, including the submission, in form and substance satisfactory to the Administrator, of (1) all information and documents necessary to demonstrate that the transaction has been completed, and (2) all loan contracts, notes, mortgages, and related documents and materials required by RUS.
(d) Deeds reflecting the change in ownership, executed bills of sale, and opinions of counsel shall be forwarded to the Area Office following closing.
(e) RUS will not advance loan funds to furnish or improve service in the acquired or merged areas until the Administrator has given final approval and the transaction has been closed. RUS may, however, advance funds if it determines that loan security will not be jeopardized.
(f) At the discretion of RUS, a GFR may be present at the closing to assist the borrower and protect the interests of RUS. Under certain circumstances the closing may take place prior to RUS granting final approval for the transaction and the execution of amended loan security documents.
(a) The unadvanced loan funds of a borrower that will not be a survivor of an acquisition or merger shall be advanced only to the survivor and only under the following circumstances.
(1) If the funds are to be used for purposes approved in prior loans, the funds shall be advanced after the effective date of the proposed action only when all loan contract prerequisites have been met and documents have been submitted in form and substance satisfactory to the Administrator.
(2) If the funds are to be used for new purposes, then in addition to the requirements in (a)(1) of this section, RUS must also approve the change in purpose.
(b) No loan or other money in the construction fund shall be used to finance facilities outside areas to be served by projects approved by RUS.
An acquisition of toll line facilities financed with loan funds must be necessary and incidental, as determined by the Administrator, to furnishing or improving telephone service in rural areas. The borrower shall submit to RUS the acquisition agreement, the original cost less depreciation of the facilities, any concurrences with the connecting companies involved, and a detailed inventory of the facilities to be purchased. The borrower must submit to RUS evidence, satisfactory to the Administrator, of the borrower's
When an acquisition is limited to toll line facilities and loan funds are not involved, RUS approval of the acquisition is not required. The borrower, however, shall submit to RUS for its approval all concurrences with the connecting companies involved and any other proof of ownership of the toll facilities required by RUS.
7 U.S.C. 901
(a) This part prescribes policies, procedures and responsibilities relating to applications for RUS loans to finance the improvement and extension of telephone service in rural areas. Requirements for both initial and subsequent loans are discussed, with differences pointed out.
(b) This part sets forth the policies, procedures, and requirements of RUS
A loan budget, feasibility study, characteristics letter, loan recommendation, and release of funds. This CFR part supersedes all RUS Bulletins that are in conflict with it.
(c) See 7 CFR part 1735 on general loan policies, 7 CFR part 1737 for details on submitting a loan application, and 7 CFR part 1744 on the advance of funds.
As used in this part:
(1) Message telegram service;
(2) Community antenna television system services or facilities other than those intended exclusively for educational purposes; or
(3) Radio broadcasting services or facilities within the meaning of section 3(o) of the Communications Act of 1934, as amended.
Single copies of RUS forms and publications cited in this part are available from Administrative Services Division, Rural Utilities Service, United States Department of Agriculture, Washington, DC 20250. These RUS forms and publications may be reproduced. The terms “RUS form”, “RUS standard form”, and “RUS specification” have the same meanings as the terms “REA form” “REA standard form”, and “REA specification”, respectively, unless otherwise indicated.
Initial loan applicants seeking assistance should write the Rural Utilities Service, United States Department of Agriculture, Washington, DC 20250. A field representative will be assigned by RUS to visit the applicant and discuss its financial needs and eligibility. Existing borrowers initiate the contact directly with their assigned field representative. Borrowers consult with RUS field representatives and headquarters staff, as necessary.
Before submitting an application to RUS, the borrower should consider the following:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(a) The completed loan application consists of four parts:
(1) A completed RUS Form 490.
(2) A market survey called the Area Coverage Survey (ACS).
(3) The plan and associated costs for the proposed construction, called the Loan Design (LD).
(4) Various supplementary information specified in 7 CFR 1737.22.
(b) The RUS field representative assists the borrower in assembling this information. Certain information is required from initial loan applicants but usually not from borrowers seeking subsequent loans. Borrowers are to submit all information in paragraph (a) of this section to their RUS field representatives, who will review and then forward the packages to RUS headquarters.
(c) RUS will make a determination of completeness of the application package and will notify the borrower of this determination within 10 working days of receipt of the information at RUS headquarters. If the application package is not complete, RUS will notify the borrower of what information is needed in order to complete the application package. If the information required to complete the application package is not received by RUS within 90 working days from the date the borrower was notified of the information needed, RUS may return the application package to the borrower. Returned applications are without prejudice and borrowers may resubmit the completed application.
RUS requires additional information in support of the loan application form. The information listed in paragraphs (a), (b), and (c) of this section must be submitted as part of the loan application as specified in 7 CFR 1737.21.
(a) The following must be submitted by all initial loan applicants. Borrowers seeking subsequent loans must submit any changes in these items since they were last submitted.
(1) Name of attorney and manager, and certified copies of board resolutions selecting them.
(2) Certified copy of articles of incorporation showing evidence of filing
(3) Certified copies of bylaws and board minutes showing their adoption.
(4) Certified sample stock certificates.
(5) Amounts of common and preferred stock issued and outstanding.
(6) Names, addresses, business affiliations, and stockholdings of the manager, officers, directors, and other principal stockholders (those owning at least 20 percent of borrower's voting stock).
(7) Certified copies of real estate deeds showing all recording information.
(8) Service agreements, such as for management or system maintenance.
(9) Certified copies of existing leases, except those for vehicles, furniture and office equipment, and computer equipment.
(10) Certified copies of existing franchises.
(11) Information on any franchises required as a result of the proposed loan project.
(12) Federal Communications Commission (FCC) authorizations.
(13) Certified copy of a certificate of convenience and necessity (or its equivalent), or information demonstrating the nonduplication of reasonably adequate facilities, for all areas in the loan project.
(14) For toll, operator office, traffic, and EAS agreements, the names of all parties to the agreement, the type of agreement, and the effective and termination dates of the agreement and annexes, and the exchanges involved.
(15) Copies of rate schedules. (A copy of the tariff must be available for review by the RUS field representative.)
(16) Executed copy of RUS Form 291, “Certification of Nonsegregated Facilities”.
(17) A sketch or map showing the existing and proposed service areas.
(18) Executed assurance that the borrower will comply with the Uniform Relocation Assistance and Real Property Acquisitions Policies Act of 1970, as amended (see 49 CFR 24.4).
(19) A certification (which is included on RUS Form 490, “Application for Telephone Loan or Guarantee”) that the borrower has been informed of the collection options listed below that the Federal government may use to collect delinquent debt. RUS and other government agencies are authorized to take any or all of the following actions in the event that a borrower's loan payments become delinquent or the borrower defaults (OMB Circular A-129 defines “delinquency” for direct or guaranteed loans as debt more than 31 days past due on a scheduled payment):
(i) Report the borrower's delinquent account to a credit bureau.
(ii) Assess additional interest and penalty charges for the period of time that payment is not made.
(iii) Assess charges to cover additional administrative costs incurred by the Government to service the borrower's account.
(iv) Offset amounts owed to the borrower under other Federal programs.
(v) Refer the borrower's debt to the Internal Revenue Service for offset against any amount owed to the borrower as an income tax refund.
(vi) Refer the borrower's account to a private collection agency to collect the amount due.
(vii) Refer the borrower's account to the Department of Justice for litigation in the courts.
(20) A certification, signed by the president of the borrower, that the borrower is participating in the State's telecommunications modernization plan (for additional information concerning the plan, see 7 CFR part 1751, subpart B). This certification is not required if the borrower is seeking a guaranteed loan.
(b) The following must be submitted by all initial loan applicants and borrowers seeking subsequent loans:
(1) Certified financial statements for the last 3 years.
(2) Toll settlement statements and related data.
(3) Present exchange rates and any pending changes.
(4) Borrower's Environmental Report (BER)—See 7 CFR part 1794.
(5) A “Certification Regarding Lobbying” for loans, or a “Statement for Loan Guarantees and Loan Insurance” for loan guarantees, and when required, an executed Standard Form LLL, “Disclosure of Lobbying Activities,” (see section 319, Public Law 101-121 (31 U.S.C. 1352)).
(6) Executed copy of Form AD-1047, “Certification Regarding Debarment, Suspension, and Other Responsibility Matters—Primary Covered Transactions” (see appendix A to 7 CFR part 3017).
(7) Borrower's determination of loan maturity, including information noted in § 1735.43(a) of this chapter as required.
(8) Approved depreciation rates for items under regulatory authority jurisdiction.
(9) A statement that the borrower is or is not delinquent on any Federal debt, such as income tax obligations or a loan or loan guarantee from another Federal agency. If delinquent, the reasons for the delinquency must be explained and RUS will take such explanation into consideration in deciding whether to approve the loan. RUS Form 490, “Application for Telephone Loan or Guarantee,” contains a section for providing the required statement and any appropriate explanation.
(10) Any other supporting data required by the Administrator.
(c) The following must be submitted for all borrowers requesting funds for refinancing:
(1) Copies of all bonds, notes, mortgages, and contracts covering outstanding indebtedness proposed to be refinanced.
(2) For each note or bond, the name of the creditor, original amount of debt and amount as of last year-end, purpose of debt, dates incurred and due, interest rates, and repayment terms.
(3) Justification for refinancing and evidence that the use of loan funds is necessary and incidental to furnishing or improving rural telephone service. See 7 CFR 1735.21.
(d) Borrowers requesting loan funds for acquisitions should refer to RUS bulletins 320-4, 321-2, 325-1, and 326-1 for requirements.
In support of a loan application, the borrower shall prepare and submit to RUS: (a) A market forecast to determine service requirements (the Area Coverage Survey) and (b) engineering studies to determine the system design that provides service most efficiently (the Loan Design). The RUS field representative confers with the borrower and its engineer to schedule the completion and submission of these studies.
(a) The Area Coverage Survey (ACS) is a market forecast of service requirements of subscribers in a proposed service area.
(b) The objective of the ACS is to determine the location, number and telephone service requirements of subscribers in a service area. RUS will use the ACS to appraise the proposed plan for area coverage and to determine the largest practical number of rural subscribers which can be served on an economically feasible basis. Preparation of the ACS requires:
(1) A field survey of the service area to locate and identify on maps all business and residential establishments, whether currently served or not. The location and identification of future establishments are also recorded on the maps.
(2) A forecast of the number of telephone subscribers, in the entire service area, by exchange, grade and class of service, projected for the end of the 5-year study period.
(c) The results of the survey and forecast shall be:
(1) Shown on maps (maps for those service areas previously financed by RUS do not have to be included in the ACS provided that the borrower's records contain sufficient information as to subscriber development to enable cost estimates for the proposed facilities to be prepared);
(2) Tabulated on RUS Form 569 “Area Coverage Survey Report,” or its equivalent; and
(3) supported by a narrative (see § 1737.32(f)(1)(ii)) containing information on the bases for the service requirement forecasts in each exchange.
(d) Guidelines on preparing an ACS are provided in RUS Telecommunications Engineering and Construction Manual section 205.
(e) The RUS field representative reviews and approves the borrower's ACS. The borrower should make sure this is done before proceeding with the Loan Design in order to prevent unnecessary expense should the ACS not be approved. The borrower's engineer must use the RUS-approved ACS in preparing the Loan Design.
(a) A loan application requires supporting data collectively called a “Loan Design.” The LD contains a forecast of service requirements and a narrative with supporting exhibits. Most of the items included in the LD are similar for all loan applications. However, as noted below, there are certain additional requirements for initial loans and for any exchange areas not previously financed by RUS, and other additional requirements for subsequent loans for areas previously financed by RUS. The LD must conform to the borrower's state telecommunications modernization plan unless the borrower is seeking a guaranteed loan (for additional information concerning the plan, see 7 CFR part 1751, subpart B).
(b) Because of the importance and complexity of the engineering studies necessary for the LD, it should be prepared by a competent experienced telecommunications engineer. While the LD is subject to RUS approval, the borrower's selection of an engineer to perform preloan work is not. Note: The borrower's selection of an engineer to perform postloan work
(c) An LD for initial loans or for any exchange areas not previously financed by RUS requires an Outside Plant Design that provides:
(1) The most economical and practical design for a telephone system that meets immediate service demands; and
(2) The basis for orderly expansion of the system to serve the widest practical number of rural establishments.
(d) The LD for a subsequent loan (which only includes areas previously financed by RUS) does not require a detailed Outside Plant Design. The detailed Outside Plant Design for these subsequent loans may be completed for RUS review and approval after loan approval, but before staking is started and plans and specifications are prepared. By scheduling preparation of the outside plant design closer to preparation for construction, the need for redesign resulting from changing conditions and its attendant costs are reduced.
(e) Guidelines on preparing an LD are provided in RUS Telecommunications Engineering and Construction Manual section 205.
(f) The LD shall include a narrative, several exhibits, and a certification, as explained below:
(1)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(B) For subsequent loans, the borrower must fully discuss as specified in paragraph (f)(1)(viii)(A) of this section proposed improvements or expansions in an exchange serving a community over 5,000 population which had a population of more than 5,000 at the time the facilities to serve the community were first financed by RUS. The population determination is based on the corporate limits or boundaries of unincorporated areas in existence at the time the facilities to serve the community were first financed by RUS.
(C) For subsequent loans, the borrower shall state whether the population of a community, which is currently more than 5,000, was considered rural at the time RUS first financed the facilities to serve the community. Detailed cost estimates are not required if the population was considered rural at the time RUS first financed facilities to serve the community, see 7 CFR 1735.13(d).
(ix)
(x)
(xi)
(2)
(ii) An RUS Form 495, “Construction Cost Estimates,” or its equivalent shall be prepared for each exchange in which system improvements or additions are proposed. An explanation of the method used in developing these cost estimates must be included.
(iii) RUS Form 494, “Loan Design Summary,” or its equivalent shall be prepared for each loan. This must show all expected 5-year construction costs, loan and nonloan.
(iv) A schematic trunking diagram shall be included showing the number and type, length, ownership and makeup of existing and proposed toll and EAS trunks, plus transmission and traffic data for each trunk group.
(v) Detailed outside plant design maps must be submitted for all central office areas of initial loan applicants and for areas not previously served by existing borrowers or financed by RUS. These design maps must be in sufficient detail to substantiate the construction cost estimates.
(vi) For subsequent loans only, if a change in system boundaries is proposed, a map must be furnished showing present and proposed boundaries, and existing establishments and subscribers in the new areas.
(vii) Any other special exhibits needed to support particular items in the loan proposal must be included.
(3)
We, the undersigned, certify that the data in this Loan Design are correct to the best of our knowledge and belief and reasonably reflect the cost to serve the subscribers as proposed on the Forms 569, “Area Coverage Survey Report,” which are integral parts hereof, and that this Loan Design adheres to RUS engineering and construction standards and practices.
(g) The RUS field representative shall review and make a recommendation on each LD.
(1) After completion of the LD, the borrower arranges a meeting with its engineer and RUS's field representative to review:
(i) Design and cost estimates.
(ii) Reserves available from prior loans, if any, or internally generated funds which may be applied against the requirements of the current application.
(2) One copy of RUS Form 567, “Checklist for Review of Loan Design,” completed and signed by the borrower's engineer must be attached to the LD submitted to the RUS field representative.
(3) The RUS field representative recommends acceptance of the LD as the basis for RUS financing.
(4) Three copies of the final LD with the RUS field representative's recommendation are then sent to the relevant Area Office in RUS. A fourth copy is retained by the RUS field representative.
(5) A transmittal letter from the borrower must accompany the LDs, requesting that the application previously submitted be amended so as to be consistent with the approved LD.
(6) Final approval of the LD is given by the relevant Area Office in RUS. To be approved, the LD must be cost effective, include appropriate technology, and provide area coverage.
(7) Upon receipt of the LD and any other required information, RUS makes a preliminary analysis of the loan proposal. Before final consideration of the loan, RUS reviews the results of its preliminary analysis with the borrower.
(a) Under special circumstances a borrower may request that RUS approve interim financing for interim construction. This subpart describes the circumstances in which RUS will consider approving interim financing of construction, the information to be submitted to RUS to support the borrower's request, RUS's requirements relating to interim construction, and related matters.
(b) For a borrower to preserve the option of obtaining loan funds for reimbursement of interim financing, it must obtain prior RUS approval of its interim financing plan and follow the procedures in 7 CFR 1737.41 and 7 CFR 1737.42.
(c) RUS will approve interim financing only for projects which must be performed immediately.
(d) RUS approval of interim financing is not a commitment that RUS will make loan funds available.
(e) Equal employment opportunity requirements apply to interim construction. See RUS Bulletin 320-15.
(a) The borrower shall submit to the RUS Area Office a written request for approval of interim financing. This request shall include:
(1) A description of the construction proposed under interim financing.
(2) An explanation of the urgency of proceeding with the proposed construction.
(3) An estimate of the cost.
(4) The source of funds to be used for interim financing.
(b) RUS will not approve interim financing until it has reviewed and found acceptable:
(1) All of the information required under § 1737.21; or
(2) The following documents:
(i) The loan application (RUS Form 490) clearly marked “in support of interim financing request.”
(ii) The Loan Design (LD), or the portion thereof that covers the proposed construction if the completed LD is not available. See 7 CFR 1737.32.
(iii) Evidence that the borrower has satisfied the requirements of 7 CFR part 1794 applying to the proposed interim construction.
(iv) A statement that the borrower is or is not delinquent on any Federal debt, such as income tax obligations or a loan guarantee from another Federal agency. If delinquent, the reasons for the delinquency must be explained and RUS will take such explanation into consideration in deciding whether to approve the interim financing, see 7 CFR 1737.22(b)(9).
(v) A “Certification Regarding Lobbying” for loans, or a “Statement for Loan Guarantees and Loan Insurance” for loan guarantees, and when required, an executed Standard Form LLL, “Disclosure of Lobbying Activities,” (see section 319, Pub. L. 101-121 (31 U.S.C. 1352)).
(vi) Executed copy of Form AD-1047, “Certification Regarding Debarment, Suspension, and Other Responsibility Matters—Primary Covered Transactions” (see appendix A to 7 CFR part 3017).
(vii) Any other supporting data required by the Administrator.
(c) RUS will not approve a borrower's request for approval of interim financing if, in RUS's judgment:
(1) The proposed interim financing does not comply with the requirements of this subpart.
(2) The proposed interim construction will not qualify for RUS financing.
(3) The proposed interim financing presents unacceptable loan security risks to RUS, or otherwise is not in the best interests of RUS.
(a) If RUS approves the interim financing, interim construction shall be conducted in accordance with 7 CFR Part 1753, 7 CFR 1788, RUS Bulletin 320-15, and RUS Bulletins 381-1, 381-2, 381-4, 381-7, 381-8, 381-9, 381-10, 381-11, 381-13, 382-1, 382-2, 382-3, 383-1, 383-4, 384-1, 384-2, 384-3, 385-1, 385-2, 385-3, 385-4, 385-5, 385-6, 387-1, 387-2, 387-3, 387-4, and 387-5) except for the following:
(1) All sellers and contractors invited to bid must be informed that funds from sources other than RUS will be used to pay for construction.
(2) Contracts involving the interim construction must contain a provision, in form and substance satisfactory to RUS, stating that RUS is not committed to lend or advance funds to finance the project.
(3) Contracts will not be approved by RUS until the borrower demonstrates to RUS's satisfaction that funds from sources other than RUS will be available when needed to pay invoices submitted in accordance with contract payment terms.
(4) The borrower shall not begin interim construction until all necessary licenses, permits, and other governmental approvals have been obtained.
(b) After RUS loan funds are released, the borrower can obtain reimbursement for interim financing by submitting a Financial Requirement Statement. See 7 CFR Part 1744, subpart C (or RUS Bulletin 327-1).
(1) The first advance of loan funds to a borrower that has received interim financing approval generally will be limited to funds to repay any interim financing indebtedness and such additional amounts as RUS deems necessary. RUS will make no further advances of loan funds until the borrower has submitted evidence, in form and substance satisfactory to the Administrator, that (i) any indebtedness created by the interim financing and any liens associated therewith have been fully discharged of record and (ii) the borrower has satisfied all other conditions on the advance of additional loan funds.
(2) If the source of funds for interim financing is the borrower's internally generated funds, the borrower may request reimbursement of those funds along with advances for other purposes on the first Financial Requirement Statement.
(a) The completed loan application consists of:
(1) A completed RUS Form 490, “Application for Telephone Loan or Loan Guarantee;”
(2) A completed certification Form AD-1047, “Certification Regarding Debarment, Suspension, and Other Responsibility Matters—Primary Covered Transactions,” (see appendix A to 7 CFR part 3017);
(3) A market survey called the Area Coverage Survey (ACS);
(4) The plan and associated costs for the proposed construction, called the Loan Design (LD);
(5) Evidence that the borrower is participating in a telecommunications modernization plan in the state where the proposed construction will occur, unless the borrower is seeking a guaranteed loan; and
(6) Various supplementary information.
(b) RUS shall review the completed loan application, particularly noting subscriber data, grades of service, extended area service (EAS), connecting company commitments, commercial facilities, system and exchange boundaries, and proposed acquisitions. RUS shall review the LD to determine that the system design is acceptable to RUS, that the design is technically correct, that the cost estimates are reasonable, and that the design provides for area coverage service. RUS shall also review the population and incorporation status of all communities served or to be served by the borrower to determine if any nonrural areas are served and if municipal franchises are required. Any RUS lending for nonrural areas must be in accordance with 7 CFR part 1735. RUS shall also check the “List of Parties Excluded from Federal Procurement of Nonprocurement Programs”, compiled, maintained and distributed by General Services Administration, to determine whether the borrower is debarred, suspended, ineligible, or voluntarily excluded (see 7 CFR 3017.505).
(c) RUS will notify the borrower if RUS recommends major changes in subscriber projections, design, cost estimates, or other significant matters. RUS will not continue loan processing until RUS and the borrower agree on all major changes.
RUS shall notify the borrower when the preloan data concerning the system design and costs and subscriber projections have been approved. If found acceptable, RUS will approve the LD with any required changes. A copy of the approved LD, with any significant changes, as determined by RUS, will be returned to the borrower.
(a) RUS shall prepare a “Telephone Loan Budget” (RUS Form 493) showing all costs for the proposed project and the amount of loan and nonloan funds to be used. The budget shall show, as applicable, amounts for central offices, outside plant and station equipment, right-of-way procurement, land, buildings, removal costs, special projects, engineering, vehicles and work equipment, office equipment, operating funds, refinancing with loan funds, debt retirement with nonloan funds, acquisitions, and contingencies. The amounts budgeted, exclusive of prior loan reserves, generally shall be rounded to the nearest $1,000.
(1) If the loan is to be made by the Rural Telephone Bank (RTB) or concurrently with RTB, the budget shall include the amount required for the purchase of RTB Class B stock. This is 5 percent of the amount to be borrowed from RTB for all purposes other than the purchase of RTB Class B stock. The borrower may elect to use nonloan funds for all or part of this requirement.
(2) The amount of funds included in any loan shall be limited for certain items:
(i) Operating funds for working capital or current operating deficiencies shall be included only in cases of financial hardship as determined by the Administrator.
(ii) Contingencies shall not exceed 3 percent of the total amount of loan funds to be used for construction, engineering, operating equipment and operating funds.
(b) RUS shall prepare the cost estimates based on the data in RUS Form 494, “Loan Design Summary,” and RUS Form 495, “Construction Cost Estimates,” or their equivalents, and other parts of the LD submitted by the borrower, and on other pertinent information. See subpart D of this part. The amounts included in the proposed budget shall be the estimated costs, less the value of materials and supplies on hand or acquired that can be used in the proposed construction. The cost estimates in the LD may be adjusted by RUS in consultation with the borrower. See § 1737.50(c).
(c) Generally, the new loan shall be reduced by any required equity funds and funds available in reserves no longer needed for prior loan purposes to determine the proposed loan requirement.
(d) When amounts are available in reserves no longer needed for prior loan purposes, RUS may, at its option, deny further advances of these funds if they will be used to finance projects in the proposed loan.
(e) The budget shall also show, if applicable, the reserves for each budget item as of the date of the latest RUS Form 481, “Financial Requirement Statement,” submitted by the borrower. To ensure that sufficient funds are included in the budget to finance all proposed construction, RUS includes in the budget any funds deposited by the borrower for approved interim financing.
(a) Pursuant to the requirements in 7 CFR part 1735, if loan funds are proposed for facilities to serve subscribers in nonrural areas, RUS shall allocate costs between rural and nonrural areas. This allocation will be used to determine whether the use of loan funds in nonrural areas is necessary and incidental to furnishing and improving telephone service in rural areas. Cost estimates shall be provided by the borrower in the LD. See subpart D of this part. RUS will use the following method to review the cost breakdowns and to determine their appropriateness:
(1) The costs of facilities associated directly with particular subscribers shall be allocated to those subscribers.
(2) The costs of facilities that serve both rural and nonrural subscribers shall be allocated based on the relative number of rural and nonrural subscribers receiving service from those facilities.
(3) When a borrower's exchange that includes a nonrural community will have an extended area of service (EAS) with other exchanges of the borrower, the breakdown of subscribers and funds
(b) If RUS determines that costs cannot be adequately allocated using the procedures in paragraphs (a)(1) through (a)(3) of this section, RUS shall, on a case by case basis, allocate costs between the rural and nonrural subscribers using whatever methodology it deems reasonable. All allocations in paragraphs (a) and (b) of this section shall be documented.
(a) In connection with each loan RUS shall prepare a feasibility study that includes sections on consolidated loan estimates, operating statistics, projected telecommunications, plant, projected retirement computations, and projected revenue and expense estimates (including detailed estimates of depreciation and amortization expense, scheduled debt service payments, toll and access charge revenues, and local service revenues). Normally, projections will be for a 5-year period and used to determine the ability of the borrower to repay its loans in accordance with the terms thereof. RUS will not require borrowers to raise local service rates. Local service revenue projections will be based on the borrower's existing local service rates or regulatory body approved rates not yet in effect but to be implemented within the Forecast period. In the latter case, if a borrower is not required to obtain regulatory body approval for the implementation of such rates, RUS will require a resolution of the board of directors indicating when those rates will be in effect.
(b) RUS makes loans only to rural telephone systems that are financially feasible. RUS shall consider the factors discussed in paragraphs (c) through (j) of this section in determining feasibility.
(c) The revenue and expense estimates for the feasibility study generally will be based on the borrower's operating experience provided that:
(1) Adjustments are made for any nonrecurring revenues and expenses that are not representative of the borrower's past operations and would thus make the borrower's experience data inappropriate for the forecast; and
(2) Adjustments are made for any special or new characteristics or other considerations deemed necessary by the Administrator.
(d) [Reserved]
(e) Depreciation expense will be determined using depreciation rates appropriate to the normal operation of the borrower, based on:
(1) The borrowers regulatory body approved depreciation rates; and
(2) Where such rates as described in paragraph (e)(1) of this section do not exist for items which the borrower is seeking financing, the most recent median depreciation rates published by RUS for all borrowers. RUS will publish such depreciation rates annually in RUS's “Statistical Report, Rural Telephone Borrowers.”
(f) Projected scheduled debt service payments will generally be based on all of the borrower's outstanding and proposed loans from RUS and all other lenders as of the end of the feasibility Forecast period (i.e. for a 5-year Forecast period, the amount of debt outstanding in year 5).
(g) The financial and statistical data are derived from RUS Form 479, “Financial and Statistical Data for Telephone Borrowers,” or for initial loans, the data may be obtained from the borrower's financial statements and other reports, and from other information supplied with the completed loan applications (see 7 CFR 1737.21 and 1737.22).
(h) When, in RUS's opinion, the borrower's operating experience is not adequate or the borrower's current operations are not representative, the estimates in the feasibility study normally will be developed from state and regional standards based on the experience of RUS borrowers. These standards are included in the Borrower's
(i) In cases where these per-subscriber standards do not represent a reasonable forecast of a particular borrower's operations (for example, when a variation greater than 20 percent is necessary), estimates based upon a special analysis of the borrower's projected operations shall be used. The special analysis will accompany the feasibility study.
(j) When it is reasonably expected that a subscriber, classified as a special project, may discontinue service, a second feasibility study will be prepared, for comparison purposes, omitting revenues and expenses from this subscriber.
(k) RUS may obtain and review commercially available credit reports on applicants for a loan or loan guarantee to verify income, assets, and credit history, and to determine whether there are any outstanding delinquent Federal or other debts. Such reports will also be reviewed for parties that are or propose to be joint owners of a project with a borrower.
(l) If it is determined that loan feasibility cannot be proven as described in this section, the loan application will be returned to the borrower with an explanation. A borrower whose application has been returned will have 90 working days, from the date the application was returned, to revise and resubmit its application. If a revised application is not received by RUS within the 90-day period described above, the application will be canceled and a new application will need to be submitted if the borrower wishes further consideration.
(a) For purposes of determining the creditworthiness of a borrower for concurrent RUS cost-of-money and RTB loans, the Administrator shall assume that the loans, if made, would bear interest at the Treasury rate on the date of determination as described in paragraph (b) of this section. If the Treasury rate exceeds 7 percent, the interest rate used to determine eligibility for the RUS cost-of-money loan will be 7 percent.
(b) The 30-year Treasury rate will be used in all feasibility studies for loans with a final maturity of at least 30 years. A straight-line interpolation between other Treasury rates will be used to determine the rate used in feasibility studies for loans with final maturities of less than 30 years.
(c) The Treasury rate will be obtained each Tuesday, or as soon as possible thereafter, from the Federal Reserve. The rate for the current week, from the column labeled “This week” in the Federal Reserve statistical release, will be used from that Wednesday through the following Tuesday.
(d) As used in this section, the “date of determination” means the date of the feasibility study used in support of the loan recommendation.
(a) After all of the studies and exhibits for the proposed loan have been prepared, but before the loan is recommended, RUS shall inform the borrower, in writing, of the characteristics of the proposed loan. The purpose of the characteristics letter is to inform the borrower and obtain its concurrence, before further consideration by RUS of the loan approval and the preparation of legal documents relating to the loan, in such matters as the amount of the proposed loan, its purposes, rate of interest, loan security requirements, and other prerequisites to the advance of loan funds. The letter,
(b) The Forecast of Revenues and Expenses and a copy of RUS Form 493, “Telephone Loan Budget,” shall be enclosed with the characteristics letter. This copy of the budget shall be subject to change by RUS with the borrower's agreement.
(a) In addition to requirements set forth in 7 CFR part 1735, 7 CFR part 1737 and other applicable parts of 7 CFR chapter XVII, the following are certain additional requirements that must be met before RUS will approve a loan:
(1) If the borrower had 100 or more employees as of the prior December 31, it must submit the current annual Employer Information Report EEO-1, Standard Form 100, as required by the Department of Labor; see 29 CFR 1602.7 through 1602.14.
(2) The borrower must be in compliance with regulations on nondiscrimination. See 7 CFR part 1790 (or RUS Bulletin 320-19).
(3) For subsequent loans, RUS must determine whether the borrower's accounting records are adequate. If the records are not adequate, as determined by RUS based on Generally Accepted Accounting Principles or other accounting conventions as deemed necessary by RUS, a provision will be included in the loan contract requiring the borrower to improve its records to an adequate level.
(4) The borrower must not have any receivables, loans, guarantees, investments, or other obligations that are contrary to the mortgage provisions or any RUS regulations including, but not limited to, 7 CFR part 1758 (or RUS Bulletins 320-4, 320-22, 321-2, 322-2, 323-1, or 326-1). If the borrower has any of these items, the loan contract shall contain a provision requiring that they be eliminated prior to the release of funds. See 7 CFR part 1744 for conditions under which RUS will provide a shared first lien and/or a lien accommodation for non-RUS lenders.
(5) RUS must make a determination on flood insurance requirements. In accordance with the National Flood Insurance Act of 1968, as amended by the Flood Disaster Protection Act of 1973, as amended (the “Flood Insurance Act”), RUS shall not approve financial assistance for the acquisition, construction, repair or improvement of any building or any machinery, equipment, fixtures or furnishings contained or to be contained in any such building located in an area which has been identified by the Director of the Federal Emergency Management Agency (the “Director of FEMA”) pursuant to the Flood Insurance Act as an area having special flood hazards unless:
(i) Flood insurance has been made available, pursuant to the Flood Insurance Act, in the area in which the acquisition, construction, repair or improvement is proposed to occur; and
(ii) The borrower has obtained flood insurance coverage with respect to such building, machinery, equipment, fixtures or furnishings as may be required pursuant to the Flood Insurance Act.
(6) All environmental requirements must be met (see 7 CFR part 1794).
(b) [Reserved]
(a) A loan is approved when the Administrator, or whoever is delegated authority, signs the administrative findings and the letter to the borrower announcing the loan.
(b) If the loan is not approved, RUS shall notify the borrower, in writing, of the reasons.
Following approval of the loan, RUS shall forward the necessary loan documents to the borrower for execution, delivery, recording, and filing, as directed by RUS. See 7 CFR part 1758 for details (or RUS Bulletins 320-4, 320-22, 321-2, 322-2, 323-1, or 326-1).
(a) Standard prerequisites to the advance of funds, generally applied to all loans, are set forth in Article II of the form of loan contract attached as appendix A to 7 CFR part 1758. Additional prerequisites may be added on a case by case basis to the loan contract.
(b) Before any loan funds can be advanced, RUS must approve a release of funds.
(c) RUS approves the release of funds only after it determines that all prerequisites to the advance of loan funds have been met or funds should be advanced even though certain loan contract prerequisites remain unsatisfied.
(d) Following release approval, loan funds and related nonloan funds may be advanced in accordance with 7 CFR part 1744.
(e) The borrower may be required to discharge indebtedness and/or to close acquisitions before advances are made for construction purposes. In such cases, the borrower shall submit evidence that these actions have been completed. If the evidence is satisfactory to RUS, RUS shall allow the remaining loan funds to be advanced in accordance with 7 CFR part 1744.
If the borrower desires to credit amounts spent for preloan activities against any equity or general funds required by the loan contract, it shall submit an itemized statement of such expenditures to the Area Office. These expenditures will be accounted for on RUS Form 503, “Release of Telephone Loan Funds,” if RUS determines that the amounts spent are reasonable based on normal industry practice and that the procedures set forth in 7 CFR part 1737, subpart D, have been complied with. Statements of preloan expenditures will be verified as to accuracy by loan fund audits.
7 U.S.C. 901
Recent changes in the telephone industry, including deregulation and technological developments, have caused RUS borrowers and other organizations providing telephone services to consider undertaking projects to provide new telecommunication services. Although certain telecommunication services may not be eligible for financing under the RE Act, these services may nevertheless advance Act objectives where the borrower obtains financing from private lenders. The borrower's financial strength and the assurance of repayment of outstanding Government debt may be improved as a result of providing new telecommunication services. To facilitate the financing of new telecommunication services, RUS is willing to consider accommodating the Government's lien on telephone borrowers’ systems or subordinating the Government's lien on after-acquired property of telephone borrowers. This part sets forth RUS policy with respect to such lien accommodations and subordinations. The policies of this part will also be utilized by the Governor of the Rural Telephone Bank in carrying out the Rural Telephone Bank's loan program.
(a) Borrowers are encouraged to submit requests for accommodation of the Government's lien on the borrower's system in order to facilitate obtaining financing from private lenders for purposes provided in the RE Act.
(b) The Administrator will consider requests for the subordination of the Government's lien on after-acquired property which will enable borrowers to obtain financing from private lenders for purposes provided in the Act: Provided, however, that property integral to the operation of projects financed with loans made or guaranteed by RUS shall be financed with funds obtained through lien accommodations instead of lien subordinations, unless the Administrator determines that it is in the Government's interest to do otherwise.
(a) The Administrator will consider requests for the accommodation of the Government's lien on the borrower's system or the subordination of the Government's lien on after-acquired property which will enable the borrowers to obtain financing from private lenders for the purpose of providing new telecommunication services which may not be eligible for financing under the Act if the Administrator is satisfied that:
(1) The borrower will have the ability to repay its existing and proposed indebtedness;
(2) The security for outstanding Government loans and guarantees is reasonably adequate and will not be adversely affected by the accommodation or subordination; and
(3) Approval of the request is in the interests of the Government. Generally, it would not be in the Government's interest if the accommodation or subordination is being requested to enable the borrower to avoid complying with such RUS policies or procedures, as competitive bid procedures or purchasing equipment acceptable to RUS, under 7 CFR part 1753.
(b) In determining that the security for outstanding Government loans and guarantees is reasonably adequate and will not be adversely affected by the accommodation or subordination the Administrator will consider, among other matters, when applicable, the following:
(1) Market forecasts for the project;
(2) Projected revenues, expenses and net income of the borrower's existing system and the project;
(3) Maximum debt service on indebtedness of both the borrower's system and the project;
(4) Projected rate of return on the borrower's investment in the project;
(5) Fair market value of property acquired by the borrower as part of the project;
(6) Impact of the project on the ratio of the borrower's secured debt to assets;
(7) Projected growth in borrower's system and project equity; and
(8) Amount of funds available for plant additions, replacements and other similar costs of the system and the project.
(c) In determining whether the accommodation or subordination is in the interests of the Government, the Administrator may consider, among other matters, whether the project will improve the borrower's financial strength and the assurance of repayment of Government debt.
(a) Requests for information regarding applications for lien accommodations or subordination under this part should be addressed to the Assistant Administrator—Telephone Rural Utilities Service, Washington, DC 20250-1500.
(b) An application for a lien accommodation or subordination shall include the following supporting information:
(1) A board Resolution from the applicant requesting the lien accommodation or subordination and stating the general purpose for which the funds from the private lender will be used, the proposed amount of the loan, and the proposed terms and conditions of the loan;
(2) An opinion from counsel representing the applicant that the applicant has the authority under its articles of incorporation, bylaws, and under applicable state law to undertake the project;
(3) Engineering and pertinent studies related to the projects or purposes to be financed, when applicable;
(4) Feasibility studies with pro forma financial statements showing the ability to repay the loan and provide an appropriate margin or net income;
(5) Such information regarding the environmental impacts of the project as may be required pursuant to 7 CFR part 1794; and
(6) Any other information or documentation deemed pertinent by the borrower or the Administrator in support of the application.
(c) When the Administrator makes a determination that an application for an accommodation or subordination will not be approved the Administrator shall set forth the reasons therefor in writing and furnish such determination and reasons to the borrower within 30 days of the determination.
(a) The standard loan documents (as defined in 7 CFR part 1758) contain provisions regarding advances and disbursements of loan funds by telephone borrowers. This part implements certain of the provisions by setting forth requirements and procedures to be followed by borrowers in obtaining advances and making disbursements of loan and nonloan funds.
(b) This part supersedes any sections of RUS Bulletins with which it is in conflict.
RUS is under no obligation to make or approve advances of loan funds unless the borrower is in compliance with all terms and conditions of the loan documents. The borrower shall use funds in its construction fund only to make disbursements approved by RUS.
When the loan is made, RUS provides the borrower a Telephone Loan Budget, RUS Form 493. This budget divides the loan into budget accounts such as “Engineering.” When a contract or other document is approved by RUS, funds
(a) If more funds are required than are available in a budget account, the borrower may request RUS's approval of a budget adjustment to use funds from another account. The request shall include an explanation of the change, the budget account to be used, and a description of how the adjustment will affect loan purposes. RUS will not approve a budget adjustment that affects other loan purposes unless the borrower satisfies RUS that the additional funds are available from another source, requests a deficiency loan, or scales back the project.
(b) RUS may make a budget adjustment without a formal request by the borrower when a budget account is insufficient to encumber funds for a contract that otherwise would be approved by RUS. See 7 CFR part 1753.
(a) The construction fund is used by the borrower primarily to hold advances until disbursed.
(b) All advances shall be deposited in the construction fund.
(c) RUS may require that other funds be deposited in the construction fund. These may include equity or general fund contributions to construction, service termination payments, proceeds from the sale of property, amounts recovered from insurance for losses during the construction period, and interest received on loan funds in savings or interest bearing checking accounts, and similar receipts. Deposit slips for any deposit to the construction fund shall show the source and amount of funds deposited and be executed by an authorized representative of the bank.
(d) Funds shall be disbursed only up to the amount approved for advance on the FRS as described in § 1744.66. No funds may be withdrawn from the fund except for loan purposes approved by RUS.
(e) The disbursement of nonloan funds requires the same RUS approvals as loan funds.
(f) Disbursements must be evidenced by canceled checks. The invoices and supporting documentation needed for construction contracts are specified in the contracts and in 7 CFR part 1753. Disbursements to reimburse the borrower's general funds shall be documented by a reimbursement schedule,
(a) To request advances, the borrower must submit to RUS an FRS, a description of the advances desired, and other information related to the transactions when required by RUS.
(b) The FRS is used by RUS and the borrower to record and control transactions in the construction fund. Approved contracts and other items are shown on the FRS under “Approved Purposes.” Except as noted below, the amount approved for advance is 100 percent of the amount encumbered for that item. Funds are approved for advance as follows:
(1)
(ii)
(iii)
(iv)
(v)
(vi)
(2)
(ii)
(iii)
(3)
(4)
(ii)
(iii)
(iv)
(5)
(ii)
(6)
(7)
(c) Funds other than loan funds deposited in the construction fund, which shall include proceeds from the sale of property on which RUS has a lien, (lines 10 and 11 on the FRS) are reported as a credit under total disbursements. Disbursements of these funds are subject to the same RUS approvals as loan funds.
(d) The borrower shall request advances as needed to meet its obligations promptly. Generally, RUS does not approve an advance requested more than 60 days before the obligation is payable.
(e) Funds should be disbursed for the item for which they were advanced. If the borrower needs to pay an invoice for which funds have not been advanced, and disbursement of advanced funds for another item has been delayed, the latter funds may be disbursed to pay the invoice up to the amount approved for advance for that item on the FRS. The borrower shall make erasable entries on the next FRS showing the changes under “Total Advances to Date” and shall explain the changes in writing before RUS will process the next FRS.
(f) Advances will be rounded down to the nearest thousands of dollars except for final amounts.
(g) The certification on each of the three copies of the FRS sent to RUS shall be signed by a corporate officer of manager authorized by resolution of the board of directors to sign such statements. At the time of such authorization a certified copy of the resolution and one copy of RUS Form 675, Certificate of Authority, shall be submitted to RUS.
(h) The documentation required for the FRS transactions are the deposit slips, the canceled construction fund checks and the supporting invoices or reimbursement schedules. These shall be kept in the borrower's files for periodic audits by RUS.
(a) When unanticipated events delay the borrower's disbursement of advanced funds, the funds may be used as follows:
(1) With RUS loan funds for loans approved prior to November 1, 1993, or hardship loan funds, the borrower may invest the funds in 5 percent Treasury
(2) With RUS cost-of-money, FFB or RTB loan funds, the following apply:
(i) The borrower may invest the funds in short term securities issued by the United States Treasury.
(ii) If permitted by state law, the borrower may deposit the funds in savings accounts, including certificates of deposit, of federally insured savings institutions.
(3) Funds advanced by a guaranteed lender other than the FFB may, if so permitted by such lender, be invested under the terms and conditions described above for FFB advances.
(4) Any security or investment made under this authorization shall identify the borrower by its corporate name followed by the words “Trustee, Rural Utilities Service.”
(5) All temporary investments and all income derived from them shall be considered part of the construction fund and be subject to the same controls as cash in that account.
(6) Securities and other investments shall have maturity dates or liquidating provisions that ensure the availability of funds as required for the completion of projects and the payment of obligations.
(7) Any instrument evidencing a security or other investment herein authorized to be purchased or made, may not be sold, discounted, or pledged as collateral for a loan or as security for the performance of an obligation or for any other purpose.
(8) The Administrator may, at his sole discretion, require a borrower to pledge any security or other evidence of investment authorized hereby by forwarding to him all pertinent instruments and related documentation as he may reasonably require.
(9) Borrowers shall be responsible for the safekeeping of securities and other investments.
(b) All interest and income received from investments of temporary excess funds, as described in this section, shall be deposited in the Construction Fund.
(c) The borrower shall account for investment proceeds on the next FRS submitted to RUS. RUS will make the necessary adjustments on budgetary records.
(d) The Administrator reserves the right to suspend any borrower's authorization to invest temporary excess funds contained herein if the borrower does not comply with the requirements.
(e) For RUS loans approved prior to October 1, 1991, the borrower may return advanced funds to RUS as a refund of an advance. Interest stops accruing on the refunded advance upon receipt by RUS. A refunded advance may be readvanced. A refund of an advance shall be sent to the Rural Utilities Service, United States Department of Agriculture, Collections and Custodial Section, Washington, DC, 20250. The borrower should clearly indicate that this is a refund of an advance, and not a loan payment or prepayment.
(a) Borrowers may specify the sequence of advances of funds under any combination of approved telephone loans from RUS, RTB, or FFB, except that for all loans approved on or after November 1, 1993, the borrower may use loan funds:
(1) Only for purposes for which that type of loan (i.e. Hardship, RUS cost-of-money, RTB, or FFB) may be made; and
(2) Only in exchanges that qualify for the type of loan from which the funds are drawn.
(b) The first or subsequent advances of loan funds may be conditioned on the satisfaction of certain requirements stated in the borrower's loan contract.
(c) Normally, only one payment is made by the Automatic Clearing House (ACH) for an advance of funds.
(d) Borrowers of RUS and RTB funds may request advances by wire service only for amounts greater than $500,000 or for advances to borrowers outside the Continental United States. FFB advances in any amount over $100,000 can be sent by wire service.
(e) The following information shall be included with the FRS:
(1) Name and address of borrower's bank.
(2) If borrower's bank is not a member of the Federal Reserve System, the name and address of its correspondent bank that is a member of the Federal Reserve System.
(3) American Bankers Association (ABA) nine digit identifier of the receiving banks (routing number and check digit).
(4) Borrower's bank account title and number.
(5) Any other necessary identifying information.
(a) RUS telephone borrowers are encouraged to utilize their own funds to participate in the economic development of rural areas, provided that such activity does not impair a borrower's ability to provide modern telecommunications services at reasonable rates or to repay its indebtedness to RUS and other lenders. When considering loans, investments, or guarantees, borrowers are expected to act in accordance with prudent business practices and in conformity with the laws of the jurisdictions in which they serve.
(b) This subpart E applies to both RUS and RTB borrowers. For the purposes of RTB borrowers, as used in this subpart E, if a borrower has received a loan from the RTB, RUS means RTB, and Administrator means Governor unless the text indicates otherwise.
As used in this subpart:
(1) Guarantees of payment or collection on a note or other debt instrument;
(2) Issuing performance bonds or completion bonds; or
(3) Cosigning leases or other obligations of third parties.
(a) A borrower that equals or exceeds the minimum total assets ratio may make a qualified investment, defined in paragraph (b) of this section without prior written approval of the Administrator.
(b) A qualified investment is a rural development investment, defined in paragraph (d) of this section meeting the following criteria:
(1) Unless the borrower's commitment is a guarantee, extension of credit, or advance, the borrower receives any financial return accruing to such investment, or the borrower's proportionate share of such return;
(2) Unless the borrower's commitment is a guarantee, extension of credit, or advance, the borrower retains title to any asset acquired with such investment, or the borrower's proportionate share of such title; and
(3) The funds committed are the borrower's own funds. As used in this subpart, the term own funds shall not include proceeds of loans made, guaranteed or lien accommodated by RUS; funds necessary to make timely payments of principal and interest on loans made, guaranteed or lien accommodated by RUS; and funds on deposit in the cash construction fund-trustee account, as defined in the borrower's loan contract with RUS.
(c) A rural development investment will not be considered to be a qualified investment to the extent that the amount of such investments exceeds the borrower's maximum investment ratio.
(d) A rural development investment is an investment, extension of credit, advance, or guarantee by a borrower for a period longer than one year and for one or more of the following purposes:
(1) Improve the economic well-being of rural residents and alleviate the problems of low income, elderly, minority, and otherwise disadvantaged rural residents;
(2) Improve the business and employment opportunities, occupational training and employment services, health care services, educational opportunities, energy utilization and availability, housing, transportation, community services, community facilities, water supplies, sewage and solid waste management systems, credit availability, and accessibility to and delivery of private and public financial resources in the maintenance and creation of jobs in rural areas;
(3) Improve state and local government management capabilities, institutions, and programs related to rural development and expand educational and training opportunities for state and local officials, particularly in small rural communities;
(4) Strengthen the family farm system; or
(5) Maintain and protect the environment and natural resources of rural areas.
(e) As used in paragraph (d) of this section, the term rural development investment shall include investments by a borrower in its own name, in affiliated companies, and in entities not affiliated with the borrower.
For purposes of determining whether a rural development investment is within the limits of the borrower's maximum investment ratio or the minimum total assets ratio, the amount of the qualified investment shall be the total amount of funds committed to the rural development project as of the date of determination. The total amount of funds committed to the rural development project includes:
(a) The principal amount of loans and advances made by the borrower;
(b) Guarantees made by the borrower; and
(c) A reasonable estimate of the amount the borrower is committed to provide to the rural development project in future years.
(a) Each borrower is authorized to make investments other than qualified investments only in accordance with the provisions of the borrower's mortgage with RUS. Without RUS's approval, the portion of any investment of funds or commitment to invest funds for any rural development investment that will exceed the borrower's maximum investment ratio or cause the borrower to fall below the minimum total assets ratio, must comply with the provisions of the RUS mortgage.
(b) RUS will consider, on a case-by-case basis, requests for approval of rural development investments not constituting qualified investments. RUS may condition such approval, if granted, on such requirements and restrictions as RUS may determine to be in the best interests of the Government, including, without limitation, the borrower's agreement to limit dividends or distributions of capital by an amount specified by RUS. Requests for such approvals must be submitted in writing to the relevant RUS regional office and shall include:
(1) A description of the rural development project and the type of investment to be made, such as a loan, guarantee, stock purchase or equity investment;
(2) A reasonable estimate of the amount the borrower is committed to provide to the rural development project including investments that may be required in the future; and
(3) A pro forma balance sheet and cash flow statement for the period covering the borrower's future commitments to the rural development project.
(c) In determining whether to approve a rural development investment that may cause the borrower to exceed the maximum investment ratio or to fall below the minimum total assets ratio in the future, RUS will consider annual increases to the borrower's net worth and total assets as might be reasonably anticipated from the borrower's normal operations.
(a) RUS will not include qualified investments, including qualified investments in affiliated companies, in calculating the amount of dividend or capital distributions a borrower may make under its RUS mortgage.
(b) A borrower's investment in its net plant shall not be considered a rural development investment for purposes of calculating the maximum investment ratio or the minimum total assets ratio.
(c) The borrower's net worth and total assets shall be determined using the balances of the respective accounts of the borrower as of December 31 of the last complete calendar year preceding the date on which the borrower's maximum investment ratio and minimum total assets ratio are calculated.
(d) All determinations required to be made under 7 U.S.C. 926 or this subpart will be made in accordance with the Uniform System of Accounts (USoA)(47 CFR part 32). References to specific USoA accounts shall include revised or replacement accounts.
If an expenditure constitutes a qualified investment under the terms of this subpart, it does not cease to be a qualified investment merely because subsequently the borrower fails to maintain the maximum investment ratio or the minimum total assets ratio.
A borrower shall not make a qualified investment or a rural development investment which jeopardizes:
(a) The security of loans made or guaranteed by RUS; or
(b) The borrower's ability to repay such loans under the terms and conditions as agreed.
All investments made by a borrower shall be subject to the provisions of this subpart, regardless of when the investment was made or whether it has been approved by RUS. Any restrictions required by RUS as a condition to approving a rural development investment before November 28, 1990, shall continue to be in effect to the extent that such investment exceeds the maximum investment ratio or causes the borrower to fall below the minimum total assets ratio.
(a) The records of borrowers, including records relating to qualified investments, shall be subject to the auditing procedures prescribed in part 1773 of this chapter. RUS reserves the right to review the records of the borrower relating to qualified investments to determine if the borrower is in compliance with this subpart.
(b) Borrowers shall report to RUS on the end-of-year operating report, RUS Form 479, the current status and principal amount of each qualified investment it has made or is committed to make pursuant to § 1744.202.
(a) Except as expressly provided in this subpart, the borrower shall comply with all provisions of its loan contract with RUS, its notes issued to RUS, and the RUS mortgage, including all provisions thereof relating to investments not covered by this subpart.
(b) Nothing in this subpart shall affect any rights of supplemental lenders under the RUS mortgage, or other creditors of the borrower, to limit a borrower's investments, loans and guarantees to levels below those permitted in § 1744.202.
(c) As used in paragraph (b) of this section, supplemental lender means a
7 U.S.C. 901
As used in this subpart:
(a) It is the policy of RUS that every State have a Modernization Plan which provides for the improvement of the State's telecommunications network.
(b) A proposed Modernization Plan must be submitted to RUS for approval. RUS will approve the proposed Modernization Plan if it conforms to the provisions of this subpart. Once obtained, RUS's approval of a Modernization Plan cannot be rescinded.
(c) The Modernization Plan shall not interfere with RUS's authority to issue such other telecommunications standards, specifications, requirements, and procurement rules as may be promulgated from time to time by RUS including, without limitation, those set forth in 7 CFR part 1755.
(d) The Modernization Plan must, at a minimum, apply to RUS Borrowers’ wireline service areas. If a Modernization Plan is developed by the PUC, RUS encourages, but does not require, that the Modernization Plan's requirements apply to the rural service areas of all providers of telecommunications services in the State. A PUC's decision not to include non-RUS Borrowers will not prejudice RUS approval of that PUC's Modernization Plan. The PUC may also, at its option, extend coverage of the Modernization Plan to all service areas of all providers of telecommunications services in the State. In addition, while the requirements and goals contained in § 1751.106 apply only to wireline services, the PUC, at its discretion, may extend coverage of Modernization Plans to wireless or other communications services in the State as it deems appropriate. Borrower-developed Modernization Plans apply only to Borrowers.
(a) Each PUC is eligible until February 13, 1996 to develop a proposed Modernization Plan and deliver it to RUS. RUS will review and consider for approval all PUC-developed Modernization Plans received by RUS within this one year period. The review and approval, if any, may occur after the one year period ends even though the PUC is no longer eligible to submit a proposed Modernization Plan.
(b) The PUC must notify all Telecommunications Providers in the State and other interested parties of its intent to develop a proposed Modernization Plan. The PUC is encouraged to consider all Telecommunications Providers’ and interested parties’ views and incorporate these views into the
(c)(1) If the PUC is no longer eligible to develop a Modernization Plan or has informed RUS that it will not develop a Modernization Plan, as described in paragraphs (a) and (b) of this section, a majority of the Borrowers within the State may develop the Modernization Plan. If a majority of Borrowers develops the Modernization Plan, the following apply:
(i) All Borrowers shall be given reasonable notice of and shall be encouraged to attend and contribute to all meetings and other proceedings relating to the development of the Modernization Plan; and
(ii) Borrowers developing a Modernization Plan are encouraged to solicit the views of other providers of telecommunications services and interested parties in the State.
(2) There is no time limit placed on Borrowers to develop a Modernization Plan. Borrowers should be aware that certain types of loans may be restricted until a Modernization Plan is approved. See § 1751.103.
(a) For information about loan eligibility requirements in relation to the Modernization Plan, see 7 CFR part 1735. In particular, beginning February 13, 1996, RUS will make RUS hardship loans, RUS cost-of-money loans, and RTB loans for facilities and other RE Act purposes in a State only if:
(1) The State has an RUS approved Modernization Plan; and
(2) The Borrower to whom the loan is to be made is participating in the Modernization Plan for the State. A Borrower is considered to be participating if, in RUS's opinion, the purposes of the loan requested by the Borrower are consistent with the Borrower achieving the requirements stated in the Modernization Plan within the timeframe stated in the Modernization Plan unless RUS has determined that achieving the requirements is not technically or economically feasible.
(b) With regard to the three types of loans discussed in paragraph (a), only loans approved after the date the State has an RUS approved Modernization Plan are subject to complying with the Modernization Plan.
(c) For loans subject to complying with the Modernization Plan, advances will not be made if, in RUS's opinion, the advances are not consistent with achieving the requirements of the Modernization Plan.
(a) To obtain RUS approval of a proposed Modernization Plan, the Plan Developer must submit the following to RUS:
(1) A certified copy of the statute or PUC order, if the PUC is the Plan Developer, or a written request for RUS approval of the proposed Modernization Plan signed by an authorized representative of the Plan Developer, if a majority of Borrowers is the Plan Developer; and
(2) Three copies of the proposed Modernization Plan.
(b) Generally, RUS will review the proposed Modernization Plan within (30) days and either:
(1) Approve the Modernization Plan if it conforms to the provisions of this subpart in which case RUS will return a copy of the Modernization Plan with notice of approval to the Plan Developer; or
(2) Not approve the proposed Modernization Plan if it does not conform to the provisions of this subpart. In this event, RUS will return the proposed Modernization Plan to the Plan Developer with specific written comments and suggestions for modifying the proposed Modernization Plan so that it will conform to the provisions of this subpart. If the Plan Developer remains eligible, RUS will invite the Plan Developer to submit a modified proposed Modernization Plan for RUS consideration. This process can continue until the Plan Developer gains approval of a proposed Modernization Plan unless the Plan Developer is a PUC whose eligibility has expired. If a PUC's eligibility has expired, RUS will return the proposed Modernization Plan unapproved. Because RUS does
(a) RUS understands that changes in standards, technology, regulation, and the economy could indicate that an RUS-approved Modernization Plan should be amended.
(b) The Plan Developer of the Modernization Plan may amend the Modernization Plan if RUS finds the proposed changes continue to conform to the provisions of this subpart.
(c) The procedure for requesting approval of an amended Modernization Plan is identical to the procedure for a proposed Modernization Plan except that there are no time limits on the eligibility of the Plan Developer.
(d) The existing Modernization Plan remains in force until RUS has approved the proposed amended Modernization Plan.
(e) RUS may from time to time revise these regulations to incorporate newer technological and economic standards that RUS believes represent more desirable goals for the future course of telecommunications services. Such revisions will be made in accordance with the Administrative Procedure Act. These revisions shall not invalidate Modernization Plans approved by RUS but shall be used by RUS to determine whether to approve amendments to Modernization Plans presented for RUS approval after March 15, 1995.
(a) The requirements for a Modernization Plan as stated in RELRA are:
(1) The plan must provide for the elimination of party line service.
(2) The plan must provide for the availability of telecommunications services for improved business, educational, and medical services.
(3) The plan must encourage and improve computer networks and information highways for subscribers in rural areas.
(4) The plan must provide for—
(i) Subscribers in rural areas to be able to receive through telephone lines—
(A) Conference calling;
(B) Video images; and
(C) Data at a rate of at least 1,000,000 bits of information per second; and
(ii) The proper routing of information to subscribers.
(5) The plan must provide for uniform deployment schedules to ensure that advanced services are deployed at the same time in rural and nonrural areas.
(6) The plan must provide for such additional requirements for service standards as may be required by the Administrator.
(b) To implement the requirements of the law described in paragraph (a) of this section, RUS has set minimum requirements as described in paragraphs (i) and (j) of this section. They are grouped into short-term and medium-term requirements. RUS has also included long-term goals which are not requirements. The Modernization Plan must meet all of the statutory requirements of RELRA and shall provide that short- and medium-term requirements be implemented as set forth in this section of the regulation except that the PUC, if it is the Plan Developer, or RUS, if a majority of Borrowers is the Plan Developer, may approve extensions of time if the required investment is not economically feasible or if the best available telecommunications technology lacks the capability to enable the Telecommunications Provider receiving the extension to comply with the Modernization Plan. Extensions shall be granted only on a case-by-case basis and generally shall not exceed a total of five years from the first such extension granted to the Telecommunications Provider.
(c) Each State's Modernization Plan shall be a strategic development proposal for modernizing the telecommunications network of the Telecommunications Providers covered by the Modernization Plan. In addition to implementing the requirements described in paragraphs (a), (i), and (j) of this section, the Modernization Plan
(d) Within the scope of § 1751.101(d), if the Plan Developer is the PUC, the Modernization Plan shall name the Telecommunications Providers in the State, in addition to Borrowers, that are covered by the Modernization Plan.
(e) The Modernization Plan must require that the design of the network provided by Telecommunications Providers allow for the expeditious deployment and integration of such emerging technologies as may from time to time become commercially feasible.
(f) The Modernization Plan must provide guidelines to Telecommunications Providers for the development of affordable tariffs for medical links and distance learning services.
(g) With regard to the uniform deployment requirement of the law restated in paragraph (a)(5) of this section, if services cannot be deployed at the same time, only the minimum feasible interval of time shall separate availability of the services in rural and nonrural areas.
(h) The Modernization Plan must make provision for reliable powering of ordinary voice telephone service operating over those portions of the telecommunications network which are not network powered. In the event of electric utility power outages, an alternative source of power must be available to ensure reliable voice service.
(i)
(2) All New Facilities providing Wireline Service after the short-term requirements start date, even if the construction began before such date, shall be constructed so that:
(i) Every subscriber can be provided 1-party service.
(ii) The New Facilities are suitable, as built or with additional equipment, to provide transmission and reception of data at a rate no lower than 1 Mb/sec.
(3) All switching equipment installed by a Telecommunications Provider after the short-term requirements start date shall be capable of:
(i) Providing custom calling features. At a minimum, custom calling features must include call waiting, call forwarding, abbreviated dialing, and three-way calling; and
(ii) Providing E911 service for areas served by the Telecommunication Provider when requested by the government responsible for this service.
(j)
(2) All New Facilities providing Wireline Service after the medium-term requirements start date, even if the construction began before such date, shall be capable, as built or with additional equipment, of transmitting video to a subscriber. The video must be capable of depicting a reasonable representation of motion. The frame rate, resolution, and other measures of audio and video quality shall be determined by the Plan Developer.
(3) No later than the medium-term requirements start date, all switching equipment of Telecommunications Providers covered by the Modernization Plan must be capable of providing E911 service when requested by the government responsible for this service.
(4) No later than five years after the medium-term requirements start date, one-party service must be provided upon demand to any subscriber of a Telecommunications Provider covered by the Modernization Plan.
(k)
(1) The elimination of party line service.
(2) For subscribers that desire the service, universal availability of:
(i) Digital voice and data service (56-164 kb/sec).
(ii) Service that provides transmission and reception of high bit rate (no less than 1 Mb/sec) data.
(iii) Service that provides reception of video as described in paragraph (j)(2) of this section.
5 U.S.C. 501, 7 U.S.C. 901
(a) The standard RUS Telecommunications Loan Documents contain provisions regarding procurement of materials and equipment and construction of telecommunications facilities by telecommunications borrowers. This part implements certain of the provisions by setting forth requirements and procedures. Borrowers shall follow these requirements and procedures whenever using loan funds to purchase materials and equipment or perform construction, unless they have received the Administrator's written approval to do otherwise.
(b) The typical procedure followed in constructing a project financed by an
(1) RUS's general requirements with respect to steps to be taken after the loan is approved and before construction begins (See § 1753.3),
(2) RUS requirements with respect to methods of construction (See §§ 1753.5 and 1753.6),
(3) RUS requirements regarding sealed competitive bidding and negotiated bidding of construction contracts (See §§ 1753.6 and 1753.9),
(4) RUS standards for materials, equipment, and construction financed with loan funds (See § 1753.7), and
(5) RUS requirements for subcontracts and contract amendments covering construction financed with loan funds (See §§ 1753.10 and 1753.12).
(c) Each borrower is responsible for the construction of its facilities and for the procurement of materials and equipment that are best suited to its needs.
(d) If contracts, P&S, or other methods of procurement are subject to RUS approval pursuant to the provisions of the loan contract, as implemented by this part, RUS will review the documents or proposals submitted and notify the borrower in writing of approval or disapproval. RUS may withhold approval if, in RUS's judgment:
(1) The P&S or contract will not accomplish loan purposes.
(2) Provisions of the P&S or contract will add unnecessary expense to the project.
(3) The proposal, method of procurement, or P&S do not conform to RUS engineering criteria or construction standards, or if they present unacceptable loan security risks to RUS.
(4) The P&S or contract have been modified.
(e) The requirements and procedures covering procurement of architectural and engineering services are described in subpart B of this part.
(f) Single copies of RUS forms cited in this part are available from Administrative Services Division, Rural Utilities Service, United States Department of Agriculture, Washington, DC 20250-1500. These RUS forms may be reproduced.
For the purpose of this part 1753:
(a) Advance RUS approval must be obtained for any construction that does not conform to RUS standards and specifications or the approved LD, such as construction of extensions to serve subscribers in areas not included in the LD (See 7 CFR part 1737). For loans approved after RUS approval of the modernization plan in the borrower's state, the proposed construction must conform to the modernization plan, as required by 7 CFR part 1751, subpart B. To obtain approval, the borrower shall submit a written proposal containing:
(1) A description of the work, indicating any deviations from the approved LD or RUS standards and specifications.
(2) An engineering study covering the deviations if there are changes in the design.
(3) A cost estimate for labor, engineering, materials, and overheads.
(4) If applicable, a brief analysis from the borrower demonstrating that the proposed changes conform to the modernization plan.
(b) Before any construction, including interim construction, is initiated, the GFR shall meet with the borrower to review the LD to determine if any significant changes have occurred since its approval by RUS. It is important that the design and construction of the proposed facilities be based on the latest information on subscriber needs.
(c) If the borrower and GFR agree that there have been no significant changes, the borrower may proceed.
(d) If the GFR finds that the LD is no longer satisfactory, the borrower shall prepare an amendment to the LD incorporating the necessary revisions (See 7 CFR part 1737). The borrower must obtain RUS approval of the LD amendment before proceeding with engineering activities on any project to be financed with loan funds.
RUS's general requirements for construction are set forth in this subpart A. Additional requirements and procedures for different types of major construction are presented in subparts D, E, F, G, and H (OMB control number 0572-0062). The requirements and procedures for minor construction are presented in subpart I. Borrowers may, at their option, follow the procedures in subparts D, E, F, G, and H for any minor construction.
(a) All major construction projects financed by loan funds shall be performed pursuant to a contract approved by RUS and awarded through sealed competitive bidding unless
(1) A specific exception is granted in subparts D, E, F, G, or H, or
(2) Written RUS approval is obtained.
(b)
(2) RUS approval of the borrower's award of the contract is required for all other competitively-bid and for negotiated major construction contracts.
(3) The requirements and procedures for sealed competitive bidding are presented in § 1753.8(a). The requirements and procedures for negotiation are presented in § 1753.8(b).
(c)
(a) Materials, equipment, and construction financed with loan funds must meet the standards and specifications established by RUS. 7 CFR part 1755 lists the RUS Bulletins containing the standards and specifications for telephone facilities. Materials and equipment meeting these standards are included on the List of Material Acceptable for Use on Telecommunications Systems of RUS Borrowers, I.P. 300-4. This bulletin may be obtained by subscription from the Superintendent of Documents, Government Printing Office, Washington, DC 20402.
(b) The borrower may use RUS loan funds to finance nonstandard construction materials or equipment only if approved by RUS in writing prior to purchase or commencement of construction.
(c) Only new materials and equipment may be financed with loan funds, unless otherwise approved by RUS. The materials and equipment must be year 2000 compliant, as defined in 7 CFR 1735.22(e).
(d) All materials and equipment financed with loan funds are subject to the “Buy American” provision (7 U.S.C. 901
(e) All software, software systems, and firmware financed with loan funds must be year 2000 compliant, as defined in 7 CFR 1732.22(e).
(a) The P&S consist of an RUS contract form, the appropriate RUS specifications, and such additional information and documents needed to provide a clear, accurate, and complete understanding of what is included in the construction.
(b) 7 CFR 1755.93 provides a list of the RUS forms of telecommunications contracts for use in purchasing telephone materials and equipment and for constructing telephone facilities with loan funds. Also listed is the source where copies may be obtained.
(c) The appropriate standards and specifications listed in 7 CFR part 1755 shall be included in the P&S. When RUS has not prepared standards and specifications, the borrower shall use general engineering requirements and
(d) The P&S shall be based on the LD approved by RUS. Section 1753.3 presents the requirements and procedures for obtaining RUS approval for construction that does not conform to the LD approved by RUS.
(e) RUS approval of P&S is required for construction that is estimated to cost over $500,000 or 25% of the total loan, whichever is less, and for all building construction. P&S for all other construction are exempt from RUS review and approval except that, at the time of contract approval, RUS will examine the plans and specifications for conformity with the loan purposes and to determine that they comply with other requirements of this part.
(f) RUS will approve only contracts that will provide for at least the following requirements.
(1)
(2)
(ii) The liquidated damages must be based upon the borrower's best estimate of the damages it would incur as a result of the contractor's default.
(3)
(ii) A contractor's bond shall be furnished as required by 7 CFR part 1788.
(iii) The borrower is responsible for ensuring that its contractor complies with the insurance and bond requirements.
(4) Telecommunications software license provision. If the borrower is required to enter into a software license agreement in order to use the equipment, the contract must contain the RUS prepared Software License Agreement as an Addendum.
(a)
(2)
(3)
(4)
(5)
(6)
(7)
(i) The bid guarantees are adequate.
(ii) All minor errors or irregularities made through inadvertence are corrected or waived. Failing this, the bid shall be rejected as nonresponsive.
(iii) In the event of non-minor errors or irregularities, the bid is rejected and the bid price not disclosed.
(8)
(9)
(10)
(i) All bids if quoted prices are not acceptable or if the specifications were ambiguous and resulted in bidders having different interpretations of the requirements.
(ii) Any bid that is not responsive, or is incomplete, or submitted by an unqualified bidder, or unbalanced between labor and materials or other respects.
(11)
(ii) If an award is made, the borrower shall award the contract to the lowest responsive bidder. The borrower may award the contract immediately upon determination of the lowest responsive bidder if the following conditions are met:
(A) The project is included in an approved loan and adequate funds were budgeted in the loan and are available.
(B) All applicable RUS procedures were followed, including those in the Notice and Instructions to Bid in the standard forms of contract.
(iii) If RUS approval of the award of contract is required under this paragraph (a)(11), the borrower shall send to RUS for consideration of approval of the award:
(A) Two copies of the low bid.
(B) The engineer's recommendation and the tabulation of all bids.
(C) Evidence of acceptance of the low bid by the borrower, such as:
(
(
(iv) If RUS approval of the award of contract is not required under this paragraph (a)(11), the borrower shall keep a file available for inspection by RUS. The file shall be kept for at least two years and shall include:
(A) One copy of all received bids.
(B) The engineer's recommendation and tabulation of all bids including “Buy American” evaluations, if any, and all other evaluations required by law.
(C) Evidence of acceptance of the low bid by the borrower, such as a copy of the board resolution certified by the Secretary of the board.
(12)
(ii) If RUS approves the contract, it shall return one copy to the borrower and send one copy to the contractor.
(b)
(2) For negotiated purchases, borrowers shall use RUS contract forms, standards, and specifications.
(3) For all contract forms except RUS Form 773:
(i) After a satisfactory negotiated proposal has been obtained, the borrower shall submit it to RUS for approval, along with the engineer's recommendation, and evidence of acceptance by the borrower.
(ii) If RUS approves the negotiated proposal, the borrower shall submit three copies of the contract, executed by the contractor and borrower, to RUS for approval.
(iii) If RUS approves the contract, RUS shall return one copy of the contract to the borrower and one copy to the contractor.
(4) For RUS Form 773, the borrower is responsible for negotiating a satisfactory proposal, executing contracts, and closing the contract. See subparts F and I of this part for requirements for major and minor construction, respectively, on Form 773.
(a) RUS construction contract Forms 257, 397, 515, and 525 contain provisions for subcontracting. Reference should be made to the individual contracts for the amounts and conditions under which a contractor may subcontract work under the contract.
(b) RUS Form 282, Subcontract, shall be used for subcontracts under construction and installation contracts.
(1) Minor modifications or additions may be made to the subcontract form, as long as they do not change the intent of the primary contract. Any alterations to the subcontract shall be initialed and dated by the persons executing the subcontract.
(2) Subcontracts shall be prepared in quadruplicate and all copies executed by the contractor and subcontractor and consented to by the borrower and surety, if any.
(3) Four executed copies of the subcontract shall be forwarded to RUS for approval. Upon approval, one copy each will be sent to the borrower, contractor, and subcontractor.
(c) As stated in contract Forms 257, 397, 515, and 525, the contractor shall bear full responsibility for the acts and omissions of the subcontractor and is not relieved of any obligations to the borrower and to the Government under the contract.
(d) As stated in the contract, construction shall not be performed by the subcontractor before approval of the subcontract by RUS.
The borrower shall conduct a conference, attended by the borrower, contractor, and resident engineer prior to the beginning of construction to provide an opportunity to discuss and agree on responsibilities, procedures, practices, and methods before the work begins. The borrower shall provide each participant with a copy of the conference results. The GFR shall be invited to attend this conference.
(a) The borrower must obtain RUS approval before execution of any amendment to a contract if
(1) The amendment alters the terms and conditions of the contract or changes the scope of the project covered by the contract regardless of the amount of the contract before amendment,
(2) The amendment increases the amount to be paid under the contract by 20% or more, or
(3) The amendment causes an unbonded contract to require a contractor's performance bond. This would occur when a contract that is executed in an amount below that requiring a performance bond by 7 CFR part 1788, subpart C, is amended to an amount above that amount.
(b) Advance RUS approval to execute other contract amendments is not required. These amendments may be submitted to RUS at any time prior to
(c) For each amendment executed, the borrower shall make certain that:
(1) The contractor's bond covers the additional work to be performed. If the amendment by itself (or together with preceding amendments) increases the original contract price by 20% or more, a bond extension will be required to bring the penal sum of the bond to the total amended contract price.
(2) If an amendment covers construction in a county or state not included in the original contract, the borrower and contractor are licensed to do business in that location.
(d) Upon execution of any amendment that causes the amended contract amount to exceed the original contract amount by 20% or more, three copies of the amendment shall be submitted to RUS for approval.
(a)(1) The standard RUS loan documents contain provisions regarding engineering and architectural services performed by or for RUS telecommunications borrowers. This part implements certain of the provisions by setting forth the requirements and procedures to be followed by borrowers in selecting architects and engineers and obtaining architectural and engineering services by contract or by force account.
(2) Borrowers shall obtain architectural and engineering services only from persons or firms which are not affiliated with, and have not represented, a contractor, vendor or manufacturer who may provide labor, materials, or equipment to the borrower under any current loan.
(3) Preloan architectural and engineering services may be provided by qualified personnel on the borrower's staff or by consultants. Neither the selection of a preloan architect or engineer by a borrower, nor the contractual arrangements with them, requires RUS approval.
(4) Postloan architectural and engineering services shall be obtained by borrowers from registered architects and engineers licensed in the State in which the facilities will be located, except where RUS has approved the borrower to provide these services by the force account method. When the extent of the proposed major or minor construction is such that the postloan engineering involved is within the capabilities of employees on the borrower's staff, the borrower may request RUS approval to provide such services. This method of providing engineering services is referred to as force account engineering. Refer to § 1753.17(c).
(5)(i) For major construction, services provided by architects and engineers not on the borrower's staff must be provided under Form 220, Architectural Service Contract, or Form 217, Postloan Engineering Service Contract—Telecommunications. These contracts require RUS approval.
(ii) For minor construction, borrowers may use the contracts in paragraph (a)(5)(i) of this section for postloan architectural or engineering services or any other form of contract, such as Form 245, Engineering Service Contract, Special Services—Telephone. RUS approval of contracts for postloan architectural or engineering services associated with minor construction, except for buildings covered in paragraph (a)(6) of this section, is not required.
(6) For buildings to be constructed with RUS funds, postloan architectural or engineering services shall be obtained if (1) the construction cost exceeds $50,000 (prefab buildings using manufacturer's specifications approved by RUS are exempt from this requirement) or (2) soil or seismic conditions require special design considerations.
(b) For the purpose of this subpart B:
(1)
(2)
(3)
(4)
(c) Single copies of RUS forms and publications cited in this part are available free from Administrative Services Division, Rural Utilities Service, United States Department of Agriculture, Washington, DC 20250-1500. These forms and publications may be reproduced.
(d)(1) All outside architects and engineers employed by RUS telephone borrowers shall have insurance coverage as required by 7 CFR part 1788.
(2) Borrowers shall ensure that their architects and engineers comply with the insurance requirements of their contracts. See 7 CFR 1788.54.
(e)(1) Borrowers shall make prompt payments to architects and engineers as required by the contract.
(2) RUS shall not make loan funds available for late payment interest charges.
(a) The borrower shall be responsible for selecting an architect to perform the architectural services required in the design and construction of buildings.
(b)(1) The borrower shall use Form 220 when contracting for architectural services for major construction, except that the borrower may use either Form 220 or Form 217 if the building is an unattended central office building.
(2) The borrower and the architect negotiate the fees for services under Form 220.
(3) Reasonable modifications or additions to the terms and provisions in Form 220 may be made, subject to RUS approval, to obtain the specific services needed for a building.
(4)(i) Three copies of Form 220, executed by the borrower and the architect, shall be sent to GFR to be forwarded to RUS for approval. RUS will review the contract terms and conditions. RUS will not approve the contract if, in RUS's judgment:
(A) Unacceptable modifications have been made to the contract form.
(B) The contract will not accomplish loan purposes.
(C) The architectural service fees are unreasonable.
(D) The contract presents unacceptable loan security risk to RUS.
(ii) If RUS approves the contract, RUS will send one copy to the architect and one copy to the borrower.
(5) Loan funds will not be available to pay for the preliminary architectural services if a loan is not made for the construction project, or if the construction project is abandoned.
(6) Subpart D of 7 CFR part 1753 sets forth the requirements and procedures to be followed by borrowers constructing central office, warehouse, and garage buildings with RUS loan funds.
(c)(1) RUS telephone borrowers shall obtain two copies of a completed Form 284, Final Statement of Architect's Fees, when all services and obligations required under the architectural services contract have been completed. All fees shown on the statement shall be supported by detailed information where appropriate. For example: out-of-pocket expense, cost plus, and per diem types of compensation shall be listed separately with labor, transportation, etc., itemized for each service involving these types of compensation.
(2) If Form 284 and supporting data are satisfactory, the borrower shall approve the statement, sign both copies, and send one copy to the GFR.
(3) Upon approval of Form 284 by RUS, the borrower shall promptly make final payment to the architect.
(a)(1) All engineering services required by a borrower to support its application for a loan shall be rendered by a qualified engineer selected by the borrower or by qualified employees on the borrower's staff. The selection of the preloan engineer, the form of preloan engineering service contract, and the contract itself, are not subject to RUS approval. Borrowers, however, should discuss their proposed method of obtaining preloan engineering services with the GFR before proceeding with any arrangements.
(2) Form 835, Preloan Engineering Service Contract, Telephone System Design, is a suggested form of preloan engineering service contract. While use of this form of contract is not required, it will be helpful in determining the tasks to be performed. Any form of contract used shall specify that preloan engineering services conform to RUS requirements for preloan studies. See subpart D of 7 CFR part 1737.
(b)(1)
(ii) RUS will review the contract terms and conditions. RUS will not approve the contract if, in RUS's judgement:
(A) Unacceptable modifications have been made to the contract form.
(B) The contract will not accomplish loan purposes.
(C) The engineering service fees are unreasonable.
(D) The contract presents unacceptable loan security risk to RUS.
(E) The consulting engineering firm is affiliated with or has represented a contractor, vendor, or manufacturer who may provide labor, materials, or equipment to the borrower under any current loan.
(2)
(c)(1)
(i) The request shall include:
(A) A description of services to be performed.
(B) The name and qualifications of the employee to be in charge. RUS requires this employee to meet the State experience requirements for registered engineers. In the absence of specific State experience requirements, the employee must have at least eight years experience in the design and construction of telecommunication facilities, with at least two years of the work experience at a supervisory level. RUS does not require professional registration of this employee, but this does not relieve the borrower from compliance with applicable State registration requirements which may require a licensed individual to perform such services.
(C) The names, qualifications, and responsibilities of other principal employees who will be associated with providing the engineering services.
(D) A letter signed by an authorized representative of the borrower authorizing the engineering services to be performed by force account and certifying the information supporting the request.
(ii) RUS shall notify the borrower by letter of approval or disapproval to perform force account engineering. The letter shall set forth any conditions associated with an approval or the reasons for disapproval.
(iii) RUS's approval of force account engineering for major construction shall be only for the specific projects named in the notice of approval.
(2)
(A) A copy of the employee's qualifications and experience record, unless previously submitted. RUS requires a minimum of four years of construction and inspection experience. The employee cannot be engaged in the actual construction.
(B) A letter signed by an authorized representative of the borrower authorizing the performance of these services by the employee, subject to RUS approval, and certifying the supporting information.
(ii) RUS shall notify the borrower by letter of approval or disapproval of the borrower's staff employee to perform the inspection and certification of construction. The approval shall be limited to the employee's area of expertise.
(d)(1) Subject to the requirements of this part and other applicable regulations, RUS will make loan funds available for the architectural and engineering services up to the amounts included in the approved loan.
(2) Advance of funds shall be requested on an FRS as set forth in 7 CFR part 1744 subpart C.
(e) The borrower shall obtain status of contract and force account proposal reports from the engineer once each month. The report shall show for each contract or FAP the approved contract or FAP amount, the date of approval, the scheduled date construction was to begin and the actual date construction began, the scheduled completion date, the estimated or actual completion date, the estimated or actual date of submission of closeout documents, and an explanation of delays or other pertinent data relative to progress of the project. One copy of this report shall be submitted to the GFR.
(f)(1) Upon completion of all services required under the engineering service contract Form 217, the borrower shall obtain from the engineer four copies of the Final Statement of Engineering Fee, Form 506.
(2) If the statement is satisfactory, the borrower shall sign all copies and send three to the GFR.
(3) After RUS approval of Form 506, one copy shall be sent to the borrower and one copy sent to the engineer.
(4) The borrower shall promptly make final payment to the engineer.
A certification of completion and inspection of construction signed by the borrower and countersigned in accordance with accepted professional engineering and architectural practice, by the engineer or architect, shall be prepared as evidence of completion of a major construction project. This certification shall make reference to the contract number and contract amount, and shall include the following:
(a) A statement that the construction is complete and was done in accordance with the RUS approved system design or layout or subsequent RUS approved changes.
(b) A statement that the construction was for loan purposes.
(c) A statement that construction used RUS-accepted materials and was in accordance with specifications published by RUS covering the construction which were in effect when the contract was executed, or in the absence of such specifications, that it meets other applicable specifications and standards (specify), and that it meets all applicable national and local code requirements as to strength and safety.
(d) A statement that the construction complies with the “Buy American” provision (7 U.S.C. 903 note) of the Rural Electrification Act of 1936 (7 U.S.C. 901
(e) A statement that all necessary approvals have been obtained from regulatory bodies and other entities with jurisdiction over the project.
(f) A statement that all closeout documents required by this part have been examined and found complete such that the Contractor has fulfilled all obligations under the contract except for warranty coverage.
(g) A statement that the engineer or architect is not affiliated with and does not represent the contractor, vendor,
(a) This subpart implements and explains the provisions of the Loan Documents setting forth the requirements and the procedures to be followed by borrowers in constructing headquarters, commercial office, central office, warehouse, and garage buildings with loan funds.
(b) Terms used in this subpart are defined in § 1753.2.
(c) All plans and specifications for buildings to be constructed with loan funds are subject to the approval of RUS. In addition, preliminary plans and specifications for headquarters and commercial office buildings to be constructed with loan funds are subject to RUS approval.
(d) RUS Form 257, Contract to Construct Buildings, shall be used for the construction of all headquarters, commercial office, central office, warehouse, and garage buildings with loan funds. Refer to § 1753.26 for further instructions.
(e) The borrower shall use the sealed competitive bid procedure for all building construction, except for:
(1) Minor construction using subpart I procedures.
(2) Major construction, where the borrower has received advanced approval to perform the construction by force account.
Refer to §§ 1753.27 and 1753.29 for further instructions.
(f) The site location, design, and construction of the facilities must comply with all applicable laws and regulations, including:
(1) Pub. L. 90-480 (42 U.S.C. 4151) (Access to Physically Handicapped), which requires certain buildings financed with Federal funds be designed and constructed to be accessible to the physically handicapped.
(2) Pub. L. 91-596 (29 U.S.C. 651) the Occupational Safety and Health Act of 1970. OSHA issues rules and regulations covering occupational safety and health standards for buildings. These regulations are codified in 29 CFR chapter XVII.
(3) 7 CFR part 1794, which provides for compliance with the National Environmental Policy Act (NEPA) and Council on Environmental Quality (CEQ) regulations (40 CFR parts 1500-1508) implementing the procedural provisions of NEPA, as well as RUS's conformance with other laws, regulations, and Executive Orders regarding environmental protection.
(4) 7 CFR part 1792, subpart C, which requires that the building design comply with applicable seismic design criteria. Prior to the design of buildings, borrowers shall submit to RUS a written acknowledgement from the architect or engineer that the design will comply.
(g) All construction pertaining to the building structure shall be performed under one contract. Separate contracts may be used for planting shrubbery, surfacing of roads and parking areas, and other identifiable parts of the project not pertaining to the building structure. These separate contracts shall also be subject to RUS approval as described in this subpart D.
(h) The borrower is responsible for submitting evidence, satisfactory to RUS, establishing that clear title to the building site has been obtained. RUS will not approve the construction contract until it has given title clearance.
(a) For headquarters and commercial office buildings only, the borrower shall prepare preliminary P&S showing
(b) The borrower shall prepare P&S for construction of all buildings. Each set of P&S shall include:
(1) RUS Contract Form 257, Contract to Construct Buildings, completed to the extent explained in (c) of this section.
(2) Complete and detailed specifications covering materials and workmanship.
(3) A detailed building plan. Where the building is to house electronic apparatus, the detailed plan or specifications shall include the equipment environmental requirements and special equipment required.
(4) A site plan for each building showing the building location and giving the legal description of the site. Sufficient information must be provided for the site so that it can be identified as the same property on which title opinion was submitted to RUS. The legal description shall be typed on the site plan. The borrower shall also furnish topographical information and a description of any proposed site development work and show proposed connections for public utilities.
(c) RUS Contract Form 257 shall be completed as follows:
(1)
(2)
(3)
(d) The plans and specifications shall show the identification and date of the model code used for seismic safety design considerations, and the seismic factor used. See 7 CFR part 1792, subpart C.
(e) Two sets of the building plans and specifications shall be prepared and submitted to the GFR.
Upon RUS approval of the P&S, the borrower shall proceed as follows:
(a) Bid documents shall consist of a copy of the approved P&S, including RUS Contract Form 257, completed in accordance with the instructions on the cover of the form and the plot plans showing site development details. For contracts in amounts of $100,000 or less, the borrower must specify in the Notice and Instructions to Bidders whether the contractor will be required to furnish a performance bond or a builder's risk policy.
(b) The borrower shall determine that title to the real estate has been approved by RUS before the invitations to bid are released.
(c) The borrower shall set the time for opening of bids, allowing ample time for bidders to prepare bids.
(d) The borrower shall solicit bids as set forth in § 1753.8(a)(2). Invitations shall be sent to at least six prospective bidders.
(e) The borrower shall conduct bid opening and award of contract in accordance with the procedure set forth in § 1753.8(a).
(a) The general requirements for contract amendments are set forth in § 1753.11.
(b) The borrower shall prepare construction contract amendments on RUS Contract Form 238, Construction or Equipment Contract Amendments. See 7 CFR 1755.93 to obtain copies of Form 238.
(a) The borrower must obtain RUS approval of the force account method of construction of buildings in advance in order to obtain RUS financing.
(b) The borrower shall prepare the P&S in accordance with § 1753.26.
(c) Prior to any construction activity or the purchase of materials or equipment, the borrower shall submit the FAP in duplicate to RUS, accompanied by a resolution indicating approval of the board of directors of the borrower or a letter signed by an authorized corporate official. The proposal shall include:
(1) A Copy of the P&S.
(2) An itemized list of all items of materials required for construction.
(3) A construction schedule showing the estimated construction period for each major construction item.
(4) An estimate of the material and labor and other costs for any construction item not provided for in the approved loan.
(d) Force Account construction to be financed with loan funds shall not be started until RUS approval has been received by the borrower.
(a) This section outlines the procedure to be followed to close out RUS Contract Form 257 (Contract to Construct Buildings) and construction or rehabilitation performed by the force account method.
(b)
(2) Upon completion of the project, the borrower shall obtain certifications from the architect or engineer that the project and all required documentation are satisfactory and complete. The requirements for this certification are contained in § 1753.18.
(3) The engineer's or architect's contract closeout certification and the final amendment shall be submitted to RUS as a basis for the final advance of funds for the contract.
(4) After all required RUS approvals are obtained, final payment is made in accordance with article III of RUS Form 257 once the borrower has received the architect's or engineer's certifications regarding satisfactory completion of the project.
(c) Upon completion of force account construction, the borrower shall:
(1) Arrange with its architect or engineer and the GFR for final inspection of the project.
(2) Complete, with the assistance of its architect or engineer, the documents listed in the following table that are required for the closeout of force account construction.
(3) Make distribution of the completed documents as indicated in the table in this section.
(d) Final payment shall not be made until RUS has approved the closeout documents.
(a) This subpart implements and explains the provisions of the Loan Documents setting forth the requirements and the procedures to be followed by borrowers in purchasing and installing central office equipment financed with loan funds.
(b) Terms used in this subpart are defined in § 1753.2 and RUS Contract Forms 525 and 545.
(c) Borrowers shall use RUS Contract Form 525, Central Office Equipment Contract (Including Installation), when the firm supplying the equipment will install it and RUS Contract Form 545, Central Office Equipment Contract (Not Including Installation) when the supplier of the equipment will not be installing it. In either case the appropriate specifications shall be included in the contract.
(d) Alternates, if any, specified in the P&S shall be kept to a minimum.
(e) The borrower shall take sealed competitive bids for all central office equipment to be purchased under RUS Contract Form 525 or 545 using the procedure set forth in § 1753.38(a), unless RUS approval to negotiate is obtained.
(f) The borrower may request permission to negotiate with a single supplier for additional central offices to standardize equipment on a system basis. RUS approval to negotiate must be obtained before release of the plans and specifications to the supplier. Except for remote switching terminals associated with an existing central office, RUS will not approve negotiation with a non-domestic manufacturer for the purpose of standardization because such a purchase does not meet the RE Act “Buy American” provisions.
(g) Materials and equipment must meet the standards and general specifications approved by RUS. Materials and equipment included in I.P. 300-4, “List of Materials Acceptable for Use on Telecommunications Systems of RUS Borrowers”, have been accepted as meeting these requirements. If the equipment is not included in the “List of Materials” but has been approved for field trial installation, the borrower must in each instance obtain field trial approval from RUS prior to entering into any agreement with a supplier.
(h) Only new equipment shall be purchased unless otherwise approved by RUS.
(i) All purchases of materials and equipment are subject to the “Buy American” requirements.
(j) If the sealed competitive bid procedure is followed, negotiation after bid opening will not be permitted.
(a)
(2) The P&S shall specify the delivery and completion time required for each exchange.
(3) The P&S shall provide for a complement of spare parts to be provided to the borrower. The quantity and type of spare parts shall be determined in accordance with the provisions in RUS Form 522 “General Specification for Digital, Stored Program Controlled Central Office Equipment.”
(4) P&S for equipment to be provided under a Form 545 contract shall require the supplier to provide specific installation information and a detailed bonding and grounding plan to be utilized by the engineer. borrower, and others responsible for the installation of the equipment.
(b)
(2) Guidelines for the preparation of the detailed equipment specifications are contained in the Telecommunications Engineering and Construction Manual (TE&CM), which is available from RUS.
(c) RUS review of P&S is required for construction estimated to cost over $500,000 total or estimated to cost more than 25% of the total loan, whichever is less.
(1) If RUS review is required, the borrower shall submit one copy of the P&S to the GFR for RUS review.
(2) RUS will review the P&S and notify the borrower in writing of approval or disapproval.
(a)
(1)
(ii) The “Notice” must set forth the method of evaluating bids and must require the submission of equipment lists and traffic calculations with the bids.
(iii) RUS Contract Forms 525 or 545 shall be used, except that the “Notice” shall state that prior to the bid opening a technical session will be conducted with each supplier to resolve any questions related to the technical proposal submitted by the supplier. The suppliers’ technical proposals should be requested for presentation 30 days in advance of the bid opening to enable sufficient time to make the technical evaluation.
(iv) The borrower shall solicit bids as set forth in § 1753.8(a)(2). The “Notice” shall be sent to at least three prospective bidders. A copy of the “Notice” and a list of such bidders shall be sent to RUS.
(v) At the request of an invited supplier, the borrower shall provide two copies of the P&S.
(2)
(A) Lists of equipment, material and software.
(B) Proposed floor plan.
(C) Power and heat dissipation calculations.
(D) List of exceptions to plans and specifications.
(E) Protection and grounding requirements.
(F) Description of how office administration, maintenance and traffic collection are handled with step-by-step examples and printouts.
(G) Explanation of processor and/or memory expansion required to meet ultimate size. This shall include discussions of software, processor memory, and hardware additions needed for line additions and the introduction of various future services; the relative costs of installing the necessary hardware and software initially as compared with the anticipated cost if installed at the time when the future services are to be offered.
(H) Description of how special equipment such as loop tests, volunteer fire alarm circuit, line load control, etc., will function.
(I) Description of method for translating initial office administration information into machine language, and proposal as to whether it will be done by the borrower or by the supplier.
(J) A software license agreement (if required by the manufacturer) in the form indicated in § 1753.38(c).
(K) Any other items pertinent to the technical proposal, such as information regarding changes that have been made in hardware and software of the equipment that is of like manufacture to that presently in operation in the borrower's system. This shall include requirements for additional spare parts or training which have developed as a result of significant change in system device technology.
(ii) The borrower shall review in detail all exceptions to the P&S. No exceptions will be accepted unless all bidders are notified, in writing, of the change in the specifications and permitted to incorporate the change in their proposal.
(iii) If the technical proposal is not responsive, the borrower shall notify the supplier, in writing, that its proposal will not be given further consideration and why.
(iv) Changes in the P&S resulting from the technical sessions shall be subject to RUS's review and approval.
(v) After evaluation of the technical proposals and RUS approval of the changes to P&S (required only for projects that are expected to exceed $500,000 or 25% of the loan, whichever is less), sealed bids shall be solicited from only those bidders whose technical proposals meet P&S requirements. When fewer than three bidders are adjudged qualified by the borrower to bid, RUS approval must be obtained to proceed. Generally, RUS will grant such approval only if the borrower can demonstrate to the satisfaction of RUS that a good faith effort was made to obtain at least three competitive bids. This would be demonstrated if all suppliers currently listed in I.P. 300-4 were invited to submit technical proposals.
(vi) The borrower shall invite the GFR to attend the technical sessions.
(3)
(ii) The bid opening and award of contract shall be conducted in accordance with the procedure set forth in § 1753.8(a).
(iii) The spare parts bid shall always be priced separately and added to the base bid when determining the low bidder.
(b)
(1) After RUS approval of the P&S and equipment requirements (required only for contracts expected to exceed $500,000 or 25% of the loan, whichever is less), the borrower shall send two complete copies of the approved P&S to the supplier an request that a proposal be submitted.
(2) The borrower shall schedule a time and date for a technical session by the supplier and request that the
(3) If the contract is expected to exceed $500,000 or 25% of the loan, whichever is less, changes in the P&S resulting from the technical session shall be subject to RUS review and approval.
(4) The submitted proposal shall be based on the agreed-upon results of the technical evaluation and must be complete, dated, and signed.
(5) The borrower shall obtain an award recommendation from its engineer.
(6) The following shall be sent to RUS for review and approval:
(i) A copy of the engineer's recommendation to the borrower, and
(ii) Evidence of acceptance of the proposal by the borrower, such as
(A) A certified copy of the board resolution, or
(B) A letter to RUS signed by an authorized corporate official.
(7) RUS approval of the proposal will be conditioned upon the borrower obtaining prices that are consistent with current competitive prices. Upon RUS approval of the proposal, three copies of the contract shall be prepared with all specifications and proposal documents, and performance bonds, to be executed by the supplier and borrower.
(8) The three complete, executed contracts shall be sent to the RUS Area Engineering Branch Chief for approval.
(9) If RUS approves the contract, one copy will be returned to the borrower and one copy will be sent to the supplier.
(10) Installation of the central office equipment and materials provided under RUS Contract Form 545 may be made in accordance with subpart I, if applicable, or by an approved Force Account Proposal (FAP).
(c)
(1)
(2)
(i) The Licensee's right to use the Licensed Software is non-exclusive and limited to use or operation in the United States of America, including its Territories, the Federated States of Micronesia, the Marshall Islands, Palau and the Commonwealth of Puerto Rico, with the System for which the Licensed Software is provided by the Licensor. The Licensee may reuse the equipment and its accompanying Licensed Software at another location within the Licensee's System without obtaining additional approvals from Licensor, provided, however, that the Licensee notify the Licensor, within ten (10) days, of the change in location of the equipment and Licensed Software.
(ii) The Licensee and any successor to the Licensee's title in the System may, without further consent of the Licensor, transfer the Licensed Software and all of the Licensee's rights and interests under this Software License to any transferee who acquires legal title to the System, provided that such transferee first agrees in writing to the Licensor to abide by all of the terms and conditions of this License including, without limitation, the territorial limitation stated in section (2)(i) and the restrictions on decompiling or reverse assembly stated in section (2)(iii). Licensee shall give Licensor written notice thirty (30) days prior to any transfer. The Licensor shall not place any additional conditions on the transferee's use of the System or the Licensed Software. If the provisions of this section (2)(ii) are satisfied, thereafter the Licensee shall bear no responsibility for transferee's failure to abide by the terms and conditions of this License.
(iii) The Licensee shall take reasonable steps to protect the confidentiality of the Licensed Software and shall not decompile or reverse assemble all or any part of the Licensed Software to generate source code. The Licensee shall not make the Licensed Software available to any person except on a need to know basis. The obligations of the Licensee hereunder shall not extend to any information or data relating to the Licensed Software which is now available to the general public or becomes available by reason of the acts of the Licensor or third parties.
(iv) The Licensee may reproduce or copy the Licensed Software and related materials solely for the purpose of archival backup, in-house training and operating, maintaining, and administering the System provided under this Contract. In such reproduction, the Licensee shall include, upon all such copies of the Licensed Software, all proprietary notices, including the copyright notice within the Licensed Software program and related documentation in the form in which it is received from the Licensor.
(v) The Licensee acknowledges that the Licensed Software program is the property of the Licensor, and shall not do, or cause to be done, anything to activate any of the subsisting nonactivated computer instruction steps therein unless authorized in writing by the Licensor. The Licensor shall have the exclusive right to activate, or authorize the activation of, the subsisting nonactivated program instruction steps in the Licensed Software. In this event Licensee shall pay any additional Right-To-Use Fee(s) agreed to by Licensee and Licensor.
(vi) In the event the Licensor develops significant improvements to the Licensed Software, the Licensor may market the improvements as a separate offering requiring payment of an additional Right-to-Use Fee.
(vii) The Licensee shall not modify or otherwise change the Licensed Software other than at the direction of the Licensor. This provision shall not apply to:
(A) Changes to the Licensed Software which are necessary to preserve or restore service. Licensee shall use all reasonable efforts to contact Licensor before making any such changes. If the Licensor is unable to make the necessary changes promptly to the Licensed Software to preserve or restore service, then the Licensee may make only such changes to the Licensed Software as are necessary to preserve or restore service. In such event, Licensee shall promptly notify Licensor of the changes made by Licensee.
(B) Changes made by the Licensee to its own database; and
(C) Changes made by the Licensee in connection with the exercise of its rights under section (2)(xi).
(viii) Within thirty (30) days after written notice that a program or a release thereof has been discontinued and is no longer required for the operation of the System and the Licensor has furnished the Licensee with a new program that is fully satisfactory to the Licensee, the Licensee agrees to return the original and all copies of the discontinued program and specified related documents. If such return is impossible or impractical, the Licensee shall destroy said program and documents and provide the Licensor with a written notice of such destruction.
(ix) The Licensor warrants to the Licensee that any Software licensed under this Software License shall function for a period of five (5) years from the warranty start date defined in the Contract in accordance with the Specifications and any written or printed technical material provided by the Licensor to explain the operation of the Licensed Software and aid in its use. The Licensor shall correct all deficiencies within thirty (30) days from the date of receipt by the Licensor of written notice of such deficiencies from the Licensee. An extension of this thirty (30) day period may be allowed only if agreed upon by the Licensee and RUS. It shall be the Licensor's obligation to insert
(x) The Licensor shall hold harmless and indemnify the Licensee from any and all claims, suits, and proceedings for the infringement of any patent, copyright, trademark, or violation of trade secrets covering any Licensed Software used with the System, except for items of the Licensee's design or selection. If the Licensee's use of the Licensed Software is enjoined, the Licensor shall promptly, at its own expense, place the Licensee in a position where it is able to use the System in accordance with the Specifications, whether by:
(A) Modifying the Licensed Software or portion thereof so that it no longer infringes but remains functionally equivalent,
(B) Replacing the Licensed Software with noninfringing equivalent software,
(C) Obtaining for the Licensee a license or other right to use, or
(D) Such other actions as may be required. This shall be in addition to any other rights or claims which the Licensee may have. The Licensor shall, at its own expense, (and the Licensee agrees to permit the Licensor to do so) defend any suits which may be instituted by any party against the Licensee for alleged infringement of patents, copyright, trademark, or violation of trade secrets relative to the Licensor's performance hereunder. Either party shall notify the other promptly of any such claims, and the Licensee shall give to the Licensor full authority and opportunity to settle such claims, and shall reasonably cooperate with the Licensor in obtaining information relative to such claims.
(xi) In the event the Licensor becomes unwilling or unable to furnish support required by the Contract for the Licensed Software, the Licensor shall, upon written request of the Licensee, provide with the greatest possible dispatch all Licensed Software back-up documentation including proprietary information other than agreed excluded documentation. In this event, (1) the Licensee shall be permitted full use of all Licensed Software and documentation as long as the System is operational and (2) the Licensee may modify, or have modified, the Licensed Software for feature enhancement or proper equipment operation and becomes the owner of such modifications for all purposes, including patenting, copywriting, sale, or license thereof. Agreed excluded documentation is Licensed Software back-up documentation described in the first sentence of this section (2)(xi) which (A) is proprietary information of a third party, (B) was specifically described at the pre-bid technical session and individually identified in an attachment to the Bid, and (C) RUS and the Licensee agree, before bids are opened, may be excluded from the requirements of this section (2)(xi). In the event the Licensor furnishes agreed excluded documentation and the Licensee exercises its rights under this section (2)(xi), the Licensor shall use its best efforts to provide such agreed excluded information to the Licensee, or obtain continuing support agreements from the parties retaining legal rights to the excluded documentation. Licensor agrees that certain Licensed Software cannot be excluded from the requirements of this section (2)(xi) including, but not limited to, software, the absence or improper operation of which would significantly impair the operation of the System, would significantly impair the ability of the Licensee to generate revenue, or would pose a risk to RUS loan security.
(xii) A breach of this License by the Licensor is a breach of the Contract. Therefore, the remedies specified in the Contract shall apply.
(xiii) The Licensee shall have thirty (30) days after receipt of written notice from the Licensor to correct any breach of this License. Damages payable by the Licensee for its breach of this License shall not exceed the total Contract price. The Licensor shall not terminate this License unless:
(A) The Licensor has given RUS sixty (60) days notice before termination; and
(B) RUS agrees with the Licensor that termination is the only method available to prevent significant harm to the Licensor from additional Licensee defaults.
(xiv) The obligations of Licensee and Licensor and any successors in title under this Agreement shall survive the termination of this Agreement and continue after any termination of rights granted hereunder.
(xv) Licensee and Licensor agree that it will not, without the prior written permission of the other party, use in advertising, publicity, packaging, labeling, or otherwise, any trade name, trademark, trade device, service mark, symbol, or any other identification or any abbreviation, contraction, or simulation thereof owned by the other party or any of its affiliates or used by the other party or any of its affiliates to identify any of their products or services, unless otherwise agreed by the parties.
(xvi) This Software License Agreement shall prevail notwithstanding any conflicting terms or legends which may appear on or in the Licensed Software.
(xvii) If any Section or part thereof, in this Agreement shall be held to be invalid or unenforceable in any jurisdiction in which this Agreement is being performed, then the meaning of such section or part shall be construed so as to render it enforceable, to the extent feasible; and if no feasible interpretation would save such section or part, it shall
(xviii) This Software License and any amendments thereto, or revisions thereof, are subject to RUS approval.
(d)
(2) Equipment contract amendments shall be prepared on RUS Contract Form 238, Construction or Equipment Contract Amendments.
(e)
(1) A proposal shall be requested from the supplier.
(2) The borrower shall prepare a plan containing an outline of the proposed use of the equipment, the proposal from the supplier and an estimate of the installation cost. If the total cost exceeds $500,000, RUS approval of the award of contract is required. The borrower shall in this case submit its plan and the supplier's proposal to GFR. If the cost does not exceed $500,000, the borrower's award of contract is not subject to RUS approval.
(3) If RUS approval was required by paragraph (e)(2) of this section, upon RUS approval the purchase may be made using RUS Contract Form 525, or 545, or when applicable, the procedures contained in subpart I of this part.
(4) If the purchase is to be made by contract, three executed copies of the contract with attachments are to be submitted to the RUS.
(5) Installation of the central office equipment and materials procured by RUS Contract Form 545 may be made in accordance with subpart I, if applicable, or by an approved FAP.
(f)
Closeout of RUS Contract Form 525, Central Office Equipment Contract (Including Installation), and RUS Contract Form 545, Central Office Equipment Contract (Not Including Installation), shall be conducted as follows:
(a)
(b)
(c)
(d)
(e)
(1) Obtain from the engineer a certification of partial closeout.
(2) Submit one copy of the summary to RUS with an FRS.
(f)
(1) The borrower shall:
(i) Immediately following completion of the last central office equipment installation, arrange with the contractor's installer, connecting company (where necessary), and the GFR for performance of the acceptance tests of offices not previously tested. The date for testing should be established so that the installer will not be required to return to the site for the sole purpose of assisting in these tests. Acceptance tests shall be performed within 30 days of completion of the installation, unless otherwise requested in writing by the contractor and approved in writing by the borrower.
(ii) When the acceptance tests have been satisfactorily completed and the contractor has corrected all the discrepancies:
(A) Prepare and assemble the documents listed in the table in this section, Documents Required to Close Out Central Office Equipment Contracts.
(B) Notify the GFR that the project is ready for final RUS inspection.
(iii) Make the documents listed in the table available for GFR review on the date of final inspection.
(iv) Distribute the documents as indicated in the table. The documents listed for RUS shall be retained by the borrower for inspection by RUS for at least two years from the date of the engineer's contract closeout certificate.
(2) The documents required and the procedure to be used for equipment purchased and/or installations made using the method of minor construction are set forth in subpart I.
(g) Once RUS approval has been obtained for any required amendments, the borrower shall obtain certifications from the engineer that the project and all required documentation are satisfactory and complete. The requirements for the final contract certification are contained in § 1753.18.
(h) Once these certifications have been received, final payment shall be made according to the payment terms of the contract. Copies of the certifications shall be submitted with the FRS, requesting the remaining funds on the contract.
(a) This subpart implements and explains the provisions of the loan documents setting forth the requirements and procedures to be followed by borrowers when outside plant major construction by contract is financed by loan funds. Terms used in this subpart are defined in § 1753.2 and RUS Contract Form 515.
(b) The contract method for major construction is described in § 1753.5(b).
(c) The two contract forms which may be used for major outside plant construction are Form 515 and Form 773. Limitations on the applicability of these forms shall be as follows:
(1) Form 515 shall be used for major outside plant construction projects which will be competitively bid. The contract contains plans and specifications and has no dollar limitation. See §§ 1753.47, 1753.48 and 1753.49.
(2) Contract Form 515, which is for $250,000 or less, may, at the borrower's option, be negotiated. See § 1753.48(b).
(3) RUS Form 773 may be used for minor outside plant projects which are not competitively bid because they cannot be designed and staked at the time of contract execution. Projects of this nature include routine line extensions and placement of subscriber drops. See subpart I of this part.
(a)
(i) A review shall be made of the outside plant requirements, and the Loan Design (LD) shall be revised to reflect any needed changes (See § 1753.3).
(ii) Deviations from the approved LD (7 CFR part 1737) must be approved by RUS (See § 1753.3).
(2) The standard RUS specifications required for construction of outside plant facilities are:
(i) RUS Form 515a (Bulletin 345-150)—Specifications and Drawings for Construction of Direct Buried Plant.
(ii) RUS Form 515c (Bulletin 345-151)—Specifications and Drawings for Conduit and Manhole Construction.
(iii) RUS Form 515d (Bulletin 345-152)—Specifications and Drawings for Underground Cable Installation.
(iv) RUS Form 515f (Bulletin 345-153)—Specifications and Drawings for Construction of Pole Lines and Aerial Cables.
(v) RUS Form 515g (Bulletin 345-154)—Specifications and Drawings for Service Entrance and Station Protector Installation.
(b)
(1) RUS Contract Form 515, “Telephone System Construction Contract (Labor and Materials).”
(2) The specifications described in paragraph (a)(2) of this section as specified by the borrower in the RUS Contract Form 515.
(3) Description of special assembly units and guide drawings, if any.
(4) Key, detail, and cable layout maps.
(5) RUS Contract Form 787, “Supplement A to Construction Contract, RUS Contract Form 515,” when the borrower proposes to provide any materials to the contractor. The borrower shall not order materials for a contractor without RUS approval. In such cases the borrower must attach Form 787 and a “List of Owner's Materials on Hand” and/or a “List of Materials Ordered by Owner but Not Delivered” to contract Form 515 (See § 1753.48(f) of this part). Any materials furnished under Supplement A shall be listed in RUS Bulletin 344-2 unless special RUS approval has been received by the borrower to use unlisted materials.
(c)
(2) If the project exceeds $500,000 or 25% of the loan, whichever is less, RUS approval of P&S is required. Two sets of P&S shall be furnished to GFR. RUS will return one set to the borrower upon notice of approval. The borrower may then proceed with procurement in accordance with § 1753.48.
(a)
(ii) RUS Form 274 or its equivalent, supplemented by RUS Form 276, shall be used for the submission of bidders’ qualifications for all types of construction and for the required information on the bidder and subcontractors.
(2)
(3)
(ii) The purpose of the pre-bid conference is to acquaint the bidders with the scope and special considerations of the project and to clarify any concerns the bidders may have.
(iii) No proposals shall be considered from bidders that do not attend the pre-bid conference unless the bidder has been notified by the engineer that such bidder's attendance has been waived. Attendance can be waived if, in
(iv) The borrower shall obtain from the engineer the minutes of the pre-bid conference and shall distribute them to all potential bidders.
(v) When fewer than three bidders have been qualified to submit bids, RUS written approval must be obtained to proceed with requesting bids.
(4)
(ii) If § 1753.8 requires RUS approval of award of the bid, the borrower shall submit to RUS two copies of the assembly unit sections of the apparent lowest responsive bid accepted by the borrower.
(b)
(2) The procedures to be followed are contained in § 1753.8(b) and paragraphs (3) and (4) of this section.
(3)
(ii) The purpose of the negotiation conference is to acquaint the contractor with the scope and special considerations of the project and to answer any questions.
(iii) The borrower shall obtain from the engineer notes covering the negotiation conference and shall distribute them to all attendees.
(4) Two copies of the assembly unit sections of the negotiated contractor's proposal shall be sent to the GFR for approval.
(c)
(d)
(e)
(f)
(1) Materials on hand to be furnished by the borrower shall be released to the contractor at the start of construction. Materials on order but not received shall be provided to the contractor as they become available. The borrower shall obtain from the contractor a written receipt for all such materials delivered.
(2) Materials on hand, until released to the contractor, shall be covered by fire and either wind-storm or extended coverage insurance, exclusive of materials stored in the open and not within 100 feet of any building. Poles, wherever stored, shall be covered by fire insurance. All insured values must be at least 80 percent of the cash value of the property insured.
(3) Subject to adjustment at the time of final settlement, the borrower shall obtain from the contractor monthly invoices that show credit to the borrower, at the prices quoted in Form 787, Supplement A, for all materials furnished by the borrower and installed by the contractor during the preceding month.
(4) Any materials furnished by the borrower remaining as surplus at the completion of construction shall be returned to the borrower. For such materials, the borrower shall furnish a written receipt to the contractor and credit the contractor at the prices quoted in Supplement A.
(g)
(2) When the changes or corrections have been made, the borrower shall have the contractor complete the form, itemizing the costs in accordance with the terms of the contract, and return three copies to the borrower's engineer. A copy of each change order shall be attached to each copy of the construction inventory required to close out the contract.
(a)
(b)
(c)
(2)
(ii) The borrower shall prepare and distribute the final inventory documents in accordance with the tables contained in this section. The documents listed for RUS shall be retained by the borrower for inspection by RUS for at least two years from the date of the engineer's contract closeout certification.
(iii) When the total inventory price exceeds the maximum contract by more than 20 percent, an extension to the contractor's bond is required.
(iv) The borrower shall submit the engineer's contract closeout certification with FRS for the final advance of funds.
(3) Final payment shall be made according to the payment provisions of article III of RUS Form 515, except that certificates and other documents required to be submitted to or approved by the Administrator shall be submitted to and approved by the Owner.
(a) This subpart implements and explains the provisions of the loan documents setting forth the requirements and the procedures to be followed by borrowers for outside plant major construction by the force account method with RUS loan funds. Terms used in this subpart are defined in § 1753.2 and RUS Contract Form 515.
(b) A borrower shall not use the force account method for construction financed with loan funds unless prior RUS approval has been obtained.
(c) Generally, RUS will not approve the force account method for major outside plant construction for the initial loan to a borrower.
(d) The Force Account Proposals (FAPs) are subject to review and approval by RUS.
(e) The FAP is approved by RUS on the basis of estimated labor and material costs. The FAP is closed based on the borrower's actual cost of performing the construction. RUS will provide loan funds only up to the amount determined by the completed assembly units priced at the unit prices in the approved FAP.
(a)
(i) The scope of the construction to be undertaken, stating briefly the facilities and equipment to be installed and other pertinent data.
(ii) The name and qualifications of the construction supervisor who will be directly in charge of construction, the names and qualifications of the construction foremen, and the availability of qualified construction personnel. The construction supervisor must have at least 5 years outside plant construction experience with at least 2 years at the supervisory level on RUS financed projects. Construction foremen must have at least 3 years of outside plant construction experience.
(iii) The availability of equipment for construction, exclusive of equipment needed for normal operation and maintenance.
(2) [Reserved]
(b)
(1) The RUS Contract Form 515 and appropriate supporting attachments that normally would be provided as plans and specifications for contract construction. See § 1753.47.
(2) The cost estimate, using Form 515 as a convenient means of showing the following:
(i) The quantity and cost estimates of the various assembly units required. “Labor and other” cost will not include the cost of engineering, legal, and other professional services, interest during construction, preliminary survey and investigation charges, and right-of-way easement procurement costs.
(ii) A list identifying materials or construction for which loan funds will not be requested.
(3) The estimated completion time.
(c)
(d)
(2)
(3)
(ii) Maintain records on all expenditures for materials, labor, transportation, and other costs of construction, in order that all costs may be fully accounted for upon completion of construction.
(iii) Ensure that all the required inspections and tests are made.
(4)
(ii) Require timely corrections and cleanup.
(iii) Perform acceptance tests as construction is completed.
(iv) Provide “as built” staking sheets of completed construction when the final inspections are made.
(v) Maintain accurate and current inventories of completed construction.
(5)
(ii) Maintain an accurate inventory of completed construction.
(iii) Perform cleanup as construction is completed.
(iv) Perform all the inspections and acceptance tests a contractor would be required to make under the construction contract.
(v) Promptly perform cleanup required after final inspection.
(a)
(2) The period between the completion of construction and submission of the closeout documents to RUS should not exceed 60 days.
(b)
(c)
(2) The GFR shall be invited to make the final inspection accompanied by the engineer and the borrower.
(3) The borrower shall correct all deficiencies found during the final inspection.
(4) The borrower may request the assistance of an RUS field accountant to review the borrower's record of construction expenditures and assist the borrower with any accounting problems in connection with construction expenditures.
(5) After inspection, the final inventory documents shall be assembled as indicated in the table in this section. RUS Forms 817, 817a, and 817b are to be submitted to GFR only if the amount of the closeout exceeds the original force account proposal by 20% or more. Otherwise, the final inventory documents are to be assembed and retained by the borrower for at least two years.
(6) Upon approval of the closeout documents, RUS will notify the borrower
(d) The above are not intended to be a complete description of the requirements of the documents relating to RUS's closeout procedure. Refer to the documents for additional requirements.
(a) This subpart implements and explains the provisions of the Loan Documents setting forth the requirements and the procedures to be followed by borrowers in purchasing and installing special equipment financed with loan funds.
(b) Terms used in this subpart are defined in § 1753.2 and RUS Contract Forms 397 and 398.
(c) Special equipment purchased with loan funds must be included in the List of Materials Acceptable for Use on Telephone Systems of RUS Borrowers (See Bulletin 344-2) and meet RUS's standards and specifications (See 7 CFR part 1755) unless otherwise approved by RUS.
(d) Borrowers must obtain RUS review and approval of the LD for their telephone systems. Applications of special equipment not included in an approved LD must conform to the modernization plan as required by 7 CFR part 1751, subpart B, and must be submitted to RUS for review and approval.
(e) RUS Form 397 and applicable specifications shall be used for the purchase of special equipment for major construction on a furnish and install basis.
(f) RUS Form 398 and applicable specifications shall be used for the purchase of equipment for major construction on a furnish only basis. The procedures provided in subpart I, if applicable, or a FAP approved by RUS may be used for the installation of special equipment purchased with a Form 398 contract.
(g) For special equipment purchases for minor construction, the borrower may at its option use the Methods of Minor Construction procedures contained in subpart I or the purchase procedures contained in this subpart H.
(h) Some types of special equipment contain software. See subpart E for RUS software licensing requirements.
(a) Special Equipment Contract, RUS Form 397 shall be used to purchase equipment on a furnish and install basis.
(b) Special Equipment Contract, RUS Form 398 shall be used to purchase equipment on a furnish only basis.
(c) The equipment specifications must accompany the selected contract form.
(1) Each specification consists of performance specifications, installation requirements (if applicable) and application engineering requirements.
(2) RUS specifications for the Special Equipment Contract are listed in 7 CFR part 1755.
(a)
(i) An initial equipment purchase is a first time purchase by a borrower of a complete system of special equipment.
(ii) Equipment additions to existing systems are additions of components to complete operating systems to increase system capacity that require components made by the manufacturer of the existing system.
(iii) New system additions are purchases of complete systems of special equipment when the purpose can be accomplished either with equipment of the same type and manufacture as other complete operating systems in
(iv) Where equipment is obtained under a Form 398 Contract, the borrower shall require the supplier to provide a detailed proposed bonding and grounding plan and detailed installation information. The installation information is to enable acceptance testing by the borrower upon completion of the installation.
(2) For initial equipment purchases that qualify as major construction, the borrower shall obtain proposals from at least three suppliers of equipment of different manufacturers.
(3) For equipment additions to increase the capacity of existing systems, the borrower may negotiate for equipment of a specific type and manufacture. RUS approval to negotiate in this instance is not required if these additions were specifically described in the LD approved by RUS
(4) For new system additions, the borrower may request RUS approval to negotiate for additional equipment for the purpose of standardization on a system basis, provided RUS approved the procurement method used for the initial equipment purchase. RUS approval to negotiate must be obtained before release of the P&S to the seller.
(5) RUS will not approve negotiation with a seller of non-domestic equipment for the purpose of standardization, because such a purchase does not meet the “Buy American” provision.
(6) RUS recommends, but does not require, that borrowers include installation by the seller for initial installations of special equipment that qualify as major construction.
(7) Special equipment may be installed by the borrower if it has qualified personnel and test equipment available to install the equipment and make the required acceptance tests, and written approval is given by RUS.
(8) Installations, whether by the borrower or the seller, must meet the installation requirements of Form 397 specifications. A copy of the acceptance tests results must be attached to the closeout documents or work order summary.
(9) Detailed considerations and guidelines for the preparation of the specifications for the various applications of special equipment can be found in RUS Telecommunications Engineering and Construction Manuals.
(10) The borrower must obtain authorization from the Federal Communications Commission (FCC) to construct and operate radio transmitting equipment. Evidence of FCC authorization is required for RUS contract approval. Where required, the borrower must obtain approval of state regulatory bodies regarding tariffs and related matters.
(b)
(2)
(ii) For projects estimated to exceed $500,000 or 25% of the loan, whichever is less, RUS will either approve P&S in writing or notify the borrower of the reasons for withholding approval.
(iii) For projects estimated to cost less than $500,000 or 25% of the loan, whichever is less, the borrower may proceed with procurement upon completion of the P&S.
(iv) If the borrower has employed full competitive bidding in the selection, a contract may be executed with the successful bidder and the borrower may proceed to paragraph (b)(2)(vi) of this section.
(v) If the borrower did not follow a fully competitive bidding process as described in § 1753.8, the selection, along with a summary of all proposals and an engineer's recommendation, shall be sent to RUS. RUS shall approve the proposal selection in writing or notify the borrower of any reason for withholding approval.
(vi) The borrower sends three executed contracts including specifications to RUS for approval.
(vii) After RUS approval of the contract, one copy will be returned to the borrower and one copy will be sent to the seller.
(3)
(4)
(ii) RUS notifies the borrower in writing as to whether the borrower may negotiate for specific equipment. If P&S were required to be submitted to RUS under paragraph (b)(4)(i) of this section, RUS notifies the borrower in writing of P&S approval (or notifies the borrower of the reasons for withholding approval).
(iii) The remainder of the purchase procedure for new system additions is the same as for initial equipment purchase.
(c)
(2) The borrower shall prepare any required amendments to the special equipment contract, arrange for the execution by all parties, and submit these amendments to RUS in accordance with § 1753.11(d). RUS Form 238, Construction or Equipment Contract Amendment, shall be used for this purpose.
(d)
(ii) The borrower shall obtain from the contractor, in writing, the results of all inspections and tests made by the contractor as required in the specifications. The borrower will analyze the test results and determine whether the performance of the equipment meets the contract specifications.
(2)
(3)
(i) Assembles and distributes the documents listed in the following table that are required for the closeout of the special equipment contract. The documents listed for RUS shall be retained by the borrower for inspection by RUS for at least two years from the date of the engineer's contract closeout certification.
(ii) Obtains certifications from the engineer that the project and all required documentation are satisfactory and complete. Requirements for this contract closeout certification are contained in § 1753.18.
(iii) Submits copies of the engineer's certifications to RUS with the FRS requesting the remaining funds on the contract.
(iv) Makes final payment in accordance with the payment terms of the contract.
(a) This subpart implements and explains the provisions of the Loan Documents containing the requirements and procedures to be followed by borrowers for minor construction of telecommunications facilities using RUS loan funds. Terms used in this subpart are defined in § 1753.2.
(b) [Reserved]
Minor construction may be performed by contract using RUS Contract Form 773, “Miscellaneous Construction Work and Maintenance Services”, by RUS Contract Form 515, or by work order construction. The rules for using Form 515 for minor construction are contained in subpart F of this part.
(a) RUS Form 773 shall be used for minor construction by contract. Compensation may be based upon unit prices, hourly rates, or another basis agreed to in advance by the borrower and the contractor. A single work project may require more than one contractor.
(b) The borrower shall prepare the contract form and attach any diagrams, sketches and tabulations necessary to specify clearly the work to be performed and who shall provide which materials. Neither the selection of the
(c) Borrowers are urged to obtain quotations from several contractors before entering into a contract to be assured of obtaining the lowest cost. The borrower must ensure that the contractor selected meets all Federal and State licensing and bonding requirements, and that the contractor maintains the insurance coverage required by the contract for the duration of the work. (See 7 part CFR 1788)
(d) Upon completion and final inspection of the construction the borrower shall obtain from the Contractor a final invoice and an executed copy of RUS Form 743, Certificate of Contractor and Indemnity Agreement.
(e) RUS Contract Form 773 may also be used to contract for the maintenance and repair of telephone equipment and facilities. Generally, RUS will not finance maintenance and repair contracts.
The borrower shall require that:
(a) Minor construction by the force account method be supervised by a competent foreman. The work shall be performed in accordance with all regulatory and safety codes.
(b) Daily time and material reports, referenced by the work project number, shall be kept to record labor and materials used as construction is performed.
(c) The construction foreman shall maintain a tabulation of all construction units installed.
(a) If the borrower performs minor construction financed with loan funds, the borrower's regular work order procedure shall be used to administer construction activities that may be performed entirely by a contractor under Form 773 contract, by work order, or jointly by work order and one or more contractors under Form 773 contracts.
(b) RUS financing under Form 773 contracts dated in the same calendar year is limited to the following amounts for the following discrete categories of minor construction. The date of the Form 773 contract is the date the Form 773 contract is executed.
(1) For outside plant construction, the limit is $500,000 or ten per cent (10%) of the borrower's previous calendar year's outside plant total construction, whichever is greater.
(2) For central office equipment, the limit is $500,000.
(3) For special equipment and buildings, the limit is $250,000 in each category.
(c) A single minor construction project may be a discrete element of a somewhat larger overall project, such as the provision and installation of a standby power generator or heating/air conditioning equipment in connection with a building modification or expansion project or the splicing on a major cable placement project. It cannot be a portion, by dividing into smaller segments, of a discrete major construction project, such as the placement of a continuous cable facility.
(d) RUS approval must be obtained in advance for minor construction unless all of the following conditions are met:
(1) RUS has approved the engineering design.
(2) All standard RUS procedures are followed, including use of new materials listed in the List of Materials for Use on Telephone Systems of RUS Borrowers (Bul. 344-2) and the application of RUS construction practices. (See § 1753.6)
(3) The Standard Form 773 contract is used without modification.
(e) The borrower shall determine the scope of each proposed construction project and decide how it will be constructed. A work project number shall be assigned to which all charges for that project are referenced.
(f) The borrower shall maintain accounting and plant records sufficient to document the cost and location of all construction and to support loan fund advances and disbursements.
(g) Normally the borrower will finance minor construction with general funds and obtain reimbursement with loan funds when construction is completed and executed Form 771 has been submitted to RUS. If a borrower satisfies RUS of its inability to finance the
(h) RUS will advance funds to finance minor construction work projects only if all necessary documents, including an FRS and supporting data covering the project, are received within one year of the date construction of the project is completed.
(a) Upon completion and prior to closeout, minor construction must be inspected and certified to be in compliance with RUS construction standards, to be reasonable in cost, and to meet applicable codes. The certification is made by an experienced telephone engineer who is either licensed in the state where the inspection will be performed, or is a borrower's staff engineer, who meets the requirements of the “employee in charge” of force account engineering as described in subpart B of this part. The GFR will periodically audit the inspection of minor construction to ensure integrity of the procedure. RUS borrowers with less than 2000 subscribers may use the above procedure or have construction inspection performed by the GFR.
(b) Engineering services for minor construction may be contracted using RUS Form 245, Engineering Service Contract—Special Services. Costs for these services may be included in the costs for construction on the Form 771. (See subpart B of this part.
(c) Upon completion of construction, the borrower shall obtain the engineer's certification on RUS Form 771. An official of the borrower, designated by the board of directors, shall also execute the borrower's certification on Form 771.
(a) For minor construction inspected by the borrower's engineer, an original and two copies of Form 771 shall be sent to the GFR. The GFR will initial and return the original and one copy.
(b) When funds are requested for minor construction, the original Form 771 signed or initialed by the GFR, shall be submitted with the FRS. Forms 771 should be submitted only with the FRS which they support. RUS does not encumber funds pursuant to Forms 771 unless an advance is made to the borrower. (See 7 CFR part 1744 subpart C).
(a) This subpart implements and explains the provisions of the loan documents setting forth the requirements and procedures to be followed by borrowers accepting nomination for the construction certification program. Terms used in this subpart are defined in § 1753.2.
(b) [Reserved]
(a) It is RUS policy that, as borrowers gain in experience and maturity, the advice and assistance rendered by RUS shall progressively diminish. Prior to approval of a loan, RUS may nominate certain borrowers to fulfill the responsibilities for administration and construction of projects financed with RUS loans. Borrowers who accept this nomination will be known as “certification borrowers,” and the program in which they participate will be known as the “certification program.”
(b) Generally, initial loan borrowers are not eligible for the certification program.
(c) Generally, the factors which RUS will consider in selecting borrowers for the certification program will include:
(1) The experience of the staff of the borrower.
(2) The RUS assessment of the borrower's ability to handle the certification program requirements considering the size and complexity of the proposed construction in the LD.
(3) The history of the borrower in following RUS's policies and procedures.
(4) Other factors deemed relevant by RUS.
(d) Except as specifically stated in this subpart, certification borrowers must comply with all requirements applicable to other borrowers.
(e) RUS reserves the right at any time to require submission of construction documents or to remove the borrower from the certification program.
(a)
(2) Approval of P&S.
(3) Approval of price quotations and bids, except where the low price bid is not accepted.
(4) Approval of award of construction contracts and amendments.
(5) Approval of FAP's if RUS has approved the force account method of construction for the construction project.
(6) Inspection and certification of construction.
(7) Approval of closeout documents.
(8) Other responsibilities as may be specifically granted in writing by RUS.
(b)
(2) Approval of use of loan funds for projects other than those included in the loan construction budget. See 7 CFR part 1744 subpart C.
(3) Approval of use of loan funds in excess of amounts included in the loan budget.
(4) Approval of force account methods of engineering and construction.
(5) Approval to make significant deviations from the work plan approved by RUS.
(6) Approval of interim construction.
(7) Approval to use materials not listed in the List of Materials Acceptable for Use on Telephone Systems of RUS Borrowers.
(8) Approval of field trials.
(9) Approval to modify or alter standard forms and contracts.
(10) Approval to open bids when fewer than the required number have been received.
(11) Approval of outside plant layouts.
(12) “Buy American” determinations.
(13) Other responsibilities not specifically transferred by this subpart or in writing by RUS.
(a) Certification borrowers shall appoint three certification officials. These appointments shall be subject to RUS approval.
(1) The “Certifying Officer” shall be an officer or employee of the borrower who is authorized to execute binding agreements. This officer shall sign all contracts, amendments, closeout documents and the certification on RUS Form 158, Certification of Contract or Force Account Proposal Approval, and RUS Form 159, Summary of Completed Construction.
(2) The “Construction Certifier” shall be an experienced telephone engineer who is either licensed in the state where the inspection will be performed, or is a borrower's staff engineer who meets the requirements of the “employee in charge” of force account engineering as described in subpart B of this part. RUS may determine that it will accept the certification only for matters within the staff engineer's area of specialization. In such cases the position of “Construction Certifier” shall be filled by more than one engineer. This official is responsible for certifying that the construction complies with all technical and code requirements.
(3) The “Certification Coordinator” shall administer the certification program and serve as the official point of contact for RUS. The certifying officer or construction certifier may also serve as the certification coordinator.
(b) Certification borrowers, shall submit and obtain RUS approval of a work
(1) The work plan shall provide a description of the proposed construction and methods of purchasing in such detail as to enable RUS to monitor the construction program to ensure to its satisfaction that loan purposes are accomplished in an organized construction program.
(2) The work plan shall include the following:
(i) The names and qualifications of the proposed certification officials defined in § 1753.94(a).
(ii) A listing of the proposed work projects to accomplish the loan purposes showing the estimated cost, method of performing the construction, and the proposed commencement and completion dates for each work project. The proposed work projects shall be summarized on RUS Form 157, Construction Work Plan and Cost Distribution, or a form providing essentially the same information.
(iii) The proposed source of funds for meeting cost overruns if the total estimated cost of work projects exceeds the loan budget.
(iv) A statement signed by the borrower's certification officials and the GFR that the work plan is accurate and complete.
(c) Under the certification program, the borrower shall follow all standard RUS postloan engineering and construction procedures except that the approvals shown in § 1753.93(a) will be made by certification officials rather than RUS. The approvals noted in § 1753.93(a)(1), (4) and (5) will be reported immediately to RUS using RUS Form 158. Approval of closeouts, § 1753.93(a) (6) and (7), will be reported immediately on RUS Form 159.
(d) As the construction program progresses, the certification borrower shall request, by letter, RUS approval of any significant changes in work plan schedules and budgets and in certification officials.
Advance of loan funds needed to meet the certification borrower's current financial obligations are to be requested on RUS Form 481 for construction and engineering items supported by appropriate RUS Forms 158 and 159. For items other than construction or engineering, other supporting data shall be submitted. (See 7 CFR part 1744 subpart C.)
The certification borrower shall modify standard RUS forms of contract for use under the certification program by inserting an executed copy of the following certification addendum in each copy of the contract.
Permission has been obtained by the Owner to proceed with this contract under 7 CFR part 1753 subpart J, pursuant to which the references in the RUS construction document requiring approvals and other actions of the RUS Administrator will not apply unless RUS gives specific notice in writing to the affected parties that designated approval(s) or action(s) will be required. Certifications by the Contractor of amounts due and certifications of completions of work under the contract are to be construed to be rendered for the purpose of inducing the Rural Utilities Service or Rural Telephone Bank to advance funds to the Owner to make, or reimburse the Owner for, payments under this contract.
7 U.S.C. 901
(a) Except as covered in Bulletin 345-3, no loan funds shall be advanced for any product if any item to be included in the project is not included in the “List of Materials Acceptable for Use on Telephone Systems of RUS Borrowers,” RUS Bulletin 344-2. When new items of materials or equipment are considered for acceptance by RUS or when a previously accepted item has been subjected to such major modifications that its suitability cannot be determined based on laboratory data and/or field experience, a field trial shall be required if RUS so determines. This field trial consists of limited field installations of the materials or equipment in closely monitored situations designed to determine, to RUS's satisfaction, their operational effectiveness under actual field conditions. Field trials are to be used only as a means for determining, to RUS's satisfaction, the operational effectiveness of a new or revised product under actual field conditions. Both the manufacturer and borrower are responsible for assuring that the field trial is carried out and that the required information on the product's performance is received by RUS in a timely manner. The use of materials or equipment derived from new inventions or concepts untried within the telephone industry is defined as “an experiment” and shall be handled as a special case using procedures considered appropriate by RUS to meet the individual experiment.
(b) To qualify for a field trial, the new and improved materials and equipment must appear to RUS to offer one or more of the following benefits:
(1) Improved performance.
(2) Decreased cost.
(3) Broader application.
(c) The item of material or equipment subject to field trial may be only part of the total amount of materials or equipment included in a bid or it may be the key component of the facility or system provided; therefore, RUS shall have authority to require that a satisfactory plan be provided to maintain or restore service in the event that the materials and equipment fail
(d) A borrower may participate in a field trial only if, in RUS's opinion, the borrower possesses:
(1) Adequate financial resources so that no delay in the project will result from lack of funds.
(2) The financial stability to overcome difficulties which may result from an unsuccessful field trial. The borrower must be able to restore and maintain service until the manufacturer meets its financial obligations with respect to the field trial.
(3) Qualified personnel to enable it to discharge its responsibilities.
(4) A record satisfactory to RUS for maintaining equipment and plant facilities and for providing RUS with information when requested.
(5) Willingness to participate in the field trial and awareness of the effort and responsibility this entails.
(e) The test site for the field trial shall be, in RUS's opinion, readily accessible and provide the conditions, such as temperature extremes, high probability of lightning damage, etc., for which the product is being evaluated. The material or equipment involved shall be covered by an RUS specification or a suitable standard acceptable to RUS. The supplier is required to submit test data to show conformance with the applicable specification or standard. Further testing shall be performed if required by RUS personnel.
(f) A field trial shall normally continue for a minimum of six months, or for a longer period of time determined by RUS to be required to obtain conclusive data that the item either fulfills all requirements or is unacceptable. Either the borrower or supplier may terminate a field trial at any time, in accordance with their contractual agreement. Such termination, if prior to the time required by RUS, shall constitute withdrawal of the product from consideration by RUS. RUS has authority to terminate field trials based on its determination that the equipment is not performing satisfactorily and that this lack of performance may, in RUS's opinion, cause service degradation or hazards to life or property.
(g) Field trials shall be conducted in accordance with the instructions set forth in this regulation and the agreement relating to the specific application. Both the supplier and the borrower shall agree, and obtain RUS approval before the start of the trial, on the following:
(1) The specific purpose of the field trial;
(2) Ownership of items during trial;
(3) Starting date and duration;
(4) Responsibility for costs and removal of items in the event of noncompliance with the specification or purpose intended and arrangements for service continuity or restoration;
(5) Responsibility for testing, test equipment and normal operation and maintenance during the trial period;
(6) Availability of test equipment on site during the trial period; and
(7) Responsibility for spare parts and components consumed during the trial period.
(h) Both the supplier and the borrower shall keep RUS informed of the status of a field trial. These reports shall not be limited to details of problems of failures encountered during installation and subsequent operation but shall include information on progress of the field trial. If these reports are not received in accordance with the requirements of the RUS Form 399b, RUS shall have the authority to deny or suspend loan funds related to these products until the delinquent reports are received.
(i) Before a borrower purchases materials or equipment that require a field trial, prior approval must be obtained from RUS and RUS Form 399b, RUS Telecommunications Equipment Field Trial (available from the Director, Administrative Services Division, Rural Utilities Service, Room 0175, South Building, U.S. Department of Agriculture, Washington, DC 20250) will be completed by RUS and must be signed by both the borrower and supplier as an indication that they understand their
(j) Procedures for establishing field trials for the various categories of equipment after RUS has approved the 399b:
(1)
(i) Voice frequency repeaters;
(ii) Trunk carriers;
(iii) Subscriber carrier;
(iv) Point-to-point radio (Microwave);
(v) Coaxial cable system electronics;
(vi) Fiber optic cable system electronics;
(vii) Multiplex equipment;
(viii) Mobile and fixed radiotelephone; and
(ix) Other items of electronic equipment associated with transmission.
(2)
(i) Central office dial equipment;
(ii) Direct distance dialing equipment;
(iii) Automatic number identification equipment;
(iv) Line concentrators;
(v) Remote switching equipment; and
(vi) All other items of equipment associated with switching equipment, such as loop extenders.
(3) Protection equipment and materials, outside plant equipment and materials, and all other equipment and materials, which includes all items not covered in paragraph (j) (1) or (2) of this section, shall be handled as described in Bulletin 344-1 “Methods of Purchasing Materials and Equipment for Use on Systems of Telephone Borrowers” except that the borrower's purchase order form is to be used for purchasing materials and equipment in these categories. In addition, the borrower and supplier shall execute three copies of the “Supplemental Agreement to Equipment Contract for Field Trial,” RUS Form 399, or a “Supplemental Agreement to Equipment Contract for Field Trial (Secondary—Delivery, Installation, Operation)”, RUS Form 399a, as the case may be, as well as three copies of the RUS Form 399b, “RUS Telecommunications Field Trial”, and forward them, together
(k) For all items except Electronic Central Office Equipment, suppliers and manufacturers must furnish warranties or guarantees satisfactory to RUS against the failure of the material and equipment used in the field trial. Terms of this warranty must not be less than the provisions of the standard warranty included in the “Telephone System Construction Contract”, RUS Form 515, or the warranty provided for similar materials and equipment included in the “List of Materials Acceptable for Use on Telephone Systems of RUS Borrowers”, RUS Bulletin 344-2. In lieu of a warranty, materials and equipment are sometimes furnished to RUS borrowers on a reduced or no cost basis. Terms of such arrangements are subject to RUS approval and should be fully covered in field trial proposals forwarded by borrowers to the Chief, Area Engineering Branch for review and approval. For the purchase of electronic central office equipment, suppliers and manufacturers are to provide warranties as provided in the applicable RUS contract form: RUS Form 397 for electronic equipment and RUS Form 525 for central office equipment. Forms 399 and 399a, which apply to field trials of these devices, specify that the term of the warranty does not begin until the satisfactory conclusion of the field trial.
(a) The standard loan agreement between RUS and its borrowers provides that, in accordance with applicable RUS regulations, borrowers shall use standard contract forms promulgated by RUS for construction, procurement, engineering services, and architectural services financed by a loan or guaranteed by RUS. This part implements these provisions of the RUS loan agreement and prescribes the procedures that RUS follows in promulgating standard contract forms that borrowers are required to use. Part 1753 prescribes when and how borrowers are required to use these standard forms of contracts.
(b)
(a)
(b)
(2) The borrower may use electronic reproductions of a contract form if the contract documents submitted for RUS approval are exact reproductions of the RUS form and include the following certification by the borrower: I (Insert name of the person.), certify that the attached (Insert name of the contract form.), between (Insert name of the parties.), dated (Insert contract date.) is an exact reproduction of RUS Form (Insert form number), dated (Insert date of RUS form).
(c)
(d)
(e)
(a)
(b)
RUS may, from time to time, promulgate new contract forms or revise or eliminate existing contract forms. In so doing, RUS shall publish a notice of rulemaking in the
(a)
(b)
(c)
(1) RUS Form 157, issued 10-77, Construction Work Plan and cost Distribution—Telephone.
(2) RUS Form 158, issued 10-77, Certification of Contract or Force Account Approval.
(3) RUS Form 159, issued 10-77, Summary of Completed Construction.
(4) RUS Form 168b, issued 3-62, Contractor's Bond.
(5) RUS Form 168c, issued 4-79, Contractor's Bond.
(6) RUS Form 181, issued 4-72, Certificate of Completion, Contract Construction Buildings.
(7) RUS Form 181a, issued 3-66, Certificate of Completion (Force Account Construction).
(8) RUS Form 213, issued 8-52, Certificate (Buy American).
(9) RUS Form 216, issued 7-67, Construction Change Order.
(10) RUS Form 217, issued 3-97, Postloan Engineering Services Contract—Telecommunications Systems.
(11) RUS Form 220, issued 6-98, Architectural Services Contract.
(12) RUS Form 224, issued 3-55, Waiver and Release of Lien.
(13) RUS Form 231, issued 4-72, Certificate of Contractor.
(14) RUS Form 238, issued 4-72, Construction or Equipment Contract Amendment.
(15) RUS Form 242, issued 11-58, Assignment of Engineering Service Contract.
(16) RUS Form 245, issued 11-75, Engineering Services Contract, Special Services—Telephone.
(17) RUS Form 257, issued 3-73, Contract to Construct Buildings.
(18) RUS Form 257a, issued 10-69, Contractor's Bond.
(19) RUS Form 274, issued 6-81, Bidder's Qualifications.
(20) RUS Form 276, issued 5-59, Bidder's Qualifications for Buried Plant Construction.
(21) RUS Form 281 issued 5-61, Tabulation of Materials Furnished by Borrower.
(22) RUS Form 282, issued 11-53, Subcontract (Under Construction or Equipment Contracts).
(23) RUS Form 284, issued 4-72, Final Statement of Cost for Architectural Service and Certificate of Architect.
(24) RUS Form 307, issued 4-60, Bid Bond.
(25) RUS Form 396, issued 3-64, Certificate of Completion—Special Equipment Contract (Including Installation).
(26) RUS Form 396a, issued 3-64, Certificate of Completion—Special Equipment Contract (Not Including Installation).
(27) RUS Form 397, issued September 25, 2000, Special Equipment Contract (Including Installation).
(28) RUS Form 397f, issued 2-63, Contractor's Bond (Special Telephone Equipment).
(29) Addendum No. 1 to RUS Form 397, issued 7-78, Special Equipment Contract (Including Installation).
(30) RUS Form 398, issued 11-62, Special Equipment Contract (Not Including Installation).
(31) RUS Form 399, issued 8-82, Supplemental Agreement to Equipment Contract for Field Trial.
(32) RUS Form 399a, issued 8-82, Supplemental Agreement to Equipment Contract for Field Trial (Secondary-Delivery, Installation, Operation).
(33) RUS Form 506, issued 3-97, Statement of Engineering Fee—Telecommunications.
(34) RUS Form 515, issued 1-90, Telephone System Construction Contract (Labor and Materials).
(35) RUS Form 517, issued 9-64, Results of Acceptance Tests
(36) RUS Form 525, issued 7-94, Central Office Equipment Contract (Including Installation).
(37) Addendum to RUS Form 525, issued 7-94, Central Office Equipment Contract (Including Installation) and RUS Form 545 Central Office Equipment Contract (Not Including Installation).
(38) RUS Form 525a, issued 10-62, Contractor's Bond (Central Office Equipment).
(39) RUS Form 526, issued 8-66, Construction Contract Amendment.
(40) RUS Form 527, issued 3-71, Statement of Construction, Telephone System “ Outside Plant.
(41) RUS Form 545, issued November 4, 1999, Central Office Equipment Contract (Not Including Installation).
(42) RUS Form 553, issued 5-67, Check List for Review of Plans and Specifications.
(43) RUS Form 724 issued 10-63, Final Inventory, Telephone Construction Contract.
(44) RUS Form 724a issued 4-61, Final Inventory, Telephone Construction—Telephone Construction Contract (Labor and Materials), columns 1-8.
(45) RUS Form 724b issued 3-61, Final Inventory, Telephone Construction Contract (Labor and Materials), columns 9-14.
(46) RUS Form 744, issued 2-62, Certificate of Contractor and Indemnity Agreement.
(47) RUS Form 752a, issued 5-66, Certificate of Completion Central Office Equipment-Not Including Installation.
(48) RUS Form 754, issued 6-66, Certificate of Completion and Certificate of Contractor and Indemnity Agreement.
(49) RUS Form 771, Issued 10-75, Summary of Work Orders (Inspected by RUS Field Engineer).
(50) RUS Form 771a, issued 10-75, Summary of Work Orders (Inspected by Licensed Engineer or Borrower's Staff Engineer).
(51) RUS Form 773, issued 12-90, Miscellaneous Construction Work and Maintenance Services Contract.
(52) RUS Form 787, issued 8-63, Supplement A to Construction Contract.
(53) RUS Form 817, issued 6-60, Final Inventory, Telephone Force Account Construction.
(54) RUS Form 817a, issued 6-60, Final Inventory, Telephone Force Account Construction, columns 1-8.
(55) RUS Form 817b, issued 6-60, Final Inventory, Telephone Force Account Construction, Columns 9-14.
(56) RUS Form 835, issued 3-66, Preloan Engineering Service Contract, Telephone System Design.
The following telephone Bulletins have been approved for incorporation by reference by the Director of the Office of the Federal Register on December 30, 1983. Bulletin 345-150 (Form 515a) containing the specifications and drawings for construction of buried cables and wires may be purchased from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. The remaining Bulletins containing construction standards and specifications for materials and equipment may be obtained from the Rural Utilities Service, Administrative Services Division, Room 0175-S, Washington, DC 20250. The bulletins are available for inspection at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC. These materials are incorporated as they exist on the date of the approval and a notice of any change in these materials will be published in the
For
The following standards and specifications are included throughout 7 CFR chapter XVII. These standards and specifications are not incorporated by reference elsewhere in the chapter. The terms “RUS form”, “RUS standard form”, “RUS specification”, and “RUS bulletin” have the same meanings as the terms “REA form”, “REA standard form”, “REA specification”, and “REA bulletin”, respectively, unless otherwise indicated.
(a)
(2) American National Standard Institute/National Fire Protection Association (ANSI/NFPA) 70, 1993 National Electrical Code (NEC) referenced in this section is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. A copy of the ANSI/NFPA 1993 NEC standard is available for inspection during normal business hours at RUS, room 2845, U.S. Department of Agriculture, Washington, DC 20250-1500 or
(3) American National Standard Institute/Institute of Electrical and Electronics Engineers, Inc. (ANSI/IEEE), 1993 National Electrical Safety Code (NESC) referenced in this section is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. A copy of the ANSI/IEEE 1993 NESC standard is available for inspection during normal business hours at RUS, room 2845, U.S. Department of Agriculture, Washington, DC 20250-1500 or at the Office of the Federal Register
(b)
(2) The installation instructions provided by the manufacturer of splicing materials shall be followed except where those instructions conflict with the procedures specified in this section.
(3) Precautions shall be taken to prevent the ingress of moisture and other contaminants during all phases of the splicing installation. When an uncompleted splice must be left unattended, it shall be sealed to prevent the ingress of moisture and other contaminants.
(4) Minor sheath damage during construction may be repaired if the repair is completed immediately and approved by the borrower's resident project representative. Minor damage is typically repaired by:
(i) Scuffing the cable sheath associated with the damaged area;
(ii) Applying several layers of DR tape over the scuffed and damaged area;
(iii) Applying several layers of plastic tape over the DR tape; and
(iv) If damage is severe enough to rupture the cable shield, a splice closure shall be installed.
(5) All splice cases installed on RUS toll trunk and feeder cables shall be filled, whether aerial, buried, or underground.
(c)
(2)
(3)
(ii) Caution shall be exercised to avoid damaging the conductor insulation when cutting through the cable shield and removing the shield. Sharp edges and burrs shall be removed from the cut end of the shield.
(4)
(5)
(ii) The standard insulation color code used to identify individual cable pairs within 25-pair binder groups shall be as shown in Table 1:
(iii) The standard binder ribbon color code used to designate 25-pair binder groups within 600-pair super units shall be as shown in Table 2:
(iv) Super-unit binder groups shall be identified in accordance with Table 3:
(v) Service pairs in screened cables shall be identified in accordance with Table 4:
(6)
(7)
(8)
(ii) Specialized connectors are available for splicing operations such as butt splices, in line splices, bridge taps, clearing and capping, and multiple pair splicing operations. The splice connector manufacturer's recommendations shall be followed concerning connector selection and use.
(iii) Caution shall be exercised to maintain conductor and pair association both during and after splicing operations.
(iv) Splicing operations that involve pairs containing working services shall utilize splice connectors that permit splicing without the interruption of service.
(9)
(10)
(11)
(12)
(13)
(14)
(ii) Only filled terminal blocks having RUS acceptance shall be used on aerial service wire connections.
(15)
(16)
(d)
(ii) Fixed count terminals shall restrict service technician access to the cable core. Predetermined cable pairs shall be spliced to the terminal leads or stub cable in advance of service assignments.
(2)
(3)
(ii) A treated plank or equivalent shall be placed 15 cm (6 in.) above the buried splice case to prevent damage to the splice case from future digging. Where a firm base for burying a splice cannot be obtained, a treated plank or equivalent shall be placed beneath the splice case.
(iii) Each buried splice shall be identified for future locating. One method of marking the splice point is the use of a warning sign. Another method is the burying of an electronic locating device.
(4)
(ii) The recommended splice capacities for BD-type pedestals are shown in Table 5. However, larger size pedestals are permissible if service requirements dictate their usefulness. Table 5 is as follows:
(iii) Special distribution pedestals having a divider plate for mounting filled terminal blocks are available. Distribution pedestals are also equipped with service wire channels for installation of buried service wires without disturbing the cabling and gravel inside the base of the pedestal. Distribution pedestals are recommended in locations where the connection of service wires is required.
(5)
(6)
(7)
(8)
(9)
(10)
(ii) Tip cables should be spliced in a cable vault. However, as a last resort, tip cables may be spliced inside a central office if flame retardant splice cases or a noncombustible central office splice housing is used to contain the splice.
(iii) Splices inside the central office shall be made as close as practical to
(e)
(2)
(3)
(ii) Undesirable splice losses are caused by poor splicing techniques including splicing irregularities such as improper cleaves and dirty splices. Typical cleave problems are illustrated in Figure 8:
(4)
(i) Avoid damaging the cable during handling operations prior to splicing. Minor damage may change the transmission characteristics of the fibers to the extent that the cable section will have to be replaced;
(ii) The cable manufacturer's recommendations concerning pulling tension shall be observed. The maximum pulling tension for most fiber optic cable is 2669 newtons (600 pound-force);
(iii) The cable manufacturer's recommendations concerning bending radius shall be observed. Unless the cable manufacturer's recommendation is more stringent, the minimum bending radius for fiber optic cable shall be 20 times the cable diameter;
(iv) The cable manufacturer's recommendations concerning buffer tube bending radius shall be observed. Unless the cable manufacturer's recommendation is more stringent, the minimum bending radius for buffer tubes is usually between 38 millimeters (mm) (1.5 in.) and 76 mm (3.0 in.). The bending limitations on buffer tubes are intended to prevent kinking. Buffer tube kinking may cause excessive optical loss or fiber breakage; and
(v) Handle unprotected glass fibers carefully to avoid introducing flaws such as scratched or broken fibers.
(5)
(i) Safety glasses shall be worn when handling glass fibers;
(ii) Never view open-ended fibers with the naked eye or a magnifying device. Improper viewing of a fiber end that is transmitting light may cause irreparable eye damage; and
(iii) Dispose of bare scrap fibers by using the sticky side of a piece of tape to pick up and discard loose fiber ends. Fiber scraps easily penetrate the skin and are difficult to remove.
(6)
(ii) Both fusion and mechanical splicing techniques are permitted on RUS financed projects. When using the mechanical splicing technique, only RUS accepted mechanical fiber optic splice connectors can be used.
(iii) Fusion splicing machines shall be kept in proper working condition. Regular maintenance in accordance with the machine manufacturer's recommendations shall be observed.
(iv) Mechanical splicing tools shall be in conformance with the tool manufacturer's recommendations.
(v) An optical time domain reflectometer (OTDR) shall be used for testing splices. The OTDR shall be stationed at the central office or launch point for testing individual splices as they are made and for end-to-end signature tests for the fiber optic link.
(vi) An optical power meter shall be used for end-to-end cable acceptance tests.
(vii) A prerequisite for the successful completion of a fiber optic splicing endeavor is the presence of a talk circuit between the splicing technician in the splicing vehicle and the operator of the OTDR in the central office. The splicing technician and the OTDR operator shall have access to communications with each other in order to inform each other as to:
(A) Which splices meet the loss objectives;
(B) The sequence in which buffer tubes and fibers are to be selected for subsequent splicing operations; and
(C) The timing required for the performance of OTDR testing to prevent making an OTDR test at the same time a splice is being fused.
(7)
(ii) The splice case manufacturer's recommendations concerning the amount of cable sheath to be removed shall be followed to facilitate splicing operations. The length of the sheath opening shall be identified with a wrap of plastic tape.
(iii) If the cable contains a rip cord, the cable jacket shall be ring cut approximately 15 cm (6 in.) from the end and the 15 cm (6 in.) of cable jacket shall be removed to expose the rip cord. The rip cord shall be used to slit the jacket to the tape mark.
(iv) If the cable does not contain a rip cord, the cable jacket shall be slit using a sheath splitter. No cuts shall be made into the cable core nor shall the buffer tubes be damaged.
(v) If the cable contains an armor sheath, the outer jacket shall be opened along the slit and the jacket shall be removed exposing the armor sheath. The armor shall be separated at the seam and pulled from the cable exposing the inner jacket. The armor shall be removed making allowances for a shield bond connector. The inner sheath shall be slit using a sheath splitter or rip cord. The cable core shall not be damaged nor shall there be any damage to the buffer tubes. The jacket shall be peeled back and cut at the end of the slit. The exposed buffer tubes shall not be cut, kinked, or bent.
(vi) After the cable sheath has been removed, the binder tape shall be removed from the cable. The cable shall not be crushed or deformed.
(vii) The buffer tubes shall be unstranded one at a time. The buffer tubes shall not be kinked.
(viii) If the cable is equipped with a strength member, the strength member shall be cut to the length recommended by the splice case manufacturer.
(ix) Each buffer tube shall be inspected for kinks, cuts, and flat spots. If damage is detected, an additional length of cable jacket shall be removed and all of the buffer tubes shall be cut off at the point of damage.
(x) The cable preparation sequence shall be repeated for the other cable end.
(8)
(9)
(10)
(ii) Experiment with a scrap buffer tube to determine the cutting tool adjustment required to ring cut a buffer tube without damaging the fibers.
(iii) Buffer tubes shall be removed by carefully ring cutting and removing approximately 15 to 46 cm (6 to 18 in.) of buffer tube at a time. The process shall be repeated until the required length of buffer tube has been removed, including the tape identification marker.
(11)
(ii) A tissue or cotton ball shall be soaked in the recommended cleaning solvent and the coated fibers shall be carefully wiped one at a time using a clean tissue or cotton ball for each coated fiber. Caution shall be exercised to avoid removing the coloring agent from the fiber coating.
(12)
(ii) The recommended length of fiber coating shall be removed only on the two fibers to be spliced. Fiber coating removal shall be performed on a one-fiber-at-a-time basis as each splice is prepared.
(13)
(14)
(15)
(16)
(ii) Each spliced fiber shall be routed through the organizer tray one at a time as splices are completed. The fibers shall be organized one at a time to prevent tangled spliced fibers. The splice case manufacturer's recommendation shall be followed concerning the splice tray selection.
(17)
(18)
(f)
(2)
(3)
(4)
(ii) As a first choice, the outside plant fiber optic cable shall be spliced to an all-dielectric fire retardant cable in a cable vault with the all-dielectric cable extending into the central office and terminating inside a fiber patch panel.
(iii) As a second choice, the outside plant cable may be spliced inside the central office if a flame retardant fiber optic splice case or a noncombustible central office splice housing equipped with organizer trays is used to contain the splice.
(iv) In cases referenced in paragraphs (f)(4)(ii) and (f)(4)(iii) of this section, as a minimum the fire retardant all-dielectric cable used to provide the connection between the cable entrance splice and the fiber patch panel shall be listed as Communication Riser Cable (Type CMR) in accordance with Sections 800-50 and 800-51(b) of the 1993 National Electrical Code.
(v) Splices inside the central office shall be made as close as practicable to
(g)
(2)
(ii)(A) Shield bonding conductors shall be either stranded or braided tinned copper wire equivalent to a minimum No. 6 American Wire Gauge (AWG) and shall be RUS accepted. The conductor connections shall be tinned or of a compatible bimetallic design to avoid corrosion problems associated with dissimilar metals. The number of shield bond connectors required per pair size and gauge shall be as shown in Table 8:
(B) It is permissible to strap across the shield bond connectors of several cables with a single length of braided wire. However, both ends of the braid shall be terminated on the pedestal ground bracket to provide a bonding loop. Shield bond connection methods for individual cables are shown in Figures 13 through 15, and the bonding of several cables inside a pedestal using the bonding loop is shown in Figure 16:
(3)
(4)
(ii) Shield bonding conductors shall be either stranded or braided tinned copper wire equivalent to a minimum No. 6 American Wire Gauge (AWG) and shall be RUS accepted. The conductor connections shall be tinned or of a compatible bimetallic design to avoid corrosion problems associated with dissimilar metals.
(5)
(ii) The conductor used for grounding metallic telephone hardware shall be a minimum No. 6 AWG solid, bare, copper conductor.
(iii) For copper and fiber optic cable plant, all cable shields, all metallic strength members, and all metallic hardware shall be:
(A) Grounded at each splice location to a driven grounding electrode (ground rod) of:
(
(
(B) Bonded to a multi-grounded power system neutral when the splice is within 1.8 meters (6 feet) of access to the grounding system of the multi-grounded neutral system. Bonding to the multi-grounded neutral of a parallel power line may help to minimize telephone interference on long exposures with copper cable plant. Consideration, thus, should be given to completing such bonds, at least four (4) times each mile, when splices are greater than 1.8 meters (6 feet) but less than 4.6 meters (15 feet) from access to the multi-grounded neutral.
(6)
(ii) Buried splice cases installed in either handholes or pedestals shall be grounded such that the cable shield grounds are attached to a common ground connection that will allow the lifting of a ground on the cable shield in either direction to permit efficient cable locating procedures. As a first choice, buried grounding conductor(s) shall be bare. However, if two or more grounding conductors are buried in the s they shall be insulated to avoid shorts when a locating tone is applied.
(iii) A typical bonding and grounding method for fiber optic splices is shown in Figure 19:
(7)
(a) RUS incorporates by reference ASTM A475-78, Standard Specification for Zinc-Coated Steel Wire Strand, issued May 1978. All seven wire galvanized steel strand purchased after April 1, 1990, for use on telecommunications systems financed by RUS loan funds must conform to this standard. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51 on January 19, 1990). Copies of ASTM A475-78 are available for inspection during normal business hours at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC, and at the Rural Utilities Service, Administrative Services Division, room 0175-S, U.S. Department of Agriculture, Washington, DC 20250, telephone 202-382-9551. Copies are available from the American Society for Testing and Materials, 1916 Race Street, Philadelphia, PA 19103, telephone 215-299-5400.
(b) In addition to the requirements of ASTM 475-78, all coils and reels having Class B or C coatings shall be marked with a 3-inch wide and 6-inch long deep-colored stripe, green or orange, respectively, to identify the class of galvanized coating of the strand. This marking shall be applied to the exposed convolutions of the strand in the eye of the coils and located near the midpoint on the outside layer of strand on the reels. The marking shall not cover any welded joint markings.
(a)
(i) The conductors are solid copper, individually insulated with an extruded solid insulating compound.
(ii) The insulated conductors are twisted into pairs which are then stranded or oscillated to form a cylindrical core.
(iii) For high frequency applications, the cable core may be separated into compartments with screening shields.
(iv) A moisture resistant filling compound is applied to the stranded conductors completely covering the insulated conductors and filling the interstices between pairs and units.
(v) The cable structure is completed by the application of suitable core wrapping material, a flooding compound, a shield or a shield/armor, and an overall plastic jacket.
(2) The number of pairs and gauge size of conductors which are used within the RUS program are provided in the following table:
(3) Screened cable, when specified, must meet all requirements of this section. The pair sizes of screened cables used within the RUS program are referenced in paragraph (e)(2)(i) of this section.
(4) All cables sold to RUS borrowers for projects involving RUS loan funds under this section must be accepted by RUS Technical Standards Committee “A” (Telephone). For cables manufactured to the specification of this section, all design changes to an accepted design must be submitted for acceptance. RUS will be the sole authority on what constitutes a design change.
(5) Materials, manufacturing techniques, or cable designs not specifically
(6) The American National Standard Institute/Insulated Cable Engineers Association, Inc. (ANSI/ICEA) S-84-608-1988 Standard For Telecommunications Cable, Filled, Polyolefin Insulated, Copper Conductor Technical Requirements referenced throughout this section is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of ANSI/ICEA S-84-608-1988 are available for inspection during normal business hours at RUS, room 2845, U.S. Department of Agriculture, Washington, DC 20250 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC. Copies are available from ICEA, P. O. Box 440, South Yarmouth, MA 02664, telephone number (508) 394-4424.
(7) American Society for Testing and Materials specifications (ASTM) A 505-87, Standard Specification for Steel, Sheet and Strip, Alloy, Hot-Rolled and Cold-Rolled, General Requirements For; ASTM B 193-87, Standard Test Method for Resistivity of Electrical Conductor Materials; ASTM B 224-80, Standard Classification of Coppers; ASTM B 694-86, Standard Specification for Copper, Copper Alloy, and Copper-Clad Stainless Steel Sheet and Strip for Electrical Cable Shielding; ASTM D 4565-90a, Standard Test Methods for Physical and Environmental Performance Properties of Insulations and Jackets for Telecommunications Wire and Cable; and ASTM D 4566-90, Standard Test Methods for Electrical Performance Properties of Insulations and Jackets for Telecommunications Wire and Cable referenced in this section are incorporated by reference by RUS. These incorporations by references were approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of the ASTM standards are available for inspection during normal business hours at RUS, room 2845, U.S. Department of Agriculture, Washington, DC 20250 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC. Copies are available from ASTM, 1916 Race Street, Philadelphia, PA 19103-1187, telephone number (215) 299-5585.
(b)
(2) Each conductor must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 2.1.
(3) Factory joints made in conductors during the manufacturing process must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 2.2.
(4) The raw materials used for conductor insulation must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 3.1 through 3.1.3.
(5) The finished conductor insulation must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 3.2.1 and 3.3.
(6) Insulated conductors must not have an overall diameter greater than 2 millimeters (mm) (0.081 inch (in.)).
(7) A permissible overall performance level of faults in conductor insulation must average not greater than one fault per 12,000 conductor meters (40,000 conductor feet) for each gauge of conductor.
(i) All insulated conductors must be continuously tested for insulation faults during the twinning operation with a method of testing acceptable to RUS. The length count and number of faults must be recorded. The information must be retained for a period of 6 months and be available for review by RUS when requested.
(ii) The voltages for determining compliance with the requirements of this section are as follows:
(8) Repairs to the conductor insulation during manufacture are permissible. The method of repair must be accepted by RUS prior to its use. The repaired insulation must be capable of meeting the relevant electrical requirements of this section.
(9) All repaired sections of insulation must be retested in the same manner as originally tested for compliance with paragraph (b)(7) of this section.
(10) The colored insulating material removed from or tested on the conductor, from a finished cable, must meet the performance requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 3.4.1, 3.4.2, 3.4.4, 3.4.5, and 3.4.6.
(c)
(i) The tip and ring conductor of each pair; and
(ii) Each pair in the completed cable.
(2) The colors to be used in the pairs in the 25 pair group, together with the pair numbers must be in accordance with the table specified in ANSI/ICEA S-84-608-1988, paragraph 3.5.
(3) Positive identification of the tip and ring conductors of each pair by marking each conductor of a pair with the color of its mate is permissible. The method of marking must be accepted by RUS prior to its use.
(4) Other methods of providing positive identification of the tip and ring conductors of each pair may be employed if accepted by RUS prior to its use.
(5) The insulated conductors must be twisted into pairs.
(6) In order to provide sufficiently high crosstalk isolation, the pair twists must be designed to enable the cable to meet the capacitance unbalance and crosstalk loss requirements of paragraphs (k)(5), (k)(6), and (k)(8) of this section.
(7) The average length of pair twists in any pair in the finished cable, when measured on any 3 meter (10 foot) length, must not exceed the requirement specified in ANSI/ICEA S-84-608-1988, paragraph 3.5.
(d)
(2) When desired for lay-up reasons, the basic group may be divided into two or more subgroups called units.
(3) Each group, or unit in a particular group, must be enclosed in bindings of the colors indicated for its particular pair count. The pair count, indicated by the colors of insulation, must be consecutive as indicated in paragraph (d)(6) of this section through units in a group.
(4) The filling compound must be applied to the cable core in such a way as to provide as near a completely filled core as is commercially practical.
(5) Threads and tapes used as binders must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 4.2 and 4.2.1.
(6) The colors of the bindings and their significance with respect to pair count must be as follows:
(7) The use of the white unit binder in cables of 100 pairs or less is optional.
(8) When desired for manufacturing reasons, two or more 25 pair groups may be bound together with nonhygroscopic and nonwicking threads or tapes into a super-unit. Threads or tapes must meet the requirements specified in paragraph (d)(5) of this section. The group binders and the super-unit binders must be color coded such that the combination of the two binders must positively identify each 25 pair group from every other 25 pair group in the
(9) Color binders must not be missing for more than 90 meters (300 feet) from any 25 pair group or from any subgroup used as part of a super-unit. At any cable cross-section, no adjacent 25 pair groups and no more than one subgroup of any super-unit may have missing binders. In no case must the total number of missing binders exceed three. Missing super-unit binders must not be permitted for any distance.
(10) Any reel of cable which contains missing binders must be labeled indicating the colors and location of the binders involved. The labeling must be applied to the reel and also to the cable.
(e)
(2) At the option of the user or manufacturer, identified service pairs providing for voice order and fault location may be placed in screened cables.
(i) The number of service pairs provided must be one per twenty-five operating pairs plus two for a cable size up to and including 400 pairs, subject to a minimum of four service pairs. The pair counts for screened cables are as follows:
(ii) The service pairs must be equally divided among the compartments. The color sequence must be repeated in each compartment.
(iii) The electrical and physical characteristics of each service pair must meet all the requirements set forth in this section.
(iv) The colors used for the service pairs must be in accordance with the requirements of paragraph (b)(5) of this section. The color code used for the service pairs together with the service pair number are shown in the following table:
(3) The screen tape must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 5.1 through 5.4.
(4) The screen tape must be tested for dielectric strength by completely removing the protective coating from one end to be used for grounding purposes.
(i) Using an electrode, over a 30 centimeter (1 foot) length, apply a direct current voltage at the rate of rise of 500 volts/second until failure.
(ii) No breakdown should occur below 8 kilovolts.
(f)
(2) The filling compound must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 4.4 through 4.4.4.
(3) The individual cable manufacturer must satisfy RUS that the filling compound selected for use is suitable for its intended application. The filling compound must be applied to the cable in such a manner that the cable components will not be degraded.
(g)
(2) If required for manufacturing reasons, white or colored binders of nonhygroscopic and nonwicking material may be applied over the core and/or wrap. When used, binders must meet the requirements specified in paragraph (d)(5) of this section.
(3) Sufficient filling compound must be applied to the core wrap so that voids or air spaces existing between the core and the inner side of the core wrap are minimized.
(h)
(2) The flooding compound must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 4.5 and the jacket slip test requirements of appendix A, paragraph (III)(5) of this section.
(3) The individual cable manufacturer must satisfy RUS that the flooding compound selected for use is acceptable for the application.
(i)
(2) For unarmored cable the shield overlap must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.2. Core diameter is defined as the diameter under the core wrap and binding.
(3) For cables containing the coated aluminum shield/coated steel armor (CACSP) sheath design, the coated aluminum shield must be applied in accordance with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.2, Dual Tape Shielding System.
(4) General requirements for application of the shielding material are as follows:
(i) Successive lengths of shielding tapes may be joined during the manufacturing process by means of cold weld, electric weld, soldering with a nonacid flux, or other acceptable means.
(ii) Shield splices must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.3.
(iii) The corrugations and the application process of the coated aluminum and copper bearing shields must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.1.
(iv) The shielding material must be applied in such a manner as to enable the cable to pass the cold bend test specified in paragraph (l)(3) of this section.
(5) The following is a list of acceptable materials for use as cable shielding. Other types of shielding materials may also be used provided they are accepted by RUS prior to their use.
(i) The 8-mil aluminum tape must be plastic coated on both sides and must comply with the requirements of ANSI/ICEA S-84-608-1988, paragraph 6.2.2.
(ii) The 5-mil copper tape must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.3.
(iii) The 10-mil copper tape must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.4.
(iv) The 6-mil copper clad stainless steel tape must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.5.
(v) The 5-mil copper clad stainless steel tape must be in the fully annealed
(A) The electrical conductivity of the clad tape must be a minimum of 28 percent of the International Annealed Copper Standard (IACS) when measured per ASTM B 193-87.
(B) The tape must be nominally 0.13 millimeter (0.005 inch) thick with a minimum thickness of 0.11 millimeter (0.0045 inch).
(vi) The 5-mil copper clad alloy steel tape must be in the fully annealed condition and the copper component must conform to the requirements of ASTM B 224-80 and the alloy steel component must conform to the requirements of ASTM A 505-87, with a cladding ratio of 16/68/16.
(A) The electrical conductivity of the copper clad alloy steel tape must comply with the requirement specified in paragraph (i)(5)(v)(A) of this section.
(B) The thickness of the copper clad alloy steel tape must comply with the requirements specified in paragraph (i)(5)(v)(B) of this section.
(vii) The 6-mil and 7-mil 194 copper alloy tapes must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.6.
(6) The corrugation extensibility of the coated aluminum shield must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.4.
(7) When the jacket is bonded to the plastic coated aluminum shield, the bond between the jacket and shield must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 7.2.6.
(8) A single plastic-coated steel corrugated armor must be applied longitudinally directly over the coated aluminum shield listed in paragraph (i)(5) of this section with an overlap complying with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.2, Outer Steel Tape.
(9) Successive lengths of steel armoring tapes may be joined during the manufacturing process by means of cold weld, electric weld, soldering with a nonacid flux, or other acceptable means. Armor splices must comply with the breaking strength and resistance requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.3.
(10) The corrugations and the application process of the coated steel armor must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.1.
(i) The corrugations of the armor tape must coincide with the corrugations of the coated aluminum shield.
(ii) Overlapped portions of the armor tape must be in register (corrugations must coincide at overlap) and in contact at the outer edge.
(11) The armoring material must be so applied to enable the cable to pass the cold bend test as specified in paragraph (l)(3) of this section.
(12) The 6-mil steel tape must be electrolytic chrome-coated steel (ECCS) plastic coated on both sides and must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.8.
(13) When the jacket is bonded to the plastic-coated steel armor, the bond between the jacket and armor must comply with the requirement specified in ANSI/ICEA-S-84-608-1988, paragraph 7.2.6.
(j)
(2) The raw materials used for the cable jacket must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 7.2.1.
(3) Jacketing material removed from or tested on the cable must meet the performance requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 7.2.3 and 7.2.4.
(4) The thickness of the jacket must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 7.2.2.
(k)
(2)
(ii) The resistance unbalance between tip and ring conductors shall be random with respect to the direction of unbalance. That is, the resistance of the tip conductors shall not be consistently higher with respect to the ring conductors and vice versa.
(3)
(4)
(ii) When measuring screened cable, the inner and outer pairs must be selected from both sides of the screen.
(5)
(ii)
(A) Between pairs adjacent in a layer in an individual compartment;
(B) Between pairs in centers of 4 pairs or less in an individual compartment; and
(C) Between pairs in adjacent layers in an individual compartment when the number of pairs in the inner (smaller) layer is 6 or less. The center is counted as a layer.
(iii) In cables with 25 pairs or less, the root-mean-square (rms) value must include all the pair-to-pair unbalances measured for each compartment separately.
(iv) In cables containing more than 25 pairs, the rms value must include the pair-to-pair unbalances in the separate compartments.
(6)
(ii) When measuring pair-to-ground capacitance unbalance all pairs except the pair under test are grounded to the shield and/or shield/armor except when measuring cables containing super units in which case all other pairs in the same super unit must be grounded to the shield.
(iii) The screen tape must be left floating during the test.
(iv) Pair-to-ground capacitance unbalance may vary directly with the length of the cable.
(7)
(ii) For T1C type cables over 12 pairs, the maximum average attenuation of all pairs on any reel must not exceed the values listed below when measured at a frequency of 1576 kilohertz at or corrected to a temperature of 20
(8)
(ii) The near-end power sum crosstalk loss (NEXT) as measured on completed cable must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 8.8, NEXT Table.
(iii)
(B) For T1C screened cable the NEXT as measured on the completed cable must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 8.9 and 8.9.2.
(9)
(10)
(ii) In each length of completed cable, the dielectric between the shield and/or armor and conductors in the core must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 8.13, Single Jacketed, Solid Column. In screened cable the screen tape must be left floating.
(iii)
(B) In this test, the cable shield and/or armor must be left floating.I11(11)
(ii) The maximum number of pairs in a cable which may vary as specified in paragraph (k)(11)(iii) of this section from the electrical parameters given in this section are listed below. These pairs may be excluded from the arithmetic calculation.
(iii)
(B)
(C)
(l)
(2)
(3)
(4)
(5)
(6)
(m)
(2) When a sheath slitting cord is used it must be nonhygroscopic and nonwicking, continuous throughout a length of cable and of sufficient strength to open the sheath without breaking the cord.
(n)
(2) The markings must be printed on the jacket at regular intervals of not more than 0.6 meter (2 feet).
(3) The completed cable must have sequentially numbered length markers in accordance with ANSI/ICEA S-84-608-1988, paragraph 10.1.5. The color of the ink used for the initial outer jacket marking must be either white or silver.
(o)
(2) The splicing modules must meet the requirements of RUS Bulletin 345-54, PE-52, RUS Specification for Telephone Cable Splicing Connectors (Incorporated by reference at § 1755.97), and be accepted by RUS prior to their use.
(p)
(2) For initial acceptance, the manufacturer must submit:
(i) An original signature certification that the product fully complies with each section of the specification;
(ii) Qualification Test Data, per appendix A of this section;
(iii) To periodic plant inspections;
(iv) A certification that the product does or does not comply with the domestic origin manufacturing provisions of the “Buy American” requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901
(v) Written user testimonials concerning field performance of the product; and
(vi) Other nonproprietary data deemed necessary by the Chief, Outside Plant Branch (Telephone).
(3) For requalification acceptance, the manufacturer must submit an original signature certification that the product fully complies with each section of the specification, excluding the Qualification Section, and a certification that the product does or does not comply with the domestic origin manufacturing provisions of the “Buy American” requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901
(4) Initial and requalification acceptance requests should be addressed to:
Chairman, Technical Standards Committee “A” (Telephone), Telecommunications Standards Division, Rural Utilities Service, Washington, DC 20250-1500.
(5)
(ii) The screen tape of each length of screened cable must be tested for continuity in accordance with ANSI/ICEA S-84-608-1988, paragraph 8.16.
(iii) Dielectric strength between conductors and shield and/or armor must be tested to determine freedom from grounds in accordance with paragraph (k)(10)(ii) of this section.
(iv) Dielectric strength between conductors and screen tape must be tested to determine freedom from grounds in accordance with paragraph (k)(10)(iii) of this section.
(v) Each conductor in the completed cable must be tested for continuity in accordance with ANSI/ICEA S-84-608-1988, paragraph 8.16.
(vi) Dielectric strength between conductors must be tested to insure freedom from shorts and crosses in each length of completed cable in accordance with paragraph (k)(10)(i) of this section.
(vii) Each conductor in the completed preconnectorized cable must be tested for continuity.
(viii) Each length of completed preconnectorized cable must be tested for split pairs.
(ix) The average mutual capacitance must be measured on all cables. If the average mutual capacitance for the first 100 pairs tested from randomly selected groups is between 50 and 53 nanofarad/kilometer (nF/km) (80 and 85 nanofarad/mile), the remainder of the pairs need not be tested on the 100 percent basis (See paragraph (k)(3) of this section).
(6)
(i) Performance requirements for conductor insulation, jacketing material, and filling and flooding compounds;
(ii) Bonding properties of coated or laminated shielding and armoring materials and performance requirements for screen tape;
(iii) Sequential marking and lettering;
(iv) Capacitance difference, capacitance unbalance, crosstalk, and attenuation;
(v) Insulation resistance, conductor resistance and resistance unbalance;
(vi) Cable cold bend and cable impact tests;
(vii) Water penetration and compound flow tests; and
(viii) Jacket notch and cable torsion tests.
(q)
(2) Measurements and computed values must be rounded off to the number of places or figures specified for the requirement according to ANSI/ICEA S-84-608-1988, paragraph 1.3.
(r)
(2) Minor defects in jackets (defects having a dimension of 3 millimeters (0.125 inch) or less in any direction) may be repaired by means of heat fusing in accordance with good commercial practices utilizing sheath grade compounds.
(s)
(2) The thermal wrap must comply with the requirements of ANSI/ICEA S-84-608-1988, paragraph 10.3. When a thermal reel wrap is supplied, the wrap must be applied to the reel and must be suitably secured in place to minimize thermal exposure to the cable during storage and shipment. The use of the thermal reel wrap as a means of reel protection will be at the option of the
(3) The outer end of the cable must be securely fastened to the reel head so as to prevent the cable from becoming loose in transit. The inner end of the cable must be securely fastened in such a way as to make it readily available if required for electrical testing. Spikes, staples, or other fastening devices which penetrate the cable jacket must not be used. The method of fastening the cable ends must be accepted by RUS prior to its use.
(4) Each length of cable must be wound on a separate reel unless otherwise specified or agreed to by the purchaser.
(5) The arbor hole must admit a spindle 63 millimeters (2.5 inches) in diameter without binding. Steel arbor hole liners may be used but must be accepted by RUS prior to their use.
(6) Each reel must be plainly marked to indicate the direction in which it should be rolled to prevent loosening of the cable on the reel.
(7) Each reel must be stenciled or labeled on either one or both sides with the information specified in ANSI/ICEA S-84-608-1988, paragraph 10.4 and the RUS cable designation:
(8) When cable manufactured to the requirements of this section is shipped, both ends must be equipped with end caps acceptable to RUS.
(9) When preconnectorized cables are shipped, the splicing modules must be protected to prevent damage during shipment and handling. The protection method must be acceptable to RUS and accepted prior to its use.
(10) All cables ordered for use in underground duct applications must be equipped with a factory-installed pulling-eye on the outer end in accordance with ANSI/ICEA S-84-608-1988, paragraph 10.5.2.
(I) The test procedures described in this appendix are for qualification of initial designs and major modification of accepted designs. Included in (V) of this appendix are suggested formats that may be used in submitting the test results to RUS.
(II)
(a) Length A shall be 10
(b) Length B shall be 12
(c) Length C shall be one meter (3 feet) long. Four lengths are required.
(d) Length D shall be 300 millimeters (1 foot) long. Four lengths are required.
(e) Length E must be 600 millimeters (2 feet) long. Four lengths are required.
(f) Length F shall be 3 meters (10 feet) long and must be maintained at 23
(2)
(III)
(b)
(i) Water Immersion Test outlined in (III)(2) of this appendix;
(ii) Water Penetration Test outlined in (III)(3) of this appendix;
(iii) Insulation Compression Test outlined in (III)(4) of this appendix; and
(iv) Jacket Slip Strength Test outlined in (III)(5) of this appendix.
(c)
(ii) The attenuation at 150 and 772 kilohertz may be calculated from open circuit admittance (Yoc) and short circuit impedance (Zsc) or may be obtained by direct measurement of attenuation.
(iii) Record on suggested formats in (V) of this appendix or on other easily readable formats.
(d)
(ii) At the end of this period note any exudation of cable filler. Measure and calculate the parameters given in (III)(1)(c) of this appendix. Record on suggested formats in (V) of this appendix or on other easily readable formats.
(iii) Cut away and discard a one meter (3 foot) section from each end of length B.
(e)
(ii) The stability of the electrical parameters after completion of this test must be within the following prescribed limits:
(A)
(B) The change in average mutual capacitance must be less than 5 percent over frequency 1 to 150 kilohertz; and
(C)
(2)
(b)
(c)
(i) Remeasure the mutual capacitance after the cables have been submerged for 24 hours and again after 30 days.
(ii) Record each sample separately on suggested formats in (V) of this appendix or on other easily readable formats.
(d)
(ii) The average mutual capacitance must be within 5 percent of its original value.
(3)
(b) Test per Option A or Option B—(i)
(ii)
(4)
(b)
(5)
(b)
(c)
(6)
(b) Immediately after completing the measurements, expose the test sample to 100 temperature cyclings. Relative humidity within the chamber must be maintained at 90
(c) Repeat steps (III)(1)(d)(ii) through (III)(5)(c) of this appendix.
(7)
(b) Immediately after completing the measurements, subject the test sample to the 10 cycles of temperature between a minimum of −40
(c) Repeat steps (III)(1)(d)(ii) through (III)(5)(c) of this appendix.
(IV)
(2) Repeat steps (III)(2) through (III)(5)(c) of this appendix except use length A instead of length B.
(3)
(b) The samples must be capable of withstanding without damage, a single surge voltage of 20 kilovolts peak between conductors, and a 35 kilovolts peak surge voltage between conductors and the shield or shield/armor as hereinafter described. The surge voltage must be developed from a capacitor discharged through a forming resistor connected in parallel with the dielectric of the test sample. The surge generator constants must be such as to produce a surge of 1.5 × 40 microsecond wave shape.
(c) The shape of the generated wave must be determined at a reduced voltage by connecting an oscilloscope across the forming resistor with the cable sample connected in parallel with the forming resistor. The capacitor bank is charged to the test voltage and then discharged through the forming resistor and test sample. The test sample will be considered to have passed the test if there is no distinct change in the wave shape obtained with the initial reduced voltage compared to that obtained after the application of the test voltage.
(V) The following suggested formats may be used in submitting the test results to RUS:
(a)
(i) Terminating subscriber lines at a location remote from the serving central office;
(ii) Concentrating the subscriber lines over a few transmission and supervisory paths to the serving central office; and
(iii) Terminating the lines at the central office without loss of individual identity. A subscriber connected to a line concentrator shall be capable of having essentially the same services as a subscriber connected directly to the central office equipment (COE). Intra-unit calling among subscribers connected to the concentrator may be provided, but is not required.
(2) Industry standards, or portions thereof, referred to in this paragraph (a) are incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552 (a) and 1 CFR part 51. Copies of these standards are available for inspection during normal business hours at RUS, room 2838, U.S. Department of Agriculture, Washington, DC 20250 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(3) American National Standards Institute (ANSI) standards are available from ANSI Inc., 11 West 42nd Street, 13th floor, New York, NY 10036, telephone 212-642-4900.
(i) ANSI Standard S1.4-1983, Specification for Sound Level Meters, including Amendment S1.4A-1985.
(ii) [Reserved]
(4) American Society for Testing Materials (ASTM) are available from 1916 Race Street, Philadelphia, PA 19103, telephone 215-299-5400.
(i) ASTM Specification B33-91, Standard Specifications for Tinned Soft or Annealed Copper Wire for Electrical Purposes.
(ii) [Reserved]
(5) Bell Communications Research (Bellcore) standards are available from Bellcore Customer Service, 8 Corporate Place, Piscataway, NJ 08854, telephone 1-800-521-2673.
(i) TR-TSY-000008, Issue 2, August 1987, Digital Interface between the SLC 96 Digital Loop Carrier System and a Local Digital Switch.
(ii) Bell Communications Research (Bellcore) document TR-TSY-000057, Issue 1, April 1987, including Revision 1, November 1988, Functional Criteria for Digital Loop Carrier Systems.
(iii) Bell Communications Research (Bellcore) Document TR-NWT-000303, Issue 2, December 1992, including Revision 1, December 1993, Integrated Digital Loop Carrier System Generic Requirements, Objectives, and Interface.
(6) Federal Standard H28, Screw-Thread Standards for Federal Services, March 31, 1978, including Change Notice 1, May 28, 1986; Change Notice 2, January 20, 1989; and Change Notice 3, March 12, 1990. Copies may be obtained from the General Services Administration, Specification Section, 490 East L'Enfant Plaza SW, Washington, DC 20407, telephone 202-755-0325.
(7) IEEE standards are available from IEEE Service Center, 445 Hoes Lane,
(i) IEEE Standard 455-1985, Standard Test Procedure for Measuring Longitudinal Balance of Telephone Equipment Operating in the Voice Band.
(ii) [Reserved]
(8) RUS standards are available from Publications and Directives Management Branch, Administrative Services Division, Rural Utilities Service, room 0180, South Building, U.S. Department of Agriculture, Washington, DC 20250-1500.
(i) RUS Bulletin 345-50, PE-60 (Sept 1979), RUS Specification for Trunk Carrier Systems.
(ii) [Reserved]
(b)
(2) The concentrator system shall communicate with standard T1 digital transmission format at a minimum between the concentrator and central office terminals. Analog conversion functions at remote and central office terminals shall be capable of being eliminated to accommodate end-to-end digital transmission.
(3) The LC shall operate properly as an integral part of the telephone network when connected to physical or carrier derived circuits and central offices meeting RUS specifications and other generally accepted telecommunications practices, such as Bellcore documents TR-NWT-000303, Integrated Digital Loop Carrier System Generic Requirements, Objectives and Interface; TR-TSY-000008, Digital Interface between the SLC 96 Digital Loop Carrier System and a Local Digital Switch; and TR-TSY-000057, Functional Criteria for Digital Loop Carrier Systems.
(4) For RUS acceptance consideration of a LC, the manufacturer must certify and demonstrate that all requirements specified in this section are available and in compliance with this section.
(5) Certain requirements are included in this section for features which may not be needed for every application. Such features are identifiable by the inclusion in the requirements of some such phrase as “when specified by the owner” or “as specified by the owner.” In some cases where an optional feature will not be required by an owner, either now or in the future, a system which does not provide this feature shall be considered to be in compliance with the specification for the specific installation under consideration, but not in compliance with the entire specification.
(6) The owner may properly request bids from any supplier of an RUS accepted LC whose system provides all the features which will be required for a specific installation.
(7) When required by the owner, the supplier shall state compliance to the Carrier Serving Area (CSA) requirements, as stated in Bell Communications Research (Bellcore) Standard TR-TSY-000057, Functional Criteria for Digital Loop Carrier Systems.
(c)
(2) The line concentrator terminal units shall be designed such that there will be no more than 4 hours of total outages in 20 years.
(d)
(e)
(f)
(ii) There should be provisions for such types of lines as ground start, loop start, regular subscriber, pay stations, etc.
(2)
(ii)
(iii)
(3)
(ii) When ringing generators are provided in the LC on an ancillary basis, they shall be accepted or technically accepted by RUS.
(iii) Where ringing is generated at the remote end, the ringing system shall provide sufficient ringing on a bridged basis over the voltage and temperature limits of this specification and over subscriber loops within the limits stated by the manufacturer. The manufacturer shall state the minimum number (not less than two) of main station ringers that can be used for each ringing option available.
(g)
(ii) Service to customers served by a traffic sensitive LC should not be noticeably different than the service to customers served by the dedicated physical pairs from the central office so that uniform grade of service will be provided to all customers in any class of service. Reference § 1755.522(p)(1)(i), RUS General Specification for Digital, Stored Program Controlled Central Office Equipment.
(2)
(3) When required, traffic data will be stored in electronic storage registers or a block of memory consisting of one or more traffic counters for each item to be measured. The bidder shall indicate what registers are to be supplied, their purpose and the means for displaying the information locally (or at a remote location when available).
(h)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(ii) Due to possible loss of the least significant bit on direct digital connections, a signal to distortion degradation of up to 2 dB may be allowed where adequately justified by the bidder.
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(ii) The output of a digital-to-digital port shall be Pulse Code Modulation (PCM), encoded in eight-bit words using the mu-255 encoding law and D3 encoding format, and arranged to interface with a T1 span line.
(iii) Signaling shall be by means of Multifrequency (MF) or Dual Pulsing (DP) and the system which is inherent in the A and B bits of the D3 format. In the case where A and B bits are not used for signaling or system control, these bits shall only be used for normal voice and data transmission.
(iv) When a direct digital interface between the span line and the host central office equipment is to be implemented, the following requirements shall be met:
(A) The span line shall be terminated in a central office as a minimum a DS1 (1.544Mb/s) shall be provided;
(B) The digital central office equipment shall be programmed to support the operation of the digital port with the line concentrator subscriber terminal;
(C) The line concentrator subscriber terminal used with a direct digital interface shall be interchangeable with the subscriber terminal used with a central office terminal.
(i)
(j)
(ii) Equipment must pass laboratory tests, simulating a hostile electrical environment, before being placed in the field for the purpose of obtaining field experience. For acceptance consideration RUS requires manufacturers to submit recently completed results (within 90 days of submittal) of data obtained from the prescribed testing. Manufacturers are expected to detail how data and tests were conducted. There are five basic types of laboratory tests which must be applied to exposed terminals in an effort to determine if the equipment will survive. Figure 2 of this section, Summary of Electrical Requirements and Tests, identifies the tests and their application as follows:
(iii) Electrical protection requirements for line concentrator equipment can be summarized briefly as follows:
(A) Current surge tests simulate the stress to which a relatively low impedance path may be subjected before main frame protectors break down. Paths with a 100 Hz impedance of 50 ohms or less shall be subjected to current surges, employing a 10 x 1000 microsecond waveshape as defined in Figure 3 of this section, Surge Waveshape. For the purpose of determining this impedance, arresters which are mounted within the equipment are to be considered zero impedance. The crest current shall not exceed 500A; however, depending on the impedance of the test specimen this value of current may be lower. The crest current through the sample, multiplied by the sample's 100 Hz impedance, shall not exceed 1000 V. Where sample impedance is less than 2 ohms, peak current shall be limited to 500A as shown in Figure 4 of this section, Current Surge Tests. Figures 3 and 4 follow:
(B) Sixty Hertz (60 Hz) current carrying tests shall be applied to simulate an ac power fault which is conducted to the unit over the cable pairs. The test shall be limited to 10 amperes Root Mean Square (rms) of 60 Hz ac for a period of 11 cycles (0.1835 seconds) and shall be applied longitudinally from line to ground.
(C) AC power service surge voltage tests shall be applied to the power input terminals of ac powered devices
(D) Voltage surge tests which simulate the voltage stress to which a relatively high impedance path may be subjected before primary protectors break down and protect the circuit. To ensure coordination with the primary protection while reducing testing to the minimum, voltage surge tests shall be conducted at a 1000 volts with primary arresters removed for devices protected by carbon blocks, or the +3 sigma dc breakdown voltage of other primary arresters. Surge waveshape should be 10 x 1000 microseconds.
(E) Arrester response delay tests are designed to stress the equipment in a manner similar to that caused by the delayed breakdown of gap type arresters when subjected to rapidly rising voltages. Arresters shall be removed for these tests, the peak surge voltage shall be the +3 sigma breakdown voltage of the arrester in question on a voltage rising at 100 V per microsecond, and the time for the surge to decay to half voltage shall equal at least the delay time of the tube as explained in Figure 5 of this section, Arrester Response Delay Time as follows:
(iv) Tests shall be conducted in the following sequence. As not all tests are required in every application, non-applicable tests should be omitted:
(A) Current Impulse Test;
(B) Sixty Hertz (60 Hz) Current Carrying Tests;
(C) AC Power Service Impulse Voltage Test;
(D) Voltage Impulse Test; and
(E) Arrester Response Delay Time Test.
(v) A minimum of five applications of each polarity for the surge tests and three for the 60 Hz Current Carrying Tests are the minimum required. All tests shall be conducted with not more than 1 minute between consecutive applications in each series of three or five applications to a specific configuration so that heating effects will be cumulative. See Figure 6 of this section, 60 Hz Current Surge Tests as follows:
(vi) Tests shall be applied between each of the following terminal combinations for all line operating conditions:
(A) Line tip to ring;
(B) Line ring to ground;
(C) Line tip to ground; and
(D) Line tip and ring tied together to ground.
(2)
(ii) Direct current potentials shall be applied between all line terminals and the equipment chassis and between these terminals and grounded equipment housings in all instances where the circuitry is dc open circuit from the chassis, or connected to the chassis through a capacitor. The duration of all dielectric strength tests shall be at least 1 second. The applied potential shall be at a minimum equal to the plus 3 sigma dc breakdown voltage of the arrester, provided by the line concentrator manufacturer.
(3)
(4)
(ii) Printed circuit boards or similar equipment employing electronic components should be self-protecting against external grounds applied to the connector terminals. Board components and coatings applied to finished products shall be of such material or so treated that they will not support combustion.
(iii) Every precaution shall be taken to protect electrostatically sensitive components from damage during handling. This shall include written instructions and recommendations.
(k)
(2)
(i) 6 turns of 30 gauge;
(ii) 6 turns of 26 gauge;
(iii) 6 turns of 24 gauge; or
(iv) 5 turns of 22 gauge.
(3)
(4)
(5)
(ii) To the extent practicable, the following temperature range objectives shall be met:
(A) For equipment mounted in central office and subscriber buildings, the carrier equipment shall operate satisfactory within an ambient temperature range of 32 °F to 120 °F (0 °C to 49 °C) and at 80 percent relative humidity between 50 °F and 100 °F (10 °C and 38 °C); and
(B) Equipment mounted outdoors in normal operation (with cabinet doors closed) shall operate satisfactorily within an ambient temperature range (external to cabinet) of −40 °F to 140 °F (−40 °C to 60 °C) and at 95 percent relative humidity between 50 °F to 100 °F (10 °C to 38 °C). As an alternative to the (60 °C) requirement, a maximum ambient temperature of 120 °F (49 °C) with equipment (cabinet) exposed to direct sunlight may be substituted.
(6)
(7)
(8)
(9)
(ii) In order to limit corrosion, all metal parts of the housing and mounting frames shall be constructed of suitable corrosion resistant materials or materials protectively coated to render them adequately resistant to corrosion under the climatic and atmospheric conditions existing in the area in which the housing is to be installed.
(10)
(ii) The distributing frame shall provide terminals for terminating all incoming cable pairs. Arresters shall be provided for all incoming cable pairs, or for a smaller number of pairs if specified.
(iii) The current carrying capacity of each arrester and its associated mounting shall coordinate with a
(iv) Remote terminal protectors may be mounted and arranged so that outside cable pairs may be terminated on the left or bottom side of protectors (when facing the vertical side of the MDF) or on the back surface of the protectors. Means for easy identification of pairs shall be provided.
(v) Protectors shall have a “dead front” (either insulated or grounded) where live metal parts are not readily accessible.
(vi) Protectors shall be provided with an accessible terminal of each incoming conductor which is suitable for the attachment of a temporary test lead. They shall also be constructed so that auxiliary test fixtures may be applied to open and test the subscriber's circuit in either direction. Terminals shall be suitable for wire wrapped connections or connectorized.
(vii) If specified, each protector group shall be furnished with a factory assembled tip cable for splicing to the outside cable; the tip cable shall be 20 feet (6.1 m) in length, unless otherwise
(viii) Protector makes and types used shall be RUS accepted.
(l)
(2)
(ii) Where equipment is dc powered, it must operate satisfactorily over a range of 50 volts
(iii) Where equipment is ac powered, it must operate satisfactorily over a range of 120
(3)
(ii) The batteries shall have an ampere hour load capacity of no less than 8 busy hours. When an emergency ac supply source is available, the battery reserve may be reduced to 3 busy hours.
(iii) The batteries shall be sealed when they are mounted in the cabinet with the concentrator equipment.
(iv) When specified by the owner, battery heaters shall be supplied in a bidder-furnished housing.
(4)
(ii) Charging shall be on a full float basis. The rectifiers shall be of the full wave, self-regulating, constant voltage, solid-state type and shall be capable of being turned on and off manually.
(iii) When charging batteries, the voltage at the battery terminals shall be adjustable and shall be set at the value recommended for the particular battery being charged, provided it is not above the maximum operating voltage of the central office switching equipment. The voltage shall not vary more than
(iv) The charger noise, when measured with a suitable noise measuring set and under the rated battery capacitance and load conditions, shall not exceed 22 dBrnC. See Figure 7 of this section, Charger Noise Test as follows:
(v) The charging equipment shall be provided with a means for indicating a failure of charging current whether due to ac power failure, an internal failure in the charger, or to other circumstances which might cause the output voltage of the charger to drop below the battery voltage. Where a supplementary constant current charger is used, an alarm shall be provided to indicate a failure of the charger.
(vi) Audible noise developed by the charging equipment shall be kept to a minimum. Acoustic noise resulting from operation of the rectifier shall be expressed in terms of dB indicated on a sound level meter conforming to American National Standards Institute S1.4, and shall not exceed 65 dB (A-weighting) measured at any point 5 feet (1.5m) from any vertical surface of the rectifier.
(vii) The charging equipment shall be designed so that neither the charger nor the central office equipment is subject to damage in case the battery circuit is opened for any value of load within the normal limits.
(5)
(ii) Power panels, cabinets and shelves, and associated wiring shall be designed initially to handle the line concentrator terminal when it reaches its ultimate capacity as specified by the owner.
(iii) The power panel shall be of the “dead front” type.
(6)
(7)
(8)
(m)
(ii) Design precautions shall be taken to prevent the possibility of equipment damage arising from the insertion of an electronic package into the wrong connector or the removal of a package from any connector or improper insertion of the correct card in its connector.
(2)
(n)
(ii) When required, a jack or other connector shall be provided to connect a fault or trouble recorder (printer or display).
(2)
(ii) The maintenance system shall be arranged to provide the ability to determine trouble to an individual card, functional group of cards, or other equipment unit.
(o)
(p)
(2) Three complete sets of legible drawings shall be provided for each central office to be accessed. Each set shall include all of the following:
(i) Drawings of major equipment items such as frames, with the location of major component items of equipment shown therein;
(ii) Wiring diagrams indicating the specific method of wiring used on each item of equipment and interconnection wiring between items of equipment;
(iii) Maintenace drawings covering each equipment item that contains replaceable parts, appropriately identifying each part by name and part number; and
(iv) Job drawings including all drawings that are individual to the particular line concentrator involved such as mainframe, power equipment, etc.
(3) The following information shall also be furnished:
(i) A complete index of required drawings;
(ii) An explanation of electrical principles of operation of overall concentrator system;
(iii) A list of tests which can be made with each piece of test equipment furnished and an explanation of the method of making each test;
(iv) A sample of each form recommended for use in keeping records;
(v) The criteria for analyzing results of tests and determining appropriate corrective action;
(vi) A set of general notes on methods of isolating equipment faults to specific printed circuit cards in the equipment;
(vii) A list of typical troubles which might be encountered, together with general indications as to probable location of each trouble; and
(viii) All special line concentrator system grounding requirements.
(4) When installation is to be done by the bidder a complete set of drawings shall be provided by the owner, such as floor plans, lighting, grounding and ac power access.
(q)
(2)
(i) Allow the bidder and its employees free access to the premises and facilities at all hours during the progress of the installation;
(ii) Provide access to the remote site and any other site for development work needed during the installation;
(iii) Take such action as necessary to ensure that the premises are dry and free from dust and in such condition as not to be hazardous to the installation personnel or the material to be installed (not required when remote terminal is not installed in a building);
(iv) Provide heat or air conditioning when required and general illumination in rooms in which work is to be performed or materials stored;
(v) Provide suitable openings in buildings to allow material to be placed in position (not required when a remote terminal is not installed in a building);
(vi) Provide the necessary conduit and commercial and dc-ac inverter output power to the locations shown on the approved floor plan drawings;
(vii) Provide 110 volts a.c., 60 Hz commercial power equipped with a secondary arrester and a reasonable number of outlets for test, maintenance and installation equipment;
(viii) Provide suitable openings or channels and ducts for cables and conductors from floor to floor and from room to room;
(ix) Provide suitable ground leads, as designated by the bidder (not required when remote terminal is not installed in a building);
(x) Provide the necessary wiring, central office ground and commercial power service, with a secondary arrester, to the location of an exterior remote terminal installation based on the voltage and load requirements furnished voltage and load requirements furnished by the bidder;
(xi) Test at the owners expense all lines and trunks for continuity, leakage and loop resistance and ensure that all lines and trunks are suitable for operation with the central office and remote terminal equipment specified;
(xii) Make alterations and repairs to buildings necessary for proper installation of material, except to repair damage for which the bidder or its employees are responsible;
(xiii) Connect outside cable pairs on the distributing frame (those connected to protectors);
(xiv) Furnish all line, class of service assignment, and party line assignment information to permit bidder to program the data base memory within a reasonable time prior to final testing;
(xv) Release for the bidder's use, as soon as possible, such portions of the
(xvi) Make prompt inspections as it deems necessary when notified by the bidder that the equipment, or any part thereof, is ready for acceptance;
(xvii) Provide adequate fire protection apparatus at the remote terminal, including one or more fire extinguishers or fire extinguishing systems of the gaseous type, that has low toxicity and effect on equipment;
(xviii) Provide necessary access ports for cable, if underfloor cabling is selected;
(xix) Install equipment and accessory plant devices mounted external to the central office building and external to the repeater and other outside housings including filters, repeater housings, splicing of repeater cable stubs, externally mounted protective devices and other such accessory devices in accordance with written instructions provided by the bidder; and
(xx) Make all cross connections (at the MDF or Intermediate Distribution Frame IDF) between the physical trunk or carrier equipment and the central office equipment unless otherwise specified in appendix A of this section.
(3)
(i) Allow the owner and its representatives access to all parts of the building at all times;
(ii) Obtain the owner's permission before proceeding with any work necessitating cutting into or through any part of the building structure such as girders, beams, concrete or tile floors, partitions or ceilings (does not apply to the installation of lag screws, expansion bolts, and similar devices used for fastening equipment to floors, columns, walls, and ceilings);
(iii) Be responsible for and repair all damage to the building due to carelessness of the bidder's workforce, exercise reasonable care to avoid any damage to the owner's switching equipment or other property, and report to the owner any damage to the building which may exist or may occur during its occupancy of the building;
(iv) Consult with the owner before cutting into or through any part of the building structure in all cases where the fireproofing or moisture proofing may be impaired;
(v) Take necessary steps to ensure that all fire fighting apparatus is accessible at all times and all flammable materials are kept in suitable places outside the building;
(vi) Not use gasoline, benzene, alcohol, naphtha, carbon tetrachloride or turpentine for cleaning any part of the equipment;
(vii) Be responsible for delivering the CO and remote terminal equipment to the sites where they will be needed;
(viii) Install the equipment in accordance with the specifications for the line concentrator;
(ix) Have all leads brought out to terminal blocks on the MDF (or IDF if stated in appendix A of this section) and have all terminal blocks identified and permanently labeled;
(x) Use separate shielded type leads grounded at one end only unless otherwise specified by the owner or bidder or tip cables meeting RUS cable crosstalk requirements for carrier frequencies inside the central office;
(xi) Group the cables to separate carrier frequency, voice frequency, signaling, and power leads;
(xii) Make the necessary power and ground connections (location as shown in appendix A of this section) to the purchaser's power terminals and ground bus unless otherwise stated in appendix A of this section (ground wire shall be 6 AWG unless otherwise stated);
(xiii) Place the battery in service in compliance with the recommendations of the battery manufacturer;
(xiv) Make final charger adjustments using the manufacturer's recommended procedure;
(xv) Run all jumpers, except line and trunk jumpers (those connected to protectors) unless otherwise specified in appendix A of this section;
(xvi) Establish and update all data base memories with subscriber information as supplied by the owner until an agreed turnover time;
(xvii) Give the owner notice of completion of the installation at least one week prior to completion;
(xviii) Permit the owner or its representative to conduct tests and inspections after installation has been completed in order that the owner may be assured the requirements for installation are met;
(xix) Allow access, before turnover, by the owner or its representative, upon request, to the test equipment which is to be turned over as a part of the delivered equipment, to permit the checking of the circuit features which are being tested and to permit the checking of the amount of connected equipment to which the test circuits have access;
(xx) Notify the owner promptly of the completion of work of the central office terminals, remote terminals or such portions thereof as are ready for inspection; and
(xxi) Correct promptly all defects for which the bidder is responsible.
(4)
(i) Two copies of the equipment list and the traffic calculations from which the quantities in the equipment list are determined;
(ii) Two copies of the traffic tables from which the quantities are determined, if other than the Erlang B traffic tables;
(iii) A block diagram of the line concentrator and associated maintenance equipment will be provided;
(iv) A prescribed method and criteria for acceptance of the completed line concentrator which will be subject to review;
(v) This special grounding requirements including the recommended configuration, suggested equipment and installation methods to be used to accomplish them;
(vi) The special handling and equipment requirements to avoid damage resulting from the discharge of static electricity (see paragraph (j)(4)(iii) of this section) or mechanical damage during transit installation and testing;
(vii) The location of technical assistance service, its availability and conditions for owner use and charges for the service by the bidder; and
(viii) The identification of the subscriber loop limits available beyond the line concentrator.
(5)
(ii) All multiple and associated wiring shall be continuous, free from crosses, reverses, and grounds and shall be correctly wired at all points.
(iii) An inspection shall be made by the owner or its representatives prior to performing operational and performance tests on the equipment, but after all installing operations which might disturb apparatus adjustments have been completed. The inspection shall be of such character and extent as to disclose with reasonable certainty any unsatisfactory condition of apparatus or equipment. During these inspections, or inspections for apparatus adjustments, or wire connections, or in testing of equipment, a sufficiently detailed examination shall be made throughout the portion of the equipment within which such condition is observed, or is likely to occur, to disclose the full extent of its existence, where any of the following conditions are observed:
(A) Apparatus or equipment units failing to compare in quantity and type to that specified for the installation;
(B) Apparatus or equipment units damaged or incomplete;
(C) Apparatus or equipment affected by rust, corrosion or marred finish; and
(D) Other adverse conditions resulting from failure to meet generally accepted standards of good workmanship.
(6)
(ii) All equipment shall be tested to ensure proper operation with all components connected in all possible combinations and each line shall be tested for proper ring, ring trip and supervision.
(iii) All fuses shall be verified for continuity and correct rating. Alarm indication shall be demonstrated for each equipped fuse position. An already failed fuse compatible with the fuse position may be used.
(iv) Each alarm or signal circuit shall be checked for correct operation.
(v) A sufficient quantity of locally originating and incoming calls shall be made to demonstrate the function of the line concentrator including all equipped transmission paths. When intra-link calling is supplied, all intra-link transmission paths shall be demonstrated.
(7)
(A) A detailed cross connect drawing of alarm to power board, central office battery to physical trunks or carrier system, wiring options used in terminals, channels, filters, repeaters, etc., marked in the owner's copy of the equipment manual or supplied separately;
(B) The measured central office supply voltages applied to the equipment terminals or repeaters at the time the jack and test point readings are made and ac supply voltages where equipment is powered from commercial ac sources;
(C) A list of all instruments, including accessories, by manufacturer and type number, used to obtain the data; and
(D) The measurements at all jack or test points recommended by the manufacturer, including carrier frequency level measurements at all carrier terminals and repeaters where utilized.
(ii) Data in the form of a checklist or other notations shall be supplied showing the results of the operational tests.
(iii) The bidder shall furnish to the owner a record of the battery cell or multicell unit voltages measured at the completion of the installation of the switching system before it is placed in commercial service. This is not required at a site where the owner furnishes dc power.
(8)
(A) The owner shall review the acceptance test data and compare it to the requirements of this section.
(B) Sample measurements shall be made on all systems installed under this contract. Test methods should follow procedures described in paragraph (g)(5) of this section.
(C) A check shall be made of measured test point and jack readings for compliance with the manufacturer's specifications. This applies also to channels, terminals, carrier frequency repefault locating circuits.
(ii) In the event that the measured data or operational tests show that equipment fails to meet the requirements quirements of this section, the deficiencies are to be resolved as set forth in Article II of the 397 Special Equipment Contract. (Copies are available from RUS, room 0174, U.S. Department of Agriculture, Washington, DC 20250-1500.) The reports of the bidder and the owner shall be detailed as to deficiencies, causes, corrective action necessary, corrective action to be taken, completion time, etc.
1.1Notwithstanding the bidder's equipment lists, the equipment and materials furnished by the bidder must meet the requirements of paragraphs (a) through (p) of this section, and this appendix A.
1.2Paragraph (a) through (p) of this section cover the minimum general requirements for line concentrator equipment.
1.3Paragraph (q) of this section covers the requirements for installation, inspection and testing when such service is included as part of the contract.
1.4This appendix A covers the technical data for application engineering and detailed equipment requirements insofar as they can be established by the owner. This appendix A shall be filled in by the owner.
1.5Appendix B of this section covers detailed information on the line concentrator equipment, information on system reliability and traffic capacity as proposed by the bidder. Appendix B of this section is to be filled in by the bidder and must be presented with the bid.
3.1Number of non-pay station lines having a loop resistance, including the telephone set as follows:
3.1.1For physical trunks between the remote and the office units, the loop resistance is to include the resistance of the trunk.
3.1.2Number of pay station lines having a loop resistance, excluding the telephone set, greater than:
When physical trunks are used, these resistances include that of the facility between the CO and the remote.
3.1.3Range extension equipment, if required, is to be provided:
4.1Average combined originating and terminating hundred call seconds (CCS) per line in the busy hour:
4.2Percent Intra-Calling
4.3Total Busy Hour Calls
5.2 Minimum ringing generator capacity to be supplied shall be sufficient to serve
6.1COE will be:
6.1.1COE Manufacturer
6.1.2
6.2Interface will be:
6.3Mounting rack for line concentrator furnished by:
6.4Equipment to be installed in existing building:
7.1Transmission facilities between the central office and remote terminals shall be:
7.1.1Type:
7.1.2Utilizes physical plant
Unless otherwise stated, physical plant will be supplied by the owner.
7.1.3Terminal equipment for transmission facility to be supplied by:
7.1.3.1Carrier e/w voice terminations
7.1.3.2Digital span line (DS1) supplied by
7.1.3.3Number of repeaters (per span line)
7.1.3.4Diverse (alternate) span line routing required
7.1.3.5Span line terminations only
7.1.3.6Span line power required (CO and Remote Terminals)
7.1.3.7Physical facility between CO and remote Loop Resistance
8.1Central Office Terminal
8.1.1Owner-furnished −48 volt dc power
8.1.2Other (Describe)
8.1.3Standby power is available
8.2Remote Terminal
8.2.1Owner-furnished −48 vdc power
8.2.2Bidder-furnished power supply
8.2.3 AC power available at site:
8.2.4A battery reserve of
8.2.5Batteries supplied shall be:
8.2.6Standby power is available
9.1Mounting
9.1.1
9.1.2
9.1.3
9.1.4
9.1.5
9.1.6
9.2Equipment is to be installed in an existing building.
9.3Other (Describe)
1.1The equipment and materials furnished by the bidder must meet the requirements of paragraphs (a) through (p) of this section.
1.2Paragraph (a) through (p) of this section cover the minimum general requirements for line concentrator equipment.
1.3Paragraph (q) of this section covers requirements for installation, inspection and testing when such service is included as part of the contract.
1.4Appendix A of this section covers the technical data for application engineering and detailed equipment requirements insofar as they can be established by the owner. Appendix A of this section is to be filled in by the owner.
1.5This appendix B covers detailed information on the line concentrator equipment, information as to system reliability and
2.1Reliability (See paragraph (c) of this section)
2.2Busy Hour Load Capacity and Traffic Delay (See Paragraph (g) of this section)
3.1Transmission Facilities between the Central Office and Remote Terminals
Power required for heating or cooling equipment in remote bidder-furnished housing
Sections 1755.400 through 1755.407 cover the requirements for acceptance tests and measurements on installed copper and fiber optic telecommunications plant and equipment.
(a) Acceptance tests outlined in §§ 1755.400 through 1755.407 are applicable to plant constructed by contract or force account. This testing standard provides for the following:
(1) Specific types of tests or measurements for the different types of telecommunications plant and equipment;
(2) The method of measurement and types of measuring equipment;
(3) The expected results and tolerances permitted to meet the acceptable standards and objectives;
(4) Suggested formats for recording the results of the measurements and tests; and
(5) Some probable causes of nonconformance and methods for corrective action, where possible.
(b) Alternative methods of measurements that provide suitable alternative results shall be permitted with the concurrence of the Rural Utilities Service (RUS).
(c) For the purpose of this testing standard, a “measurement” shall be defined as an evaluation where quantitative data is obtained (e.g., resistance in ohms, structural return loss in decibels (dB), etc.) and a “test” shall be defined as an evaluation where no quantitative data is obtained (e.g., a check mark indicating conformance is usually the result of the test).
(d) The sequence of tests and measurements described in this standard have been prepared as a guide. Variations from the sequence may be necessary on an individual application basis.
(e) There is some overlap in the methods of testing shown; also, the extent of each phase of testing may vary on an individual basis. The borrower shall determine the overall plan of testing, the need and extent of testing, and the responsibility for each phase of testing.
(a) The resistance of the central office (CO) and the remote switching terminal (RST) ground shall be measured before and after it has been bonded to the master ground bar (MGB) where it is connected to the building electric service ground.
(b) The ground resistance of electronic equipment such as span line repeaters, carrier terminal equipment, concentrators, etc. shall be measured.
(c)
(d)
(e)
(2) For electronic equipment, the ground resistance shall not exceed 25 ohms. Where the measured ground resistance exceeds 25 ohms, the borrower shall determine what additional grounding, if any, shall be provided.
(3) When ground resistance measurements exceed the ground resistance requirements of paragraphs (e)(1) and (e)(2) of this section, refer to RUS Bulletin 1751F-802, “Electrical Protection Grounding Fundamentals,” for suggested methods of reducing the ground resistance.
(f)
(g)
(a)
(2) Measurement techniques outlined here for verification of shield or shield/armor continuity are applicable to buried cable plant. Measurements of shield continuity between splices in aerial cable plant should be made prior to completion of splicing. Conclusive results cannot be obtained on aerial plant after all bonds have been completed to the supporting strand, multigrounded neutral, etc.
(3)
(ii) Cable shield or shield/armor continuity within pedestals or splices shall be measured with a cable shield splice continuity test set. The step-by-step measurement procedure outlined in the manufacturer's operating instructions for the specific test equipment being used shall be followed.
(4)
(ii) A cable shield splice continuity tester shall be used to measure shield or shield/armor continuity within pedestals or splices.
(5)
(ii) All values of shield and shield/armor resistance provided in Tables 1 and 2 in (a)(5)(i) of this section are considered approximations. If the measured value corrected to 68°F (20°C) is within
(iii) To correct the measured shield resistance to the reference temperature of 68°F (20°C) use the following formulae:
(iv) The temperature coefficients (A) for the shield tapes to be used in the formulae referenced in paragraph (a)(5)(iii) of this section are as follows:
(A) 5 and 10 mil copper = 0.0021 for English units and 0.0039 for Metric units;
(B) 8 mil coated aluminum and 8 mil coated aluminum/6 mil coated steel = 0.0022 for English units and 0.0040 for Metric units;
(C) 5 mil copper clad stainless steel and 5 mil copper clad alloy steel = 0.0024 for English units and 0.0044 for Metric units;
(D) 6 mil copper clad stainless steel = 0.0019 for English units and 0.0035 for Metric units; and
(E) 6 and 7 mil alloy 194 = 0.0013 for English units and 0.0024 for Metric units.
(v) When utilizing shield continuity testers to measure shield and shield/armor continuity within pedestals or splices, refer to the manufacturer's published information covering the specific test equipment to be used and for anticipated results.
(6)
(7)
(b)
(c)
(2)
(ii) IR tests are normally made from the MDF with all CO equipment disconnected at the MDF, but this test may be made on new cables at field locations before they are spliced to existing cables. The method of measurement shall be as shown in Figure 3 as follows:
(iii) If the IR of the conductor cannot be measured because of breakdown of lightning arresters by the test voltage, the arrester units shall be removed and the conductor IR retested. If the IR then meets the minimum requirements, the conductor will be considered satisfactory. Immediately following the IR tests, all arrester units which have been removed shall be reinstalled.
(3)
(ii) The IR test set shall have an output voltage not to exceed 500 volts dc and shall be of the hand cranked or battery operated type.
(iii) The dc bridge type megohmmeter, which may be alternating current (ac) powered, shall have scales and multiplier which make it possible to accurately read IR from 1 megohm to 1 gigohm. The voltage applied to the conductors under test shall not exceed “250 volts dc” when using an instrument having adjustable test voltage levels. This will help to prevent breakdown of lightning arresters.
(4)
(ii) The megohm-mile (megohm-km) value for a conductor may be computed by multiplying the actual scale reading in megohms on the test set by the length in miles (km) of the conductor under test.
(iii) The objective insulation resistance may be determined by dividing 500 by the length in miles (805 by the length in km) of the cable or wire conductor being tested. The resulting value shall be the minimum acceptable meter scale reading in megohms.
(iv) Due to the differences between various insulating materials and filling compounds used in manufacturing cable or wire, it is impractical to provide simple factors to predict the magnitude of variation in insulation resistance due to temperature. The variation can, however, be substantial for wide excursions in temperature from the ambient temperature of 68 °F (20 °C).
(v) Borrowers should be certain that tip and ring IR measurements of each pair are approximately the same. Borrowers should also be certain that IR measurements are similar for cable or wire sections of similar length and cable or wire type. If some pairs measure significantly lower, borrowers should attempt to improve these pairs in accordance with cable manufacturer's recommendations.
Only the megohm-mile (megohm-km) requirement shall be cause for rejection, not individual measurement differences.
(5)
(6)
(ii) Should the cable or wire fail to meet the 500 megohm-mile (805 megohm-km) requirement when the temperature is known to be approximately 68 °F (20 °C) there is not yet justification for rejection of the cable or wire. Protectors, lightning arresters, etc., may be a source of low insulation resistance. These devices shall be removed from the cable or wire and the cable or wire IR measurement shall be repeated. If the result is acceptable, the cable or wire shall be considered acceptable. The removed devices which caused the low insulation resistance value shall be identified and replaced, if found defective.
(iii) When the cable or wire alone is still found to be below the 500 megohm-mile (805 megohm-km) requirement after completing the steps in paragraph (c)(6)(i) and/or paragraph (c)(6)(ii) of this section, the test shall be repeated to measure the cable or wire in sections to isolate the piece(s) of cable or wire responsible. The cable or wire section(s) that is found to be below the 500 megohm-mile (805 megohm-km) requirement shall be either repaired in accordance with the cable or wire manufacturer's recommended procedure or shall be replaced as directed by the borrower.
(d)
(2) Dc loop resistance and dc resistance unbalance measurements shall be made on all cable pairs used as subscriber loop circuits when:
(i) Specified by the borrower;
(ii) A large number of long loops terminate at one location (similar to trunk circuits); or
(iii) Circuit balance is less than 60 dB when computed from noise measurements as described in paragraph (e) of this section.
(3) Dc resistance unbalance is controlled to the maximum possible degree by the cable specification. Allowable random unbalance is specified between tip and ring conductors within each reel. Further random patterns should occur when the cable conductor size changes. Cable meeting the unbalance requirements of the cable specification may under some conditions result in unacceptable noise levels as discussed in paragraph (d)(6)(iii) of this section.
(4)
(5)
(6)
(ii) The calculated dc loop resistance is computed as follows:
(A) Multiply the length of each different gauge by the applicable resistance per unit length as shown in Table 3 as follows:
(B) Add the individual resistances for each gauge to give the total calculated dc loop resistance at a temperature of 68°F (20°C).
(C) Correct the total calculated dc loop resistance at the temperature of 68°F (20°C) to the measurement temperature by the following formulae:
(D) Compare the calculated dc loop resistance at the measurement temperature to the measured dc loop resistance to determine compliance with the requirement specified in paragraph (d)(6)(i) of this section.
(iii) Resistance varies directly with temperature change. For copper conductor cables, the dc resistance changes by
(iv) The dc resistance unbalance between the individual conductors of a pair shall not exceed that value which will result in a circuit balance of less than 60 dB when computed from noise measurements as described in paragraph (e) of this section. It is impractical to establish a precise limit for overall circuit dc resistance unbalance due to the factors controlling its contribution to circuit noise. These factors include location of the resistance unbalance in relation to a low impedance path to ground (close to the central office) and the magnitude of unbalance in short lengths of cable making up the total circuit length. The objective is to obtain the minimum unbalance throughout the entire circuit when it is ascertained through noise measurements that dc resistance unbalance may be contributing to poor cable balance.
(v) Pairs with poor noise balance may be improved by reversing tip and ring conductors of pairs at cable splices. Where dc resistance unbalances are systematic over the total trunk circuit or loop circuit length, tip and ring reversals may be made at frequent intervals. Where the unbalances are concentrated in a shorter section of cable, only one tip and ring reversal should be required. Concentrated dc resistance unbalance produces maximum circuit noise when located adjacent to the central office. Concentrated dc resistance unbalance will contribute to overall circuit noise at a point approximately two-thirds (
(vi) A systematic dc resistance unbalance can sometimes be accompanied by other cable parameters that are marginal. Among these are pair-to-pair capacitance unbalance, capacitance unbalance-to-ground, and 150 kilohertz (kHz) crosstalk loss. Engineering judgment has to be applied in each case. Rejection of cable for excessive dc resistance unbalance shall only apply to a single reel length, or shorter.
(7)
(8)
(e)
(2) At a minimum, insertion loss and frequency response of subscriber loop plant shall be measured at 1,000, 1,700, 2,300, and 2,800 Hertz (Hz). When additional testing frequencies are desired, the additional frequencies shall be specified in the applicable construction contract.
(3) Measurements of insertion loss and noise shall be made on five percent or more of the pairs. A minimum of five pairs shall be tested on each route. Pairs shall be selected on a random basis with greater consideration in the selection given to the longer loops. Consideration shall be given to measuring a large percentage, up to 100 percent, of all loops.
(4)
(ii)
(5)
(ii) There should be no measurable transmission loss when testing through loop extenders.
(6)
(B) For H88 loaded cables (a specific loading scheme using an 88 millihenry inductor spaced nominally at 6,000 ft [1,829 m] intervals) measured at a point one-half section length beyond the last load point, the measured nonrepeatered insertion loss shall be within
(C) For nonloaded cables, the measured insertion loss shall be within
(D) For loaded cables, the calculated loss at each desired frequency shall be computed as follows:
(
(
(
(E) For nonloaded cables, the calculated loss at each desired frequency shall be computed by multiplying the length in miles (km) of each different gauge by the applicable dB/mile (dB/km) value shown in Table 6 and then adding the individual losses for each gauge to determine the total calculated insertion loss for the nonloaded loop.
(F) The attenuation information in Tables 4, 5, and 6 are based on a cable temperature of 68 °F (20 °C). Insertion loss varies directly with temperature. To convert measured losses for loaded cables to a different temperature, use the following value for copper conductors: For each
(G) For loaded subscriber loops, the 1 kHz loss shall be approximately 0.45 dB per 100 ohms of measured dc loop resistance. This loss shall be the measured loss less the net gain of any voice frequency repeaters in the circuit. Testing shall also be conducted to verify that the loss increases gradually as the frequency increases. The loss on H88 loaded loops should be down only slightly at 2.8 kHz but drop rapidly above 2.8 kHz. The loss on D66 loaded loops shall be fairly constant to about 3.4 kHz and there shall be good response at 4.0 kHz. When voice frequency repeaters are in the circuit there will be some frequency weighting in the build-out network and the loss at the higher frequencies will be greater than for nonrepeatered loops.
(H) For nonloaded subscriber loops, the 1 kHz loss shall be approximately 0.9 dB per 100 ohms of measured dc loop resistance. Testing shall also be conducted to verify that the loss is approximately a straight line function with no abrupt changes. The 3 kHz loss should be approximately 70% higher than the 1 kHz loss.
(ii)
(7)
(8)
(ii)
(f)
(2) For loaded loops, open circuit measurements shall be made using one of the following methods:
(i) Impedance or pulse return pattern, with cable pair trace compared to that of an artificial line of the same length and gauge. For best results, a level tracer or fault locator with dual trace capability is required;
(ii) Return loss using a level tracer, with cable pair compared to an artificial line of the same length and gauge connected in lieu of a Precision Balance Network (PBN). This method can be made with level tracers having only single trace capability; or
(iii) Open circuit structural return loss using a level tracer. This method can be made with level tracer having only single trace capability.
(3) Of the three methods suggested for loaded loops, the method specified in paragraph (f)(2)(ii) of this section is the preferred method because it can yield both qualitative and quantitative results. The methods specified in paragraphs (f)(2)(i) and (f)(2)(iii) of this section can be used as trouble shooting tools should irregularities be found during testing.
(4) For nonloaded loops, open circuit measurements shall be made using the method specified in paragraph (f)(2)(i) of this section.
(5)
(i)
(ii)
(iii)
(6)
(7)
(ii) For loaded loops, results for return loss measurements using a level tracer, with artificial line, in lieu of a PBN (paragraph (f)(5)(ii) of this section) shall meet the following requirements:
(A) For D66 and H88 loaded cables the structural return loss (SRL) values shall range between 28 and 39 dB, respectively, at the critical frequency of structural return loss (CFSRL) within the pass band of the loading system being used. The minimum SRL value for uniform gauge shall be 25 dB CFSRL. These SRL values apply for loaded cables of uniform gauge for the
(B) For mixed gauge loaded cables the SRL values shall be 25 and 27 dB CFSRL, respectively, and the minimum SRL value shall be 22 dB CFSRL; and
(C) The two traces in the pulse return pattern should be essentially identical. The degree of comparison required of the two traces is determined by experience.
(iii) For loaded loops, the results of open circuit structural return loss measurements using a level tracer (paragraph (f)(5)(iii) of this section) shall meet the following requirements. For D66 and H88 loaded cables with uniform or mixed gauges, the worst value allowed for measured open circuit structural return loss between 1,000-3,500 Hz and 1,000-3,000 Hz, respectively, shall be approximately 0.9 dB (round trip) for each 100 ohms outside plant dc loop resistance including the resistance of the load coils. The value of 0.9 dB per 100 ohms for the round trip loss remains reasonably accurate as long as:
(A) The subscriber end section of the loaded pair under test is approximately 2,250 ft (685 m) for D66 loading or 3,000 ft (914 m) for H88 loading in length; and
(B) The one-way 1,000 Hz loss does not exceed 10 dB.
(iv) For loaded loops, the measured value of open circuit structural return loss can only be as accurate as the degree to which the dc loop resistance of the loaded pair under test is known. Most accurate results shall be obtained when the dc loop resistance is known by actual measurements as described in paragraph (d) of this section. Furthermore, where the dc loop resistance is measured at the same time as the open circuit structural return loss, no correction for temperature is needed because the loss is directly proportional to the loop resistance. Where it is not practical to measure the dc loop resistance, it shall be calculated and corrected for temperature as specified in paragraph (d)(6)(ii) of this section. When measuring existing plant, care shall be taken to verify the accuracy of the records, if they are used for the calculation of the dc loop resistance. For buried plant, the temperature correction shall be based at the normal depth of the cable in the ground. (Temperature can be measured by boring a hole to cable depth with a ground rod, placing a thermometer in the ground at the cable depth, and taking and averaging several readings during the course of the resistance measurements.) For aerial cable it shall be based on the temperature inside the cable sheath.
(v) For loaded loops, the best correlation between the measured and the expected results shall be obtained when the cable is of one gauge, one size, and the far end section is approximately 2,250 ft (685 m) for D66 loading or 3,000 ft (914 m) for H88 loading. Mixing gauges and cable sizes will result in undesirable small reflections whose frequency characteristics and magnitude cannot be accurately predicted. In subscriber loop applications, cable gauge may be somewhat uniform but the cable pair size most likely will not be uniform as cable pair sizes taper off toward the customer access location and a downward adjustment of 1 dB of the allowed value shall be acceptable. “Long” end sections (as defined in TE&CM Section 424, “Guideline for Telecommunications Subscriber Loop Plant”) lower the expected value, a further downward adjustment of 3 dB in the allowed value shall be acceptable.
(vi) For loaded loops, the limiting factor when making open circuit structural return loss measurements is when the 1,000 Hz one-way loss of the loaded cable pair under test becomes 10 dB or greater; it becomes difficult to detect the presence of irregularities beyond the 10 dB point on the loop. To overcome this difficulty, loaded loops having a one-way loss at 1,000 Hz greater than 10 dB shall be opened at some convenient point (such as a pedestal or ready access enclosure) and loss measurements at the individual portions measuring less than 10 dB one-way shall be made separately. When field mounted voice frequency repeaters are used, the measurement shall be made at the repeater location in both directions.
(8)
(ii) When performing open circuit return loss measurements using the return loss balanced to an artificial line or return loss using a level tracer on loaded loops, the value of the poorest (lowest numerical value) SRL and its frequency in the proper column between 1,000 and 3,500 Hz for D66 loading or between 1,000 and 3,000 Hz for H88 loading shall be recorded. A suggested format similar to Format I for subscriber loops in § 1755.407 or a format specified in the applicable construction contract may be used.
(9)
(g)
(2)
(3)
(4)
(ii) The measured insertion loss of the cable shall be within
(iii) The calculated insertion loss is computed as follows:
(A) Multiply the length of each different gauge by the applicable dB per unit length as shown in Table 7 or 8 as follows:
(B) Add the individual losses for each gauge to give the total calculated insertion loss at a temperature of 68°F (20°C);
(C) Correct the total calculated insertion loss at the temperature of 68°F (20°C) to the measurement temperature by the following formulae:
A
A
(D) Compare the calculated insertion loss at the measurement temperature to the measured insertion loss to determine compliance with the requirement specified in paragraph (g)(4)(ii) of this section. (
(iv) If the measured value exceeds the
(5)
(6)
(a)
(2) Measurement techniques outlined here for verification of armor continuity are applicable to buried fiber optic cable plant. Measurements of armor continuity between splices in aerial, armored, fiber optic cable should be made prior to completion of splicing. Conclusive results cannot be obtained on aerial plant after all bonds have been completed to the supporting strand, multigrounded neutral, etc.
(3)
(4)
(5)
(6)
(7)
(b)
(2)
(ii) CO splice loss measurements shall be made at 1310 and/or 1550 nanometers for single mode fibers and in accordance with Figure 15. Two splice loss measurements shall be made between the end termination points. The first measurement shall be from termination point A to termination point B. The second measurement shall be from termination point B to termination point A.
(3)
(4)
(ii) When specified in the applicable construction contract, the splice loss of each field splice at 1310 and/or 1550 nanometers shall not exceed the limit specified in the contract.
(iii) When no limit is specified in the applicable construction contract, the splice loss of each field splice shall not exceed 0.2 dB at 1310 and/or 1550 nanometers.
(iv) The splice loss for each single mode CO splice shall be the bi-directional average of the two OTDR reading. To calculate actual splice loss, substitute the OTDR reading, maintaining the sign of the loss (+) or apparent gain (−), into the equation specified in paragraph (b)(4)(i) of this section.
(v) When specified in the applicable construction contract, the splice loss of each central office splice at 1310 and/or 1550 nanometers shall not exceed the limit specified in the contract.
(vi) When no limit is specified in the applicable construction contract, the splice loss of each central office splice shall not exceed 1.2 dB at 1310 and/or 1550 nanometers.
(5)
(6)
(i) Proper end preparation of the fibers;
(ii) End separation between the fiber ends;
(iii) Lateral misalignment of fiber cores;
(iv) Angular misalignment of fiber cores;
(v) Fresnel reflection;
(vi) Contamination between fiber ends;
(vii) Core deformation; or
(viii) Mode-field diameter mismatch.
(c)
(2)
(3)
(4)
(5)
(6)
(i) Excessive field or central office splice loss;
(ii) Excessive cable attenuation; or
(iii) Damage to the fiber optic cable during installation.
(d)
(2)
(3)
(4)
(5)
(6)
(a) The data transmission measurements listed in this section shall be used to determine the acceptability of trunk and nonloaded subscriber loop circuits for data modem transmission.
(b)
(2) S/CNN is the logarithmic ratio expressed in dB of a 1,004 Hz holding tone signal compared to the C-message weighted noise level. S/CNN is one of the most important transmission parameters affecting the performance of data transmission because proper modem operation requires low noise relative to received power level. Since modulated carriers are used in data communication systems, noise measurements need to be performed with power on the connection to activate equipment having signal-level-dependent noise sources. For 4 kHz channels, a 1,004 Hz holding tone is used to activate the signal-dependent equipment on the channel or connection.
(3)
(4)
(5)
(6)
(7)
(c)
(2) S/IMD is a measure of the distortion produced by extraneous frequency cross products, known as intermodulation products, when a multi-tone tone signal is applied to a system.
(3) Intermodulation distortion (IMD) is caused by system nonlinearities acting upon the harmonic frequencies produced from an input of multiple tones. The products resulting from IMD can be more damaging than noise in terms of producing data transmission errors.
(4) IMD is measured as a signal to distortion ratio and is expressed as the logarithmic ratio in dB of the composite power of four resulting test frequencies to the total power of specific higher order distortion products that are produced. The higher order products are measured at both the 2nd order and 3rd order and are designated R2 and R3, respectively. The four frequency testing for IMD is produced with four tones of 857, 863, 1,372, and 1,388 Hz input at a composite power level of −13 dBm0.
(5)
(6)
(7)
(8)
(9)
(d)
(2) EDD is a measure of the linearity or uniformity of the phase versus frequency characteristics of a transmission facility. EDD is also known as relative envelope delay (RED).
(3) EDD is specifically defined as the delay relative to the envelope delay at the reference frequency of 1,704 Hz. EDD is typically measured at two frequencies, one low and one high in the voiceband. The low frequency measurement is made at 604 Hz. The high frequency measurement is made at 2,804 Hz.
(4)
(5)
(6)
(7)
(8)
(e)
(2) AJ is any fluctuation in the peak amplitude value of a fixed tone signal at 1,004 Hz from its nominal value. AJ is expressed in peak percent amplitude modulation.
(3) AJ is measured in two separate frequency bands, 4-300 Hz and 20—300 Hz. The 4—300 Hz band is important for modems employing echo canceling capabilities. The 20-300 Hz band is used for modems that do not employ echo cancelers.
(4) Amplitude modulation can affect the error performance of voiceband data modems. The measurement of amplitude jitter indicates the total effect on the amplitude of the holding tone of incidental amplitude modulation and other sources including quantizing and message noise, impulse noise, gain hits, phase jitter, and additive tones such as single-frequency interference.
(5)
(6)
(7)
(8)
(9)
(f)
(2) PJ is any fluctuation in the zero crossings of a fixed tone signal (usually 1,004 Hz) from their nominal position in time within the voiceband. PJ is expressed in terms of either degrees peak-to-peak (°p-p) or in terms of a Unit Interval (UI). One UI is equal to 360° p-p.
(3) PJ measurements are typically performed in two nominal frequency bands. The frequency bands are 20-300 Hz band and either the 2-300 Hz band or the 4-300 Hz band. The 20-300 Hz band is important to all phase-detecting modems. The 4-300 Hz band or the 2-300 Hz band is important for modems employing echo canceling capabilities.
(4) Phase jitter can affect the error performance of voiceband data modems that use phase detection techniques. The measurement of phase jitter indicates the total effect on the holding tone of incidental phase modulation and other sources including quantizing and message noise, impulse noise, phase hits, additive tones such as single-frequency interference, and digital timing jitter.
(5)
(6)
(7)
(8)
(9)
(g)
(2) Impulse noise is a measure of the presence of unusually large noise excursions of short duration that are beyond the normal background noise levels on a facility. Impulse noise is typically measured by counting the number of occurrences beyond a particular noise reference threshold in a given time interval. The noise reference level is C-message weighted.
(3)
(4)
(5)
(6)
(7)
(a) Shield or armor ground resistance measurements shall be made on completed lengths of copper cable and wire plant and fiber optic cable plant.
(b)
(2) The method of measurement using either an insulation resistance test set or a dc bridge type megohmmeter shall be as shown in Figure 18 as follows:
(c)
(2) The insulation resistance test set should have an output voltage not to exceed 500 volts dc and may be hand cranked or battery operated.
(3) The dc bridge type megohmmeter, which may be ac powered, should have
(4) Commercially available fault locators may be used in lieu of the above equipment, if the devices are capable of detecting faults having resistance values of 50,000 ohms to 10 megohms. Operation of the devices and method of locating the faults should be in accordance with manufacturer's instructions.
(d)
(2) Shield or armor ground resistance varies inversely with length and temperature. In addition other factors which may affect readings could be soil conditions, faulty test equipment and incorrect test procedures.
(3) For the resistance test method and dc bridge type megohmmeter, the ohm-mile (ohm-km) value for the shield or armor ground resistance shall be computed by multiplying the actual scale reading in ohms on the test set by the length in miles (km) of the cable or wire under test.
(4)(i) The objective shield or armor ground resistance may be determined by dividing 100,000 by the length in miles (161,000 by the length in km) of the cable or wire under test. The resulting value is the minimum acceptable meter scale reading in ohms. Examples for paragraphs (d)(3) and (d)(4) of this section are as follows:
(ii) Since the 33,333 ohms (32,857 ohms) is the minimum acceptable meter scale reading and the meter scale reading was 75,000 ohms, the cable is considered to have met the 100,000 ohm-mile (161,000 ohm-km) requirement.
(5) Due to the differences between various jacketing materials used in manufacturing cable or wire and to varying soil conditions, it is impractical to provide simple factors to predict the magnitude of variation in shield or armor to ground resistance due to temperature. The variations can, however, be substantial for wide excursions in temperature from the ambient temperature of 68 °F (20 °C).
(e)
(f)
(2) When the resistance value of the cable or wire is still found to be below 100,000 ohm-mile (161,000 ohm-km) requirement after completion of the steps listed in paragraph (f)(1) of this
(3) Once the fault or faults have been isolated, the cable or wire jacket shall be repaired in accordance with § 1755.200, RUS Standard for Splicing Copper and Fiber Optic Cables or the entire cable or wire section may be replaced at the request of the borrower.
The following suggested formats listed in this section may be used for recording the test data:
(a)
(2) The output of a digital-to-digital port shall be Pulse Code Modulation
(3) American National Standards Institute (ANSI) Standard S1.4-1983, Specification for Sound Level Meters, is incorporated by reference by RUS. This includes S1.4A-1985 that is also incorporated by reference. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from ANSI Inc., 11 West 42nd Street, 13th Floor, New York, NY 10036, telephone 212-642-4900. Copies may be inspected during normal business hours at RUS, room 2838-S, U.S. Department of Agriculture, Washington, DC 20250 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(4) American Society for Testing Materials (ASTM) Specification B 33-91, Standard Specification for Tinned Soft or Annealed Copper Wire for Electrical Purposes, is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from ASTM, 1916 Race Street, Philadelphia, PA, telephone 215-299-5400. Copies may be inspected during normal business hours at RUS, room 2838-S, U.S. Department of Agriculture, Washington, DC 20250 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(5) Bell Communications Research (Bellcore) document SR-TSV-002275, BOC Notes on the LEC Networks—1990, March 1991, is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR Part 51. Copies may be obtained from Bellcore Customer Service, 60 New England Avenue, Piscataway, NJ 08854, telephone 1-800-521-2673. Copies may be inspected during normal business hours at RUS, room 2838-S, U.S. Department of Agriculture, Washington, DC 20250 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(6) Bellcore TR-TSY-000508, Automatic Message Accounting, July 1987, is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from Bellcore Customer Service, 60 New England Avenue, Piscataway, NJ 08854, telephone 1-800-521-2673. Copies may be inspected during normal business hours at RUS, room 2838-S, U.S. Department of Agriculture, Washington, DC 20250 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(7) Federal Standard H28, Screw-Thread Standards for Federal Services, March 31, 1978, is incorporated by reference by RUS. This includes: Change Notice 1, Federal Standard, Screw-Thread Standards for Federal Services, May 28, 1986; Change Notice 2, Federal Standard, Screw-Thread Standards for Federal Services, January 20, 1989; and Change Notice 3, Federal Standard, Screw-Thread Standards for Federal Services, March 12, 1990. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from the General Services Administration, Specification Section, 490 East L'Enfant Plaza SW, Washington, DC 20407, telephone 202-755-0325. Copies may be inspected during normal business hours at RUS, room 2838-S, U.S. Department of Agriculture, Washington, DC 20250 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(8) Institute of Electrical and Electronics Engineers (IEEE) Std 455-1985, IEEE Standard Test Procedure for Measuring Longitudinal Balance of Telephone Equipment Operating in the Voice Band, is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from IEEE Service Center, 445 Hoes Lane, P. O. Box 1331, Piscataway, NJ 08854, telephone (201) 981-0060. Copies may be inspected during normal business hours at RUS, room 2838-S, U.S. Department
(9) Institute of Electrical and Electronics Engineers (IEEE) Std 730-1989, IEEE Standard for Software Quality Assurance Plans, is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from IEEE Service Center, 445 Hoes Lane, P. O. Box 1331, Piscataway, NJ 08854, telephone (201) 981-0060. Copies may be inspected during normal business hours at RUS, room 2838-S, U.S. Department of Agriculture, Washington, DC 20250 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(10) RUS Bulletin 345-50, PE-60, RUS Specification for Trunk Carrier Systems, September 1979, is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552 (a) and 1 CFR part 51. Copies may be obtained from the Rural Utilities Service, Administrative Services Division, room 0175-S, Washington, DC 20250. The bulletin may be inspected at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(11) RUS Bulletin 345-55, PE-61, Central Office Loop Extenders and Loop Extender Voice Frequency Repeater Combinations, December 1973, is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552 (a) and 1 CFR part 51. Copies may be obtained from the Rural Utilities Service, Administrative Services Division, room 0175-S, Washington, DC 20250. The bulletin may be inspected at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(12) RUS Bulletin 345-87, PE-87, RUS Specification for Terminating (TIP) Cable, December 1983, is incorporated by reference RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552 (a) and 1 CFR part 51. Copies may be obtained from the Rural Utilities Service, Administrative Services Division, room 0175-S, Washington, DC 20250. The bulletin may be inspected at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(b)
(2) The central office switching system shall be designed such that the expected individual line downtime does not exceed 30 minutes per year. This is the interval that the customer is out of service as a result of all failure types, excluding dispatch and travel time, i.e., hardware, software, and procedural errors.
(3) The central office switching system shall be designed such that there will be no more than 1 hour of total outages in 20 years, excluding dispatch and travel time for unattended offices.
(c)
(2) A “completed call” test shall be made part of these system type acceptance tests. There shall be no more than two in 10,000 locally originating and incoming calls misdirected, unsuccessfully terminated, prematurely disconnected or otherwise failing as a result of equipment malfunction and/or equipment failures, or as a result of transients, noise or design deficiencies. This test shall be made with a load box
(3) System type acceptance testing applies basically to factory type testing, and not to owner acceptance testing for individual installations. The overall installed and operating system shall also meet these requirements, except for unusual circumstances or where specifically excluded by this or other RUS requirements.
(d)
(2) Optional requirements are those which may not be needed for every office and are identifiable by a phrase such as, “when specified by the owner,” or, “as specified by the owner.”
(3) In some cases where an optional feature specified in paragraph (e) of this section will not be required by an owner, either now or in the future, a system which does not provide this feature will be considered to be in compliance with this section for the specific installation under consideration, but not in compliance with the entire section.
(4) The owner may request bids from any RUS accepted supplier whose system provides all the features which will be required for a specific installation.
(5) The Application Guide, RUS TE&CM 322, provides information about the economic and service factors involved in all optional features, as well as instructions for the completion of appendices A and B of this section.
(e)
(2) Complete flexibility shall be provided for assigning any subscriber directory number to any central office line equipment by the use of internal programmed memory. Thus, any subscriber line and/or directory number may be moved to another terminal to distribute traffic loads, if the line equipment hardware is compatible with the service provided.
(3) The system shall be arranged to interface with interexchange carrier trunks and networks using single digit or multi-digit access codes. The system shall be equipped to handle at least 20-digit subscriber dialed numbers. All subscriber directory numbers in the office shall be seven-digit numbers.
(4) The network and the control equipment shall be comprised of solid-state and integrated circuitry components. Peripheral equipment shall be comprised of solid-state and integrated circuitry components as far as practical and consistent with the state-of-the-art and economics of the subject system.
(5) The basic switching system shall include the provision of software programming and necessary hardware, including memory, for optional custom calling services such as call waiting, call forwarding, three-way calling, and abbreviated dialing. It shall be possible to provide these services to any individual line (single-party) subscriber. The addition of these services shall not reduce the anticipated ultimate engineered line, trunk, and traffic capacity of the switching system as specified in appendix A of this section.
(6) The requirements in this specification apply only to single party lines. Although only single frequency ringing is required, other types may be requested in appendix A of this section.
(7) Provision shall be made for local automatic message accounting (LAMA), and for traffic service position system (TSPS) trunks, or equivalent, to the operator's office when required either initially or in the future.
(8) Tandem switching features shall be provided if specified in appendix A of this section.
(9) The system shall be arranged to serve a minimum of eight All Number Calling (ANC) office codes per office, with discrimination on terminating calls by trunk group, numbering plan, or programmed memory and class mark, if specified in appendix A of this section.
(10) Busy hour load handling capacity is an important feature when an office approaches capacity. The delays which may occur in call completion during busy hour periods may prove to be excessive in some system designs. Accordingly, each bidder shall provide, in appendix C of this section, data satisfactory to RUS regarding the busy hour load handling capacity and traffic delays of the system.
(11) Provision shall be made for hotel-motel arrangements, as required by the owner, to permit the operation of message registers at the subscriber's premises to record local outdial calls by guests (see Item 10.5, appendix A of this section).
(12) Provision shall be made to identify the calling line or incoming trunk on nuisance calls (see paragraph (g)(10) of this section for details).
(13) Full access from every subscriber line to every interoffice trunk shall be provided.
(14) Facilities shall be provided to implement service orders, make traffic studies, and perform switching and transmission tests by means of remote control devices if such operations are specified in Items 11.2 and 11.3 of appendix A of this section.
(15) Provision shall be made for the addition of facilities to record all subscriber originated calls based on dialed directory number, time of day, and duration of conversation. They shall be such that the additional equipment (if any is required) may be added to an in-service system without interruption of service and a minimum of equipment, wiring and software modifications.
(16) The system shall be capable of distributed switching operation where groups of subscriber lines can be remotely located from the central office. The remotely situated units are known as “Remote Switching Terminals” (RST's) (see paragraph (w) of this section). This does not eliminate the use of pair gain devices such as direct digitally connected concentrators, regular concentrators or subscriber carrier equipment, where specifically ordered by the owner and its engineer.
(17) The switching system shall have means to synchronize its clock with switches above it in the network hierarchy, when specified by the owner in item 3, appendix A of this section (see paragraph (j) of this section).
(18) Consistent with system arrangements and ease of maintenance, space shall be provided on the floor plan for an orderly layout of future equipment bays that will be required for anticipated traffic when the office reaches its ultimate size. Readily accessible terminals shall be provided for connection to interbay and frame cables to future bays. All cables, interbay and intrabay (excluding power), if technically feasible, shall be terminated at both ends by use of connectors.
(19) When specified in appendix A of this section, the system shall be capable of processing emergency calls to a 911 service bureau connected either by a group of one-way 911 lines or a trunk group.
(i) It shall be possible to reach the service bureau by dialing 911, 1+911, or a 7-digit number.
(ii) The system shall select an idle 911 line or trunk.
(iii) The system shall provide usual ringing and ringback signal until the called 911 line answers.
(iv) If the calling line goes on-hook first, the system shall hold the connection from the called 911 line and return steady low tone to the service bureau. The system shall then begin a 45-minute timeout, after which the calling line is disconnected and an alarm message is printed on a TTY. If the calling line goes off-hook before timeout, the system shall reestablish the conversation path.
(v) If the calling line does not disconnect, the service bureau attendant shall have the ability to force a disconnect of the established connection with the calling party.
(vi) When the 911 call is answered, the equipment shall be arranged so that coin lines are not charged for the call. Similarly, if some form of local call charging is used, there shall be no charge for the 911 call.
(vii) If the 911 service bureau is holding a calling line, it shall be possible for the 911 line to cause the equipment to ring back the calling line. This is done by providing a flash of on-hook signal from the 911 line lasting from 200 to 1,100 milliseconds. The signal to the calling line shall be ringing current if
(viii) Calls shall not be originated from the service bureau via the dedicated 911 lines. If an attempt is made to originate a call, it shall receive reorder tone. After 6 minutes, the system shall print an alarm message.
(ix) If 911 calls pass through intermediate switching, the forced-hold control, emergency ringback, and calling line status monitoring capabilities are lost.
(f)
(ii) In addition to operating on nonloaded cable pairs and subscriber carrier, the equipment shall function properly with D-66 and H-88 loaded cable pairs, including any provisions the equipment must control for the purposes of proper transmission.
(2)
(ii)
(iii)
(B) The receiver shall comply with the operating parameters of the dual-tone multifrequency (DTMF) central office receiver as described in section 6 of Bell Communications Research (Bellcore) document SR-TSV-002275, BOC Notes on the LEC Networks—1990.
(3)
(4)
(ii) The line on lockout shall be reconnected automatically to the central office when the permanent off-hook condition is cleared.
(5)
(6)
(ii) Working limits for subscriber lines with loop extenders are covered in RUS Bulletin 345-55, PE-61, Central Office Loop Extenders and Loop Extender Voice Frequency Repeater Combinations.
(iii) Ringing from RUS accepted loop extenders, or their equivalent, shall be
(7)
(8)
(9)
(g)
(i) Provide dial tone in response to origination of a call by a subscriber, except on special lines where the application of dial tone is not applicable, such as manual and hot lines;
(ii) Remove dial tone immediately after the first digit has been dialed;
(iii) Recognize the class of service of the calling subscriber;
(iv) Register the digits dialed by the calling subscriber where the rotary dial or pushbutton dialing characteristics and the minimum interdigital times are as specified;
(v) Perform the necessary translation functions when the required number of digits have been registered, and select a channel to a proper outgoing trunk, if one is available, to the designated interexchange carrier;
(vi) Provide a transmission path from the calling subscriber line to the selected trunk, if an idle one is found;
(vii) Provide for more than one alternate route to the desired destination when specified by the owner, select an idle outgoing trunk in the first or second choice alternate route trunk group, if all trunks in the higher choice groups are busy, and provide a reorder signal (see paragraph (i)(2)(iv) of this section) to the subscriber if no trunks are available in the last choice alternate route;
(viii) Translate the proper part of the registered incoming routing data on tandem calls into an identification of an outgoing trunk group, select an idle trunk in that group, initiate the connection of the incoming trunk to the outgoing trunk, set the trunks in the proper configuration for tandem operation, and transmit information as required to permit completion to the desired destination in the distant office;
(ix) Transmit the proper stored information over the selected trunk to permit completion of outgoing calls to the desired destination by the distant office or offices, and provide multifrequency (MF) outpulsing when specified;
(x) Register all the digital information on calls incoming from a distant office, when dial or MF pulsing characteristics and interdigital times are as specified;
(xi) Translate internally a registered directory number into line equipment location, ringing code and terminating class (such as “PBX hunting”) on incoming or intraoffice calls;
(xii) Test the called line for a busy condition;
(xiii) Connect the incoming trunk or locally originated call to the called line if the called line is idle;
(xiv) Permit any type of ringing voltage available in the central office to be associated with any Subscriber Directory Number (SDN), cause the proper type of ringing voltage to be connected to the called line, and remove ringing from the line upon answer whether in the ringing or silent period; and
(xv) Test and monitor the switching system continually during periods of low traffic using the maintenance and diagnostic subsystem.
(2) The switching system shall offer at least the following originating and terminating class-of-service indications on a per-line basis to subscribers, as specified by the owner:
(i) Flat rate individual line, bridged ringing;
(ii) Flat rate PBX and trunk hunting numbers, bridged ringing;
(iii) Pay station;
(iv) Message rate subscriber line;
(v) Wide Area Telephone Service (WATS);
(vi) Extended Area Service (EAS);
(vii) Data service;
(viii) Hotel-Motel capability;
(ix) Denied originating;
(x) Denied terminating;
(xi) Custom calling features;
(xii) Special interexchange carrier accesses; and
(xiii) Presubscription to designated interexchange carrier.
(3) The switching system shall provide PBX hunting.
(i) At least one trunk hunting group in each 100 SDN's equipped shall be provided. More may be provided as specified by the owner.
(ii) PBX groups shall be of a reasonable size commensurate with the ultimate size of the switching system.
(iii) Any available SDN may be used for PBX trunk hunting.
(iv) Each PBX group shall have the capability of being assigned one or more nonhunting SDN's for night service.
(v) If the called line is a PBX hunting line, the switching system shall test all assigned lines in the hunting group for a busy condition.
(vi) If the called PBX group is busy, line busy tone, as specified in paragraph (i)(2)(iii) of this section, shall be returned to the originating end of the connection.
(4) The switching system shall provide pay stations which may be prepay or semi-postpay. The system shall be arranged so that an operator and emergency service (911) may be reached from prepay or semi-postpay coin lines without the use of a coin, when the proper pay station equipment is provided.
(5) To meet dialing requirements, the switching system shall:
(i) Initiate the line lockout function after a delay, as specified in paragraph (r)(3) of this section, if dial or pushbutton dialing pulses are not received after initiation of a call, preferably routing the subscriber line to a holding circuit for tones and then automatically to lockout;
(ii) Connect 120 interruptions per minute (IPM) paths busy tone, recorded message, or other distinctive tone to the calling subscriber if an interval longer than that specified in paragraph (r)(4) of this section elapses between dialed digits;
(iii) Register the standard tone calling signals received from a subscriber station arranged for pushbutton dialing if specified by the owner, provide arrangements to function properly with 12-button pushbutton dialing sets, and return a reorder signal to the subscriber upon receipt of signal from the 11th or 12th buttons if neither of these buttons is assigned functions; and
(iv) Connect the incoming trunk to the digit register equipment within 120 milliseconds after seizure where direct dialing is received on calls from a distant office, cancel the bid for a register, and return reorder tone to the calling end if dial pulses are received before a register is attached.
(6) The switching system shall provide for appropriate circuit usage.
(i) To avoid inefficient utilization of the switching network, that portion of the common equipment that establishes the connection on intramachine calls shall not require more than 500 milliseconds, exclusive of ringing and ring trip, to complete its function under no-delay conditions.
(ii) The switching system shall provide for duplication in a load sharing or redundant configuration any circuit elements or components, the failure of which would reduce the grade of service of 100 or more lines by more than 25 percent of the traffic carrying capacity.
(iii) The switching system shall ensure that failure of access to a high choice circuit will not prevent subsequent calls from being served by lower choice circuits, wherever possible.
(iv) Where only two circuits of a type are provided, circuits shall be designed so that failure of one circuit will not permanently block any portion of the system for the duration of the failure.
(v) Where more than two circuits of a type are provided, successive usages should be on a rotational or random basis rather than the step-up selection with the possible exception of a last choice trunk.
(vi) The system shall be designed so that, in the event of a network failure, the system shall immediately or simultaneously use a redundant portion of the network to complete the call.
(7) The switching system shall provide busy verification facilities with the method of access specified by the owner.
(i) Only an operator or a switchman shall be able to override a busy line condition.
(ii) If the called line is busy, off-hook supervision shall be given the operator or switchman.
(iii) The responsibility of restricting subscribers in distant offices from having access to busy verification shall be on the distant office personnel when the toll trunks are used for both toll connecting and verification traffic.
(iv) When a verification code is used, all digits of the code must be dialed before cut-through to the called line can be accomplished.
(8) The switching system shall provide intercept facilities.
(i) All unused numbering plan area codes, home numbering plan area office codes, service codes and subscriber directory numbers (SDN's) shall be routed to intercept. All intercept administration shall be by changes in memory administrable by telephone company personnel. Maximum machine time to place a subscriber on intercept shall be 15 seconds.
(ii) Unequipped SDN's intercept shall be effective if the processor memory does not have information concerning the SDN in question.
(iii) The intercept equipment shall be arranged so that specific SDN's can be routed to a separate intercept circuit for changed numbers.
(iv) When an intercept call is answered, either by an operator or by a recorded announcement, an off-hook or charge supervision signal shall not be returned, even momentarily, to the originating end.
(v) When intercepting service is to be handled over the regular interoffice toll trunks, a distinctive identifying tone shall be transmitted when the operator answers. This tone shall be of the frequency and duration specified in paragraph (i)(2)(x) of this section.
(9) The switching system shall provide nuisance call trap facilities which, when activated, provide a permanent record of the calling and called numbers complete with date and time of day. Where the call originates over an interoffice trunk, the actual trunk number shall be recorded. There shall be provision for the called subscriber to hold the connection and for the positive trace of the call from origination to termination within the office.
(10) The switching system shall follow appropriate release procedures.
(i) The office shall be arranged so a connection to a terminating channel other than assistance operator shall be released under control of the calling party so that the channel can be reseized, unless the call is to emergency 911 service or other termination arranged for called party control.
(ii) If the called party disconnects first, the channel used in the originally established connection shall be held until the calling party disconnects or until the timing interval specified in paragraph (r)(7) of this section has elapsed. This feature shall not interfere with the normal operation of calls to intercept, fire alarm, or other special services.
(11) The switching system shall provide line load control facilities, when specified by the owner, to give preference for originating service to a limited group of subscribers during emergencies.
(i) These facilities may be activated manually by input-output (I/O) device or automatically after a manual setting of a key (or equivalent) to put line load control into effect, as determined by the bidder. The automatic procedure is preferable.
(ii) Procedures shall be established to avoid the unauthorized use of the line load control facilities.
(iii) Where automatic activation is provided, service may be provided to small groups of nonemergency subscribers on limited grade of service whenever the office load becomes low enough to permit this to be done safely.
(h)
(ii) Trunks shall not be directly driven from the subscriber's dial on outward calls.
(iii) In order to reduce the spares inventory and minimize incidence of improper maintenance replacement of circuit assemblies, the types of trunk circuits shall be kept to a minimum. Variation in assemblies should be mainly limited to variation in signaling modes.
(iv) Trunk circuits which connect with carrier or 4-wire transmission facilities shall be arranged for 4-wire transmission to avoid an intermediate 2-wire interface between a 4-wire switching system and trunk facilities.
(2)
(3)
(ii) There are no requirements for trunks arranged for manual re-ring by a toll operator, either with the receiver on or off the hook, except to coin stations with the receiver on the hook.
(iii) On calls from subscribers to the assistance operator, the release of the connection shall be under control of the last party to disconnect. An exception is operator control of disconnect that is used on outgoing trunks to a TSP/TSPS system.
(iv) On calls originated by an operator, the release of the connection shall be under control of the operator.
(v) Where trunks with E and M lead signaling are used, the trunk circuits for Type I signaling shall be arranged to place ground on the M lead during the on-hook condition and battery on the M lead in the off-hook condition. For E and M Type II, only a make contact between the MA and MB lead will be required. In either type, current limiting shall be provided in the E lead of the trunk circuit itself, as required for proper operation. It shall be assumed that connection equipment in the form of trunk carrier, multiplex, or associated signaling apparatus furnishes only a contact closure to ground (Type I) or to a signal ground lead (Type II) for an off-hook condition on the E lead.
(vi) Where answer supervision is used to determine the initiation of the charging interval for a call, such answer supervision shall not be effective for charging until after the elapse of the timing interval listed in paragraph (r)(5) of this section.
(vii) When necessary, provision shall be made for reception of start and stop dial signals on toll trunk equipment.
(viii) When trunks arranged for automatic message accounting (AMA), toll ticketing, or centralized automatic message accounting (CAMA) are specified by the owner, these trunks shall provide the pertinent features described in paragraph (k) of this section applicable to such functions.
(4)
(ii) Each interface circuit shall connect 24 voice channels to the switching system from a 1.544 megabit per second DS1 bit stream. The DS1 bit stream entering or exiting the system shall be in the D3 format and the voice signals shall be encoded in 8 bit mu-255 PCM. The format and processing of the bit stream must be compatible with characteristics of the D3 channel bank such as alarm and maintenance characteristics. Loss of receive signal (DS1) shall be detected and the equivalent of a carrier group alarm shall be executed in
(iii) Signaling shall be by means of MF or dial pulse (DP) and the system which is inherent in the A and B bits of the D3 format. In the case where they are not used for signaling, the A and B bits shall be used only for normal voice and data transmission.
(i)
(2)
(ii) Low tone shall consist of 480 Hz plus 620 Hz at a composite level of −21 dBm0 which equates to −24 dBm0 per frequency.
(iii) Line busy tone shall be low tone interrupted at 60 IPM, with tone on 0.5 seconds and off 0.5 seconds.
(iv) Reorder, all paths busy, and no circuit tone shall be low tone interrupted at 120 IPM, with tone on 0.25 seconds and off 0.25 seconds.
(v) Identifying tone on calls from coin lines shall be uninterrupted low tone.
(vi) High tone shall consist of 480 Hz at −17 dBm0.
(vii) Audible ringback tone shall consist of 440 plus 480 Hz at a composite level of −16 dBm0 which equates to −19 dBm0 per frequency.
(viii) The call progress tones listed in this section are described in Bellcore document SR-TSV-002275, BOC Notes on the LEC Networks—1990, section 6. The 350, 440, 480, and 620 Hz tones shall be held at
(ix) Distinctive tone, when required for alarm calls, or other features, shall consist of high tone interrupted at 200 IPM with tone on 150 ms and off 150 ms.
(x) Identifying tone on intercepted calls shall consist of uninterrupted high tone impressed on the trunk circuit 300 to 600 milliseconds following the operator's answer of intercepted calls.
(xi) An ROH circuit shall have output tones which do not interfere with the pushbutton or multifrequency signaling tones. The ROH tone may be introduced digitally internal to the system near the overload level of +3 dBm0. No power adjustment will be required. The frequency of the output shall be distinctive and urgent in order to attract the subscriber's attention to an off-hook situation. (Warning: In order to determine the signal level, a frequency selective voltmeter must be used to determine the level of each signal component and mathematical power addition used to combine these measurements into a single level value.)
(xii) During application of tones, office longitudinal balance shall be maintained within 15 dB of that specified in paragraph (q)(8) of this section.
(j)
(2) The end office central office system clock shall be a Stratum 3 clock with:
(i) A minimum long-term accuracy of
(ii) A minimum stability of 3.7 × 10
(iii) A “Pull-In Range” for the capability of synchronizing to a clock with accuracy of
(3) The access tandem central office system clock shall be a Stratum 2 clock with:
(i) A minimum long-term accuracy of
(ii) A minimum stability of 1 × 10
(iii) A “Pull-In Range” for the capability of synchronization to a clock with accuracy of
(k)
(2)
(ii) All equipment shall be arranged for Feature Group B given that appendix A of this section requires the equipment of the necessary trunks (Trunk Side Connection).
(iii) The equipment shall be arranged for Feature Group C on the trunk groups specified in appendix A of this section. Even though appendix A of this section specifies Feature Group D or some other trunk group, it shall be possible through software commands available to the owner to use Feature Group C signaling protocols on a trunk group basis until such time that the trunk group in question converts to Feature Group D signaling protocols.
(iv) The equipment shall be arranged for Feature Group D on the trunk groups specified in appendix A of this section.
(v) Calls originating from coin lines toward switched access service shall be arranged either to provide signaling protocols for TSPS, or in the absence of TSPS-type service, such calls shall be blocked.
(vi) The equipment shall be arranged for forwarding routing information, calling party identification, and called party numbers in the proper feature group protocols, by trunk group as specified in appendix A of this section.
(vii) The equipment shall be arranged for AMA data collection as specified in appendix A of this section by trunk group. Unless otherwise specified by the owner, the equipment shall be arranged to collect the billing data in the Bellcore AMA format as described in Bellcore document TR-TSY-000508, Automatic Message Accounting.
(viii) If specified in Item 9.4, appendix A of this section, the equipment shall be arranged to store the billing data in a pollable system. If specified in Item 9.5, appendix A of this section, equipment shall be furnished to poll the pollable systems associated with the contract.
(l)
(ii) Design precautions shall be taken to prevent the possibility of equipment damage arising from the insertion of an electronic package into the wrong connector, the removal of a package from any connector, or the improper insertion of the correct card in its connector.
(2)
(3)
(ii) Printed circuit boards or similar equipment employing electronic components shall be self-protecting against external grounds applied to the connector terminals, where feasible. Board components and coatings applied to finished products shall be of such material or treated so they will not support combustion.
(iii) Every precaution shall be taken to protect electrostatically sensitive components from damage during handling. This shall include written instructions and recommendations (see Item 6.1,h of appendix C of this section).
(m)
(ii) The switching network shall employ time division digital switching and be compatible for connection to D3 type PCM channel banks without conversion to analog.
(iii) Equipment shall be available as required to connect analog lines and trunks, analog or digital service circuits, digital carriers to RST's, D3 channel banks or other digital switching units.
(2)
(n)
(2) Programs shall be modular, flexible and structured. In the interest of more dependable and more easily read programs, it is desirable to use a language which is more person-oriented leaving the detailed machine-oriented problems to a compiler program. Quality assurance of all software programs shall be in accordance with IEEE Std 730-1989, IEEE Standard for Software Quality Assurance Plans, or equivalent.
(3) The office administration program shall have checks within it to prevent failure due to erroneous or inconsistent input data. It shall safeguard against the possibility of upsetting machine performance with improper instructions or information. In addition, modular structure shall allow the use of a variety of human-engineered service order formats. Service changes may be performed remotely if so desired. Average machine time for service change shall be 15 seconds or less. Service changes shall not be registered in permanent memory until verified. The access to the service change shall not have access to generic program.
(4) The switching system shall be able to offer, by request, at least the following printouts of its routine stored data for administrative purposes:
(i) A list of all assigned directory numbers, in numerical order, with their assigned class of service and line terminal numbers;
(ii) A list of all directory numbers, in numerical order, associated with a class of service;
(iii) A list of all unassigned line terminals;
(iv) Traffic data in proper form for separation studies in accordance with the revenue separations procedures current at the time of the contract;
(v) All lines on lockout;
(vi) All lines assigned to intercept;
(vii) All available (unassigned) directory numbers in the working thousands group; and
(viii) A list of equipment busied out for maintenance.
(5) The printouts in paragraph (n)(4) of this section may be delayed to times of light traffic.
(6) Maintenance diagnostics shall be performed by a fault recognition system utilizing both software and hardware, each being used where they are most effective for maintenance and reliability. In the economic interests of providing early and efficient fault detection and accurate pinpointing of faulty areas, it is desirable to have a comprehensive person-machine interface supported by extensive automatic fault detection and analysis, involving diagnostic software for fault resolution and automatic recovery mechanisms to maintain continuous service. Maintenance messages may be channeled to a remote maintenance center if so desired.
(7) Information in memory, having no requirement for changes to be introduced in the maintenance or operation of the system, may be stored in memory devices such as programmable
(o)
(ii) The alarms shall be classified in accordance with their effect on the system.
(A) Catastrophic alarms demand immediate attention and require notification of the highest level of supervisory personnel. Conditions such as loss of service, loss of one or more remote line switches or line concentrators connected through Direct Digital Interface, loss of network control, and loss of computer program in all processors shall produce catastrophic alarms.
(B) Major alarms demand rapid action. Conditions such as loss of one or more groups of subscribers or trunk ports, blown fuses for common groups of channels, loss of control to groups of channels, failure of one or both redundant units, and total loss of battery charging current for more than 15 minutes shall produce major alarms.
(C) Minor alarms indicate nonemergency conditions which cause degraded service or fault conditions which causes the system to operate within less-than-optimum performance. Conditions discovered in automatic routining which have not shown in the operation of the equipment but require attention and cumulative line lockout (level adjustable) are examples of minor alarm conditions.
(iii) When the office is arranged for unattended operation, facilities shall be provided for extending the alarm indications to an attended point.
(iv) When the use of a separate outside plant facility for alarm sending is specified, the nature of the alarm may be indicated to the distant point by machine printout or other display device.
(v) When alarm sending is accomplished over a regular operator office trunk, the operator shall be apprised that the call is an alarm indication by a distinctive tone, as specified by the owner in appendix A of this section. It shall be possible for the operator to determine at any time the presence of a trouble condition by dialing a number set aside for that purpose. This number shall also be accessible from lines classmarked for this feature.
(vi) When the alarm sending circuit seizes an interoffice operator trunk, the operator must dial the alarm checking code over another trunk before the first trunk can be released except where the alarm condition has disappeared first.
(vii) The alarm sending circuit shall have access to two or more trunks if the trunks are used for subscriber traffic.
(viii) An alarm indication of higher priority shall supersede an original alarm indication and reseize an interoffice operator trunk.
(ix) In any group of offices purchased under one contract, the same codes shall be used in each office for alarm checking and test.
(x) When the alarm checking number is dialed, the alarm indications received shall be as follows:
(A) Catastrophic alarm—No tone.
(B) Major alarm—Continuous busy tone 60 IPM, unless alarm is overridden.
(C) Minor alarm—Continuous 1-ring code ringback tone, unless alarm is overridden.
(D) No trouble—Continuous 2-ring code ringback tone, unless alarm is overridden.
(xi) Audible and visual local alarms and transmitted alarms shall be provided as follows:
(xii) The central office alarm circuits shall be arranged to provide optional wiring to transmit either a minor alarm or a major alarm and a printout to accommodate various types of trunk and subscriber carrier systems, microwave, mobile radio, other transmission systems, and environmental protection
(2)
(B) The fault recorder shall provide a permanent or semi-permanent record of the circuit elements involved whenever a trouble is encountered. It shall be arranged to recognize an existing fault condition and not cause multiple printouts of the same fault, except during test routine.
(ii)
(B) The maintenance system shall provide both specialized maintenance hardware circuits and an extensive software package to enable maintenance to determine trouble to an individual card or functional group of cards.
(C) Maintenance programs may be both on-line and off-line. On-line maintenance programs are activated by system errors and shall be scheduled to execute call tests during low traffic periods and periodic hardware tests at specific time intervals. Programs shall provide diagnostic tools for the maintenance personnel and be initiated by them.
(D) Scheduled periodic hardware tests shall automatically detect faults and alert maintenance personnel via alarm or appropriate input/output device(s) at local and/or remote locations.
(E) Facilities shall be provided so that test calls can be set up using pre-selected items of switching equipment.
(F) The maintenance personnel shall be able to make tests to determine if every trunk and every item of switching equipment are functioning properly. Also, it shall be possible to make each trunk and each SPC equipment, or part thereof, busy to service calls. Where possible, equipment which is made busy to service calls shall still be accessible for test calls.
(iii)
(
(
(
(
(
(
(
(
(
(
(B) An acceptable arrangement for making the tests shown in paragraph (o)(2)(iii)(A) of this section is to have them under software control with results displayed at one of the system's I/O ports.
(C) A howler circuit for maintenance purposes, if ordered by the owner, shall
(D) When a dial speed test facility is specified by the owner, it shall be accessed by dialing a special code and shall return to the calling station readily identifiable signals to indicate that the dial speed is slow, normal, or fast.
(E) When the office is arranged for pushbutton dialing, optional facilities shall be provided for testing the pushbutton dialing equipment at the subscriber station.
(F) When a system for testing subscriber lines in remote offices from a test position in a centrally located office is specified by the owner, it shall be capable of working with all the central offices and RST's in the remote areas. This testing equipment shall preferably be solid-state with a minimum of electromechanical devices and shall operate from central office battery. It shall be capable of working over any voice grade telephone circuit and shall not require a dedicated trunk. There shall be no interference to or from “in-band” voice channel tones. When used over a network, the verification or access shall be guarded to prevent unauthorized access by subscribers. Access to this system shall only be available to the test operator in all cases.
(3)
(ii) Transmission test circuits are available with a variety of options. These include single frequency and multifrequency tone generators with one or more generator output terminals, quiet terminations, and loop around test arrangements for both one-way and two-way trunks.
(iii) Where multifrequency generators are used, they are usually arranged to provide a minimum of three frequencies. With some equipment, up to seven additional frequencies may be provided if needed. No industry standardization of test frequencies is as yet provided. Therefore, it is important that the selection of frequencies, the order in which they are applied and the time interval for application of each frequency be agreed upon by the connecting company and the RUS borrower and listed in appendix A of this section in those situations where connecting companies request the installation of multifrequency generators in borrowers’ central offices.
(iv) The milliwatt generator shall be solid-state and generate the analog or digital equivalent of 1004 Hz. The milliwatt generator shall be assigned to a 4-wire analog test port or be digitally generated. All 2-wire and 4-wire voice frequency ports are at a nominal 0 dBm0 level. The level of the 1004 Hz tone generator shall appear at outgoing 2-wire and 4-wire ports at 0 dBm
(v) Reference tone generators can be used individually or they can be part of a loop around test arrangement. If both single frequency and multifrequency reference tone generators are to be provided, only one can be arranged as part of a loop around test. Where a loop around arrangement is provided, the generator output can be obtained by dialing singly one of the two line terminals. By dialing the other line terminal singly, usually a 900 ohm resistor in series with a 2.16 microfarad capacitor is connected to the circuit under test to
(vi) Provision shall be made so that the milliwatt supply can be manually patched to circuits.
(vii) Test jack access shall be provided for all interoffice trunks of the voice frequency type. The jack access shall be properly designated for line, drop, monitor, and signaling leads plus any other jacks as requested by the owner. This may be accomplished by a set of jacks located at the maintenance center which have access to each trunk on a switching basis.
(p)
(ii) The traffic capacity for all interoffice trunks shall be based on full availability, even though the distant office itself is not engineered to provide full availability access.
(iii) The Traffic Table may also be used to determine the approximate traffic capacity of high-usage intertoll trunks. The traffic offered to high-usage groups may be read at B.10, signifying that 10 percent of the traffic overflows to the alternate route. This approximates the HU12 table used by AT&T.
(iv) In reading the trunk quantity from the table, the higher quantity shall be used when the CCS load is three or more CCS over the lower quantity. For example, the number of trunks justified for 294 CCS at B.005 is 16, but for 295 CCS 17 trunks are justified.
(v) Limited availability is not permitted.
(vi) The traffic capacity in the following table should be used for small trunk groups such as pay station, special service trunks, intercept, and PBX trunks, unless otherwise specified in appendix A of this section:
(vii) The percentage of lines equipped for pushbutton dialing is to be used to determine the number of tone receivers. Local registers, if required, shall be supplied on the basis of all dial pulse.
(2)
(ii) The number of calls encountering dial tone delay in excess of 3 seconds, measured over the busy hour of the four high-consecutive week (4HW) period, shall not be more than 1.5 percent.
(iii) The average post dialing delay objective for an intraoffice call shall not exceed 1 second. This includes all connect, operate, and translation time.
(iv) The line to line (intraoffice) network matching loss objective shall be 0.02 or less.
(v) The blocking probabilities related to trunks include both “mismatch” probability and probability of “all trunks busy.” It is likely that the “mismatch” will be negligible in that many digital central offices have essentially nonblocking switching characteristics. The objectives for trunk connections are as follows:
(A) Subscriber to outgoing trunk objective 0.01 or less;
(B) Incoming trunk to subscriber objective 0.02 or less; and
(C) Local trunk tandem objective 0.01 or less.
(vi) Groups of common service circuits are to be engineered utilizing the full availability traffic tables that appear in paragraph (p)(1)(i) of this section at the following stipulated probabilities:
(A) Outgoing trunks to 2/6 MF or dial pulse senders at B.001;
(B) Incoming trunks to 2/6 MF receivers at B.001;
(C) Incoming nondelay dial trunks to receivers at B.001; and
(D) Incoming trunks with start dial at B.01.
(vii) Remote Switching Terminals (RST's) shall meet the same grade of service objectives as the host.
(3)
(i) The following average call holding times (HT) may be used.
(ii) The following average subscriber dialing holding times may be used (times used to dial digits do not include machine time).
(iii) The following average incoming register holding times may be used (times for digit registrations do not include machine time).
(iv) The following average sender holding times may be used (does not include machine setup and release time).
(4)
(A)
(B)
(C)
(D)
(E)
(ii) Traffic data shall be stored in electronic storage registers or block of memory consisting of one or more traffic counters for each item to be measured. The registers listed in paragraph (p)(4)(i) of this section shall be associated with the interoffice trunks, switching network and central control equipment in such a manner that the register readings can be used to determine the traffic load and flow to, from and within the system. Two-way trunks shall be metered to indicate inward and outward seizures. The bidder shall indicate what registers are to be supplied and their purpose.
(iii) The measured data shall be shown on a printout. It should be possible to have local or remote printout, or both. Arrangement shall be made for automatic data printout on command for 15-, 30-, or 60-minute intervals as required, and be arranged for automatic start-stop and in accordance with revenue separation procedures current at the time of contract.
(iv) All traffic records shall have dates and times and office identification.
(q)
(2)
(3)
(i)
(ii)
(iii)
(iv)
(4)
(i)
(ii)
(iii)
(5)
(6)
(7)
(ii) Far end test terminations shall be as follows:
(A) Loaded line circuit—1650 ohms in parallel with the series combination of .005 microfarads and 100 ohms;
(B) Nonloaded line circuit—800 ohms in parallel with the series combination of .05 microfarads and 100 ohms;
(C) Special service line circuit including electronic lines and carrier lines—900 ohms in series with 2.16 microfarads;
(D) Two-wire trunk—900 ohms in series with 2.16 microfarads; and
(E) Four-wire trunk—600 ohms.
(iii) For trunk-to-trunk (2-wire or 4-wire) connections the echo return loss (ERL) shall be 27 dB, minimum and the singing return loss (SRL) shall be 20 dB, minimum low and 23 dB, minimum high.
(iv) For trunk-to-line (2-wire or 4-wire) connections the ERL shall be 24 dB, minimum and the SRL shall be 17 dB, minimum low and 20 dB, minimum high.
(v) For line-to-line or line-to-trunk (2-wire or 4-wire) connections the ERL shall be 18 dB, minimum and the SRL shall be 12 dB, minimum low and 15 dB, minimum high.
(8)
(9)
(10)
(11)
(12)
(13)
(ii) Due to the possible loss of the least significant bit on direct digital
(14)
(15)
(16)
(17)
(18) Radio and television interference. The central office switching equipment shall be designed and installed so that radiation of high frequency noise will be limited so as not to interfere with radio and television receivers.
(r)
(2)
(3)
(4)
(5)
(6)
(7)
(i) Disconnect signal;
(ii) Wink signal;
(iii) Start dialing signal;
(iv) Pulse delay signal;
(v) Go signal;
(vi) Digit timing; and
(vii) Sender, register, and link attachment timing.
(s)
(2)
(ii) When lead calcium cells are specified, no cell shall differ from the average voltage of the string of fully charged cells by more than
(iii) Voltage readings shall be corrected by a temperature coefficient of 0.0033 volt per degree F (0.006 per degree C), whenever temperature variations exist between cells in a given string. This correction factor shall also be applied when comparing cell voltages taken at different times and at different temperatures. The correction
(iv) The specific gravity readings of lead antimony cells at full charge shall be 1.210
(v) When counter cells are supplied by the bidder, they shall be the dry counter electromotive force (CEMF) type.
(vi) When lead antimony batteries are specified, they shall be designed to last a minimum of 10 years when maintained on a full float operation between 2.15 and 2.17 volts per cell. When lead calcium batteries are specified, they shall be designed to last a minimum of 20 years when maintained on full float operation between 2.17 and 2.25 volts per cell. The battery shall be clearly designated as “antimony” or “calcium” by means of stencils, decals or other devices.
(vii) Each battery cell shall be equipped with an explosion control device.
(viii) The battery size shall be calculated in accordance with standard procedures. The battery in no case shall have a reserve capacity in ampere hours less than four times the current capacity of the largest charger.
(3)
(ii) When charging batteries, the voltage at the battery terminals shall be adjustable and shall be set at the value recommended for the particular battery being charged, providing it is not above the maximum operating voltage of the switching system equipment. The voltage shall not vary more than plus or minus 0.02 volt per cell between 10 percent load and 100 percent load. Between 3 percent and 10 percent load, the output voltage shall not vary more than plus or minus 0.04 volt per cell. Beyond full load current, the output voltage shall drop sharply. The output voltage shall be maintained with the line voltage variations of plus or minus 10 percent. Provision shall be made to change the output voltage of the rectifier manually to 2.25 volts per cell to provide an equalization charge on the battery.
(iii) The charger noise shall not exceed 22 dBrnC when measured with a suitable noise measuring set and under the rated battery capacitance and load conditions as determined in Figure 2.
(30,000 × 100)/25 = 120,000
(iv) The charging equipment shall indicate a failure of charging current, whether due to ac power failure, an internal failure in the charger, or to other circumstances which might cause the output voltage of the charger to drop below the battery voltage. Where a supplementary constant current charger is used, an alarm shall be provided to indicate a failure of the charger.
(v) Audible noise developed by the charging equipment shall be kept to a minimum. Acoustic noise resulting from operation of the rectifier shall be expressed in terms of dB indicated on a sound level meter conforming to ANSI S1.4-1983, Specification for Sound Level Meters, and shall not exceed 65 dB (A-weighting) measured at any point 5 feet (152.4 cm) from any vertical surface of the rectifier.
(vi) The charging equipment shall be designed so that neither the charger nor the central office switching equipment is subject to damage in case the battery circuit is opened for any value of load within the normal limits.
(vii) The charging equipment shall have a capacity to meet the requirements of central office size and special requirements of the owner in appendix A of this section.
(viii) Minimum equipment requirement for chargers is one of the following:
(A) Two chargers either capable of carrying the full office load as specified in Item 12 of appendix A of this section; or
(B) Three chargers each capable of carrying half the office load as specified in Item 12 of appendix A of this section.
(4)
(ii) Power converters required for the purpose of providing various operating voltages to printed circuit boards or similar equipment employing electronic components shall be provided in duplicate with each unit capable of immediately assuming the full operating load upon failure of a unit. An exception to the duplicate power converter requirement permits nonduplicated power converter(s) to be utilized where there is full compliance with the following criteria.
(A) The failure of any single nonduplicated power converter shall not reduce the grade of service of common control and service circuits to any individual line or trunk by more than 50 percent.
(B) The failure of any single nonduplicated power converter shall not reduce the traffic carrying capacity of any interoffice trunk group by more than 50 percent.
(C) In central office switching systems of 400 or more equipped lines, any single nonduplicated power converter failure shall not cause a complete loss of service to more than 100 equipped lines.
(D) In central office switching systems of less than 400 equipped lines, any single nonduplicated power converter failure shall not cause a complete loss of service to more than 25 percent of the total equipped lines.
(5)
(i)
(B) An exception to the redundant ringing equipment requirement permits nonredundant ringing equipment to be utilized where there is full compliance with the following service criteria.
(
(
(ii)
(B) The ringing generator shall obtain its energy from the nominal 48-volt office battery.
(C) The output of each generator shall have three or more voltage taps or a single tap with associated variable control. Taps or control shall be easily accessible as installed in the field. Software control of ringing generator outputs via I/O devices may be provided in lieu of taps. The taps, or equivalent, shall be designated L, M, and H. The variable control shall have a locking device to prevent accidental readjustment. The outputs at the terminals of the generators with a voltage input of 52.1 volts and rated full resistive load shall be as follows for the ringing frequencies provided:
(D) No voltages in excess of the values in column H of the table in paragraph (s)(5)(ii)(C) of this section shall be provided at the output taps. Additional intermediate and/or lower taps may be provided without restriction.
(iii)
(B) The output voltage for resistive, capacitive power factor of 0.8, and inductive power factor of 0.5 from no load to full rated output with input battery variations between 48-56 volts dc shall not vary more than
(C) The output voltage for resistive, capacitive power factor of 0.8, and inductive power factor of 0.5 loads from no load to full rated output and with input battery variations between 44-56 volts dc shall not vary more than +10/−15 percent from the output voltage measured at 1/2 rated output and 1.0 power factor with 52.1 volts dc input applied.
(iv)
(v)
(vi)
(6)
(ii) The ringing cycle provided by the interrupter equipment shall not exceed 6 seconds in length. The ringing period shall be 2 seconds.
(7)
(ii) Portable or panel mounted frequency meters shall be provided as specified by the owner unless the system is equipped to measure actual ringing generator voltage and frequency outputs internally. If the system is equipped to make such measurements and print the results, the bidder is not required to provide a frequency meter.
(iii) Power panels, cabinets and shelves, and associated wiring shall be designed initially to handle the exchange when it reaches its ultimate capacity as specified by the owner.
(iv) The power panel shall be of the “dead front” type.
(t)
(2) The current carrying capacity of each arrester and its associated mounting shall coordinate with a #22 gauge
(3) Central office protectors shall be mounted and arranged so that outside cable pairs may be terminated on the left side of protectors (when facing the vertical side of the MDF) or on the back surface of the protectors. Means for easy identification of pairs shall be provided.
(4) Protectors shall have a “dead front” (either insulated or grounded) whereby live metal parts are not readily accessible.
(5) Protectors shall be provided with an accessible terminal of each incoming conductor which is suitable for the attachment of a temporary test lead. They shall also be constructed so that auxiliary test fixtures may be applied to open and test the subscriber's circuit in either direction. Terminals shall be tinned or plated and shall be suitable for wire wrapped, insulation displacement or connectorized connections.
(6) If specified in appendix A of this section, each protector group shall be furnished with a factory assembled tip cable for splicing to the entrance cable; the tip cable to be 20 feet (610 cm) in length unless otherwise specified. Factory assembled tip cable shall be #22 gauge and selected from RUS Bulletin 1755I-100, List of Materials Acceptable for Use on Telephone Systems of RUS Borrowers. Tip cable requirements are provided in RUS Bulletin 345-87, PE-87, RUS Specification for Terminating (TIP) Cable. Cables having other kinds of insulation and jackets which have equivalent resistance to fire and which produce less smoke and toxic fumes may be used if specifically approved by RUS.
(7) Protectors shall be mounted on vertical supports, with centers not exceeding 9 inches (22.9 cm). The space between protector units shall be adequate for terminating conductors.
(8) Cable supporting framework shall be provided between the cable entrance and the MDF when overhead cable entrance is specified in Item 14.3.3 of appendix A of this section.
(9) The main distributing frame shall be equipped with a copper ground bus bar having the conductivity of a #6 American Wire Gauge (AWG) copper conductor or a greater conductivity, or may consist of another metal if specifically approved, provided it has adequate cross-sectional area to provide conductivity equivalent to, or better than, bare copper. A guardrail or equivalent shall also be furnished.
(10) Other features not specified in paragraph (t) of this section may be required at the option of the owner, if checked in Item 13.4 of appendix A of this section.
(11) Main frame protector makes and types shall be selected only from RUS Bulletin 1755I-100, List of Materials Acceptable for Use on Telephone Systems of RUS Borrowers. Protectors shall be capable of easy removal.
(u)
(ii) Central office switching equipment shall pass laboratory tests, simulating the hostile electrical environment, before being placed in the field for the purpose of obtaining field experience. There are five basic types of laboratory tests which shall be applied to exposed terminals in an effort to determine if the equipment will survive. Figure 3 summarizes these tests and the minimum acceptable levels of protection for equipment to pass them.
(iii)
Surge Waveshape is defined as follows:
Rise Time × Time to Decay to Half Crest Value
(For example, 10 × 1000
(B) Sixty Hertz (60 Hz) current-carrying tests should be applied to simulate an ac power fault which is conducted to the unit over the cable pairs. The test should be limited to 10 amperes rms at 60 Hz for a period of 11 cycles (0.1835 seconds) and should be applied longitudinally from line to ground (see Figures 3 and 6 of this section).
(C) AC power service surge voltage tests should be applied to the power input terminals of ac powered devices to simulate switching surges or lightning-induced transients on the ac power system. The test shall employ a 1.2 × 50 microseconds waveshape with a crest voltage of 2500V. Communications line protectors may be left in place for this test. Borrowers are urged to install commercially available surge protectors at the ac service entrance as part of their COE building program.
(D) Voltage surge tests simulate the voltage stress to which a relatively high impedance path may be subjected before primary protectors break down and protect the circuit. To assure coordination with the primary protection while reducing testing to the minimum, voltage surge tests should be conducted at a 1000 volts with primary arresters removed for devices protected by carbon blocks, or the +3 sigma dc breakdown of other primary arresters. Surge waveshape should be 10 × 1000 microseconds.
(E) Arrester response delay tests are designed to stress the equipment in a manner similar to that caused by the delayed breakdown of gap type arresters when subjected to rapidly rising voltages. Arresters shall be removed for these tests, the peak surge voltage should be the +3 sigma breakdown of the arrester in question on a voltage rising at 100V per microsecond and the time for the surge to decay to half voltage shall equal at least the delay time of the tube, as explained in Figure 7.
(iv) Five applications of each polarity for the surge tests and three for the 60 Hz Current Carrying Test are the minimum required. All tests should be conducted with not more than 1 minute between consecutive applications in each series of three or five to a specific configuration so that heating effects will be cumulative. As not all tests are required in every application, nonapplicable tests should be omitted. Tests should be conducted in the following sequence.
(A) Current Impulse Test.
(B) Sixty Hertz (60 Hz) Current Carrying Test.
(C) AC Power Service Impulse Voltage Test.
(D) Voltage Impulse Test.
(E) Arrester Response Delay Test.
(v) Tests should be applied between each of the following terminal combinations for all line operating conditions.
(A) Line tip to ring.
(B) Line ring to ground.
(C) Line tip to ground.
(D) Line tip to ring tied together to ground.
(2)
(3)
(4)
(5)
(ii) The unit equipment shall not be permanently damaged by accidental short circuits of any duration across either the central office side tip and ring or the line side tip and ring. A test is to be made with the unit energized at the highest recommended voltages.
(6)
(v)
(2)
(i) 6 Turns of 30 Gauge.
(ii) 6 Turns of 26 Gauge.
(iii) 6 Turns of 24 Gauge.
(iv) 5 Turns of 22 Gauge.
(3)
(4)
(5)
(6)
(7)
(8)
(w)
(2)
(3)
(ii) As long as the connecting span line is intact, the subscribers served by the RST shall have all features, traffic capacity, and services including busy verification, available to all other subscribers in the system.
(iii) The RST shall have available an emergency call processing option which permits calling among all subscribers and from subscribers to emergency numbers within the RST if control link connections to the host central office are severed or otherwise disabled. The RST shall be capable of rerouting normally used emergency numbers, such as 911, to predetermined line terminations in this emergency stand-alone operating condition. This RST emergency call processing option shall be provided only when specified by the owner in Item 6.1 of appendix B of this section.
(4)
(ii) If tests in paragraph (w)(4)(i) of this section are not requested by the owner for a particular installation, a subscriber loop test set (see paragraph (o)(2)(iii)(A) of this section) shall be supplied at the RST with a means to access all lines.
(5)
(6)
(ii)
(B) An exception to the duplicated ringing source requirement permits nonduplicated ringing source(s) to be utilized where there is full compliance with the following service criteria.
(
(
(iii)
(B) An exception to the duplicate power converter requirement permits nonduplicated power converter(s) to be utilized where there is full compliance with the following criteria.
(
(
(
(
(7)
(x)
(ii) The layout drawings shall also show provision for the ultimate capacity of the central office as specified by the owner.
(iii) After approval by the owner of the tentative floor plan, and within 10 calendar days after approval of the contract by the Administrator, the owner shall furnish the bidder the necessary data on the actual floor plan. Within 20 calendar days after receiving the necessary building data, the bidder shall then supply floor plan drawings showing exact locations of all equipment, both initial and ultimate, including points where connection to commercial power are required, with voltage and wattage indicated at each point. Within 20 calendar days after receiving the floor plan drawings from the bidder, the owner shall approve these drawings or take the necessary steps to have the drawings changed to meet his approval. The layout planning must be so coordinated between the owner and the bidder as not to delay the scheduled equipment installation date.
(2)
(3)
(A) A floor plan showing exact dimensions and location of each equipment frame or item to a convenient scale;
(B) A block schematic drawing showing the various equipment components in the system, and their identifying circuit number (e.g., MDF, line circuits, memory, trunks, etc.);
(C) Drawings of major equipment items such as frames, with the location of major component items of equipment shown;
(D) Individual functional drawings for electrical circuits in the system;
(E) A detailed description of the operation of each circuit down to a circuit package level;
(F) Wiring diagrams indicating the specific method of wiring used on each item of equipment and interconnection wiring between items of equipment;
(G) Sufficient software documentation to maintain and service the system, including drawings showing principal aspects of the software architecture;
(H) Individual maintenance drawings covering each equipment item that contains replaceable parts, appropriately identifying each part by name and part number, or, complete ordering instructions for all replaceable parts if individual item drawings are not provided; and
(I) Job drawings including all drawings that are individual to the particular office involved, such as main frame, power panel, test board, etc.
(ii) The following information shall also be furnished:
(A) Complete index of the required drawings;
(B) Explanation of electrical principles of operation of the overall switching system;
(C) List of tests which can be performed with each piece of test equipment furnished, and explanation of the method of performing each test;
(D) Sample of each form recommended for use in keeping records of tests;
(E) Criteria for analyzing results of tests and determining appropriate corrective action;
(F) General notes on the methods of isolating equipment faults to specific printed circuit cards in the equipment;
(G) List of typical troubles which might be encountered, together with general indications as to the probable location of each trouble;
(H) Special office grounding requirements;
(I) A site specific central office ground system acceptance checklist that is consistent with industry practice; and
(J) A site specific layout of the master ground bar (MGB) showing assignment of P, A, N, and I equipment areas.
(4)
(5)
(6)
(A) “Units” are defined as user replaceable components used in the central office equipment. “Spare Parts” are direct replacements for units. Spare parts are necessary for the maintenance and diagnostic operations where the suspected faulty unit may be removed and a spare part substituted in anticipation that the trouble will be cleared.
(B) Examples of units for which spare parts should be furnished are printed circuit cards; circuit pack assemblies; fuses; and power supplies.
(C) Spare parts are not required as part of this addendum for items such as connectorized cables, nuts, bolts, and similar hardware; nor for items which can be obtained from sources other than the bidder such as battery cells, chargers, powerboards, magnetic tape transport assemblies, disk drives, ringing machines, recorded announcement machines, loop extenders and voice frequency repeaters, fire bars, teletypewriters, and video monitors.
(D) When 100 or more like units are used in the hosts and RST's to be bid, the quantity of spares to be furnished is determined by multiplying the total number of like units in the contract by .05 or .03, as applicable, and rounding off to the next lowest integer. For example, 119 Class 1 units require five spares; 120 require six.
(E) When alternates are required, the price of the spare parts for the alternates shall be included with the price of the alternate.
(F) For equipment in which the line cards consist of a number of plug-in “daughter” boards on a “mother” board, the line card is defined as the “daughter” board unit. In a similar manner for those designs which have line cards backed up by a “control card,” the “control card” is not, by definition, a line card.
(G) The quantities of spare parts determined in paragraph (x)(6)(vi) of this section are a minimum quantity. The bidder may add quantities of spare parts to bring the number of spare parts up to the bidder's list of spare parts necessary for proper operation in the field.
(ii) A Class 1 unit does not have automatic transfer to a redundant or standby pool of identical units, and provides any function for 24 or more lines or trunks or for all trunks in a group. Nonredundant digital trunk interfaces are included in this category.
(iii) A Class 2 unit has automatic transfer to a redundant or standby pool of identical units, and provides any function for 24 or more lines or trunks or for all trunks in a group. Redundant digital trunk interfaces and units of a redundant stored program processor are included in this category.
(iv) A Class 3 unit does not have automatic transfer to a redundant or standby pool of identical units and provides any function for no more than 23 lines or trunks or for less than all trunks in a group. Nonredundant analog trunks are included in this category. Excluded from this category are line cards, which are in Class 4.
(v) A Class 4 unit has automatic transfer to a redundant or standby pool of identical units and provides any function for no more than 23 lines or trunks or for less than all trunks in a group. Also, any line cards are in Class 4.
(vi) The spare parts for all of the hosts and the RST's included in this contract shall be provided as follows:
(vii) As a part of the response to the bid, the supplier shall furnish a list of units used by class and a list of spare parts to be furnished with this contract. This list shall be placed in Item 6.2 of appendix C of this section for only one of the host specifications included in the entire contract.
(7)
(8)
(9)
(y)
(1)
(i) Allow the bidder and its employees free access to the premises and facilities at all hours during the progress of the installation;
(ii) Take such action as necessary to ensure that the premises are dry and free from dust and in such condition as not to be hazardous to the installation personnel or the material to be installed (not required for an RST installed in a self-contained environmentally controlled cabinet);
(iii) Provide heat or air conditioning when required and general illumination in rooms in which work is to be performed or materials stored (not required for an RST installed in a self-contained environmentally controlled cabinet);
(iv) Provide suitable openings in buildings to allow material to be placed in position (not required for an RST installed in a self-contained environmentally controlled cabinet);
(v) Provide the necessary conduit and commercial and dc-ac inverter output power to the locations shown on the approved floor plan drawings; provide 120 volts, 60 Hz commercial power equipped with a secondary arrester and a reasonable number of outlets for test, maintenance and installation equipment; provide suitable openings or channels and ducts for cables and conductors, from floor to floor and from room to room; provide an acceptable central office grounding system and at a ground resistance level that is reasonable for office site conditions (not required for an RST installed in a self-contained environmentally controlled cabinet);
(vi) Provide the necessary wiring, central office grade ground and commercial power service, with a secondary arrester, to the location of an exterior RST installation based on the voltage and load requirements furnished by the bidder;
(vii) Test at the owner's own expense all lines and trunks for continuity, leakage and loop resistance and ensure that all lines and trunks are suitable for operation with the central office equipment specified;
(viii) Make alterations and repairs to buildings necessary for proper installation of material, except to repair damage for which the bidder or its employees are responsible;
(ix) Connect outside cable pairs on the distributing frame and run all line and trunk jumpers (those connected to protectors);
(x) Furnish all trunk, line, and party assignment information to permit the bidder to program the data base memory within a reasonable time prior to final testing;
(xi) Release for the bidder's use such portions of the existing plant as are necessary for the proper completion of such tests as require coordination with existing facilities including facilities for T1 span lines with properly installed repeaters between the central office and the RST installations;
(xii) Make prompt inspections as it deems necessary when notified by the bidder that the equipment, or any part of the equipment, is ready for acceptance;
(xiii) Provide and install adequate fire protection apparatus, including one or more fire extinguishers or fire extinguishing systems of the gaseous type that has low toxicity and effect on equipment; and
(xiv) Provide necessary access ports for cable, if underfloor cable is selected.
(2)
(i) Allow the owner and its representatives access to all parts of the buildings at all times during the installation;
(ii) Obtain the owner's permission before cutting into or through any part of the building structure such as girders, beams, concrete or tile floors, partitions or ceilings (not applicable to the installation of lag screws, expansion bolts, and similar devices used for fastening equipment to floors, columns, walls and ceilings);
(iii) Be responsible for reporting to the owner any damage to the building
(iv) Consult with the owner before cutting into or through any part of the building structure where the fireproofing or moisture proofing may be impaired;
(v) Take necessary steps to ensure that all fire fighting apparatus is accessible at all times and all flammable materials are kept in suitable places outside the building;
(vi) Not use gasoline, benzene, alcohol, naphtha, carbon tetrachloride or turpentine for cleaning any part of the equipment;
(vii) Install the equipment in accordance with the specifications for the office;
(viii) Run all jumpers, except line and trunk jumpers (those connected to protectors);
(ix) Establish and update all data base memories with subscriber and trunk information as supplied by the owner until an agreed turnover time;
(x) Give the owner notice of completion of the installation at least 1 week prior to completion;
(xi) Permit the owner or its representative to conduct tests and inspections after installation has been completed in order that the owner may be assured that the requirements for installation are met;
(xii) Allow access, before turnover, by the owner or its representative, upon request, to the test equipment which is to be turned over as a part of the office equipment, to permit the checking of the circuit features which are being tested and to permit the checking of the amount of connected equipment to which the test circuits have access;
(xiii) Make final charger adjustments using the manufacturer's recommended procedure;
(xiv) Notify the owner promptly of the completion of work of the central office, or such portions as are ready for inspection;
(xv) Correct promptly all defects for which the bidder is responsible;
(xvi) Provide the owner with one set of marked prints, or strapping prints, showing which of the various options and figures are in use on each switching system as specified in paragraph (x)(3)(i) of this section;
(xvii) Place the battery in service in compliance with the recommendations of the battery manufacturer; and
(xviii) Furnish the owner with a record of the cell voltages and specific gravity readings made at the completion of the installation of the switching system and before it is placed in commercial service.
(3)
(ii) All multiple and associated wiring shall be continuous, free from crosses, reverses and grounds and shall be correctly wired at all points.
(iii) An inspection shall be made by the owner or its representatives prior to performing operational and performance tests on the equipment. However, this inspection shall be made after all installing operations which might disturb apparatus adjustments have been completed. The inspection shall be of such character and extent as to disclose with reasonable certainty any unsatisfactory condition of apparatus or equipment. During these inspections, or inspections for apparatus adjustments, or soldering, or in testing of equipment, a sufficiently detailed examination shall be made throughout the portion of the equipment within which such condition is observed, or is likely to occur, to disclose the full extent of its existence, where any of the following conditions are observed:
(A) Apparatus or equipment units failing to compare in quantity and code with that specified for the installation;
(B) Apparatus or equipment units damaged or incomplete;
(C) Apparatus or equipment affected by rust, corrosion or marred finish; or
(D) Other adverse conditions resulting from failure to meet generally accepted standards of good workmanship.
(4)
(ii) A sufficient quantity of overall tests shall be made to ensure proper operation of all specified features.
(iii) A sufficient quantity of locally originating and incoming calls shall be made to prove the switching system can accept and process calls to completion.
(5)
(ii) This single-point grounding system audit is to be conducted by authorized representatives of the supplier and owner, and with the RUS general field representative participating at his discretion.
(iii) The single-point grounding system audit is to be conducted using the checklist contained in appendix D of this section.
(iv) Appendix D of this section shall be the principal single-point grounding system audit guideline document. A supplemental checklist may be prepared and provided by the switching system supplier which recognizes unique grounding requirements related to their particular switching system. The scope of this supplier checklist is to be confined to unique and specific switching system requirements only. Acceptable supplier supplemental grounding checklist must have prior approval of and be on file with the Central Office Equipment Branch of the Telecommunications Standards Division of RUS.
(v) It is the responsibility of the central office supplier to ensure that the grounding system evaluation criteria contained in the combination of the appendix D checklist of this section and their optional supplemental checklist adequately fulfill requirements for warranty coverage.
(vi) All deficiencies in the single-point grounding system are to be corrected prior to the switching system being placed into full service operation. Exceptions are permitted only by mutual agreement of the owner and supplier and with written approval of the RUS general field representative.
(vii) The acceptance statement facesheet of the audit checklist in appendix D of this section shall be signed by authorized representatives of the supplier and owner to indicate mutual approval of the single-point grounding system. Copies of all completed grounding system audit documents are to be provided to the supplier, owner and appropriate RUS telephone program regional offices.
1.1Notwithstanding the bidder's equipment lists, the equipment and materials furnished by the bidder must meet the requirements of paragraphs (a) through (x), Appendix A and Appendix B of § 1755.522.
1.2Paragraphs (a) through (x) of § 1755.522 cover the minimum general requirements for digital, stored program controlled central office switching equipment.
1.3Paragraph (y) of § 1755.522 covers requirements for installation, inspection, and testing when such service is included as part of the contract.
1.4Appendices A and B of § 1755.522 cover the technical data for application engineering and detailed equipment requirements insofar as they can be established by the owner. These appendices are to be filled in by the owner.
1.5Appendix C of § 1755.522 covers detailed information on the switching network equipment and the common control equipment, and information as to system reliability and heavy traffic delays as proposed by the bidder. This appendix is to be filled in by the bidder and must be presented with the bid.
1.6Appendix D of § 1755.522 is the single-point grounding system audit checklist.
2.1This office shall be arranged to serve the following area and office code(s):
If more than one code is to be served, discrimination shall be determined by the following:
2.2This office shall be arranged to provide EAS service to the following:
2.2.1Seven digits shall be dialed for all local and EAS calls.
2.3Additional dialing procedures to be provided include the following:
10XXX Dialing to Interexchange Carriers:
2.4Assistance calls are answered: (Check appropriate items)
2.4.1At the operator office in
2.4.1.1By means of the regular interoffice toll trunks
2.4.1.2By means of the regular interoffice EAS trunks
2.4.1.3By means of a separate special service trunk group
2.4.1.4Locally
Explain:
3.1This office is to be slave clock synchronized with another office:
3.2This office is to be a master clock office to provide synchronization timing for other offices:
4.1A sketch showing relative location of exchanges, RST's, and number of circuits shall be included, also the office and area codes of the direct trunk points. The diagram should indicate whether toll or EAS trunk groups are “High Usage” or “Final.” Alternate routes should be included. Indicate whether the trunk termination is direct digital or analog.
6. Line Circuit Requirements (Includes all lines associated with RST's.)
8.1.2Pads for 4-Wire Carrier (7dB and 16dB)
Refer to the attached information regarding connecting company trunk circuit drawing numbers and name of manufacturer.
8.2
8.2.1Originating Traffic
8.2.2Terminating Traffic
9.4Billing Data
9.5
9.5.1Polling device to be provided on this contract
9.5.2Pollable system to be backed up by tape or disc standby
9.6.1Bellcore Format
11. Maintenance Facility Requirements
11.1
11.1.1Handled locally
11.1.2Transmitted to attended point
11.1.2.1Via operator office trunks
11.1.2.2Via printout or other display service
11.1.2.3Type of tone to operator
11.1.2.3.1Distinctive tone (see (i)(2)(ix) of § 1755.522)
11.1.2.3.2Other
11.1.3Alarm checking signals for carrier and mobile radio systems
11.3.1Furnish reference tone
If supplied by owner, explain in Item 16, Appendix A, including manufacturer, model, location.
If required, explain in Item 16, Appendix A, including number, type and location.
12.1.1A battery reserve of
12.1.1.1The owner will furnish a standby generator, permanently installed in this office, with capacity sufficient to power air conditioning equipment required for cooling of the central office equipment and to maintain an adequate dc supply in the event of a failure of the commercial ac supply.
12.1.2
12.1.3Voltmeter (portable 3-60-150 volt scale, 1% accuracy) shall be furnished.
12.1.4Hydrometer in a hydrometer holder with glass or plastic drop cup shall be furnished.
12.1.6Special equipment power requirements (carrier, voice frequency repeaters, etc.). Drain in amperes
12.1.6.1Supply all necessary equipment to provide the following 48-volt battery taps:
12.2.1Charging equipment shall be provided capable of charging the office battery on a full float basis when the office reaches
12.2.2Charger input rating shall be:
12.3.1Solid-state ringing equipment in accordance with paragraph (s)(5)(i) of § 1755.522 shall be provided for generating the frequencies specified by check marks in the following table. Ringing generator sets serving the entire office shall each be sized to carry the full office ringing load when the office size reaches
12.3.2Ringing frequencies to be supplied:
12.3.3Furnish frequency meter (accurate within 1.3 Hz) and voltmeter (5% accuracy) for ringing measurements (see paragraph (s)(7)(ii) of § 1755.522). Check One:
The power panel and associated wiring shall be of ample size to meet the load requirements when this office reaches
Is present MDF to be reused?
If “Yes,” Type
Reused protectors are:
13.4.1Number of pairs of arrester units (switching equipment)
13.4.2Number of pairs of gas tube arrester units (special equipment)
13.4.2.1Gas tubes to be:
13.4.2.2Fail shorted/low breakdown failure mode required
13.4.2.3Breakdown voltage of gas tube arresters
13.4.3Number of terminated pairs to be grounded
13.4.4Factory assembled tip cable
13.4.4.1Tip cable length [if other than 20 feet (610 cm)]
13.4.4.2Tip cable formed
13.4.5Pairs per vertical
13.4.6Height of vertical
14.1Equipment is to be installed in an existing building (Attach detailed plan.)
14.2A new building is planned
14.2.1Tentative plan (
14.3
14.3.1Partition required (to isolate space containing battery, charger, power board, test panel, main distributing frame and subscriber's loop test circuit (wire chief's test desk) from that of the remaining equipment).
14.3.2Vestibule required
14.3.3Cable entrance
14.3.4Additional floor space will be required for the following equipment which is being furnished by the owner or by the connecting company:
14.3.5The office will be arranged for
14.3.6Is earthquake bracing required?
(If “Yes,” explain zone and criteria used for zone in Item 16, Appendix A.)
14.3.7Office ground will be
14.3.8The office is considered to be in the following category for lightning damage probability based on the Figure 1 map of RUS TE&CM 823 (see paragraph (u)(2) of 1755.522).
14.3.9The following is additional information regarding operating environment conditions which should be considered in determining system protection requirements (tower in vicinity, high exposure, etc.):
1.1Single-Party:
1.2Semi-Postpay Pay Station
1.3Prepay Pay Station
1.4PABX Lines
1.5Number of lines to be pushbutton
1.6911 Emergency Lines
1.7Anticipated ultimate capacity (20-Year)
2.1Originating traffic per line—CCS/BH:
2.2Terminating traffic per line—CCS/BH:
2.2.1Terminating will be made equal to originating if it is not known to be different.
3.1Number of subscriber lines having loop resistance, including the telephone set of:
3.2Number of pay station lines having loop resistance, excluding the telephone set, greater than:
4.1If no standby power is available at the site, loop extenders may be required on 1501 to 1900 ohms loops.
4.2
5.1Power Board.
5.1.1The power board and associated wiring shall be of ample size to meet the load requirements when this RST reaches
5.2
5.2.1Charger shall be capable of charging the RST battery on a full float basis when the RST reaches
5.2.2Charger shall be redundant
5.3Battery reserve shall be
5.4Standby power is available.Yes
5.5Special equipment power requirements
5.6
5.6.1Type of Ringing.
5.6.3Wattage to be sized for
5.6.4Frequency Meter (see Item 12.3.3, Appendix A). Panel Mounted
6.1If path to central office is opened, the RST shall be able to complete calls between subscribers in its own system: Yes
Further requirements should be listed under Item 12, Appendix B.
7.1Total number of outside plant cable pairs to be terminated
7.1.1Gauge of outside plant cable pairs
7.2Number of outside plant cable pairs to be protected
7.3Number of additional protector pair units to be provided on MDF
Explain:
7.4
7.4.1Present MDF to be reused Yes
If “Yes”, Type
Reused protectors are:
7.4.2 Number of pairs of arrester units (switching equipment)
7.4.3Number of pairs of gas tube arrester units (special equipment)
7.4.3.1Gas tubes to be:
7.4.3.2 Failshorted/low breakdown failure mode requiredYes
7.4.3.3Breakdown voltage of gas tube arresters
7.4.4Number of terminated pairs to be grounded
7.4.5Factory assembled tip cable Yes
7.4.5.1Tip cable length [if other than 20 feet (610 cm)]
7.4.5.2Tip cable formedUp
7.4.6Pairs per vertical
7.4.7Height of vertical
8.1RST to be mounted in building
8.1.1Earthquake bracing requiredYes
8.1.2Supply building floor plan.
8.2RST to be mounted in cabinet out of doors
8.2.1Cabinet to be mounted
9.1Remote testing of subscriber lines is requiredYes
9.2Subscriber loop test set
10.1To be supplied by Owner
10.2To be supplied by Bidder
10.2.1When the bidder is to supply the span lines, an RUS Form 397b, Trunk Carrier Systems, with the applicable parts completed must be attached with a physical layout of the span line.
11.1The RST ground will be
11.2This RST is considered to be in the following category for lightning damage probability based on the Figure 1 map of RUS TE&CM 823.
11.3The following is additional information regarding operating environment conditions which should be considered in determining system protection requirements (tower in vicinity, high exposure, etc.):
Attended
1.1The equipment and materials furnished by the bidder must meet the requirements of paragraphs (a) through (x), Appendix A, and Appendix B of § 1755.522.
1.2Paragraphs (a) through (x) of § 1755.522 cover the minimum general requirements for digital, stored program controlled central office switching equipment.
1.3Paragraph (y) of § 1755.522 covers requirements for installation, inspection, and testing when such service is included as part of the contract.
1.4Appendices A and B of § 1755.522 cover the technical data for application engineering and detailed equipment requirements insofar as they can be established by the owner. These appendices are to be filled in by the owner.
1.5Appendix C of § 1755.522 covers detailed information on the switching network equipment and the stored program controlled equipment, and information as to system reliability and heavy traffic delays as proposed
1.6Appendix D of § 1755.522 is the single-point grounding system audit checklist.
2.1
2.2
3.1
3.1.1Number of Lines.
3.1.1.1The number of lines to be provided shall include the number required for the termination of subscriber lines, Item 7, Appendix A, plus the number required for routine testing plus any additional to meet the minimum switch increment of the selected system.
3.1.1.2The number of lines provided for this office will be
3.1.2Number of Ports Used for Trunks
3.1.2.1The number of trunk ports to be provided shall be based on the trunk quantities required (Item 8, Appendix A) as modified by the minimum increment of the selected system. Provision shall be made for at least 5 percent additional inlet and outlet ports over those required initially. The additional ports shall be used for connecting additional trunks that may be required in the future.
3.1.2.2The number of trunk ports provided for this office will be
3.1.3Number of Subscriber Directory Numbers
3.1.3.2The number of subscriber directory numbers provided for this office will be
4.1Information for RST's must be supplied for each RST to be furnished.
4.2Number of line terminals for this RST will be
4.3Number of span line terminations to the central office being supplied
4.4If the emergency operation option is required, it will provide the following service when connection to the main office is severed:
4.5The ac power drain at the remote end will be:
4.6Special environmental requirements for the remote end:
5.1
5.2
5.2.1Operating Temperature Range
5.2.2Operating Humidity Range
6.1The bidder shall accompany its bid with the following information:
a. Two copies of the equipment list and the calculations from which the quantities in the equipment list are determined;
b. Two copies of the traffic tables from which the quantities are determined, other than the full availability tables shown in paragraph (p)(1)(i) of § 1755.522;
c. Two copies of detailed switching diagram showing the traffic on each route, the grade of service, the quantity of circuits, and main distributing frames;
d. Block diagram of stored program control and associated maintenance equipment;
e. A prescribed method and criteria for acceptance of the completed central office, which is subject to review;
f. Location of technical assistance service with 24-hour maintenance, and conditions when owner will be charged for access to the service;
g. Calculations showing the method by which ringing machine sizes were derived;
h. Precautions to be taken against static discharge;
i. Details of central office grounding requirements, recognizing local grounding conditions;
j. Details concerning traffic measurement capabilities and formats; and
k. Details concerning AMA features and formats to be provided.
6.2As a part of the response to the bid, the bidder must also list information concerning the types and quantities of spare parts to be furnished. All units, excluding those units described in paragraph (x)(6)(i)(C) of § 1755.522, must fall into one of the four classes. The information must be in the following format:
2.1This office is considered to be in the following category for probability of lightning damage based on the Figure 1 map in RUS TE&CM 823 (also refer to paragraph (u)(2) of § 1755.522)
2.2Central office ground field (COGF) to be inspected for proper bonding of conductors to ground rods, etc. COGF to earth grounding reading is
2.3Ground connection to be inspected from the master ground bar (MGB) to the central office ground field (COGF) to ensure it is properly sized and installed by most direct route with no sharp bends. (Refer to RUS TE&CM 810, Item 4.3.2 and section 8.1.)
2.4Building structure grounds (steel rebar in footings, ironwork, etc.) are to be properly bonded and connected to the MGB. (Refer to RUS TE&CM 810, Item 4.3.4.)
2.5Metallic central office door(s) are to be painted with metallic paint with doorknobs left bare. Door(s) and frames are to be 00PAGE P='739'>grounded to the building structural ground or the MGB.
2.6Metallic fences within 6 feet (183 cm) of the exchange building, storage facilities ground field, etc. are to be properly bonded to the COGF outside of the central office building. Handhole enclosure is to be used
2.7Lightning rod systems are to be grounded by a separate dedicated ground field. A bond should be provided between the COGF and the lightning rod ground field. Handhole enclosure is to be used for the COGF connection to permit inspection and disconnect for earth resistance testing. (Refer to RUS TE&CM 810, Item 4.3.2.1.)
2.8Radio/microwave tower ground grid is to be properly bonded to the COGF by a direct outside connection. Handhole enclosure is to be used for the COGF connection to permit inspection and disconnect for earth resistance testing. (Refer to RUS TE&CM 810, Item 4.3.2 and section 10.)
2.9If a qualified metallic water system is present, inspect the MGB connecting conductor to ensure that it is properly sized and installed by the most direct route with no sharp bends and that it is clamped solidly on the water pipes. (Refer to RUS TE&CM 810, Item 4.3.3 for details on metallic water system grounding.)
2.10All power and grounding conductors are to be continuous, end to end, with no splices, size discontinuity or intermediate terminations. If an exception is necessary, unusual care must be taken to assure proper bonding between the two sections. (Refer to RUS TE&CM 810, Appendix C, section 5.)
2.11All ground conductors should be void of sharp bends along their entire lengths. (Refer to RUS TE&CM 810, Item 8.2.2.)
2.12Ground conductors should only be placed in nonmetallic conduit. Those routed through metallic conduit require that both ends of the conduit be bonded to the ground conductor. (Refer to RUS TE&CM 810, Item 8.2.4.)
2.13Ground conductors should not be encircled by metallic clamp. Metallic straps are to be removed and replaced with nonmetallic clamps. (Refer to RUS TE&CM 810, Item 8.2.4.)
2.14If metallic conduit is used, it is to be insulated from all ironwork.
2.15Inspect to determine if the required central office supplier electrostatic discharge plates, wrist wraps, antistatic floor mats, etc. are available and properly installed. (Refer to RUS TE&CM 810, Item 12.3.)
2.16Ground conductors, except green wires, should not be routed close and parallel to other conductors so as to minimize induction on surges into equipment wiring. It is also better not to route these ground conductors through cable racks or troughs, or within the confines of any iron work. (Refer to RUS TE&CM 810, Item 8.2.3.)
3.1The designated P, A, N, and I segments of the master ground bar (MGB) should be clearly identified. (Refer to RUS TE&CM 810, Figure 1 for MGB segmentation arrangement.)
3.2Check for appearance and proper location of following on MGB:
(a) R—Interior radio equipment
(b) C—Cable entrance ground bar
(c) M—MDF ground bar
(d) G—Standby power equipment frame ground
(e) N—Commercial power MGN
(f) B—Building structure ground
(g) L—Central office ground field
(h) W—Water pipe system
(i) N
(j) N
(k) N
(l) I
(m) I
3.3All connections to MGB are to be two-hole bolted down copper crimped or compression type terminal lugs. (NOTE: No solder connections are permitted.)
3.4MGB is to be properly insulated from the mounting surface.
3.5All connections are to be tight.
3.6The MGB is to have an anticorrosion coating of the type which enhances conductivity.
3.7Bar is to be clearly stenciled or legibly labeled “MGB.”
3.8All ground leads are to be properly sized and labeled as to point of origin. (Refer to RUS TE&CM 810, Item 8.3.1 and section 8.1.)
Acceptable:
4.1All equipment grounds that originate inside of an Isolated Ground Zone (IGZ) are to be terminated on the GWB which is preferably located physically inside the IGZ and insulated from its support. (Refer to RUS TE&CM 810, Item 5.1.)
Acceptable:
4.2Each GWB is to be connected to the MGB by the most direct route with a conductor of 2/0-gauge or coarser, or resistance of less than 0.005 ohms. Parallel conductors for redundancy if required by the supplier. (Refer to RUS TE&CM 810, Item 8.1.2.)
Acceptable:
4.3The metal framework grounds of only that switching equipment and associated electrical equipment located inside of the IGZ should be connected to the GWB as required by the central office equipment supplier. (Refer to RUS TE&CM 810, Item 5.5.)
Acceptable:
4.4GWB is to be clearly stenciled or labeled “GWB.”
Acceptable:
4.5All connections are to be tight.
Acceptable:
5.1IGZ areas are to be clearly marked on the floor or in some other easily recognizable manner. (Refer to RUS TE&CM 810, Item 6.1.1)
Acceptable:
5.2Confirm that all framework, cabinets, etc., within the IGZ are ground connected only to the GWB. (Refer to RUS TE&CM 810, Item 5.5.)
Acceptable:
5.3All cable racks, ground mats, switching and transmission equipment within the IGZ are to have ground leads
Acceptable:
5.4Review ac power feed arrangement within the IGZ for acceptable receptacle type and confirm that all green wires are properly connected. (Refer to RUS TE&CM 810, Item 5.5.4.)
Acceptable:
5.5All ironwork, metallic conduit, and other equipment associated with the switch are to be properly insulated at the IGZ boundary as stipulated by the supplier. (Refer to RUS TE&CM 810, Item 6.2.)
Acceptable:
5.6With the GWB disconnected from the MGB, the resistance reading of
Acceptable:
6.1When neither a cable vault nor a splicing trough exists, the outside plant cable should be brought into the central office and spliced to tip cables with a PVC outer jacket (ALVYN
Acceptable:
6.2All outside entrance cables and all tip cable shields are to be separated by at least a 3-inch (7.6 cm) gap between shield ends.
Acceptable:
6.3All entrance cable shields are to be bonded separately to #6 AWG or larger insulated wire or bonding ribbon and connected to the Cable Entrance Ground Bar (CEGB) by most direct route with minimum bends.
Acceptable:
6.4Outside plant cable shields are to be connected only to the CEGB, and the tip cable shields are to be connected only to the Main Distributing Frame Bar (MDFB).
Acceptable:
7.1The CEGB is to be properly insulated from the mounting surface. (Refer to TE&CM 810, Item 4.2.1.)
Acceptable:
7.2The CEGB is to be located as close as possible to the physical ends of the entrance cable shields.
Acceptable:
7.3All connections are to use two-hole bolted down copper crimped or compression type terminal lugs. (NOTE: No solder connections are permitted.)
Acceptable:
7.4All connections are to be tight.
Acceptable:
7.5Bar is to be clearly stenciled or legibly labeled “CEGB.”
Acceptable:
7.6All ground leads are to be properly sized and labeled.
Acceptable:
7.7The CEGB is to have an anticorrosion coating of the type which enhances conductivity.
Acceptable:
7.8The CEGB is to be connected to the MGB by a properly sized conductor and by the most direct route. (Refer to RUS TE&CM 810, section 8.1.)
Acceptable:
8.1RUS strongly recommends that MDF protectors be furnished without heat coils. (Refer to RUS TE&CM 810, section 7.6.)
Acceptable:
8.2Incoming cable pairs terminated on MDF protector assemblies should be protected with protector modules. These modules should contain white coded carbon blocks or orange coded gas tube arrestors that are included in the RUS List of Materials. (Refer to RUS TE&CM 810, Item 7.4)
Acceptable:
8.3All incoming subscriber cable pairs are to be properly terminated at either a protector equipped terminal or connected to ground.
Acceptable:
8.4MDF protector assemblies may be mounted directly on the vertical frame ironwork. Protector assemblies on each vertical are interconnected with each other and the Main Distributing Frame Bar (MDFB) with a #6 copper grounding conductor. Alternative means of connecting to the MDFB are also acceptable which do not rely on the frame ironwork for conducting surge currents to ground. (Refer to RUS TE&CM 810, section 7.)
Acceptable:
8.5Protective “ground connections” should be provided between the MDFB and the frame ironwork for personnel protection regardless of the type of protector assembly used. Protective ground leads should be 14-gauge, less than 12 inches (30.5 cm) in length with paint thoroughly removed at point of connection to the ironwork. (Refer to RUS TE&CM 810, Item 7.1.3.)
Acceptable:
8.6The MDFB should be insulated from the frame ironwork in all cases where it is used as a Master Ground Bar (MGB). (Refer to RUS TE&CM 810, Item 7.1.2.)
Acceptable:
8.7Where the MDFB is used as the MGB in very small offices the protective “ground connections” should be connected on the N section of the bar. The MDF line protector assembly grounds should be connected to the P section of the bar. (Refer to RUS TE&CM 810, Item 7.1.4.)
Acceptable:
8.8The MDFB is to be connected to the MGB by the most direct path with minimum bends and proper conductor size. (Refer to RUS TE&CM 810, Item 8.1.4.)
Acceptable:
8.9The MDFB should be free of all other ground leads when not used as an MGB.
Acceptable:
8.10Alternative arrangements which insulate the line protector assemblies and MDFB from the frame ironwork may require a direct ground connection of the frame ironwork to the MGB for personnel protection. Conductor is properly sized and tightened with paint removal on main frame ironwork at point of connection.
Acceptable:
9.1The ground conductor between the ac power system multigrounded neutral (MGN) at the main ac disconnect panel and the master ground bar (MGB) is to be properly sized
9.2If there is a non-MGN ac power system, there is to be a properly sized and connected insulated conductor bond between the power service ground electrode and the MGB. (Refer to RUS TE&CM 810, Item 4.3.1.1.)
9.3AC conductors including ground conductors serving 120-volt ac electric convenience receptacles and all direct wire peripheral equipment, located in the IGZ, should be sized in accordance with normal “green wire” criteria. (Refer to RUS TE&CM 810, Items 5.5.4, 5.5.5, and 5.5.6.)
9.4Minimum protection for ac power serving the central office buildings should consist of an RUS accepted secondary arrestor at the service entrance. (Refer to RUS TE&CM 810, section 9.)
9.5A properly sized conductor for ground bonding between the standby power plant framework (not separately derived) and the MGB is to be provided to equalize framework voltages for personnel safety reasons. (Refer to RUS TE&CM 810, Item 4.2.4.)
10.1All non-IGZ equipment frames, relay racks, cable racks and other ironwork are to be properly connected to the MGB. (Refer to TE&CM 810, Item 4.4.)
10.2Shields on high frequency intra-office cables are to be properly isolated and connected only to an isolation ground bar in the relay rack. All shielded cables entering the IGZ should only be referenced at the IGZ termination point as given by the manufacturer. (Refer to RUS TE&CM 810, Item 7.2.1.2.)
10.3Isolation ground bars in the relay racks are to be properly connected to the MGB with appropriate sized conductor with no sharp bends.
10.4All radio equipment cabinet(s) are to be at least 10 feet (305 cm) from the IGZ.
10.5The metal spare parts cabinet is to be grounded with a
§§ 1755.701 through 1755.704 cover the requirements for aerial service wires.
(a) This section covers the requirements for aerial service wires intended for aerial subscriber drops.
(b) The aerial service wires can be either copper coated steel reinforced or nonmetallic reinforced designs.
(c) For the copper coated steel reinforced design, the reinforcing members are the conductors.
(1) The conductors are solid copper-covered steel wires.
(2) The wire structure is completed by insulating the conductors with an overall extruded plastic insulating compound.
(d) For the nonmetallic reinforced design, the conductors are solid copper individually insulated with an extruded solid insulating compound.
(1) The insulated conductors are either laid parallel (two conductor design only) or twisted into pairs (a star-quad configuration is permitted for two pair wires).
(2) The wire structure is completed by the application of nonmetallic reinforcing members and an overall plastic jacket.
(e) All wires sold to RUS borrowers for projects involving RUS loan funds under §§ 1755.700 through 1755.704 must be accepted by RUS Technical Standards Committee “A” (Telecommunications). For wires manufactured to the specification of §§ 1755.700 through 1755.704, all design changes to an accepted design must be submitted for acceptance. RUS will be the sole authority on what constitutes a design change.
(f) Materials, manufacturing techniques, or wire designs not specifically addressed by §§ 1755.700 through 1755.704 may be allowed if accepted by RUS. Justification for acceptance of modified materials, manufacturing techniques, or wire designs must be provided to substantiate product utility and long term stability and endurance.
(a)
(2) Factory joints in conductors shall comply with the requirement specified in ANSI/ICEA S-89-648-1993, paragraph 2.1.6.
(b)
(2) The raw materials shall be accepted by RUS prior to their use.
(3) The finished conductor insulation shall be free from holes, splits, blisters, or other imperfections and shall be as smooth as is consistent with best commercial practice.
(4) The finished conductor insulation shall comply with the requirements specified in ANSI/ICEA S-89-648-1993, paragraphs 3.1.5 through 3.1.5.4.
(5) The insulation shall have a minimum spot thickness of not less than 0.9 millimeters (mm) (0.03 inches (in.)) at any point.
(c)
(2) The finished wire assembly shall be either a flat or a notched oval. Other finished wire assemblies may be used provided that they are accepted by RUS prior to their use.
(3) The overall dimensions of the finished wire assembly shall be in accordance with the following requirements:
(d)
(e)
(2)
(3)
(4)
(5)
(ii) The dry dielectric strength between conductors of the completed CCSR aerial service wire shall comply with the requirement specified in ANSI/ICEA S-89-648-1993, paragraph 7.1.7.
(6)
(7)
(f)
(ii) All CCSR aerial service wires manufactured in accordance with this section shall comply with the aged impact test specified in ANSI/ICEA S-89-648-1993, paragraph 8.1.3.
(2)
(3)
(4)
(g)
(ii) All CCSR aerial service wires manufactured in accordance with this section shall comply with the aged cold temperature handling test specified in ANSI/ICEA S-89-648-1993, paragraph 8.2.2.
(2)
(3)
(4)
(5)
(h)
(i)
(2) When sequentially numbered length markings are used, the length
(j)
(a)
(2) Factory joints made in the conductors during the manufacturing process shall comply with the requirement specified in ANSI/ICEA S-89-648-1993, paragraph 2.2.2.
(b)
(2) The finished conductor insulation shall comply with the requirements specified in ANSI/ICEA S-89-648-1993, paragraph 3.2.3.
(3) The dimensions of the insulated conductors shall comply with the requirements specified in ANSI/ICEA S-89-648-1993, paragraph 3.2.3.1.
(4) The colors of the insulation shall comply with the requirements specified in ANSI/ICEA S-89-648-1993, paragraph 3.2.3.2.
(5) A permissible overall performance level of faults in conductor insulation shall comply with the requirement specified in ANSI/ICEA S-89-648-1993, paragraph 3.2.4.6. The length count and number of faults shall be recorded. The information shall be retained for a period of 6 months and be available for review by RUS when requested.
(6) Repairs to the conductor insulation during manufacture are permissible. The method of repair shall be accepted by RUS prior to its use. The repaired insulation shall comply with the requirement specified in ANSI/ICEA S-89-648-1993, paragraph 3.2.3.3.
(7) All repaired sections of insulation shall be retested in the same manner as originally tested for compliance with paragraph (b)(5) of this section.
(8) The colored insulating material removed from or tested on the conductor, from a finished wire shall comply with the requirements specified in ANSI/ICEA S-89-648-1993, paragraphs 3.2.4 through 3.2.4.5.
(c)
(i) The tip and ring conductor of each pair; and
(ii) Each pair in the completed wire.
(2) The colors to be used in the pairs together with the pair numbers shall be in accordance with the table specified in ANSI/ICEA S-89-648-1993, paragraph 4.1.1.
(3) The insulated conductors shall be either layed parallel (two conductor design only) or twisted into pairs.
(4) When using parallel conductors for the two conductor design, the parallel conductors shall be designed to enable the wire to meet the electrical requirements specified in paragraph (g) of this section.
(5) When twisted pairs are used, the following requirements shall be met:
(i) The pair twists shall be designed to enable the wire to meet the electrical requirements specified in paragraph (g) of this section; and
(ii) The average length of pair twists in any pair in the finished wire, when measured on any 3 meter (10 foot) length, shall not exceed the requirement specified in ANSI/ICEA S-89-648-1993, paragraph 4.1.
(6) An alternative method of forming the two-pair wire is the use of a star-quad configuration.
(i) The assembly of the star-quad shall be such as to enable the wire to
(ii) The star-quad configuration shall be assembled in accordance with ANSI/ICEA S-89-648-1993, paragraph 4.1.2.
(iii) The average length of twist for the star-quad in the finished wire, when measured on any 3 meter (10 foot) length, shall not exceed the requirement specified in ANSI/ICEA S-89-648-1993, paragraph 4.1.
(iv) The color scheme used to provide identification of the tip and ring conductors of each pair in the star-quad shall comply with the table specified in ANSI/ICEA S-89-648-1993, paragraph 4.1.2.
(d)
(e)
(2) The jacket raw materials shall be accepted by RUS prior to their use.
(f)
(g)
(2)
(ii) The resistance unbalance between tip and ring conductors shall be random with respect to the direction of unbalance. That is, the resistance of the tip conductors shall not be consistently higher with respect to the ring conductors and vice versa.
(3)
(4)
(5)
(ii) The wet attenuation of the completed NMR aerial service wire shall comply with the requirement specified in ANSI/ICEA S-89-648-1993, paragraph 7.2.8.
(6)
(ii) The wet insulation resistance of the completed NMR aerial service wire shall comply with the requirement specified in ANSI/ICEA S-89-648-1993, paragraph 7.2.10.
(7)
(8)
(9)
(ii) The input-to-input near-end crosstalk loss (NEXT) for any pair of completed NMR aerial service wire shall comply with the requirement specified in ANSI/ICEA S-89-648-1993, paragraph 7.2.14.
(h)
(ii) All NMR aerial service wires manufactured in accordance with this section shall comply with the aged impact test specified in § 1755.702(f)(1)(ii).
(2)
(3)
(4)
(5)
(i)
(ii) All NMR aerial service wires manufactured in accordance with this section shall comply with the aged cold temperature handling test specified in § 1755.702(g)(1)(ii).
(2)
(3)
(4)
(j)
(2) When a ripcord is used it shall comply with the requirements specified in ANSI/ICEA S-89-648-1993, paragraphs 4.2 through 4.2.3.
(k)
(l)
(2) When sequentially numbered length markings are used, the length markings shall be in accordance with in accordance with § 1755.702(i)(2).
(m)
(a)
(2) For initial acceptance, the manufacturer shall:
(i) Certify that the product fully complies with each paragraph in §§ 1755.700 through 1755.704;
(ii) Agree to periodic plant inspections by RUS;
(iii) Certify whether the product complies with the domestic origin manufacturing provisions of the “Buy American” requirements of the Rural Electrification Act of 1938 (7 U.S.C. 903 note), as amended (the “REA Buy-American provision”);
(iv) Submit at least three written user testimonials concerning field performance of the product; and
(v) Provide any other nonpropriety data deemed necessary by the Chief, Outside Plant Branch (Telecommunications).
(3) In order for RUS to consider a manufacturer's request that a product be requalified, the manufacturer shall certify not later than June 30 of the year in which requalification is required, that the product:
(i) Fully complies with each paragraph in §§ 1755.700 through 1755.704; and
(ii) Does or does not comply with the domestic origin manufacturing provisions of the REA Buy American provisions. The required certifications shall be dated within 90 days of the submission.
(4) Initial and requalification acceptance requests should be addresses to: Chairman, Technical Standards Committee “A” (Telecommunications), Telecommunications Standards Division, Rural Utilities Service, AG Box 1598, Washington, DC 20250-1598.
(b)
(ii) Each conductor in the completed CCSR and NMR aerial service wire shall be tested for shorts in accordance with ANSI/ICEA S-89-648-1993, paragraphs 7.1.1 and 7.2.1, respectively.
(iii) Each length of completed CCSR and NMR aerial service wire shall be tested for insulation imperfections in accordance with § 1755.702(e)(7) and § 1755.703(b)(5), respectively.
(2)
(i) Performance of the conductors;
(ii) Performance of the conductor insulation and jacket material;
(iii) Sequential marking and lettering;
(iv) Mutual capacitance, capacitance unbalance, attenuation, and crosstalk;
(v) Conductor resistance, resistance unbalance, and insulation resistance;
(vi) Dielectric strength and fusing coordination;
(vii) Impact, abrasion, static load, elongation, and plasticizer compatibility tests; and
(viii) Cold temperature handling, light absorption, low temperature separation, and flammability tests.
(c)
(2) Measurements and computed values shall be rounded off to the number of places or figures specified for the requirement according to ANSI/ICEA S-89-648-1993, paragraph 1.3.
(d)
(2) Repairs to the jacket of NMR aerial service wires are not permitted in wires supplied to end users under §§ 1755.700 through 1755.704.
(e)
(f)
(2) When CCSR and NMR aerial service wires are shipped on reels the following provisions shall apply:
(i) The diameter of the drum shall be large enough to prevent damage to the wire from reeling or unreeling. The reels shall be substantial and so constructed as to prevent damage to the wire during shipment and handling;
(ii) A waterproof corrugated board or other suitable means of protection accepted by RUS prior to its use may be applied to the reel. If the waterproof corrugated board or other suitable material is used for protection, it shall be suitably secured in place to prevent damage to the wire during storage and handling. The use of the waterproof corrugated board or other suitable means of protection shall be at the option of the manufacturer unless specified by the end user;
(iii) The outer end of the wire shall be securely fastened to the reel head so as to prevent the wire from becoming loose in transit. The inner end of the wire shall be securely fastened in such a way as to make it readily available if required for electrical testing. Spikes, staples, or other fastening devices which penetrate the conductor insulation of the CCSR aerial service wire and the jacket of the NMR aerial service wire shall not be used. The method of fastening the wire ends shall be accepted by RUS prior to their use;
(iv) Each length of wire shall be wound on a separate reel;
(v) Each reel shall be plainly marked to indicate the direction in which it should be rolled to prevent loosening of the wire on the reel; and
(vi) Each reel shall be stenciled or labeled on either one or both sides with the following information:
(A) Customer order number;
(B) Manufacturer's name and product code;
(C) Factory reel number and year of manufacture;
(D) Gauge of conductors and pair size of wire;
(E) Length of wire; and
(F) RUS designation letter “K.”
(3) When CCSR and NMR aerial service wires are shipped in coils the following provisions shall apply:
(i) The diameter of the coil shall be large enough to prevent damage to the wire from coiling or uncoiling;
(ii) The nominal length of the wire in a coil shall be 305 meters (1,000 feet). No coil shall be less than 290 meters (950 feet) long or more than 460 meters (1,500 feet) long; however, 25 percent of the total number of coils may be less than 305 meters (1,000 feet);
(iii) The coils of wire shall be wound securely with strong tape in four separate evenly spaced places;
(iv) The coils may be protected from damage by wrapping the coil with heavy paper, burlap, or other suitable material accepted by RUS prior to its use. The use of the heavy paper, burlap, or other suitable means of protection shall be at the option of the manufacturer unless specified by the end user; and
(v) Each coil shall be tagged with the following information:
(A) Customer order number;
(B) Manufacturer's name and product code;
(C) Year of manufacture;
(D) Gauge of conductors and pair size of wire;
(E) Length of wire; and
(F) RUS designation letter “K.”
(4) In lieu of wrapping the coil with heavy paper, burlap, or other suitable material, the coil may be packaged in a moisture resistant carton.
(5) When the coils are shipped in moisture resistant cartons, each carton shall be marked with the information specified in paragraphs (f)(3)(v)(A) through (f)(3)(v)(F) of this section.
(6) Other methods of shipment may be used if accepted by RUS prior to their use.
(7) When NMR aerial service wire is shipped, the ends of the wire shall be sealed in accordance with ANSI/ICEA S-89-648-1993, paragraph 9.2.
(a)
(i) The conductors are solid copper, individually insulated with an extruded solid insulating compound.
(ii) The insulated conductors are twisted into pairs (a star-quad configuration is permitted for the two pair wires) which are then stranded or oscillated to form a cylindrical core.
(iii) A moisture resistant filling compound is applied to the stranded conductors completely covering the insulated conductors and filling the interstices between the pairs.
(iv) The wire structure is completed by the application of an optional core wrapping material, an inner jacket, a flooding compound, a shield, a flooding compound, and an overall plastic jacket.
(2) The number of pairs and gauge size of conductors which are used within the RUS program are provided in the following table:
(3) All wires sold to RUS borrowers for projects involving RUS loan funds under this section must be accepted by RUS Technical Standards Committee “A” (Telephone). For wires manufactured to the specification of this section, all design changes to an accepted design must be submitted for acceptance. RUS will be the sole authority on what constitutes a design change.
(4) Materials, manufacturing techniques, or wire designs not specifically addressed by this section may be allowed if accepted by RUS. Justification for acceptance of modified materials, manufacturing techniques, or wire designs must be provided to substantiate product utility and long term stability and endurance.
(5) The American National Standards Institute/Electronic Industries Association (ANSI/EIA) 359-A-84, EIA Standard Colors for Color Identification and Coding, referenced in this section is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of ANSI/EIA 359-A-84 are available for inspection during normal business hours at RUS, room 2845, U.S Department of Agriculture, Washington, DC 20250-1500 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC. Copies are available from EIA, 2001 Pennsylvania Avenue, NW., suite 900, Washington, DC 20006, telephone number (202) 457-4966.
(6) American Society for Testing and Materials specifications (ASTM) A 505-87, Standard Specification for Steel, Sheet and Strip, Alloy, Hot-Rolled and Cold-Rolled, General Requirements for; ASTM B 3-90, Standard Specification for Soft or Annealed Copper Wire; ASTM B 193-87, Standard Test Method for Resistivity of Electrical Conductor Materials; ASTM B 224-91, Standard Classification of Coppers; ASTM B 694-86, Standard Specification for Copper, Copper Alloy, and Copper-Clad Stainless Steel Sheet and Strip for Electrical Cable Shielding; ASTM D 150-87, Standard Test Methods for A-C Loss Characteristics and Permittivity (Dielectric Constant) of Solid Electrical Insulating Materials; ASTM D 257-91, Standard Test Methods for D-C Resistance or Conductance of Insulating Materials; ASTM D 1238-90b, Standard Test Method for Flow Rates of Thermoplastics by Extrusion Plastometer; ASTM D 1248-84(1989), Standard Specification for Polyethylene Plastics Molding and Extrusion Materials; ASTM D 1535-89, Standard Test Method for Specifying Color by the Munsell System; ASTM D 3349-86, Standard Test Method for Absorption Coefficient of Carbon Black Pigmented Ethylene Plastic; ASTM D 4101-82(1988), Standard Specification for Propylene Plastic Injection and Extrusion Materials; ASTM D 4565-90a, Standard Test Methods for Physical and Environmental Performance Properties of Insulations and Jackets for Telecommunications Wire and Cable; ASTM D 4566-90, Standard Test Methods for Electrical Performance Properties of Insulations and Jackets for Telecommunications Wire and Cable; ASTM D 4568-86, Standard Test Methods for Evaluating Compatibility between Cable Filling and Flooding Compounds and Polyolefin Cable Materials; ASTM D 4872-88, Standard Test Method for Dielectric Testing of Wire and Cable Filling Compounds; ASTM E 8-91, Standard Test Methods of Tension Testing of Metallic Materials; and ASTM E 29-90, Standard Practice for Using Significant Digits in Test Data to Determine
(b)
(2) The minimum conductor elongation in the final wire must comply with the following limits when tested in accordance with ASTM E 8-91.
(3) Joints made in conductors during the manufacturing process may be brazed, using a silver alloy solder and nonacid flux, or they may be welded using either an electrical or cold welding technique. In joints made in uninsulated conductors, the two conductor ends must be butted. Splices made in insulated conductors need not be butted but may be joined in a manner acceptable to RUS.
(4)(i) The tensile strength of any section of a conductor containing a factory joint must not be less than 85 percent of the tensile strength of an adjacent section of the solid conductor of equal length without a joint.
(ii)
(5) Each conductor must be insulated with either a colored, solid, insulating grade, high density polyethylene or crystalline propylene/ethylene copolymer or with a solid natural primary layer and a colored, solid outer skin using one of the insulating materials listed in paragraphs (b)(5)(i) through (b)(5)(ii) of this section.
(i) The polyethylene raw material selected to meet the requirements of this section must be Type III, Class A, Category 4 or 5, Grade E9, in accordance with ASTM D 1248-84(1989).
(ii) The crystalline propylene/ethylene raw material selected to meet the requirements of this section must be Class PP 200B 40003 E11 in accordance with ASTM D 4101-82(1988).
(iii) Raw materials intended as conductor insulation furnished to these requirements must be free from dirt, metallic particles, and other foreign matter.
(iv) All insulating raw materials must be accepted by RUS prior to their use.
(6) All conductors in any single length of wire must be insulated with the same type of material.
(7) A permissible overall performance level of faults in conductor insulation must average not greater than one fault per 12,000 conductor meters (40,000 conductor feet) for each gauge of conductor.
(i) All insulated conductors must be continuously tested for insulation faults during the twinning operation with the method of test acceptable to RUS. The length count and number of faults must be recorded. The information must be retained for a period of 6 months and be available for review by RUS when requested.
(ii) The voltages for determining compliance with the requirements of this section are as follows:
(8) Repairs to the conductor insulation during manufacturing are permissible. The method of repair must be accepted by RUS prior to its use. The repaired insulation must be capable of meeting the relevant electrical requirements of this section.
(9) All repaired sections of insulation must be retested in the same manner as originally tested for compliance with paragraph (b)(7) of this section.
(10) Colored insulating material removed from or tested on the conductor, from a finished wire, must be capable of meeting the following performance requirements:
(11)
(i)
(ii)
Quality assurance testing at a jaw separation speed of 500 mm/min (20 in./min) is permissible. Failures at this rate must be retested at the 50 mm/min (2 in./min) rate to determine section compliance.
(iii)
(iv)
(v)
(12) Other methods of testing may be used if acceptable to RUS.
(c)
(i) The tip and ring conductor of each pair; and
(ii) Each pair in the completed wire.
(2) The colors to be used to provide identification of the tip and ring conductor of each pair are shown in the following table:
(3)
(4) Positive identification of the tip and ring conductors of each pair by marking each conductor of a pair with the color of its mate is permissible. The method of marking must be accepted by RUS prior to its use.
(5) Other methods of providing positive identification of the tip and ring conductors of each pair may be employed if accepted by RUS prior to its use.
(6) The insulated conductors must be twisted into pairs.
(7) In order to provide sufficiently high crosstalk isolation, the pair twists must be designed to enable the wire to meet the capacitance unbalance and the crosstalk loss requirements of paragraphs (m)(2), (m)(3), and (m)(4) of this section.
(8) The average length of pair twists in any pair in the finished wire, when measured on any 3 meter (m) (10 foot(ft)) length, must not exceed 152 mm (6 in.).
(9) An alternative method of forming the two pair wire is the use of a star-quad configuration.
(i) The assembly of the star-quad must be such as to enable the wire to meet the capacitance unbalance and the crosstalk loss requirements of paragraphs (m)(2), (m)(3), and (m)(4) of this section.
(ii) The four individual insulated conductors must be twisted together to form a star-quad configuration with the tip and ring conductors of each pair diagonally opposite each other in the quad.
(iii) The average length of twist for the star-quad in the finished wire, when measured on any 3 m (10 ft) length, must not exceed 152 mm (6 in.).
(iv) The following color scheme must be used to provide identification of the tip and ring conductor of each pair in the star-quad:
(v) If desired, the blue and orange conductors may contain a white stripe. The stripes in this case must be narrow enough so that the tip and ring identification is obvious.
(d)
(2) The filling compound must be applied to the wire core in such a way as to provide a completely filled core as is commercially practical.
(3) If desired for manufacturing reasons, white or colored binders of nonhygroscopic and nonwicking material may be applied over the core.
(e)
(2) The filling compound must be free from dirt, metallic particles, and other foreign matter. It must be applied in such a way as to fill the space within the wire core.
(3) The filling compound must be nontoxic and present no dermal hazards.
(4) The filling compound must exhibit the following dielectric properties at a temperature of 23
(i) The dissipation factor must not exceed 0.0015 at a frequency of 1 megahertz (MHz).
(ii) The dielectric constant must not exceed 2.30.
(5) The volume resistivity must not be less than 10
(6) The individual wire manufacturer must satisfy RUS that the filling compound selected for use is suitable for its intended application. The filling compound must be compatible with the wire components when tested in accordance with ASTM D 4568-86 at a temperature of 80
(f)
(2) The core wrap must provide a sufficient heat barrier to prevent visible evidence of conductor insulation deformation or adhesion between conductors, caused by adverse heat transfer during the inner jacketing operation.
(3) If required for manufacturing reasons, white or colored binders of nonhygroscopic and nonwicking material may be applied over the core wrap.
(4) Sufficient filling compound must be applied to the core wrap that voids or air spaces existing between the core and inner side of the core wrap are minimized.
(g)
(2) The jacket must be free from holes, splits, blisters, or other imperfections and must be as smooth and concentric as is consistent with the best commercial practice.
(3) The inner jacket material and test requirements must be as specified for the outer jacket material per paragraphs (j)(3) through (j)(5)(iv) of this section.
(4) The inner jacket thickness at any point must not be less than 0.5 mm (0.020 in.). The thickness must be determined from measurements on 50 mm (2 in.) samples taken not less than 0.3 m (1 ft) from either end of the wire. The average must be determined from 4 readings taken approximately 90
(h)
(2) The flooding compound must be compatible with the jacket when tested in accordance with ASTM D 4568-86 at a temperature of 80
(3) The individual wire manufacturer must satisfy RUS that the flooding compound selected for use is acceptable for the application.
(i)
(i) If the shield is applied longitudinally, it must be corrugated.
(ii) If the shield is applied helically, it must be smooth.
(2) The overlap for longitudinally applied shields must be a minimum of 2 mm (0.075 in.) The overlap for helically applied shields must be a minimum of 23 percent of the tape width.
(3) General requirements for application of the shielding material are as follows:
(i) Successive lengths of shielding tapes may be joined during the manufacturing process by means of cold weld, electric weld, soldering with a nonacid flux, or other acceptable means;
(ii) Where two ends of a metal shield are to be joined together, care shall be taken to clean the metal surfaces in
(iii) The shields of each length of wire must be tested for continuity. A one meter (3 ft) section of shield containing a factory joint must exhibit not more than 110 percent of the resistance of a shield of equal length without a joint;
(iv) The breaking strength of any section of a shield tape containing a factory joint must not be less than 80 percent of the breaking strength of an adjacent section of the shield of equal length without a joint;
(v) The reduction in thickness of the shielding material due to the corrugating or application process must be kept to a minimum and must not exceed 10 percent at any spot; and
(vi) The shielding material must be applied in such a manner as to enable the wire to pass the bend test as specified in paragraph (n)(3) of this section.
(4) The following materials are acceptable for use as wire shielding:
(i) The copper-clad steels and copper alloy 664 shielding tapes must be capable of meeting the following performance requirements prior to application to the wire:
(ii)
(iii)
(iv)
(v)
(j)
(2) The jacket must be free from holes, splits, blisters, or other imperfections and must be as smooth and concentric as is consistent with the best commercial practice.
(3) The raw material used for the outer jacket must be one of the five types listed in paragraphs (j)(3)(i) through (j)(3)(v) of this section. The raw material must contain an antioxidant to provide long term stabilization and the materials must contain a
(i) Low density, high molecular weight polyethylene (LDHMW) must conform to the requirements of ASTM D 1248-84(1989), Type I, Class C, Category 4 or 5, Grade J3.
(ii) Low density, high molecular weight ethylene copolymer (LDHMW) must conform to the requirements of ASTM D 1248-84 (1989), Type I, Class C, Category 4 or 5, Grade J3.
(iii) Linear low density, high molecular weight polyethylene (LLDHMW) must conform to the requirements of ASTM D 1248-84(1989), Type I, Class C, Category 4 or 5, Grade J3.
(iv) High density polyethylene (HD) must conform to the requirements of ASTM D 1248-84(1989), Type III, Class C, Category 4 or 5, Grade J4.
(v) Medium density polyethylene (MD) must conform to the requirements of ASTM D 1248-84(1989), Type II, Class C, Category 4 or 5, Grade J4.
(vi) Particle size of the carbon selected for use must not average greater than 20 nanometers.
(vii) Absorption coefficient must be a minimum of 400 in accordance with the procedures of ASTM D 3349-86.
(4) The outer jacketing material removed from or tested on the wire must be capable of meeting the following performance requirements:
(5)
(i)
(ii)
(iii)
(iv)
(6)
(7)
(k)
(2) When a sheath slitting cord is used it must be nonhygroscopic and nonwicking, continuous throughout a length of wire, and of sufficient strength to open the sheath without breaking the cord.
(3) Sheath slitting cords must be capable of consistently slitting the jacket(s) and/or shield for a continuous length of 0.6 m (2 ft) when tested in accordance with the procedure specified in appendix B of this section.
(l)
(2) The number of conductor pairs and their gauge size must be marked on the jacket.
(3) The marking must be printed on the jacket at regular intervals of not more than 1.5 m (5 ft).
(4) An alternative method of marking may be used if accepted by RUS prior to its use.
(5) The completed wire must have sequentially numbered length markers in FEET OR METERS at regular intervals of not more than 1.5 m (5 ft) along the outside of the jacket.
(6) The method of length marking must be such that for any single length of wire, continuous sequential numbering must be employed.
(7) The numbers must be dimensioned and spaced to produce good legibility and must be approximately 3 mm (0.125 in.) in height. An occasional illegible marking is permissible if there is a legible marking located not more than 1.5 m (5 ft) from it.
(8) The method of marking must be by means of suitable surface markings producing a clear, distinguishable, contrasting marking acceptable to RUS. Where direct or transverse printing is employed, the characters should be indented to produce greater durability of marking. Any other method of length marking must be acceptable to RUS as producing a marker suitable for the field. Size, shape and spacing of numbers, durability, and overall legibility of the marker will be considered in acceptance of the method.
(9) The accuracy of the length marking must be such that the actual length of any wire section is never less than the length indicated by the marking and never more than one percent greater than the length indicated by the marking.
(10) The color of the initial marking must be white or silver. If the initial marking fails to meet the requirements of the preceding paragraphs, it will be permissible to either remove the defective marking and re-mark with the white or silver color or leave the defective marking on the wire and re-mark with yellow. No further re-marking is permitted. Any re-marking must be on a different portion of the wire circumference than any existing marking when possible and have a numbering sequence differing from any other existing marking by at least 5,000.
(11) Any reel of wire which contains more than one set of sequential markings must be labeled to indicate the color and sequence of marking to be used. The labeling must be applied to the reel and also to the wire.
(m)
(ii) The mutual conductance (corrected for length and gauge) of any pair must not exceed 2 micromhos/kilometer (micromhos/km) (3.3 micromhos/mile) when tested in accordance with ASTM D 4566-90 at a frequency of 1.0
(2)
(3)
(ii) When measuring pair-to-ground capacitance unbalance, all pairs, except the pair under test, are grounded to the shield.
(iii) Pair-to-ground capacitance unbalance may vary directly with the length of the wire.
(4)
(5)
(6)
(7)
(A) 5.0 kilovolts for 22-gauge conductors; and
(B) 4.0 kilovolts for 24-gauge conductors.
(ii) In each length of completed wire, the dielectric strength between the shield and all conductors in the core must be tested in accordance with ASTM D 4566-90 and must withstand, for 3 seconds, a dc potential whose value is not less than 20 kilovolts.
(8)
(9)
(ii) The resistance unbalance between tip and ring conductors shall be random with respect to the direction of unbalance. That is, the resistance of the tip conductors shall not be consistently higher with respect to the ring conductors and vice versa.
(n)
(2)
(3)
(4)
(ii) After the one hour period, there must be no water leakage in the sheath interfaces, under the core wrap or between any insulated conductors in the core.
(iii) If water leakage is detected in the first sample, one 3 m (10 ft) additional adjacent sample from the same reel of wire must be tested in accordance with paragraph (n)(4)(ii) of this section. If the second sample exhibits water leakage, the entire reel of wire is to be rejected. If the second sample exhibits no leakage, the entire reel of wire is considered acceptable.
(5)
(o)
(2) For initial acceptance, the manufacturer must submit:
(i) An original signature certification that the product fully complies with each requirement of this section;
(ii) Qualification Test Data, per appendix A of this section;
(iii) To periodic plant inspections;
(iv) A certification that the product does or does not comply with the domestic origin manufacturing provisions of the “Buy American” requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901
(v) Written user testimonials concerning performance of the product; and
(vi) Other nonproprietary data deemed necessary by the Chief, Outside Plant Branch (Telephone).
(3) For requalification acceptance, the manufacturer must submit an original signature certification that the product fully complies with each section of the specification, excluding the Qualification Section, and a certification that the product does or does not comply with the domestic origin manufacturing provisions of the “Buy American” requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901
(4) Initial and requalification acceptance requests should be addressed to: Chairman, Technical Standards, Committee “A” (Telephone), Telecommunications Standards Division, Rural Utilities Service, Washington, DC 20250-1500.
(5) Tests on 100 percent of completed wire. (i) The shield of each length of wire must be tested for continuity using the procedures of ASTM D 4566-90.
(ii) Dielectric strength between all conductors and the shield must be tested to determine freedom from grounds in accordance with paragraph (m)(7)(ii) of this section.
(iii) Each conductor in the completed wire must be tested for continuity using the procedures of ASTM D 4566-90.
(iv) Dielectric strength between conductors must be tested to ensure freedom from shorts and crosses in accordance with paragraph (m)(7)(i) of this section.
(v) The average mutual capacitance must be measured on all wires.
(6)
(i) Performance requirements for conductor insulation and jacket material;
(ii) Performance requirements for filling and flooding compounds;
(iii) Sequential marking and lettering;
(iv) Capacitance unbalance and crosstalk;
(v) Insulation resistance;
(vi) Conductor resistance and resistance unbalance;
(vii) Wire bending and wire breaking strength tests;
(viii) Mutual conductance and attenuation; and
(ix) Water penetration and compound flow tests.
(p)
(2) Measurements and computed values must be rounded off to the number of places of figures specified for the requirement according to ASTM E 29-90.
(q)
(2) Minor defects in the outer jackets (defects having a dimension of 3 mm (0.125 in.) or less in any direction) may be repaired by means of heat fusing in accordance with good commercial practices utilizing sheath grade compound.
(r)
(2) The thermal wrap must comply with the requirements of appendix C of this section. When a thermal reel wrap is supplied, the wrap must be applied to the reel and must be suitably secured in place to minimize thermal exposure to the wire during storage and shipment. The use of the thermal reel wrap as a means of reel protection will be at the option of the manufacturer unless specified by the end user.
(3) The outer end of the wire must be securely fastened to the reel head so as to prevent the wire from becoming loose in transit. The inner end of the wire must be securely fastened in such a way as to make it readily available if required for electrical testing. Spikes, staples, or other fastening devices which penetrate the wire jacket must not be used. The method of fastening the wire ends must be accepted by RUS prior to it being used.
(4) Each length of wire must be wound on a separate reel unless otherwise specified or agreed to by the purchaser.
(5) Each reel must be plainly marked to indicate the direction in which it should be rolled to prevent loosening of the wire on the reel.
(6) Each reel must be stenciled or labeled on either one or both sides with the name of the manufacturer, year of manufacture, actual shipping length, an inner and outer end sequential length marking, description of the wire, reel number and the RUS wire designation:
(7) Both ends of the filled buried wire, manufactured to the requirements of this section, must be equipped with end caps which are acceptable to RUS.
(I) The test procedures described in this appendix are for qualification of initial designs and major modifications of accepted designs. Included in (V) of this appendix are suggested formats that may be used in submitting test results to RUS.
(II)
(a) Length A shall be 10
(b) Length B shall be 12
(c) Length C shall be one meter (3 feet) long. Four lengths are required.
(d) Length D shall be 300 millimeters (1 foot) long. Four lengths are required.
(e) Length E shall be 600 millimeters (2 feet) long. Four lengths are required.
(f) Length F shall be 3 meters (10 feet) long and must be maintained at 23
(2)
(III)
(b)
(i) Water Immersion Test outlined in (III)(2) of this appendix;
(ii) Water Penetration Test outlined in (III)(3) of this appendix; .
(iii) Insulation Compression Test outlined in (III)(4) of this appendix; and
(iv) Jacket Slip Strength Test outlined in (III)(5) of this appendix.
(c)
(ii) The attenuation at 150 kilohertz may be calculated from open circuit admittance (Yoc) and short circuit impedance (Zsc) or may be obtained by direct measurement of attenuation.
(iii) Record on suggested formats attached in (V) of this appendix or on other easily readable formats.
(d)
(ii) At the end of this period note any exudation of filling compound. Measure and calculate the parameters given in (III)(1)(c) of this appendix. Record on suggested formats attached in (V) of this appendix or on other easily readable formats.
(iii) Cut away and discard a one meter (3 foot) section from each end of length B.
(e)
(ii) The stability of the electrical parameters after completion of this test must be within the following prescribed limits:
(A)
(B) The change in average mutual capacitance must be less than 5 percent over the frequency range of 1 to 150 kilohertz;
(C)
(D)
(2)
(b)
(c)
(i) Remeasure the mutual capacitance and conductance after the wires have been submerged for 24 hours and again after 30 days.
(ii) Record each sample separately on the suggested formats attached in (V) of this appendix or on other easily readable formats.
(d)
(ii) The stability of the electrical parameters after of the test must be within the following prescribed limits:
(A)
(B)
(3)
(b) Test per Option A or Option B. (i)
(ii)
(4)
(b)
(5)
(b)
(c)
(6)
(b) Immediately after completing the measurements, expose the test sample to 100 temperature cyclings. Relative humidity within the chamber must be maintained at 90
(c) Repeat steps (III)(1)(d)(ii) through (III)(5)(c) of this appendix.
(7)
(b) Immediately after completing the measurements, subject the test sample to 10 cycles of temperature between −40
(c) Repeat steps (III)(1)(d)(ii) through (III)(5)(c) of this appendix.
(IV)
(2) Repeat steps (III)(2) through (III)(5)(c) of this appendix except use length A instead of length B.
(3)
(b) The samples must be capable of withstanding, without damage, a single surge voltage of 20 kilovolts peak between conductors, and 35 kilovolts peak between conductors and the shield as hereinafter described. The surge voltage must be developed from a capacitor discharge through a forming resistor connected in parallel with the dielectric of the test sample. The surge generator constants must be such as to produce a surge of 1.5 × 40 microseconds wave shape.
(c) The shape of the generated wave must be determined at a reduced voltage by connecting an oscilloscope across the forming resistor with the wire sample connected in parallel with the forming resistor. The capacitor bank is charged to the test voltage and then discharged through the forming resistor and test sample. The test sample will be considered to have passed the test if there is no distinct change in the wave shape obtained with the initial reduced voltage compared to that obtained after the application of the test voltage.
(V) The following suggested formats may be used in submitting the test results to RUS:
(I) The test procedures described in this appendix are for qualification of initial and subsequent changes in sheath slitting cords.
(II)
(III)
(2) The prepared test specimens must be maintained at a temperature of 23
(3) Wrap the sheath slitting cord around the plier jaws to ensure a good grip.
(4) Grasp and hold the wire in a convenient position while gently and firmly pulling the sheath slitting cord longitudinally in the direction away from the wire end. The angle of pull may vary to any convenient and functional degree. A small starting notch is permissible.
(5) The sheath slitting cord is considered acceptable if the cord can slit the jacket and/or shield for a continuous length of 0.6 meter (2 feet) without breaking the cord.
(I) The test procedures described in this appendix are for qualification of initial and subsequent changes in thermal reel wraps.
(II)
(III)
(2) Tape thermocouples to the jackets of each sample to measure the jacket temperature.
(3) Cover one sample with the thermal reel wrap.
(4) Expose the samples to a radiant heat source capable of heating the uncovered jacket sample to a minimum of 71
(5) The height of the lamp above the jacket shall be 380 millimeters (15 inches) or a height that produces the 71
(6) After the samples have stabilized at the temperature, the jacket temperatures of the samples must be recorded after one hour of exposure to the heat source.
(7) Compute the temperature difference between the jackets.
(8) For the thermal reel wrap to be acceptable to RUS, the temperature differences between the jacket with the thermal reel wrap and the jacket without the reel wrap must be greater than or equal to 17
(a)
(i) The conductors are solid tinned copper, individually insulated with extruded solid dual insulating compounds.
(ii) The insulated conductors are twisted into pairs which are then stranded or oscillated to form a cylindrical core.
(iii) The cable structure is completed by the application of a core wrap, a shield, and a polyvinyl chloride jacket.
(2) The number of pairs and gauge size of conductors which are used within the RUS program are provided in the following table:
(3) All cables sold to RUS borrowers for projects involving RUS loan funds under this section must be accepted by RUS Technical Standards Committee “A” (Telephone). For cables manufactured to the specification of this section, all design changes to an accepted design must be submitted for acceptance. RUS will be the sole authority on what constitutes a design change.
(4) Materials, manufacturing techniques, or cable designs not specifically addressed by this section may be allowed if accepted by RUS. Justification for acceptance of modified materials, manufacturing techniques, or cable designs shall be provided to substantiate product utility and long term stability and endurance.
(5) The American National Standard Institute/Electronic Industries Association (ANSI/EIA) 359-A-84, EIA Standard Colors for Color Identification and Coding, referenced in this section is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of ANSI/EIA 359-A-84 are available for inspection during normal business hours at RUS, room 2845, U.S. Department of Agriculture, Washington, DC 20250-1500 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC. Copies are available from Global Engineering Documents, 15 Inverness Way East, Englewood, CO 80112, telephone number (303) 792-2181.
(6) American Society for Testing and Materials Specifications (ASTM) B 33-91, Standard Specification for Tinned Soft or Annealed Copper Wire for Electrical Purposes; ASTM B 736-92a Standard Specification for Aluminum, Aluminum Alloy and Aluminum-Clad Steel Cable Shielding Stock; ASTM D 1248-84 (1989), Standard Specification for Polyethylene Plastics Molding and Extrusion Materials; ASTM D 1535-89, Standard Test Method for Specifying Color by the Munsell System; ASTM D 2287-81 (Reapproved 1988), Standard Specification for Nonrigid Vinyl Chloride Polymer and Copolymer Molding and Extrusion Compounds; ASTM D 2436-85, Standard Specification for Forced-Convection Laboratory Ovens for Electrical Insulation; ASTM D 2633-82 (Reapproved 1989), Standard Methods of Testing Thermoplastic Insulations and Jackets for Wire and Cable; ASTM D 4101-82 (1988), Standard Specification for Propylene Plastic Injection and Extrusion Materials; ASTM D 4565-90a, Standard Test Methods for Physical and Environmental Performance Properties of Insulations and Jackets for Telecommunications Wire and Cable; ASTM D 4566-90, Standard Test Methods for Electrical Performance Properties of Insulations and Jackets for Telecommunications Wire and Cable; and ASTM E 29-90, Standard Practice for Using Significant Digits in Test Data to Determine Conformance with Specifications, referenced in this section are incorporated by reference by RUS. These incorporations by references were approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of the ASTM standards are available for inspection during normal business hours at RUS, room 2845, U.S. Department of Agriculture, Washington, DC 20250-1500 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC. Copies are available from ASTM, 1916 Race Street, Philadelphia, Pennsylvania 19103-1187, telephone number (215) 299-5585.
(7) American National Standards Institute/National Fire Protection Association (ANSI/NFPA), NFPA 70-1993 National Electrical Code referenced in this section is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. A copy of the ANSI/NFPA standard is available for inspection during normal business hours at RUS, room 2845, U.S. Department of Agriculture, Washington, DC 20250-1500 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC. Copies are available from NFPA, Batterymarch Park, Quincy, Massachusetts 02269, telephone number 1 (800) 344-3555.
(8) Underwriters Laboratories Inc. (UL) 1666, Standard Test for Flame Propagation Height of Electrical and Optical-Fiber Cables Installed Vertically in Shafts, dated January 22, 1991, referenced in this section is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. A copy of the UL standard is available for inspection during normal business hours at RUS, room 2845, U.S. Department of Agriculture, Washington, DC 20250-1500 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC. Copies are available from UL Inc., 333 Pfingsten Road, Northbrook, Illinois 60062-2096, telephone number (708) 272-8800.
(b)
(2) Joints made in conductors during the manufacturing process may be brazed, using a silver alloy solder and nonacid flux, or they may be welded using either an electrical or cold welding technique. In joints made in uninsulated conductors, the two conductor ends shall be butted. Splices made in insulated conductors need not be butted but may be joined in a manner acceptable to RUS.
(3) The tensile strength of any section of a conductor, containing a factory joint, shall not be less than 85 percent of the tensile strength of an adjacent section of the solid conductor of equal length without a joint.
(4) Engineering Information: The sizes of wire used and their nominal diameters shall be as shown in the following table:
(5) Each conductor shall be insulated with a primary layer of natural or white solid, insulating grade, high density polyethylene or crystalline propylene/ethylene copolymer and an outer skin of colored, solid, insulating grade, polyvinyl chloride (PVC) using one of the insulating materials listed in paragraphs (b)(5)(i) through (iii) of this section.
(i) The polyethylene raw material selected to meet the requirements of this section shall be Type III, Class A, Category 4 or 5, Grade E9, in accordance with ASTM D 1248-84 (1989).
(ii) The crystalline propylene/ethylene raw material selected to meet the requirements of this section shall be Class PP 200B 40003 E11 in accordance with ASTM D 4101-82 (1988).
(iii) The PVC raw material selected to meet the requirements of this section shall be either Type PVC-64751E3XO, Type PVC-76751E3XO, or Type PVC-77751E3XO in accordance with ASTM D 2287-81 (1988).
(iv) Raw materials intended as conductor insulation furnished to these requirements shall be free from dirt, metallic particles, and other foreign matter.
(v) All insulating raw materials shall be accepted by RUS prior to their use.
(6) All conductors in any single length of cable shall be insulated with the same type of material.
(7) A permissible overall performance level of faults in conductor insulation when using the test procedures in paragraph (b)(8) of this section shall average not greater than one fault per 12,000 conductor meters (40,000 conductor feet) for each gauge of conductor.
(8) The test used to determine compliance with paragraph (b)(7) of this section shall be conducted as follows:
(i) Samples tested shall be taken from finished cables selected at random from standard production cable. The samples tested shall contain a minimum of 300 conductor meters (1,000 conductor feet) for cables sizes less than 50 pairs and 1,500 conductor meters (5,000 conductor feet) for cables sizes greater than or equal to 50 pairs. No further sample need be taken from the same cable production run within 6,000 cable meters (20,000 cable feet) of the original test sample from that run.
(ii) The cable sample shall have its jacket, shield, and core wrap removed and its core shall be immersed in tap water for a minimum period of 6 hours. In lieu of removing the jacket, shield, and core wrap from the core, the entire cable may be tested. In this case, the core shall be completely filled with tap water, under pressure; then the cable assembly shall be immersed for a minimum period of 6 hours. With the cable core still fully immersed, except for end connections, the insulation resistance (IR) of all conductors to water shall be measured using a direct current (dc) voltage of 100 volts to 550 volts.
(iii) An IR value of less than 500 megohms for any individual insulated conductor tested at or corrected to a temperature of 23 °C is considered a failure. If the cable sample is more than 7.5 meters (25 feet) long, all failing conductors shall be retested and reported in 7.5 meter (25 foot) segments.
(iv) The pair count, gauge, footage, and number of insulation faults shall be recorded. This information shall be retained on a 6 month running basis for review by RUS when requested.
(v) A fault rate, in a continuous length in any one reel, in excess of one fault per 3,000 conductor meters (10,000 conductor feet) due to manufacturing defects is cause for rejection. A minimum of 6,000 conductor meters (20,000 conductor feet) is required to develop a noncompliance in a reel.
(9) Repairs to the conductor insulation during manufacturing are permissible. The method of repair shall be accepted by RUS prior to its use. The repaired insulation shall be capable of meeting the relevant electrical requirements of this section.
(10) All repaired sections of insulation shall be retested in the same manner as originally tested for compliance with paragraph (b)(7) of this section.
(11) The colored composite insulating material removed from or tested on the conductor, from a finished cable, shall be capable of meeting the following performance requirements:
(12)
(i)
Quality assurance testing at a jaw separation speed of 500 mm/min (20 in./min) is permissible. Failures at this rate shall be retested at the 50 mm/min (2 in./min) rate to determine specification compliance.
(ii)
(iii)
(iv)
(v)
(13) Other methods of testing may be used if acceptable to RUS.
(c)
(i) The tip and ring conductor of each pair; and
(ii) Each pair in the completed cable.
(2) The colors used to provide identification of the tip and ring conductor of each pair shall be as shown in the following table:
(3)
(4) Positive identification of the tip and ring conductors of each pair by marking each conductor of a pair with the color of its mate is permissible.
(5) Other methods of providing positive identification of the tip and ring conductors of each pair may be employed if accepted by RUS prior to its use.
(6) The insulated conductors shall be twisted into pairs.
(7) In order to provide sufficiently high crosstalk isolation, the pair twists shall be designed to enable the cable to meet the capacitance unbalance and the crosstalk loss requirements of paragraphs (h)(2), (h)(3), and (h)(4) of this section.
(8) The average length of pair twists in any pair in the finished cable, when measured on any 3 meter (m) (10 foot (ft)) length, shall not exceed 152 mm (6 in.).
(d)
(2) When desired for lay-up reasons, the basic group may be divided into two or more subgroups called units.
(3) Each group, or unit in a particular group, shall be enclosed in bindings of the colors indicated for its particular pair count. The pair count, indicated by the color of insulation, shall be consecutive as indicated in paragraph (d)(5) of this section through units in a group.
(4) Threads or tapes used as binders shall be nonhygroscopic and nonwicking. The threads shall consists of a suitable number of ends of each color arranged as color bands. When tapes are used as binders, they shall be colored. Binders shall be applied with a lay of not more than 100 mm (4 in.). The colored binders shall be readily recognizable as the basic intended color and shall be distinguishable from all other colors.
(5) The colors of the bindings and their significance with respect to pair count shall be as shown in the following table:
(6) The use of the white unit binder in cables of 100 pair or less is optional.
(7) When desired for manufacturing reasons, two or more 25 pair groups may be bound together with nonhygroscopic and nonwicking threads or tapes into super-units. The group binders and the super-unit binders shall be colored such that the combination of the two binders shall positively identify each 25 pair group from every other 25 pair group in the cable.
(8) Super-unit binders shall be of the colors shown in the following table:
(e)
(2) The core wrap shall provide a sufficient heat barrier to prevent visible evidence of conductor insulation deformation or adhesion between conductors, caused by adverse heat transfer during the jacketing operation.
(3) Engineering Information: If required for manufacturing reasons, white or uncolored binders of nonhygroscopic and nonwicking material may be applied over the core and/or core wrap.
(f)
(2) The shield may be applied over the core wrap with or without corrugations (smooth) and shall be bonded to the outer jacket.
(3) The shield overlap shall be a minimum of 3 mm (0.125 in.) for cables with core diameters of 15 mm (0.625 in.) or less and a minimum of 6 mm (0.25 in.) for cables with core diameters greater than 15 mm (0.625 in.). The core diameter is defined as the diameter under the core wrap and binding.
(4) General requirements for application of the shielding material shall be as follows:
(i) Successive lengths of shielding tapes may be joined during the manufacturing process by means of cold weld, electric weld, soldering with a nonacid flux, or other acceptable means;
(ii) The metal shield with the plastic coating shall have the coating removed prior to joining the metal ends together. After joining, the plastic coating shall be restored without voids using good manufacturing techniques;
(iii) The shields of each length of cable shall be tested for continuity. A one meter (3 ft) section of shield containing a factory joint shall exhibit not more than 110 percent of the resistance of a shield of equal length without a joint;
(iv) The breaking strength of any section of a shield tape containing a factory joint shall not be less than 80 percent of the breaking strength of an adjacent section of the shield of equal length without a joint;
(v) The reduction in thickness of the shielding material due to the corrugating or application process shall be kept to a minimum and shall not exceed 10 percent at any spot; and
(vi) The shielding material shall be applied in such a manner as to enable the cable to pass the bend test as specified in paragraph (i)(1) of this section.
(5) The dimensions of the uncoated aluminum tape shall be 0.2030
(6) The aluminum tape shall conform to either Alloy AA-1100-0, AA-1145-0, or AA-1235-0 as covered in the latest edition of Aluminum Standards and Data, issued by the Aluminum Association, except that requirements for tensile strength are waived.
(7) The single-sided plastic coated aluminum shield shall conform to the requirements of ASTM B 736-92a, Type I Coating, Class 1 or 2, or Type II Coating, Class 1. The minimum thickness of the Type I Coating shall be 0.038 mm (0.0015 in.). The minimum thickness of the Type II Coating shall be 0.008 mm (0.0003 in.).
(8) The plastic coated aluminum shield shall be tested for resistance to water migration by immersing a one meter (3 ft) length of tape under a one meter (3 ft) head of water containing a soluble dye plus 0.25 percent (%) wetting agent.
(i) After a minimum of 5 minutes, no dye shall appear between the interface of the shield tape and the plastic coating.
(ii) The actual test method shall be acceptable to RUS.
(9) The bond between the plastic coated shield and the jacket shall conform to the following requirements:
(i) Prepare test strips approximately 200 mm (8 in.) in length. Slit the jacket and shield longitudinally to produce 4 strips evenly spaced and centered in 4 quadrants on the jacket circumference. One of the strips shall be centered over the overlapped edge of the shielding tape. The strips shall be 13 mm (0.5 in.) wide. For cable diameters less than 19 mm (0.75 in.) make two strips evenly spaced.
(ii) Separate the shield and jacket for a sufficient distance to allow the shield and jacket to be fitted in the upper and lower jaws of a tensile machine. Record the maximum force required to separate the shield and jacket to the nearest newton (pound-force). Repeat this action for each test strip.
(iii) The force required to separate the jacket from the shield shall not be less than 9 N (2 lbf) for any individual strip when tested in accordance with paragraph (f)(9)(ii) of this section. The average force for all strips of any cable shall not be less than 18 N (4 lbf).
(g)
(2) The jacket shall be free from holes, splits, blisters, or other imperfections and shall be as smooth and concentric as is consistent with the best commercial practice.
(3) The raw material used for the cable jacket shall be one of the following four types:
(i) Type PVC-55554EOXO in accordance with ASTM D 2287-81(1988);
(ii) Type PVC-65554EOXO in accordance with ASTM D 2287-81(1988);
(iii) Type PVC-55556EOXO in accordance with ASTM D 2287-81(1988); or
(iv) Type PVC-66554EOXO in accordance with ASTM D 2287-81(1988).
(4) The jacketing material removed from or tested on the cable shall be capable of meeting the following performance requirements:
(5)
(i)
Quality assurance testing at a jaw separation speed of 500 mm/min (20 in./min) is permissible. Failures at this rate shall be retested at the 50 mm/min (2 in./min) rate to determine specification compliance.
(ii)
(iii)
(6)
(i)
(ii)
(B)
(7) The color of the jacket shall be either black or dark grey in conformance with the Munsell Color System specified in ASTM D 1535-89.
(8) There shall be no water or other contaminants in the finished cable which would have a detrimental effect on its performance or its useful life.
(h)
(ii) The root mean square (rms) deviation of the mutual capacitance of all pairs from the average mutual capacitance of that reel shall not exceed 3.0 % when calculated in accordance with ASTM D 4566-90.
(iii) The mutual conductance (corrected for length and gauge) of any pair shall not exceed 3.7 micromhos/kilometer (micromhos/km) (6.0 micromhos/mile) when tested in accordance with ASTM D 4566-90 at a frequency of 1.0
(2)
(3)
(ii) When measuring pair-to-ground capacitance unbalance all pairs except the pair under test are grounded to the shield except when measuring cable containing super-units in which case all other pairs in the same super-unit shall be grounded to the shield.
(iii) Pair-to-ground capacitance unbalance may vary directly with the length of the cable.
(4)
(ii) The FEXT crosstalk loss between any pair combination of a cable shall not be less than 58 dB/km (63 dB/1000 ft) at a frequency of 150 kHz. If the loss K
(iii) The near-end crosstalk loss (NEXT) as measured within and between units of a completed cable in accordance with ASTM D 4566-90 at a frequency of 772 kHz shall not be less than the following mean minus sigma (M-S) crosstalk requirement for any unit within the cable:
(5)
(6)
(A) 3.6 kilovolts for 22-gauge conductors; or
(B) 3.0 kilovolts for 24-gauge conductors.
(ii) In each length of completed cable, the dielectric strength between the shield and all conductors in the core shall be tested in accordance with ASTM D 4566-90 and shall withstand, for 3 seconds, a dc potential whose value is not less than 10 kilovolts.
(7)
(8)
(ii) The resistance unbalance between tip and ring conductors shall be random with respect to the direction of unbalance. That is, the resistance of the tip conductors shall not be consistently higher with respect to the ring conductors and vice versa.
(9)
(ii) The maximum number of pairs in a cable which may vary as specified in paragraph (h)(9)(iii) of this section from the electrical parameters given in this section are listed in this paragraph. These pairs may be excluded from the arithmetic calculation:
(iii)
(B)
(C)
RUS recognizes that in large pair count cables (600 pair and above) a cross, short, or open circuit condition occasionally may develop in a pair which does not affect the performance of the other cable pairs. In these circumstances rejection of the entire cable may be economically unsound or repairs may be impractical. In such circumstances the manufacturer may desire to negotiate with the customer for acceptance of the cable. No more than 0.5 percent of the pairs may be involved.
(i)
(2)
(3)
(j)
(2) When a sheath slitting cord is used it shall be nonhygroscopic and nonwicking, continuous throughout a length of cable, and of sufficient strength to open the sheath without breaking the cord.
(3) Sheath slitting cords shall be capable of consistently slitting the jacket and/or shield for a continuous length of 0.6 m (2 ft) when tested in accordance with the procedure specified in appendix B of this section.
(k)
(2) The number of conductor pairs and their gauge size shall be marked on the jacket.
(3) The marking shall be printed on the jacket at regular intervals of not more than 1.5 m (5 ft).
(4) An alternative method of marking may be used if accepted by RUS prior to its use.
(5) The completed cable shall have sequentially numbered length markers in FEET OR METERS at regular intervals of not more than 1.5 m (5 ft) along the outside of the jacket.
(6) The method of length marking shall be such that for any single length of cable, continuous sequential numbering shall be employed.
(7) The numbers shall be dimensioned and spaced to produce good legibility and shall be approximately 3 mm (0.125 in.) in height. An occasional illegible marking is permissible if there is a legible marking located not more than 1.5 m (5 ft) from it.
(8) The method of marking shall be by means of suitable surface markings producing a clear, distinguishable, contrasting marking acceptable to RUS. Where direct or transverse printing is employed, the characters should be indented to produce greater durability of marking. Any other method of length marking shall be acceptable to RUS as producing a marker suitable for the field. Size, shape and spacing of numbers, durability, and overall legibility of the marker shall be considered in acceptance of the method.
(9) The accuracy of the length marking shall be such that the actual length of any cable section is never less than the length indicated by the marking and never more than one percent greater than the length indicated by the marking.
(10) The color of the initial marking for a black colored jacket shall be either white or silver. The color of the initial marking for a dark grey colored jacket shall be either red or black. If the initial marking of the black colored jacket fails to meet the requirements of the preceding paragraphs, it will be permissible to either remove the defective marking and re-mark with the white or silver color or leave the defective marking on the cable and re-mark with yellow. If the initial marking of the dark grey colored jacket fails to meet the requirements of the preceding paragraphs, it will be permissible to either remove the defective marking and re-mark with the red or black color or leave the defective marking on the cable and re-mark with yellow. No further re-marking is permitted. Any re-marking shall be on a different portion of the cable circumference than any existing marking when possible and have a numbering sequence differing from any other existing marking by at least 5,000.
(11) Any reel of cable which contains more than one set of sequential markings shall be labeled to indicate the color and sequence of marking to be used. The labeling shall be applied to the reel and also to the cable.
(l)
(2) The splicing modules shall meet the requirements of RUS Bulletin 345-54, PE-52, RUS Specification for Telephone Cable Splicing Connectors (Incorporated by Reference at § 1755.97), and be accepted by RUS prior to their use.
(m)
(2) For initial acceptance, the manufacturer shall submit:
(i) An original signature certification that the product fully complies with each section of the specification;
(ii) Qualification Test Data, per appendix A of this section;
(iii) To periodic plant inspections;
(iv) A certification that the product does or does not comply with the domestic origin manufacturing provisions of the “Buy American” requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901
(v) Written user testimonials concerning performance of the product; and
(vi) Other nonproprietary data deemed necessary by the Chief, Outside Plant Branch (Telephone).
(3) For requalification acceptance, the manufacturer shall submit an original signature certification that the product fully complies with each section of the specification, excluding the Qualification Section, and a certification that the product does or does not comply with the domestic origin manufacturing provisions of the “Buy American” requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901
(4) Initial and requalification acceptance requests should be addressed to: Chairman, Technical Standards Committee “A” (Telephone), Telecommunications Standards Division, Rural Utilities Service, Washington, DC 20250-1500.
(5)
(ii) Dielectric strength between all conductors and the shield shall be tested to determine freedom from grounds in accordance with paragraph (h)(6)(ii) of this section.
(iii) Each conductor in the completed cable shall be tested for continuity using the procedures of ASTM D 4566-90.
(iv) Dielectric strength between conductors shall be tested to ensure freedom from shorts and crosses in accordance with paragraph (h)(6)(i) of this section.
(v) Each conductor in the completed preconnectorized cable shall be tested for continuity.
(vi) Each length of completed preconnectorized cable shall be tested for split pairs.
(vii) The average mutual capacitance shall be measured on all cables. If the average mutual capacitance for the first 100 pairs tested from randomly selected groups is between 50 and 53 nF/km (80 to 85 nF/mile), the remainder of the pairs need not to be tested on the 100 percent basis. (See paragraph (h)(1) of this section).
(6)
(i) Performance requirements for conductor insulation and jacket material;
(ii) Bonding properties of coated or laminated shielding materials;
(iii) Sequential marking and lettering;
(iv) Capacitance unbalance and crosstalk;
(v) Insulation resistance;
(vi) Conductor resistance and resistance unbalance;
(vii) Cable cold bend and cable flame tests; and
(viii) Mutual conductance.
(n)
(2) Measurements and computed values shall be rounded off to the number of places of figures specified for the requirement according to ASTM E 29-90.
(o)
(2) No repairs or defects in the jacket are allowed.
(p)
(2) A waterproof corrugated board or other means of protection acceptable to RUS shall be applied to the reel and shall be suitably secured in place to prevent damage to the cable during storage and shipment.
(3) The outer end of the cable shall be securely fastened to the reel head so as to prevent the cable from becoming loose in transit. The inner end of the cable shall be securely fastened in such a way as to make it readily available if required for electrical testing. Spikes, staples, or other fastening devices which penetrate the cable jacket shall not be used. The method of fastening the cable ends shall be accepted by RUS prior to it being used.
(4) Each length of cable shall be wound on a separate reel unless otherwise specified or agreed to by the purchaser.
(5) The arbor hole shall admit a spindle 63 mm (2.5 in.) in diameter without binding. Steel arbor hole liners may be used but shall be acceptable to RUS prior to their use.
(6) Each reel shall be plainly marked to indicate the direction in which it should be rolled to prevent loosening of the cable on the reel.
(7) Each reel shall be stenciled or labeled on either one or both sides with the name of the manufacturer, year of manufacture, actual shipping length, an inner and outer end sequential length marking, description of the cable, reel number and the RUS cable designation:
(8) When preconnectorized cable is shipped, the splicing modules shall be protected to prevent damage during shipment and handling. The protection method shall be acceptable to RUS prior to its use.
(I) The test procedures described in this appendix are for qualification of initial designs and major modifications of accepted designs. Included in paragraph (V) of this appendix are suggested formats that may be used in submitting test results to RUS.
(II)
(a) Length A shall be 12
(b) Length B shall be 300 millimeters (1 foot) long. Three lengths are required.
(c) Length C shall be 3 meters (10 feet) long and shall be maintained at 23
(2)
(III)
(b)
(c)
(ii) Record on suggested formats in paragraph (V) of this appendix or on other easily readable formats.
(d)
(ii) At the end of this period. Measure and calculate the parameters given in paragraph (III)(1)(c) of this appendix. Record on suggested formats in paragraph (V) of this appendix or on other easily readable formats.
(e)
(ii) The stability of the electrical parameters after completion of this test shall be within the following prescribed limits:
(A)
(B) The change in average mutual capacitance shall be less than 10 percent over the frequency range of 1 to 150 kilohertz; and
(C)
(2)
(b)
(3)
(b) Immediately after completing the measurements, subject the test samples to 10 cycles of temperature between −40 °C and +60 °C. The test samples shall be held at each temperature extreme for a minimum of 1.5 hours during each cycle of temperature. The air within the temperature cycling chamber shall be circulated throughout the duration of the cycling.
(c) Repeat paragraphs (III)(1)(d)(ii) through (III)(2)(b) of this appendix.
(IV)
(2) Repeat paragraphs (III)(2) through (III)(2)(b) of this appendix.
(3)
(b) The samples shall be capable of withstanding, without damage, a single surge voltage of 20 kilovolts peak between conductors, and 35 kilovolts peak between conductors and the shield as hereinafter described. The surge voltage shall be developed from a capacitor discharge through a forming resistor connected in parallel with the dielectric of the test sample. The surge generator constants shall be such as to produce a surge of 1.5 × 40 microseconds wave shape.
(c) The shape of the generated wave shall be determined at a reduced voltage by connecting an oscilloscope across the forming resistor with the cable sample connected in parallel with the forming resistor. The capacitor bank is charged to the test voltage and then discharged through the forming resistor and test sample. The test sample shall be considered to have passed the test if there is no distinct change in the wave shape obtained with the initial reduced voltage compared to that obtained after the application of the test voltage.
(V) The following suggested formats may be used in submitting the test results to RUS:
(I) This test procedure described in this appendix is for qualification of initial and subsequent changes in sheath slitting cords.
(II)
(III)
(2) The prepared test specimens shall be maintained at a temperature of 23
(3) Wrap the sheath slitting cord around the plier jaws to ensure a good grip.
(4) Grasp and hold the cable in a convenient position while gently and firmly pulling the sheath slitting cord longitudinally in the direction away from the cable end. The angle of pull may vary to any convenient and functional degree. A small starting notch is permissible.
(5) The sheath slitting cord is considered acceptable if the cord can slit the jacket and/or shield for a continuous length of 0.6 m (2 ft) without breaking the cord.
(a)
(i) The conductors are solid copper, individually insulated with an extruded cellular insulating compound which may be either totally expanded or expanded with a solid skin coating.
(ii) The insulated conductors are twisted into pairs which are then stranded or oscillated to form a cylindrical core.
(iii) For high frequency applications, the cable core may be separated into compartments with screening shields.
(iv) A moisture resistant filling compound is applied to the stranded conductors completely covering the insulated conductors and filling the interstices between pairs and units.
(v) The cable structure is completed by the application of suitable core wrapping material, a flooding compound, a shield or a shield/armor, and an overall plastic jacket.
(2) The number of pairs and gauge size of conductors which are used within the RUS program are provided in the following table:
(3) Screened cable, when specified, must meet all requirements of this section. The pair sizes of screened cables used within the RUS program are referenced in paragraph (e)(2)(i) of this section.
(4) All cables sold to RUS borrowers for projects involving RUS loan funds under this section must be accepted by RUS Technical Standards Committee “A” (Telephone). For cables manufactured to the specification of this section, all design changes to an accepted design must be submitted for acceptance. RUS will be the sole authority on what constitutes a design change.
(5) Materials, manufacturing techniques, or cable designs not specifically addressed by this section may be allowed if accepted by RUS. Justification for acceptance of modified materials, manufacturing techniques, or cable designs must be provided to substantiate product utility and long-term stability and endurance.
(6) The American National Standard Institute/Insulated Cable Engineers Association, Inc. (ANSI/ICEA) S-84-608-1988, Standard For Telecommunications Cable, Filled, Polyolefin Insulated, Copper Conductor Technical Requirements referenced throughout this section is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of ANSI/ICEA S-84-608-1988 are available for inspection during normal business hours at RUS, room 2845, U.S. Department of Agriculture, Washington, DC 20250 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC. Copies are available from ICEA, P. O. Box 440, South Yarmouth, MA 02664, telephone number (508) 394-4424.
(7) American Society for Testing and Materials specifications (ASTM) A 505-87, Standard Specification for Steel, Sheet and Strip, Alloy, Hot-Rolled and Cold-Rolled, General Requirements For; ASTM B 193-87, Standard Test Method for Resistivity of Electrical Conductor Materials; ASTM B 224-80, Standard Classification of Coppers; ASTM B 694-86, Standard Specification for Copper, Copper Alloy, and Copper-Clad Stainless Steel Sheet and Strip for Electrical Cable Shielding; ASTM D 4565-90a, Standard Test Methods for Physical and Environmental Performance Properties of Insulations and Jackets for Telecommunications Wire and Cable; and ASTM D 4566-90, Standard Test Methods for Electrical Performance Properties of Insulations and Jackets for Telecommunications Wire and Cable referenced in this section are incorporated by reference by RUS. These incorporations by references were approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of the ASTM standards are available for inspection during normal business hours at RUS, room 2845, U.S. Department of Agriculture, Washington, DC 20250 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC. Copies area available from ASTM, 1916 Race Street, Philadelphia, PA 19103-1187, telephone number (215) 299-5585.
(b)
(2) Each conductor must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 2.1.
(3) Factory joints made in conductors during the manufacturing process must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 2.2.
(4) The raw materials used for conductor insulation must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 3.1 through 3.1.3.
(5) The finished conductor insulation must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 3.2.2, 3.2.3, and 3.3.
(6) Insulated conductor must not have an overall diameter greater than 2 millimeters (mm) (0.081 inch (in.)).
(7) A permissible overall performance level of faults in conductor insulation must average not greater than one fault per 12,000 conductor meters (40,000 conductor feet) for each gauge of conductor.
(i) All insulated conductors must be continuously tested for insulation faults during the twinning operation
(ii) The voltages for determining compliance with the requirements of this section are as follows:
(8) Repairs to the conductor insulation during manufacture are permissible. The method of repair must be accepted by RUS prior to its use. The repaired insulation must be capable of meeting the relevant electrical requirements of this section.
(9) All repaired sections of insulation must be retested in the same manner as originally tested for compliance with paragraph (b)(7) of this section.
(10) The colored insulating material removed from or tested on the conductor, from a finished cable, must meet the performance requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 3.4.1 through 3.4.6.
(c)
(i) The tip and ring conductor of each pair; and
(ii) Each pair in the completed cable.
(2) The colors to be used in the pairs in the 25 pair group, together with the pair numbers must be in accordance with the table specified in ANSI/ICEA S-84-608-1988, paragraph 3.5.
(3) Positive identification of the tip and ring conductors of each pair by marking each conductor of a pair with the color of its mate is permissible. The method of marking must be accepted by RUS prior to its use.
(4) Other methods of providing positive identification of the tip and ring conductors of each pair may be employed if accepted by RUS prior to its use.
(5) The insulated conductors must be twisted into pairs.
(6) In order to provide sufficiently high crosstalk isolation, the pair twists must be designed to enable the cable to meet the capacitance unbalance and crosstalk loss requirements of paragraphs (k)(5), (k)(6), and (k)(8) this section.
(7) The average length of pair twists in any pair in the finished cable, when measured on any 3 meter (10 foot) length, must not exceed the requirement specified in ANSI/ICEA S-84-608-1988, paragraph 3.5.
(d)
(2) When desired for lay-up reasons, the basic group may be divided into two or more subgroups called units.
(3) Each group, or unit in a particular group, must be enclosed in bindings of the colors indicated for its particular pair count. The pair count, indicated by the colors of insulation, must be consecutive as indicated in paragraph (d)(6) of this section through units in a group.
(4) The filling compound must be applied to the cable core in such a way as to provide as near a completely filled core as is commercially practical.
(5) Threads and tapes used as binders must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 4.2 and 4.2.1.
(6) The colors of the bindings and their significance with respect to pair count must be as follows:
(7) The use of the white unit binder in cables of 100 pairs or less is optional.
(8) When desired for manufacturing reasons, two or more 25 pair groups may be bound together with nonhygroscopic and nonwicking threads or tapes into a super-unit. Threads or tapes must meet the requirements specified in paragraph (d)(5) of this section. The group binders and the super-unit binders must be color coded such that the combination of the two binders must positively identify each 25 pair group from every other 25 pair group in the cable. Super-unit binders must be of the color shown in the following table:
(9) Color binders must not be missing for more than 90 meters (300 feet) from any 25 pair group or from any subgroup used as part of a super-unit. At any cable cross-section, no adjacent 25 pair groups and no more than one subgroup of any super-unit may have missing binders. In no case must the total number of missing binders exceed three. Missing super-unit binders must not be permitted for any distance.
(10) Any reel of cable which contains missing binders must be labeled indicating the colors and location of the binders involved. The labeling must be applied to the reel and also to the cable.
(e)
(2) At the option of the user or manufacturer, identified service pairs providing for voice order and fault location may be placed in screened cables.
(i) The number of service pairs provided must be one per twenty-five operating pairs plus two for a cable size up to and including 400 pairs, subject to a minimum of four service pairs. The pair counts for screened cables are as follows:
(ii) The service pairs must be equally divided among the compartments. The color sequence must be repeated in each compartment.
(iii) The electrical and physical characteristics of each service pair must meet all the requirements set forth in this section.
(iv) The colors used for the service pairs must be in accordance with the requirements of paragraph (b)(5) of this section. The color code used for the service pairs together with the service pair number are shown in the following table:
(3) The screen tape must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 5.1 through 5.4.
(4) The screen tape must be tested for dielectric strength by completely removing the protective coating from one end to be used for grounding purposes.
(i) Using an electrode, over a 30 centimeter (1 foot) length, apply a direct current (dc) voltage at the rate of rise of 500 volts/second until failure.
(ii) No breakdown should occur below 8 kilovolts.
(f)
(2) The filling compound must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 4.4 through 4.4.4.
(3) The individual cable manufacturer must satisfy RUS that the filling compound selected for use is suitable for its intended application. The filling compound must be applied to the cable in such a manner that the cable components will not be degraded.
(g)
(2) If required for manufacturing reasons, white or colored binders of nonhygroscopic and nonwicking material may be applied over the core and/or wrap. When used, binders must meet the requirements specified in paragraph (d)(5) of this section.
(3) Sufficient filling compound must have been applied to the core wrap so that voids or air spaces existing between the core and the inner side of the core wrap are minimized.
(h)
(2) The flooding compound must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 4.5 and the jacket slip test requirements of appendix A, paragraph (III)(5) of this section.
(3) The individual cable manufacturer must satisfy RUS that the flooding compound selected for use is acceptable for the application.
(i)
(2) For unarmored cable the shield overlap must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.2. Core diameter is defined as the diameter under the core wrap and binding.
(3) For cables containing the coated aluminum shield/coated steel armor (CACSP) sheath design, the coated aluminum shield must be applied in accordance with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.2, Dual Tape Shielding System.
(4) General requirements for application of the shielding material are as follows:
(i) Successive lengths of shielding tapes may be joined during the manufacturing process by means of cold weld, electric weld, soldering with a nonacid flux or other acceptable means.
(ii) Shield splices must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.3.
(iii) The corrugations and the application process of the coated aluminum and copper bearing shields must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.1.
(iv) The shielding material must be applied in such a manner as to enable the cable to pass the cold bend test specified in paragraph (l)(3) of this section.
(5) The following is a list of acceptable materials for use as cable shielding. Other types of shielding materials may also be used provided they are accepted by RUS prior to their use.
(i) The 8-mil aluminum tape must be plastic coated on both sides and must comply with the requirements of ANSI/ICEA S-84-608-1988, paragraph 6.2.2.
(ii) The 5-mil copper tape must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.3.
(iii) The 10-mil copper tape must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.4.
(iv) The 6-mil copper clad stainless steel tape must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.5.
(v) The 5-mil copper clad stainless steel tape must be in the fully annealed condition and must conform to the requirements of American Society for Testing and Materials (ASTM) B 694-86, with a cladding ratio of 16/68/16.
(A) The electrical conductivity of the clad tape must be a minimum of 28 percent of the International Annealed Copper Standard (IACS) when measured per ASTM B 193-87.
(B) The tape must be nominally 0.13 millimeter (0.005 inch) thick with a minimum thickness of 0.11 millimeter (0.0045 inch).
(vi) The 5-mil copper clad alloy steel tape must be in the fully annealed condition and the copper component must conform to the requirements of ASTM B 224-80 and the alloy steel component must conform to the requirements of ASTM A 505-87, with a cladding ratio of 16/68/16.
(A) The electrical conductivity of the copper clad alloy steel tape must comply with the requirement specified in (5)(v)(A) of this section.
(B) The thickness of the copper clad alloy steel tape must comply with the requirements specified in (5)(v)(B) of this section.
(vii) The 6-mil and 7-mil 194 copper alloy tapes must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.6.
(6) The corrugation extensibility of the coated aluminum shield must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.4.
(7) When the jacket is bonded to the plastic coated aluminum shield, the bond between the jacket and shield must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 7.2.6.
(8) A single plastic coated steel corrugated armor must be applied longitudinally directly over the coated aluminum shield listed in paragraph (i)(5) of this section with an overlap complying with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.2, Outer Steel Tape.
(9) Successive lengths of steel armoring tapes may be joined during the manufacturing process by means of cold weld, electric weld, soldering with a nonacid flux or other acceptable means. Armor splices must comply with the breaking strength and resistance requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.3.
(10) The corrugations and the application process of the coated steel armor must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.1.
(i) The corrugations of the armor tape must coincide with the corrugations of the coated aluminum shield.
(ii) Overlapped portions of the armor tape must be in register (corrugations must coincide at overlap) and in contact at the outer edge.
(11) The armoring material must be so applied to enable the cable to pass the cold bend test specified in paragraph (l)(3) of this section.
(12) The 6-mil steel tape must be electrolytic chrome coated steel (ECCS) plastic coated on both sides and must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.8.
(13) When the jacket is bonded to the plastic coated steel armor, the bond between the jacket and armor must comply with the requirement specified in ANSI/ICEA-S-84-608-1988, paragraph 7.2.6.
(j)
(2) The raw materials used for the cable jacket must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 7.2.1.
(3) Jacketing material removed from or tested on the cable must meet the performance requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 7.2.3 and 7.2.4.
(4) The thickness of the jacket must comply with the requirements specified
(k)
(2)
(ii) The resistance unbalance between tip and ring conductors shall be random with respect to the direction of unbalance. That is, the resistance of the tip conductors shall not be consistently higher with respect to the ring conductors and vice versa.
(3)
(4)
(ii) When measuring screened cable, the inner and outer pairs must be selected from both sides of the screen.
(5)
(ii)
(A) Between pairs adjacent in a layer in an individual compartment;
(B) Between pairs in centers of 4 pairs or less in an individual compartment; and
(C) Between pairs in adjacent layers in an individual compartment when the number of pairs in the inner (smaller) layer is 6 or less. The center is counted as a layer.
(iii) In cables with 25 pairs or less, the root-mean-square (rms) value is to include all the pair-to-pair unbalances measured for each compartment separately.
(iv) In cables containing more than 25 pairs, the rms value must include the pair-to-pair unbalances in the separate compartments.
(6)
(ii) When measuring pair-to-ground capacitance unbalance all pairs except the pair under test are grounded to the shield and/or shield/armor except when measuring cables containing super units in which case all other pairs in the same super unit must be grounded to the shield.
(iii) The screen tape must be left floating during the test.
(iv) Pair-to-ground capacitance unbalance may vary directly with the length of the cable.
(7)
(ii) For T1C type cables over 12 pairs, the maximum average attenuation of all pairs on any reel must not exceed the values listed below when measured at a frequency of 1576 kilohertz at or corrected to a temperature of 20
(8)
(ii) The near-end power sum crosstalk loss (NEXT) as measured on completed cable must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 8.8, NEXT Table.
(iii)
(B) For T1C screened cable the NEXT as measured on the completed cable must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 8.9 and 8.9.2.
(9)
(10)
(ii) In each length of completed cable, the dielectric between the shield and/or armor and conductors in the core must comply with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 8.13, Single Jacketed, Foam and/or Foam-Skin Column. In screened cable the screen tape must be left floating.
(iii)
(B) In this test, the cable shield and/or armor must be left floating.
(11)
(ii) The maximum number of pairs in a cable which may vary as specified in paragraph (k)(11)(iii) of this section from the electrical parameters given in this section are listed below. These pairs may be excluded from the arithmetic calculation.
(iii)
(B)
(C)
(l)
(2)
(3)
(4)
(5)
(6)
(m)
(2) When a sheath slitting cord is used it must be nonhygroscopic and nonwicking, continuous throughout a length of cable and of sufficient strength to open the sheath without breaking the cord.
(n)
(2) The markings must be printed on the jacket at regular intervals of not more than 0.6 meter (2 feet).
(3) The completed cable must have sequentially numbered length markers in accordance with ANSI/ICEA S-84-608-1988, paragraph 10.1.5. The color of the ink used for the initial outer jacket marking must be either white or silver.
(o)
(2) The splicing modules must meet the requirements of RUS Bulletin 345-54, PE-52, RUS Specification for Telephone Cable Splicing Connectors (Incorporated by Reference at § 1755.97), and be accepted by RUS prior to their use.
(p)
(2) For initial acceptance, the manufacturer must submit:
(i) An original signature certification that the product fully complies with each section of the specification;
(ii) Qualification Test Data, per appendix A of this section;
(iii) To periodic plant inspections;
(iv) A certification that the product does or does not comply with the domestic origin manufacturing provisions of the “Buy American” requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901
(v) Written user testimonials concerning field performance of the product; and
(vi) Other nonproprietary data deemed necessary by the Chief, Outside Plant Branch (Telephone).
(3) For requalification acceptance, the manufacturer must submit an original signature certification that the product fully complies with each section of the specification, excluding the Qualification Section, and a certification that the product does or does not comply with the domestic origin manufacturing provisions of the “Buy American” requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901
(4) Initial and requalification acceptance requests should be addressed to:
Chairman, Technical Standards Committee “A” (Telephone), Telecommunications Standard Division, Rural Utilities Service, Washington, DC 20250-1500.
(5)
(ii) The screen tape of each length of screened cable must be tested for continuity in accordance with ANSI/ICEA S-84-608-1988, paragraph 8.16.
(iii) Dielectric strength between conductors and shield and/or armor must be tested to determine freedom from grounds in accordance with paragraph (k)(10)(ii) of this section.
(iv) Dielectric strength between conductors and screen tape must be tested to determine freedom from grounds in accordance with paragraph (k)(10)(iii) of this section.
(v) Each conductor in the completed cable must be tested for continuity in accordance with ANSI/ICEA S-84-608-1988, paragraph 8.16.
(vi) Dielectric strength between conductors, in each length of completed cable, must be tested to insure freedom from shorts and crosses in each length of completed cable in accordance with paragraph (k)(10)(i) of this section.
(vii) Each conductor in the completed preconnectorized cable must be tested for continuity.
(viii) Each length of completed preconnectorized cable must be tested for split pairs.
(ix) The average mutual capacitance must be measured on all cables. If the average mutual capacitance for the first 100 pairs tested from randomly selected groups is between 50 and 53 nanofarads/kilometer (nF/km) (80 and 85 nanofarad/mile), the remainder of the pairs need not be tested on the 100 percent basis (See paragraph (k)(3) of this section).
(6)
(i) Performance requirements for conductor insulation, jacketing material, and filling and flooding compounds;
(ii) Bonding properties of coated or laminated shielding and armoring materials and performance requirements for screen tape;
(iii) Sequential marking and lettering;
(iv) Capacitance difference, capacitance unbalance, crosstalk, and attenuation;
(v) Insulation resistance, conductor resistance, and resistance unbalance;
(vi) Cable cold bend and cable impact tests;
(vii) Water penetration and compound flow tests; and
(viii) Jacket notch and cable torsion tests.
(q)
(2) Measurements and computed values must be rounded off to the number of places or figures specified for the requirement according to ANSI/ICEA S-84-608-1988, paragraph 1.3.
(r)
(2) Minor defects in jackets (defects having a dimension of 3 millimeters (0.125 inch.) or less in any direction) may be repaired by means of heat fusing in accordance with good commercial practices utilizing sheath grade compounds.
(s)
(2) The thermal wrap must comply with the requirements of ANSI/ICEA S-84-608-1988, paragraph 10.3. When a thermal reel wrap is supplied, the wrap must be applied to the reel and must be
(3) The outer end of the cable must be securely fastened to the reel head so as to prevent the cable from becoming loose in transit. The inner end of the cable must be securely fastened in such a way as to make it readily available if required for electrical testing. Spikes, staples, or other fastening devices which penetrate the cable jacket must not be used. The method of fastening the cable ends must be acceptable to RUS and accepted prior to its use.
(4) Each length of cable must be wound on a separate reel unless otherwise specified or agreed to by the purchaser.
(5) The arbor hole must admit a spindle 63 millimeters (2.5 inches) in diameter without binding. Steel arbor hole liners may be used but must be accepted by RUS prior to their use.
(6) Each reel must be plainly marked to indicate the direction in which it should be rolled to prevent loosening of the cable on the reel.
(7) Each reel must be stenciled or labeled on either one or both sides with the information specified in ANSI/ICEA S-84-608-1988, paragraph 10.4 and the RUS cable designation:
(8) When cable manufactured to the requirements of this specification is shipped, both ends must be equipped with end caps acceptable to RUS.
(9) When preconnectorized cables are shipped, the splicing modules must be protected to prevent damage during shipment and handling. The protection method must be acceptable to RUS and accepted prior to its use.
(10) All cables ordered for use in underground duct applications must be equipped with a factory-installed pulling-eye on the outer end in accordance with ANSI/ICEA S-84-608-1988, paragraph 10.5.2.
(I) The test procedures described in this appendix are for qualification of initial cable designs and major modifications of accepted designs. Included in (V) of this appendix are suggested formats that may to be used in submitting test results to RUS.
(II)
(a) Length A must be 10
(b) Length B must be 12
(c) Length C must be one meter (3 feet) long. Four lengths are required.
(d) Length D must be 300 millimeters (1 foot) long. Four lengths are required.
(e) Length E must be 600 millimeters (2 feet) long. Four lengths are required.
(f) Length F must be 3 meters (10 feet) long and must be maintained at 23
(2)
(III)
(b)
(i) Water Immersion Test outlined in (III)(2) of this appendix;
(ii) Water Penetration Test outlined in (III)(3) of this appendix;
(iii) Insulation Compression Test outlined in (III)(4) of this appendix; and
(iv) Jacket Slip Strength Test outlined in (III)(5) of this appendix.
(c)
(ii) The attenuation at 150 and 772 kilohertz may be calculated from open circuit admittance (Yoc) and short circuit impedance (Zsc) or may be obtained by direct measurement of attenuation.
(iii) Record on suggested formats in (V) of this appendix or on other easily readable formats.
(d)
(ii) At the end of this period note any exudation of cable filler. Measure and calculate the parameters given in (III)(1)(c) of this appendix. Record on suggested formats in (V) of this appendix or other easily readable formats.
(iii) Cut away and discard a one meter (3 foot) section from each end of length B.
(e)
(ii) The stability of the electrical parameters after completion of this test must be within the following prescribed limits:
(A)
(B) The change in average mutual capacitance must be less than 5 percent over frequency 1 to 150 kilohertz; and
(C)
(2)
(b)
(c)
(i) Remeasure the mutual capacitance after the cables have been submerged for 24 hours and again after 30 days.
(ii) Record each sample separately on suggested formats attached or on other easily readable formats.
(d)
(ii) The average mutual capacitance must be within 5 percent of its original value.
(3)
(b) Test per Option A or Option B—(i)
(ii)
(4)
(b)
(5)
(b)
(c)
(6)
(b) Immediately after completing the measurements, expose the test sample to 100 temperature cyclings. Relative humidity within the chamber must be maintained at 90
(c) Repeat steps (III)(1)(d)(ii) through (III)(5)(c) of this appendix.
(7)
(b) Immediately after completing the measurements, subject the test sample to the 10 cycles of temperature between a minimum of −40
(c) Repeat steps (III)(1)(d)(ii) through (III)(5)(c) of this appendix.
(IV)
(2) Repeat steps (III)(2) through (III)(5)(c) of this appendix except use length A instead of length B.
(3)
(b) The samples must be capable of withstanding without damage, a single surge voltage of 15 kilovolts peak between conductors, and a 25 kilovolts peak surge voltage between conductors and the shield or shield/armor as hereinafter described. The surge voltage must be developed from a capacitor discharged through a forming resistor connected in parallel with the dielectric of the test sample. The surge generator constants must be such as to produce a surge of 1.5 × 40 microsecond wave shape.
(c) The shape of the generated wave must be determined at a reduced voltage by connecting an oscilloscope across the forming resistor with the cable sample connected in parallel with the forming resistor. The capacitor bank is charged to the test voltage and then discharged through the forming resistor and test sample. The test sample will be considered to have passed the test if there is no distinct change in the wave shape obtained with the initial reduced voltage compared to that obtained after the application of the test voltage.
(V) The following suggested formats may be used in submitting the test results to RUS:
(a)
(i) The optical waveguides are glass fibers having directly-applied protective coatings, and are called “fibers”, herein. These fibers may be assembled in either loose fiber bundles with a protective core tube, encased in several protective buffer tubes, or in tight buffer tubes.
(ii) Fillers, strength members, core wraps, and bedding tapes may complete the cable core.
(iii) The core or buffer tubes containing the fibers and the interstices between the buffer tubes, fillers, and strength members in the core structure are filled with a suitable material to exclude water.
(iv) The cable structure is completed by an extruded overall plastic jacket. This jacket may have strength members embedded in it, in some designs.
(v) Buried installation requires an armor under the outer jacket.
(vi) For self-supporting cable the outer jacket may be extruded over the support messenger and cable core.
(2) The cable is fully color coded so that each fiber is distinguishable from every other fiber. A basic color scheme of twenty-four colors allows individual fiber identification. Colored tubes, binders, threads, stripings, or markings provide fiber group identification.
(3) Cable manufactured to this section must demonstrate compliance with the qualification testing requirements to ensure satisfactory end-use performance characteristics for the intended applications.
(4) Optical cable designs not specifically addressed by this section may be allowed if accepted by RUS. Justification for acceptance of a modified design must be provided to substantiate product utility and long term stability and endurance.
(5) All cables sold to RUS borrowers for projects involving RUS loan funds under this section must be accepted by RUS Technical Standards Committee “A” (Telephone). For cables manufactured to the specification of this section, all design changes to an accepted design must be submitted for acceptance. RUS will be the sole authority on what constitutes a design change.
(6) The American National Standard Institute/Institute of Electrical and Electronics Engineers, Inc (ANSI/IEEE), 1993 National Electrical Safety Code (NESC) referenced in this section is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register
(7) American Society for Testing and Materials Specifications (ASTM) A 640-91, Standard Specification for Zinc-Coated Steel Strand for Messenger Support of Figure 8 Cable; ASTM B 736-
(8) Electronic Industries Association Standards (EIA)-455-20, Measurement of Change in Optical Transmittance; EIA-455-41, Compressive Loading Resistance of Fiber Optic Cables; EIA-455-86, Fiber Optic Cable Jacket Shrinkage; EIA-455-89A, Fiber Optic Cable Jacket Elongation And Tensile Strength; and EIA-455-174, Mode Field Diameter of Single-Mode Optical Fiber by Knife-Edge Scanning in the Far Field, referenced in this section are incorporated by reference by RUS. These incorporations by references were approved by the Director of the Federal Register
(9) Electronic Industries Association/Telecommunications Industries Association Standards (EIA/TIA)-455-25A, Repeated Impact Testing of Fiber Optic Cables and Cable Assemblies; EIA/TIA-455-30B, Frequency Domain Measurement of Multimode Optical Fiber Information Transmission Capacity; EIA/TIA-455-31B, Fiber Tensile Proof Test Method; EIA/TIA-455-37A, Low or High Temperature Bend Test for Fiber Optic Cable; EIA/TIA-455-45B, Method for Measuring Optical Fiber Geometry Using a Laboratory Microscope; EIA/TIA-455-46A, Spectral Attenuation Measurement for Long-Length, Graded-Index Optical Fibers; EIA/TIA-455-48B, Measurement of Optical Fiber Cladding Diameter Using Laser-Based Instruments; EIA/TIA-455-51A, Pulse Distortion Measurement of Multimode Glass Optical Fiber Information Transmission Capacity; EIA/TIA-455-53A, Attenuation by Substitution Measurement for Multimode Graded-Index Optical Fibers or Fiber Assemblies Used in Long Length Communications Systems; EIA/TIA-455-55B, End-View Methods for Measuring Coating and Buffer Geometry of Optical Fibers; EIA/TIA-455-58A, Core Diameter Measurement of Graded-Index Optical Fibers; EIA/TIA-455-59, Measurement of Fiber Point Defects Using an OTDR; EIA/TIA-455-61, Measurement of Fiber or Cable Attenuation Using an OTDR; EIA/TIA-455-78A, Spectral-Attenuation Cutback Measurement for Single-Mode Optical Fibers; EIA/TIA-455-81A, Compound Flow (Drip) Test for Filled Fiber Optic Cable; EIA/TIA-455-82B, Fluid Penetration Test for Fluid-Blocked Fiber Optic
(10) RUS intends that the optical fibers contained in the cables manufactured in accordance with this section have characteristics that will allow signals, having a range of wavelengths, to be carried simultaneously.
(b)
(2) The optical fiber types must be one of the following:
(i) Dispersion-unshifted single mode fiber EIA Class IVa;
(ii) Dispersion-shifted single mode fiber EIA Class IVb;
(iii) 50/125 micrometer multimode fiber EIA Class Ia; or
(iv) 62.5/125 micrometer multimode fiber EIA Class Ia.
(3) The dispersion-unshifted single mode fiber core must have either a matched or depressed clad step refractive index profile with a mode-field diameter of 9.0
(i) EIA/TIA-455-164A;
(ii) EIA/TIA-455-165A;
(iii) EIA/TIA-455-167A; or
(iv) EIA-455-174.
(4) The dispersion-shifted single mode fiber core must have either a segmented core design or depressed clad step refractive index profile with a mode-field diameter of 7.5+1.5 micrometers/−1.3 micrometers when measured at 1550 nanometers in accordance with any one of the test procedures specified in paragraph (b)(3) of this section.
(5) The core clad off-set of the dispersion-unshifted and dispersion-shifted single mode fibers must not be greater than 1.0 micrometer when measured in accordance with either EIA/TIA-455-45B or EIA/TIA-455-176.
(6) The multimode fiber cores must have graded (parabolic) refractive index profiles with core diameters of 50.0
(7) The core noncircularity of multimode fibers must not exceed 6 percent when measured in accordance with either EIA/TIA-455-45B or EIA/TIA-455-176.
(8) The outside diameter of the glass fiber for both single mode and
(i) EIA/TIA-455-45B;
(ii) EIA/TIA-455-176; or
(iii) EIA/TIA-455-48B, Methods A or B.
(9) The outside diameter of the glass fiber must be nominally concentric with the fiber core as is consistent with the best commercial practice.
(10) The individual fibers must be proof tested at a minimum tensile stress of 0.35 gigapascal for approximately one second when measured in accordance with EIA/TIA-455-31B.
(11) Factory splices of fibers are allowed provided that prior acceptance from RUS is obtained for the splice technique, that all splices are documented and reported to the customer and that the spliced fiber meets all requirements of this section.
(12) The optical fiber must be coated with a suitable material to preserve the intrinsic strength of the glass having an outside diameter of 250
(13) The maximum force required to remove 25 millimeters of protective fiber coating must not exceed 13 newtons when measured in accordance with EIA/TIA-455-178.
(14) All optical fibers in any single length of cable must be of the same type.
(c)
(2) Optical fibers covered in near contact with an extrusion (tight tube) must have an intermediate soft buffer to allow for thermal expansions and minor pressures.
(3) All protective coverings in any single length of cable must be continuous and be of the same material except at splice locations.
(4) The protective coverings must be free from holes, splits, blisters, and other imperfections and must be as smooth and concentric as is consistent with the best commercial practice.
(5) Repairs to the fiber coatings are not allowed except at splice locations.
(6) Both loose tube and tight tube coverings of each color and other fiber package types removed from the finished cable must meet the following shrinkback and cold bend performance requirements. The fibers may be left in the tubes.
(i)
(ii)
Channel cores and similar slotted single component core designs need not be tested for cold bend.
(d)
(2)
(i) The aqua color limits using the Munsell Color System must be as follows:
(ii) Other coloring schemes used for providing identification of buffer tubes and optical fibers which deviate from the requirements of paragraph (d)(1) of this section will not be accepted by RUS.
(e)
(2) The combined strength of all the strength members must be sufficient to support the stress of installation and to protect the cable in service.
(3) Strength members may be incorporated into the core as a central support member or filler, as fillers between the fiber packages, as an annular serving over the core, as an annular serving over the intermediate jacket, embedded in the outer jacket or as a combination of any of these methods.
(4) The central support member or filler must contain no more than one splice per kilometer of cable. Individual fillers placed between the fiber packages and placed as annular servings over the core must contain no more than one splice per kilometer of cable. Cable sections having central member or filler splices must meet the same physical requirements as unspliced cable sections.
(5) Strength member materials and splicing techniques must be accepted by RUS prior to their use.
(6) In each length of completed cable having a metallic central member, the dielectric strength between the armor and the metallic center member must withstand at least 15 kilovolts direct current for 3 seconds.
(f)
(2) The standard cylindrical group or core designs shall consist of 4, 6, 8, 10, 12, 16, 18, 20, or 24 fibers. Cylindrical groups or core designs larger than the sizes shown above must meet all the requirements of this section.
(3) When threads or tapes are used as core binders, they must be colored either white or natural and must be a nonhygroscopic and nonwicking dielectric material.
(4) When threads or tapes are used as unit binders to define optical fiber units in loose tube, tight tube, slotted, or bundled cored designs, they must be colored in accordance with the table listed below and must be a nonhygroscopic and nonwicking dielectric material or be rendered such by the filling compound. The colors of the binders must be in accordance with paragraphs (d)(2) introductory text and (d)(2)(i) of this section.
(g)
(2) The materials must be homogeneous and uniformly mixed; free from dirt, metallic particles and other foreign matter; easily removed; nontoxic and present no dermal hazards.
(3) The individual cable manufacturer must satisfy RUS that the filling compound selected for use is suitable for its intended application. The filling compound must be compatible with the cable components when tested in accordance with ASTM D 4568-86 at a temperature of 80° C.
(h)
(2) The core wrap(s) can be used to provide a heat barrier to prevent deformation or adhesion between the fiber tubes or can be used to contain the core.
(3) When core wraps are used, sufficient filling compound must be applied to the core wraps so that voids or air spaces existing between the core wraps and between the core the inner side of the core wrap are minimized.
(i)
(i) For armored cable an inner jacket is optional but recommended. The inner jacket may absorb stresses in the cable core that may be introduced by armor application or by armored cable installation.
(ii) For unarmored cable an inner jacket is optional.
(2) The inner jacket material and test requirements must be as for the outer jacket material per paragraphs (m)(3) introductory text through (m)(3)(v) of this section, except that either black or natural polyethylene may be used. In the case of natural polyethylene, the requirements for absorption coefficient and the inclusion of furnace black are waived.
(j)
(2) The flooding compound must be compatible with the jacket when tested in accordance with ASTM D 4568-86 at a temperature of 80° C. The floodant must exhibit adhesive properties sufficient to prevent jacket slip when tested in accordance with the requirements of appendix A, paragraph (III)(3), of this section.
(3) The individual cable manufacturer must satisfy RUS that the flooding compound selected for use is acceptable for the application.
(4) In lieu of a flooding compound, water blocking tapes may be applied between the inner jacket and armor and between the armor and outer jacket to prevent water migration. The use of the water blocking tape between the armor and outer jacket is not required when uniform bonding, per paragraph (k)(10) of this section, is achieved between the plastic-clad armor and the outer jacket.
(k)
(2) The uncoated steel tape must be electrolytic chrome coated steel (ECCS) with a thickness of 0.155
(3) The reduction in thickness of the armoring material due to the corrugating or to the application process must be kept to a minimum and must not exceed 10 percent at any spot.
(4) The armor of each length of cable must be electrically continuous with no more than one joint or splice allowed per kilometer of cable. This requirement does not apply to a joint or splice made in the raw material by the raw material manufacturer.
(5) The breaking strength of any section of an armor tape, containing a factory splice joint, must not be less than 80 percent of the breaking strength of an adjacent section of the armor of equal length without a joint.
(6) For cables containing no floodant over the armor, the overlap portions of the armor tape must be bonded in cables having a flat, noncorrugated armor to meet the requirements of paragraphs (q)(1) through (q)(7)(ii) of this section. If the tape is corrugated, the overlap portions of the armor tape must be sufficiently bonded and the corrugations must be sufficiently in register to meet the requirements of paragraphs (q)(1) through (q)(7)(ii) of this section.
(7) The armor tape must be so applied as to enable the cable to pass the bend test as specified in paragraph (q)(1) of this section.
(8) The protective coating on the steel armor must meet the Bonding-to-Metal, Heat Sealability, Lap-Shear and Moisture Resistance requirements of Type I, Class 2 coated metals in accordance with ASTM B 736-92a.
(9) The ability of the plastic-clad metal to resist the flooding compound must be determined as required by ASTM D 4568-86 using a one meter length of coated steel which must be aged for 7 days at 68
(10) When the jacket is bonded to the plastic coated armor, the bond between the plastic coated armor and the outer jacket must not be less than 525 newtons per meter over at least 90 percent of the cable circumference when tested in accordance with ASTM D 4565-90a. For cables with strength members embedded in the jacket, and residing directly over the armor, the area of the armor directly under the strength member is excluded from the 90 percent calculation.
(l)
(2) The fully flooded, stranded support messenger must be 6.35 millimeters diameter, 7 wire, extra high strength grade, Class A galvanized steel strand conforming to ASTM A 640-91 with exceptions and additional provisions as follows:
(i) The maximum lay of the individual wires of the strand must be 140 millimeters.
(ii) Any section of a completed strand containing a joint must have minimum tensile strength and elongation of 29,500 newtons and 3.5 percent, respectively, when tested in accordance with the procedures specified ASTM A 640-91.
(iii) The individual wires from a completed strand which contain joints must not fracture when tested according to the “Ductility of Steel” procedures specified in ASTM A 640-91 except that the mandrel diameter must be equal to 5 times the nominal diameter of the individual wires.
(3) The support strand must be completely covered with a corrosion protective floodant. The floodant must be homogeneous and uniformly mixed.
(4) The floodant must be nontoxic and present no dermal hazard.
(5) The floodant must be free from dirt, metallic particles, and other foreign matter that may interfere with the performance of the cable.
(6) The floodant must be compatible with the polyethylene outer jacket and must be acceptable to RUS.
(7) Other methods of providing self-supporting cable specifically not addressed in this section may be allowed
(m)
(2) The jacket must be free from holes, splits, blisters, or other imperfections and shall be as smooth and concentric as is consistent with the best commercial practice.
(3) The raw material used for the outer jacket must be one of the five types listed in paragraphs (m)(3)(i) through (m)(3)(v) of this section. The raw material must contain an antioxidant to provide long term stabilization and the materials must contain a 2.60
(i) Low density, high molecular weight polyethylene (LDHMW) must conform to the requirements of ASTM D 1248-84(1989), Type I, Class C, Category 4 or 5, Grade J3.
(ii) Low density, high molecular weight ethylene copolymer (LDHMW) must conform to the requirements of ASTM D 1248-84(1989), Type I, Class C, Category 4 or 5, Grade J3.
(iii) Linear low density, high molecular weight polyethylene (LLDHMW) must conform to the requirements of ASTM D 1248-84(1989), Type I, Class C, Category 4 or 5, Grade J3.
(iv) High density polyethylene (HD) must conform to the requirements of ASTM D 1248-84(1989), Type III, Class C, Category 4 or 5, Grade J4.
(v) Medium density polyethylene (MD) must conform to the requirements of ASTM D 1248-84(1989), Type II, Class C, Category 4 or 5, Grade J4.
(vi) Particle size of the carbon selected for use must not average greater than 20 nanometers.
(vii) Absorption coefficient must be a minimum of 400 in accordance with the procedures of ASTM D 3349-86.
(4) The outer jacketing material removed from or tested on the cable must be capable of meeting the following performance requirements:
(5)
(i)
(ii)
(iii)
(iv)
(v)
(6)
(i)
(ii)
(B) The maximum and minimum thickness values shall be based on the average of each axial section.
(7) For jackets having embedded strength members, the jacket thickness must meet the requirements of paragraph (m)(6) of this section except that the jacket thickness over the strength members must not be less than 0.50 millimeters.
(8) The minimum jacket thickness at any point over the support messenger for self-supporting aerial cable utilizing such an element must be 1.1 millimeters.
(9) The web dimension for self-supporting aerial cable utilizing such a feature must be as follows:
(n)
(2) When a sheath slitting cord is used it must be nonhygroscopic and nonwicking or be rendered such by the filling or flooding compound, continuous throughout a length of cable and of sufficient strength to open the sheath over at least a one meter length without breaking the cord at a temperature of 23
(o)
(2) Each length of cable intended for direct burial installation shall be marked with a telephone handset in compliance with Rule 350G of the 1993 National Electrical Safety Code (NESC).
(3) Mark the number of fibers on the jacket.
(4) The markings must be printed on the jacket at regular intervals of not more than 2 meters.
(5) An alternative method of marking may be used if acceptable to RUS.
(6) The completed cable must have sequentially numbered length markers in Meters or Feet at regular intervals of not more than 2 meters along the outside of the jacket.
(7) Continuous sequential numbering must be employed in a single length of cable.
(8) The numbers must be dimensioned and spaced to produce good legibility and must be approximately 3 millimeters in height. An occasional illegible
(9) The method of marking must be by means of suitable surface markings producing a clear distinguishable contrasting marking acceptable to RUS. Where direct or transverse printing is employed, the characters should be indented to produce greater durability of marking. Any other method of length marking must be acceptable to RUS as producing a marker suitable for the field. Size, shape and spacing of numbers, durability and overall legibility of the marker will be considered in acceptance of the method.
(10) Agreement between the actual length of the cable and the length marking on the cable jacket must be within the limits of +1 percent, −0 percent.
(11) The color of the initial marking must be white or silver. If the initial marking fails to meet the requirements of the preceding paragraphs, it will be permissible to either remove the defective marking and re-mark with the white or silver color or leave the defective marking on the cable and re-mark with yellow. No further re-marking is permitted. Any re-marking must be on a different portion of the cable circumference than any existing marking when possible and have a numbering sequence differing from any other existing marking by at least 3,000.
(12) Any reel of cable that contains more than one set of sequential markings must be labeled to indicate the color and sequence of marking to be used. The labeling must be applied to the reel and also to the cable.
(p)
(i) The attenuation values of the single mode fibers within the cable must not exceed 0.5 decibel per kilometer (dB/km) for dispersion-unshifted single mode fiber at 1310 and 1550 nanometers and must not exceed 0.5 dB/km for dispersion-shifted single mode fiber at 1550 nanometers. The test method used for measuring the attenuation must be in accordance with either:
(A) EIA/TIA-455-78A; or
(B) EIA/TIA-455-61.
(ii) The attenuation values for wavelengths between 1285 and 1330 nanometers and between 1525 and 1575 nanometers for dispersion-unshifted fibers must not exceed the attenuation at 1310 and 1550 nanometers by more than 0.1 dB/km. The attenuation values for wavelengths between 1525 and 1575 nanometers for dispersion-shifted fibers must not exceed the attenuation at 1550 nanometers by more than 0.1 dB/km. The test method used for measuring the attenuation must be in accordance with any one of the methods specified in paragraph (p)(1)(i) of this section.
(iii) Attenuation discontinuities in the fiber's length must not exceed 0.1 decibel (dB) for dispersion-unshifted fiber at 1310
(iv) Measurement of the attenuation must be conducted at the wavelength specified for application and must be expressed in decibels per kilometer.
(v) Because the accuracy of attenuation measurements for single mode fibers becomes questionable when measured on short cable lengths, attenuation measurements are to be made utilizing characterization cable lengths. If the ship length of cable is less than one kilometer, the attenuation values measured on longer lengths of cable (characterization length of cable) before cutting to the ship lengths of cable may be applied to the ship lengths.
(vi) For dispersion-unshifted fiber the zero dispersion wavelength must be between 1300 and 1322 nanometers, and the value of the dispersion slope at the zero-dispersion wavelength must not be greater than 0.092 picosecond per nanometer squared times kilometer (ps/(nm
(A) EIA/TIA-455-168A;
(B) EIA/TIA-455-169A; or
(C) EIA/TIA-455-175A.
(vii) For dispersion-shifted fiber, the dispersion over the wavelength range
(viii) The cut off wavelength of the dispersion-unshifted and the dispersion-shifted fibers in a cable must be less than 1260 nanometers when measured in accordance with EIA/TIA-455-170.
(2) The optical performance of the multimode fibers must be in accordance with the requirements specified in paragraphs (p)(2)(i) through (p)(2)(vi) of this section.
(i) The attenuation values of the 50/125 and 62.5/125 micrometer multimode fibers within the cable must not exceed 1.5 dB/km at 1300 nanometers when measured in accordance with either:
(A) EIA/TIA-455-46A;
(B) EIA/TIA-455-53A; or
(C) EIA/TIA-455-61.
(ii) Attenuation discontinuities in the fiber's length must not exceed 0.2 dB for both multimode fiber types at 1300
(iii) Measurement of the attenuation must be conducted at the wavelength specified for application and must be expressed in decibels per kilometer.
(iv) Because the accuracy of attenuation measurements for multimode fibers becomes questionable when measured on short cable lengths, attenuation measurements are to be made utilizing characterization cable lengths. If the ship length of cable is less than one kilometer, the attenuation values measured on longer lengths of cable (characterization length of cable) before cutting to the ship lengths of cable may be applied to the ship lengths.
(v) The bandwidth of the multimode fibers at the −3 dB optical power of the optical fibers within the cable must be within the limits prescribed in the purchase order.
(vi) The test methods used to measure bandwidth must be in accordance with either EIA/TIA-455-30B or EIA/TIA-455-51A.
(3) Numerical aperture (NA) for each multimode optical fiber in the cable must be 0.20
(q)
(ii) Measure the attenuation of dispersion-unshifted single mode fibers at 1310
(iii) After measuring the attenuation of the optical fibers, test the cable sample in accordance with EIA/TIA-455-37A, Test Condition E, Turns Test Level 3. The following detailed test conditions shall apply:
(A) Section 4.2—Mandrel diameter must be 20 times the cable diameter.
(B) Section 4.5—Measure the attenuation increase of the wound sample at the test temperature and specified wavelengths in accordance with EIA-455-20.
(C) For armored cable, the armor overlap must be on the outside of the bend.
(D) For self-supporting cable, the jacketed support messenger and connection web must be removed prior to testing.
(iv) The cable may be allowed to warm to room temperature before visual inspection. The bent area of the cable must show neither visible evidence of fracture of the jacket nor delamination of the bond at the overlap and to the outer jacket in nonflooded cable. After removal of the jacket, there must be no visible evidence of fracture of the armor, when present, and of the components in the core.
(2)
(ii) Measure the attenuation of the optical fibers in accordance with paragraph (q)(1)(ii) of this section.
(iii) After measuring the attenuation of the optical fibers, test the cable in accordance with EIA/TIA-455-25A.
(3)
(ii) Measure the attenuation of the optical fibers in accordance with paragraph (q)(1)(ii) of this section.
(iii) After measuring the attenuation of the optical fibers, test the cable in accordance with EIA-455-41 using a rate of 3 millimeters to 20 millimeters per minute and maintaining the load for 10 minutes.
(4)
(ii) Measure the attenuation of the optical fibers in accordance with paragraph (q)(1)(ii) of this section.
(iii) After measuring the attenuation of the optical fibers, test the cable in accordance with EIA/TIA-455-85A, using a maximum cable twisting length of 4 meters.
(5)
(ii) Measure the attenuation of the optical fibers in accordance with paragraph (q)(1)(ii) of this section.
(iii) After measuring the attenuation of the optical fibers, test the cable in accordance with EIA/TIA-455-104A, Test Conditions I and II, flexed for 25 cycles using a sheave diameter not less than 20 times the cable diameter (Test condition letter B).
(iv) After completion of the test, the bent area of the cable must show neither visible evidence of fracture of the jacket nor delamination of the bond at the overlap and to the outer jacket in nonflooded cable. After removal of the jacket, there must be no visible evidence of fracture of the armor, when present, and of the components in the core.
(6)
(ii) After the one hour period, there must be no water leakage through the sheath interfaces, under the core wrap, between the cable core interstices or through the fiber buffers.
(iii) If water leakage is detected in the first sample, one additional 3 meter sample from EACH END of the same reel must be tested in accordance with paragraph (q)(6)(i) of this section. If either sample exhibits water leakage, the entire reel of cable is to be rejected. If the samples exhibit no leakage, the entire reel of cable is considered acceptable.
(7)
(ii) The amount of filling or flooding compounds that flowed or dripped from any of the suspended cable specimens must be less than or equal to 0.5 grams of material. The measurement of an amount greater than 0.5 grams for any of the suspended cable specimens constitutes failure.
(r)
(2) All connectors must be accepted by RUS prior to their use.
(s)
(2) For initial acceptance, the manufacturer must submit:
(i) An original signature certification that the product fully complies with each section of the specification;
(ii) Qualification Test Data, per appendix A of this section;
(iii) A set of instructions for handling the cable;
(iv) OSHA Material Safety Data Sheets for all components;
(v) Agree to periodic plant inspections;
(vi) A certification that the product does or does not comply with the domestic origin manufacturing provisions, of the “Buy American” requirements of the Rural Electrification Act of 1938 (52 Stat. 818);
(vii) Written user testimonials concerning field performance of the product; and
(viii) Other nonproprietary data deemed necessary by the Chief, Outside Plant Branch (Telephone).
(3) For requalification acceptance, the manufacturer must submit an original signature certification that the product fully complies with each section of the specification, excluding the Qualification Section, and a certification that the product does or does not comply with the domestic origin manufacturing provisions of the “Buy American” requirements of the Rural Electrification Act of 1938 (52 Stat. 818), for acceptance by September 30 every three years. The required data and certification must have been gathered within 90 days of the submission.
(4) Initial and requalification acceptance requests should be addressed to: Chairman, Technical Standards Committee “A” (Telephone), Telecommunications Standards Division, Rural Utilities Service, Washington, DC 20250-1500.
(5)
(ii) Attenuation for each optical fiber in the cable must be measured.
(iii) Optical discontinuities must be isolated and their location and amplitude recorded.
(6)
(i) Numerical aperture and bandwidth of multimode fibers;
(ii) Cut off wavelength of single mode fibers;
(iii) Dispersion of single mode fibers;
(iv) Shrinkback and cold testing of loose tube and tight tube buffers;
(v) Adhesion properties of the protective fiber coating;
(vi) Dielectric strength between the armor and the metallic central member;
(vii) Performance requirements for the inner and outer jacketing materials;
(viii) Performance requirements for the filling and flooding compounds;
(ix) Bonding properties of the coated armoring material;
(x) Sequential marking and lettering;
(xi) Cable bend and cable impact tests;
(xii) Water penetration and compound flow tests;
(xiii) Cable twist, cable flex, and cable compression tests; and
(xiv) Performance requirements of support messenger.
(t)
(2) Measurements and computed values must be rounded off to the number of places or figures specified for the requirement according to ASTM E 29-90.
(u)
(2) Minor defects in the inner and outer jacket (defects having a dimension of 3 millimeter or less in any direction) may be repaired by means of heat fusing in accordance with good commercial practices utilizing sheath grade compounds.
(3) Buffer tube repair is permitted only in conjunction with fiber splicing.
(v)
(2) A circumferential thermal wrap or other means of protection complying with the requirements of appendix B of this section must be secured between the outer edges of the reel flange to protect the cable against damage during storage and shipment.
(3) Cable manufactured to the requirements of this section must be sealed at the ends to prevent entrance of moisture. The method of sealing must be accepted by RUS prior to its use.
(4) The end-of-pull (outer end) of the cable must be securely fastened to prevent the cable from coming loose during transit. The start-of-pull (inner end) of the cable must project through a slot in the flange of the reel, around an inner riser, or into a recess on the reel flange near the drum and fastened in such a way to prevent the cable from becoming loose during installation.
(5) Spikes, staples or other fastening devices must be used in a manner which will not result in penetration of the cable.
(6) The arbor hole must admit a spindle 63.5 millimeters in diameter without binding. Steel arbor hole liners may be used but must be accepted by RUS prior to their use.
(7) Each reel must be plainly marked to indicate the direction in which it should be rolled to prevent loosening of the cable on the reel.
(8) Each reel must be stenciled or lettered with the name of the manufacturer.
(9) The following information must be either stenciled on the reel or on a tag firmly attached to the reel:
(10) When preconnectorized cable is shipped, the splicing modules must be protected to prevent damage during shipment and handling. The protection method must be accepted by RUS prior to its use.
(I) The test procedures described in this appendix are for qualification of initial cable designs and major modifications of accepted designs. Included in (V) of this appendix are suggested formats that may be used in submitting test results to RUS.
(II) Sample selection and preparation. (1) All testing must be performed on lengths removed sequentially from any of the same cables listed below. The cables must not have been exposed to temperatures in excess of 38°C since their initial cool downs after sheathing. The lengths specified are minimum lengths and if desirable from a laboratory testing standpoint longer lengths may be used:
(a) 12 single mode fiber jacketed cable consisting of 6 single mode dispersion-unshifted
(b) 12 multimode fiber jacketed cable consisting of 6 50/125 micrometer multimode fibers and 6 62.5/125 micrometer multimode fibers.
(c) 24 fiber jacketed combination cable consisting of 6 single mode dispersion-unshifted fibers; 6 single mode dispersion-shifted fibers; 6 50/125 micrometer multimode fibers; and 6 62.5/125 micrometer multimode fibers.
(2) Length A shall be a minimum of 500 meters long. Coil the sample with a diameter of 50 to 75 times its sheath diameter. Three lengths are required if only requesting acceptance for either single mode fiber cable (a), multimode fiber cable (b), or using the combination fiber cable (c). Six lengths, 3 lengths of single mode fiber cable (a), and 3 lengths of multimode fiber cable (b), are required if requesting acceptance for both single mode and multimode fiber cables.
(3) Length B shall be one meter long. Four lengths of either single mode fiber cable (a), multimode fiber cable (b) or the combination fiber cable (c) are required.
(4) Length C shall be 600 millimeters long. Four lengths of either single mode fiber cable (a), multimode fiber cable (b) or the combination fiber cable (c) are required.
(5) Data reference temperature. Unless otherwise specified, all measurement shall be made at 23
(III)
(b)
(i) Water Penetration Test outlined in paragraph (III ) (2) of this appendix; and
(ii) Jacket Slip Strength Test outlined in paragraph (III) (3) of this appendix. (For Flooded Designs Only)
(c)
(ii) Record on suggested formats in (V) of this appendix or on other easily readable formats.
(d)
(ii) At the end of this period note any exudation of cable filler. Measure the parameters given in paragraph (III)(1)(c) of this appendix. Record on suggested formats in (V) of this appendix or on other easily readable formats.
(e)
(ii) The stability of the optical parameters after completion of this test must be within the following prescribed limits:
(A)
(B)
(2)
(b) Test per Option A or Option B. (i)
(ii)
(3)
(b)
(c)
(4)
(b) Immediately after completing the measurements, expose the test sample to 100 temperature cyclings. Relative humidity within the chamber shall be maintained at 90
(c) Repeat paragraphs (III)(1)(d)(ii) through (III)(3)(c) of this appendix.
(5)
(b) Immediately after completing the measurements, subject the test sample to 10 cycles of temperature between −40°C and +60°C. The test sample must be held at each temperature extreme for a minimum of 1
(c) Repeat paragraphs (III)(1)(d)(ii) through (III)(3)(c) of this appendix.
(IV)
(b) Repeat paragraphs (III)(2) through (III)(3)(c) of this appendix for these samples.
(V) The following suggested formats may be used in submitting the test results to RUS:
(I) The test procedures described in this appendix are only for qualification of initial and subsequent changes in thermal reel wraps.
(II)
(III)
(2) Tape thermocouples to the jackets of each sample to measure the jacket temperature.
(3) Cover one sample with the thermal reel wrap.
(4) Expose the samples to a radiant heat source capable of heating the uncovered jacket sample to a minimum of 71 °C. A GE 600 watt photoflood lamp or an equivalent lamp having the light spectrum approximately that of the sun shall be used.
(5) The height of the lamp above the jacket shall be 380 millimeters or an equivalent height that produces the 71 °C jacket temperature on the unwrapped sample shall be used.
(6) After the samples have stabilized at the temperature, the jacket temperatures of the samples shall be recorded after one hour of exposure to the heat source.
(7) Compute the temperature difference between jackets.
(8) For the thermal reel wrap to be acceptable to RUS, the temperature difference between the jacket with the thermal reel wrap and the jacket without the reel wrap shall be greater than or equal to 17 °C.
(a)
(2) The housing and terminal requirements reflect the best engineering judgment available at the present time and may be subject to change due to advances in technology, economic conditions, or other factors.
(3) The test procedures described in this section are required by RUS to
(4) The test procedures specified herein satisfy the requirements of housings as well as the requirements of terminals that may be installed within housings. Some of the requirements are interrelated to several tests designed to determine the performance aspects of terminals and are directly affected by testing required for housings. Therefore, the manufacturer should carefully review all the test requirements in order to develop a testing schedule that is comprehensive, efficient in terms of the number of test specimens required and can be accomplished in an orderly and logical sequence.
(5) The specified tests may require special facilities to comply with Federal, State, or local regulatory requirements. Some test procedures are potentially hazardous to personnel because of the high voltages and mechanical forces involved. Safety precautions are necessary to prevent injury.
(6) Underwriters Laboratories, Inc. (UL) 94, Tests for Flammability of Plastic Materials for Parts in Devices and Appliances, fourth edition, dated June 18, 1991, referenced in this section is incorporated by reference by RUS. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. A copy of the UL standard is available for inspection during normal business hours at RUS, room 2845-S, U.S. Department of Agriculture, Washington, DC 20250-1500 or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC. Copies are available from UL Inc., 333 Pfingsten Road, Northbrook, Illinois 60062-2096, telephone number (708) 272-8800.
(7) The American Society for Testing and Materials Specifications (ASTM) A 109-91, Standard Specification for Steel, Strip, Carbon, Cold-Rolled; ASTM A 153-82 (Reapproved 1987), Standard Specification for Zinc Coating (Hot-Dip) on Iron and Steel Hardware; ASTM A 366/A 366M-91, Standard Specification for Steel, Sheet, Carbon, Cold-Rolled, Commercial Quality; ASTM A 525-91b, Standard Specification for General Requirements for Steel Sheet, Zinc-Coated (Galvanized) by the Hot-Dip Process; ASTM A 526/A 526M-90, Standard Specification for Steel Sheet, Zinc-Coated (Galvanized) by the Hot-Dip Process, Commercial Quality; ASTM A 569/A 569M-91a, Standard Specification for Steel, Carbon (0.15 Maximum, Percent), Hot-Rolled Sheet and Strip Commercial Quality; ASTM A 621/A 621M-92, Standard Specification for Steel, Sheet and Strip, Carbon, Hot-Rolled, Drawing Quality; ASTM B 117-90, Standard Test Method of Salt Spray (Fog) Testing; ASTM B 539-90, Standard Test Methods for Measuring Contact Resistance of Electrical Connections (Static Contacts); ASTM B 633-85, Standard Specification for Electrodeposited Coatings of Zinc on Iron and Steel; ASTM D 523-89, Standard Test Method for Specular Gloss; ASTM D 610-85 (Reapproved 1989), Standard Test Method for Evaluating Degree of Rusting on Painted Steel Surfaces; ASTM D 822-89, Standard Practice for Conducting Tests on Paint and Related Coatings and Materials using Filtered Open-Flame Carbon-Arc Light and Water Exposure Apparatus; ASTM D 1535-89, Standard Test Method for Specifying Color by the Munsell System; ASTM D 1654-92, Standard Test Method for Evaluation of Painted or Coated Specimens Subjected to Corrosive Environments; ASTM D 1693-70 (Reapproved 1988), Standard Test Method for Environmental Stress-Cracking of Ethylene Plastics; ASTM D 2197-86 (Reapproved 1991), Standard Test Method for Adhesion of Organic Coatings by Scrape Adhesion; ASTM D 2247-92, Standard Practice for Testing Water Resistance of Coatings in 100% Relative Humidity; ASTM D 2565-92, Standard Practice for Operating Xenon Arc-Type Light-Exposure Apparatus With and Without Water for Exposure of Plastics; ASTM D 2794-92, Standard Test Method for Resistance of Organic Coatings to the Effects of Rapid Deformation (Impact); ASTM D 3928-89, Standard Test Method for Evaluation of Gloss or Sheen Uniformity; ASTM D 4568-86, Standard
(b)
(2) Pedestals are housings primarily intended to house, organize, and protect cable terminations incorporating terminal blocks, splice connectors and modules, ground lugs and load coils. Activities typically performed in a pedestal are cable splicing, shield bonding and grounding, inductive loading, and connection of subscriber drops.
(3) Serving area interface (SAI) cabinets are housings intended to perform some of the same functions as pedestals but are primarily intended to serve as the connecting terminal between feeder cable and distribution cables.
(4) Outside plant housings shall be manufactured in accordance with National Electrical Code (NEC) requirements, Underwriters’ Laboratories (UL) requirements, Department of Labor, Occupational Safety and Health Administration Standards (OSHA), and all other applicable Federal, State, and local requirements including, but not limited to, statutes, rules, regulations, orders, or ordinances otherwise imposed by law.
(c)
(ii) When requested by RUS, or an RUS borrower, the manufacturer shall prepare a training package for the purpose of training technicians in the use and installation of the product and its auxiliary equipment.
(iii) The manufacturer shall provide ordering information for repair parts. Repair parts shall be obtainable through a local distributor or shall be easily obtainable. Information describing equivalent parts and their sources should be provided for those parts that may also be obtained from other sources.
(2)
(3)
(ii) For initial acceptance the manufacturer shall:
(A) Submit an original signature certification that the product complies with each section of the specification;
(B) Provide qualification test data;
(C) Provide OSHA Material Safety Data Sheets for the product;
(D) Provide a detailed explanation concerning the intended use and capacity of the product;
(E) Provide a complete set of instructions, recommendations for equipment organization and splicing;
(F) Agree to periodic plant inspections;
(G) Provide a certification that the product does or does not comply with the domestic origin manufacturing provisions of the “Buy American” requirements of the Rural Electrification Act of 1938 (52 Stat. 818);
(H) Provide user testimonials concerning field performance of the product;
(I) Provide product samples if requested by RUS; and
(J) Provide any other data required by the Chief, Outside Plant Branch (Telephone).
(iii) Each requirement of this section must be addressed in submissions for acceptance. The designation N/A may be entered when the requirements do not apply.
(iv) Acceptance requests should be addressed to: Chairman, Technical Standards, Committee “A” (Telephone), Telecommunications Standards Division, Rural Utilities Service, Washington, DC 20250-1500.
(d)
(ii) Housings shall be of sufficient size to permit easily managed installation, operational, testing, and maintenance operations. The general shape of outside plant housings is usually comparable to that of a rectangular column or cylinder, with the shape of any particular housing being left to the manufacturer's discretion. Each design is subject to acceptance by RUS.
(2)
(ii) The classifications of pedestals are the general purpose channel Type (H) and the dome Type (M). The Type H pedestal has either front only access or back and front access while the Type M pedestal has top only access. Pedestals are further designated as follows:
(iii) The minimum volume associated with the pedestal designations shall be as shown in the following table:
(iv) Equipment cabinets intended for use as SAI housings shall be assigned size designations according to their maximum pair termination capacities. The capacity will vary depending on
(v) Large pair count splice cabinets are classified according to their splice capacity. Approximately 48 cm
(vi) The minimum volume associated with large pair count splice cabinets shall be as shown in the following table:
(3)
(ii) Type M pedestal housings shall consist of a one piece upper sleeve designed to fit over the base cover trapping air to prohibit water from entering the splice area when installed in locations prone to temporary flooding. Pedestals designed to be mounted extra high on poles for locations susceptible to deep snow shall have a bottom close-off option available to prohibit the ingress of birds, rodents and insects.
(iii) The external housing components on all outside plant housings shall provide reasonable protection against accidental removal or vandalism. Housings shall be equipped with a cover plate retaining bolt and cup washer that may be opened only with an industry accepted socket type can wrench. Housings may be equipped with provisions to allow the purchaser to install a padlock.
(iv) Installed housings shall resist the disassembling force of frost heaving applied to the bottom of ground line cover plates. The base cover must remain stationary to stabilize the contents of the housing cavity.
(v) In an effort to provide protection against dust penetration, blowing snow, rain, and ultraviolet light degradation of internal components, all mechanical gaps shall be restricted. The use of seals, overlaps, gaskets, and/or dovetailing is required to assure satisfactory protection of housed equipment.
(vi) Knockouts, cutouts, or notches designed to accommodate aerial service drops shall not be permitted. A design option for housings intended to accommodate service drops shall include a separate channel or equivalent in the base cover to allow future additions of service drops without the removal of gravel or the moisture barrier in the base of the housing. Service wire channels must be designed to prevent the entry of birds, reptiles, rodents and insects.
(vii) Minimal venting of SAI housings may be necessary to relieve internal pressure and condensation.
(viii) There shall be no aluminum housing components that will become buried in the soil when the housing is properly installed.
(ix) Housing components may be assembled using rivets, welds, glue, bolts and nuts, or other techniques suitable for the materials involved.
(x) Housings and their components that require field assembly must be capable of being assembled with tools normally available to outside plant technicians.
(xi) Hinged doors on SAI housings and large pair count splice housings shall be equipped with a device that restrains the doors in the open position.
(xii) Outside plant housings shall be free of sharp edges, burrs, etc., that could present a safety hazard to personnel involved in installation and use of the product or to the general public. Surfaces inside housings must not
(xiii) A ground line mark shall be provided, approximately 15 cm (6 in.) below the top edge of the housing base cover plate on housings intended for ground level mounting. Base cover plates shall have a minimum height of 31 cm (12 in.).
(xiv) Any housing, which weighs in excess of 91 kilograms (kg) (200 pounds (lb)), including its contents, shall be equipped with lifting brackets for attaching hoisting cables or chains.
(xv) Housing stakes shall be a minimum of 107 cm (42 in.) in length. If fabricated from steel, they shall have a minimum thickness of No. 13 gauge as measured according to American Society for Testing and Materials (ASTM) A 525-91b. Stakes shall be formed into a “U” channel with a minimum depth of 2 cm (0.75 in.). The stake shall be a single part of suitable design strength for driving 91 cm (36 in.) into the soil with hand tools without damage such as bending or warping. The stake shall have adequate mounting holes having a minimum separation of 15 cm (6 in.) for mounting the housing baseplate. The stake material must resist corrosion and deterioration when exposed to soil and atmospheric conditions.
(xvi) The housing design must permit a logical progression of installation steps that would normally be encountered in typical field installations.
(xvii) Provisions for attaching housings to stakes, poles, walls, other housings, or pads shall be provided for each design intended for those purposes. Locations of holes for mounting attachments may be provided by knockouts on above ground components. Mounting hole locations for below ground components may be predrilled.
(xviii) Pole mounting hardware shall provide at least 1.3 cm (0.5 in.) clearance from the pole to the housing. Pole mounting brackets shall accommodate the wide range of pole sizes used in the telephone industry.
(xix) Pad-mounted housings shall have hardware available for anchoring the housing base to the pad. A template may be provided to assist in the location of mounting attachment details for pad preparation.
(xx) Housings equipped with stub cables shall have strain relief devices to permit shipping and handling of the housing without damage to the housing or stub cables. Only RUS accepted cable shall be used for stub cables. The cable manufacturer's recommendations concerning minimum bend radius shall be observed. The minimum bend radius for most copper cables is 10 times the cable diameter.
(xxi) Cable supports shall be provided near the top of the ground line cover and other appropriate locations within the housing to provide cable stability consistent with the intended use and capacity of the housing. Cable supports shall be capable of holding a minimum load of 23 kg (50 lb).
(xxii) An adequate supply of nonmetallic retainer clips or tie wraps capable of supporting a minimum load of 23 kg (50 lb) shall be provided with the housing. Adequate spaces for installation of the clips or tie wraps must be provided on the housing backplate and cable supports.
(xxiii) Housing chambers designed for splicing operations shall be equipped with insulated supporting straps or rods suitable for supporting splice bundles. The insulation on the straps or rods shall extend for the entire length of the device and shall have a dielectric strength of 15 kilovolts (kv) direct current (dc) minimum. Housings having an “H” frame design where both front and rear covers may be removed may incorporate insulated tie bars to be used as cable supports.
(xxiv) Housings designed to contain equipment in addition to splices shall be equipped with a device for physically separating the splice area from the service area of the housing.
(xxv) A dielectric shield rated at 15 kv dc shall be provided to enclose the cable splice area. The shield shall extend from the lower cable supports to within 2.5 cm (1 in.) of the top of the housing. The shield shall be equipped with Velcro or equivalent fastening devices designed to hold the shield in both the open or closed positions. The fastening devices shall extend along the entire vertical edge of the dielectric shield.
(xxvi) Mounting arrangements for a variety of terminal blocks and other equipment shall be provided by means of good housekeeping panels or other devices that may enhance the service aspect of the housing.
(xxvii) Housings designed for SAI cabinets may be shipped with terminal blocks installed and stub cables attached. If this option is exercised, the stub cables and terminal blocks must be RUS accepted. In all cases, SAI cabinets must be equipped with appropriate mounting devices for installing the peripheral equipment required for a serving area interface.
(xxviii) SAI cabinets shall be designed to provide physical separation between the splicing area and the area provided for running cross-connect jumpers.
(xxix) SAI cabinets and large splice housings must have an external feature for attaching a padlock to prevent unauthorized entry.
(xxx) Each housing shall have a tinned or zinc electroplated copper alloy or equivalent connector plate or bar to be used for terminating ground and cable shield bond connections. The device shall be equipped with captive studs and nuts with captive lock washers designed for attaching 6 American Wire Gauge (AWG) copper bonding harness wire or braid and a 6 AWG copper ground wire. Connector plates shall be equipped with enough studs and nuts to provide individual connections equivalent to the maximum number of cable sheaths recommended for the housing. Housings shall incorporate design features that enable the field installation of at least one additional connector plate for service conditions that require numerous connections. A bonding and grounding system capable of providing support and strain relief for service wires shall be provided for housings intended for use as distribution points. The bonding system shall be designed to provide sheath continuity as cable and service wires are installed, and prior to any other operation being performed. The bonding arrangement shall provide electrical continuity between all bonds and the ground connector plate. The bonding and grounding arrangement shall permit the lifting of individual cable ground connections for testing and cable locating activities without jeopardizing the grounding potential of other cables that may enter the housing. The bonding and grounding system shall be capable of conducting a current of 1000 amperes for at least 20 seconds.
(4)
(ii) For pedestals, the sign shall be centered horizontally on the front cover and the top of the sign shall be not more than 10 cm (4 in.) from the top of the housing.
(iii) For SAI cabinets, the sign shall be centered horizontally and vertically on the door. If there are two doors, the sign shall be mounted on the left door.
(iv) Deviations from warning sign location requirements are permitted only for housing design constraints. Alternate sign locations will be considered by RUS.
(v) The RUS standard sign design is shown in Figure 1.
(5)
(ii) All materials are required to have fire resistance ratings consistent with recognized industry standards. External materials must be flame resistant.
(iii) All materials used in the manufacture of housings or component parts must achieve the required strength properties, resist deterioration when exposed to outdoor conditions, and be
(iv) Nonmetallic housing materials shall have a fungus growth rating no greater than one according to ASTM G 21-90.
(v) Metallic components shall be either corrosion resistant or protected against corrosion and must not produce galvanic corrosion in wet or humid conditions on other metals that may be present in the housing environment.
(vi) Mill galvanized steel used in the manufacture of housings shall comply with the appropriate requirements of one of the following standards:
(A) ASTM A 109-91;
(B) ASTM A 366/A 366M-91;
(C) ASTM A 525-91b; or
(D) ASTM A 526/A 526M-90.
(vii) Hot rolled steel shall comply with the appropriate requirements of one of the following standards:
(A) ASTM A 569/A 569M-91a; or
(B) ASTM A 621/A 621M-92.
(viii) Cold rolled steel shall comply with the appropriate requirements of one of the following standards:
(A) ASTM A l09-91; or
(B) ASTM A 366/A 366M-91.
(ix) Steel parts used for internal housing brackets shall be hexavalent chromate coated or zinc plated in accordance with ASTM B 633-85.
(x) Hardware items used for assembling or fastening housing components shall be 300 series or passivated 400 series stainless steel or hot dip galvanized in accordance with ASTM A l53-82 (1987). Other materials will be considered by RUS on an individual basis.
(xi) Aluminum components shall be fabricated from alloy types 5052 or 6061 or other types that have been recognized as having acceptable corrosion resistance and formability and weldability features.
(xii) Nonmetallic parts must be resistant to solvents and stress cracking and shall be compatible with metals and other materials such as conductor insulations and filling compounds used in the manufacture of cable. Plastic materials must be noncorrosive to metals and resist deterioration when exposed to industrial chemical pollutants, ultra-violet rays, road salts, cleaning agents, insecticides, fertilizers, or other detrimental elements normally encountered in the outdoor environment.
(xiii) Housing door seals and gaskets may be manufactured from rubber or synthetic rubber-like elastomer materials. Seals and gaskets shall exhibit a high degree of weatherability with an effective life of at least 30 years in the outdoor environment. The material shall be tear resistant and have a low compression set.
(6)
(ii) There shall be inherent design provisions to prevent objectionable deterioration of the housing such as rusting, exposure of fiber or delamination. Secondary protection, such as galvanizing over steel per ASTM A 526/A 526M-90 or anodizing over aluminum, shall be provided to ensure reliability over the projected 30 year design life of the housing.
(iii) Painted metal housings shall have a minimum gloss of 60 (60° specular) in accordance with ASTM D 523-89.
(iv) All painted surfaces shall have a uniform color and texture in accordance with ASTM D 3928-89. Nonmetallic housings shall meet recognized industry standards concerning optical appearance for gloss and haze as applicable for the material.
(v) The colors of housings that RUS will consider for acceptance shall be as follows:
(7)
(ii) No special tools or equipment other than that usually carried by outside plant technicians and construction crews must be required for installation of the housing. Security devices are the exception to this requirement.
(iii) Installation hardware shall maintain housings in an erect and stable position when subjected to normal storm loads. Pad-mounted designs must accommodate precast or cast-in-place reinforced concrete or other suitable prefabricated material. Brackets, inserts for fastening, conduit openings, or other items necessary for a pad-mounted installation must be provided. The manufacturer shall provide detailed drawings or a template for locating inserts, conduit openings, or slots for cast-in-place pad construction.
(e)
(ii) Testing shall be performed at a room temperature of 24
(2)
(ii) The typical test sample shall consist of the exterior housing components such as covers, backplates, good housekeeping panels, cap assembly, anchor posts, decals, etc. Interior components must include the bonding and grounding hardware for cables and service wires and the dielectric shield. The housing may include terminal blocks or cross-connect modules, cable splices, or the typical outside plant equipment the housing is designed to contain and protect.
(3)
(ii)
(iii)
(iv)
(v)
(A) To insure complete saturation of the three test panels, soak them for 96 hours in a container of distilled water 22
(B) Lower the temperature of the water and the immersed test panels to −28
(C) Thaw the water with the samples to 22
(D) Repeat the procedure 24 times. Any cracking, crazing, deforming, or delaminating on any of the three test panels shall be considered a failure; and
(E) Remove the samples from the water and impact test the three panels by delivering a force of 11.3 N-m (100 lb-in.) using a Gardner-Impact Tester to each specimen at 71, 22, and −28
(vi)
(vii)
(viii)
(A) Industry recognized filling compounds;
(B) Isopar M;
(C) Industry recognized solvents;
(D) Industry recognized encapsulants; and
(E) Commonly used insect, pest, and weed control products and agricultural fertilizers.
(ix)
(
(
(
(
(B) There shall be no swelling, deformation, or softening of the material samples or any discoloration of the solution.
(x)
(xi)
(xii)
(
(
(B)(
(
(
(xiii)
(B) Polymeric materials shall be tested in accordance with the Underwriters Laboratories Publication (UL) 94, dated June 18, 1991. Materials used in housing components shall have a rating of 94V-0 or 94V-1 and shall not sustain combustion when an open flame source is removed.
(4)
(A) The impact force shall be delivered to the front, back, and top surfaces. Circular housings shall be impacted on side surfaces 180° apart and on the top. The device used to deliver the force shall be spherical and approximately 25 to 31 cm (10 to 12 in.) in diameter. A typical test procedure may include the use of a hard rubber bowling ball, weighing 6 to 7 kg (13 to 16 lb), enclosed in a mesh bag, attached to a rope with a metal ring. The load shall be dropped vertically on the top surface and applied to the sides with a pendulum motion using the appropriate height and extension arm to achieve the required impact force. The housing must be impacted at the approximate mid-point of the surface area.
(B) Housings shall be conditioned for a minimum of eight hours at −40°C (−40°F) in an environmental chamber prior to testing. If the chamber is insufficient in size to conduct tests within the chamber, the housing may be removed and shall be tested within 10 minutes after removal.
(C) After impact testing, the housing shall not exhibit fractured or ruptured surfaces sufficient to allow the ingress of moisture or dust. The housing shall not exhibit mechanical damage that would impair the functioning of hinges, latches, locks, etc.
(ii)
(iii)
(iv)
(A) Packaged housings and their contents weighing 91 kg (200 lb) or less
(B) Packaged housings and their contents weighing more than 91 kg (200 lb) shall be capable of enduring a single drop on each of two diagonally opposite corners of the package without significant damage from a height specified as follows:
(
(
(
(
(C) Unpackaged housings and their contents weighing 23 kg (50 lb) or less shall be capable of enduring a single drop on each face and adjacent corners without significant damage from a height specified as follows:
(D)(
(
(v)
(vi)
(vii)
(viii)
(B) There shall be no functional failure of the restraining device nor mechanical damage to the housing.
(ix)
(5)
(6)
(ii)
(iii)
(iv)
(v)
(f)
(2)
(ii) All individual terminals or terminal fields must be enclosed and the terminal enclosure must be totally filled with an encapsulating grease or gel which prevents connection degradation caused by moisture and corrosion. The encapsulant must provide complete encapsulation of terminal metallic connections and surfaces and totally fill all voids and cavities within individual terminal enclosures or terminal field enclosures to prevent ingress of moisture. The encapsulant must not restrict access to the terminal or restrict craft personnel from making connections. The encapsulant must be compatible with the standard materials used in cross-connect hardware and wiring.
(iii) Binding post terminals shall not be susceptible to damage under normal use of standard tools used by outside plant technicians such as screwdrivers and test set clips. In addition, use of other tools such as scissors, diagonal cutters and long nose pliers for tightening and loosening screws shall not result in damage to the terminal.
(iv) Terminals shall be designed so that a typical technician using customary tools shall be able to terminate cross-connect wire on a pair of terminals, or to remove it, without causing an electrical short between any two terminals or any other adjacent terminals.
(v) The terminal count sequence shall be indicated using numerals of at least 0.25 cm (0.10 in.) in height.
(vi) A means shall be provided to distinguish feeder terminals from distribution terminals.
(vii) A means shall be provided to identify tip terminals and ring terminals in a terminal field. The identification convention shall indicate tip on the left with ring on the right for horizontal spacing and tip on the top with ring on the bottom for vertical spacing.
(viii) The preferred height of the highest terminal in the connector field in a ground mounted SAI unit shall be 168 cm (66 in.) or less as measured from the top surface of the mounting pad. The bottom or lowest terminals in the connector field shall be at least 46 cm (18 in.) from the top surface of the pad.
(ix) Pole mounted aerial units shall be 84 cm (33 in.) or less in width. The maximum allowable height of the highest terminals in a pole mounted aerial unit is 168 cm (66 in.) as measured from the top surface of the standard balcony seat used with the interface. For computation purposes, 15 cm (6 in.) shall be allowed for the distance between the bottom of the interface and the top of the balcony seat.
(3)
(ii) A 25 or 50 pair test connector shall be available which can be used to make reliable electrical contact to terminals associated with discrete 25 pair binder groups. The multi-pair test connector shall be provided with a minimum of 1.8 m (6 ft) of suitable cabling terminated to a connector, for interfacing with test sets common to the industry. The multi-pair test connector shall be functional on all terminal groups.
(iii) A special service marker shall be available which must attach to a binding post terminal to identify special circuits and insulate exposed metal
(iv)(A) A supply of twisted pair cross-connect wire shall be supplied with housings that are equipped with cross-connect terminals or that have provisions for mounting cross-connect terminals. The minimum length of cross-connect wire supplied is dependent on the SAI cabinet terminal capacity as follows:
(B) The cabinet shall be equipped to store the length of wire in a manner designed for convenient dispensing. The cross-connect wire supply shall be easily replaceable.
(g)
(2)
(A)
(B)
(ii)
(B) With the cabinet doors open, a spray of tap water at a rate of 3.8 liters per minute (1 gallon per minute) at 276 kilo-pascals (40 pounds per square inch)
(iii)
(A) The test shall consist of eight-hour temperature cycles with one-hour dwells at extreme temperatures of −40 °C to +60 °C (−40 °F to +140 °F), and temperature changes at an average rate of 16 °C (60 °F) per hour between the extremes. The relative humidity shall be maintained at 95
(B) A minimum of 100 terminals equipped with cross-connect wire installed in a manner typical of the industry shall be maintained at 118 °C (245 °F) during the test period, except during disturbance measurement periods where each wire connection to the terminals shall have a 0.23 kg (0.5 lb) force momentarily applied in a manner to stress the connection. Initial millivolt measurements shall be made without disturbing the joints in accordance with paragraph (g)(2)(iii)(A) of this section with the samples at room temperature. After initial measurement each sample shall be disturbed followed by a millivolt drop measurement after 1, 2, 4, 8, 16, and 33 days. The change in contact resistance should be less than 2 milliohms when compared to the initial measurement.
(iv)
(v)
(vi)
(3)
(ii)
(A) Test specimens shall include the terminals along the matrix edge at mid-span locations as well as centrally located terminals. Tests shall be conducted using a torque indicating screwdriver, or wrench, with an accuracy of
(B) The post or stud of the binding post terminal shall not fail before the screw or nut when increasing torque. The faceplate or receptacle restraining the post or stud shall not fail before the screw or nut when increasing torque.
(iii)
(iv)
(v)
(B) A multi-pair test connector shall be attached to the binding post terminal field and tests for opens between the binding post terminals and the test
(vi)
(4)
(5)
(ii) Twenty-five jumper connections shall be made on each of two binding post connectors chosen at random from a representative sample in an assembled interface unit. After exposure to this test, these and adjacent connectors shall be inspected for damage such as cracks or chips in metal or plastic parts. Failure consists of structural damage, open circuits through the connector, or inability to pass the torsional, lateral loading, or axial pullout tests described in paragraphs (g)(3)(ii) through (g)(3)(iv) of this section.
(iii) Select six binding posts at random in a representative interface. On each connector, attach any test cord included with the unit and then remove the test cord as follows. On binding post sample 1, remove the cord normally ten times. On binding post sample 2, remove the cord ten times by jerking the test leads straight out. In these and the remaining tests, do this without releasing any manual attachment mechanisms. On sample 3, remove ten times by jerking downward at 45° from horizontal; sample 4, upward at 45° ten times; sample 5, left 45° ten times; sample 6, right 45° ten times. Check for opens and damage in the test cord, clips, and connectors. Failure consists of structural damage, open circuits through the connector, or inability of the terminal blocks to pass the torsional, lateral loading, axial pullout, test connector reliability, or dielectric strength tests described in paragraphs (g)(3)(ii) through (g)(3)(v)(B), and paragraph (g)(4) of this section.
(iv) Use craft tools such as scissors, diagonal cutters, and long nose pliers to loosen and tighten screws where the binding post design does not prohibit the possibility. Failure consists of severe structural damage.
(h)
(2)
(ii) The cross-connect module manufacturer shall make available any nonstandard tools and test apparatus which are required for splicing, placing of jumpers, and the performance of maintenance operations.
(iii) The module shall be designed so that a typical outside plant technician using tools shall be able to terminate cross-connect wire on terminals, or to remove them without causing electrical shorts between any other terminals.
(iv) The pair count sequence terminated on a module shall be easily visible and shall have numerals of at least 0.25 cm (0.10 in.) in height.
(v) Feeder terminations shall be easily distinguished from distribution terminations.
(vi) Tip and ring terminations shall be easily visible and shall be identifiable as described in paragraph (f)(2)(vi) of this section.
(vii) The preferred locations for cross-connect modules to be mounted inside a housing is the same as those for terminals and are described in paragraphs (f)(2)(vii) and (f)(2)(viii) of this section.
(3)
(ii) Special service markers shall be available for cross-connect modules as described in paragraph (f)(3)(iii) of this section.
(iii) Housings equipped with, or designed for, cross-connect modules shall contain a supply of cross-connect wire as described in paragraph (f)(3)(iv) of this section.
(i)
(2)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(3)
(ii)
(iii)
(iv)
(v)
(4)
(ii) The dielectric strength of a contact within the cross-connect module to contacts on either side shall be tested. The module shall be tested in a dry environment with an ac power source capable of supplying 8 kv at a rate of increase of 500 volts per second, a circuit breaker to open at breakdown, and a voltmeter to record the breakdown potential. Cross-connect modules shall be prepared in accordance with industry accepted splicing techniques with leads trimmed to approximately 38 cm (15 in.). The dielectric strength of each contact to the contacts on either side shall have an average dielectric strength of approximately 5.0 kv.
(5)
(ii) Twenty-five jumper connections shall be made on each of two contacts chosen at random from a representative sample in an assembled interface unit. After this test, these and surrounding contacts shall be inspected for damage such as cracks or chips in metal or plastic parts. Failure consists of structural damage, open circuits
(iii) Select six contacts at random in a representative interface. On each of these contacts attach any test cord included with the unit as specified under normal use of that cord and then remove the test cord as follows. On sample 1, remove the cord normally ten times. On sample 2, remove the clip ten times by jerking the test leads straight out. In these and the remaining tests, do this without releasing any manual attachment mechanisms. On sample 3, remove ten times by jerking downward at 45° from horizontal; sample 4, upward 45° ten times; sample 5, left 45° ten times; sample 6, right 45° ten times. Check for opens and damage in the test cord, clips, and cross-connect modules. Failure consists of structural damage, open circuits through the connector, or inability of module to pass the test connector reliability, jumper wire pullout, and dielectric strength tests described in paragraphs (i)(3)(ii), (i)(3)(iv), and (i)(4)(ii) of this section.
(j)
(ii) The date of manufacture, model number, serial number and RUS assigned designations shall be placed on a decal inside housings. The product identification nomenclature must correspond with the nomenclature used in the manufacturer's quality assurance program.
(2)
(ii) The product with all the necessary parts shall be shipped in one container unless significant advantages to the user can be obtained otherwise. Packaging of parts in the carton shall be such that the parts become available in the order in which they are needed. The package should be clearly marked as to which end to open. Packages shall be clearly labeled, and correspond to the names given in the instructions.
(iii) Products packed in shipping containers shall be cushioned, blocked, braced, and anchored to prevent movement and damage.
(iv) All products shall be secured to pallets with non-metallic strapping. The strapping and the manner employed shall be of sufficient quantity, width, and thickness to preclude failure during transit and handling.
(v) The use of shrink or stretch film to secure the load to the pallet is permitted. However, such film must be applied over the required strapping.
(vi) Containers that are too large or heavy to be palletized, such as crates, shall be shipped in their own containers. When practical, these containers shall be provided with skids to facilitate fork-lift handling.
(vii) When packaged, the outer cartons shall meet the requirements of the Uniform Freight Classification and the National Motor Freight Classification.
(3)
(ii) The RUS assigned housing designation shall be stamped or marked on the outside of the package container with letter and number sizes large enough for easy identification.
(iii) Each package shall be marked with its approximate gross weight.
(iv) All containers carrying delicate or fragile items shall be marked to clearly identify this condition.
(v) All marking shall be clear, legible, and as large as space permits.
7 U.S.C. 901
As used in this part:
(1) For each retirement unit:
(i) The name or description of the unit, or both;
(ii) The location of the unit;
(iii) The date the unit was placed in service;
(iv) The cost of the unit as set forth in § 1767.16 (b) and (c); and
(v) The plant control account to which the cost of the unit is charged.
(2) For each category of mass property:
(i) A general description of the property and quantity;
(ii) The quantity placed in service by vintage year;
(iii) The average cost as set forth in § 1767.16 (b) and (c); and
(iv) The plant control account to which the costs are charged.
(1) That such items will be included in a different period(s) for purposes of developing the rates the utility is authorized to charge for its utility services; or
(2) In the case of regulatory liabilities, that refunds to customers, not provided for in the other accounts, will be required.
(a) The standard form of RUS loan documents for electric borrowers requires that the borrower keep books, records, and accounts in which full and true entries will be made of all of the dealings, business and affairs of the borrower in accordance with the methods and principles of accounting of this part.
(b) This subpart implements these provisions of the RUS loan documents by prescribing the RUS USoA for electric borrowers and by providing accounting methodologies and procedures which are applicable to particular situations.
(a) Each RUS electric borrower must maintain and keep its books of accounts and all other books and records that support the entries in such books of accounts in accordance with §§ 1767.18-1767.31.
(b) Each RUS electric borrower shall maintain and keep its books of accounts and all other books and records which support the entries in such books of accounts in accordance with § 1767.41, Accounting Methods and Procedures Required of All RUS Borrowers, herein, which prescribes accounting principles to be applied to specific factual circumstances.
(a) No departures are to be made to the prescribed RUS USoA without the prior written approval of RUS. RUS grants a departure to any borrower electing to delay implementation of the functional (activity-based) accounting requirements of this part through December 31, 1997. Requests for departures from the RUS USoA shall be addressed, in writing, to the Director, Program Accounting Services Division (PASD).
(b) RUS borrowers subject to the jurisdiction of a state regulatory authority with jurisdiction over rates and/or accounting for electric utilities will not:
(1) Request approval of such authority to use accounting methodologies and principles that depart from the provisions herein; or
(2) File with such authority, any documents or information, including without limitation, any filings associated with the borrower's rates, based upon accounting methods and principles inconsistent with the provisions of this part.
(c) If any state regulatory authority with jurisdiction over an RUS borrower prescribes accounting methods or principles for the borrower that are inconsistent with the provisions of this part, the borrower must immediately notify the Director, BAD, and provide such documents, information, and reports as RUS may request to evaluate the impact that such accounting methods or principles may have on the interests of RUS.
(1) If RUS determines that the accounting methods and principles do not adversely impact RUS interests, RUS will permit the borrower to use the accounting methods and principles as prescribed by the state regulatory authority to comply with the provisions of the RUS loan documents.
(2) If RUS determines that the accounting methods and principles may adversely impact RUS's interests, RUS may require that, for the purposes of complying with provisions of RUS loan documents, including, without limitation, those provisions relating to financial coverage standards (e.g. “TIER”), the borrower continue to maintain books, records, and accounts in accordance with this subpart.
(i) RUS may, however, approve requests by the borrower to maintain such additional books, records, and accounts as necessary to comply with the requirements of the state regulatory authority.
(ii) Such approval will not waive, modify or amend the requirements of the RUS loan documents or of this subpart.
(d) RUS borrowers will not implement the provisions of Statement of Financial Accounting Standards (SFAS) No. 71, Accounting for the Effects of Certain Types of Regulation, SFAS No. 90, Regulated Enterprises—Accounting for Abandonments and Disallowances of Plant Costs, SFAS No. 92, Regulated Enterprises—Accounting for Phase-in Plans, without the prior written approval of RUS except as provided for in paragraphs (d)(1) through (d)(5) of this section. Requests for approval shall be addressed, in writing, to the Director, PASD. The specific deferrals set forth in paragraphs (d)(1) through (d)(5) of this section may be implemented without the prior written
(1) The deferral and amortization of prior service pension costs (See § 1767.41, Interpretation No. 606, Pension Costs), remapping expenses (See § 1767.41, Interpretation No. 613, Mapping Costs), and preliminary survey and investigation charges (See § 1767.17, Interpretation No. 111, Engineering Contracts for System Planning);
(2) The deferral of any current period expense or expenses, on a cumulative basis for the fiscal year, only if a borrower would have met each of its financial tests or coverage ratios that it has covenanted with RUS to meet for that fiscal year, had the deferral not been made;
(3) The deferral of any cost that will be fully amortized within the next 12 succeeding months;
(4) The accelerated amortization of any previously deferred expense; and
(5) The deferral of revenues coincident with a moratorium imposed by the National Rural Electric Cooperative Association on its Retirement and Security Program, provided, however, that the deferral is for the sole purpose of offsetting future pension costs.
(e) RUS will consider approval of specific departures from this part upon submission of:
(1) A detailed description of the proposed departure;
(2) The specific accounting journal entries that will be used including the account number and title, and the dollar amounts where appropriate;
(3) The total dollar amount of the departure and the impact on margins during the time period of the departure; and
(4) Any additional information RUS may deem necessary to adequately evaluate the borrower's request.
(f) RUS will, within 90 days of final receipt of this information, render a decision on the borrower's request for a departure from the prescribed RUS USoA.
(1) If, due to extenuating circumstances, RUS is unable to reach a decision within the required time period, RUS will notify the borrower of the delay within this same 90-day period, and provide a projected decision date.
(2) The requested departure from the prescribed RUS USoA must not be implemented until final approval is granted by RUS.
To maintain uniformity in accounting, borrowers must submit questions concerning interpretations of the RUS USoA, in writing, to the Director, BAD, for consideration and decision.
(a)
(2) Each entry shall be supported by such detailed information as will permit ready identification, analysis, and verification of all facts relevant thereto.
(3) The books and records referred to herein include not only accounting records in a limited technical sense, but all other records, such as minute books, stock books, reports, correspondence, memoranda, etc., which may be useful in developing the history of or facts regarding any transaction.
(4) No utility shall destroy any such books or records unless the destruction thereof is permitted by the rules and regulations of RUS in 7 CFR chapter XVII.
(5) In addition to the prescribed accounts, clearing accounts, temporary or experimental accounts, and subdivisions of any accounts, may be kept, provided the integrity of the prescribed accounts is not impaired.
(6) All amounts included in the accounts prescribed herein for electric plant and operating expenses shall be
(7) The arrangement or sequence of the accounts prescribed herein shall not be controlling as to the arrangement or sequence in report forms which may be prescribed by RUS.
(b)
(2) In certain instances, numbers have been skipped in order to allow for possible later expansion or to permit better coordination with the numbering system for other utility departments.
(3) The numbers prefixed to account titles are to be considered as parts of the titles.
(i) Each utility, however, may adopt, for its own purposes, a different system of account numbers provided that the numbers herein prescribed shall appear in the descriptive headings of the ledger accounts and in the various sources of original entry.
(ii) If a utility uses a different group of account numbers and it is not practicable to show the prescribed account numbers in the various sources of original entry, such reference to the prescribed account numbers may be omitted from the various sources of original entry.
(iii) Each utility using different account numbers for its own purposes shall keep readily available, a list of such account numbers which it uses and a reconciliation of such account numbers with the account numbers provided herein.
(iv) The utility's records shall be so kept as to permit ready analysis by prescribed accounts (by direct reference to sources of original entry to the extent practicable) and to permit preparation of financial and operating statements directly from such records at the end of each accounting period according to the prescribed accounts.
(c)
(2) Amounts applicable or assignable to specific utility departments shall be so segregated monthly.
(3) Each utility shall close its books at the end of each fiscal year unless otherwise authorized by RUS.
(d)
(e)
(2) The lists are intended to be representative, but not exhaustive.
(3) The appearance of an item in a list warrants the inclusion of the item in the account mentioned only when the text of the account also indicates inclusion inasmuch as the same item frequently appears in more than one list.
(4) The proper entry in each instance must be determined by the texts of the accounts.
(f)
(2) Those items related to the effects of events and transactions which have occurred during the current period and which are not typical or customary business activities of the company shall be considered extraordinary items.
(3) They will be events and transactions of significant effect which would not be expected to recur frequently and which would not be considered as recurring factors in any evaluation of the ordinary operating processes of business.
(i) In determining significance, items of a similar nature should be considered in the aggregate.
(ii) Dissimilar items should be considered individually; however, if they are few in number, they may be considered in the aggregate.
(iii) To be considered as extraordinary under the above guidelines, an item should be more than approximately 5 percent of income, computed before extraordinary items.
(iv) RUS approval must be obtained to treat an item of less than 5 percent, as extraordinary. (See Accounts 434 and 435.)
(g)
(i) Correction of an error in the financial statements of a prior year
(ii) Adjustments that result from realization of income tax benefits of preacquisition operating loss carryforwards of purchased subsidiaries.
(2) All other items of profit and loss recognized during the year shall be included in the determination of net income for that year.
(h)
(2) The utility is not required to anticipate minor items which would not appreciably affect the accounts.
(i)
(j)
(2) Such underlying data shall permit a reasonably accurate distribution to be made of the cost of labor charged initially to clearing accounts so that the total labor cost may be classified among construction, cost of removal, electric operating functions (steam generation, nuclear generation, hydraulic generation, transmission, distribution, etc.) and nonutility operations.
(k)
(i) This requires the inclusion, in its accounts, of all known transactions of appreciable amount which affect the accounts.
(ii) If bills covering such transactions have not been received or rendered, the amounts shall be estimated and appropriate adjustments made when the bills are received.
(2) When payments are made in advance for items such as insurance, rents, taxes, or interest, the amount applicable to future periods shall be charged to Account 165, Prepayments, and spread over the periods to which applicable, by credits to Account 165, and charges to the accounts appropriate for the expenditure.
(l)
(2) The term “plant” as used herein includes each generating station and each transmission line or appropriate group of transmission lines.
(m)
(2) It is not intended that proprietary and similar accounts which apply to the utility as a whole shall be departmentalized.
(n)
(2) The statements may be required to show the general nature of the transactions, the amounts involved therein and the amounts included in each account prescribed herein with respect to such transactions. Transactions with associated companies shall be recorded in the appropriate accounts for transactions of the same nature. Nothing herein contained, however, shall be construed as restraining the utility from subdividing accounts for the purpose of recording separately transactions with associated companies.
(o)
(2) Contingent liabilities include items which may, under certain conditions, become obligations of the utility but which are neither direct nor assumed liabilities at the date of the balance sheet. The utility shall be prepared to give a complete statement of significant contingent assets and liabilities (including cumulative dividends on preference stock) in its audited financial statements; its RUS Form 7, Financial and Statistical Report, or its RUS Form 12, Operating Report—Financial; and at such other times as may be requested by RUS.
(p)
(1) The actual legitimate original cost of the project, including the original cost of the original project, the original cost of additions thereto and betterments thereof, and credits for property retired from service, as determined under RUS's regulations in 7 CFR chapter XVII;
(2) The charges for operation and maintenance of the project property directly assignable to the project;
(3) The credits and debits to the depreciation and amortization accounts, and the balances in such accounts; and
(4) The credits and debits to the operating revenue, income, and retained earnings accounts that can be identified with and directly assigned to the project.
The purpose of this instruction is to insure that accounts or records are currently maintained by each borrower from which reports may be made to RUS for use in determining the net investment in each licensed project. The instruction covers only the debit and credit items appearing in the borrower's accounts which may be identified with and assigned directly to any project. In the determination of the net investment, allocations of items affecting the net investment may be required where direct assignment is not practicable.
(q)
(ii) The premium will be recorded in Account 225, Unamortized Premium on Long-Term Debt, the discount will be recorded in Account 226, Unamortized Discount on Long-Term Debt—Debit, and the expense of issuance shall be recorded in Account 181, Unamortized Debt Expense.
(iii) The premium, discount and expense shall be amortized over the life of the respective issues under a plan which will distribute the amounts equitably over the life of the securities.
(A) The amortization shall be charged or credited on a monthly basis with the amounts relating to discount and expense charged to Account 428, Amortization of Debt Discount and Expense.
(B) The amounts relating to premium shall be credited to Account 429, Amortization of Premium on Debt—Credit.
(2)
(ii) The utility shall amortize the recorded amounts equally on a monthly basis over the remaining life of the respective security issues (old original debt).
(iii) The amount so amortized shall be charged to Account 428.1, Amortization of Loss on Reacquired Debt, or credited to Account 429.1, Amortization of Gain on Reacquired Debt—Credit, as appropriate.
(3)
(ii) The utility may elect to account for such amounts as follows:
(A) Write them off immediately when the amounts are insignificant;
(B) Amortize them by equal monthly amounts over the remainder of the original life of the issue retired; or
(C) Amortize them by equal monthly amounts over the life of the new issue.
(iii) Once an election is made, it shall be applied on a consistent basis.
(iv) The amounts in paragraphs (q)(3)(ii)(A), (B), or (C) of this section shall be charged to Account 428.1, Amortization of Loss on Reacquired Debt, or credited to Account 429.1, Amortization of Gain on Reacquired Debt—Credit, as appropriate.
(4) Under methods in paragraphs (q)(3)(ii)(B) and (C) of this section, the increase or reduction in current income taxes resulting from the reacquisition should be apportioned over the remainder of the original life of the issued retired or over the life of the new issue, as appropriate, as directed more specifically in paragraphs (q)(5) and (6) of this section.
(5) When the utility recognizes the loss in the year of reacquisition as a tax deduction, Account 410.1, Provision for Deferred Income Taxes, Utility Operating Income, shall be debited and Account 283, Accumulated Deferred Income Taxes—Other, shall be credited with the amount of the related tax effect, such amount to be allocated to the periods affected in accordance with the provisions of Account 283.
(6) When the utility chooses to recognize the gain in the year of reacquisition as a taxable gain, Account 411.1, Provision for Deferred Income Taxes—Credit, Utility Operating Income, shall be debited with the amount of the related tax effect, such amount to be allocated to the periods affected in accordance with the provisions of Account 190, Accumulated Deferred Income Taxes.
(7) When the utility chooses to use the optional privilege of deferring the tax on the gain attributable to the reacquisition of debt by reducing the depreciable basis of utility property for tax purposes, pursuant to Section 108 of the Internal Revenue Code (26 U.S.C. 108), the related tax effects shall be deferred as the income is recognized for accounting purposes, and the deferred amounts shall be amortized over the life of the associated property on a vintage year basis.
(i) Account 410.1, Provision for Deferred Income Taxes, Utility Operating Income, shall be debited, and Account 282, Accumulated Deferred Income Taxes—Other Property, shall be credited with an amount equal to the estimated income tax effect applicable to the portion of the income, attributable to reacquired debt, recognized for accounting purposes during the period.
(ii) Account 282 shall be debited and Account 411.1, Provision for Deferred Income Taxes—Credit, Utility Operating Income, shall be credited with an
(8) The tax effects relating to gain or loss shall be allocated as above to utility operations except in cases where a portion of the debt reacquired is directly applicable to nonutility operations.
(i) In that event, the related portion of the tax effects shall be allocated to nonutility operations.
(ii) Where it can be established that reacquired debt is generally applicable to both utility and nonutility operations, the tax effects shall be allocated between utility and nonutility operations based on the ratio of net investment in utility plant to net investment in nonutility plant.
(9) Premium, discount, or expense on debt shall not be included as an element in the cost of construction or acquisition of property (tangible or intangible), except under the provisions of Account 432, Allowance for Borrowed Funds Used During Construction—Credit.
(10)
(i) The difference between the amount paid upon reacquisition of any long-term debt and the face value, adjusted for unamortized discount, expenses or premium, as the case may be, applicable to the debt redeemed shall be recognized currently in income and recorded in Account 421, Miscellaneous Nonoperating Income, or Account 426.5, Other Deductions.
(ii) When this alternate method of accounting is used, the utility shall include a footnote to each financial statement, prepared for public use, explaining why this method is being used along with the treatment given for ratemaking purposes.
(r)
(2) Comprehensive interperiod tax allocation should be followed whenever transactions enter into the determination of pretax accounting income for the period even though some transactions may affect the determination of taxes payable in a different period.
(3) Utilities are not required to utilize comprehensive interperiod income tax allocation until the deferred income taxes are included as an expense in the rate level by the regulatory authority having rate jurisdiction over the utility.
(4) Where comprehensive interperiod tax allocation accounting is not practiced the utility shall include as a note to each financial statement, prepared for public use, a footnote explanation setting forth the utility's accounting policies with respect to interperiod tax allocation and describing the treatment for rate making purposes of the tax timing differences by regulatory authorities having rate jurisdiction.
(5) Should the utility be subject to more than one agency having rate jurisdiction, its accounts shall appropriately reflect the ratemaking treatment (deferral or flow through) of each jurisdiction.
(6) Once comprehensive interperiod tax allocation has been initiated either in whole or in part it shall be practiced on a consistent basis and shall not be changed or discontinued without prior RUS approval.
(7) Tax effects deferred currently will be recorded as deferred debits or deferred credits in Accounts 190, Accumulated Deferred Income Taxes; 281, Accumulated Deferred Income Taxes—Accelerated Amortization Property; 282, Accumulated Deferred Income Taxes—
(8) The resulting amounts recorded in these accounts shall be disposed of as prescribed in this system of accounts or as otherwise authorized by RUS.
(s)
(i) The lease transfers ownership of the property to the lessee by the end of the lease term.
(ii) The lease contains a bargain purchase option.
(iii) The lease term is equal to 75 percent or more of the estimated economic life of the leased property. However, if the beginning of the lease term falls within the last 25 percent of the total estimated economic life of the leased property, including earlier years of use, this criterion shall not be used for purposes of classifying the lease.
(iv) The present value at the beginning of the lease term of the minimum lease payments, excluding that portion of the payments representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon, equals or exceed 90 percent of the excess of the fair value of the leased property to the lessor at the inception of the lease over any related investment tax credit retained by the lessor and expected to be realized by lessor.
(A) However, if the beginning of the lease term falls within the last 25 percent of the total estimated economic life of the leased property, including earlier years of use, this criterion shall not be used for purposes of classifying the lease.
(B) The lessee utility shall compute the present value of the minimum lease payments using its incremental borrowing rate, unless it is practicable for the utility to learn the implicit rate computed by the lessor, and the implicit rate computed by the lessor is less than the lessee's incremental borrowing rate. If both of those conditions are met, the lessee shall use the implicit rate.
(2) If, at any time, the lessee and lessor agree to change the provisions of the lease, other than by renewing the lease or extending its term, in a manner that would have resulted in a different classification of the lease under the criteria in paragraph (s)(1) of this section had the changed terms been in effect at the inception of the lease, the revised agreement shall be considered as a new agreement over its term, and the criteria in paragraph (s)(1) of this section shall be applied for purposes of the expiration of the existing lease term, such as the exercise of a lease renewal option other than those already included in the lease term, shall be considered as a new agreement and shall be classified according to the above provision. Changes in estimates (for example, changes in estimates of the economic life or of the residual value of the leased property) or changes in circumstances (for example, default by the lessee) shall not give rise to a new classification of a lease for accounting purposes.
(t)
(2) The utility shall record a capital lease as an asset in Account 101.1, Property Under Capital Leases, and Account 120.6, Nuclear Fuel Under Capital Leases; as appropriate, and an obligation in Account 227, Obligations Under Capital Leases—Noncurrent, or Account 243, Obligations Under Capital Leases—Current, at an amount equal to the present value at the beginning of the lease term of minimum lease payments during the lease term, excluding that portion of the payments representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, together with any profit thereon. However, if the amount so determined exceeds the fair value of the leased property at the inception of the lease, the amount recorded as the asset and obligation shall be the fair value.
(3) Rental payments on all leases shall be charged to rent expense, fuel expense, construction work in progress, or other appropriate accounts as they become payable.
(4) For a capital lease, for each period during the lease term, the amounts recorded for the asset and obligation shall be reduced by an amount equal to the portion of each lease payment that
(u)
(2) When purchased, allowances become eligible for use in different years, and the allocation of the purchase cost cannot be determined by fair value, the purchase cost allocated to allowances of each vintage shall be determined through use of a present-value based measurement. The interest rate used in the present-value measurement shall be the utility's incremental borrowing rate, in the month in which the allowances are acquired, for a loan with a term similar to the period that it will hold the allowances and in an amount equal to the purchase price.
(3) The underlying records supporting Account 158.1 and Account 158.2 shall be maintained in sufficient detail so as to provide the number of allowances and the related cost by vintage year.
(4) Issuances from inventory included in Account 158.1 and Account 158.2 shall be accounted for on a vintage basis using a monthly weighted-average method of cost determination. The cost of eligible allowances not used in the current year shall be transferred to the vintage for the immediately following year.
(5) Account 158.1 shall be credited and Account 509, Allowances, debited so that the cost of the allowances to be remitted for the year is charged to expense monthly based on each month's emissions. This may, in certain circumstances, require allocation of the cost of an allowance between months on a fractional basis.
(6) In any period in which actual emissions exceed the amount allowable based on eligible allowances owned, the utility shall estimate the cost to acquire the additional allowances needed and charge Account 158.1 with the estimated cost. This estimated cost of future allowance acquisitions shall be credited to Account 158.1 and charged to Account 509 in the same accounting period as the related charge to Account 158.1. Should the actual cost of these allowances differ from the estimated cost, the differences shall be recognized in the then-current period's inventory issuance cost.
(7) Any penalties assessed by the Environmental Protection Agency for the emission of excess pollutants shall be charged to Account 426.3, Penalties.
(8) Gains on dispositions of allowances, other than allowances held for speculative purposes, shall be accounted for as follows. First, if there is uncertainty as to the regulatory treatment, the gain shall be deferred in Account 254, Other Regulatory Liabilities, pending resolution of the uncertainty. Second, if there is certainty as to the existence of a regulatory liability, the gain will be credited to Account 254, with subsequent recognition in income when reductions in charges to customers occur or the liability is otherwise satisfied. Third, all other gains will be credited to Account 411.8, Gains from Disposition of Allowances. Losses on disposition of allowances, other than allowances held for speculative purposes, shall be accounted for as follows. Losses that qualify as regulatory assets shall be charged directly to Account 182.3, Other Regulatory Assets. All other losses shall be charged to Account 411.9, Losses from Disposition of Allowances. (See the definition of regulatory assets and liabilities.) Gains or losses on disposition of allowances held for speculative purposes shall be recognized in Account 421, Miscellaneous Nonoperating Income, or Account 426.5, Other Deductions, as appropriate.
(9) The costs and benefits of exchange-traded allowance futures contracts used to protect the utility from the risk of unfavorable price changes (“hedging transactions”) shall be deferred in Account 186, Miscellaneous Deferred Debits, or Account 253, Other Deferred Credits, as appropriate. Such deferred amounts shall be included in Account 158.1, Allowance Inventory, in the month in which the related allowances are acquired, sold or otherwise disposed of. Where the costs or benefits of hedging transactions are not identifiable with specific allowances, the amounts shall be included in Account 158.1 when the futures contract is closed. The costs and benefits of exchange-traded allowance futures contracts entered into as a speculating activity shall be charged or credited to Account 421, Miscellaneous Nonoperating Income, or Account 426.5, Other Deductions, as appropriate.
(a)
(2) The cost to the utility of its unclassified plant shall be ascertained by analysis of the utility's records. Adjustments shall not be made to record in utility plant accounts amounts previously charged to operating expenses or to income deductions in accordance with the USoA in effect at the time or in accordance with the discretion of management as exercised under a USoA, or under accounting practices previously followed.
(3) The detailed electric plant accounts (301 to 399, inclusive) shall be stated on the basis of cost to the utility of plant constructed by it and the original cost, estimated if not known, of plant acquired as an operating unit or system. The difference between the original cost, as above, and the cost to the utility of electric plant after giving effect to any accumulated provision for depreciation or amortization shall be recorded in Account 114, Electric Plant Acquisition Adjustments. The original cost of electric plant shall be determined by analysis of the utility's records or those of the predecessor or vendor companies with respect to electric plant previously acquired as operating units or systems and the difference between the original cost so determined, less accumulated provisions for depreciation and amortization and the cost to the utility with necessary adjustments for retirements from date of acquisition, shall be entered in Account 114, Electric Plant Acquisition Adjustments. Any difference between the cost of electric plant and its book cost, when not properly includible in other accounts, shall be recorded in Account 116, Other Electric Plant Adjustments.
(b)
(2) When the consideration given for property is other than cash, the value of such consideration shall be determined on a cash basis (see, however, the definition of cost in § 1767.10). In the entry recording such transition, the actual consideration shall be described with sufficient particularity to identify it. The utility shall be prepared to furnish RUS the particulars of
(3) When property is purchased under a plan involving deferred payments, no charge shall be made to the electric plant accounts for interest, insurance, or other expenditures occasioned solely by such form of payment.
(4) The electric plant accounts shall not include the cost or other value of electric plant contributed to the company. Contributions in the form of money or its equivalent toward the construction of electric plant shall be credited to accounts charged with the cost of such construction. Plant constructed from contributions of cash or its equivalent shall be shown as a reduction to gross plant constructed when assembling cost data in work orders for posting to plant ledgers of accounts. The accumulated gross costs of plant accumulated in the work order shall be recorded as a debit in the plant ledger of accounts along with the related amount of contributions concurrently be recorded as a credit.
(c)
(1)
(2)
(3)
The cost of individual items of equipment of small value (for example, $500 or less) or of short life, including small portable tools and implements, shall not be charged to utility plant accounts unless the correctness of the accounting therefor is verified by current inventories. The cost shall be charged to the appropriate operating expense or clearing accounts, according to the use of such items, or, if such items are consumed directly in construction work, the cost shall be included as part of the cost of the construction.
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(i) The formula and elements for the computation of the allowance for funds used during construction shall be:
(ii) The rate shall be determined annually.
(A) The balance for long-term debt, preferred stock, and patronage capital assigned shall be the actual book balances as of the end of the prior year.
(B) The cost rate for long-term debt and preferred stock shall be the weighted average cost.
(C) The cost rate for patronage capital assigned shall be the entity's incremental borrowing rate.
(D) The short-term debt balances and related cost and the average balance for construction work in progress plus nuclear fuel in process of refinement, conversion, enrichment, and fabrication shall be estimated for the current year with appropriate adjustments as actual data becomes available.
When only a portion of a plant or project is placed in operation or is completed and ready for service but the construction work as a whole is incomplete, that part of the cost of the property placed in operation or ready for service shall be treated as “Electric Plant in Service,” and an allowance for funds used during construction thereon as a charge to construction shall cease. Allowance for funds used during construction on that part of the cost of the plant which is incomplete may continue to be charged to construction until such time as it is placed in operation or is ready for service, except as limited in Item in paragraph (c)(17) of this section.
(18)
(i) The earnings shall include revenues received or earned for power produced by generating plants during the construction period and sold or used by the utility.
(A) Where such power is sold to an independent purchaser before intermingling with power generated by other plants, the credit shall consist of the selling price of the energy.
(B) Where the power generated by a plant under construction is delivered to the utility's electric system for distribution and sale, or is delivered to an associated company, or is delivered to and used by the utility for purposes other than distribution and sale (for manufacturing or industrial use, for example), the credit shall be the fair value of the energy so delivered.
(C) Revenue shall also include rentals for lands, buildings, and other property, and miscellaneous receipts not properly includible in other accounts.
(ii) Expenses shall consist of the cost of operating the power plant, and other costs incident to the production and delivery of the power for which construction is credited under paragraph (c)(18)(i) of this section, including the cost of repairs and other expenses of operating and maintaining lands, buildings, and other property, and other miscellaneous and like expenses not properly includible in other accounts.
(19)
(ii) Once plant is placed in service, the capitalization of training costs shall cease and subsequent training costs shall be expensed. (See § 1767.17 (d).)
(20)
(ii) Studies relative to facilities in service shall be charged to Account 183, Preliminary Survey and Investigation Charges.
(d)
(2) As far as practicable, the determination of payroll charges includible in construction overheads shall be based on time card distributions thereof.
(i) Where this procedure is impractical, special studies shall be made periodically of the time of supervisory employees devoted to construction activities to the end that only such overhead costs as have a definite relation to construction shall be capitalized.
(ii) The addition to direct construction cost of arbitrary percentages or amounts to cover assumed overhead costs is not permitted.
(3) The records supporting the entries for overhead constructions costs shall be so kept as to show:
(i) The total amount of each overhead for each year;
(ii) The nature and amount of each overhead expenditure charged to each construction work order and to each electric plant account; and
(iii) The bases of distribution of such costs.
(e)
(2) The accounting for the acquisition shall then be completed as follows:
(i) The original cost of plant, estimated if not known, shall be credited to Account 102, Electric Plant Purchased or Sold, and concurrently charged to the appropriate electric plant in service accounts and to Account 104, Electric Plant Leased to Others; Account 105, Electric Plant Held for Future Use; and Account 107, Construction Work in Progress—Electric, as appropriate.
(ii) The depreciation and amortization applicable to the original cost of the properties purchased shall be charged to Account 102, Electric Plant Purchased or Sold, and concurrently credited to the appropriate account for accumulated provision for depreciation or amortization.
(iii) The cost to the utility of any property includible in Account 121, Nonutility Property, shall be transferred thereto.
(iv) The amount remaining in Account 102, Electric Plant Purchased or Sold, shall then be closed to Account 114, Electric Plant Acquisition Adjustments.
(3) If property acquired in the purchase of an operating unit or system is in such physical condition when acquired that it is necessary to substantially rehabilitate it in order to bring the property up to the standards of the utility, the cost of such work, except replacements, shall be accounted for as a part of the purchase price of the property.
(4) When any property acquired as an operating unit or system includes duplicate or other plant which will be retired by the accounting utility in the
(5) In connection with the acquisition of electric plant constituting an operating unit or system, the utility shall procure, if possible, all existing records relating to the property acquired or certified copies thereof, and shall preserve such records in conformity with regulations or practices governing the preservation of records of its own construction.
(6) When electric plant constituting an operating unit or system is sold, conveyed, or transferred to another by sale, merger, consolidation, or otherwise, the book cost of the property sold or transferred to another shall be credited to the appropriate utility plant accounts, including amounts carried in Account 114, Electric Plant Acquisition Adjustments, and the amounts (estimated if not known) carried with respect thereto in the accounts for accumulated provision for depreciation and amortization and in Account 252, Customer Advances for Construction, shall be charged to such accounts and contra entries made to Account 102, Electric Plant Purchased or Sold. Unless otherwise ordered by RUS, the difference, if any, between:
(i) The net amount of debits and credits, and
(ii) The consideration received for the property (less commissions and other expenses of making the sale) shall be included in Account 421.1, Gain on Disposition of Property, or Account 421.2, Loss on Disposition of Property. (See Account 102, Electric Plant Purchased or Sold.)
In cases where existing utilities merge or consolidate because of financial or operating reasons or statutory requirements rather than as a means of transferring title of purchased properties to a new owner, the accounts of the constituent utilities, with the approval of RUS, may be combined. In the event original cost has not been determined, the resulting utility shall proceed to determine such cost as outlined herein.
(f)
(i) If the service life of the improvements is terminable by action of the lease, the cost, less net salvage, of the improvements shall be spread over the life of the lease by charges to Account 404, Amortization of Limited-Term Electric Plant.
(ii) If the service life is not terminated by action of the lease but by depreciation proper, the cost of the improvements, less net salvage, shall be accounted for as depreciable plant. The provisions of (1) are applicable to property leased under either capital leases or operating leases.
(2) If improvements made to property leased for a period of more than one year are of relatively minor cost, or if the lease is for a period of not more than one year, the cost of the improvements shall be charged to the account in which the rent is included, either directly or by amortization thereof.
(g)
(i) Do not include in the accounts for land and land rights and rights-of-way costs incurred in connection with first clearing and grading of land and rights-of-way and the damage costs associated with the construction and installation of plant.
(ii) Such costs shall be included in the appropriate plant accounts directly benefited.
(2) Where special assessments for public improvements provide for deferred payments, the full amount of the assessments shall be charged to the appropriate land account and the unpaid balance shall be carried in an appropriate liability account.
(i) Interest on unpaid balances shall be charged to the appropriate interest account.
(ii) If any part of the cost of public improvements is included in the general tax levy, the amount thereof shall be charged to the appropriate tax account.
(3) The net profit from the sale of timber, cord wood, sand, gravel, other resources or other property acquired with the rights-of-way or other lands shall be credited to the appropriate plant accounts to which related. Where land is held for a considerable period of time and timber and other natural resources on the land at the time of purchase increase in value, the net profit (after giving effect to the cost of the natural resources) from the sale of timber or its products or other natural resources shall be credited to the appropriate utility operating income account when such land has been recorded in Account 105, Electric Plant Held for Future Use, or classified as plant in service, otherwise to Account 421, Miscellaneous Nonoperating Income.
(4) Separate entries shall be made for the acquisition, transfer, or retirement of each parcel of land, and each land right (except rights-of-way for distribution lines), or water right, having a life of more than one year.
(i) A record shall be maintained showing the nature of ownership, full legal description, area, map reference, purpose for which used, city, county, and tax district on which situated, from whom purchased or to whom sold, payment given or received, other costs, contract date and number, date of recording of deed, and book and page of record.
(ii) Entries transferring or retiring land or land rights shall refer to the original entry recording its acquisition.
(5) Any difference between the amount received from the sale of land or land rights, less agents’ commissions and other costs incident to the sale, and the book cost of such land or rights, shall be included in Account 411.6, Gains from Disposition of Utility Plant, or 411.7, Losses from Disposition of Utility Plant, when such property has been recorded in Account 105, Electric Plant Held for Future Use, otherwise to Account 421.1, Gain on Disposition of Property, or 421.2, Loss on Disposition of Property, as appropriate, unless a reserve therefor has been authorized and provided. Appropriate adjustments of the accounts shall be made with respect to any structures or improvements located on land sold.
(6) The cost of buildings and other improvements (other than public improvements) shall not be included in the land accounts. If, at the time of acquisition of an interest in land, such interest extends to buildings or other improvements (other than public improvements) which are then devoted to utility operations, the land and improvements shall be separately appraised and a cost allocated to land and buildings or improvements on the basis of the appraisals. If the improvements are removed or wrecked without being used in operations, the cost of removing or wrecking shall be charged and the salvage credited to the account in which the cost of land is recorded.
(7) When the purchase of land for electric operations requires the purchase of more land than needed for such purposes, the charge to the specific land account shall be based upon the cost of the land purchased, less the fair market value of that portion of the land which is not to be used in utility operations. The portion of the cost measured by the fair market value of the land not to be used shall be included in Account 105, Electric Plant Held for Future Use, or Account 121, Nonutility Property, as appropriate.
(8) Provisions shall be made for amortizing amounts carried in the accounts for limited-term interest in land so as to apportion equitably the cost of each interest over the life thereof. (See Account 111, Accumulated Provision for Amortization of Electric Utility Plant, and Account 404, Amortization of Limited-Term Electric Plant.)
(9) The items of cost to be included in the accounts for land and land rights are as follows:
(i) Bulkheads, buried, not requiring maintenance or replacement;
(ii) First cost of acquisition including mortgages and other liens assumed (but not subsequent interest thereon);
(iii) Condemnation proceedings, including court and counsel costs;
(iv) Consents and abutting damages;
(v) Conveyancers’ and notaries’ fees;
(vi) Fees, commissions, and salaries to brokers, agents, and other in connection with the acquisition of the land or land rights;
(vii) Leases, cost of voiding upon purchase to secure possession of land;
(viii) Removing, relocating, or reconstructing property of others, such as buildings, highways, railroads, bridges, cemeteries, churches, telephone and power lines, etc., in order to acquire quiet possession;
(ix) Retaining walls unless identified with structures;
(x) Special assessments levied by public authorities for public improvements on the basis of benefits for new roads, new bridges, new sewers, new curbing, new pavements, and other public improvements, but not taxes levied to provide for the maintenance of such improvements;
(xi) Surveys in connection with the acquisition, but not amounts paid for topographical surveys and maps where such costs are attributable to structures or plant equipment erected or to be erected or installed on such land;
(xii) Taxes assumed, accrued to date of transfer of title;
(xiii) Title, examining, clearing, insuring, and registering in connection with the acquisition and defending against claims relating to the period prior to the acquisition;
(xiv) Appraisals prior to closing title;
(xv) Cost of dealing with distributees or legatees residing outside of the state or county, such as recording power of attorney, recording will or exemplification of will, recording satisfaction of state tax;
(xvi) Filing satisfaction of mortgage;
(xvii) Documentary stamps;
(xviii) Photographs of property at acquisition;
(xix) Fees and expenses incurred in the acquisition of water rights and grants;
(xx) Cost of fill to extend bulkhead line over land under water, where riparian rights are held, which is not occasioned by the erection of a structure;
(xxi) Sidewalks and curbs constructed by the utility on public property; and
(xxii) Labor and expenses in connection with securing rights of way, where performed by company employees and company agents.
(h)
(2) Also include those costs incurred in connection with the first clearing and grading of land and rights-of-way and the damage costs associated with construction and installation of plant.
(3) The cost of specially provided foundations not intended to outlast the machinery or apparatus for which provided, and the cost of angle irons, and castings installed at the base of an item of equipment, shall be charged to the same account as the cost of the machinery, apparatus, or equipment.
(4) Minor buildings and structures, such as valve towers, patrolmen's towers, telephone stations, fish and wildlife, and recreation facilities which are used directly in connection with or form a part of a reservoir, dam or waterway shall be considered a part of the facility in connection with which constructed or operated and the cost thereof accounted for accordingly.
(5) Where furnaces and boilers are used primarily for furnishing steam for some particular department and only incidentally for furnishing steam for heating a building and operating the equipment therein, the entire cost of such furnaces and boilers shall be charged to the appropriate plant account, and no part to the building account.
(6) Where the structure of a dam forms also the foundation of the power plant building, such foundation shall be considered a part of the dam.
(7) The cost of disposing of materials excavated in connection with construction of structures shall be considered as a part of the cost of such work, except when such material is used for filling, the cost of loading, hauling, and dumping shall be equitably apportioned between the work in connection with which the removal occurs and the work in connection with which the material is used; and when such material is sold, the net amount realized from such sales shall be credited to the work in connection with which the removal occurs. If the amount realized from the sale of excavated materials exceeds the removal costs and the costs in connection with the sale, the excess shall be credited to the land account in which the site is carried.
(8) Lighting or other fixtures temporarily attached to building for purposes of display or demonstration shall not be included in the cost of the building but in the appropriate equipment account.
(9) The items of cost to be included in the accounts for structures and improvements are as follows:
(i) Architects’ plans and specifications including supervision;
(ii) Ash pits (when located within the building);
(iii) Athletic field structures and improvements;.
(iv) Boilers, furnaces, piping, wiring, fixtures, and machinery for heating, lighting, signaling, ventilating, and air conditioning systems, plumbing, vacuum cleaning systems, incinerator and smoke pipe, flues, etc;
(v) Bulkheads, including dredging, riprap fill, piling, decking, concrete, fenders, etc., when exposed and subject to maintenance and replacement;
(vi) Chimneys;
(vii) Coal bins and bunkers;
(viii) Commissions and fees to brokers, agents, architects and others;
(ix) Conduit (not to be removed) with its contents;
(x) Damages to abutting property during construction;
(xi) Docks;
(xii) Door checks and door stops;
(xiii) Drainage and sewerage systems;
(xiv) Elevators, cranes, hoists, etc., and the machinery for operating them;
(xv) Excavation, including shoring, bracing, bridging, refill and disposal of excess excavated material, cofferdams around foundation, pumping water from cofferdams during construction and test borings;
(xvi) Fences and fence curbs (not including protective fences isolating items of equipment, which shall be charged to the appropriate equipment accounts);
(xvii) Fire protection systems when forming a part of a structure;
(xviii) Flagpole;
(xix) Floor covering (permanently attached);
(xx) Foundations and piers for machinery, constructed as a permanent part of a building or other item listed herein;
(xxi) Grading and clearing when directly occasioned by the building of a structure;
(xxii) Intrasite communication system, poles, pole fixtures, wires, and cable;
(xxiii) Landscaping, lawns, shrubbery, etc.;
(xxiv) Leases, voiding upon purchase to secure possession of structures;
(xxv) Leased property, expenditures on;
(xxvi) Lighting fixtures and outside lighting system;
(xxvii) Mailchutes when part of a building;
(xxviii) Marquee, permanently attached to the building;
(xxix) Painting, first cost;
(xxx) Permanent paving, concrete, brick, flagstone, asphalt, etc., within the property lines;
(xxxi) Partitions, including movable;
(xxxii) Permits and privileges;
(xxxiii) Platforms, railings and gratings when constructed as a part of a structure;
(xxxiv) Power boards for services to a building;
(xxxv) Refrigerating systems for general use;
(xxxvi) Retaining walls except when identified with land;
(xxxvii) Roadways, railroads, bridges, and trestles intrasite except railroads provided for in equipment accounts;
(xxxviii) Roofs;
(xxxix) Scales, connected to and forming a part of a structure;
(xl) Screens;
(xli) Sewer systems, for general use;
(xlii) Sidewalks, culverts, curbs and streets constructed by the utility on its property;
(xliii) Sprinkling systems;
(xliv) Sump pumps and pits;
(xlv) Stacks—brick, steel, or concrete, when set on foundation forming part of general foundation and steelwork of a building;
(xlvi) Steel inspection during construction;
(xlvii) Storage facilities constituting a part of a building;
(xlviii) Storm doors and windows;
(xlix) Subways, areaways, and tunnels, directly connected to and forming part of a structure;
(l) Tanks, constructed as part of a building or as a distinct structural unit;
(li) Temporary heating during construction (net cost);
(lii) Temporary water connection during construction (net cost);
(liii) Temporary shanties and other facilities used during construction (net cost);
(liv) Topographical maps;
(lv) Tunnels, intake and discharge, when constructed as part of a structure, including sluice gates, and those constructed to house mains;
(lvi) Vaults constructed as part of a building;
(lvii) Watchmen's sheds and clock systems (net cost when used during construction only);
(lviii) Water basins or reservoirs;
(lix) Water front improvements;
(lx) Water meters and supply system for a building or for general company purposes;
(lxi) Water supply piping, hydrants, and wells;
(lxii) Wharves;
(lxiii) Window shades and ventilators;
(lxiv) Yard drainage system;
(lxv) Yard lighting system; and
(lxvi) Yard surfacing, gravel, concrete, or oil (First cost only).
Structures and improvements accounts shall be credited with the cost of coal bunkers, stacks, foundations, subways, and tunnels, the use of which has terminated with the removal of the equipment with which they are associated even though they have not been physically removed.
(i)
(2) Also include those costs incurred in connection with the first clearing and grading of land and rights-of-way and the damage costs associated with construction and installation of plant.
(3) Exclude from equipment accounts hand and other portable tools, which are likely to be lost or stolen or which have relatively small value (for example, $500 or less) or short life, unless the correctness of the accounting therefor as electric plant is verified by current inventories.
(i) Special tools acquired and included in the purchase price of equipment shall be included in the appropriate plant accounts.
(ii) Portable drills and similar tool equipment when used in connection with the operation and maintenance of a particular plan or department, such as production, transmission, or distribution or in “stores”, shall be charged to the plant accounts appropriate for their use.
(4) The equipment accounts shall include angle irons and similar items which are installed at the base of an item of equipment, but piers and foundations which are designed to be as permanent as the buildings which house the equipment, or which are constructed as a part of the building and which cannot be removed without cutting into the walls, ceilings, or floors or, without in some way impairing the building, shall be included in the building accounts.
(5) The equipment accounts shall include the necessary costs of testing or running a plant or parts thereof during an experimental or test period prior to such plant becoming ready for or placed in service.
(i) The utility shall furnish RUS with full particulars of and justification for
(ii) Such particulars shall include a detailed operational and downtime log showing days of production, gross kilowatts generated by hourly increments, types, and periods of outages by hours with explanation thereof, beginning with the first date the equipment was either tested or synchronized on the line to the end of the test period.
(6) The cost of efficiency or other tests made subsequent to the date equipment becomes available for service shall be charged to the appropriate expense accounts, except that tests to determine whether equipment meets the specifications and requirements as to efficiency, or performance guaranteed by manufacturers, made after operations have commenced and within the period specified in the agreement or contract of purchase, may be charged to the appropriate electric plant accounts.
(j)
(2) The addition and retirement of retirement units shall be accounted for as follows:
(i) When a retirement unit is added to electric plant, the cost thereof shall be added to the appropriate electric plant account, except that when units are acquired in the acquisition of any electric plant constituting an operating system, they shall be accounted for as provided in paragraph (e) of this section.
(ii) When a retirement unit is retired from electric plant, with or without replacement, the book cost thereof shall be credited to the electric plant account in which it is included, determined in the manner set forth in Item in paragraph (j)(4) of this section. If the retirement unit is of a depreciable class, the book cost of the unit retired and credited to electric plant shall be charged to the accumulated provision for depreciation applicable to such property. The cost of removal and the salvage shall be charged or credited, as appropriate, to such depreciation account.
(3) The addition and retirement of minor items of property shall be accounted for as follows:
(i) When a minor item of property which did not previously exist is added to plant, the cost thereof shall be accounted for in the same manner as for the addition of a retirement unit, as set forth in Item in paragraph (j)(2)(i) of this section, if a substantial addition results, otherwise the charge shall be to the appropriate maintenance expense account.
(ii) When a minor item of property is retired and not replaced, the book cost thereof shall be credited to the electric plant account in which it is included; and, in the event the minor item is a part of depreciable plant, the account for accumulated provision for depreciation shall be charged with the book cost and cost of removal and credited with the salvage. If, however, the book cost of the minor item retired and not replaced has been or will be accounted for by its inclusion in the retirement unit of which it is a part when such unit is retired, no separate credit to the property account is required when such minor item is retired.
(iii) When a minor item of depreciable property is replaced independently of the retirement unit of which it is a part, the cost of replacement shall be charged to the maintenance account appropriate for the item, except that if the replacement effects a substantial betterment (the primary aim of which is to make the property affected more useful, more efficient, of greater durability, or of greater capacity), the excess cost of the replacement over the estimated cost at current prices of replacing without betterment shall be charged to the appropriate electric plant accounts.
(4) The book cost of electric plant retired shall be the amount at which such property is included in the electric plant accounts, including all components of construction costs. The book cost shall be determined from the utility's records and if this cannot be done, it shall be estimated. When it is impracticable to determine the book
(5) The book cost of land retired shall be credited to the appropriate land accounts. If the land is sold, the difference between the book cost (less any accumulated provision for depreciation or amortization therefore which has been authorized and provided) and the sale price of the land (less commissions and other expenses of making the sale) shall be recorded in Account 411.6, Gains from Disposition of Utility Plant, or Account 411.7, Losses from Disposition of Utility Plant, when the property has been recorded in Account 105, Electric Plant Held for Future Use, otherwise to Accounts 421.1, Gain on Disposition of Property, or 421.2, Loss on Disposition of Property, as appropriate. If the land is not used in utility service but is retained by the utility, the book cost shall be charged to Account 105, Electric Plant Held for Future Use, or Account 121, Nonutility Property, as appropriate.
(6) The book cost less net salvage of depreciable electric plant retired shall be charged in its entirety to Account 108, Accumulated Provision for Depreciation of Electric Utility Plant in Service. Any amounts which, by approval or order of RUS, are charged to Account 182.1, Extraordinary Property Losses, shall be credited to Account 108.
(7) The accounting for the retirement of amounts included in Account 302, Franchises and Consents, and Account 303, Miscellaneous Intangible Plant, and the items of limited-term interest in land included in the accounts for land and land rights, shall be as provided for in the text of Account 111, Accumulated Provision for Amortization of Electric Utility Plant in Service; Account 404, Amortization of Limited-Term Electric Plant; and Account 405, Amortization of Other Electric Plant.
(k)
(2) Each utility shall keep its work order system so as to show the nature of each addition to or retirement of electric plant, the total cost thereof, the source or sources of costs, and the electric plant account or accounts to which charged or credited. Work orders covering jobs of short duration may be cleared monthly.
(3) Each utility shall maintain records in which, for each plant account, the amounts of the annual additions and retirements are classified so as to show the number and cost of the various record units or retirement units.
(l)
(m)
(2) The book amount of utility plant designated as common plant shall be
(3) The utility shall be prepared to show, at any time, and to report to RUS annually, or more frequently, if required, and by utility plant accounts (301 to 399) the book cost of common utility plant, the allocation of such cost to the respective departments using the common utility plant, and the basis of the allocation.
(4) The accumulated provision for depreciation and amortization of the utility shall be segregated so as to show the amount applicable to the property classified as common utility plant.
(5) The expenses of operation, maintenance, rents, depreciation and amortization of common utility plant shall be recorded in the accounts prescribed herein, but designated as common expenses, and the allocation of such expenses to the departments using the common utility plant shall be supported in such manner as to reflect readily the basis of allocation used.
(n)
(1)
(2)
Stations which change electricity from transmission to distribution voltage shall be classified as distribution stations.
(3) Where poles or towers support both transmission and distribution conductors, the poles, towers, anchors, guys, and rights-of-way shall be classified as transmission system. The conductors, cross-arms, braces, grounds, tiewire, and insulators shall be classified as transmission or distribution facilities, according to the purpose for which used.
(4) Where underground conduit contains both transmission and distribution conductors, the underground conduit and right-of-way shall be classified as distribution system. The conductors shall be classified as transmission or distribution facilities according to the purpose for which used.
(5) Land (other than rights-of-way) and structures used jointly for transmission and distribution purposes shall be classified as transmission or distribution according to the major use thereof.
(o)
(p)
(a)
(1) Labor items:
(i) Special tests to determine efficiency of equipment operation;
(ii) Preparing or reviewing budgets, estimates, and drawings relating to operation or maintenance for departmental approval;
(iii) Preparing instructions for operations and maintenance activities;
(iv) Reviewing and analyzing operating results;
(v) Establishing organizational setup of departments and executing changes therein;
(vi) Formulating and reviewing routines of departments and executing changes therein;
(vii) General training and instruction of employees by supervisors whose pay is chargeable hereto. Specific instructions and training in a particular type of work is chargeable to the appropriate functional account (See paragraph (c)(19) of this section); and
(viii) Secretarial work for supervisory personnel, but not general clerical and stenographic work chargeable to other accounts.
(2) Expense items:
(i) Employee pensions and benefits;
(ii) Social security and other payroll taxes;
(iii) Injuries and damages;
(iv) Consultants’ fees and expenses; and
(v) Meals, traveling, and incidental expenses.
(b)
(2) Materials recovered in connection with the maintenance of property shall be credited to the same account to which the maintenance cost was charged.
(3) If the book cost of any property is carried in Account 102, Electric Plant Purchased or Sold, the cost of maintaining such property shall be charged to the accounts for maintenance of property of the same class and use, the book cost of which is carried in other electric plant in service accounts. Maintenance of property leased from others shall be treated as provided in paragraph (c) of this section.
(4) Items:
(i) Direct field supervision of maintenance;
(ii) Inspecting, testing, and reporting on condition of plant specifically to determine the need for repairs, replacements, rearrangements, and changes and inspecting and testing the adequacy of repairs which have been made;
(iii) Work performed specifically for the purpose of preventing failure, restoring serviceability or maintaining life of plant;
(iv) Rearranging and changing the location of plant not retired;
(v) Repairing for reuse materials recovered from plant;
(vi) Testing for, locating, and clearing trouble;
(vii) Net cost of installing, maintaining, and removing temporary facilities to prevent interruptions in service; and
(viii) Replacing or adding minor items of plant which do not constitute a retirement unit.
(c)
(2) If rents cover property used for more than one function such as production and transmission, or by more than one department, the rents shall be apportioned to the appropriate rent expense or clearing accounts of each department on an actual, or if necessary, an estimated basis.
(3) When a portion of property or equipment rented from others for use in connection with utility operations is subleased, the revenue derived from such subleasing shall be credited to the rent revenue account in operating revenues; provided, however, that in case the rent was charged to a clearing account, amounts received from subleasing the property shall be credited to such clearing account.
(4) The cost, when incurred by the lessee, of operating and maintaining leased property, shall be charged to the accounts appropriate for the expense if the property were owned.
(5) The cost incurred by the lessee of additions and replacements to electric plant leased from others shall be account for as provided in § 1767.16 (f).
(d)
(2) These expenses shall be charged to the appropriate functional accounts currently as they are incurred.
(3) When the training costs involved relate to facilities which are not conventional in nature, or are new to the company's operations, see § 1767.16 (c)(19), for the accounting.
The asset and other debits accounts identified in this section shall be used by all RUS borrowers.
A. This account shall include the original cost of electric plant, included in Accounts 301 to 399, prescribed herein, owned and used
B. (See also Account 106 for unclassified construction costs of completed plant actually in service.)
C. The cost of additions to and betterments of property leased from others, which are includible in this account, shall be recorded in subdivisions separate and distinct from those relating to owned property. (See § 1767.16 (f).)
A. This account shall include the amount recorded under capital leases for plant leased from others and used by the utility in its utility operations.
B. The electric property included in this account shall be classified separately according to the detailed accounts (301 to 399) prescribed for electric plant in service.
C. Records shall be maintained with respect to each capital lease reflection: (1) name of lessor, (2) basic details of lease, (3) terminal date, (4) original cost or fair market value of property leased, (5) future minimum lease payments, (6) executory costs, (7) present value of minimum lease payments, (8) the amount representing interest and the interest rate used, and (9) expenses paid.
A. This account shall be charged with the cost of electric plant acquired as an operating unit or system by purchase, merger, consolidation liquidation, or otherwise, and shall be credited with the selling price of like property transferred to others pending the distribution to appropriate accounts in accordance with § 1767.16 (e).
B. Within 6 months from the date of acquisition or sale of property recorded herein, the borrower shall file with RUS the proposed journal entries to clear from this account the amounts recorded herein.
A. This account shall include the cost of electric plant which was constructed as a research, development, and demonstration plant under the provisions of Paragraph C, Account 107, Construction Work in Progress—Electric, and due to the nature of the plant, it is desirous to operate it for a period of time in an experimental status.
B. Amounts in this account shall be transferred to Account 101, Electric Plant in Service, or Account 121, Nonutility Property, as appropriate when the project is no longer considered as experimental.
C. The depreciation on property in this account shall be charged to Account 403, Depreciation Expense, and credited to Account 108, Accumulated Provision for Depreciation of Electric Utility Plant. The amounts herein shall be depreciated over a period which would correspond to the estimated useful life of the relevant project considering the characteristics involved. However, when projects are transferred to Account 101, Electric Plant in Service, a new depreciation rate based upon the remaining service life and undepreciated amounts, will be established.
D. Records shall be maintained with respect to each unit of experiment so that full details may be obtained as to the cost, depreciation, and the experimental status.
E. Should it be determined that experimental plant recorded in this account will fail to satisfactorily perform its function, the costs thereof shall be accounted for as directed or authorized by RUS.
A. This account shall include the original cost of electric plant owned by the utility, but leased to others as operating units or systems, where the lessee has exclusive possession.
B. The property included in this account shall be classified according to the detailed accounts (301 to 399) prescribed for electric plant in service and this account shall be maintained in such detail as though the property were used by the owner in its utility operations.
A. This account shall include the original cost of electric plant (except land and land rights) owned and held for future use in electric service under a definite plan for such use, to include: (1) Property acquired (except land and land rights) but never used by the utility in electric service, but held for such service in the future under a definite plan, and (2) property (except land and land rights) previously used by the utility in service but retired from such service and held pending its reuse in the future, under a definite plan, in electric service.
B. This account shall also include the original cost of land and land rights owned and held for future use in electric service under a plan for such use, to include land and land rights: (1) Acquired but never used by the utility in electric service, but held for such service in the future under a plan, and (2) previously held by the utility in service, but retired from such service and held pending its reuse in the future under a plan, in electric service. (See § 1767.16 (g).)
C. In the event that property recorded in this account shall no longer be needed or appropriate for future utility operations, the borrower shall notify RUS of such condition and request approval of journal entries to remove such property from this account.
D. Gains or losses from the sale of land and land rights or other disposition of such property previously recorded in this account and not placed in utility service shall be recorded directly in Accounts 411.6 or 411.7, as appropriate, except when determined to be significant by RUS. Upon such a determination, the amounts shall be transferred to Account 256, Deferred Gains from Disposition of Utility Plant, or Account 187, Deferred Losses from Disposition of Utility Plant, and amortized to Account 411.6, Gains from Disposition of Utility Plant, or Account 411.7, Losses from Disposition of Utility Plant, as appropriate.
E. The property included in this account shall be classified according to the detail accounts (301 to 399) prescribed for electric plant in service and the account shall be maintained in such detail as though the property were in service.
Materials and supplies, meters and transformers held in reserve, and normal spare capacity of plant in service shall not be included in this account.
At the end of the year or such other date as a balance sheet may be required by RUS, this account shall include the total of the balances of work orders for electric plant which has been completed and placed in service but which work orders have not been classified for transfer to the detailed electric plant accounts.
For the purpose of reporting to RUS, the classification of electric plant in service by accounts is required, the utility shall also report the balance in this account tentatively classified as accurately as practicable according to prescribed account classifications. The purpose of this provision is to avoid any significant omissions in reported amounts of electric plant in service.
A. This account shall include the total of the balances of work orders for electric plant in process of construction.
B. Work orders shall be cleared from this account as soon as practicable, after completion of the job. Further, if a project, such as a hydroelectric project, a steam station, or a transmission line, is designed to consist of two or more units or circuits which may be placed in service at different dates, any expenditures which are common to and which will be used in the operation of the project as a whole shall be included in electric plant in service upon the completion and the readiness for service of the first unit. Any expenditures which are identified exclusively with units of property not yet in service shall be included in this account.
C. Expenditures on research, development, and demonstration projects for construction of utility facilities are to be included in a separate subdivision in this account. Records must be maintained to show separately each project along with complete detail of the nature and purpose of the research, development, and demonstration project together with the related costs.
D. Account 107 shall be subaccounted as follows:
A. This account shall be credited with the following:
1. Amounts charged to Account 403, Depreciation Expense, or to clearing accounts for current depreciation expense for electric plant in service.
2. Amounts charged to Account 421, Miscellaneous Nonoperating Income, for depreciation expense on property included in Account 105, Electric Plant Held for Future Use. Include, also, the balance of accumulated provision for depreciation on property when transferred to Account 105, Electric Plant Held for Future Use, from other property accounts. Normally, Account 108 will not be used for current depreciation provision because, as provided herein, the service life during which depreciation is computed commences with the date property is includible in electric plant in service; however, if special circumstances indicate the propriety of current accruals for depreciation, such charges shall be made to Account 421, Miscellaneous Nonoperating Income.
3. Amounts charged to Account 413, Expenses of Electric Plant Leased to Others, for electric plant included in Account 104, Electric Plant Leased to Others.
4. Amounts charged to Account 416, Costs and Expenses of Merchandising, Jobbing, and Contract Work, or to clearing accounts for current depreciation expense.
5. Amounts of depreciation applicable to electric properties acquired as operating units or systems. (See § 1767.16 (e).)
6. Amounts charged to Account 182.1, Extraordinary Property Losses, when authorized by RUS.
7. Amounts of depreciation applicable to electric plant donated to the utility.
The utility shall maintain separate subaccounts for depreciation applicable to electric plant in service, electric plant leased to others, and electric plant held for future use.)
B. At the time of retirement of depreciable electric utility plant, this account shall be charged with the book cost of the property retired and the cost of removal and shall be credited with the salvage value and any other amounts recovered, such as insurance. When retirement, costs of removal and salvage are entered originally in retirement work orders, the net total of such work orders may be included in a separate subaccount hereunder. Upon completion of the work order, the proper distribution to subdivisions of this account shall be made as provided in the following paragraph.
C. Account 108 shall be subaccounted as follows:
These subsidiary records shall reflect the current credits and debits to this account in sufficient detail to show separately for each such functional classification: (1) the amount of accrual for depreciation, (2) the book cost of property retired, (3) cost of removal, (4) salvage, and (5) other items, including recoveries from insurance.
D. When transfers of plant are made from one electric plant account to another, or from or to another utility department, of from or to nonutility property accounts, the accounting for depreciation shall be as provided in § 1767.16 (l).
E. The utility is restricted in its use of the accumulated provision for depreciation to the purposes set forth above. It shall not transfer any portion of this account to retained earnings or make any other use thereof without authorization by RUS.
A. This account shall be credited with the following:
1. Amounts charged to Account 404, Amortization of Limited-Term Electric Plant, for the current amortization of limited-term electric plant investments.
2. Amounts charged to Account 421, Miscellaneous Nonoperating Income, for amortization expense on property included in Account 105, Electric Plant Held for Future Use. Include also the balance of accumulated provision for amortization on property when transferred to Account 105, Electric Plant Held for Future Use, from other property accounts. See also Paragraph A(2), Account 108, Accumulated Provision for Depreciation of Electric Utility Plant.
3. Amounts charged to Account 405, Amortization of Other Electric Plant.
4. Amounts charged to Account 413, Expenses of Electric Plant Leased to Others, for the current amortization of limited-term or other investments subject to amortization included in Account 104, Electric Plant Leased to Others.
5. Amounts charged to Account 425, Miscellaneous Amortization, for the amortization of intangible or other electric plant which does not have a definite or terminable life and is not subject to charges for depreciation expense, with RUS approval.
(The utility shall maintain subaccounts of this account for the amortization applicable to electric plant in service, electric plant leased to others and electric plant held for future use.)
B. When any property to which this account applies is sold, relinquished, or otherwise retired from service, this account shall be charged with the amount previously credited in respect to such property. The book cost of the property so retired less the amount chargeable to this account and less the net proceeds realized at retirement shall be included in Account 421.1, Gain on Disposition of Property, or Account 421.2, Loss on Disposition of Property, as appropriate.
C. For general ledger and balance sheet purposes, this account shall be regarded and treated as a single composite provision for amortization. For purposes of analysis, however, each utility shall maintain subsidiary records in which this account is segregated according to the following functional classification for electric plant: (1) Steam production, (2) Nuclear production, (3) Hydraulic production, (4) Other production, (5) Transmission, (6) Distribution, and (7) General. These subsidiary records shall reflect the current credits and debits to this account in sufficient detail to show separately for each such functional classification: (1) the amount of accrual for amortization, (2) the book cost of property retired, (3) cost of removal, (4) salvage, and (5) other items, including recoveries from insurance.
D. The utility is restricted in its use of the accumulated provision for amortization to the purposes set forth above. It shall not transfer any portion of this account to retained earnings or make any other use thereof without authorization by RUS.
A. This account shall include the difference between the cost to the accounting utility of electric plant acquired as an operating unit or system by purchase, merger, consolidation, liquidation, or otherwise, and the original cost, estimated, if not known, of such property, less the amount or amounts credited by the accounting utility at the time of acquisition to accumulated provisions for depreciation and amortization and contributions in aid of construction with respect to such property.
B. With respect to acquisitions after the effective date of this system of accounts, this account shall be subdivided so as to show the amounts included herein for each property acquisition and to electric plant in service, electric plant held for future use, and electric plant leased to others. (See § 1767.16 (e).)
C. Debit amounts recorded in this account related to plant and land acquisition may be amortized to Account 425, Miscellaneous Amortization, over a period not longer than the estimated remaining life of the properties to which such amounts relate. Amounts related to the acquisition of land only may be amortized to Account 425 over a period of not more than 15 years. Should a utility wish to account for debit amounts in this account in any other manner, it shall petition RUS for authority to do so. Credit amounts recorded in this account shall be accounted for as directed by RUS.
This account shall be credited or debited with amounts which are includible in Account 406, Amortization of Electric Plant Acquisition Adjustments, or Account 425, Miscellaneous Amortization, for the purpose of providing for the extinguishment of amounts in Account 114, Electric Plant Acquisition Adjustments, in instances where the amortization of Account 114 is not being made by direct write-off of the account.
A. This account shall include the difference between the original cost, estimated if not known, and the book cost of electric plant to the extent that such difference is not properly includible in Account 114, Electric Plant Acquisition Adjustments. (See § 1767.16 (a)(3))
B. Amounts included in this account shall be classified in such manner as to show the origin of each amount and shall be disposed of as RUS may approve or direct.
The provisions of this account shall not be construed as approving or authorizing the recording of appreciation of electric plant.
This account shall include the balances in accounts for utility plant, other than electric plant, such as gas, or railway.
This account shall include the accumulated provision for depreciation and amortization applicable to utility property other than electric plant.
A. This account shall include the original cost to the utility of nuclear fuel materials while in process of refinement, conversion, enrichment, and fabrication into nuclear fuel assemblies and components, including processing, fabrication, and necessary shipping costs. This account shall also include the salvage value of nuclear materials which are actually being reprocessed for use and were transferred from Account 120.5, Accumulated Provision for Amortization of Nuclear Fuel Assemblies. (See § 1767.10 (a)(27).)
B. This account shall be credited and Account 120.2, Nuclear Fuel Materials and Assemblies—Stock Account, shall be debited for the cost of completed fuel assemblies delivered for use in refueling or to be held as spares. In the case of the initial core loading, the transfer shall be made directly to Account 120.3, Nuclear Fuel Assemblies in Reactor, upon the conclusion of the experimental or test period of the plant prior to its becoming available for service.
1. Cost of natural uranium, uranium ores concentrates or other nuclear fuel sources, such as thorium, plutonium, and U-233.
2. Value of recovered nuclear materials being reprocessed for use.
3. Milling process costs.
4. Sampling and weighing, and assaying costs.
5. Purification and conversion process costs.
6. Costs of enrichment by gaseous diffusion or other methods.
7. Costs of fabrication into fuel forms suitable for insertion in the reactor.
8. All shipping costs of materials and components, including shipping of fabricated fuel assemblies to the reactor site.
9. Use charges on leased nuclear materials while in process of refinement, conversion, enrichment, and fabrication.
A. This account shall be debited and Account 120.1, Nuclear Fuel in Process of Refinement, Conversion, Enrichment and Fabrication, shall be credited with the cost of fabricated fuel assemblies delivered for use in refueling or to be carried in stock as spares. It shall also include the original cost of fabricated fuel assemblies purchased in completed form. This account shall also include the original cost of partially irradiated fuel assemblies being held in stock for reinsertion in a reactor which had been transferred from Account 120.3, Nuclear Fuel Assemblies in Reactor.
B. When fuel assemblies included in this account are inserted in a reactor, this account shall be credited and Account 120.3, Nuclear Fuel Assemblies in Reactor, debited for the cost of such assemblies.
C. This account shall also include the cost of nuclear materials and byproduct materials being held for future use and not actually in process in Account 120.1, Nuclear Fuel in Process of Refinement, Conversion, Enrichment and Fabrication.
A. This account shall include the cost of nuclear fuel assemblies when inserted in a reactor for the production of electricity. The amounts included herein shall be transferred from Account 120.2, Nuclear Fuel Materials and Assemblies—Stock Account, except for the initial core loading which will be transferred directly from Account 120.1, Nuclear Fuel in Process of Refinement, Conversion, Enrichment and Fabrication.
B. Upon removal of fuel assemblies from a reactor, the original cost of the assemblies removed shall be transferred to Account 120.4, Spent Nuclear Fuel, or Account 120.2, Nuclear Fuel Materials and Assemblies—Stock Account, as appropriate.
A. This account shall include the original cost of nuclear fuel assemblies, in the process of cooling, transferred from Account 120.3, Nuclear Fuel Assemblies in Reactor, upon removal from a reactor pending reprocessing.
B. This account shall be credited and Account 120.5, Accumulated Provision for Amortization of Nuclear Fuel Assemblies, debited for fuel assemblies, after the cooling period is over, at the cost recorded in this account.
A. This account shall be credited and Account 518, Nuclear Fuel Expense, shall be debited for the amortization of the net cost of nuclear fuel assemblies used in the production of energy. The net cost of nuclear fuel assemblies subject to amortization shall be the original cost of nuclear fuel assemblies, plus or less the expected net salvage value of uranium, plutonium, and other by-products.
B. This account shall be credited with the net salvage value of uranium, plutonium, and other nuclear by-products when such items are sold, transferred or otherwise disposed. Account 120.1, Nuclear Fuel in Process of Refinement, Conversion, Enrichment and Fabrication, shall be debited with the net salvage value of nuclear materials to be reprocessed. Account 157, Nuclear Materials Held for Sale, shall be debited for the net salvage value of nuclear materials not to be reprocessed but to be sold or otherwise disposed of and Account 120.2, Nuclear Fuel Materials and Assemblies—Stock Account, will be debited with the net salvage value of nuclear materials that will be held for future use and not actually in process, in Account 120.1, Nuclear Fuel in Process of Refinement, Conversion, Enrichment, and Fabrication.
C. This account shall be debited and Account 120.4, Spent Nuclear Fuel, shall be credited with the cost of fuel assemblies at the end of the cooling period.
A. This account shall include the amount recorded under capital leases for nuclear fuel leased from others for use by the utility in its utility operations.
B. Records shall be maintained with respect to each capital lease reflecting: (1) name of lessor, (2) basic details of lease, (3) terminal date, (4) original cost or fair market value of nuclear fuel leased, (5) future minimum lease payments, (6) the amount representing interest and the interest rate used, and (7) expenses paid.
A. This account shall include the book cost of land, structures, equipment, or other tangible or intangible property owned by the utility, but not used in utility service and not properly includible in Account 105, Electric Plant Held for Future Use.
B. This account shall also include the amount recorded under capital leases for property leased from others and used by the utility in its nonutility operations. Records shall be maintained with respect to each lease reflecting: (1) name of lessor, (2) basic details of lease, (3) terminal date, (4) original cost or fair market value of property leased, (5) future minimum lease payments, (6) executory costs, (7) present value of minimum lessee payments, (8) the amount representing interest and the interest rate used, and (9) expenses paid.
C. This account shall be subdivided so as to show the amount of property used in operations which are nonutility in character but nevertheless constitute a distinct operating activity of the company (such as operation of an ice department where such activity is not classed as a utility) and the amount of miscellaneous property not used in operations. The records in support of each subaccount shall be maintained so as to show an appropriate classification of the property.
The gain from the sale or other disposition of property included in this account which had been previously recorded in Account 105, Electric Plant Held for Future Use, shall be accounted for in accordance with Paragraph C of Account 105.
This account shall include the accumulated provision for depreciation and amortization applicable to nonutility property.
A. This account shall include the book cost of investments in securities issued or assumed by associated companies and investment advances to such companies, including interest accrued thereon when such interest is not subject to current settlement, provided that the investment does not relate to a subsidiary company. (If the investment relates to a subsidiary company, it shall be included in Account 123.11, Investment in Subsidiary Companies.) Include herein the offsetting entry to the recording of amortization of discount or premium on interest bearing investments. (See Account 419, Interest and Dividend Income.)
B. This account shall be maintained in such manner as to show the investment in securities of, and advances to, each associated company together with full particulars regarding any of such investments that are pledged.
Securities and advances of associated companies owned and pledged shall be included in this account, but such securities, if held in special deposits or in special funds, shall be included in the appropriate deposit or fund account. A complete record of securities pledged shall be maintained.
Securities of associated companies held as temporary cash investments are includible in Account 136, Temporary Cash Investments.
Balances in open accounts with associated companies, which are subject to current settlement, are includible in Account 146, Accounts Receivable from Associated Companies.
The utility may write down the cost of any security in recognition of a decline in the value thereof. Securities shall be written off or written down to a nominal value if there is no reasonable prospect of substantial value. Fluctuations in market value shall not be recorded but a permanent impairment in the value of securities shall be recognized in the accounts. When securities are written off or written down, the amount of the adjustment shall be charged to Account 426.5, Other Deductions, or to an appropriate account for accumulated provisions for loss in value established as a separate subdivision of this account.
C. Account 123 shall be subaccounted as follows:
This account shall include patronage capital credits allocated to the accounting borrower by G&T cooperatives. It shall also include capital credits, deferred patronage refunds, or like items from other associated cooperatives. The account shall be maintained so as to reflect separately, the allocations of patronage capital and patronage refunds from each organization that makes such allocations to the borrower.
This account shall include investment advances of Federal funds received from a Rural Economic Development Grant to associated organizations for authorized rural economic development projects.
This account shall include investment advances of non-Federal funds from the Rural Economic Development Grant revolving fund to associated organizations for authorized rural economic development projects.
A. This account shall include the cost of investments in securities issued or assumed by subsidiary companies and investment advances to such companies, including interest
B. This account shall be maintained in such a manner as to show separately for each subsidiary: the cost of such investments in the securities of the subsidiary at the time of acquisition; the amount of equity in the subsidiary's undistributed net earnings or net losses since acquisition; advances or loans to such subsidiary; and full particulars regarding any such investments that are pledged.
This account shall include the total subscriptions to capital term certificates of CFC. When subscriptions are paid, this account shall be credited and Account 123.22, Investments in Capital Term Certificates—Supplemental Financing, debited.
This account shall include paid subscriptions in capital term certificates of CFC or other supplemental lenders.
This account shall include investments in capital stock, securities, membership fees, and investment advances to associated organizations other than provided for elsewhere. This account shall be maintained in such a manner as to show the investment in stock and securities of and advances to each associated organization.
1. Investments in capital stock of associated organizations.
2. Investments in securities issued by associated organizations.
3. Membership fees in associated organizations, including NRECA, and Statewide associations of RUS-financed borrowers.
4. Investment advances to associated organizations.
A. This account shall include the book cost of investments in securities issued or assumed by nonassociated companies, investment advances to such companies, and any investments not accounted for elsewhere. Include also the offsetting entry to the recording of amortization of discount or premium on interest bearing investments. (See Account 419, Interest and Dividend Income.)
B. The records shall be maintained in such manner as to show the amount of each investment and the investment advances to each person.
C. Account 124 shall be subaccounted as follows:
Securities owned and pledged shall be included in this account, but securities held in special deposits or in special funds shall be included in appropriate deposit or fund accounts. A complete record of securities pledged shall be maintained.
Securities held as temporary cash investments shall not be included in this account.
See Note D of Account 123.
This account shall include investment advances of Federal funds received from a Rural Economic Development Grant to nonassociated organizations for authorized rural economic development projects.
This account shall include investment advances of non-Federal funds from the Rural Economic Development Grant revolving fund to nonassociated organizations for authorized rural economic development projects.
This account shall include the amount of cash and book cost of investments held in sinking funds. A separate account, with appropriate title, shall be kept for each sinking fund. Transfers from this account to special deposit accounts, may be made as necessary for the purpose of paying matured sinking fund obligations, or obligations called for redemption but not presented, or the interest thereon.
This account shall include the amount of cash and the book cost of investments which have been segregated in a special fund for the purpose of identifying such assets with the accumulated provisions for depreciation.
This account shall include the amount of cash and book cost of investments which have been segregated in special funds for insurance, employee pensions, savings, relief, hospital, and other purposes not provided for elsewhere. A separate account, with appropriate title, shall be kept for each fund.
Amounts deposited with a trustee under the terms of an irrevocable trust agreement for pensions or other employee
Current and accrued assets are cash, those assets which are readily convertible into cash or are held for current use in operations or construction, current claims against others, payment of which is reasonably assured, and amounts accruing to the utility which are subject to current settlement, except such items for which accounts other than those designated as current and accrued assets are provided. There shall not be included in the category of accounts designated as current and accrued assets any item, the amount or collectibility of which is not reasonably assured, unless an adequate provision for possible loss has been made therefor. Items of current character but of doubtful value may be written down, and for record purposes carried in these accounts at nominal value.
A. This account shall include the amount of current cash funds except working funds.
B. Account 131 shall be subaccounted as follows:
This account shall include all cash of the organization not provided for elsewhere. Separate subaccounts may be maintained for each bank account in which general cash is maintained. Funds held by others for current obligations shall be recorded in Account 134, Other Special Deposits.
This account shall include the cash received from the Rural Utilities Service, CFC, and any other source of supplemental financing for financing the construction, purchase, and operation of electric facilities. RUS construction loan fund advances shall be charged to this account and credited to Account 224.4, RUS Notes Executed—Construction—Debit. CFC and other supplemental lender construction loan fund advances shall be charged to this account and credited to Account 224.13, Supplemental Financing Notes Executed—Debit.
A. This account shall include the cash advanced on installation loans made subsequent to September 13, 1957. Such advances shall be debited to this account as received and credited to Account 224.10, RUS Notes Executed—Installation—Debit. This account shall also include interest and principal collections received on consumers’ loans financed from RUS loans made subsequent to September 13, 1957.
B. Payments shall be made from this account solely for financing consumers’ loans for the purpose of wiring of consumers’ premises, and the acquisition and installation of electrical and plumbing appliances and equipment by consumers. The cash in this account is also used for the payment of principal and interest on installation loans made by RUS, subsequent to September 13, 1957, in accordance with the terms of the loan agreement.
This account shall be used in transferring funds from one bank account to another. This account is charged when the check is drawn for the transfer and entered in the check register, and credited when the amount transferred is entered in the cash receipts book. This account is to be used as a clearing account and should not have a balance at the end of an accounting period.
This account shall include the cash received from the Rural Utilities Service for Rural Economic Development Loans. Economic development loan advances shall be charged to this account and credited to Account 224.17, RUS Notes Executed—Economic Development—Debit.
This account shall include cash received from the Rural Utilities Service for Rural Economic Development Grants. Economic development grant funds shall be charged to this account and credited to Account 224.18, Other Long-Term Debt—Grant Funds; Account 208, Donated Capital; or Account 421, Miscellaneous Nonoperating Income, as appropriate. This account shall be credited and either Account 123.3, Investment in Associated Organizations—Federal Economic Development Loans, or Account 124.1, Other Investments—Federal Economic Development Loans, shall be debited, as appropriate, with the amount of an economic development revolving fund loan.
This account shall include all non-Federal funds comprising the economic development revolving fund. It shall include all funds supplied by the borrower as well as all cash received from the repayment of loans made from the economic development revolving fund. This account shall be credited and either Account 123.4, Investment in Associated Organizations—Non-Federal Economic Development Loans, or Account 124.2, Other Investments—Non-Federal Economic Development Loans, shall be debited, as appropriate, with the amount of an economic development revolving fund loan.
This account shall include special deposits with fiscal agents or others for the payment of interest.
This account shall include special deposits with fiscal agents or others for the payment of dividends.
This account shall include deposits with fiscal agents or others for special purposes other than the payment of interest and dividends. Such special deposits may include cash deposited with Federal, state, or municipal authorities as a guaranty for the fulfillment of obligations; cash deposited with trustees to be held until mortgaged property sold, destroyed, or otherwise disposed of is replaced; and cash realized from the sale of the accounting utility's securities and deposited with trustees to be held until invested in property of the utility. Entries to this account shall specify the purpose for which the deposit is made.
Assets available for general corporate purposes shall not be included in this account. Further, deposits for more than one year, which are not offset by current liabilities, shall not be charged to this account but to Account 128, Other Special Funds.
This account shall include cash advanced to officers, agents, employees, and others as petty cash or working funds.
A. This account shall include the book cost of investments, such as demand and time loans, bankers’ acceptances, United States Treasury certificates, marketable securities, and other similar investments, acquired for the purpose of temporarily investing cash.
B. This account shall be so maintained as to show separately temporary cash investments in securities of associated companies and of others. Records shall be kept of any pledged investments.
A. This account shall include the book cost, not includible elsewhere, of all collectible obligations in the form of notes receivable and similar evidences (except interest coupons) of money due on demand or within one year from the date of issue, except, however, notes receivable from associated companies. (See Account 136, Temporary Cash Investments, and Account 145, Notes Receivable from Associated Companies.)
The face amount of notes receivable discounted, sold, or transferred without releasing the utility from liability as endorser thereon, shall be credited to a separate subdivision of this account and appropriate disclosure shall be made in the financial statements of any contingent liability arising from such transactions.
B. Account 141 shall be subaccounted as follows:
This account shall be credited with amounts provided for losses on notes receivable which may become uncollectible, and also with collections on notes previously charged hereto. Concurrent charges shall be made to Account 904, Uncollectible Accounts.
A. This account shall include amounts due from customers for utility service and for merchandising, jobbing, and contract work. This account shall not include amounts due from associated companies.
B. This account shall be maintained so as to permit ready segregation of the amounts due for merchandising, jobbing, and contract work.
C. Account 142 shall be subaccounted as follows:
This account shall include amounts due from customers for utility service.
This account shall include amounts due from customers for merchandising, jobbing, and contract work.
A. This account shall include amounts due the utility upon open accounts, other than amounts due from associated companies and from customers for utility services and merchandising, jobbing and contract work.
B. This account shall be maintained so as to show separately amounts due on subscriptions to capital stock and from officers and employees. The account shall not include amounts advanced to officers or others as working funds. (See Account 135, Working Funds.)
A. This account shall include amounts provided for losses on accounts receivable which may become uncollectible, and also with collections on accounts previously charged hereto. Concurrent charges shall be made to Account 904, Uncollectible Accounts, for amounts applicable to utility operations, and to corresponding accounts for other operations. Records shall be maintained so as to show the write-offs of accounts receivable for each utility department.
B. Account 144 shall be subaccounted as follows:
This account shall be credited with amounts provided for losses on accounts receivable which may become uncollectible, and also with collections on accounts previously charged hereto. Concurrent charges shall be made to Account 904, Uncollectible Accounts.
This account shall be credited with amounts provided for losses on merchandising, jobbing, and contract work which may become uncollectible, and also with collections on accounts previously charged hereto. Concurrent charges shall be made to Account 904, Uncollectible Accounts, for amounts applicable to utility operations, and to corresponding accounts for other operations.
This account shall be credited with amounts provided for losses on accounts receivable from officers and employees which may become uncollectible and also with collections on accounts previously charged hereto. Concurrent charges shall be made to Account 904, Uncollectible Accounts.
This account shall be credited with amounts provided for losses on accounts receivable which may become uncollectible and for which the recording of this credit has not been provided for elsewhere. This account shall also be credited with collections on accounts previously charged hereto. Concurrent charges shall be made to Account 904, Uncollectible Accounts, for amounts applicable to utility operations and to corresponding accounts for other operations.
This account shall include notes upon which associated companies are liable, and which mature and are expected to be paid in full not later than one year from the date of issue, together with any interest thereon, and debit balances subject to current settlement in open accounts with associated companies. Items which do not bear a specified due date but which have been carried for more than twelve months and items which are not paid within twelve months from due date shall be transferred to Account 123, Investment in Associated Companies.
The face amount of notes receivable discounted, sold or transferred without releasing the utility from liability as endorser thereon, shall be credited to a separate subdivision of this account and appropriate disclosure shall be made in the financial statements of any contingent liability arising from such transactions.
This account shall include drafts upon which associated companies are liable, and which mature and are expected to be paid in full not later than one year from the date of issue, together with any interest thereon, and debit balances subject to current settlement in open accounts with associated companies. Items which do not bear a specified due date but which have been carried for more than twelve months and items which are not paid within twelve months from due date shall be transferred to Account 123, Investment in Associated Companies.
On the balance sheet, accounts receivable from an associated company may be
This account shall include the book cost of fuel on hand.
1. Invoice price of fuel less any cash or other discounts.
2. Freight, switching, demurrage, and other transportation charges, not including, however, any charges for unloading from the shipping medium.
3. Excise taxes, purchasing agents’ commissions, insurance, and other expenses directly assignable to cost of fuel.
4. Operating, maintenance and depreciation expenses, and ad valorem taxes on utility-owned transportation equipment used to transport fuel from the point of acquisition to the unloading point.
5. Lease or rental costs of transportation equipment used to transport fuel from the point of acquisition to the unloading point.
A. This account may include the cost of labor and of supplies used and expenses incurred in unloading fuel from the shipping medium and in the handling thereof prior to its use, if such expenses are sufficiently significant in amount to warrant being treated as a part of the cost of fuel inventory rather than being charged direct to expense as incurred.
B. Amounts included herein shall be charged to expense as the fuel is used to the end that the balance herein shall not exceed the expenses attributable to the inventory of fuel on hand.
1. Procuring and handling of fuel.
2. All routine fuel analyses.
3. Unloading from shipping facility and placing in storage.
4. Moving of fuel in storage and transferring from one station to another.
5. Handling from storage or shipping facility to first bunker, hopper, bucket, tank, or holder of boiler house structure.
6. Operation of mechanical equipment such as locomotives, trucks, cars, boats, barges, and cranes.
1. Tools, lubricants and other supplies.
2. Operating supplies for mechanical equipment.
3. Transportation and other expenses in moving fuel.
4. Stores expenses applicable to fuel.
This account shall include the book cost of any residuals produced in the production or manufacturing processes.
A. This account shall include the cost of materials purchased primarily for use in the utility business for construction, operation and maintenance purposes. It shall also include the book cost of materials recovered in connection with construction, maintenance, or the retirement of property, such materials being credited to construction, maintenance, or accumulated depreciation provision, respectively, and included herein as follows:
1. Reusable materials consisting of large individual items shall be included in this account at original cost, estimated if not known. The cost of repairing such items shall be charged to the maintenance account appropriate for the previous use.
2. Reusable materials consisting of relatively small items, the identity of which (from the date of original installation to the final abandonment or sale thereof) cannot be ascertained without undue refinement in accounting, shall be included in this account at current prices new for such items. The cost of repairing such items shall be charged to the appropriate expense account as indicated by previous use.
3. Scrap and nonusable materials included in this account shall be carried at the estimated net amount realizable therefrom. The difference between the amounts realized for scrap and nonusable materials sold and the net amount at which the materials were carried in this account, as far as practicable, shall be adjusted to the accounts credited when the materials were charged to this account.
B. Materials and supplies issued shall be credited hereto and charged to the appropriate construction, operating expense, or other account on the basis of a unit price determined by the use of cumulative average, first-in-first-out, or such other method of inventory accounting as conforms with accepted accounting standards consistently applied.
1. Invoice price of materials less cash or other discounts.
2. Freight, switching, or other transportation charges when practicable to include as part of the cost of particular materials to which they relate.
3. Customs duties and excise taxes.
4. Costs of inspection and special tests prior to acceptance.
5. Insurance and other directly assignable charges.
Where expenses applicable to materials purchased cannot be directly assigned
This account shall include the book cost of materials and supplies and appliances and equipment held primarily for merchandising, jobbing, and contract work. The principles prescribed in accounting for utility materials and supplies shall be observed with respect to items carried in this account.
This account shall include the book cost of materials and supplies held primarily for nonutility purposes. The principles prescribed in accounting for utility materials and supplies shall be observed with respect to items carried in this account.
This account shall include the net salvage value of uranium, plutonium, and other nuclear materials held by the company for sale or other disposition that are not to be reused by the company in its electric utility operations. This account shall be debited and Account 120.5, Accumulated Provision for Amortization of Nuclear Fuel Assemblies, credited for such net salvage value. Any difference between the amount recorded in this account and the actual amount realized from the sale of materials shall be debited or credited, as appropriate, to Account 518, Nuclear Fuel Expense, at the time of such sale.
A. This account shall include the cost of allowances owned by the utility and not withheld by the Environmental Protection Agency. See § 1767.15 (u) and Account 158.2, Allowances Withheld.
B. This account shall be credited and Account 509, Allowances, shall be debited concurrent with the monthly emission of sulfur dioxide.
C. Separate subdivisions of this account shall be maintained so as to separately account for those allowances usable in the current year and in each subsequent year. The underlying records of these subdivisions shall be maintained in sufficient detail so as to identify each allowance included; the origin of each allowance; and the acquisition cost, if any, of the allowance.
A. This account shall include the cost of allowances owned by the utility but withheld by the Environmental Protection Agency. (See § 1767.15 (u).)
B. The inventory cost of the allowances released by the Environmental Protection Agency for use by the utility shall be transferred to Account 158.1, Allowance Inventory.
C. The underlying records of this account shall be maintained in sufficient detail so as to identify each allowance included; the origin of each allowance; and the acquisition cost, if any, of the allowances.
A. This account shall include the cost of supervision, labor, and expenses incurred in the operation of general storerooms, including purchasing, storage, handling, and distribution of materials and supplies.
B. This account shall be cleared by adding to the cost of materials and supplies issued, a suitable loading charge which will distribute the expense equitably over stores issues. The balance in the account at the close of the year shall not exceed the amount of stores expenses reasonably attributable to the inventory of materials and supplies, exclusive of fuel, as any amount applicable to fuel costs should be included in Account 152, Fuel Stock Expenses Undistributed.
1. Inspecting and testing materials and supplies when not assignable to specific items.
2. Unloading from shipping facility and placing in storage.
3. Supervision of purchasing and stores department to extent assignable to materials handled through stores.
4. Getting materials from stock and in readiness to go out.
5. Inventorying stock received or stock on hand by stores employees but not including inventories by general department employees as part of internal or general audits.
6. Purchasing department activities in checking material needs, investigating sources of supply, analyzing prices, preparing and placing orders, and related activities to extent applicable to materials handled through stores. (Optional: Purchasing department expenses may be included in administrative and general expenses.)
7. Maintaining stores equipment.
8. Cleaning and tidying storerooms and stores offices.
9. Keeping stock records, including the recording and posting of material receipts and issues and maintaining inventory records of stock.
10. Collecting and handling scrap materials in stores.
1. Adjustments of inventories of materials and supplies but not including large differences which can readily be assigned to important classes of materials and equitably distributed among the accounts to which
2. Cash and other discounts not practically assignable to specific materials.
3. Freight and express charges when not assignable to specific items.
4. Heat, light, and power for storerooms and store offices.
5. Brooms, brushes, sweeping compounds and other supplies used in cleaning and tidying storerooms and stores offices.
6. Injuries and damages.
7. Insurance on materials and supplies and on stores equipment.
8. Losses due to breakage, leakage, evaporation, fire or other causes, less credits for amounts received from insurance, transportation companies, or others in compensation of such losses.
9. Postage, printing, stationery, and office supplies.
10. Rent of storage space and facilities.
11. Communication service.
12. Excise and other similar taxes not assignable to specific materials.
13. Transportation expense on inward movement of stores and on transfer between storerooms but not including charges on materials recovered from retirements which shall be accounted for as part of the cost of removal.
A physical inventory of each class of materials and supplies shall be made at least every two years.
A. This account shall include amounts representing prepayments of insurance, rents, taxes, interest, and miscellaneous items, and shall be kept or supported in such manner as to disclose the amount of each class of prepayment.
B. Account 165 shall be subaccounted as follows:
This account shall include the amount of interest on bonds, mortgages, notes, commercial paper, loans, open accounts, and deposits, the payment of which is reasonably assured, and the amount of dividends declared or guaranteed on stocks owned.
Interest which is not subject to current settlement shall not be included herein but in the account in which the associated principle is recorded.
Interest and dividends receivable from associated companies shall be included in Account 146, Accounts Receivable from Associated Companies.
This account shall include rents receivable or accrued on property rented or leased by the utility to others.
Rents receivable from associated companies shall be included in Account 146, Accounts Receivable from Associated Companies.
At the option of the utility, the estimated amount accrued for service rendered, but not billed at the end of any accounting period, may be included herein. If accruals are made for unbilled revenues, accruals shall also be made for unbilled expenses, such as the purchase of energy.
This account shall include the book cost of all other current and accrued assets, appropriately designated and supported so as to show the nature of each asset included herein.
This account shall include expenses related to the issuance or assumption of debt securities. Amounts recorded in this account shall be amortized over the life of each respective issue under a plan which will distribute the amount equitably over the life of the security. The amortization shall be on a monthly basis, and the amounts thereof shall be charged to Account 428, Amortization of Debt Discount and Expense. Any unamortized amounts outstanding at the time that the related debt is prematurely reacquired shall be accounted for as indicated in § 1767.15 (q).
A. When authorized or directed by RUS, this account shall include extraordinary losses which could not reasonably have been anticipated and which are not covered by insurance or other provisions, such as unforeseen damages to property.
B. Application to RUS for permission to use this account shall be accompanied by a statement giving a complete explanation with respect to the items which it is proposed to include herein, the period over which, and the accounts to which it is proposed to write off the charges, and other pertinent information.
A. This account shall include: (1) nonrecurring costs of studies and analyses mandated by regulatory bodies related to plants
B. This account shall be credited and Account 407, Amortization of Property Losses, Unrecovered Plant and Regulatory Study Costs, shall be debited over the period specified by RUS.
C. Any additional costs incurred, relative to the cancellation or premature retirement, may be included in this account and amortized over the remaining period of the original amortization period. Should any gains or recoveries be realized relative to the cancelled or prematurely retired plant, such amounts shall be used to reduce the unamortized amount of the costs recorded herein.
D. In the event that the recovery of costs included herein is disallowed in the rate proceedings, the disallowed costs shall be charged to Account 426.5, Other Deductions, in the year of such disallowance.
A. This account shall include the amounts of regulatory-created assets, not includable in other accounts, resulting from the ratemaking actions of regulatory agencies. (See the definition of regulatory assets and liabilities.)
B. The amounts included in this account are to be established by those charges which would have been included in net income determinations in the current period under the general requirements of the Uniform System of Accounts but for it being probable that such items will be included in a different period(s) for purposes of developing the rates that the utility is authorized to charge for its utility services. When specific identification of the particular source of a regulatory asset cannot be made, such as in plant phase-ins, rate moderation plans, or rate levelization plans, Account 407.4, Regulatory Credits, shall be credited. The amounts recorded in this account are generally to be charged, concurrently with the recovery of the amounts in rates, to the same account that would have been charged if included in income when incurred, except all regulatory assets established through the use of Account 407.4 shall be charged to Account 407.3, Regulatory Debits, concurrent with the recovery of the amounts in rates.
C. If rate recovery of all or part of an amount included in this account is disallowed, the disallowed amount shall be charged to Account 426.5, Other Deductions, or Account 435, Extraordinary Deductions, in the year of the disallowance.
D. The records supporting the entries to this account shall be kept so that the utility can furnish full information as to the nature and amount of each regulatory asset included in this account, including justification for inclusion of such amounts in this account.
A. This account shall be charged with all expenditures for preliminary surveys, plans, and investigations made for the purpose of determining the feasibility of utility projects under contemplation. If construction results, this account shall be credited and the appropriate utility plant account charged. If the work is abandoned, the charge shall be made to Account 426.5, Other Deductions, or to the appropriate operating expense account.
B. This account shall also include costs of studies and analyses mandated by regulatory bodies related to plant in service. If construction results from such studies, this account shall be credited and the appropriate utility plant account charged with an equitable portion of such study costs directly attributable to new construction. The portion of such study costs not attributable to new construction or the entire cost if construction does not result shall be charged to Account 182.2, Unrecovered Plant and Regulatory Study Costs, or the appropriate operating expense account. The costs of such studies relative to plant under construction shall be included directly inAccount 107, Construction Work in Progress—Electric.
C. The records supporting the entries to this account shall be so kept that the utility can furnish complete information as to the nature and the purpose of the survey, plans, or investigations, and the nature and amounts of the several charges.
The amount of preliminary survey and investigation charges transferred to utility plant shall not exceed the expenditures which may reasonably be determined to contribute directly and immediately and without duplication to utility plant.
A. This caption shall include undistributed balances in clearing accounts at the date of the balance sheet. Balances in clearing account shall be substantially cleared not later than the end of the calendar year unless items held therein relate to a future period.
B. Account 184 shall be subaccounted as follows:
This account shall include amounts shown by work orders for plant installed for temporary use in utility service for periods of less than one year. Such work orders shall be
This account shall include all debits not elsewhere provided for, such as miscellaneous work in progress, and unusual or extraordinary expenses, not included in other accounts, which are in process of amortization and items the proper final disposition of which is uncertain.
This account shall include losses from the sale or other disposition of property previously recorded in Account 105, Electric Plant Held for Future Use, under the provisions of Paragraphs B, C, and D thereof, where such losses are significant and are to be amortized over a period of 5 years, unless otherwise authorized by RUS. The amortization of the amounts in this account shall be made by debits to Account 411.7, Losses from Disposition of Utility Plant. (See Account 105, Electric Plant Held for Future Use.)
A. This account shall be charged with the cost of all expenditures coming within the meaning of Research, Development, and Demonstration (RD&D) of this USoA (See § 1767.10 (a)(34)) except those expenditures properly chargeable to Account 107, Construction Work in Progress—Electric.
B. Costs that are minor or of a general or recurring nature shall be transferred from this account to the appropriate operating expense function or if such costs are common to the overall operations or cannot be feasibly allocated to the various operating accounts, such costs shall be recorded in Account 930.2, Miscellaneous General Expenses.
C. In certain instances, a company may incur large and significant research, development, and demonstration expenditures which are nonrecurring and which would distort the annual research, development, and demonstration charges for the period. In such a case, the portion of such amounts that cause the distortion may be amortized to the appropriate operating expense account over a period not to exceed 5 years unless otherwise authorized by RUS.
D. The entries in this account must be so maintained as to show separately each project along with complete detail of the nature and purpose of the research, development, and demonstration project together with the related costs.
This account shall include the losses on long-term debt reacquired or redeemed. The amounts in this account shall be amortized in accordance with § 1767.15 (q).
A. This account shall be debited and Account 411.1, Provision for Deferred Income Taxes—Credit, Utility Operating Income, or Account 411.2, Provision for Deferred Income Taxes—Credit, Other Income and Deductions, as appropriate, shall be credited with an amount equal to that by which income taxes payable for the year are higher because of the inclusion of certain items in income for tax purposes, which items for general accounting purposes will not be fully reflected in the utility's determination of annual net income until subsequent years.
B. This account shall be credited and Account 410.1, Provision for Deferred Income Taxes, Utility Operating Income, or Account 410.2, Provision for Deferred Income Taxes, Other Income and Deductions, as appropriate, shall be debited with an amount equal to that by which income taxes payable for the year are lower because of prior payment of taxes as provided by Paragraph A above, because of difference in timing for tax purposes of particular items of income or income deductions from that recognized by the utility for general accounting purposes. Such credit to this account and debit to Account 410.1 or Account 410.2 shall, in general, represent the effect on taxes payable in the current year of the smaller amount of book income recognized for tax purposes as compared to the amount recognized in the utility's current accounts with respect to the item or class of items for which deferred tax accounting by the utility was authorized by RUS.
C. Vintage year records with respect to entries to this account, as described above, and the account balance, shall be so maintained as to show the factor of calculation with respect to each annual amount of the item or class of items for which deferred tax accounting by the utility is utilized.
D. The utility is restricted in its use of this account to the purpose set forth above. It shall not make use of the balance in this account or any portion thereof except as provided in the text of this account, without prior approval of RUS. Any remaining deferred tax account balance with respect to an amount for any prior year's tax deferral, the amortization of which or other recognition in the utility's income accounts has been completed, or other disposition made, shall
The liabilities and other credit accounts identified in this section shall be used by all RUS borrowers.
A. This account shall include the total amount of memberships issued and subscribed.
B. Account 200 shall be subaccounted as follows:
A. This account shall include the face value of membership certificates outstanding. A detailed record shall be maintained to show for each member, the name, address, date of payment, amount paid, and certificate number.
B. If membership fees are applied against energy bills, this account shall be debited for the full amount of the membership with the offsetting credit to the appropriate accounts receivable, and to accounts payable for any refundable amounts. Any balances that cannot be refunded, due to inability to locate the member or because of bylaw restrictions, shall be credited to Account 208, Donated Capital. If determination of the ultimate disposition of the fees cannot be made immediately, the amount involved should be transferred to Account 253, Other Deferred Credits, until the determination is made.
C. When a transfer fee is collected, the transaction shall be recorded by debiting Account 131.1, Cash—General, and crediting Account 451, Miscellaneous Service Revenues, with the fee collected.
This account shall include the face value of memberships subscribed for but not issued. When certificates are issued, the amount of the memberships shall be transferred to Account 200.1, Memberships Issued.
A. This account shall include the total amount of patronage capital assignable and assigned.
B. Account 201 shall be subaccounted as follows:
A. This account shall include the amounts of patronage capital which have been assigned to individual patrons. A subsidiary record, “patronage capital ledger,” shall be maintained, containing an account for each patron who has furnished capital under a capital credits plan.
B. When the return of patrons’ capital to individual patrons has been authorized by the board of directors (or trustees), the amounts authorized shall be transferred to Account 238.1, Patronage Capital Payable. (See also Account 217, Retired Capital Credits-Gain.)
A. This account shall include all amounts transferred from Account 219.1, Operating Margins; Account 219.2, Nonoperating Margins; Account 219.3, Other Margins; and Account 219.4, Other Margins and Equities—Prior Periods, which are assignable to individual patrons’ capital accounts.
B. Entries to this account shall be made so as to clearly disclose the nature and source of each transaction. Amounts so assigned shall be transferred to Account 201.1, Patronage Capital Credits.
This account shall include credits arising from forfeiture of membership fees and from donations of capital not otherwise provided for. Entries to this account shall be made so as to clearly disclose the nature and source of each transaction.
This account shall include the amounts billed to consumers as “amortization charges” for the purpose of servicing long-term debt.
This account shall include all amounts appropriated as reserves from margins. The account shall be so maintained as to show the amount of each separate reserve and the nature and amounts of the debits and credits thereto.
This account shall include the unrealized holding gains and losses for available-for-sale securities.
This account shall include the balances, either debit or credit, of undistributed retained earnings of subsidiary companies since their acquisition. When dividends are received from subsidiary companies relating to amounts included in this account, this account shall be debited and Account 219.2, Nonoperating Margins, credited.
A. This account shall include credits resulting from the retirement of patronage capital through settlement of individual patrons’ capital credits at less than 100 percent of the capital assigned to the patron. The portion of patronage capital not returned to the patrons, under such settlements, shall be debited to Account 201.1, Patronage Capital Credits, and credited to this account.
B. This account shall also include amounts representing patronage capital authorized to be retired to patrons who cannot be located. Returned checks issued for retirements of patronage capital, after an appropriate waiting period, shall be credited to this account, and a record maintained adequate to enable the cooperative to make payment to the patron if and when a claim has been established by the consumer.
No entries shall be made to this account without the prior approval of RUS unless it is to distribute past capital gains and losses as capital credits or to eliminate accumulated capital losses in conformance with the bylaws of the cooperative.
A. This account shall include total amount of margins and equities from all sources.
B. Account 219 shall be subaccounted as follows:
This account shall be debited or credited with the balances arising from transactions, the details of which have been recorded in Accounts 400, 401, 402, 403, 404, 405, 406, 407, 408, 412, 413, 414, 423, 424, 425, 426, 427, 428, and 431. Accounts 400, 401, and 402 are control accounts and, at the option of the borrower may or may not be used. If they are not used, the detailed revenue and expense accounts shall be closed directly to this account.
This account shall be debited or credited with the balances arising from transactions, the details of which have been recorded in Accounts 415, 416, 417, 417.1, 418, 419, 419.1, 421, 421.1, 421.2, 422, 434, and 435.
No entries shall be made to this account unless it is to distribute or eliminate prior balances in conformance with the bylaws of the cooperative.
A. This account shall include significant nonrecurring transactions relating to prior
B. All entries to this account must receive RUS prior approval.
C. These transactions are limited to items to (1) correct an error in the financial statements of a prior year, and (2) make adjustments that result from realization of income tax benefits of preacquisition operating loss carryforwards. This account shall also include the related income taxes (state and Federal) on items included herein.
D. Amounts in this account shall be transferred at the end of the year to Account 219.1, Operating Margins, or Account 219.2, Nonoperating Margins, as appropriate. Also, at the end of the year, these amounts should be transferred from Account 219.1, or Account 219.2 to Account 201.2, Patronage Capital Assignable, when appropriate.
This account shall include, in a separate subdivision for each class and series of bonds, the face value of the actually issued and unmatured bonds which have not been retired or cancelled; also the face value of such bonds issued by others, the payment of which has been assumed by the utility.
A. This account shall include the face value of bonds actually issued or assumed by the utility and reacquired by it and not retired or cancelled. The account for reacquired debt shall not include securities which are held by trustees in sinking or other funds.
B. When bonds are reacquired, the difference between face value, adjusted for unamortized discount, expenses or premium, and the amount paid upon reacquisition, shall be included in Account 189, Unamortized Loss on Reacquired Debt, or Account 257, Unamortized Gain on Reacquired Debt, as appropriate. (See § 1767.15 (q).)
A. This account shall include the face value of notes payable to associated companies and the amount of open book accounts representing advances from associated companies. It does not include notes and open accounts representing indebtedness subject to current settlement which are includible in Account 233, Notes Payable to Associated Companies, or Account 234, Accounts Payable to Associated Companies.
B. The records supporting the entries to this account shall be so kept that the utility can furnish complete information concerning each note and open account.
A. This account shall include, until maturity, all long-term debt not otherwise provided for. This covers such items as receivers’ certificates, real estate mortgages executed or assumed, assessments for public improvements, notes and unsecured certificates of indebtedness not owned by associated companies, receipts outstanding for long-term debt, and other obligations maturing more than one year from the date of issue or assumption.
B. Account 224 shall be subaccounted as follows:
A. This account shall include the contractual obligation to RUS on construction loans covered by loan contract but not by executed notes.
B. This account is to be used at the option of the borrower.
A. This account shall include the total loans (for construction purposes) which are covered by loan contract but not by executed notes.
B. This account is to be used at the option of the borrower.
This account shall include the contractual liability to RUS on construction notes executed. Records shall be maintained to show separately for each class of obligation all details as to the date of obligation, date of maturity, interest date and rate, and securities for the obligation.
This account shall include the total amount of the unadvanced RUS loans for construction purposes, which are covered by executed notes. When advances are received from the RUS for construction, this account shall be credited and Account 131.2, Cash—Construction Fund—Trustee, debited with the amount of cash advanced.
This account shall include interest on RUS construction obligations deferred by the terms of mortgage notes or extension agreements.
A. This account shall include principal payments on mortgage notes paid in advance of the date due and not applied to a specific note. Also, include in this account interest savings which are accrued and added to the advance payment unapplied.
B. At such time as these payments are applied to a specific note or loan balances, this account shall be credited and the long-term debt account debited with the amount so applied.
A. This account shall include the contractual obligation to RUS on installation loans covered by loan contract but not covered by executed notes.
B. This account is to be used at the option of the borrower.
A. This account shall include the total loans for installation purposes which are covered by loan contract but not by executed notes.
B. This account is to be used at the option of the borrower.
This account shall include the contractual liability to RUS on installation notes executed.
This account shall include the total amount of unadvanced loans for installation purposes, which are covered by executed note. When advances are received from RUS, this account shall be credited and Account 131.3, Cash—Installation Loan and Collection Fund, debited with the amount of cash advanced.
This account shall include the contractual obligation to purchase CFC Capital Term Certificates and any other similar obligation relating to supplemental financing.
This account shall include the contractual liability to CFC or other supplemental lenders for that portion of funds borrowed which mature in more than one year.
This account shall include the total amount of the unadvanced loans for construction purposes, which are covered by executed notes to CFC or other supplemental lender. This account shall be debited with the face amount of notes executed. When advances are received from a supplemental lender for construction, this account shall be credited and Account 131.2, Cash—Construction Fund—Trustee, debited with the amount of cash advanced.
This account shall include the amount of other long-term debt not provided for elsewhere.
This account shall include the total amount of the unadvanced loans for construction purposes, which are covered by executed notes to others not included in the foregoing accounts. When advances are received from such supplemental lender, this account shall be credited and Account 131.2, Cash—Construction Fund—Trustee, debited with the amount of cash so advanced.
This account shall include the contractual liability to RUS on rural economic development notes executed. Records shall be maintained to show separately for each class of obligation all details as to the date of obligation, date of maturity, interest date and rate, and securities for the obligation.
This account shall include the total amount of the unadvanced RUS loans for rural economic development purposes, which are covered by executed notes. When advances are received from the RUS for rural economic development projects, this account shall be credited and Account 131.12, Cash—General—Economic Development Funds, debited with the amount of cash advanced.
A. This account shall include the excess of the cash value of consideration received over the face value upon the issuance or assumption of long-term debt securities.
B. Amounts recorded in this account shall be amortized over the life of each respective issue under a plan which will distribute the amount equitably over the life of the security. The amortization shall be on a monthly basis, with the amounts thereof to be credited to Account 429, Amortization of Premium on Debt—Credit. (See § 1767.15 (q).)
A. This account shall include the excess of the face value of long-term debt securities over the cash value of consideration received therefor, related to the issue or assumption of all types and classes of debt.
B. Amounts recorded in this account shall be amortized over the life of the respective issues under a plan which will distribute the amount equitably over the life of the securities. The amortization shall be on a monthly basis, wit the amounts thereof charged to Account 428, Amortization of Debt Discount and Expense. (See § 1767.15 (q).)
This account shall include the portion not due within one year, of the obligations recorded for the amounts applicable to leased property recorded as assets in Account 101.1, Property Under Capital Leases; Account 120.6, Nuclear Fuel Under Capital Leases; or Account 121, Nonutility Property.
No amounts shall be credited to Accounts 228.1 through 228.4 unless authorized by a regulatory authority or authorities to be collected in the utility's rates.
A. This account shall include amounts reserved by the utility for losses through accident, fire, flood, or other hazards to its own property or property leased from others, not covered by insurance. The amounts charged to Account 924, Property Insurance, or other appropriate accounts to cover such risks shall be credited to this account. A schedule of risks covered shall be maintained, giving a description of the property involved, the character of the risks covered and the rates used.
B. Charges shall be made to this account for losses covered, not to exceed the account balance. Details of these charges shall be maintained according to the year the casualty occurred which gave rise to the loss.
A. This account shall be credited with amounts charged to Account 925, Injuries and Damages, or other appropriate accounts, to meet the probable liability, not covered by insurance, for deaths or injuries to employees and others and for damages to property neither owned nor held under lease by the utility.
B. When liability for any injury or damage is admitted by the utility either voluntarily or because of the decision of a court or other lawful authority, such as a workmen's compensation board, the admitted liability shall be charged to this account and credited to the appropriate current liability account. Details of these charges shall be maintained according to the year the casualty occurred which gave rise to the loss.
Recoveries or reimbursements for losses charged to this account shall be credited hereto; the cost of repairs to property of others, if provided for herein, shall be charged to this account.
A. This account shall include provisions made by the utility and amounts contributed by employees for pensions, accident and death benefits, savings, relief, hospital, and other provident purposes, where the funds are included in the assets of the utility either in general or in segregated fund accounts.
B. Amounts paid by the utility for the purpose for which this liability is established shall be charged hereto.
C. A separate account shall be kept for each kind of provision included herein.
If employee pension or benefit plan funds are not included among the assets of the utility but are held by outside trustees, payments into such funds, or accruals therefor, shall not be included in this account.
A. This account shall include all operating provisions which are not provided for elsewhere.
B. This account shall be maintained in such a manner as to show the amount of each separate provision and the nature and amounts of the debits and credits thereto.
This account includes only provisions as may be created for operating purposes and does not include any reservations of income, the credits for which should be recorded in Account 215, Appropriated Margins.
A. This account shall be credited with amounts charged to Account 449.1, Provision for Rate Refunds, to provide for estimated refunds where the utility is collecting amounts in rates subject to refund.
B. When a refund of any amount recorded in this account is ordered by a regulatory authority, such amount shall be charged hereto and credited to Account 242, Miscellaneous Current and Accrued Liabilities.
C. Records supporting the entries to this account shall be kept so as to identify each amount recorded by the respective rate filing docket number.
Current and accrued liabilities are those obligations which have either matured or which become due within 1 year from the date thereof; except however, bonds, receivers’ certificates, and similar obligations which shall be classified as long-term debt until date of maturity; accrued taxes, such as income taxes, which shall be classified as accrued liabilities even though payable more than one year from date; compensation awards, which shall be classified as current liabilities regardless of date due; and minor amounts payable in installments which may be classified as current liabilities. If a liability is due more than 1 year from the date of issuance or assumption by the utility, it shall be credited to a long-term debt account appropriate for the transaction; except however, the current liabilities previously mentioned.
This account shall include the face value of all notes, drafts, acceptances, or other similar evidences of indebtedness, payable on demand or within a time not exceeding 1 year from the date of issue, to other than associated companies.
A. This account shall include all amounts payable by the utility within 1 year, which are not provided for in other accounts.
B. Account 232 shall be subaccounted as follows:
This account shall include amounts owing to associated companies on notes, drafts, acceptances, or other similar evidences of indebtedness payable on demand or not more than 1 year from the date of issue or creation.
Notes which are includible in Account 223, Advances from Associated Companies, shall be excluded from this account.
This account shall include amounts owing to associated companies on open accounts payable on demand.
Accounts which are includible in Account 223, Advances from Associated Companies, shall be excluded from this account.
This account shall include all amounts deposited with the utility by its customers as security for the payment of bills.
A. This account shall be credited with the amount of taxes accrued during the accounting period, corresponding debits being made to the appropriate accounts for tax charges. Such credits may be based upon estimates, but from time to time during the year as the facts become known, the amount of the periodic credits shall be adjusted so as to include, as nearly as can be determined in each year, the taxes applicable thereto. Any amount representing a prepayment of taxes applicable to the period subsequent to the date of the balance sheet, shall be shown under Account 165, Prepayments.
B. If accruals for taxes are found to be insufficient or excessive, correction therefor shall be made through current tax accruals.
C. Accruals for taxes shall be based upon the net amounts payable after credit for any discounts, and shall not include any amounts for interest on tax deficiencies or refunds. Interest received on refunds shall be credited to Account 419, Interest and Dividend Income, and interest paid on deficiencies shall
D. Account 236 shall be subaccounted as follows:
This account shall include the amount of interest accrued but not matured on all liabilities of the utility not including, however, interest which is added to the principal of the debt on which incurred. Supporting records shall be maintained so as to show the amount of interest accrued on each obligation.
A. This account shall include the total amount of patronage capital authorized to be returned and paid to patrons.
B. Account 238 shall be subaccounted as follows:
This account shall include the amount of patronage capital which has been authorized to be returned to the patron.
This account shall include the amount of patronage refunds which have been authorized to be paid to patrons.
This account shall include the amount of long-term debt (including any obligation for premiums) matured and unpaid, without specific agreement for extension of the time of payment and bonds called for redemption but not presented.
This account shall include the amount of matured interest on long-term debt or other obligations of the utility at the date of the balance sheet unless such interest is added to the principal of the debt on which incurred.
This account shall include the amount of taxes collected by the utility through payroll deductions or otherwise, pending transmittal of such taxes to the proper taxing authority.
Do not include liabilities for taxes assessed directly against the utility which are accounted for as part of the utility's own tax expense.
A. This account shall include the amount of all other current and accrued liabilities not provided for elsewhere appropriately designated and supported so as to show the nature of each liability.
B. Account 242 shall be subaccounted as follows:
This account shall include unpaid joint use pole rentals and other rentals. The records supporting the entries to this account shall be maintained so as to show for each class of rental, the amount accrued, the basis for the accrual, the accounts to which charged, and the amount of rentals paid.
This account shall include the accrued liability for salaries and wages at the end of an accounting period for which the appropriate expense or other accounts have been charged. This account is to be used whether salaries and wages are paid on a weekly, semimonthly, or monthly basis.
This account shall include the liability for accrued wages for employees’ vacation, holidays, and sick leave.
A. This account shall most commonly be used in case of workmen's compensation and public liability insurance for recording the excess amounts of earned premium over the advance premiums. Earned premiums are computed each month by applying the insurance rates to the actual payrolls.
B. Until the amount of the advance premiums is exhausted, the earned premium is credited to Account 165, Prepayments. Earned premiums in excess of the advance premiums are credited to this account.
This account shall include current and accrued liabilities not provided for elsewhere.
This account shall include the portion, due within 1 year, of the obligations recorded for the amounts applicable to leased property recorded as assets in Account 101.1, Property Under Capital Leases; Account 120.6, Nuclear Fuel Under Capital Leases; or Account 121, Nonutility Property.
This account shall include consumer advances for construction which are to be refunded either wholly or in part. When a customer is refunded the entire amount to which he is entitled, according to the agreement or rule under which the advance was made, the balance, if any, remaining in this account shall be credited to the respective plant accounts.
This account shall include advance billings and receipts and other deferred credit items, not provided for elsewhere, including amounts which cannot be entirely cleared or disposed of until additional information has been received.
This account shall include the amount of advance payments made by consumers in connection with electric service.
A. This account shall include the amounts of regulatory liabilities, not includible in other accounts, imposed on the utility by the ratemaking actions of regulatory agencies.
B. The amounts included in this account are to be established by those credits which would have been included in net income determinations in the current period under the general requirements of the Uniform System of Accounts but for it being probable that: (1) such items will be included in a different period(s) for purposes of developing the rates that the utility is authorized to charge for its utility services; or (2) refunds to customers, not provided for in other accounts, will be required. When specific identification of the particular source of the regulatory liability cannot be made or when the liability arises from revenues collected pursuant to tariffs on file at a regulatory agency, Account 407.3, Regulatory Debits, shall be debited. The amounts recorded in this account generally are to be credited to the same account that would have been credited if included in income when earned except: (1) all regulatory liabilities established through the use of Account 407.3 shall be credited to Account 407.4, Regulatory Credits; and (2) in the case of refunds, a cash account or other appropriate account should be credited when the obligation is satisfied.
C. If it is later determined that the amounts recorded in this account will not be returned to customers through rates or refunds, such amounts shall be credited to Account 421, Miscellaneous Nonoperating Income, or Account 434, Extraordinary Income, as appropriate, in the year such determination is made.
D. The records supporting the entries to this account shall be kept in such a manner that the utility can furnish full information as to the nature and amount of each regulatory liability included in this account, including justification for inclusion of such amounts in this account.
A. This account shall be credited with all investment tax credits deferred by companies which have elected to follow deferral accounting, partial or full, rather than recognizing, in the income statement, the total benefits of the tax credit as realized. After such election, a company may not transfer amounts from this account, except as authorized herein and in Account 411.4, Investment Tax Credit Adjustments, Utility Operations; Account 411.5, Investment Tax Credit Adjustments, Nonutility Operations; and Account 420, Investment Tax Credits, or with approval of RUS.
B. Where the company's accounting provides that investment tax credits are to be passed on to customers, this account shall be debited and Account 411.4 credited with a proportionate amount determined in relation to the average useful life of electric utility property to which the tax credits relate or such lesser period of time as allowed by a regulatory agency having rate jurisdiction. If, however, the deferral procedure provides that investment tax credits are not to be passed on to customers, the proportionate restorations to income shall be credited to Account 420.
C. Subdivisions of this account, by department, shall be maintained for deferred investment tax credits that are related to nonelectric utility or other operations. Contra entries affecting such account subdivisions shall be appropriately recorded in Account 413, Expenses of Electric Plant Leased to Others; or Account 414, Other Utility Operating Income. Use of deferral or nondeferral accounting procedures adopted for nonelectric utility or other operations are to be followed on a consistent basis.
D. Separate records for electric and nonelectric utility or other operations shall be maintained identifying the properties giving
This account shall include gains from the sale or other disposition of property previously recorded in Account 105, Electric Plant Held for Future Use, under the provisions of Paragraphs B, C, and D thereof, where such gains are significant and are to be amortized over a period of 5 years, unless otherwise authorized by RUS. The amortization of the amounts in this account shall be made by credits to Account 411.6, Gains from Disposition of Utility Plant. (See Account 105, Electric Plant Held for Future Use.)
This account shall include the amounts of discount realized upon reacquisition or redemption of long-term debt. The amounts in this account shall be amortized in accordance with § 1767.15 (q).
Before using the deferred tax accounts provided below, refer to § 1767.15 (r), Comprehensive Interperiod Income Tax Allocation. The text of these accounts are designed primarily to cover deferrals of Federal income taxes. However, they are also to be used when making deferrals of state and local income taxes. Utilities and licensees which, in addition to an electric utility department, have another utility department, gas or water and nonutility property, and which have deferred taxes on income with respect thereto shall separately classify such deferrals in the accounts provided below so as to allow ready identification of items relating to each utility deductions.
A. This account shall include tax deferrals resulting from adoption of the principles of comprehensive interperiod tax allocation described in § 1767.15 (s) that relate to property for which the utility has availed itself of the use of accelerated (5-year) amortization of (1) certified defense facilities as permitted by Section 168 of the Internal Revenue Code, and (2) certified pollution control facilities as permitted by Section 169 of the Internal Revenue Code.
B. This account shall be credited and Account 410.1, Provision for Deferred Income Taxes, Utility Operating Income, or Account 410.2, Provision for Deferred Income Taxes, Other Income and Deductions, as appropriate, shall be debited with tax effects related to property described in Paragraph A above where taxable income is lower than pretax accounting income due to differences between the periods in which revenue and expense transactions affect taxable income and the periods in which they enter into the determination of pretax accounting income.
C. This account shall be debited and Account 411.1, Provision for Deferred Income Taxes—Credit, Utility Operating Income, or Account 411.2, Provision for Deferred Income Taxes-Credit, Other Income and Deductions, as appropriate, shall be credited with taxes related to property described in Paragraph A above where taxable income is higher than pretax accounting income due to differences between the periods in which revenue and expense transactions affect taxable income and the periods in which they enter into the determination of pretax accounting income.
D. The utility is restricted in its use of this account to the purposes set forth above. It shall not transfer the balance in this account or any portion thereof to retained earnings or make any use thereof except as provided in the text of this account without prior approval of RUS. Upon the disposition by sale, exchange, transfer, abandonment, or premature retirement of plant on which there is a related balance therein, this account shall be charged with an amount equal to the related income tax expense, if any, arising from such disposition and Account 411.1, Provision for Deferred Income Taxes—Credit, Utility Operating Income, or Account 411.2, Provision for Deferred Income Taxes—Credit, Other Income and Deductions, as appropriate, shall be credited. When the remaining balance, after consideration of any related income tax expense, is less than $25,000, this account shall be charged and Account 411.1 or Account 411.2, as appropriate, credited with such balance. If after consideration of any related income tax expense, there is a remaining amount of $25,000 or more, RUS shall authorize or direct how such amount shall be accounted for at the time approval for the disposition of accounting is granted. When plant is disposed of by transfer to a wholly owned subsidiary, the related balance in this account shall also be transferred. When the disposition relates to retirement of an item or items under a group method of depreciation where there is no tax effect in the year of retirement, no entries are required in this account if it can be determined that the related balances would be necessary to be retained to offset future group item tax deficiencies.
A. This account shall include the tax deferrals resulting from adoption of the principle
B. This account shall be credited and Account 410.1, Provision for Deferred Income Taxes, Utility Operating Income, or Account 410.2, Provision for Deferred Income Taxes, Other Income and Deductions, as appropriate, shall be debited with tax effects related to property described in Paragraph A above where taxable income is lower than pretax accounting income due to differences between the periods in which revenue and expense transactions affect taxable income and the periods in which they enter into the determination of pretax accounting income.
C. This account shall be debited and Account 411.1, Provision for Deferred Income Taxes—Credit, Utility Operating Income, or Account 411.2, Provision for Deferred Income Taxes—Credit, Other Income and Deductions, as appropriate, shall be credited with tax effects related to property described in Paragraph A above where taxable income is higher than pretax accounting income due to differences between the periods in which revenue and expense transactions affect taxable income and the periods in which they enter into the determination of pretax accounting income.
D. The utility is restricted in its use of this account to the purposes set forth above. It shall not transfer the balance in this account or any portion thereof to retained earnings or make any use thereof except as provided in the text of this account without prior approval of RUS. Upon the disposition by sale, exchange, transfer, abandonment, or premature retirement of plant on which there is a related balance herein, this account shall be charged with an amount equal to the related income tax expense, if any, arising from such disposition and Account 411.1, Provision for Deferred Income Taxes—Credit, Utility Operating Income, or Account 411.2, Provision for Deferred Income Taxes—Credit, Other Income and Deductions, shall be credited. When the remaining balance after consideration of any related tax expenses, is less than $25,000, this account shall be charged and Account 411.1 or Account 411.2, as appropriate, credited with such balance. If after consideration any related income tax expense, there a remaining amount of $25,00 or more, RUS shall authorize or direct how such amount shall be accounted for at the time approval for the disposition of accounting is granted. When plant is disposed of by transfer to a wholly owned subsidiary, the related balance in this account shall also be transferred. When the disposition relates to retirement of an item or items under a group method of depreciation where there is no tax effect in the year of retirement, no entries are required in this account if it can be determined that the related balance would be necessary to be retained to offset future group item tax deficiencies.
A. This account shall include all credit tax deferrals resulting from the adoption of the principles of comprehensive interperiod income tax allocation described in § 1767.15 (r) other than those deferrals which are includible in Account 281, Accumulated Deferred Income Taxes—Accelerated Amortization Property, and Account 282, Accumulated Deferred Income Taxes—Other Property.
B. This account shall be credited and Account 410.1, Provision for Deferred Income Taxes, Utility Operating Income, or Account 410.2, Provision for Deferred Income Taxes, Other Income and Deductions, as appropriate, shall be debited with tax effects related to items described in Paragraph A above where taxable income is lower than pretax accounting income due to differences between the periods in which revenue and expense transactions affect taxable income and the periods in which they enter into the determination of pretax accounting income.
C. This account shall be debited and Account 411.1, Provision for Deferred Income Taxes—Credit, Utility Operating Income or Account 411.2, Provision for Deferred Income Taxes—Credit, Other Income and Deductions, as appropriate, shall be credited with tax effects related to items described in Paragraph A above where taxable income is higher than pretax accounting income due to differences between the periods in which revenue and expense transactions affect taxable income and the periods in which they enter into the determination of pretax accounting income.
D. Records with respect to entries to this account, as described above, and the account balance, shall be so maintained as to show the factors of calculation with respect to each annual amount of the item or class of items.
E. The utility is restricted in its use of this account to the purposes set forth above. It shall not transfer the balance in the account or any portion thereof to retained earnings or to any other account or make any use thereof except as provided in the text of this account, without prior approval of RUS. Upon the disposition by sale, exchange, transfer, abandonment, or premature retirement of items on which there is a related balance herein, this account shall be charged with an amount equal to the related income tax effect, if any, arising from such disposition and Account 411.1, Provision For Deferred Income Taxes—Credit, Utility Operating Income, or Account 411.2, Provision For Deferred Income Taxes-Credit, Other Income and Deductions, as appropriate, shall be credited. When the remaining balance,
When plant is disposed of by transfer to a wholly owned subsidiary, the related balance in this account shall also be transferred. When the disposition relates to retirement of an item or items under a group method of depreciation where there is no tax effect in the year of retirement, no entries are required in this account if it can be determined that the related balance would be necessary to be retained to offset future group item tax deficiencies.
The plant accounts identified in this section shall be used by all RUS borrowers.
This account shall include all fees paid to Federal or state governments for the privilege of incorporation and expenditures incident to organizing the corporation, partnership, or other enterprise and putting it into readiness to do business.
1. Cost of obtaining certificates authorizing an enterprise to engage in the public-utility business.
2. Fees and expenses for incorporation.
3. Fees and expenses for mergers or consolidations.
4. Office expenses incident to organizing the utility.
5. Stock and minute books and corporate seal.
This account shall not include any discounts upon securities issued or assumed; nor shall it include any costs incident to negotiating loans, selling bonds or other evidences of debt or expenses in connection with the authorization, issuance, or sale of capital stock.
Exclude from this account and include in the appropriate expense account the cost of preparing and filing papers in connection with the extension of the term of incorporation unless the first organization costs have been written off. When charges are made to this account for expenses incurred in mergers, consolidations, or reorganizations, amounts previously included herein or in similar accounts in the books of the companies concerned shall be excluded from this account.
A. This account shall include amounts paid to the Federal Government, to a state or to a political subdivision thereof in consideration for franchises, consents, water power licenses, or certificates, running in perpetuity or for a specified term of more than one year, together with necessary and reasonable expenses incident to procuring such franchises, consents, water power licenses, or certificates of permission and approval, including expenses of organizing and merging separate corporations, where statutes require, solely for the purpose of acquiring franchises.
B. If a franchise, consent, water power license, or certificate is acquired by assignment, the charge to this account in respect thereof shall not exceed the amount paid therefor by the utility to the assignor, nor shall it exceed the amount paid by the original grantee, plus the expense of acquisition to such grantee. Any excess of the amount actually paid by the utility over the amount above specified shall be charged to Account 426.5, Other Deductions.
C. When any franchise has expired, the book cost thereof shall be credited hereto and charged to Account 426.5, Other Deductions, or to Account 111, Accumulated Provision for Amortization of Electric Utility Plant, as appropriate.
D. Records supporting this account shall be kept so as to show separately the book cost of each franchise or consent.
Annual or other periodic payments under franchises shall not be included herein but in the appropriate operating expense account.
A. This account shall include the cost of patent rights, licenses, privileges, and other intangible property necessary or valuable in the conduct of utility operations and not specifically chargeable to any other account.
B. When any item included in this account is retired or expires, the book cost thereof shall be credited hereto and charged to Account 426.5, Other Deductions, or Account 111, Accumulated Provision for Amortization of Electric Utility Plant, as appropriate.
C. This account shall be maintained in such a manner that the utility can furnish full information with respect to the amounts included herein.
This account shall include the cost of land and land rights used in connection with steam-power generation. (See § 1767.16 (g).)
This account shall include the cost, in place, of structures and improvements used in connection with steam-power generation. (See § 1767.16 (h).)
Include steam production roads and railroads in this account.
This account shall include the cost installed of furnaces, boilers, coal and ash handling and coal preparing equipment, steam and feed water piping, boiler apparatus, and accessories used in the production of steam, mercury, or other vapor, to be used primarily for generating electricity.
1. Ash handling equipment, including hoppers, gates, cars, conveyors, hoists, sluicing equipment, including pumps and motors, sluicing water pipe and fittings, sluicing trenches and accessories, except sluices which are a part of a building.
2. Boiler feed system, including feed water heaters, evaporator condensers, heater drain pumps, heater drainers, deaerators, and vent condensers, boiler feed pumps, surge tanks, feed water regulators, feed water measuring equipment, and all associated drives.
3. Boiler plant cranes and hoists and associated drives.
4. Boilers and equipment, including boilers and baffles, economizers, superheaters, soot blowers, foundations and settings, water walls, arches, grates, insulation, blowdown system, drying out of new boilers, also associated motors or other power equipment.
5. Breeching and accessories, including breeching, dampers, soot spouts, hoppers and
6. Coal handling and storage equipment, including coal towers, coal lorries, coal cars, locomotives and tracks when devoted principally to the transportation of coal, hoppers, downtakes, unloading and hoisting equipment, skip hoists and conveyors, weighing equipment, magnetic separators, cable ways, and housings and supports for coal handling equipment.
7. Draft equipment, including air preheaters and accessories, induced and forced draft fans, air ducts, combustion control mechanisms, and associated motors or other power equipment.
8. Gas-burning equipment, including holders, burner equipment and piping, and control equipment.
9. Instruments and devices, including all measuring, indicating, and recording equipment for boiler plant service together with mountings and supports.
10. Lighting systems.
11. Oil-burning equipment, including tanks, heaters, pumps with drive, burner equipment and piping, and control equipment.
12. Pulverized fuel equipment, including pulverizers, accessory motors, primary air fans, cyclones and ducts, dryers, pulverized fuel bins, pulverized fuel conveyors and equipment, burners, burner piping, priming equipment, air compressors, and motors.
13. Stacks, including foundations and supports, stack steel and ladders, stack brickwork, stack concrete, stack lining, stack painting (first), when set on separate foundations, independent of substructures or superstructures of building.
14. Station piping, including pipe, valves, fittings, separators, traps, desuperheaters, hangers, excavation, and covering for station piping system, including all steam, condensate, boiler feed and water supply piping, but not condensing water, plumbing, building heating, oil, gas, air piping or piping specifically provided for in Account 313.
15. Stoker or equivalent feeding equipment, including stokers and accessory motors, clinker grinders, fans and motors.
16. Ventilating equipment.
17. Water purification equipment, including softeners and accessories, evaporators and accessories, heat exchanges, filters, tanks for filtered or softened water, pumps, and motors.
18. Water-supply systems, including pumps, motors, strainers, raw-water storage tanks, boiler wash pumps, intake and discharge pipes, and tunnels not a part of a building.
19. Wood fuel equipment, including hoppers, fuel hogs and accessories, elevators and conveyors, bins and gates, spouts, measuring equipment and associated drives.
When the system for supplying boiler or condenser water is elaborate, and when it includes a dam, reservoir, canal, pipe line, cooling ponds, or where gas or oil is used as a fuel for producing steam and is supplied through a pipe line system owned by the utility, the cost of such special facilities shall be charged to a subdivision of Account 311, Structures and Improvements.
This account shall include the cost installed of steam engines, reciprocating or rotary, and their associated auxiliaries; and engine-driven main generators, except turbogenerator units.
1. Air cleaning and cooling apparatus, including blowers, drive equipment, air ducts, not a part of building, louvers, pumps, and hoods.
2. Belting, shafting, pulleys, and reduction gearing.
3. Circulating pumps, including connections between condensers and intake and discharge tunnels.
4. Cooling system, including towers, pumps, tank, and piping.
5. Condensers, including condensate pumps, air and vacuum pumps, ejector unloading valves and vacuum breakers, expansion devices, and screens.
6. Cranes and hoists, including items wholly identified with items listed herein.
7. Engines, reciprocating or rotary.
8. Fire-extinguishing systems.
9. Foundations and settings, especially constructed for and not expected to outlast the apparatus for which provided.
10. Generators-Main, a.c. or d.c., including field rheostats and connections for self-excited units, and excitation systems when identified with the generating unit.
11. Governors.
12. Lighting systems.
13. Lubricating systems, including gauges, filters, tanks, pumps, piping, and motors.
14. Mechanical meters, including gauges, recording instruments, sampling and testing equipment.
15. Piping-main exhaust, including connections between generator and condenser and between condenser and hotwell.
16. Piping-main stream, including connections from main throttle valve to turbine inlet.
17. Platforms, railings, steps, and gratings appurtenant to apparatus listed herein.
18. Pressure oil system, including accumulators, pumps, piping, and motors.
19. Throttle and inlet valve.
20. Tunnels, intake and discharge, for condenser system, when not a part of a structure.
21. Water screens and motors.
This account shall include the cost installed of main turbine-driven units and accessory equipment used in generating electricity by steam.
1. Air leaning and cooling apparatus, including blowers, drive equipment, air ducts not a part of building, louvers, pumps, and hoods.
2. Circulating pumps, including connections between condensers and intake and discharge tunnels.
3. Condensers, including condensate pumps, air and vacuum pumps, ejectors, unloading valves and vacuum breakers, expansion devices, and screens.
4. Generator hydrogen, gas piping, and detrainment equipment.
5. Cooling system, including towers, pumps, tanks, and piping.
6. Cranes and hoists, including items wholly identified with items listed herein.
7. Excitation system, when identified with main generating units.
8. Fire-extinguishing systems.
9. Foundations and settings, especially constructed for and not expected to outlast the apparatus for which provided.
10. Governors.
11. Lighting systems.
12. Lubricating systems, including gauges, filters, water separators, tanks, pumps, piping, and motors.
13. Mechanical meters, including gauges, recording instruments, sampling and testing equipment.
14. Piping-main exhaust, including connections between turbogenerator and condenser and between condenser and hotwell.
15. Piping-main steam, including connections from main throttle valve to turbine inlet.
16. Platforms, railings, steps, and gratings appurtenant to apparatus listed herein.
17. Pressure oil systems, including accumulators, pumps, and piping motors.
18. Steelwork, specially constructed for apparatus listed herein.
19. Throttle and inlet valve.
20. Tunnels, intake and discharge, for condenser system, when not a part of structure, and water screens.
21. Turbogenerators-main, including turbine and generator, field rheostats and electric connections for self-excited units.
22. Water screens and motors.
23. Moisture separator for turbine steam.
24. Turbine lubricating oil (initial charge).
This account shall include the cost installed of auxiliary generating apparatus, conversion equipment, and equipment used primarily in connection with the control and switching of electric energy produced by steam power, and the protection of electric circuits and equipment, except electric motors used to drive equipment included in other accounts. Such motors shall be included in the account in which the equipment with which they are associated is included.
1. Auxiliary generators, including boards, compartments, switching equipment, control equipment, and connections to auxiliary power bus.
2. Excitation system, including motor, turbine and dual-drive exciter sets and rheostats, storage batteries and charging equipment, circuit breakers, panels and accessories, knife switches and accessories, surge arresters, instrument shunts, conductors and conduit, special supports for conduit, generator field and exciter switch panels, exciter bus tie panels, generator and exciter rheostats and special housing and protective screens.
3. Generator main connections, including oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks, current transformers, potential transformers, protective relays, isolated panels and equipment, conductors and conduit, special supports for generator main leads, grounding switch, and special housings and protective screens.
4. Station buses including main, auxiliary, transfer, synchronizing and fault ground buses, including oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks, reactors and accessories, voltage regulators and accessories, compensators, resistors, starting transformers, current transformers, potential transformers, protective relays, storage batteries and charging equipment, isolated panels and equipment, conductors and conduit, special supports, special housings, concrete pads, general station grounding system, special fire-extinguishing system, and test equipment.
5. Station control system, including station switchboards with panel wiring, panels with instruments and control equipment only, panels with switching equipment mounted or mechanically connected, truck-type boards complete, cubicles, station supervisory control boards, generator and exciter signal stands, temperature recording devices, frequency-control equipment, master clocks, watt-hour meters and synchronoscope in the turbine room, station totalizing wattmeter, boiler-room load indicator equipment, storage batteries, panels and charging sets, instrument transformers for supervisory metering, conductors and conduit, special supports for conduit, switchboards, batteries, special housing for batteries, protective screens, and doors.
Do not include in this account transformers and other equipment used for changing the voltage or frequency of electricity for the purposes of transmission or distribution.
When any item of equipment listed herein is used wholly to furnish power to equipment included in another account, its cost shall be included in such other account.
This account shall include the cost installed of miscellaneous equipment in and about the steam generating plant devoted to general station use, and which is not properly includible in any of the foregoing steam-power production accounts.
1. Compressed air and vacuum cleaning systems, including tanks, compressors, exhausters, air filters, and piping.
2. Cranes and hoisting equipment, including cranes, cars, crane rails, monorails, and hoists with electric and mechanical connections.
3. Fire-extinguishing equipment for general station use.
4. Foundations and settings specially constructed for and not expected to outlast the apparatus for which provided.
5. Locomotive cranes not includible elsewhere.
6. Locomotives not includible elsewhere.
7. Marine equipment, including boats and barges.
8. Miscellaneous belts, pulleys, and countershafts.
9. Miscellaneous equipment, including atmospheric and weather indicating devices, intrasite communication equipment, laboratory equipment, signal systems, callophones, emergency whistles and sirens, fire alarms, insect-control equipment, and other similar equipment.
10. Railway cars not includible elsewhere.
11. Refrigerating systems, including compressors, pumps, and cooling coils.
12. Station maintenance equipment, including lathes, shapers, planers, drill presses, hydraulic presses, and grinders with motors, shafting, hangers, and pulleys.
13. Ventilating equipment, including items wholly identified with apparatus listed herein.
When any item of equipment listed herein is wholly used in connection with equipment included in another account, its cost shall be included in such other account.
This account shall include the cost of land and land rights used in connection with nuclear power generation. (See § 1767.16(g).)
This account shall include the cost, in place, of structures and improvements used and useful in connection with nuclear power generation. (See § 1767.16 (h).)
Include vapor containers and nuclear production roads and railroads in this account.
This account shall include the installed cost of reactors, reactor fuel handling and storage equipment, pressurizing equipment, coolant charging equipment, purification and discharging equipment, radioactive waste treatment and disposal equipment, boilers, steam and feed water piping, reactor and boiler apparatus and accessories and other reactor plant equipment used in the production of steam to be used primarily for generating electricity, including auxiliary superheat boilers and associated equipment in systems which change temperatures or pressure of steam from the reactor system.
1. Auxiliary superheat boilers and associated fuel storage handling preparation and burning equipment. (See Account 312, Boiler Plant Equipment, for items, but exclude water supply, water flow lines, and steam lines, as well as other equipment not strictly within the superheat function.)
2. Boiler feed system, including feed water heaters, evaporator condensers, heater drain pumps, heater drainers, deaerators, and vent condensers, boiler feed pumps, surge tanks, feed water regulators, feed water measuring equipment, and all associated drivers.
3. Boilers and heat exchangers.
4. Instruments and devices, including all measuring, indicating, and recording equipment for reactor and boiler plant service together with mountings and supports.
5. Lighting systems.
6. Moderators, such as heavy water, and graphite, initial charge.
7. Reactor coolant; primary and secondary systems, initial charge.
8. Radioactive waste treatment and disposal equipment, including tanks, ion exchangers, incinerators, condensers, chimneys, and diluting fans and pumps.
9. Foundations and settings, especially constructed for and not expected to outlast the apparatus for which provided.
10. Reactor including shielding, control rods and mechanisms.
11. Reactor fuel handling equipment, including manipulating and extraction tools, underwater viewing equipment, seal cutting and welding equipment, fuel transfer equipment, and fuel disassembly machinery.
12. Reactor fuel element failure detection system.
13. Reactor emergency poison container and injection system.
14. Reactor pressuring and pressure relief equipment, including pressurizing tanks and immersion heaters.
15. Reactor coolant or moderator circulation charging, purification, and discharging equipment, including tanks, pumps, heat exchangers, demineralizers, and storage.
16. Station piping, including pipes, valves, fittings, separators, traps, desuperheaters, hangers, excavation, and covering for station piping system, including all-reactor coolant, steam, condensate, boiler feed and water supply piping, but not condensing water, plumbing, building heating, oil, gas, or air piping.
17. Ventilating equipment.
18. Water purification equipment, including softeners, demineralizers and accessories, evaporators and accessories, heat exchangers, filters, tanks for filtered or softened water, pumps, and motors.
19. Water supply systems, including pumps, motors, strainers, raw-water storage tanks, boiler wash pumps, intake and discharge pipes and tunnels not a part of a building.
20. Reactor plant cranes and hoists, and associated drives.
When the system for supplying boiler or condenser water is elaborate, as when it includes a dam, reservoir, canal, pipe lines, or cooling ponds, the cost of such special facilities shall be charged to a subdivision of Account 321, Structures and Improvements.
This account shall include the cost installed of main turbine-driven units and accessory equipment used in generating electricity by steam.
1. Air cleaning and cooling apparatus, including blowers, drive equipment, air ducts, not a part of building, louvers, pumps, and hoods.
2. Circulating pumps, including connections between condensers, and intake and discharge tunnels.
3. Condensers, including condensate pumps, air and vacuum pumps, ejectors, unloading valves and vacuum breakers, expansion devices, and screens.
4. Generator hydrogen gas piping system and hydrogen detrainment equipment, and bulk hydrogen gas storage equipment.
5. Cooling system, including towers, pumps, tanks, and piping.
6. Cranes and hoists, including items wholly identified with items listed herein.
7. Excitation system, when identified with main generating units.
8. Fire extinguishing systems.
9. Foundations and settings, especially constructed for and not expected to outlast the apparatus for which provided.
10. Governors.
11. Lighting systems.
12. Lubricating systems, including gauges, filters, water separators, tanks, pumps, piping, and motors.
13. Mechanical meters, including gauges, recording instruments, sampling and testing equipment.
14. Piping-main steam, including connections between turbogenerator and condenser and between condenser and hotwell.
15. Piping-main steam, including connections from main throttle valve to turbine inlet.
16. Platforms, railings, steps, and gratings appurtenant to apparatus listed herein.
17. Pressure oil systems, including accumulators, pumps, piping, and motors.
18. Steelwork, specially constructed for apparatus listed herein.
19. Throttle and inlet valve.
20. Tunnels, intake and discharge, for condenser system, when not a part of structure, and water screens.
21. Turbogenerators-main, including turbine and generator, field rheostats and electric connections for self-excited units.
22. Water screens and motors.
23. Moisture separators for turbine steam.
24. Turbine lubricating oil, initial charge.
This account shall include the cost installed of auxiliary generating apparatus, conversion equipment, and equipment used primarily in connection with the control and switching of electric energy produced by nuclear power, and the protection of electric circuits and equipment, except electric motors used to drive equipment included in other accounts. Such motors shall be included in the account in which the equipment with which they are associated is included.
Do not include in this account transformers and other equipment used for changing the voltage or frequency of electric energy for the purpose of transmission or distribution.
1. Auxiliary generators, including boards, compartments, switching equipment, control equipment, and connections to auxiliary power bus.
2. Excitation system, including motor, turbine and dual-drive exciter sets and rheostats, storage batteries, and charging equipment, circuit breakers, panels and accessories, knife switches and accessories, surge arresters, instrument shunts, conductors and conduit, special supports for conduit, generator field and exciter switch panels, exciter
3. Generator main connections, including oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks, current transformers, potential transformers, protective relays, isolated panels and equipment, conductors and conduit, special supports for generator main leads, grounding switch, special housings and protective screens.
4. Station buses, including main, auxiliary, transfer, synchronizing and fault ground buses, including oil circuit breakers and accessories, operating mechanisms and interlocks, reactors and accessories, voltage regulators and accessories, compensators, resistors, starting transformers, current transformers, potential transformers, protective relays, storage batteries and charging equipment, isolated panels and equipment, conductors and conduit, special supports, special housings, concrete pads, general station grounding system, fire-extinguishing system, and test equipment.
5. Station control system, including station switchboards with panel wiring, panels with instruments and control equipment only, panels with switching equipment mounted or mechanically connected, truck-type boards complete, cubicles, station supervisory control boards, generator and exciter signal stands, temperature recording devices, frequency-control equipment, master clocks, watt-hour meters and synchronoscope in the turbine room, station totalizing wattmeter, boiler-room load indicator equipment, storage batteries, panels and charging sets, instrument transformers for supervisory metering, conductors and conduit, special supports for conduit, switchboards, batteries, special housing for batteries, protective screens, and doors.
When any item of equipment listed herein is used wholly to furnish power to equipment included in another account, its cost shall be included in such other account.
This account shall include the cost installed of miscellaneous equipment in and about the nuclear generating plant devoted to general station use, which is not properly includible in any of the foregoing nuclear-power production accounts.
1. Compressed air and vacuum cleaning systems, including tanks, compressors, exhausters, air filters, and piping.
2. Cranes and hoisting equipment, including cranes, cars, crane rails, monorails, and hoists with electric and mechanical connections.
3. Fire-extinguishing equipment for general station and site use.
4. Foundations and settings specially constructed for and not expected to outlast the apparatus for which provided.
5. Locomotive cranes not includible elsewhere.
6. Locomotives not included elsewhere.
7. Marine equipment, including boats and barges.
8. Miscellaneous belts, pulleys, and countershafts.
9. Miscellaneous equipment, including atmospheric and weather recording devices, intrasite communication equipment, laboratory equipment, signal systems, callophones, emergency whistles and sirens, fire alarms, insect-control equipment, and other similar equipment.
10. Railway cars or special shipping containers not includible elsewhere.
11. Refrigerating systems, including compressors, pumps, and cooling coils.
12. Station maintenance equipment, including lathes, shapers, planers, drill presses, hydraulic presses, and grinders with motors, shafting, hangers, and pulleys.
13. Ventilating equipment, including items wholly identified with apparatus listed herein.
14. Station and area radiation monitoring equipment.
When any item of equipment listed herein is wholly used in connection with equipment included in another account, its cost shall be included in such other account.
This account shall include the cost of land and land rights used in connection with hydraulic power generation. (See § 1767.16 (g).) It shall also include the cost of land and land rights used in connection with (1) the conservation of fish and wildlife, and (2) recreation. Separate subaccounts shall be maintained for each of the above.
This account shall include the cost, in place, of structures and improvements used in connection with hydraulic power generation. (See § 1767.16 (h).) It shall also include the cost, in place, of structures and improvements used in connection with (1) the conservation of fish and wildlife, and (2) recreation. Separate subaccounts shall be maintained for each of the above.
This account shall include the cost in place of facilities used for impounding, collecting, storage, diversion, regulation, and delivery of water used primarily for generating electricity. It shall also include the cost in place
1. Bridges and culverts, when not a part of roads or railroads.
2. Clearing and preparing land.
3. Dams, including wasteways, spillways, flash boards, spillway gates with operating and control mechanisms, tunnels, gate houses, and fish ladders.
4. Dikes and embankments.
5. Electric system, including conductors, control system, transformers, and lighting fixtures.
6. Excavation, including shoring, bracing, bridging, refill, and disposal of excess excavated material.
7. Foundations and settings specially constructed for and not expected to outlast the apparatus for which provided.
8. Intakes, including trash racks, rack cleaners, control gates and valves with operating mechanisms, and intake house when not a part of station structure.
9. Platforms, railings, steps, and gratings appurtenant to structures listed herein.
10. Power line wholly identified with items included herein.
11. Retaining walls.
12. Water conductors and accessories, including canals, tunnels, flumes, penstocks, pipe conductors, forebays, tailraces, navigation locks and operating mechanisms, water-hammer and surge tanks, and supporting trestles and structures.
13. Water storage reservoirs, including dams, flashboards, spillway gates and operating mechanisms, inlet and outlet tunnels, regulating valves and valve towers, silt and mud sluicing tunnels with valve or gate towers, and all other structures wholly identified with any of the foregoing items.
This account shall include the cost installed of water wheels and hydraulic turbines (from connection with penstock or flume to tailrace) and generators driven thereby devoted to the production of electricity by water power or for the production of power for industrial or other purposes, if the equipment used for such purposes is a part of the hydraulic power plant works.
1. Exciter water wheels and turbines, including runners, gates, governors, pressure regulators, oil pumps, operating mechanisms, scroll cases, draft tubes, and draft-tube supports.
2. Fire-extinguishing equipment.
3. Foundations and settings, specially constructed for and not expected to outlast the apparatus for which provided.
4. Generator cooling system, including air cooling and washing apparatus, air fans and accessories, and air ducts.
5. Generators-main, a.c. or d.c., including field rheostats and connections for self-excited units and excitation system when identified with the generating unit.
6. Lighting systems.
7. Lubricating systems, including gauges, filters, tanks, pumps, and piping.
8. Main penstock valves and appurtenances, including main valves, control equipment, bypass valves and fittings, and other accessories.
9. Main turbines and water wheels, including runners, gates, governors, pressure regulators, oil pumps, operating mechanisms, scroll cases, draft tubes, and draft-tube supports.
10. Mechanical meters and recording instruments.
11. Miscellaneous water-wheel equipment, including gauges, thermometers, meters, and other instruments.
12. Platforms, railings, steps, and gratings appurtenant to apparatus listed herein.
13. Scroll case filling and drain system, including gates, pipe, valves, and fittings.
14. Water-actuated pressure-regulator system, including tanks and housings, pipes, valves, fittings and insulators, piers and anchorage, and excavation and backfill.
This account shall include the cost installed of auxiliary generating apparatus, conversion equipment, and equipment used primarily in connection with the control and switching of electric energy produced by hydraulic power and the protection of electric circuits and equipment, except electric motors used to drive equipment included in other accounts, such motors being included in the account in which the equipment with which they are associated is included.
1. Auxiliary generators, including boards, compartments, switching equipment, control equipment, and connections to auxiliary power bus.
2. Excitation system, including motor, turbine, and dual-drive exciter sets and rheostats, storage batteries and charging equipment, circuit breakers, panels and accessories, knife switches and accessories, surge arresters, instrument shunts, conductors and conduit, special supports for conduit, generator field and exciter switch panels, exciter bus tie panels, generator and exciter rheostats and special housings and protective screens.
3. Generator main connections, including oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks, current transformers, potential transformers, protective relays, isolated panels and equipment, conductors and conduit, special supports for generator main leads, grounding switch, and special housings and protective screens.
4. Station buses, including main, auxiliary, transfer, synchronizing, and fault ground buses, including oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks, reactors and accessories, voltage regulators and accessories, compensators, resistors starting transformers, current transformers, potential transformers, protective relays, storage batteries, and charging equipment, isolated panels and equipment, conductors and conduit, special supports, special fire-extinguishing system, and test equipment.
5. Station control system, including station switchboards with panel wiring, panels with instruments and control equipment only, panels with switching equipment mounted for mechanically connected, truck-type boards complete, cubicles, station supervisory control devices, frequency control equipment, master clocks, watt-hour meter, station totalizing watt-meter, storage batteries, panels and charging sets, instrument transformers for supervisory metering, conductors and conduit, special supports for conduit, switchboards, batteries, special housings for batteries, protective screens, and doors.
Do not include in this account transformers and other equipment used for changing the voltage or frequency of electricity for the purpose of transmission or distribution.
When any item of equipment listed herein is used wholly to furnish power to equipment, it shall be included in such equipment account.
This account shall include the cost installed of miscellaneous equipment in and about the hydroelectric generating plant which is devoted to general station use and is not properly includible in other hydraulic production accounts. It shall also include the cost of equipment used in connection with (1) the conservation of fish and wildlife, and (2) recreation. Separate subaccounts shall be maintained for each of the above.
1. Compressed air and vacuum cleaning systems, including tanks, compressors, exhausters, air filters, and piping.
2. Cranes and hoisting equipment, including cranes, cars, crane rails, monorails, and hoists with electric and mechanical connections.
3. Fire-extinguishing equipment for general station use.
4. Foundations and settings, specially constructed for and not expected to outlast the apparatus for which provided.
5. Locomotive cranes not includible elsewhere.
6. Locomotives not includible elsewhere.
7. Marine equipment, including boats and barges.
8. Miscellaneous belts, pulleys, and countershafts.
9. Miscellaneous equipment, including atmospheric and weather indicating devices. Intrasite communication equipment, laboratory equipment, insect control equipment, signal systems, callophones, emergency whistles and sirens, fire alarms, and other similar equipment.
10. Railway cars, not includible elsewhere.
11. Refrigerating system, including compressors, pumps, and cooling coils.
12. Station maintenance equipment, including lathes, shapers, planers, drill presses, hydraulic presses, and grinders with motors, shafting, hangers, and pulleys.
13. Ventilating equipment, including items wholly identified with apparatus listed herein.
When any item of equipment, listed herein, is used wholly in connection with equipment included in another account, its cost shall be included in such other account.
This account shall include the cost of roads, railroads, trails, bridges, and trestles used primarily as production facilities. It also includes those roads necessary to connect the plant with highway transportation systems, except when such roads are dedicated to public use and maintained by public authorities.
1. Bridges, including foundations, piers, girders, trusses, and flooring.
2. Clearing land.
3. Railroads, including grading, ballast, ties, rails, culverts, and hoists.
4. Roads, including grading, surfacing, and culverts.
5. Structures, constructed and maintained in connection with items listed herein.
6. Trails, including grading, surfacing, and culverts.
7. Trestles, including foundations, piers, girders, trusses, and flooring.
Roads intended primarily for connecting employees’ houses with the power plant, and roads used primarily in connection with fish and wildlife, and recreation activities, shall not be included herein but in Account 331, Structures and Improvements.
The cost of temporary roads and bridges necessary during the period of construction but abandoned or dedicated to public use upon completion of the plant, shall not be included herein but shall be charged to the accounts appropriate for the construction.
This account shall include the cost of land and land rights used in connection with other power generation. (See § 1767.16 (g).)
This account shall include the cost in place of structures and improvements used in connection with other power generation. (See § 1767.16 (h).)
This account shall include the cost installed of fuel handling and storage equipment used between the point of fuel delivery to the station and the intake pipe through which fuel is directly drawn to the engine, also the cost of gas producers and accessories devoted to the production of gas for use in prime movers driving main electric generators.
1. Blower and fans.
2. Boilers and pumps.
3. Economizers.
4. Exhauster outfits.
5. Flues and piping.
6. Pipe system.
7. Producers.
8. Regenerators.
9. Scrubbers.
10. Steam injectors.
11. Tanks for storage of oil and gasoline.
12. Vaporizers.
This account shall include the cost installed of Diesel or other prime movers devoted to the generation of electric energy, together with their auxiliaries.
1. Air-filtering system.
2. Belting, shafting, pulleys, and reduction gearing.
3. Cooling system, including towers, pumps, tanks, and piping.
4. Cranes and hoists, including items wholly identified with apparatus listed herein.
5. Engines, Diesel, gasoline, gas, or other internal combustion.
6. Foundations and settings specially constructed for and not expected to outlast the apparatus for which provided.
7. Governors.
8. Ignition system.
9. Inlet valve.
10. Lighting systems.
11. Lubricating systems, including filters, tanks, pumps, and piping.
12. Mechanical meters, including gauges, recording instruments, sampling, and testing equipment.
13. Mufflers.
14. Piping.
15. Starting systems, compressed air, or other, including compressors and drives, tanks, piping, motors, boards and connections, and storage tanks.
16. Steelwork, specially constructed for apparatus listed herein.
17. Waste heat boilers and antifluctuators.
This account shall include the cost installed of Diesel or other power driven main generators.
1. Cranes and hoists, including items wholly identified with such apparatus.
2. Fire-extinguishing equipment.
3. Foundations and settings, specially constructed for and not expected to outlast the apparatus for which provided.
4. Generator cooling system, including air cooling and washing apparatus, air fans and accessories, and air ducts.
5. Generators-main, a.c. or d.c., including field rheostats and connections for self-excited units and excitation system when identified with the generating unit.
6. Lighting systems.
7. Lubricating system, including tanks, filters, strainers, pumps, piping, and coolers.
8. Mechanical meters and recording instruments.
9. Platforms, railings, steps, and gratings appurtenant to apparatus listed herein.
If prime movers and generators are so integrated that it is not practical to classify them separately, the entire unit may be included in Account 344, Generators.
This account shall include the cost installed of auxiliary generating apparatus, conversion equipment, and equipment used primarily in connection with the control and switching of electric energy produced in other power generating stations, and the protection of electric circuits and equipment, except electric motors used to drive equipment included in other accounts. Such motors shall be included in the account in which the equipment with which it is associated is included.
1. Auxiliary generators, including boards, compartments, switching equipment, control equipment, and connections to auxiliary power bus.
2. Excitation system, including motor, turbine and dual-drive exciter sets and rheostats, storage batteries and charging equipment, circuit breakers, panels and accessories, knife switches and accessories, surge arresters, instrument shunts, conductors and conduit, special supports for conduit, generator field and exciter switch panels, exciter bus tie panels, generator and exciter rheostats and special housings and protective screens.
3. Generator main connections, including oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks, current transformers, potential transformers, protective relays, isolated panels and equipment, conductors and conduit, special supports for generator main leads, grounding switch, and special housing and protective screens.
4. Station control system, including station switchboards with panel wiring, panels with instruments and control equipment only, panels with switching equipment mounted or mechanically connected, trunk-type boards complete, cubicles, station supervisory control boards, generator and exciter signal stands, temperature-recording devices, frequency control equipment, master clocks, watt-hour meter, station totalizing wattmeter, storage batteries, panels and charging sets, instrument transformers for supervisory metering, conductors and conduit, special supports for conduit, switchboards, batteries, special housing for batteries, protective screens, and doors.
5. Station buses, including main, auxiliary, transfer, synchronizing and fault ground buses, including oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks, reactors and accessories, voltage regulators and accessories, compensators, resistors, starting transformers, current transformers, potential transformers, protective relays, storage batteries and charging equipment, isolated panels and equipment, conductors and conduit, special supports, special housings, concrete pads, general station ground system, special fire-extinguishing system, and test equipment.
Do not include in this account transformers and other equipment used for changing the voltage or frequency of electric energy for the purpose of transmission or distribution.
When any item of equipment listed herein is used wholly to furnish power to equipment included in another account, its cost shall be included in such other account.
This account shall include the cost installed of miscellaneous equipment in and about the other power generating plant, devoted to general station use, and not properly includible in any of the foregoing other power production accounts.
1. Compressed air and vacuum cleaning systems, including tanks, compressors, exhausters, air filters, and piping.
2. Cranes and hoisting equipment, including cranes, cars, crane rails, monorails, and hoists with electric and mechanical connections.
3. Fire-extinguishing equipment for general station use.
4. Foundations and settings, specially constructed for and not expected to outlast the apparatus for which provided.
5. Miscellaneous equipment, including atmospheric and weather indicating devices, intrasite communication equipment, laboratory equipment, signal systems, callophones, emergency whistles and sirens, fire alarms, and other similar equipment.
6. Miscellaneous belts, pulleys, and countershafts.
7. Refrigerating systems including compressors, pumps, and cooling coils.
8. Station maintenance equipment, including lathes, shapers, planters, drill presses, hydraulic presses, and grinders with motors, shafting, hangers, or pulleys.
9. Ventilating equipment, including items wholly identified with apparatus listed herein.
When any item of equipment, listed herein is used wholly in connection with equipment included in another account, its cost shall be included in such other account.
This account shall include the cost of land and land rights used in connection with transmission operations. (See § 1767.16 (g).)
This account shall include the cost, in place, of structures and improvements used in connection with transmission operations. (See § 1767.16 (h).)
This account shall include the cost installed of transforming, conversion, and switching equipment used for the purpose of changing the characteristics of electricity in connection with its transmission or for controlling transmission circuits.
1. Bus compartments, concrete, brick, and sectional steel, including items permanently attached thereto.
2. Conduit, including concrete and iron duct runs not a part of a building.
3. Control equipment, including batteries, battery charging equipment, transformers, remote relay boards, and connections.
4. Conversion equipment, including transformers, indoor and outdoor, frequency changers, motor generator sets, rectifiers, synchronous converters, motors, cooling equipment, and associated connections.
5. Fences.
6. Fixed and synchronous condensers, including transformers, switching equipment, blowers, motors and connections.
7. Foundations and settings, specially constructed for and not expected to outlast the apparatus for which provided.
8. General station equipment, including air compressors, motors, hoists, cranes, test equipment, and ventilating equipment.
9. Platforms, railings, steps, and gratings appurtenant to apparatus listed herein.
10. Primary and secondary voltage connections, including bus runs and supports, insulators, potheads, lightning arresters, cable and wire runs from and to outdoor connections or to manholes and the associated regulators, reactors, resistors, surge arresters, and accessory equipment.
11. Switchboards, including meters, relays, and control wiring.
12. Switching equipment, indoor and outdoor, including oil circuit breakers and operating mechanisms, truck switches, and disconnect switches.
13. Tools and appliances.
This account shall include the cost installed of towers and appurtenant fixtures used for supporting overhead transmission conductors.
1. Anchors, guys, and braces.
2. Brackets.
3. Crossarms, including braces.
4. Excavation, backfill, and disposal of excess excavated material.
5. Foundations.
6. Guards.
7. Insulator pins and suspension bolts.
8. Ladder and steps.
9. Railings.
10. Towers.
This account shall include the cost installed of transmission line poles, wood, steel, concrete, or other material, together with appurtenant fixtures used for supporting overhead transmission conductors.
1. Anchors, head arm and other guys, including guy guards, guy clamps, strain insulators, and pole plates.
2. Brackets.
3. Crossarms and braces.
4. Excavation and backfill, including disposal of excess excavated material.
5. Extension arms.
6. Gaining, roofing, stenciling, and tagging.
7. Insulator pins and suspension belts.
8. Paving.
9. Pole steps.
10. Poles, wood, steel, concrete, or other material.
11. Racks complete with insulators.
12. Reinforcing and stubbing.
13. Settings.
14. Shaving and painting.
This account shall include the cost installed of overhead conductors and devices used for transmission purposes.
1. Circuit breakers.
2. Conductors, including insulated and bare wires and cables.
3. Ground wires and ground clamps.
4. Insulators, including pin, suspension, and other types.
5. Lightning arresters.
6. Switches.
7. Other line devices.
This account shall include the cost installed of underground conduit and tunnels used for housing transmission cables or wires. (See § 1767.16 (n).)
1. Conduit, concrete, brick or tile, including iron pipe, fiber pipe, Murray duct, and standpipe on pole or tower.
2. Excavation, including shoring, bracing, bridging, backfill, and disposal of excess excavated material.
3. Foundations and settings specially constructed for and not expected to outlast the apparatus for which provided.
4. Lighting systems.
5. Manholes, concrete or brick, including iron or steel, frames and covers, hatchways, gratings, ladders, cable racks and hangers, permanently attached to manholes.
6. Municipal inspection.
7. Pavement disturbed, including cutting and replacing pavement, pavement base and sidewalks.
8. Permits.
9. Protection of street openings.
10. Removal and relocation of subsurface obstructions.
11. Sewer connections, including drains, traps, tide valves, and check valves.
12. Sumps, including pumps.
13. Ventilating equipment.
This account shall include the cost installed of underground conductors and devices used for transmission purposes.
1. Armored conductors, buried, including insulators, insulating materials, splices, potheads, and trenching.
2. Armored conductors, submarine, including insulators, insulating materials, splices in terminal chambers, and potheads.
3. Cables in standpipe, including pothead and connection from terminal chamber of manhole to insulators on pole.
4. Circuit breakers.
5. Fireproofing, in connection with any items listed herein.
6. Hollow-core oil-filled cable, including straight or stop joints, pressure tanks, auxiliary air tanks, feeding tanks, terminals, potheads and connections, and ventilating equipment.
7. Lead and fabric covered conductors, including insulators, compound filled, oil filled, or vacuum splices, and potheads.
8. Lightning arresters.
9. Municipal inspection.
10. Permits.
11. Protection of street openings.
12. Racking of cables.
13. Switches.
14. Other line devices.
This account shall include the cost of roads, trails, and bridges used primarily as transmission facilities.
1. Bridges, including foundation piers, girders, trusses, and flooring.
2. Clearing land.
3. Roads, including grading, surfacing, and culverts.
4. Structures, constructed and maintained in connection with items included herein.
5. Trails, including grading, surfacing, and culverts.
The cost of temporary roads, and bridges necessary during the period of construction but abandoned or dedicated to public use upon completion of the plant, shall be charged to the accounts appropriate for the construction.
This account shall include the cost of land and land rights used in connection with distribution operations. (See § 1767.16 (g).)
Do not include the cost of permits to erect poles, or towers or to trim trees in this account. (See Account 364, Poles, Towers and Fixtures, and Account 365, Overhead Conductors and Devices.)
This account shall include the cost, in place, of structures and improvements used in connection with distribution operations. (See § 1767.16 (h).)
This account shall include the cost installed of station equipment, including transformer banks, which are used for the purpose of changing the characteristics of electricity in connection with its distribution.
1. Bus compartments, concrete, brick and sectional steel, including items permanently attached thereto.
2. Conduit, including concrete and iron duct runs not part of building.
3. Control equipment, including batteries, battery charging equipment, transformers, remote relay boards, and connections.
4. Conversion equipment, indoor and outdoor, frequency changers, motor generator sets, rectifiers, synchronous converters, motors, cooling equipment, and associated connections.
5. Fences.
6. Fixed and synchronous condensers, including transformers, switching equipment, blowers, motors, and connections.
7. Foundations and settings, specially constructed for and not expected to outlast the apparatus for which provided.
8. General station equipment, including air compressors, motors, hoists, cranes, test equipment, and ventilating equipment.
9. Platforms, railings, steps, and gratings appurtenant to apparatus listed herein.
10. Primary and secondary voltage connections, including bus runs and supports, insulators, potheads, lightning arresters, cable and wire runs from and to outdoor connections or to manholes and the associated regulators, reactors, resistors, surge arresters, and accessory equipment.
11. Switchboards, including meters, relays, and control wiring.
12. Switching equipment, indoor and outdoor, including oil circuit breakers and operating mechanisms, truck switches, disconnect switches.
The cost of rectifiers, series transformers, and other special station equipment devoted exclusively to street lighting service shall not be included in this account, but in Account 373, Street Lighting and Signal Systems.
1. Batteries, including elements, tanks, and tank insulators.
2. Battery room connections, including cable or bus runs and connections.
3. Battery room flooring, when specially laid for supporting batteries.
4. Charging equipment, including motor generator sets and other charging equipment and connections, and cable runs from generator or station bus to battery room connections.
5. Miscellaneous equipment, including instruments, and water stills.
6. Switching equipment, including endcell switches and connections, boards and panels, used exclusively for battery control, not part of general station switchboard.
7. Ventilating equipment, including fans and motors, louvers, and ducts not part of building.
Storage batteries used for control and general station purposes shall not be included in this account but in the account appropriate for their use.
This account shall include the cost installed of poles, towers, and appurtenant fixtures used for supporting overhead distribution conductors and service wires.
1. Anchors, head arm, and other guys, including guy guards, guy clamps, strain insulators, and pole plates.
2. Brackets.
3. Crossarms and braces.
4. Excavation and backfill, including disposal of excess excavated material.
5. Extension arms.
6. Foundations.
7. Guards.
8. Insulator pins and suspension bolts.
9. Paving.
10. Permits for construction.
11. Pole steps and ladders.
12. Poles, wood, steel, concrete, or other material.
13. Racks complete with insulators.
14. Railings.
15. Reinforcing and stubbing.
16. Settings.
17. Shaving, painting, gaining, roofing, stenciling, and tagging.
18. Towers.
19. Transformer racks and platforms.
This account shall include the cost installed of overhead conductors and devices used for distribution purposes.
1. Circuit breakers.
2. Conductors, including insulated and bare wires and cables.
3. Ground wires and clamps.
4. Insulators, including pin, suspension, and other types, and tie wire or clamps.
5. Lightning arresters.
6. Railroad and highway crossing guards.
7. Splices.
8. Switches.
9. Tree trimming, initial cost including the cost of permits therefor.
10. Other line devices.
11. Oil circuit reclosers (OCR).
12. Sectionalizers.
13. Labor costs for installation of OCRs and Sectionalizers, first only.
The cost of conductors used solely for street lighting or signal systems shall not be included in this account but in Account 373, Street Lighting and Signal Systems.
This account shall include the cost installed of underground conduit and tunnels used for housing distribution cables or wires.
1. Conduit, concrete, brick and tile, including iron pipe, fiber pipe, Murray duct, and standpipe on pole or tower.
2. Excavation, including shoring, bracing, bridging, backfill, and disposal of excess excavated material.
3. Foundations and settings specially constructed for and not expected to outlast the apparatus for which constructed.
4. Lighting systems.
5. Manholes, concrete or brick, including iron or steel frames and covers, hatchways, gratings, ladders, cable racks, and hangers permanently attached to manholes.
6. Municipal inspection.
7. Pavement disturbed, including cutting and replacing pavement, pavement base, and sidewalks.
8. Permits.
9. Protection of street openings.
10. Removal and relocation of subsurface obstructions.
11. Sewer connections, including drains, traps, tide valves, and check valves.
12. Sumps, including pumps.
13. Ventilating equipment.
The cost of underground conduit used solely for street lighting or signal systems shall be included in Account 373, Street Lighting and Signal Systems.
This account shall include the cost installed of underground conductors and devices used for distribution purposes.
1. Armored conductors, buried, including insulators, insulating materials, splices, potheads, and trenching.
2. Armored conductors, submarine, including insulators, insulating materials, splices in terminal chamber, and potheads.
3. Cables in standpipe, including pothead and connection from terminal chamber or manhole to insulators on pole.
4. Circuit breakers.
5. Fireproofing, in connection with any items listed herein.
6. Hollow-core oil-filled cable, including straight or stop joints, pressure tanks, auxiliary air tanks, feeding tanks, terminals, potheads and connections.
7. Lead and fabric covered conductors, including insulators, compound-filled, oil-filled or vacuum splices, and potheads.
8. Lightning arresters.
9. Municipal inspection.
10. Permits.
11. Protection of street openings.
12. Racking of cables.
13. Switches.
14. Other line devices.
The cost of underground conductors and devices used solely for street lighting or signal systems shall be included in Account 373, Street Lighting and Signal Systems.
A. This account shall include the cost installed of overhead and underground distribution line transformers and pole-type and underground voltage regulators owned by the utility, for use in transforming electricity to the voltage at which it is to be used by the customer, whether actually in service or held in reserve.
B. When a transformer is permanently retired from service, the original installed cost thereof shall be credited to this account.
C. The records covering line transformers shall be so kept that the utility can furnish the number of transformers of various capacities in service and those in reserve, and the location and the use of each transfer.
1. Installation, labor of (first installation only).
2. Transformer cut-out boxes.
3. Transformer lightning arresters.
4. Transformers, line and network.
5. Capacitors.
6. Network protectors.
7. Voltage regulators.
The cost of removing and resetting line transformers shall not be charged to this account but to Account 583, Overhead Line Expenses, or Account 584, Underground Line Expenses, as appropriate. The cost of line transformers used solely for street lighting or signal systems shall be included in Account 373, Street Lighting and Signal Systems.
This account shall include the cost installed of overhead and underground conductors leading from a point where wires leave the last pole of the overhead system or the distribution box or manhole, or the top of the pole of the distribution line, to the point of connection with the customer's outlet or wiring. Conduit used for underground service conductors shall be included herein.
1. Brackets.
2. Cables and wires.
3. Conduit.
4. Insulators.
5. Municipal inspection.
6. Overhead to underground, including conduit or standpipe and conductor from last splice on pole to connection with customer's wiring.
7. Pavement disturbed, including cutting and replacing pavement, pavement base, and sidewalks.
8. Permits.
9. Protection of street openings.
10. Service switch.
11. Suspension wire.
A. This account shall include the cost installed of meters or devices and appurtenances thereto, for use in measuring the electricity delivered to its users, whether actually in service or held in reserve.
B. When a meter is permanently retired from service, the installed cost included herein shall be credited to this account.
C. The records covering meters shall be so kept that the utility can furnish information as to the number of meters of various capacities in service and in reserve as well as the location of each meter owned.
1. Alternate current, watt-hour meters.
2. Current limiting devices.
3. Demand indicators.
4. Demand meters.
5. Direct current watt-hour meters.
6. Graphic demand meters.
7. Installation, labor of (first installation only).
8. Instrument transformers.
9. Maximum demand meters.
10. Meter badges and their attachments.
11. Meter boards and boxes.
12. Meter fittings, connections, and shelves (first set).
13. Meter switches and cut-outs.
14. Prepayment meters.
15. Protective devices.
16. Testing new meters.
This account shall not include meters for recording output of a generating station, or substation meters. It includes only those meters used to record energy delivered to customers.
The cost of removing and resetting meters shall be charged to Account 586, Meter Expenses.
This account shall include the cost installed of equipment on the customer's side of a meter when the utility incurs such cost and when the utility retains title to and assumes full responsibility for maintenance and replacement of such property. This account shall not include leased equipment. (See Account 372, Leased Property on Customers’ Premises.)
1. Cable vaults.
2. Commercial lamp equipment.
3. Foundations and settings specially provided for equipment included herein.
4. Frequency changer sets.
5. Motor generator sets.
6. Motors.
7. Switchboard panels, high or low tension.
8. Wire and cable connections to incoming cables.
Do not include in this account any costs incurred in connection with merchandising, jobbing, or contract work activities.
This account shall include the cost of electric motors, transformers, and other equipment on customers’ premises (including municipal corporations), leased or loaned to customers, but not including property held for sale.
The cost of setting and connecting such appliances or equipment on the premises of customers and the cost of resetting or removal shall not be charged to this account but to operating expenses, Account 587, Customer Installations Expenses.
Do not include in this account any costs incurred in connection with merchandising, jobbing, or contract work activities.
This account shall include the cost installed of equipment used wholly for public street and highway lighting or traffic, fire alarm, police, and other signal systems.
1. Armored conductors, buried or submarine, including insulators, insulating materials, splices, and trenching.
2. Automatic control equipment.
3. Conductors, overhead or underground, including lead or fabric covered, parkway cables, including splices, and insulators.
4. Lamps, arc, incandescent, or other types, including glassware, suspension fixtures, and brackets.
5. Municipal inspection.
6. Ornamental lamp posts.
7. Pavement disturbed, including cutting and replacing pavement, pavement base, and sidewalks.
8. Permits.
9. Posts and standards.
10. Protection of street openings.
11. Relays or time clocks.
12. Series contactors.
13. Switches.
14. Transformers, pole or underground.
This account shall include the cost of land and land rights used for utility purposes, the cost of which is not properly includible in other land and land rights accounts. (See § 1767.16 (g).)
This account shall include the cost, in place, of structures and improvements used for utility purposes, the cost of which is not properly includible in other structures and improvements accounts. (See § 1767.16 (h).)
This account shall include the cost of office furniture and equipment owned by the utility and devoted to utility service, and not permanently attached to buildings, except the cost of such furniture and equipment which the utility elects to assign to other plant accounts on a functional basis.
1. Bookcases and shelves.
2. Desks, chairs, and desk equipment.
3. Drafting-room equipment.
4. Filing, storage, and other cabinets.
5. Floor covering.
6. Library and library equipment.
7. Mechanical office equipment, such as accounting machines, and typewriters.
8. Safes.
9. Tables.
This account shall include the cost of transportation vehicles used for utility purposes.
1. Airplanes.
2. Automobiles.
3. Bicycles.
4. Electrical vehicles.
5. Motor trucks.
6. Motorcycles.
7. Repair cars or trucks.
8. Tractors and trailers.
9. Other transportation vehicles.
This account shall include the cost of equipment used for the receiving, shipping, handling, and storage of materials and supplies.
1. Chain falls.
2. Counters.
3. Cranes (portable).
4. Elevating and stacking equipment (portable).
5. Hoists.
6. Lockers.
7. Scales.
8. Shelving.
9. Storage bins.
10. Trucks, hand and power driven.
11. Wheelbarrows.
This account shall include the cost of tools, implements, and equipment used in construction, repair work, general shops and garages and not specifically provided for or includible in other accounts.
1. Air compressors.
2. Anvils.
3. Automobile repair shop equipment.
4. Battery charging equipment.
5. Belts, shafts and countershafts.
6. Boilers.
7. Cable pulling equipment.
8. Concrete mixers.
9. Drill presses.
10. Derricks.
11. Electric equipment.
12. Engines.
13. Forges.
14. Furnaces.
15. Foundations and settings specially constructed for and not expected to outlast the equipment for which provided.
16. Gas producers.
17. Gasoline pumps, oil pumps, and storage tanks.
18. Greasing tools and equipment.
19. Hoists.
20. Ladders.
21. Lathes.
22. Machine tools.
23. Motor-driven tools.
24. Motors.
25. Pipe threading and cutting tools.
26. Pneumatic tools.
27. Pumps.
28. Riveters.
29. Smithing equipment.
30. Tool racks.
31. Vises.
32. Welding apparatus.
33. Work benches.
This account shall include the cost installed of laboratory equipment used for general laboratory purposes and not specifically provided for or includible in other departmental or functional plant accounts.
1. Ammeters.
2. Current batteries.
3. Frequency changers.
4. Galvanometers.
5. Inductometers.
6. Laboratory standard millivolt meters.
7. Laboratory standard volt meters.
8. Meter-testing equipment.
9. Millivolt meters.
10. Motor generator sets.
11. Panels.
12. Phantom loads.
13. Portable graphic ammeters, voltmeters, and wattmeters.
14. Portable loading devices.
15. Potential batteries.
16. Potentiometers.
17. Rotating standards.
18. Standard cell, reactance, resistor, and shunt.
19. Switchboards.
20. Synchronous timers.
21. Testing panels.
22. Testing resistors.
23. Transformers.
24. Voltmeters.
25. Other testing, laboratory, or research equipment not provided for elsewhere.
This account shall include the cost of power operated equipment used in construction or repair work exclusive of equipment includible in other accounts. Include, also, the tools and accessories acquired for use with such equipment and the vehicle on which such equipment is mounted.
1. Air compressors, including driving unit and vehicle.
2. Back filling machines.
3. Boring machines.
4. Bulldozers.
5. Cranes and hoists.
6. Diggers.
7. Engines.
8. Pile drivers.
9. Pipe cleaning machines.
10. Pipe coating or wrapping machines.
11. Tractors-Crawler type.
12. Trenchers.
13. Other power operated equipment.
It is intended that this account include only such large units as are generally self-propelled or mounted on movable equipment.
This account shall include the cost installed of telephone, telegraph, and wireless equipment for general use in connection with utility operations.
1. Antennae.
2. Booths.
3. Cables.
4. Distributing boards.
5. Extension cords.
6. Gongs.
7. Hand sets, manual and dial.
8. Insulators.
9. Intercommunicating sets.
10. Loading coils.
11. Operators’ desks.
12. Poles and fixtures used wholly for telephone or telegraph wire.
13. Radio transmitting and receiving sets.
14. Remote control equipment and lines.
15. Sending keys.
16. Storage batteries.
17. Switchboards.
18. Telautograph circuit connections.
19. Telegraph receiving sets.
20. Telephone and telegraph circuits.
21. Testing instruments.
22. Towers.
23. Underground conduit used wholly for telephone or telegraph wires and cable wires.
This account shall include the cost of equipment, and apparatus used in the utility operations, which is not includible in other accounts.
1. Hospital and infirmary equipment.
2. Kitchen equipment.
3. Employees’ recreation equipment.
4. Radios.
5. Restaurant equipment.
6. Soda fountains.
7. Operators’ cottage furnishings.
8. Other miscellaneous equipment.
Miscellaneous equipment of the nature indicated above wherever practicable, shall be included in the utility plant accounts on a functional basis.
This account shall include the cost of tangible utility plant not provided for elsewhere.
The operating income accounts identified in this section shall be used by all RUS borrowers.
There shall be shown under this caption the total amount included in the electric operating revenue accounts provided herein.
There shall be shown under this caption the total amount included in the electric operation expense accounts provided herein. (See note to § 1767.17 (c).)
There shall be shown under this caption the total amount included in the electric maintenance expense accounts provided herein.
A. This account shall include the amount of depreciation expense for all classes of depreciable electric plant in service except such depreciation expense as is chargeable to clearing accounts or to Account 416, Costs and Expenses of Merchandising, Jobbing and Contract Work.
B. The utility shall keep such records of property and property retirements as will reflect the service life of property which has been retired and aid in estimating probable service life by mortality, turnover, or other appropriate methods; and also such records as will reflect the percentage of salvage and costs of removal for property retired from each account, or subdivision thereof, for depreciable electric plant.
Depreciation expense applicable to property included in Account 104, Electric Plant Leased to Others, shall be charged to Account 413, Expenses of Electric Plant Leased to Others.
Depreciation expenses applicable to transportation equipment, shop equipment, tools, work equipment, power operated equipment, and other general equipment may be charged to clearing accounts as necessary in order to obtain a proper distribution of expenses between construction and operation.
Depreciation expense applicable to transportation equipment used for transportation of fuel from the point of acquisition to the unloading point shall be charged to Account 151, Fuel Stock.
C. Account 403 shall be subaccounted as follows:
This account shall include amortization charges applicable to amounts included in the electric plant accounts for limited-term franchises, licenses, patent rights, limited-term interests in land, and expenditures on leased property where the service life of the improvements is terminable by action of the lease. The charges to this account shall be such as to distribute the book cost of each investment as evenly as may be over the period of its benefit to the utility. (See Account 111, Accumulated Provision for Amortization of Electric Utility Plant.)
A. When authorized by RUS, this account shall include charges for amortization of intangible or other electric utility plant which does not have a definite or terminable life and which is not subject to charges for depreciation expense.
B. This account shall be supported in such detail as to show the amortization applicable to each investment being amortized, together with the book cost of the investment and the period over which it is being written off.
This account shall be debited or credited, as appropriate, with amounts includible in operating expenses, pursuant to approval or order of RUS, for the purpose of providing for the extinguishment of the amount in Account 114, Electric Plant Acquisition Adjustments.
This account shall be charged with amounts credited to Account 182.1, Extraordinary Property Losses, when RUS has authorized the amount in the latter account to be amortized by charges to electric operations.
This account shall be debited, when appropriate, with the amounts credited to Account 254, Other Regulatory Liabilities, to record regulatory liabilities imposed on the utility by the ratemaking actions of regulatory agencies. This account shall also be debited, when appropriate, with the amounts credited to Account 182.3, Other Regulatory Assets, concurrent with the recovery of such amounts in rates.
This account shall be credited, when appropriate, with the amounts debited to Account 182.3, Other Regulatory Assets, to establish regulatory assets. This account shall also be credited, when appropriate, with the amounts debited to Account 254, Other Regulatory Liabilities, concurrent with the return of such amounts to customers through rates.
A. This account shall include the amounts of ad valorem, gross revenue, or gross receipts taxes, state unemployment insurance, franchise taxes, Federal excise taxes, social security taxes, and all other taxes assessed by Federal, state, county, municipal, or other local governmental authorities, except income taxes.
B. These accounts shall be charged in each accounting period with the amounts of taxes which are applicable thereto, with concurrent credits to Account 236, Taxes Accrued, or Account 165, Prepayments, as appropriate. When it is not possible to determine the exact amounts of taxes, the amounts shall be estimated and adjustments made in current accruals as the actual tax levies become known.
C. The charges to these accounts shall be made or supported so as to show the amount of each tax and the basis upon which each charge is made. In the case of a utility rendering more than one utility service, taxes of the kind includible in these accounts shall be assigned directly to the utility department the operation of which gave rise to the tax, in so far as practicable. Where the tax is not attributable to a specific utility department, it shall be distributed among the utility departments or nonutility operations on an equitable basis after appropriate study to determine such basis.
D. Account 408 shall be subaccounted as follows:
A. These accounts shall include the amount of local, state, and Federal income taxes on income properly accruable during the period covered by the income statement to meet the actual liability for such taxes. Concurrent credits for the tax accruals shall be made to Account 236, Taxes Accrued, and as the exact amounts of taxes become known, the current tax accruals shall be adjusted by charges or credits to these accounts.
B. The accruals for income taxes shall be apportioned among utility departments and to Other Income and Deductions so that, as nearly as practicable, each tax shall be included in the expenses of the utility department or Other Income and Deductions, the income from which gave rise to the tax. The
Taxes assumed by the utility on interest shall be charged to Account 431, Other Interest Expense.
Interest on tax refunds or deficiencies shall not be included in these accounts but in Account 419, Interest and Dividend Income, or Account 431, Other Interest Expense, as appropriate.
This account shall include the amount of those local, state, and Federal income taxes which relate to utility operating income. This account shall be maintained so as to allow ready identification of tax effects (both positive and negative) relating to Utility Operating Income (by department), Utility Plant Leased to Others, and Other Utility Operating Income.
This account shall include the amount of those local, state, and Federal income taxes (both positive and negative), which relate to Other Income and Deductions.
This account shall include the amount of those local, state, and Federal income taxes (both positive and negative), which relate to Extraordinary Items.
A. Accounts 410.1 and 410.2 shall be debited, and Accumulated Deferred Income Taxes, shall be credited, with amounts equal to any current deferrals of taxes on income or any allocations of deferred taxes originating in prior periods, as provided by the texts of Accounts 190, 281, 282, and 283. There shall not be netted against entries required to be made to these accounts any credit amounts appropriately includible in Account 411.1 or Account 411.2.
B. Accounts 411.1 or 411.2 shall be credited, and Accumulated Deferred Income Taxes, shall be debited, with amounts equal to any allocations of deferred taxes originating in prior periods or any current deferrals of taxes on income, as provided by the texts of Accounts 190, 281, 282, and 283. There shall not be netted against entries required to be made to these accounts any debit amounts appropriately includible in Account 410.1 or Account 410.2.
This account shall include the amounts of those deferrals of taxes and allocations of deferred taxes which relate to Utility Operating Income (by department).
This account shall include the amounts of those deferrals of taxes and allocations of deferred taxes which relate to Other Income and Deductions.
This account shall include the amounts of those allocations of deferred taxes and deferrals of taxes, credit, which relate to Utility Operating Income (by department).
This account shall include the amounts of those allocations of deferred taxes and deferrals of taxes, credit, which relate to Other Income and Deductions.
A. Account 411.4 shall be debited with the amounts of investment tax credits related to electric utility property that are credited to Account 255, Accumulated Deferred Investment Tax Credits, by companies which do not apply the entire amount of the benefits of the investment credit as a reduction of the overall income tax expense in the year in which such credit is realized. (See Account 255).
B. Account 411.4 shall be credited with the amounts debited to Account 255 for proportionate amounts of tax credit deferrals allocated over the average useful life of electric utility property to which the tax credits relate or such lesser period of time as may be adopted and consistently followed by the company.
C. Account 411.5 shall be debited and credited as directed in paragraphs A and B, for investment tax credits related to nonutility property.
This account shall include the amount of those investment tax credit adjustments related to property used in Utility Operations (by department).
This account shall include the amount of those investment tax credit adjustments related to property used in Nonutility Operations.
This account shall include, as approved by RUS, amounts relating to gains from the disposition of future use utility plant including amounts which were previously recorded in and transferred from Account 105, Electric Plant Held for Future Use, under the Provisions of Paragraphs B, C, and D thereof. Income taxes relating to gains recorded in this account shall be recorded in Account 409.1, Income Taxes, Utility Operating Income.
This account shall include, as approved by RUS, amounts relating to losses from the disposition of future use utility plant including amounts which were previously recorded in and transferred from Account 105, Electric Plant Held for Future Use, under the provisions of Paragraphs B, C, and D thereof. Income taxes relating to losses recorded in this account shall be recorded in Account 409.1, Income Taxes, Utility Operating Income.
This account shall be credited with the gain on the sale, exchange, or other disposition of allowances in accordance with § 1767.15 (u)(8). Income taxes relating to gains recorded in this account shall be recorded in Account 409.1, Income Taxes, Utility Operating Income.
This account shall be debited with the loss on the sale, exchange, or other disposition of allowances in accordance with § 1767.15 (u)(8). Income taxes relating to losses recorded in this account shall be recorded in Account 409.1, Income Taxes, Utility Operating Income.
This account shall include revenues from electric property constituting a distinct operating unit or system leased by the utility to others, and which property is properly includible in Account 104, Electric Plant Leased to Others.
Related taxes shall be recorded in Account 408, Taxes Other Than Income Taxes, or Account 409.1, Income Taxes, Utility Operating Income, as appropriate.
A. This account shall include expenses from electric property constituting a distinct operating unit or system leased by the utility to others, and which property is properly includible in Account 104, Electric Plant Leased to Others.
B. The detail of expenses shall be kept or supported so as to show separately the following:
1. Operation.
2. Maintenance.
3. Depreciation.
4. Amortization.
Related taxes shall be recorded in Account 408, Taxes Other Than Income Taxes, or Account 409.1, Income Taxes, Utility Operating Income, as appropriate.
A. This account shall include the revenues received and expenses incurred in connection with the operations of utility plant, the book cost of which is included in Account 118, Other Utility Plant.
B. The expenses shall include every element of cost incurred in such operations, including depreciation, rents, and insurance.
Related taxes shall be recorded in Account 408, Taxes Other Than Income Taxes, or Account 409.1, Income Taxes, Utility Operating Income, as appropriate.
The other income and deductions accounts identified in this section shall be used by all RUS borrowers.
A. This account shall include all revenues derived from the sale of merchandise and jobbing or contract work, including any profit or commission accruing to the utility on jobbing work performed by it as agent under contracts whereby it does jobbing work for another for a stipulated profit or commission. Interest related income from installment sales shall be recorded in Account 419, Interest and Dividend Income.
B. Records in support of this account shall be so kept as to permit ready summarization of revenues by such major items as are feasible.
The classification of revenues of merchandising, jobbing, and contract work as nonoperating, and thus included in this account, is for accounting purposes. It does not preclude consideration of justification to the contrary for ratemaking or other purposes.
1. Revenues from sale of merchandise and from jobbing and contract work.
2. Discounts and allowances made in settlement of bills for merchandise and jobbing work.
A. This account shall include all expenses derived from the sale of merchandise and jobbing or contract work.
B. Records in support of this account shall be so kept as to permit ready summarization of costs and expenses by such major items as are feasible.
The classification of costs and expenses of merchandising, jobbing, and contract work as nonoperating, and thus included in this account, is for accounting purposes. It does not preclude consideration of justification to the contrary for ratemaking or other purposes.
1. Canvassing and demonstrating appliances in homes and other places for the purpose of selling appliances.
2. Demonstrating and selling activities in sales rooms.
3. Installing appliances on customer premises where such work is done only for purchasers of appliances from the utility.
4. Installing wire, piping, or other property work, on a jobbing or contract basis.
5. Preparing advertising materials for appliance sales purposes.
6. Receiving and handling customer orders for merchandise or for jobbing services.
7. Cleaning and tidying sales rooms.
8. Maintaining display counters and other equipment used in merchandising.
9. Arranging merchandise in sales rooms and decorating display windows.
10. Reconditioning repossessed appliances.
11. Bookkeeping and other clerical work in connection with merchandise and jobbing activities.
12. Supervising merchandise and jobbing operations.
13. Advertising in newspapers, periodicals, radio, and television.
14. Cost of merchandise sold and of materials used in jobbing work.
15. Stores expenses on merchandise and jobbing stocks.
16. Fees and expenses of advertising and commercial artists’ agencies.
17. Printing booklets, dodgers, and other advertising data.
18. Premiums given as inducement to buy appliances.
19. Light, heat, and power.
20. Depreciation on equipment used primarily for merchandise and jobbing operations.
21. Rent of sales rooms or of equipment.
22. Transportation expense in delivery and pick-up of appliances by utility's facilities or by others.
23. Stationery and office supplies and expenses.
24. Losses from uncollectible merchandise and jobbing accounts.
This account shall include revenues applicable to operations which are nonutility in character but nevertheless constitute a distinct operating activity of the enterprise as a whole, such as the operation of an ice department where applicable statutes do not define such operation as a utility, or the operation of a servicing organization for furnishing supervision, management, engineering, and similar services to others.
Related taxes shall be recorded in Account 408, Taxes Other Than Income
A. This account shall include expenses applicable to operations which are nonutility in character but nevertheless constitute a distinct operating activity of the enterprise as a whole, such as the operation of an ice department where applicable statutes do not define such operation as a utility, or the operation of a servicing organization for furnishing supervision, management, engineering, and similar services to others.
B. The expenses shall include all elements of costs incurred in such operations, and the accounts shall be maintained so as to permit ready summarization as follows:
1. Operation.
2. Maintenance.
3. Rents.
4. Depreciation.
5. Amortization.
Related taxes shall be recorded in Account 408, Taxes Other Than Income Taxes, or Account 409.2, Income Taxes, Other Income and Deductions, as appropriate.
A. This account shall include all rent revenues and related expenses of land, buildings, or other property included in Account 121, Nonutility Property, which is not used in operations covered by Account 417 or Account 417.1.
B. The expenses shall include all elements of costs incurred in the ownership and rental of property and the accounts shall be maintained so as to permit ready summarization as follows:
1. Operation.
2. Maintenance.
3. Rents.
4. Depreciation.
5. Amortization.
Related taxes shall be recorded in Account 408, Taxes Other Than Income Taxes, or Account 409.2, Income Taxes, Other Income and Deductions, as appropriate.
This account shall include the utility's equity in the earnings or losses of subsidiary companies for the year.
A. This account shall include interest revenues on securities, loans, notes, advances, special deposits, tax refunds, and all other interest-bearing assets, and dividends on stocks of other companies, whether the securities on which the interest and dividends are received are carried as investments or included in sinking or other special fund accounts.
Related taxes shall be recorded in Account 408, Taxes Other Than Income Taxes, or Account 409.2, Income Taxes, Other Income and Deductions, as appropriate.
Interest accrued, the payment of which is not reasonably assured, dividends receivable which have not been declared or guaranteed, and interest or dividends upon reacquired securities issued or assumed by the utility shall not be credited to this account.
This account shall include concurrent credits for allowance for funds other than borrowed funds used for construction purposes during the period of construction, based upon a reasonable rate. (See § 1767.16 (c)(17).)
This account shall be credited as follows with investment tax credit amounts not passed on to customers:
1. By amounts equal to debits to Account 411.4, Investment Tax Credit Adjustments, Utility Operations, and Account 411.5, Investment Tax Credit Adjustments, Nonutility Operations, for investment tax credits used in calculating income taxes for the year when the company's accounting provides for non-deferral of all or a portion of such credits.
2. By amounts equal to debits to Account 255, Accumulated Deferred Investment Tax Credits, for proportionate amounts of tax credit deferrals allocated over the average useful life of the property to which the tax credits relate, or such lesser period of time as may be adopted and consistently used by the company.
This account shall include all revenue and expense items, except taxes properly includible in the income account, not provided for elsewhere. Related taxes shall be recorded in Account 408, Taxes Other Than Income Taxes, or Account 409.2, Income Taxes, Other Income and Deductions, as appropriate.
1. Profit on sale of timber. (See § 1767.16 (g)(3).)
2. Profits from operations of others realized by the utility under contracts.
3. Gains on disposition of investments. Also, gains on reacquisition and resale or retirement of the utility's debt securities when the gain is not amortized or used by a jurisdictional regulatory agency to reduce embedded debt cost in establishing rates. (See § 1767.15 (q).)
This account shall be credited with the gain on the sale, conveyance, exchange, or transfer of utility or other property to another. Amounts relating to gains on land and land rights held for future use recorded in Account 105, Electric Plant Held for Future Use, will be accounted for as prescribed in Paragraphs B, C, and D thereof. (See § 1767.16 (e)(6), (g)(5), and (j)(5).) Income taxes on gains recorded in this account shall be recorded in Account 409.2, Income Taxes, Other Income and Deductions.
This account shall be charged with the loss on the sale, conveyance, exchange, or transfer of utility or other property to another. Amounts relating to losses on land and land rights held for future use recorded in Account 105, Electric Plant Held for Future Use, will be accounted for as prescribed in Paragraphs B, C, and D thereof. (See § 1767.16 (e)(6), (g)(5), and (j)(5).) The reduction in income taxes relating to losses recorded in this account shall be recorded in Account 409.2, Income Taxes, Other Income and Deductions.
This account shall be charged with taxes relating to nonoperating income.
This account shall be credited with the annual capital furnished the power supply cooperative through payment of power bills. The amount of capital furnished the power supply cooperative should be recorded in the applicable year even though, in most cases, the power supplier's notice of the allocation will not have been received until after the close of the year to which it relates.
This account shall be credited with the capital furnished in connection with patronage of cooperative or mutual-type service organization such as CFC and other financing cooperatives, and insurance, oil product, telephone, and data processing cooperatives. This account should be credited in the year in which the notice of the capital credit or patronage capital allocation is received.
This account shall include amortization charges not includible in other accounts which are properly deductible in determining the income of the utility before interest charges. Charges includible herein, if significant in amount, must be in accordance with an orderly and systematic amortization program.
1. Amortization of utility plant acquisition adjustments, or of intangibles included in utility plant in service when not authorized to be included in utility operating expenses by RUS.
2. Other miscellaneous amortization charges allowed to be included in this account by RUS.
These accounts shall include miscellaneous expense items which are nonoperating in nature but which are properly deductible before determining total income before interest charges.
The classification of expenses as nonoperating and their inclusion in these accounts is for accounting purposes. It does not preclude RUS consideration of proof to the contrary for ratemaking or other purposes.
This account shall include all payments or donations for charitable, social, or community welfare purposes.
This account shall include all payments for life insurance of officers and employees where the company is the beneficiary (net premiums less the increase in the cash surrender value of policies.)
This account shall include payments by the company for penalties or fines for violation of any regulatory statutes by the company or its officials.
This account shall include expenditures for the purpose of influencing public opinion with respect to the election or appointment of public officials, referenda, legislation, or ordinances (either with respect to the possible adoption of new referenda, legislation or ordinances or repeal or modification of existing referenda, legislation or ordinances) or approval, modification, or revocation of franchises; or for the purpose of influencing the decisions of public officials, but shall not include such expenditures which are directly related to appearances before regulatory or other governmental bodies in connection with the reporting utility's existing or proposed operations.
This account shall include other miscellaneous expenses which are nonoperating in nature, but which are properly deductible before determining total income before interest charges.
1. Loss relating to investments in securities written-off or written-down.
2. Loss on sale of investments.
3. Loss on reacquisition, resale, or retirement of the utility's debt securities, when the loss is not amortized and used by a jurisdictional regulatory agency to increase embedded debt cost in establishing rates. (See § 1767.15 (q).)
4. Preliminary survey and investigation expenses related to abandoned projects, when not written-off to the appropriate operating expense account.
5. Costs of preliminary abandonment costs recorded in Account 182.1, Extraordinary Property Losses, and Account 182.2, Unrecovered Plant and Regulatory Study Costs, not allowed to be amortized to Account 407, Amortization of Property Losses, Unrecovered Plant and Regulatory Study Costs.
The interest charges accounts identified in this section shall be used by all RUS borrowers.
A. This account shall include the amount of interest on outstanding long-term debt issued or assumed by the utility, the liability for which included in Account 221, Bonds, or Account 224, Other Long-Term Debt.
B. This account shall be so kept or supported as to show the interest accruals on each class and series of long-term debt.
This account shall not include interest on nominally issued or nominally outstanding long-term debt, including securities assumed.
This account shall include concurrent credits for interest charged to construction based upon the net cost for the period of construction of borrowed funds used for construction purposes.
A. This account shall include the amortization of unamortized debt discount and expense on outstanding long-term debt. Amounts charged to this account shall be credited concurrently to Account 181, Unamortized Debt Expense, and Account 226, Unamortized Discount on Long-Term Debt—Debit.
B. This account shall be so kept or supported as to show the debt discount and expense on each class and series of long-term debt.
A. This account shall include the amortization of the losses on reacquisition of debt. Amounts charged to this account shall be credited concurrently to Account 189, Unamortized Loss on Reacquired Debt.
B. This account shall be maintained so as to allow ready identification of the loss amortized applicable to each class and series of long-term debt reacquired. (See § 1767.15 (q).)
A. This account shall include the amortization of unamortized net premium on outstanding long-term debt. Amounts credited to this account shall be charged concurrently to Account 225, Unamortized Premium on Long-Term Debt.
B. This account shall be so kept or supported as to show the premium on each class and series of long-term debt.
A. This account shall include the amortization of the gains realized from reacquisition of debt. Amounts credited to this account shall be charged concurrently to Account 257, Unamortized Gain on Reacquired Debt.
B. This account shall be maintained so as to allow ready identification of the amortized gains applicable to each class and series of long-term debt reacquired. (See § 1767.15 (q).)
A. This account shall include the interest accrued on amounts included in Account 223, Advances from Associated Companies, and on all other obligations to associated companies.
B. The records supporting the entries to this account shall be so kept as to show to whom the interest is to be paid, the period covered by the accrual, the rate of interest, and the principal amount of the advances or other obligations on which the interest is accrued.
This account shall include all interest charges not provided for elsewhere.
1. Interest on notes payable on demand or maturing one year or less from date and on open accounts, except notes and accounts with associated companies.
2. Interest on customers’ deposits.
3. Interest on claims and judgments, tax assessments, and assessments for public improvements past due.
4. Income and other taxes levied upon bondholders of the utility and assumed by it.
This account shall include concurrent credits for allowance for borrowed funds used during construction, not to exceed amounts computed in accordance with the formula prescribed in § 1767.16 (c)(17).
The extraordinary items accounts identified in this section shall be used by all RUS borrowers.
This account shall be credited with nontypical, noncustomary, infrequently recurring gains which would significantly distort the current year's income computed before extraordinary items, if reported other than as extraordinary items. Income tax relating to the amounts recorded in this account shall be recorded in Account 409.3, Income Taxes, Extraordinary Items. (See § 1767.15 (g).)
This account shall be debited with nontypical, noncustomary, infrequently recurring losses which would significantly distort the current year's income computed before extraordinary items, if reported other than as extraordinary items. Income tax relating to the amounts recorded in this account shall be recorded in Account 409.3, Income Taxes, Extraordinary Items. (See § 1767.15 (f).)
This account shall include the cumulative effect on margins of prior periods as a result of a change in accounting principle from one that is no longer generally accepted to one that is generally accepted.
The retained earnings accounts identified in this section shall be used by all RUS borrowers.
The operating revenue accounts identified in this section shall be used by all RUS borrowers.
A. This account shall include the net billing for electricity supplied for residential or domestic purposes.
When electricity supplied through a single meter is used for both residential and commercial purposes, the total revenue shall be included in this account, or Account 442, Commercial and Industrial Sales, according to the rate schedule that is applied. If the same rate schedules apply to residential and commercial and industrial service, classification shall be made according to principal use.
B. Account 440 shall be subaccounted as follows:
A. This account shall include the net billing for electricity supplied for residential and domestic purposes.
B. This account shall also include net billings for single phase service to schools, churches, lodges, and other public buildings.
C. Records shall be maintained so that the quantity of electricity sold and the revenue received under each rate schedule shall be readily available.
Net billings for multiphase service to schools, churches, lodges, and other public buildings shall be included in the appropriate subaccount of Account 442, Commercial and Industrial Sales.
This account shall include the net billings for electricity supplied for residential and domestic purposes to seasonal consumers.
This account shall include the net billings for electricity supplied for irrigation pumping. It need not be used unless such service is provided under a special irrigation rate.
A. This account shall include the net billing for electricity supplied to customers for commercial and industrial purposes.
If the utility classifies large commercial and industrial customers and related revenues on a lesser basis than 1000 kilowatts of demand, or segregates industrial customers and related revenues according to a recognized definition of an industrial customer, such classifications are acceptable in lieu of those otherwise required by the text of this account on the basis of 1000 kilowatts of demand.
When electricity supplied through a single meter is used for both commercial and residential purposes, the total revenue shall be included in this account, or Account 440, Residential Sales, according to the rate schedule that is applied. If the same rate schedules apply to residential and commercial and industrial service, classification shall be made according to principal use.
B. Account 442 shall be subaccounted as follows:
A. This account shall include the net billing for electricity supplied to consumers for commercial and industrial purposes requiring transformer capacity of 1000 kVA or less.
B. Records shall be maintained so that the quantity of electricity sold and the revenue received under each rate schedule shall be readily available.
When electricity supplied through a single meter is used for both commercial and residential purposes, the total revenue shall be included in this account or in Account 440, Residential Sales, based upon primary use.
A. This account shall include the net billing for electricity supplied to consumers for commercial and industrial purposes requiring transformer capacity in excess of 1000 kVA.
B. Records shall be maintained so that the quantity of electricity sold and the revenue received under each rate schedule shall be readily available.
A. This account shall include the net billing for electricity supplied and services rendered for the purposes of lighting streets, highways, parks, and other public places or for traffic or signal system service, for municipalities or other divisions or agencies of state of Federal Governments.
B. Records shall be maintained so that the quantity of electricity sold and the revenue received from each customer shall be readily
A. This account shall include the net billing for electricity supplied to municipalities or divisions or agencies of Federal or state governments, under special contracts or agreements or service classifications applicable only to public authorities, except such revenues as are includible in Account 444 and Account 447.
B. Records shall be maintained so as to show the quantity of electricity sold and the revenues received from each customer.
A. This account shall include the net billing for electricity supplied to railroads and interurban and street railways, for general railroad use, including the propulsion of cars or locomotives, where such electricity is supplied under separate and distinct rate schedules.
B. Records shall be maintained so that the quantity of electricity sold and the revenue received from each customer shall be readily available.
Revenues from incidental use of electricity furnished under a contract for propulsion of cars or locomotives shall be included herein.
A. This account shall include the net billing for electricity supplied to other electric utilities or to public authorities for resale purposes.
Revenues from electricity supplied to other utilities for use by them and not for distribution, shall be included in Account 442, Commercial and Industrial Sales, unless supplied under the same contracts as and not readily separable from revenues includible in this account.
B. Account 447 shall be subaccounted as follows:
A. This account shall include the net billing for electricity supplied to RUS borrowers for resale.
B. Records shall be maintained so as to show the quantity of electricity sold and the revenue received from each customer.
Revenues from electricity supplied to other utilities for use by them and not for distribution, shall be included in Account 442, Commercial and Industrial Sales, unless supplied under the same contract as and not readily separable from revenues includible in this account.
A. This account shall include the net billing for electricity supplied for resale to utilities not financed by RUS.
B. Records shall be maintained so as to show the quantity of electricity sold and the revenue received from each customer.
Revenues from electricity supplied to other utilities for use by them and not for distribution, shall be included in Account 442, Commercial and Industrial Sales, unless supplied under the same contract as and not readily separable from revenues includible in this account.
A. This account shall include amounts charged by the electric department at tariff or other specified rates for electricity supplied by it to other utility departments.
B. Records shall be maintained so that the quantity of electricity supplied each other department and the charges therefor shall be readily available.
A. This account shall be charged with provisions for the estimated pretax effects on net income of the portions of amounts being collected subject to refund which are estimated to be required to be refunded. Such provisions shall be credited to Account 229, Accumulated Provision for Rate Refunds.
B. This account shall also be charged with amounts refunded when such amounts had not been previously accrued.
C. Income tax effects relating to the amounts recorded in this account shall be recorded in Account 410.1, Provision for Deferred Income Taxes, Utility Operating Income, or Account 411.1, Provision for Deferred Income Taxes—Credit, Utility Operating Income, as appropriate.
This account shall include the amount of discounts forfeited or additional charges imposed because of the failure of customers to pay their electric bills on or before a specified date.
This account shall include revenues for all miscellaneous services and charges billed to customers which are not specifically provided for in other accounts.
1. Fees for changing, connecting, or disconnecting service.
2. Profit on maintenance of appliances, wiring, piping, or other installations on customers’ premises.
3. Net credit or debit (cost less net salvage and less payment from customers) on closing of work orders for plant installed for temporary service of less than one year. (See Account 185, Temporary Facilities.)
4. Recovery of expenses in connection with current diversion cases (billing for the electricity consumed shall be included in the appropriate electric revenue account).
A. This account shall include revenues derived from the sale of water for irrigation, domestic, industrial, or other uses or for the development by others of water power or for headwater benefits; also, revenues derived from furnishing water power for mechanical purposes when the investment in the property used in supplying such water or water power is carried as electric plant in service.
B. The records for this account shall be kept in such manner as to permit an analysis of the rates charged and the purposes for which the water was used.
A. This account shall include rents received for the use by others of land, buildings, and other property devoted to electric operations by the utility.
B. When property owned by the utility is operated jointly with others under a definite arrangement for apportioning the actual expenses among the parties to the arrangement, any amount received by the utility for interest or return or in reimbursement of taxes or depreciation on the property shall be credited to this account.
Do not include in this account rents from property constituting an operating unit or system. (See Account 412, Revenues from Electric Plant Leased to Others.)
This account shall include rents credited to the electric department on account of rental charges made against other departments (gas, water, etc.) of the utility. In the case of property operated under a definite arrangement to allocate the costs among the departments using the property, any reimbursement to the electric department for interest or return and depreciation and taxes shall be credited to this account.
This account shall include revenues derived from electric operations not includible in any of the foregoing accounts. It shall also include, in a separate subaccount, revenues received from operation of fish and wildlife and recreation facilities whether operated by the company or by contract concessionaires, such as revenues from leases or rentals of land for cottages, homes, or campsites.
1. Commission on sale or distribution of electricity of others when sold under rates filed by such others.
2. Compensation for minor or incidental services provided for others such as customer billing, and engineering.
3. Profit or loss on the sale of material and supplies not ordinarily purchased for resale and not handled through merchandising and jobbing accounts.
4. Sale of steam, but not including sales made by a steamheating department or transfers of steam under joint facility operations.
5. Revenues from transmission of electricity of others over transmission facilities of the utility.
6. Include in a separate subaccount, revenues in payment for rights and/or benefits received from others which are realized through research, development, and demonstration ventures. In the event the amounts received are so large as to distort revenues for the year in which received (5 percent of net income before application of the benefit), the amounts shall be credited to Account 253, Other Deferred Credits, and amortized by credits to this account over a period not to exceed 5 years.
The operation and maintenance expense accounts identified in this section shall be used by all RUS borrowers.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general supervision and direction of the operation of steam power generating stations. Direct supervision of specific activities, such as fuel handling, boiler-room operations, and generator operations shall be charged to the appropriate account. (See § 1767.17(a).)
A. This account shall include the cost of fuel used in the production of steam for the generation of electricity, including expenses in unloading fuel from the shipping media and handling thereof up to the point where the fuel enters the first boiler plant bunker, hopper, bucket, tank, or holder of the boiler-house structure. Records shall be maintained to show the quantity, B.t.u. content and cost of each type of fuel used.
B. The cost of fuel shall be charged initially to Account 151, Fuel Stock, and cleared to this account on the basis of the fuel used. Fuel handling expenses may be charged to this account as incurred or charged initially to Account 152, Fuel Stock Expenses Undistributed. In the latter event, they shall be cleared to this account on the basis of the fuel used. Respective amounts of fuel stock and fuel stock expenses shall be readily available.
1. Supervising, purchasing, and handling of fuel.
2. All routine fuel analyses.
3. Unloading from shipping facility and placing in storage.
4. Moving of fuel in storage and transferring fuel from one station to another.
5. Handling from storage or shipping facility to first bunker, hopper, bucket, tank, or holder of boiler-house structure.
6. Operation of mechanical equipment, such as locomotives, trucks, cars, boats, barges, and cranes.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Operating, maintenance, and depreciation expenses and ad valorem taxes on utility-owned transportation equipment used to transport fuel from the point of acquisition to the unloading point.
2. Lease or rental costs of transportation equipment used to transport fuel from the point of acquisition to the unloading point.
3. Cost of fuel including freight, switching, demurrage, and other transportation charges.
4. Excise taxes, insurance, purchasing commissions, and similar items.
5. Stores expenses to extent applicable to fuel.
6. Transportation and other expenses in moving fuel in storage.
7. Tools, lubricants, and other supplies.
8. Operating supplies for mechanical equipment.
9. Residual disposal expenses less any proceeds from sale of residuals.
Abnormal fuel handling expenses occasioned by emergency conditions shall be charged to expense as incurred.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in production of steam for electric generation. This includes all expenses of handling and preparing fuel beginning at the point where the fuel enters the first boiler plant bunker, hopper, tank, or holder of the boiler-house structure.
1. Supervising steam production.
2. Operating fuel conveying, storage, weighing, and processing equipment within boiler plant.
3. Operating boiler and boiler auxiliary equipment.
4. Operating boiler feed water purification and treatment equipment.
5. Operating ash-collecting and disposal equipment located inside the plant.
6. Operating boiler plant electrical equipment.
7. Keeping boiler plant log and records and preparing reports on boiler plant operations.
8. Testing boiler water.
9. Testing, checking, and adjusting meters, gauges, and other instruments and equipment in boiler plant.
10. Cleaning boiler plant equipment when not incidental to maintenance work.
11. Repacking glands and replacing gauge glasses where the work involved is of a minor nature and is performed by regular operating crews. Where the work is of a major character, such as that performed on high-pressure boilers, the item should be considered as maintenance.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Chemicals and boiler inspection fees.
2. Lubricants.
3. Boiler feed water purchased and pumping supplies.
This account shall include the cost of steam purchased or transferred from another department of the utility or from others under a joint facility operating arrangement for use in prime movers devoted to the production of electricity.
The records shall be so kept as to show separately for each company from which stem is purchased, the point of delivery, the quantity, the price, and the total charge. When steam is transferred from another department or from others under a joint operating arrangement, the utility shall be prepared to show full details of the cost of producing such steam, the basis of the charge to electric generation, and the extent and manner of use by each department or party involved.
A. This account shall include credits for expenses of producing steam which are charged to others or to other utility departments under a joint operating arrangement. Include also credits for steam expenses chargeable to other electric accounts outside of the steam generation group. Full details of the basis of determination of the cost of steam transferred shall be maintained.
B. If the charges to others or to other departments of the utility include an amount for depreciation, taxes, and return on the joint steam facilities, such portion of the charge shall be credited, in the case of others, to Account 454, Rent from Electric Property, and in the case of other departments of the utility, to Account 455, Interdepartmental Rents.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, and materials used, and expenses incurred in operating prime movers, generators, and their auxiliary apparatus, switch gear, and other electric equipment to the points where electricity leaves for conversion for transmission or distribution.
1. Supervising electric production.
2. Operating turbines, engines, generators, and exciters.
3. Operating condensers, circulating water systems, and other auxiliary apparatus.
4. Operating generator cooling system.
5. Operating lubrication and oil control system, including oil purification.
6. Operating switchboards, switch gear and electric control, and protective equipment.
7. Keeping electric plant log and records and preparing reports on electric plant operations.
8. Testing, checking, and adjusting meters, gauges, and other instruments, relays, controls, and other equipment in the electric plant.
9. Cleaning electric plant equipment when not incidental to maintenance work.
10. Repacking glands and replacing gauge glasses.
1. Federal and state unemployment.
2. F.I.C.A.
3. Taxes.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Lubricants and control system oils.
2. Generator cooling gases.
3. Circulating water purification supplies.
4. Cooling water purchased.
5. Motor and generator brushes.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and materials used and expenses incurred which are not specifically provided for or not readily assignable to other steam generation operation expense accounts.
1. General clerical and stenographic work.
2. Guarding and patrolling plant and yard.
3. Building service.
4. Care of grounds including snow removal, and grass cutting.
5. Miscellaneous labor.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
1. General operating supplies, such as tools, gaskets, packing waste, gauge glasses, hose, indicating lamps, record and report forms.
2. First-aid supplies and safety equipment.
3. Employees’ service facilities expenses.
4. Building service supplies.
5. Communication service.
6. Miscellaneous office supplies and expenses, printing, and stationery.
7. Transportation expenses.
8. Meals, traveling, and incidental expenses.
9. Research, development, and demonstration expenses.
This account shall include all rents of property of others used, occupied or operated in connection with steam power generation. (See § 1767.17 (c).)
This account shall include the cost of allowances expensed concurrent with the monthly emission of sulfur dioxide. (See § 1767.15 (u).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general supervision and direction of maintenance of steam generation facilities. Direct field supervision of specific jobs shall be charged to the appropriate maintenance account. (See § 1767.17(a).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and materials used and expenses incurred in the maintenance of steam structures, the book cost of which is includible in Account 311, Structures and Improvements. (See § 1767.17(b).)
A. This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and materials used and expenses incurred in the maintenance of steam plant, the book cost of which is includible in Account 312, Boiler Plant Equipment. (See § 1767.17(b).)
B. For the purpose of making charges hereto and to Account 513, Maintenance of Electric Plant, the point at which steam plant is distinguished from electric plant is defined as follows:
1. Inlet flange of throttle valve on prime mover.
2. Flange of all steam extraction lines on prime mover.
3. Hotwell pump outlet on condensate lines.
4. Inlet flange of all turbine-room auxiliaries.
5. Connection to line side of motor starter for all boiler-plant equipment.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and materials used and expenses incurred in the maintenance of electric plant, the book cost of which is includible in Account 313, Engines and Engine-Driven Generators; Account 314, Turbogenerator Units; and Account 315, Accessory Electric Equipment. (See § 1767.17(b) and Paragraph B of Account 512.)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and materials used and expenses incurred in maintenance of miscellaneous steam generation plant, the book cost of which is includible in Account 316, Miscellaneous Power Plant Equipment. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general supervision and direction of the operation of nuclear power generating stations. Direct supervision of specific activities, such as fuel handling, reactor operations, and generator operations shall be charged to the appropriate account. (See § 1767.17(a).)
A. This account shall be debited and Account 120.5, Accumulated Provision for Amortization of Nuclear Fuel Assemblies, credited for the amortization of the net cost of nuclear fuel assemblies used in the production of energy. The net cost of nuclear fuel assemblies subject to amortization shall be the cost of nuclear fuel assemblies plus or less the expected net salvage of uranium, plutonium, and other byproducts and unburned fuel. The utility shall adopt the necessary procedures to assure that charges to this account are distributed according to the thermal energy produced in such periods.
B. This account shall also include the costs involved when fuel is leased.
C. This account shall also include the cost of other fuels, used for ancillary steam facilities, including superheat.
D. This account shall be debited or credited as appropriate for significant changes in the amounts estimated as the net salvage value of uranium, plutonium, and other byproducts contained in Account 157, Nuclear Materials Held for Sale, and the amount realized upon the final disposition of the materials. Significant declines in the estimated realizable value of items carried in Account 157 may be recognized at the time of market
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, and materials used and expenses incurred for heat transfer materials and water used for steam and cooling purposes.
1. Operation of water supply facilities.
2. Handling of coolants and heat transfer materials.
1. Federal and state unemployment.
2. F.I.C.A.
3. Taxes.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Chemicals.
2. Additions to or refining of fluids used in reactor systems.
3. Lubricants.
4. Pumping supplies and expenses.
5. Miscellaneous supplies and expenses.
6. Purchased water.
Do not include in this account water for general station use or the initial charge for coolants, heat transfer, or moderator fluids, chemicals, or other supplies capitalized.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, and materials used and expenses incurred in production of steam through nuclear processes, and similar expenses for operation of any auxiliary superheat facilities.
1. Supervising steam production.
2. Fuel handling including removal, insertion, disassembly, and preparation for cooling operations and shipment.
3. Testing instruments and gauges.
4. Health, safety, monitoring, and decontamination activities.
5. Waste disposal.
6. Operating steam boilers and auxiliary steam, superheat facilities.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Chemical supplies.
2. Charts and logs.
3. Health, safety, monitoring, and decontamination supplies.
4. Boiler inspection fees.
5. Lubricants.
This account shall include the cost of steam purchased or transferred from another department of the utility or from others under a joint facility operating arrangement for use in prime movers devoted to the production of electricity.
The records shall be so kept as to show separately for each company from which steam is purchased, the point of delivery, the quantity, the price, and the total charge. When steam is transferred from another operating department, the utility shall be prepared to show full details of the cost of producing such steam, the basis of the charges to electric generation, and the extent and manner of use by each department involved.
A. This account shall include credits for expenses of producing steam which are charged to others or to other utility departments under a joint operating arrangement. Include also credits for steam expenses chargeable to other electric accounts outside of the steam generation group. Full details of the basis of determination of the cost of steam transferred shall be maintained.
B. If the charges to others or to other departments of the utility include an amount for depreciation, taxes, and return on the joint steam facilities, such portion of the charge shall be credited in the case of others, to Account 454, Rent from Electric Property, and in the case of other departments of the utility, to Account 455, Interdepartmental Rents.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in operating turbogenerators, steam turbines and their auxiliary apparatus, switch gear, and other electric equipment to the points where electricity leaves for conversion for transmission or distribution.
1. Supervising electric production.
2. Operating turbines, engines, generators, and exciters.
3. Operating condensers, circulating water systems, and other auxiliary apparatus.
4. Operating generator cooling system.
5. Operating lubrication and oil control system, including oil purification.
6. Operating switchboards, switch gear, and electric control and protective equipment.
7. Keeping plant log and records and preparing reports on electric plant operations.
8. Testing, checking and adjusting meters, gauges, and other instruments, relays, controls, and other equipment in the electric plant.
9. Cleaning electric plant equipment when not incidental to maintenance.
10. Repacking glands and replacing gauge glasses.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Lubricants and control system oils.
2. Generator cooling gases.
3. Log sheets and charts.
4. Motor and generator brushes.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred which are not specifically provided for or are not readily assignable to other nuclear generation operation accounts.
1. General clerical and stenographic work.
2. Plant security.
3. Building service.
4. Care of grounds, including snow removal, and grass cutting
5. Miscellaneous labor.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
1. General operating supplies, such as tools, gaskets, hose, indicating lamps, records and reports forms.
2. First-aid supplies and safety equipment.
3. Employees’ service facilities expenses.
4. Building service supplies.
5. Communication service.
6. Miscellaneous office supplies and expenses, printing and stationery.
7. Transportation expenses.
8. Meals, traveling, and incidental expenses.
9. Research, development, and demonstration expenses.
This account shall include all rents of property of others used, occupied, or operated in connection with nuclear generation. (See § 1767.17 (c).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general supervision and direction of maintenance of nuclear generation facilities. Direct field supervision of specific jobs shall be charged to the appropriate maintenance account. (See § 1767.17(a).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in the maintenance of structures, the book cost of which is includible in Account 321, Structures and Improvements. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in the maintenance of reactor plant, the book cost of which is includible in Account 322, Reactor Plant Equipment. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in the maintenance of electric plant, the book cost of which is includible in Account 323, Turbogenerator Units, and Account 324, Accessory Electric Equipment. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of miscellaneous nuclear generating plant, the book cost of which is includible in Account 325, Miscellaneous Power Plant Equipment. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and
This account shall include the cost of water used for hydraulic power generation.
1. Cost of water purchased from others, including water tolls paid reservoir companies.
2. Periodic payments for licenses or permits from any governmental agency for water rights, or payments based on the use of the water.
3. Periodic payments for riparian rights.
4. Periodic payments for headwater benefits or for detriments to others.
5. Cloud seeding.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in operating hydraulic works including reservoirs, dams, and waterways, and in activities directly relating to the hydroelectric development outside the generating station. It shall also include the cost of labor, materials used, and other expenses incurred in connection with the operation of (1) fish and wildlife, and (2) recreation facilities. Separate subaccounts shall be maintained for each of the above.
1. Supervising hydraulic operation.
2. Removing debris and ice from trash racks, reservoirs, and waterways.
3. Patrolling reservoirs and waterways.
4. Operating intakes, spillways, sluiceways, and outlet works.
5. Operating bubbler, heater, or other deicing systems.
6. Ice and log jam work.
7. Operating navigation facilities.
8. Operations relating to conservation of game, fish, and forests.
9. Insect control activities.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Insect control materials.
2. Lubricants, packing, and other supplies used in the operation of hydraulic equipment.
3. Transportation expense.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in operating prime movers, generators, and their auxiliary apparatus, switchgear, and other electric equipment, to the point where electricity leaves for conversion for transmission or distribution.
1. Supervising electric production.
2. Operating prime movers, generators, and auxiliary equipment.
3. Operating generator cooling system.
4. Operating lubrication and oil control systems, including oil purification.
5. Operating switchboards, switchgear, and electric control and protection equipment.
6. Keeping plant log and records and preparing reports on plant operations.
7. Testing, checking and adjusting meters, gauges, and other instruments, relays, controls, and other equipment in the plant.
8. Cleaning plant equipment when not incidental to maintenance work.
9. Repacking glands.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Lubricants and control system oils.
2. Motor and generator brushes.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred which are not specifically provided for or are not readily assignable to other hydraulic generation operation expense accounts.
1. General clerical and stenographic work.
2. Guarding and patrolling plant and yard.
3. Building service.
4. Care of grounds including snow removal, and grass cutting.
5. Snow removal from roads and bridges.
6. Miscellaneous labor.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
1. General operating supplies, such as tools, gaskets, packing, waste, hose, indicating lamps, record and report forms.
2. First-aid supplies and safety equipment.
3. Employees’ service facilities expenses.
4. Building service supplies.
5. Communication service.
6. Office supplies, printing and stationery.
7. Transportation expenses.
8. Fuel.
9. Meals, traveling, and incidental expenses.
10. Research, development, and demonstration expenses.
This account shall include all rents of property of others used, occupied, or operated in connection with hydraulic power generation, including amounts payable to the United States for the occupancy of public lands and reservations for reservoirs, dams, flumes, forebays, penstocks, and power houses but not including transmission right-of-way. (See § 1767.17 (c).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general supervision and direction of the maintenance of hydraulic power generating stations. Direct field supervision of specific jobs shall be charged to the appropriate maintenance account. (See § 1767.17(a).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of hydraulic structures, the book cost of which is includible in Account 331, Structures and Improvements. (See § 1767.17 (b).) However, the cost of labor, materials used, and expenses incurred in the maintenance of fish and wildlife and recreation facilities, the book cost of which is includible in Account 331, Structures and Improvements, shall be charged to Account 545, Maintenance of Miscellaneous Hydraulic Plant.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of plant includible in Account 332, Reservoirs, Dams, and Waterways. (See § 1767.17(b).) However, the cost of labor, materials used, and expenses incurred in the maintenance of fish and wildlife and recreation facilities, the book cost of which is includible in Account 332, Reservoirs, Dams, and Waterways, shall be charged to
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of plant includible in Account 333, Water Wheels, Turbines and Generators, and Account 334, Accessory Electric Equipment, (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of plant, the book cost of which is includible in Account 335, Miscellaneous Power Plant Equipment, and Account 336, Roads Railroads and Bridges. (See § 1767.17(b).) It shall also include the cost of labor, materials used, and other expenses incurred in the maintenance of (1) fish and wildlife, and (2) recreation facilities. Separate subaccounts shall be maintained for each of the above.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general supervision and direction of the operation of other power generating stations. Direct supervision of specific activities, such as fuel handling and engine and generator operation shall be charged to the appropriate account. (See § 1767.17(a).)
This account shall include the cost delivered at the station (See Account 151, Fuel Stock) of all fuel, such as gas, oil, kerosene, and gasoline used in other power generation.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in operating prime movers, generators, and electric equipment in other power generating stations, to the point where electricity leaves for conversion for transmission or distribution.
1. Supervising other power generation operation.
2. Operating prime movers, generators, and auxiliary apparatus and switching and other electric equipment.
3. Keeping plant log and records and preparing reports on plant operations.
4. Testing, checking, cleaning, oiling, and adjusting equipment.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Dynamo, motor, and generator brushes.
2. Lubricants and control system oils.
3. Water for cooling engines and generators.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in the operation of other power generating stations which are not specifically provided for or are not readily assignable to other generation expense accounts.
1. General clerical and stenographic work.
2. Guarding and patrolling plant and yard.
3. Building service.
4. Care of grounds, including snow removal, and grass cutting.
5. Miscellaneous labor.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
1. Building service supplies.
2. First-aid supplies and safety equipment.
3. Communication service.
4. Employees’ service facilities expenses.
5. Office supplies, printing and stationery.
6. Transportation expense.
7. Meals, traveling, and incidental expenses.
8. Fuel for heating.
9. Water for fire protection or general use.
10. Miscellaneous supplies, such as hand tools, drills, saw blades, and files.
11. Research, development, and demonstration expenses.
This account shall include all rents of property of others used, occupied, or operated in connection with other power generation. (See § 1767.17 (c).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general supervision and direction of the maintenance of other power generating stations. Direct field supervision of specific jobs shall be
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of facilities used and expenses incurred in maintenance of facilities used in other power generation, the book cost of which is includible in Account 341, Structures and Improvements, and Account 342, Fuel Holders, Producers and Accessories. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of plant, the book cost of which is includible in Account 343, Prime Movers; Account 344, Generators; and Account 345, Accessory Electric Equipment. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of other power generation plant, the book cost of which is includible in Account 346, Miscellaneous Power Plant Equipment. (See § 1767.17(b).)
A. This account shall include the cost at point of receipt by the utility of electricity purchased for resale. It shall also include, net settlements for exchange of electricity or power, such as economy energy, off-peak energy for on-peak energy, and spinning reserve capacity. In addition, the account shall include the net settlements for transactions under pooling or interconnection agreements wherein there is a balancing of debits and credits for energy, or capacity. Distinct purchases and sales shall not be recorded as exchanges and net amounts only recorded merely because debit and credit amounts are combined in the voucher settlement.
B. The records supporting this account shall show, by months, the demands and demand charges, kilowatt-hours and prices thereof under each purchase contract and the charges and credits under each exchange or power pooling contract.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, and expenses incurred in load dispatching activities for system control. Utilities having an interconnected electric system or operating under a central authority which controls the production and dispatching of electricity may apportion these costs to this account and Account 561, Load Dispatching, and Account 581, Load Dispatching.
1. Allocating loads to plants and interconnections with others.
2. Directing switching.
3. Arranging and controlling clearances for construction, maintenance, test, and emergency purposes.
4. Controlling system voltages.
5. Recording loadings, and water conditions.
6. Preparing operating reports and data for billing and budget purposes.
7. Obtaining reports on the weather and special events.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Communication service provided for system control purposes.
2. System record and report forms.
3. Meals, traveling, and incidental expenses.
4. Obtaining weather and special events reports.
A. This account shall be charged with any production expenses including expenses incurred directly in connection with the purchase of electricity, which are not specifically provided for in other production expense accounts. Charges to this account shall be supported so that a description of each type of charge will be readily available.
B. Recoveries from insurance companies, under use and occupancy provisions of policies, of amounts in reimbursement of excessive or added productions costs for which the insurance company is liable under the terms of the policy shall be credited to this account.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general supervision and direction of the operation of the transmission system as a whole. Direct supervision of specific activities, such as station operation and line operation shall be charged to the appropriate account. (See § 1767.17(a).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in load dispatching operations pertaining to the transmission of electricity.
1. Direct switching.
2. Arranging and controlling clearances for construction, maintenance, test, and emergency purposes.
3. Controlling system voltages.
4. Obtaining reports on the weather and special events.
5. Preparing operating reports and data for billing and budget purposes.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Communication service provided for system control purposes.
2. System record and report forms.
3. Meals, traveling, and incidental expenses.
4. Obtaining weather and special events reports.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in operating transmission substations and switching stations. If transmission station equipment is located in or adjacent to a generating station, the expenses applicable to transmission station operations shall nevertheless be charged to this account.
1. Supervising station operation.
2. Adjusting station equipment where such adjustment primarily affects performance, such as regulating the flow of cooling water, adjusting current in fields of a machine or changing voltage of regulators, changing station transformer taps.
3. Inspecting, testing, and calibrating station equipment for the purpose of checking its performance.
4. Keeping station log and records and preparing records on station operation.
5. Operating switching and other station equipment.
6. Standing watch, guarding, and patrolling station and station yard.
7. Sweeping, mopping, and tidying station.
8. Care of grounds, including snow removal, and grass cutting.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Building service expenses.
2. Operating supplies, such as lubricants, commutator brushes, water, and rubber goods.
3. Station meter and instrument supplies, such as ink and charts.
4. Station record and report forms.
5. Tool expense.
6. Transportation expenses.
7. Meals, traveling, and incidental expenses.
A. These accounts shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in the operation of transmission lines.
B. If the expenses are not substantial for both overhead and underground lines, these accounts may be combined.
1. Supervising line operation.
2. Inspecting and testing lightning arresters, circuit breakers, switches, and grounds.
3. Load tests of circuits.
4. Routine line patrolling.
5. Routine voltage surveys made to determine the condition or efficiency of transmission system.
6. Transferring loads, switching and reconnecting circuits and equipment for operating purposes. (Switching for construction or maintenance purposes is not includible in this account.)
7. Routine inspection and cleaning of manholes, conduit, network, and transformer vaults.
8. Electrolysis surveys.
9. Inspecting and adjusting line-testing equipment, such as voltmeters, ammeters, and wattmeters.
10. Regulation and addition of oil or gas in high-voltage cable systems.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Transportation expenses.
2. Meals, traveling, and incidental expenses.
3. Tool expenses.
4. Operating supplies, such as instrument charts, and rubber goods.
This account shall include amounts payable to others for the transmission of the utility's electricity over transmission facilities owned by others.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damage, materials used, and expenses incurred in transmission map and record work, transmission office expenses, and other transmission expenses not provided for elsewhere.
1. General records of physical characteristics of lines and stations, such as capacities.
2. Ground resistance records.
3. Janitor work at transmission office buildings, including care of grounds, snow removal, and grass cutting.
4. Joint pole maps and records.
5. Line load and voltage records.
6. Preparing maps and prints.
7. General clerical and stenographic work.
8. Miscellaneous labor.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
1. Communication service.
2. Building service supplies.
3. Map and record supplies.
4. Transmission office supplies and expenses, printing and stationery.
5. First-aid supplies.
6. Research, development, and demonstration expenses.
This account shall include rents of property of others used, occupied, or operated in connection with the transmission system, including payments to the United States and others for use of public or private lands and reservations for transmission line rights-of-way. (See § 1767.17 (c).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general supervision and direction of maintenance of the transmission system. Direct field supervision of specific jobs shall be charged to the appropriate maintenance account. (See § 1767.17(a).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in the maintenance of structures, the book cost of which is includible in Account 352, Structures and Improvements. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of station equipment, the book cost of which is includible in Account 353, Station Equipment. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of transmission plant, the book cost of which is includible in Accounts 354, Towers and Fixtures; 355, Poles and Fixtures; 356, Overhead Conductors and Devices; and 359, Roads and Trails. (See § 1767.17(b).)
1. Work of the following character on poles, towers, and fixtures:
a. Installing or removing additional clamps or strain insulators on guys in place.
b. Moving line or guy pole in relocation of the same pole or section of line.
c. Painting poles, towers, crossarms, or pole extensions.
d. Readjusting and changing position of guys or braces.
e. Realigning and straightening poles, crossarms braces, and other pole fixtures.
f. Reconditioning reclaimed pole fixtures.
g. Relocating crossarms, racks, brackets, and other fixtures on poles.
h. Repairing or realigning pins, racks, or brackets.
i. Repairing pole supported platform.
j. Repairs by others to jointly owned poles.
k. Shaving, cutting rot, or testing poles or crossarms in use or salvaged for reuse.
l. Stubbing poles already in service.
m. Supporting fixtures and conductors and transferring them to new poles during pole replacements.
n. Maintenance of pole signs, stencils, and tags.
2. Work of the following character on overhead conductors and devices:
a. Overhauling and repairing line cutouts, line switches, and line breakers.
b. Cleaning insulators and bushings.
c. Refusing cutouts.
d. Repairing line oil circuit breakers and associated relays and control wiring.
e. Repairing grounds.
f. Resagging, retyping, or rearranging position or spacing of conductors.
g. Standing by phones, going to calls, cutting faulty lines clear, or similar activities at times of emergencies.
h. Sampling, testing, changing, purifying, and replenishing insulating oil.
i. Repairing line testing equipment.
j. Transferring loads, switching and reconnecting circuits and equipment for maintenance purposes.
k. Trimming trees and clearing brush.
l. Chemical treatment of right of way areas when occurring subsequent to construction of line.
3. Work of the following character on roads and trails:
a. Repairing roadways and bridges.
b. Trimming trees and brush to maintain previous roadway clearance.
c. Snow removal from roads and trails.
d. Maintenance work on publicly owned roads and trails when done by utility at its expense.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital services and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of transmission plant, the book cost of which is includible in Accounts 357, Underground Conduit, and Account 358, Underground Conductors and Devices. (See § 1767.17(b).)
1. Work of the following character on underground conduit:
a. Cleaning ducts, manholes, and sewer connections.
b. Minor alterations of handholes, manholes, or vaults.
c. Refastening, repairing, or moving racks, ladders, hangers in manholes, or vaults.
d. Plugging and shelving or replugging ducts.
e. Repairs to sewers and drains, walls and floors, rings and covers.
2. Work of the following character on underground conductors and devices:
a. Repairing oil circuit breakers, switches, cutouts, and control wiring.
b. Repairing grounds.
c. Retraining and reconnecting cables in manholes, including transfer of cables from one duct to another.
d. Repairing conductors and splices.
e. Repairing or moving junction boxes and potheads.
f. Refireproofing of cables and repairing supports.
g. Repairing electrolysis preventive devices for cables.
h. Repairing cable bonding systems.
i. Sampling, testing, changing, purifying, and replenishing insulating oil.
j. Transferring loads, switching and reconnecting circuits, and equipment for maintenance purposes.
k. Repairing line testing equipment.
l. Repairs to oil or gas equipment in high-voltage cable system and replacement of oil or gas.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of owned or leased plant which is assignable to transmission operations and is not provided for elsewhere. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general supervision and direction of the operation of the distribution system. Direct supervision of specific activities, such as station operation, line operation, and meter department operation shall be charged to the appropriate account. (See § 1767.17(a).)
This account (the keeping of which is optional with the utility) shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in load dispatching operations pertaining to the distribution of electricity.
1. Direct switching.
2. Arranging and controlling clearances for construction, maintenance, test, and emergency purposes.
3. Controlling system voltages.
4. Preparing operating reports.
5. Obtaining reports on the weather and special events.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Communication service provided for system control purposes.
2. System record and report forms.
3. Meals, traveling, and incidental expenses.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in the operation of distribution substations.
1. Supervising station operation.
2. Adjusting station equipment where such adjustment primarily affects performance, such as regulating the flow of cooling water, adjusting current in fields of a machine, changing voltage of regulators, or changing station transformer taps.
3. Keeping station log and records and preparing reports on station operation.
4. Inspecting, testing, and calibrating station equipment for the purpose of checking its performance.
5. Operating switching and other station equipment.
6. Standing watch, guarding, and patrolling station and station yard.
7. Sweeping, mopping, and tidying station.
8. Care of grounds, including snow removal, and grass cutting.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Building service expenses.
2. Operating, supplies, such as lubricants, commutator brushes, water, and rubber goods.
3. Station meter and instrument supplies, such as ink and charts.
4. Station record and report forms.
5. Tool expense.
6. Transportation expense.
7. Meals, traveling, and incidental expenses.
If the utility owns storage battery equipment used for supplying electricity to customers in periods of emergency, the cost of operating labor and of supplies, such as acid, gloves, hydrometers, thermometers, soda, automatic cell fillers, and acid proof shoes shall be included in this account. If significant in amount, a separate subdivision shall be maintained for such expenses.
These accounts shall include, respectively, the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in the operation of overhead and underground distribution lines.
1. Supervising line operation.
2. Changing line transformer taps.
3. Inspecting and testing lightning arresters, line circuit breakers, switches, and grounds.
4. Inspecting and testing line transformers for the purpose of determining load, temperature, or operation performance.
5. Patrolling lines.
6. Load tests and voltage surveys of feeders, circuits, and line transformers.
7. Removing line transformers and voltage regulators with or without replacement.
8. Installing line transformers or voltage regulators with or without change in capacity provided that the cost of first installation of these items is included in Account 368, Line Transformers.
9. Voltage surveys, either routine or upon request of customers, including voltage tests at customer's main switch.
10. Transferring loads, switching and reconnecting circuits and equipment for operation purpose.
11. Electrolysis surveys.
12. Inspecting and adjusting line testing equipment.
1. Federal and State unemployment.
2. F.I.C.A,
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Tool expense.
2. Transportation expense.
3. Meals, traveling, and incidental expenses.
4. Operating supplies, such as instrument charts, and rubber goods.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in: (1) The operation of street lighting and signal system plant which is owned or leased by the utility; and (2) the operation and maintenance of such plant owned by customers where such work is done regularly as a part
1. Supervising street lighting and signal systems operation.
2. Replacing lamps and incidental cleaning of glassware and fixtures in connection therewith.
3. Routine patrolling for lamp outages, extraneous nuisances, or encroachments.
4. Testing lines and equipment including voltage and current measurement.
5. Winding and inspection of time switch and other controls.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Street lamp renewals.
2. Transportation and tool expense.
3. Meals, traveling, and incidental expenses.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in the operation of customer meters and associated equipment.
1. Supervising meter operation.
2. Clerical work on meter history and associated equipment record cards, test cards, and reports.
3. Disconnecting and reconnecting, removing and reinstalling, sealing and unsealing meters and other metering equipment in connection with initiating or terminating services including the cost of obtaining meter readings, if incidental to such operation.
4. Consolidating meter installations due to elimination of separate meters for different rates of service.
5. Changing or relocating meters, instrument transformers, time switches, and other metering equipment.
6. Resetting time controls, checking operation of demand meters and other metering equipment, when done as an independent operation.
7. Inspecting and adjusting meter testing equipment.
8. Inspecting and testing meters, instrument transformers, time switches, and other metering equipment on premises or in shops
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Meter seals and miscellaneous meter supplies.
2. Transportation expenses.
3. Meals, traveling, and incidental expenses.
4. Tool expenses.
The cost of the first setting and testing of a meter is chargeable to utility plant, Account 370, Meters.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in work on customer installations in inspecting premises and in rendering services to customers of the nature of those indicated by the list of items hereunder.
1. Supervising customer installations work.
2. Inspecting premises, including the check of wiring for code compliance.
3. Investigating, locating, and clearing grounds on customers’ wiring.
4. Investigating service complaints, including load tests of motors and lighting and power circuits on customers’ premises; field investigations of complaints on bills or of voltage.
5. Installing, removing, renewing, and changing lamps and fuses.
6. Radio, television, and similar interference work including erection of new aerials on customers’ premises and patrolling of lines, testing of lightning arresters, inspection of pole hardware, and examination on or off premises of customers’ appliances, wiring, or equipment to locate cause of interference.
7. Installing, connecting, reinstalling, or removing leased property on customers’ premises.
8. Testing, adjusting, and repairing customers’ fixtures and appliances in the shop or on premises.
9. Cost of changing customers’ equipment due to changes in service characteristics.
10. Investigation of current diversion including setting and removal of check meters and securing special readings thereon; special calls by employees in connection with
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Lamp and fuse renewals.
2. Materials used in servicing customers’ fixtures, appliances, and equipment.
3. Power, light, heat, telephone, and other expenses of the appliance repair department.
4. Tool expense.
5. Transportation expense, including pickup and delivery charges.
6. Meals, traveling, and incidental expenses.
7. Rewards paid for discovery of current diversion.
Amounts billed customers for any work, the cost of which is charged to this account, shall be credited to this account. Any excess over costs resulting therefrom, shall be transferred to Account 451, Miscellaneous Service Revenues.
Do not include in this account expenses incurred in connection with merchandising, jobbing, and contract work.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in distribution system operation not provided for elsewhere.
1. General records of physical characteristics of lines and substations, such as capacities.
2. Ground resistance records.
3. Joint pole maps and records.
4. Distribution system voltage and load records.
5. Preparing maps and prints.
6. Service interruption and trouble records.
7. General clerical and stenographic work except that chargeable to Account 586, Meter Expenses.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
1. Operating records covering poles, transformers, manholes, cables, and other distribution facilities. Exclude meter records chargeable to Account 586, Meter Expenses, and station records chargeable to Account 582, Station Expenses, and stores records chargeable to Account 163, Stores Expense Undistributed.
2. Janitor work at distribution office buildings including snow removal and grass cutting.
3. Communication service.
4. Building service expenses.
5. Miscellaneous office supplies and expenses, printing and stationery, maps and records, and first-aid supplies.
6. Research, development, and demonstration expenses.
This account shall include rents of property of others used, occupied, or operated in connection with the distribution system, including payments to the United States and others for the use and occupancy of public lands and reservations for distribution line rights of way. (See § 1767.17 (c).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general supervision and direction of maintenance of the distribution system. Direct field supervision of specific jobs shall be charged to the appropriate maintenance account. (See § 1767.17(a).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of structures, the book cost of which is includible in Account 361, Structures and Improvements. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of plant, the book cost of which is includible in Account 362, Station Equipment, and Account 363, Storage Battery Equipment. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in the maintenance of overhead distribution line facilities, the book cost of which is includible in Account 364, Poles, Towers and Fixtures; Account 365, Overhead Conductors and Devices; and Account 369, Services. (See § 1767.17(b).)
1. Work of the following character on poles, towers, and fixtures:
a. Installing additional clamps or removing clamps or strain insulators on guys in place.
b. Moving line or guy pole in relocation of pole or section of line.
c. Painting poles, towers, crossarms, or pole extensions.
d. Readjusting and changing position of guys or braces.
e. Realigning and straightening poles, crossarms, braces, pins, racks, brackets, and other pole fixtures.
f. Reconditioning reclaimed pole fixtures.
g. Relocating crossarms, racks, brackets, and other fixtures on poles.
h. Repairing pole supported platform.
i. Repairs by others to jointly owned poles.
j. Shaving, cutting rot, or treating poles or crossarms in use or salvaged for reuse.
k. Stubbing poles already in service.
l. Supporting conductors, transformers, and other fixtures and transferring them to new poles during pole replacements.
m. Maintaining pole signs, stencils, and tags.
2. Work of the following character on overhead conductors and devices:
a. Overhauling and repairing line cutouts, line switches, line breakers, and capacitor installations.
b. Cleaning insulators and bushings.
c. Refusing line cutouts.
d. Repairing line oil circuit breakers and associated relays and control wiring.
e. Repairing grounds.
f. Resagging, retying, or rearranging position or spacing of conductors.
g. Standing by phones, going to calls, cutting faulty lines clear, or similar activities at times of emergency.
h. Sampling, testing, changing, purifying, and replenishing insulating oil.
i. Transferring loads, switching, and reconnecting circuits and equipment for maintenance purposes.
j. Repairing line testing equipment.
k. Trimming trees and clearing brush.
l. Chemical treatment of right-of-way area when occurring subsequent to construction of line.
3. Work of the following character on overhead services:
a. Moving position of service either on pole or on customers’ premises.
b. Pulling slack in service wire.
c. Retying service wire.
d. Refastening or tightening service bracket.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in the maintenance of underground distribution line facilities, the book cost of which is includible in Account 366, Underground Conduit; Account 367, Underground Conductors and Devices; and Account 369, Services. (See § 1767.17(b).)
1. Work of the following character on underground conduit:
a. Cleaning ducts, manholes, and sewer connections.
b. Moving or changing position of conduit or pipe.
c. Minor alterations of handholes, manholes, or vaults.
d. Refastening, repairing, or moving racks, ladders, or hangers in manholes or vaults.
e. Plugging and shelving ducts.
f. Repairs to sewers, drains, walls, and floors, rings, and covers.
2. Work of the following character on underground conductors and devices:
a. Repairing circuit breakers, switches, cutouts, network protectors, and associated relays and control wiring.
b. Repairing grounds.
c. Retraining and reconnecting cables in manholes including transfer of cables from one duct to another.
d. Repairing conductors and splices.
e. Repairing or moving junction boxes and potheads.
f. Refireproofing cables and repairing supports.
g. Repairing electrolysis preventive devices for cables.
h. Repairing cable bonding systems.
i. Sampling, testing, changing, purifying, and replenishing insulating oil.
j. Transferring loads, switching and reconnecting circuits and equipment for maintenance purposes.
k. Repairing line testing equipment.
l. Repairing oil or gas equipment in high voltage cable systems and replacement of oil or gas.
3. Work of the following character on underground services:
a. Cleaning ducts.
b. Repairing any underground service plant.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of distribution line transformers, the book cost of which is includible in Account 368, Line Transformers. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of plant, the book cost of which is includible in Account 373, Street Lighting and Signal Systems. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in the maintenance of meters and meter testing equipment, the book cost of which is includible in Account 370, Meters, and Account 395, Laboratory Equipment, respectively. (See § 1767.17(b).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in maintenance of plant, the book cost of which is includible in Accounts 371, Installations on Customers’ Premises, and Account 372, Leased Property on Customers’ Premises, and any other plant the maintenance of which is assignable to the distribution function and is not provided for elsewhere. (See § 1767.17(b).)
1. Work of similar nature to that listed in other distribution maintenance accounts.
2. Maintenance of office furniture and equipment used by distribution system department.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
The customer accounts expense accounts identified in this section shall be used by all RUS borrowers.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general direction and supervision of customer accounting and collecting activities. Direct supervision of a specific activity shall be charged to Account 902, Meter Reading Expenses, or Account 903, Customer Records and Collection Expenses, as appropriate. (See § 1767.17(a).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in reading customer meters, and determining consumption when performed by employees engaged in reading meters.
1. Addressing forms for obtaining meter readings by mail.
2. Changing and collecting meter charts used for billing purposes.
3. Inspecting time clocks and checking seals when performed by meter readers and the work represents a minor activity incidental to regular meter reading routine.
4. Reading meters, including demand meters, and obtaining load information for billing purposes. Exclude and charge to Account 586, Meter Expenses, or to Account 903, Customer Records and Collection Expenses, as applicable, the cost of obtaining meter readings, first and final, if incidental to the operation of removing or resetting, sealing or locking, and disconnecting or reconnecting meters.
5. Computing consumption from meter reader's book or from reports by mail when done by employees engaged in reading meters.
6. Collecting from prepayment meters when incidental to meter reading.
7. Maintaining record of customers’ keys.
8. Computing estimated or average consumption when performed by employees engaged in reading meters.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
1. Badges, lamps, and uniforms.
2. Demand charts, meter books and binders and forms for recording readings, but not the cost of preparation.
3. Postage and supplies used in obtaining meter readings by mail.
4. Transportation, meals, and incidental expenses.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in work on customer applications, contracts, orders, credit investigations, billing and accounting, collections and complaints.
1. Receiving, preparing, recording, and handling routine orders for service, disconnections, transfers or meter tests initiated by the customer, excluding the cost of carrying out such orders, which is chargeable to the account appropriate for the work called for by such orders.
2. Investigations of customers’ credit and keeping of records pertaining thereto, including records of uncollectible accounts written off.
3. Receiving, refunding, or applying customer deposits and maintaining customer deposit, line extension, and other miscellaneous records.
4. Checking consumption shown by meter readers’ reports where incidental to preparation of billing date.
5. Preparing address plates and addressing bills and delinquent notices.
6. Preparing billing data.
7. Operating billing and bookkeeping machines.
8. Verifying billing records with contracts or rate schedules.
9. Preparing bills for delivery and mailing or delivering bills.
10. Collecting revenues, including collection from prepayment meters, unless incidental to meter-reading operations.
11. Balancing collections, preparing collections for deposit, and preparing cash reports.
12. Posting collections and other credits or charges to customer accounts and extending unpaid balances.
13. Balancing customer accounts and controls.
14. Preparing, mailing, or delivering delinquent notices and preparing reports of delinquent accounts.
15. Final meter reading of delinquent accounts when done by collectors incidental to regular activities.
16. Disconnecting and reconnecting service because of nonpayment bills.
17. Receiving, recording, and handling of inquiries, complaints, and requests for investigations from customers, including preparation of necessary orders, but excluding the cost of carrying out such orders, which is chargeable to the account appropriate for the work called for by such orders.
18. Statistical and tabulating work on customer accounts and revenues, but not including special analyses for sales department, rate department, or other general purposes, unless incidental to regular customer accounting routines.
19. Preparing and periodically rewriting meter reading sheets.
20. Determining consumption and computing estimated or average consumption when performed by employees other than those engaged in reading meters.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
1. Address plates and supplies.
2. Cash overages and shortages.
3. Commissions or fees to others for collecting.
4. Payments to credit organizations for investigations and reports.
5. Postage.
6. Transportation expenses, including transportation of customer bills and meter books under centralized billing procedures.
7. Transportation, meals expenses, and incidental expenses.
8. Bank charges, exchange, and other fees for cashing and depositing customers’ checks.
9. Forms for recording orders for services, or removals.
10. Rent of mechanical equipment.
The cost of work on meter history and meter location records in chargeable to Account 586, Meter Expenses.
This amount shall be charged with amounts sufficient to provide for losses from uncollectible utility revenues. Concurrent credits shall be made to Account 144, Accumulated Provision for Uncollectible Accounts—Credit. Losses from uncollectible accounts shall be charged to Account 144.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred not provided for in other accounts.
1. General clerical and stenographic work.
2. Miscellaneous labor.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Communication service.
2. Miscellaneous office supplies and expenses and stationery and printing other than those specifically provided for in Account 902 and Account 903.
The customer service and informational expense accounts identified in this section shall be used by all RUS borrowers.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general direction and supervision of customer service activities, the object of which is to encourage safe, efficient, and economical use of the utility's service. Direct supervision of a specific activity within customer service and informational expense classification shall be charged to the account wherein the
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in providing instructions or assistance to customers, the object of which is to encourage safe, efficient, and economical use of the utility's service.
1. Direct supervision of department.
2. Processing customer inquiries relating to the proper use of electric equipment, the replacement of such equipment, and information related to such equipment.
3. Advice directed to customers as to how they may achieve the most efficient and safest use of electric equipment.
4. Demonstrations, exhibits, lectures, and other programs designed to instruct customers in the safe, economical, or efficient use of electric service, and/or oriented toward conservation of energy.
5. Engineering and technical advice to customers, the object of which is to promote safe, efficient, and economical use of the utility's service.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
1. Supplies and expenses pertaining to demonstrations, exhibits, lectures, and other programs.
2. Loss in value on equipment and appliances used for customer assistance programs.
3. Office supplies and expenses.
4. Transportation, meals, and incidental expenses.
Do not include in this account expenses that are provided for elsewhere, such as Accounts 416, Costs and Expenses of Merchandising, Jobbing, and Contract Work; 587, Customer Installations Expenses; and 912, Demonstrating and Selling Expenses.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in activities which primarily convey information as to what the utility urges or suggests customers should do in utilizing electric service to protect health and safety, to encourage environmental protection, to utilize their electric equipment safely and economically, or to conserve electric energy.
1. Direct supervision of information activities.
2. Preparing informational materials for newspapers, periodicals, and billboards and preparing and conducting informational motion pictures, radio and television programs.
3. Preparing informational booklets and bulletins used in direct mailings.
4. Preparing informational window and other displays.
5. Employing agencies, selecting media, and conducting negotiations in connection with the placement and subject matter of information programs.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
1. Use of newspapers, periodicals, billboards, and radio for informational purposes.
2. Postage on direct mailings to customers exclusive of postage related to billings.
3. Printing of informational booklets, dodgers, and bulletins.
4. Supplies and expenses in preparing informational materials by the utility.
5. Office supplies and expenses.
Exclude from this account and charge to Account 930.2, Miscellaneous General Expenses, the cost of publication of stockholder reports, dividend notices, bond redemption notices, financial statements, and other notices of a general corporate character. Also exclude all expenses of a promotional, institutional, goodwill, or political nature, which are includible in such accounts as 913, Advertising Expenses; 930.1, General Advertising Expenses; and 426.4, Expenditures for Certain Civic, Political and Related Activities.
Entries relating to informational advertising included in this account shall contain or refer to supporting documents which identify the specific advertising message. If references are used, copies of the advertising message shall be readily available.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in connection with customer service and informational activities which are not includible in other customer information expense accounts.
1. General clerical and stenographic work not assigned to specific customer service and informational programs.
2. Miscellaneous labor.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Communication service.
2. Printing, postage, and office supplies expenses.
The sales expense accounts identified in this section shall be used by all RUS borrowers.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general direction and supervision of sales activities, except merchandising. Direct supervision of a specific activity, such as demonstrating, selling, or advertising shall be charged to the account wherein the costs of such activity are included. (See § 1767.17(a).)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in promotional, demonstrating, and selling activities, except by merchandising, the object of which is to promote or retain the use of utility services by present and prospective customers.
1. Demonstrating uses of utility services.
2. Conducting cooking schools, preparing recipes, and related home service activities.
3. Exhibitions, displays, lectures, and other programs designed to promote use of utility services.
4. Experimental and development work in connection with new and improved appliances and equipment, prior to general public acceptance.
5. Solicitation of new customers or of additional business from old customers, including commissions paid employees.
6. Engineering and technical advice to present or prospective customers in connection with promoting or retaining the use of utility services.
7. Special customer canvasses when their primary purpose is the retention of business or the promotion of new business.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
1. Supplies and expenses pertaining to demonstration, experimental, and development activities.
2. Booth and temporary space rental.
3. Loss in value on equipment and appliances used for demonstration purposes.
4. Transportation, meals, and incidental expenses.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in advertising designed to promote or retain the use of utility service, except advertising the sale of merchandise by the utility.
1. Direct supervision of department.
2. Preparing advertising material for newspapers, periodicals, and billboards, and preparing and conducting motion pictures, radio, and television programs.
3. Preparing booklets and bulletins used in direct mail advertising.
4. Preparing window and other displays.
5. Clerical and stenographic work.
6. Investigating advertising agencies and media and conducting negotiations in connection with the placement and subject matter of sales advertising.
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
1. Advertising in newspapers, periodicals, billboards, and radio for sales promotion purposes, but not including institutional or goodwill advertising includible in Account 930.1, General Advertising Expenses.
2. Materials and services given as prizes or otherwise in connection with civic lighting contests, canning, or cooking contests, and bazaars in order to publicize and promote the use of utility services.
3. Fees and expenses of advertising agencies and commercial artists.
4. Novelties for general distribution.
5. Postage on direct mail advertising.
6. Premiums distributed generally, such as recipe books when not offered as inducement to purchase appliances.
7. Printing booklets, dodgers, and bulletins.
8. Supplies and expenses in preparing advertising material.
9. Office supplies and expenses.
The cost of advertisements which set forth the value or advantages of utility service without reference to specific appliances, or, if reference is made to appliances, invites the reader to purchase appliances from his dealer or refer to appliances not carried for sale by the utility, shall be considered sales promotion advertising and charged to this account. However, advertisements which are limited to specific makes of appliances sold by the utility and price and terms, thereof, without referring to the value or advantages of utility service, shall be considered as merchandise advertising and the cost shall be charged to Costs and Expenses of Merchandising, Jobbing and Contract Work, Account 416.
Advertisements which substantially mention or refer to the value or advantages of utility service, together with specific reference to makes of appliance sold by the utility and the price, and terms, thereof, and designed for the joint purpose of increasing the use of utility service and the sales of appliances, shall be considered as a combination advertisement and the costs shall be distributed between this account and Account 416 on the basis of space, time, or other proportional factors.
Exclude from this account and charge to Account 930.2, Miscellaneous General Expenses, the cost of publication of stockholder reports, dividend notices, bond redemption notices, financial statements, and other notices of a general corporate character. Also exclude all institutional or goodwill advertising. (See Account 930.1, General Advertising Expenses.)
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in connection with sales activities, except merchandising, which are not includible in other sales expense accounts.
1. General clerical and stenographic work not assigned to specific functions.
2. Special analysis of customer accounts and other statistical work for sales purposes not a part of the regular customer accounting and billing routine.
3. Miscellaneous labor.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Communication service.
2. Printing, postage, office supplies, and expenses applicable to sales activities, except those chargeable to Account 913, Advertising Expenses.
The administrative and general expense accounts identified in this section shall be used by all RUS borrowers.
A. This account shall include the compensation (salaries, bonuses, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and other consideration for services, but not including directors’ fees) of officers, executives, and other employees of the utility properly chargeable to utility operations and not chargeable directly to a particular operating function.
B. This account may be subdivided in accordance with a classification appropriate to the departmental or other functional organization of the utility.
A. This account shall include office supplies and expenses incurred in connection with the general administration of the utility's operations which are assignable to specific administrative or general departments and are not specifically provided for in other accounts. This includes the expenses of the various administrative and general departments, the salaries and wages of which are includible in Account 920.
B. This account may be subdivided in accordance with a classification appropriate to the departmental or other functional organization of the utility.
Office expenses which are clearly applicable to any category of operating expenses other than the administrative and general category shall be included in the appropriate account in such category. Further, general expenses which apply to the utility as a whole rather than to a particular administrative function, shall be included in Account 930.2, Miscellaneous General Expenses.
1. Automobile service, including charges through clearing account.
2. Bank messenger and service charges.
3. Books, periodicals, bulletins, and subscriptions to newspapers, newsletters, and tax services.
4. Building service expenses for customer accounts, sales, and administrative and general purposes.
5. Communication service expenses.
6. Cost of individual items of office equipment used by general departments which are of small value or short life.
7. Membership fees and dues in trade, technical, and professional associations paid by a utility for employees. (Company memberships are includible in Account 930.2.)
8. Office supplies and expenses.
9. Payment of court costs, witness fees, and other expenses of legal department.
10. Postage, printing, and stationery.
11. Meals, traveling, and incidental expenses.
This account shall be credited with administrative expenses recorded in Account 920 and Account 921 which are transferred to construction costs or to nonutility accounts. (See § 1767.16 (d).)
A. This account shall include the fees and expenses of professional consultants and others for general services which are not applicable to a particular operating function or other accounts. It shall include also the pay and expenses of persons engaged for a special or temporary administrative or general purpose in circumstances where the person so engaged is not considered as an employee of the utility.
B. This account shall be so maintained as to permit ready summarization according to the nature of service and the person furnishing the same.
1. Fees, pay, and expenses of accountants and auditors, actuaries, appraisers, attorneys, engineering consultants, management consultants, negotiators, public relations counsel, and tax consultants.
2. Supervision fees and expenses paid under contracts for general management services.
Do not include inspection and brokerage fees and commissions chargeable to other accounts or fees and expenses in connection with security issues which are includible in the expenses of issuing securities.
A. This account shall include the cost of insurance or reserve accruals to protect the utility against losses and damages to owned or leased property used in its utility operations. It shall also include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and the related supplies and expenses incurred in property insurance activities.
B. Recoveries from insurance companies or others for property damages shall be credited to the account charged with the cost of the damage. If the damaged property has been retired, the credit shall be to the appropriate account for accumulated provision for depreciation.
C. Records shall be kept so as to show the amount of coverage for each class of insurance carried, the property covered, and the applicable premiums. Any dividends distributed by mutual insurance companies shall be credited to the accounts to which the insurance premiums were charged.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
The cost of insurance or reserve accruals capitalized, shall be charged to construction and retirement either directly or by transfers to construction and retirement work orders from this account.
The cost of insurance or reserve accruals for the following classes of property shall be charged as indicated:
1. Materials, supplies, and stores equipment to Account 163, Stores Expense Undistributed, or appropriate materials account.
2. Transportation and other general equipment to appropriate clearing accounts that may be maintained.
3. Electric plant leased to others to Account 413, Expenses of Electric Plant Leased to Others.
4. Nonutility property to the appropriate nonutility income account.
5. Merchandise and jobbing property to Account 416, Costs and Expenses of Merchandising, Jobbing and Contract Work.
The cost of labor, employee pensions and benefits, social security and other payroll taxes, and the related supplies and expenses of administrative and general employees who are only incidentally engaged in property insurance work may be included in Account 920 and Account 921, as appropriate.
The cost of insurance or reserve accruals applicable to the various utility functions shall be charged to the specific functional operations and the appropropriate miscellaneous administrative expense accounts either directly or by transfers from this account.
A. This account shall include the cost of insurance or reserve accruals to protect the utility against injuries and damages claims of employees or others, losses of such character not covered by insurance, and expenses
B. Reimbursements from insurance companies or others for expenses charged hereto on account of injuries, damages, and insurance dividends or refunds shall be credited to this account.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
Payments to or in behalf of employees for accident or death benefits, hospital expenses, medical expenses, or for salaries while incapacitated for service or on leave of absence beyond periods normally allowed, when not the result of occupational injuries, shall be charged to Account 926, Employee Pensions and Benefits. (See also Note B of Account 926.)
A. This account shall include pensions paid to or on behalf of retired employees or accruals to provide for pensions or payments for the purchase of annuities for this purpose, when the utility has definitely, by contract, committed itself to a pension plan under which the pension funds are irrevocably devoted to pension purposes and payments for employee accident, sickness, hospital, and death benefits, or insurance therefor. Include, also, expenses incurred in medical, educational, or recreational activities for the benefit of employees and administrative expenses in connection with employee pensions and benefits.
B. The utility shall maintain a complete record of accruals or payments for pensions and be prepared to furnish full information to RUS of the plan under which it has created or proposes to create a pension fund and a copy of the declaration of trust or resolution under which the pension plan is established.
C. There shall be credited to this account, the portion of pensions and benefits expenses which is applicable to nonutility operations, the specific functional operations, maintenance, and administrative expense accounts, and to construction and retirement activities unless such amounts are distributed directly to the accounts involved and are not included herein in the first instance.
D. Records in support of this account shall be so kept that the total pensions expense, the total benefits expense, the administrative expenses included herein, and the amounts of pensions and benefits expenses transferred to the operations, maintenance, administrative, construction or retirement accounts will be readily available.
1. Payment of pensions to retirees on a nonaccrual basis.
2. Accruals for or payments to pension funds or to insurance companies for pension purposes.
3. Group and life insurance premiums (credit dividends received).
4. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
5. Payments for accident, sickness, hospital, and death benefits or insurance.
6. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
7. Expenses in connection with educational and recreational activities for the benefit of employees.
The cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and the related supplies and expenses of administrative and general employees who are only incidentally engaged in employee pension and benefit activities may be included in Account 920 and Account 921, as appropriate.
A. This account shall include payments to municipal or other governmental authorities and the cost of materials, supplies, and services furnished such authorities without reimbursement in compliance with franchise, ordinance, or similar requirements; provided, however, that the utility may charge to this account at regular tariff rates, instead of cost, utility service furnished without charge under provisions of franchises.
B. When no direct outlay is involved, concurrent credit for such charges shall be made to Account 929, Duplicate Charges—Credit.
C. The account shall be maintained so as to readily reflect the amounts of cash outlays, utility service supplied without charge, and other items furnished without charge.
Franchise taxes shall not be charged to this account, but to Account 408.1, Taxes Other Than Income Taxes, Utility Operating Income.
A. This account shall include all expense (except pay of regular employees only incidentally engaged in such work) properly includible in utility operating expenses, incurred by the utility in connection with formal cases before regulatory commissions or other regulatory bodies or cases in which such a body is a party, including payments made to a regulatory commission for fees assessed against the utility for pay and expenses of such commission, its officers, agents, and employees, and also including payments made to the United States for the administration of the Federal Power Act.
B. Amounts of regulatory commission expenses which, by approval or direction of RUS, are to be spread over future periods shall be charged to Account 182.3, Other Regulatory Assets, and amortized by charges to this account.
C. The utility shall be prepared to show the cost of each formal case.
1. Salaries, fees, retainers, and expenses of counsel, solicitors, attorneys, accountants, engineers, clerks, attendants, witnesses, and others engaged in the prosecution of or defence against petitions or complaints presented to regulatory bodies or in the valuation of property owned or used by the utility in connection with such cases.
2. Office supplies and expenses, payments to public service or other regulatory commissions, stationery and printing, traveling expenses, and other expenses incurred directly in connection with formal cases before regulatory commissions.
Exclude from this account and include in other appropriate operating expense accounts, expenses incurred in the improvement of service, additional inspection, or rendering reports which are made necessary by the rules and regulations, or orders, of regulatory bodies.
This account shall include concurrent credits for charges which may be made to operating expenses or to other accounts for the use of utility service from its own supply. Include, also, offsetting credits for any other charges made to operating expenses for which there is no direct money outlay.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in advertising and related activities, the cost of which by their content and purpose are not provided for elsewhere.
1. Supervision.
2. Preparing advertising material for newspapers, periodicals, and billboards and preparing or conducting motion pictures, radio, and television programs.
3. Preparing booklets and bulletins used in direct mail advertising.
4. Preparing window and other displays.
5. Clerical and stenographic work.
6. Investigating and employing advertising agencies, selecting media, and conducting
1. Federal and state unemployment.
2. F.I.C.A.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
2. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
3. Fees and expenses of claim investigators.
4. Payment of awards to claimants for court costs and attorneys’ services.
5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
6. Compensation payments under workmen's compensation laws.
7. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
8. Cost of safety, accident prevention, and similar educational activities.
1. Advertising in newspapers, periodicals, billboards, and radios.
2. Advertising matter such as posters, bulletins, booklets, and related items.
3. Fees and expenses of advertising agencies and commercial artists.
4. Postage and direct mail advertising.
5. Printing of booklets, dodgers, and bulletins.
6. Supplies and expenses in preparing advertising materials.
7. Office supplies and expenses.
Properly includible in this account is the cost of advertising activities on a local or national basis of a goodwill or institutional nature, which is primarily designed to improve the image of the utility or the industry, including advertisements which inform the public concerning matters affecting the company's operations, such as, the cost of providing service, the company's efforts to improve the quality of service, and the company's efforts to improve and protect the environment. Entries relating to advertising included in this account shall contain or refer to supporting documents which identify the specific advertising message. If references are used, copies of the advertising message shall be readily available.
Exclude from this account and include in Account 426.4, Expenditures for Certain Civic, Political and Related Activities, expenses for advertising activities, which are designed to solicit public support or the support of public officials in matters of a political nature.
This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, and expenses incurred in connection with the general management of the utility not provided for elsewhere.
1. Miscellaneous labor not elsewhere provided for.
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
1. Accruals for or payments to pension funds or to insurance companies for pension purposes.
2. Group and life insurance premiums (credit dividends received).
3. Payments for medical and hospital services and expenses of employees when not the result of occupational injuries.
4. Payments for accident, sickness, hospital, and death benefits or insurance.
5. Payments to employees incapacitated for service or on leave of absence beyond periods normally allowed when not the result of occupational injuries or in excess of statutory awards.
6. Expenses in connection with educational and recreational activities for the benefit of employees.
1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.
2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance, for similar protection.
3. Special costs incurred in procuring insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees, and expenses.
6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others, such as public liability, property damages, casualty, employee liability, etc., and amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for similar protection.
7. Losses not covered by insurance or reserve accruals on account of injuries or deaths to employees or others and damages to the property of others.
8. Fees and expenses of claim investigators.
9. Payment of awards to claimants for court costs and attorneys’ services.
10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of others.
11. Compensation payments under workmen's compensation laws.
12. Compensation paid while incapacitated as the result of occupational injuries. (See Account 924, Note A.)
13. Cost of safety, accident prevention, and similar educational activities.
1. Industry association dues for company memberships.
2. Contributions for conventions and meetings of the industry.
3. Research, development, and demonstration expenses not charged to other operation and maintenance expense accounts on a functional basis.
4. Communication service not chargeable to other accounts.
5. Trustee, registrar, and transfer agent fees and expenses.
6. Stockholders meeting expenses.
7. Dividend and other financial notices.
8. Printing and mailing dividend checks.
9. Directors’ fees and expenses.
10. Publishing and distributing annual reports to stockholders.
11. Public notices of financial, operating, and other data required by regulatory statutes, not including, however, notices required in connection with security issues or acquisitions of property.
This account shall include rents properly includible in utility operating expenses for the property of others used, occupied, or operated in connection with the customer accounts, customer service and informational, sales, general, and administrative functions of the utility. (See § 1767.17 (c).)
A. This account shall include the cost assignable to customer accounts, sales, administrative, and general functions of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used, and expenses incurred in the maintenance of property, the book cost of which is includible in Account 390, Structures and Improvements; Account 391, Office Furniture and Equipment; Account 397, Communication Equipment; and Account 398, Miscellaneous Equipment. (See § 1767.17(b).)
B. Maintenance expenses on office furniture and equipment used elsewhere than in general, commercial, and sales offices shall be charged to the following accounts:
1. Steam Power Generation, Account 514.
2. Nuclear Power Generation, Account 532.
3. Hydraulic Power Generation, Account 545.
4. Other Power Generation, Account 554.
5. Transmission, Account 573.
6. Distribution, Account 598.
7. Merchandise and Jobbing, Account 416.
8. Garages, Shops, etc., Appropriate clearing account, if used.
Maintenance of plant included in other general equipment accounts shall be included herein unless charged to clearing accounts or to the particular functional maintenance expense account indicated by the use of the equipment.
All RUS borrowers shall maintain and keep their books of accounts and
When a minor item of property is removed from service and not replaced, a retirement work order is not required except in the case of a conductor. The cost of the minor item shall remain in the appropriate plant account until the retirement unit, of which it is a part, is retired. However, as conductor is recorded in feet and is not part of any specific retirement unit, conductor shall be retired even though the amount taken down and not replaced is less than a retirement unit (two spans).
When minor items of plant are removed and not replaced, material salvaged shall be recorded on a material salvage ticket. Items of material recorded on this ticket shall be charged to the materials and supplies account and credited in the miscellaneous columns of the Materials Register to the Accumulated Provision for Depreciation. In this example, it is assumed that the cost of removal is nil. If, however, costs are incurred during the removal of minor items of plant, these costs shall reduce the credit to the Accumulated Provision for Depreciation.
When a staking sheet supporting a single work order reflects a combination of new construction and replacements, or system improvements, the predominant cost shall be the governing factor in determining the amount of cost RUS will finance. To illustrate, assume that a service is to be run to a new home near the end of an existing line. On inspection, the pole from which the service is to be run is found to be in very poor physical condition and must be replaced. In addition, a single span of wire and a service are presently connected to this pole which serve no purpose. The home originally served has been demolished and the existing span, pole, and service were retired. In other words, what started out to be simply the installation of a new service now includes the retirement of a span of wire, a pole, and a service; the replacement of a pole; and the running of a new service. Assuming the replacement of the pole is the costliest part of this project, the construction and retirement activity shall be classified as an ordinary replacement even though the work includes new construction and retirements without replacement.
If it is necessary to move a conductor from one location to another on a pole assembly during the conversion of a line from one phase to another phase, the cost of moving the conductor is capitalizable as a system improvement.
Many utilities conduct studies to determine whether sacrificial anodes are needed to protect underground cable against corrosion. The following procedures shall be followed to account for sacrificial anodes and the replacement of a neutral:
1. If the study results in the installation of sacrificial anodes, the cost of the study shall be capitalized to Account 367, Underground Conductors and Devices. If the study does not result in the installation of anodes, the cost shall be charged to Account 594, Maintenance of Underground Lines.
2. Costs incurred in the first installation are capitalizable even though anodes are considered minor items of property. However, only the first costs of installation shall be capitalized. All subsequent replacements of anodes shall be expensed.
3. Sacrificial anodes do not constitute a record unit; therefore, the cost of anodes shall be added to the cost of the underground cable unit.
4. Because a neutral is part of an underground cable record unit, and is not, in and of itself, a record unit, the cost to replace a corroded neutral shall be charged to Account 594, Maintenance of Underground Lines.
Borrowers are sometimes required to construct terminal facilities in the transmission line of another utility in order to receive power from their power supplier. The document executed between the borrower and the utility is normally referred to as a “License Agreement”. The license agreement may stipulate that certain items of the terminal facilities are to be transferred to, and become the property of, the other utility upon completion of the construction. The accounting for this type of transaction shall be as follows:
1. All construction costs incurred shall be charged to a work order. Upon completion of the construction and accumulation of all costs, the cost of the facilities that become the property of another utility shall be transferred from construction work-in-progress to Account 303, Miscellaneous Intangible Plant. The cost of the plant for which the borrower retains title shall be charged to the appropriate plant accounts.
2. The cost of the facilities recorded in Account 303 shall be amortized to Account 405, Amortization of Other Electric Plant, over the contract term or the estimated useful service life of the plant, whichever is shorter. If the related contract or contracts for this power supply are terminated, the unamortized balance shall be expensed, in the current period, in Account 557.
The installation of pole top service disconnect switches, where title is retained by the utility, shall be capitalized in Account 371, Installations on Customers’ Premises. If a switch cabinet is purchased with a current transformer included as an integral part of the cabinet, the entire cost of the switch shall be charged to Account 371. If the current transformer is installed outside of the switch cabinet, the transformer, meter, and meter base, together with the first installation costs, shall be capitalized, upon purchase, in Account 370, Meters.
Payments received from the customer toward construction costs shall be credited to Account 371, Installations on Customers’ Premises. Such payments, together with any amount not financed by RUS, shall be entered in column 9 of the RUS Form 219, Inventory of Work Orders. The associated maintenance costs shall be charged to Account 587, Customer Installations Expenses, or to Account 597, Maintenance of Meters, as appropriate.
When pole top disconnect switches are installed and title is held by the customer, the cost of the material shall be charged to Account 456, Other Electric Revenues and the receipts from the sale of line material shall be credited to Account 456. The portion of the receipts for resale material as well as that for installation shall be credited to Account 415, Revenues from Merchandising, Jobbing, and Contract Work. The cost of resale material sold and the cost of installation shall be charged to Account 416, Costs and Expenses of Merchandising, Jobbing and Contract Work.
Future maintenance costs incurred by the cooperative that are not billed to the customer shall be charged to Account 587, Customer Installations Expenses.
The cost associated with the purchase and installation of steel pole reinforcers shall be charged to Account 593, Maintenance of Overhead Lines.
Mobile substations shall be accounted for in a manner similar to that for a spare and are, therefore, included as part of transmission or distribution station equipment, depending upon the use of the mobile substation. The mobile substation, together with the trailer on which it is permanently mounted, shall be capitalized upon purchase. A general purpose truck or tractor used to relocate a mobile substation and trailer shall be classified as transportation equipment.
The composite depreciation rate used for transmission plant or distribution plant, as appropriate, shall be applied to the mobile substation.
Where a pole supports both a secondary wire and a security light, the
There are many cases in which an electric utility and a communications utility enter into an agreement that provides for joint use of poles. Under the terms of these agreements, either utility may occupy the poles of the other upon payment of a stipulated annual rental. If such joint occupancy necessitates the use of a higher than standard pole, the new pole shall be provided at the expense of the utility having the need for the higher pole.
When an electric utility replaces, at its own expense, a standard pole belonging to the communications utility with a higher pole, the cost of the higher pole, less net salvage (if any) of the pole replaced, shall be charged to the account in which the pole rental is included.
Contributions made to an electric utility by a communications utility for the costs incurred in stubbing joint use electric poles shall be credited to Account 593, Maintenance of Overhead Lines. The cost of pole stubbing on electric plant distribution facilities shall be charged to Account 593.
An investment in outside plant that is held in joint ownership shall be recorded in the appropriate plant accounts at its cost to the utility. For continuing property record purposes, jointly owned property units shall be priced at their cost to the utility and shall be appropriately segregated in the CPRs to indicate joint ownership.
Utility accounting practice requires the costs associated with the first clearing and grading of land and rights of way and any resulting damage thereto, to be included in the accounts for structures and improvements or equipment to which such costs relate. Since the first clearing, as well as clearing which is “directly occasioned by the building of a structure,” is done, not for the purpose of enhancing the value of the land or the rights of way, but for the purpose of constructing plant, these costs are more directly related to the construction of plant than to the purchase of land or rights of way. The accounts shall be charged as follows:
1. For overhead transmission pole lines, Account 356, Overhead Conductors and Devices;
2. For overhead distribution lines, Account 365, Overhead Conductors and Devices; and
3. For underground distribution lines, Account 366, Underground Conduit, for a conduit installation; or Account 367, Underground Conductors and Devices, for a direct burial installation.
Engineering costs for long-range system plans shall be charged to Account 183, Preliminary Survey and Investigation Charges, as incurred. The cost of engineering services incurred in preparing a long-range system plan represents a legitimate component of the total cost of construction of all system improvements detailed in the plan. The amount of engineering costs to be associated with any specific system improvement is the annual costs incurred up to the time of the allocation (not previously allocated), plus that portion of the initial cost which relates to the particular construction in question. If any major system improvement included in the engineering plan is not constructed, or if the study is superseded by another complete study, the cost of that portion of the original study not resulting in construction shall be charged to Account 182.2, Unrecovered Plant and Regulatory Study Costs, if the costs are to be recovered through future rates. Costs recorded in Account 182.2 shall be amortized to Account 407, Amortization of Property Losses, Unrecovered Plant and Regulatory Study Costs, as the costs are recovered through the rates. Any costs included in Account 182.2 that are disallowed for rate-making purposes shall be charged to Account 426.5, Other Deductions.
The allocation of engineering services to the various construction
If construction is performed by contract, the engineering cost applicable thereto shall be transferred from Account 183 to Account 107, Construction Work-in-Progress—Electric, and thereby spread to the appropriate plant accounts on the basis of contract costs.
In the case of system improvement construction performed on the basis of work orders, engineering costs shall be transferred to Account 107, Construction Work-in-Progress—Electric, and included in total work order costs as either overhead or special services. If engineering services are not readily identifiable with individual work orders, they shall be capitalized as overhead. If engineering costs for each work order are readily separable from the engineering costs for all other work orders, they shall be capitalized as special services.
In summarizing system improvement work orders on the RUS Form 219, Inventory of Work Orders, the amount of engineering costs previously approved for advance on the long range plan, if any, shall be deducted to determine the balance of loan funds subject to advance by RUS.
Costs relating to the determination of availability of service, rates, and similar items for individual applicants shall be charged to Account 912, Demonstrating and Selling Expenses. If it is expected that construction will result, the costs incurred to provide service, including staking, shall be charged to Account 107, Construction Work-in-Progress—Electric. If construction does not result, Account 107 shall be credited and Account 426.5, Other Deductions, shall be charged.
Plant installed for temporary use, a period of less than 1.ar, shall be recorded in Account 185, Temporary Facilities, net of any payments received from customers. Upon retirement, this net cost plus cost of removal, less any salvage value, shall be cleared to Account 451, Miscellaneous Service Revenues.
When a temporary service is installed at the site of a building under construction, the location of the permanent service entrance and the load and its characteristics are usually known. The temporary service is of the proper capacity and is so located or has sufficient slack, that it can be relocated to serve the new building as a permanent service. Under these conditions, the service shall be charged to Account 369, Services, when first installed. The cost of moving and attaching the service to the permanent service entrance shall be charged to Account 593, Maintenance of Overhead Lines or Account 594, Maintenance of Underground Lines, as appropriate.
When installed plant, not yet completed or completed but not yet placed in service, has been damaged or destroyed by storm, the cost of the repair and restoration shall be added to the cost of construction and capitalized if the plant was constructed under force account or work order construction, and the utility paid for the cost of the repairs. If the plant was constructed under contract, the contractor is required to deliver the plant in new condition. Therefore, any repairs required prior to the completion of construction and acceptance by the utility, are ordinarily borne by the contractor.
Liquidated damages are amounts paid by or assessed against contractors
When a contractor has been paid in full from loan funds or from funds to be reimbursed by loan funds without a deduction for liquidated damages, the amount of liquidated damages received shall be deposited in the Construction Fund. This amount shall be reflected by a decrease in column 5, “Total Expenditures to Date,” of the RUS Form 595, Financial Requirement and Expenditure Statement, and as an increase in column 6, “Cash Balance.” If liquidated damages are obtained by withholding an equivalent amount from the contractor's payment, the net result will be the same.
Nonrefundable payments (contributions) from customers and developers for underground construction shall first be credited to Account 107.2, Construction Work-in-Progress—Force Account. When the constructed plant is unitized and distributed to the individual plant accounts, the contributions shall be credited to those plant accounts which gave rise to the contribution.
When a customer or developer furnishes a trench or other service in connection with buried plant, the cooperative shall debit Account 107.2 with the actual or estimated cost of the service performed, and account for the credit as set forth above.
Refunds of overpayments for materials and equipment previously purchased are occasionally received as the result of legal action brought against electrical suppliers for price fixing in violation of antitrust laws. Such refunds shall be accounted for as follows:
1. The refund shall first be applied to any litigation costs that were incurred.
2. Refunds for special equipment items shall be accounted for, in detail, on the Summary of Special Equipment Costs and credited against the appropriate plant accounts.
3. Other material or equipment items that were installed through work orders or a materials furnished contract shall be adjusted on an amended work order. The amended work order shall include full details of the refund.
4. Continuing property records shall be adjusted to reflect the above transactions.
5. Amounts approved for advance on the RUS Form 595, Financial Requirement and Expenditure Statement, and on the loan budget records, shall be adjusted. For special equipment items, the adjustment shall be requested in a letter to RUS. For materials installed by work order or contract, the adjustments shall be made through credits shown on the RUS Form 219, Inventory of Work Orders.
6. Refunds for material currently in stock shall be credited to Account 154, Plant Materials and Operating Supplies.
7. If the material was used in maintenance activities or operations, the refund shall be credited to the appropriate maintenance or operations expense account.
8. Refunds for materials or equipment financed from loan funds shall be deposited in the Construction Fund—Trustee Account or remitted to RUS as a special payment on a note. Other refunds shall be deposited in the general funds.
The primary purpose of a Load Management System is to optimize load dispatch and to reduce or minimize system peaks in order to reduce purchases of power or to delay or eliminate the need for construction of new plant. A Load Management System may be used on integrated systems, or on generation, transmission, or distribution systems separately. The telemetry equipment used for data acquisition and interpretation may be included at various points on a system, such as generation, transmission, or
An effective load control program should be coordinated with the G&T and requires full participation of all member distribution systems. The G&T monitors the power load of the total member distribution system to predict the time of the system's peak load. An optimal load control strategy is developed by the G&T and is passed on from the G&T computer system to the load control computer systems of the member distribution cooperatives.
The equipment at the member distribution system level is the type actually being used by an integrated power system to operate a load control program. The equipment used may vary from one integrated power system to another. The selection of equipment used is determined by the information needs of the integrated power system, and the method selected to operate the load control system.
Some equipment performs only SCADA-type functions. This equipment is included with the equipment that performs only load control functions because SCADA-type equipment is an integral part of a load control program. An effective load control strategy requires current information on loads so that member distribution systems can determine the actual loads to be shed and the duration of the load control.
The function and location of the load control equipment are the primary factors in determining the account in which the equipment shall be recorded. The following example depicts a common load control system and the associated accounting. Equipment type may vary, thereby necessitating the use of accounts not prescribed below. In all instances, however, the function and location of the equipment shall dictate the appropriate account classification.
1.
Coordinating System Equipment is the data acquisition, processing and control hardware and software used to coordinate the load control efforts of the member distribution system. Generally, this equipment is dedicated to load control use and is not shared with other electric utility activities.
The purpose of the G&T load control computer system is to reduce or minimize the peak power requirements of the entire member distribution system. This involves load dispatching to control transmission circuits and breakers. The computer system for load control shall, therefore, be recorded in Account 353, Station Equipment, with the associated operating expenses recorded in Account 561, Load Dispatching, and maintenance expenses recorded in Account 570, Maintenance of Station Equipment.
2.
The G&T load control computer system is usually linked to the load control computer system for each member distribution system by a radio or telephone link that is dedicated to that purpose and is not shared with other communication activities. Under such circumstances, communications equipment shall be classified in Account 353, Station Equipment. If the communications equipment is shared with general use or voice communications equipment, however, the equipment shall be classified in Account 397, Communication Equipment.
3.
Load control equipment shall be recorded in separate subaccounts of the primary plant accounts detailed above and shall be depreciated based upon the owner's estimate of the equipment's useful service life.
1.
Member system equipment is the data acquisition, processing and control hardware and software used as a subset to the overall load control efforts by the integrated power system.
The member system computer for each distribution member system accepts the control strategy from the G&T coordinating system and develops the tables that determine the control loads that are to be shed and the duration of the load control. The member system computer for each distribution system monitors the usage at each of its delivery points. This usage data is
The member computer system shall be recorded in Account 362, Station Equipment. The associated operating expenses shall be recorded in Account 581, Load Dispatching, and maintenance expenses shall be recorded in Account 592, Maintenance of Station Equipment.
2.
Substation Remote Controllers are located at the distribution substation. They accept control signals from the member system computer and couple the signal to the portion of the distribution system to which it is connected. Substation Remote Controllers also serve as a receiver of inbound signals from transponders located in the distribution system. They also send data back to the member system computer.
Substation Remote Controllers shall be recorded in Account 362, Station Equipment. The associated operating expenses shall be recorded in Account 582, Station Expenses, and maintenance expenses shall be recorded in Account 592, Maintenance of Station Equipment.
3.
Substation Injection Units are used only in power line based systems and are located in distribution substations. A major function of the Substation Injection Unit is to receive load control signals from the member system computer and inject them into the power line based system to be transmitted to the Load Control Receivers. Substation Injection Units can also perform control and SCADA functions similar to those performed by Substation Remote Controllers.
Substation Injection Units shall be recorded in Account 362, Station Equipment. The associated operating expenses shall be recorded in Account 582, Station Expenses, and maintenance expenses shall be recorded in Account 592, Maintenance of Station Equipment.
4.
Remote Terminal Units perform electric utility SCADA functions in a distribution substation or delivery point. These functions include monitoring equipment for abnormal operating conditions, monitoring analog quantities such as conductor voltage or substation load, and controlling of certain equipment within the substation.
Remote Terminal Units shall be recorded in Account 362, Station Equipment. The associated operating expenses shall be recorded in Account 582, Station Expenses, and maintenance expenses shall be recorded in Account 592, Maintenance of Station Equipment.
5.
A Line Device Transponder directly controls a piece of distribution apparatus, such as a voltage regulator or a power factor correction capacitor, located on a distribution feeder and not accessible to a Remote Terminal Unit. The Line Device Transponder actuates the control functions and reports back to the member system computer upon completion of the requested action. This transponder is located at the site of the distribution apparatus being controlled.
Line Device Transponders shall be recorded in Account 368, Line Transformers. The associated operating expense shall be recorded in Account 583, Overhead Line Expenses, or Account 584, Underground Line Expenses, as appropriate, and maintenance expenses shall be recorded in Account 595, Maintenance of Line Transformers.
6.
Communication Verification Transponders are used to respond to inquiries from Substation Remote Controllers. In power line based systems, these transponders are used to verify the performance of the communications system. They are also used during adverse system operations to isolate sections of the distribution system that are experiencing an outage.
Communication Verification Transponders shall be recorded in Account 362, Station Equipment. The associated operating expenses shall be recorded in Account 582, Station Expenses, and
7.
The Load Control Receiver, also known as a load control switch, is located at the site of the consumer's load. These receivers directly control the electric supply to an end-use appliance, such as an electric water heater, central air conditioning compressor, or irrigation pump. The amount of time that an appliance will be turned off by the load control receiver is preset. When the member system computer determines that load shedding is necessary, it sends a signal to the communication link which then sends signals directly to the Load Control Receivers. In a power line based system, the signal from the communications link is sent by radio or telephone line to the Substation Injection Units, which then signals the Load Control Receivers to shut down the appliances for the present time. In nonpower line based systems, the signal from the communications link is sent by radio directly to the Load Control Receivers.
Load Control Receivers are located on the consumer's side of the meter. When the member distribution system retains title to the Load Control Receivers and assumes full responsibility for maintenance and replacement of the equipment, it shall be classified in Account 371, Installations on Customer's Premises. Load Control Receivers that are donated or given to consumers shall be charged to Account 908, Customer Assistance Expenses.
Operating and maintenance expenses applicable to Load Control Receivers recorded in Account 371 shall be charged to Account 587, Customer Installations Expenses, and Account 598, Maintenance of Miscellaneous Distribution Plant, respectively. Expenses applicable to Load Control Receivers donated or given to consumers shall be recorded in Account 908, Customer Assistance Expenses.
Load Control Receivers may be moved on a continual basis from one customer location to another and are, therefore, considered to be special equipment items. When ownership is maintained by the member distribution cooperative, Load Control Receivers shall be accounted for in accordance with the special equipment procedures outlined in Accounting Interpretation No. 119 of this section.
8.
The communication link in the member distribution systems between the Member System Computer, the Substation Remote Controllers or Substation Injection Units, Remote Terminal Units, Line Device Transponders, Communication Verification Transponders, and Load Control Receivers is usually accomplished by radio, telephone line, or power line based system. The communication links are normally dedicated to the SCADA and load control functions being served. Under such circumstances, communications equipment shall be recorded in Account 362, Station Equipment. If, however, the communication equipment used is shared with general use or voice communications equipment, the equipment shall be charged to Account 397, Communication Equipment.
9.
Load control equipment shall be recorded in separate subaccounts of the primary plant accounts detailed above and shall be depreciated based upon the manufacturer's estimate of the equipment's useful service life.
Special Equipment items are classified as such because they are continually being moved from one location to another due to load changes and maintenance practices. The USoA provides accounting that differs from that used for other types of materials. The cost, new, of special equipment items shall be capitalized at the time of purchase; it shall not be charged to Account 154 as is the case with other materials. The first installation cost, as well as all incidental costs necessary to prepare the equipment for use, shall be capitalized with the material upon purchase. All subsequent costs of removing, resetting, changing, renewing oil, and repairing constitute operations and maintenance expenses. The capitalized cost of special equipment items, including the first installation, shall be
Meters, line-type transformers, oil circuit reclosers, sectionalizers, current and potential transformers, meter sockets, and other metering equipment listed in Account 370, Meters, as well as pole-type and underground voltage regulators in Account 368, Line Transformers, are considered to be special equipment items. Similarly, load control receivers (load control switches) recorded in Account 371, Installations on Customers’ Premises, are considered to be items of special equipment. (See Interpretation No. 118.) Transformers, voltage regulators, metering equipment, and current and potential transformers for substations are not.
Special equipment items which are classified as nonusable shall be segregated in the warehouse and retired from service. The Summary of Special Equipment Costs shall be retitled Summary of Special Equipment Costs Retired and used for this purpose. A journal entry reflecting this information shall be prepared and posted to the books. Since loan funds for special equipment, including first installation costs, are approved for advance by RUS upon receipt of the borrower's written estimate of funds required, and not on the basis of an Inventory of Work Orders, it is improper to take a credit for any salvage involved in the retirement of special equipment on the Inventory of Work Orders.
When a utility furnishes meter sockets, ownership by the utility of the meter socket or base, as well as the meter itself, is established by virtue of them being furnished without cost to the consumer by the cooperative. While no agreement as to ownership between the cooperative and the property owner exists, cooperative ownership is implied by long standing practice and tradition in the electric utility industry.
A minimum—maximum voltmeter is used to record the minimum and maximum voltages at a specific line location over a period of time. It is normally installed on a pole in connection with a 1
Minimum—maximum voltmeters shall be recorded, through work orders, in Account 370, Meters, when installed. The cost of the transformers shall remain in Account 368, Line Transformers, with the cost of the meter bases remaining in Account 370, Meters. The miscellaneous material used in installing the transformer and the meter base shall be charged to Account 370, Meters.
Maintenance expense shall be charged to either Account 595, Maintenance of Line Transformers, or Account 597, Maintenance of Meters, as appropriate. Costs associated with reading the voltmeters shall be charged to Account 583, Overhead Line Expenses, and the cost of relocating or changing the complete installation or any part thereof, other than retirement of the meter base, shall be charged to Account 583, Overhead Line Expenses, or Account 586, Meter Expenses.
A demand meter measures the amount of electricity used over a period of time in kilowatt-hours (kWh) and indicates the maximum kilowatts (kW) required at any one time by means of a pointer.
Electronic or solid state demand meters have a direct readout which reads kilowatt demand to two decimal places. The use of a direct readout demand meter may result in increased revenues as pointer readings tend to register lower than actual usages.
The process of retrofitting a demand meter replaces the pointer with a direct readout. The cost of such a replacement is usually expensed as a minor item of property; however, since the use of a direct readout results in a substantial betterment, the excess cost of the replacement over the estimated
The conversion of an overhead transformer to an underground transformer constitutes a betterment and shall, therefore, be capitalized.
Transclosures are enclosures or cabinets in which line transformers are mounted. The cost of transclosures that are purchased separately from the transformer shall be charged to Account 154, Plant Materials and Operating Supplies, when received, and capitalized, upon installation, to Account 368, Line Transformers, as a separate unit of property. If the case and the transformer are inseparable, the unit is considered a transformer and shall be capitalized upon purchase.
A retirement unit shall consist of a complete service rather than the individual wires comprising that service. If each separate wire of a service were treated as a retirement unit, the retirement unit would represent a comparatively small cost. Such a small unit of property would substantially increase the number of retirement work orders. The complete service shall, therefore, be considered a retirement unit.
When minor items of property are added separately from complete retirement units, the costs of these items shall be included in work orders, and by unitizing all costs of completed construction for a month, these minor items shall be spread to the retirement units of which they normally form a part. For example, to convert a two-phase line to a three-phase line requires the addition of a conductor, an insulator and a pole-top pin. A pole-top pin is typically capitalized as a component of the cost of the pole to which it is attached. Assuming this is the only work order for the month, the cost of this pin shall be charged to the conductor, so that its cost is included in the total cost of the project. In actual practice, however, this does not happen as it is normal to have a number of work orders for a given month, which include the setting of poles. In allocating the cost of all construction projects for the month, part of the cost of pole-top pins shall be allocated to poles even though the work orders on which they were capitalized did not include poles.
The retirement and replacement of isolated single retirement units cannot be charged to maintenance; a retirement and construction work order shall be used.
The costs of installing a system of continuing property records shall be charged to Account 930.2, Miscellaneous General Expenses, and may include:
1. Labor and expenses incurred in developing an inventory of property;
2. Labor and material costs incurred in connection with developing pole records including map preparation and pole cards; and
3. Labor and material costs (ledger sheets, etc.) incurred in connection with the installation of the record system.
When establishing continuing property records for a building where there is no detailed breakdown of contract costs, it is necessary to estimate the cost of the each component part. It should be noted that the establishment of continuing property records is not required for buildings; however, if CPRs are not maintained, all repairs including the replacement of major component parts shall be expensed in the period incurred.
All proceeds deposited in the Construction Fund account from the sale of property, regardless of materiality, shall be reflected on the RUS Form 595,
Proceeds from the sale of property shall not be used to maintain an “Employee Fund.” A utility may, pursuant to board policy, use general funds for employee welfare equivalent in amount to proceeds received from the sale of scrap property. If general funds, in an amount equivalent to proceeds received from the sale of scrap property, are used for employee welfare, Account 926, Employee Pensions and Benefits, shall be charged.
A gain on the sale of an office building shall be recorded in Account 421.1, Gain on the Disposition of Property, with a loss recorded in Account 421.2, Loss on the Disposition of Property. If the gain or loss will materially distort current year's net margins, such gain or loss is reportable as an extraordinary item in Account 434, Extraordinary Income, or Account 435, Extraordinary Deductions.
The value of material salvaged from the retirement of units of property reduces the loss on the retirement and shall be so applied. The value assigned to salvage shall be credited to Account 108.8, Retirement Work-in-Progress, which results in reducing net charges to the provision for depreciation when the work order is completed and cleared.
If salvage is sold, any difference between the realized value and the estimated value of the salvaged material shall be charged or credited to the appropriate provision for depreciation.
Salvage resulting from maintenance where no retirement units are involved shall be debited to the materials and supplies account, and credited to the appropriate maintenance account.
Occasionally a utility will have a loss due to obsolescence of materials on hand. If the loss is due to obsolescence of new material, the loss shall be charged to Account 426.5, Other Deductions. If the loss is due to obsolescence of used material, the loss shall be charged to the appropriate subaccount of Account 108, Accumulated Provision for Depreciation.
Plant acquisition adjustments shall be amortized to the operating expense accounts. These adjustments are recorded in Account 114, Electric Plant Acquisition Adjustments, and amortized to Account 406, Amortization of Electric Plant Acquisition Adjustments, or Account 425, Miscellaneous Amortization, as required by the regulatory commission having jurisdiction. Accounts 406 and 425 shall be closed to operating margins.
When the unit method of depreciation is used for general plant items, gains and losses on sales, trades or disposals of equipment shall be recorded as such. If the composite method of depreciation is used, gains or losses on the disposal of general plant items shall be recorded in the appropriate depreciation reserve account.
A truck which is used only for transporting power operated equipment mounted thereon shall be charged, together with the installed equipment, to Account 396, Power Operated Equipment. If the same type of truck is used for transporting materials and supplies, tools and work equipment, personnel, or other items, the cost of the truck shall be charged to Account 392, Transportation Equipment.
Depreciation and other expenses relating to power operated equipment shall be accumulated in a subaccount of Account 184, Clearing Accounts, and distributed monthly on an equitable basis to the accounts properly chargeable.
Depreciation expense on vehicles and other work equipment, furniture and office equipment, and other such plant used in the construction of utility plant, is a proper component of construction cost. To avoid a duplicate advance of funds, however, the amount of depreciation on such items that has previously been financed from loan
In December 1986, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 90, Regulated Enterprises—Accounting for Abandonments (Statement No. 90) and Disallowances of Plant Costs. This section provides an overview of the requirements outlined in Statement No. 90 together with the specific accounts that shall be used to record a plant abandonment or a disallowance of plant costs.
When an abandonment becomes probable, the cost of the abandoned asset shall be removed from Construction Work-in-Progress or Plant-in-Service, as applicable. Before making this transfer, however, a determination must be made as to whether recovery of the allowed cost is likely to be provided with a full return on the investment during the period from the time the abandonment becomes probable, to the time when recovery is completed, or with a partial or no return on the investment. This determination shall be made based upon the facts and circumstances of the specific abandonment, and past practices and current policies of regulatory jurisdiction.
If a full return on the investment is likely to be provided, any disallowance of all or part of the cost of abandoned plant that is both probable and reasonably estimated shall be recognized as a loss in the current year with the carrying basis of the asset reduced by an equal amount. The remaining cost of abandoned plant shall be recorded as a separate new asset.
If partial or no return on the investment is likely to be provided, any disallowance of abandoned plant costs that is both probable and reasonably estimated shall be recognized as a loss. The present value of the future revenues expected to be provided to recover the allowable cost of the abandoned plant and return on the investment, if any, shall be reported as a separate new asset. The discount rate used to compute the present value shall be the borrower's incremental borrowing rate, which is the rate that the borrower would have to pay to borrow an equivalent amount for a period equal to the expected recovery period. In determining the value of expected future revenues, the borrower shall consider the probable time period before the recovery is expected to begin and the probable time period over which recovery is expected to be provided.
The amount of the new asset shall be adjusted from time to time, as necessary, if new information indicates that the estimates used to record the new asset have changed. The carrying value of the new asset, however, shall not be adjusted for changes in the incremental borrowing rate. The amount of any adjustments shall be recorded as a gain or loss.
During the period between the date on which a new asset is recognized and the date on which recovery begins, the carrying amount shall be increased by accruing a carrying charge. The rate used to accrue the carrying charge shall be:
1. If a full return on the investment is likely, a rate equal to the allowed overall cost of capital in the jurisdiction in which recovery is expected to be provided shall be used.
2. If partial or no return is likely, the asset shall be amortized in a manner that will produce a constant return on the unamortized investment in the new asset equal to the rate at which the expected revenues were discounted.
Due to the nonprofit environment in which electric cooperatives operate, full recovery of interest expense on plant related long-term debt equates to full recovery of the rate of return for an investor-owned utility. Therefore, if a cooperative is permitted full recovery of the interest expense incurred on the long-term debt borrowed to finance construction of an abandoned plant, no discounting of the asset is required nor is accrual of the carrying charge permitted.
If, at the time the provisions of Statement No. 90 are first applied, the
The specific accounts that shall be used to record transactions involving plant abandonments are as follows:
1. In the year of the abandonment, the unrecoverable portion of the cost of abandoned plant included in construction work-in-progress shall be recognized as a loss by a charge to Account 426.5, Other Deductions, and a credit to Account 107, Construction Work-in-Progress.
2. The balance of the cost remaining in the construction work-in-progress account shall be credited to Account 107 and charged to Account 182.2, Unrecovered Plant and Regulatory Study Costs.
3. The difference between the charge to Account 182.2 and the present value of expected future revenues for recovery of the new asset, shall be recorded as a credit to Account 182.2 and a debit to Account 426.5. The credit to Account 182.2 shall be segregated from the amount charged to Account 182.2 by the use of a separate subaccount. Statement No. 90 does not require this segregation; however, it is necessary under the USoA to provide for the appropriate segregation of operating and nonoperating income.
4. During the waiting period for recovery of the new asset to begin, carrying charges shall be accrued by a debit toAccount 182.2 with a concurrent credit to Account 421, Miscellaneous Nonoperating Income. Debits to Account 182.2 shall be treated as reductions to the credit subaccount of Account 182.2.
5. The borrower shall amortize the amount debited to Account 182.2 by charges to operating income, consistent with the way the amortized amounts are recovered through rates. These charges to income shall be recorded in Account 407, Amortization of Property Losses, Unrecovered Plant and Regulatory Study Costs.
6. As the recoverable amount recorded in Account 182.2 is recovered through rates, the borrower shall accrue income by charges to Account 182.2 and credits to Account 421, Miscellaneous Nonoperating Income. Accruals shall be computed by applying the same rate used to derive the present value of the asset established in Account 182.2, to the unamortized balance in that account. Accrued amounts charged to Account 182.2 shall be treated as reductions to the credit subaccount withinAccount 182.2.
Prior to implementing the accounting prescribed above, the borrower shall submit the details of each plant abandonment to RUS for approval.
When it becomes probable that a portion of the cost of recently completed plant will be disallowed for rate making purposes and a reasonable estimate of the amount of the disallowance can be made, the estimated amount of the probable disallowance shall be deducted from the reported cost of the plant and recognized as a loss. If a portion of the costs is explicitly, but indirectly disallowed, the equivalent amount of the cost shall be deducted from the reported cost of the plant and recognized as a loss. The specific accounts that shall be used to record transactions involving the disallowance of plant costs are as follows:
1. Estimated disallowed plant costs which the borrower records as a credit to Account 101, Electric Plant-in-Service, shall be charged to Account 426.5, Other Deductions.
2. If the loss qualifies as an extraordinary item under the criteria set forth in General Instruction No. 7 of the USoA, the borrower shall record the loss in Account 435, Extraordinary Deductions. To be considered extraordinary, an item shall be more than five
In August 1987, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 92, Regulated Enterprises—Accounting for Phase-in Plans (Statement No. 92). This section provides an overview of the requirements outlined in Statement No. 92.
The term phase-in plan is used to refer to any method of recognition of allowable costs in rates that meets all of the following criteria:
1. The method was adopted by the regulator in connection with a major, newly completed plant of the regulated enterprise or one of its suppliers or a major plant scheduled for completion in the near future.
2. The method defers the rates intended to recover allowable costs beyond the period in which those allowable costs would be charged to expense under generally accepted accounting principles applicable to enterprises in general.
3. The method defers the rates intended to recover allowable costs beyond the period in which those rates would have been ordered under the rate-making methods routinely used prior to 1982 by that regulator for similar allowable costs of that regulated enterprise.
If a phase-in plan is ordered by a regulator in connection with a plant on which no substantial physical construction had been performed before January 1, 1988, none of the allowable costs that are deferred for future recovery by the regulator under the plan for rate-making purposes, shall be capitalized for general-purpose financial reporting purposes (financial reporting).
If a phase-in plan is ordered by a regulator in connection with a plant completed before January 1, 1988, or a plant on which substantial physical construction had been performed before January 1, 1988, the criteria specified below shall be applied to that plan. If the phase-in plan meets all of those criteria, all allowable costs that are deferred for future recovery by the regulator under the plan shall be capitalized for financial reporting purposes as a separate asset (a deferred charge). If any one of those criteria is not met, none of the allowable costs that are deferred for future recovery by the regulator under the plan shall be capitalized for financial reporting. The criteria for determining whether capitalization is appropriate are:
1. The allowable costs in question are deferred pursuant to a formal plan that has been agreed to by the regulator;
2. The plan specifies the timing of recovery of all allowable costs that will be deferred under the plan;
3. All allowable costs deferred under the plan are scheduled for recovery within 10 years of the date when the deferral began; and
4. The percentage increase in rates scheduled under the plan for each future year is no greater than the percentage increase in rates scheduled under the plan for each immediately preceding year. That is, the scheduled percentage increase in year two is no greater than the percentage increase granted in year one, the scheduled percentage increase in year three is no greater than the percentage increase in year two, etc.
By definition, a phase-in plan approved prior to 1982 that contains provisions contrary to those detailed above is not subject to the provisions of Statement No. 92. This exemption, however, only relates to a specific utility and a specific regulator. For example, a utility cannot use a phase-in plan approved by its regulator for a different utility as justification for its phase-in plan exceeding the 10-year limit imposed by Statement No. 92.
A phase-in plan is a method of rate making intended to moderate a sudden increase in rates while providing the regulated enterprise with recovery of its investment and a return on that investment during the recovery period. A disallowance is a rate-making action that prevents the regulated enterprise
The terms of any phase-in plan in effect during the year or ordered for future years shall be disclosed in the financial statements. Statement No. 92 does not permit capitalization for financial reporting of allowable costs deferred for future recovery by the regulator pursuant to a phase-in plan that does not meet the criteria or a phase-in plan related to plant on which substantial physical construction was not completed before January 1, 1988. Nevertheless, the financial statements shall include disclosures of the net amount deferred at the balance sheet date for rate-making purposes, and the net change in deferrals for rate-making purposes during the year for those plans.
If the provisions of Statement No. 92 are applied retroactively, the financial statements of all periods presented shall be restated. In addition, the restated financial statements shall, in the year that Statement No. 92 is first applied, disclose the nature of any restatement and its effect on margins before extraordinary items, net margins, and on patronage capital at the beginning of the earliest period presented. If the financial statements for prior years are not restated, the effects of applying Statement No. 92 to existing phase-in plans shall be reported as a change in accounting principle and the financial statements shall disclose the effect of adopting Statement No. 92 on margins before extraordinary items and net margins.
The application of Statement No. 92 to an existing phase-in plan shall be delayed if both of the following conditions are met:
1. The enterprise has filed a rate application to have the plan amended to meet the criteria of Statement No. 92 or intends to do so as soon as practicable; and
2. It is reasonably possible that the regulator will change the terms of the phase-in plan so that it will meet the criteria of Statement No. 92.
If the above conditions are met, the provisions of Statement No. 92 shall be applied to the existing phase-in plan on the earlier of the date when one of the conditions ceases to be met or the date when the final rate order is received, amending or refusing to amend the phase-in plan. However, if the enterprise delays filing its application for the amendment or the regulator does not process the application in the normal period of time, the application of Statement No. 92 shall not be further delayed.
In applying the criteria of Statement No. 92 to a plan that was in existence prior to the first fiscal year beginning after December 15, 1987, and that was revised to meet that criteria, the 10-year criterion and the requirement concerning the percentage increase shall be measured from the date of the amendment rather than from the date of the first scheduled deferrals under the original plan. All phase-in plans must receive RUS approval prior to implementation.
Under arrangements with another party, a borrower agrees, or is obliged, to remove, relocate, rearrange, or otherwise make changes in utility property, other than for the purpose of rendering utility service to the other party, for which the utility is reimbursed for all or a portion of the costs incurred.
The relocation of the line shall be accounted for as follows:
1. If all of the assemblies in the line are retired or completely removed and later reinstalled or if the line is constructed in a new location before the old line is removed, construction and retirement work orders shall be prepared except for the costs relating to special equipment items (transformers, oil circuit reclosers, etc.) which shall be charged to operations expense.
2. If a line is moved in its entirety to a new location except for isolated retirement units (such as at the end of the line) or poles not suitable for resetting, the cost of moving the portion of line that is moved intact shall be charged to maintenance expense while the cost related to the change in isolated retirement units or the replacement of poles not suitable for resetting shall be accounted for through use of construction and retirement work orders.
3. If a line is moved intact without any change in assemblies, the cost shall be charged to maintenance expense.
If the borrower receives reimbursement for the costs related to the relocation of the line, the reimbursement shall be accounted for by crediting operation and maintenance expenses to the extent of actual expenses occasioned by the plant changes and crediting the remainder to the accumulated provision for depreciation, unless contractual terms definitely characterize residual or specific amounts as applicable to the cost of replacement. In the latter event, appropriate credits shall be entered in the plant accounts.
Reimbursement received from a telephone company for adding a pole or replacing a present pole with a taller pole under joint use contracts falls within this latter category. In this instance, appropriate credits are charged against the plant accounts.
The total reimbursement, less any portion for operations and maintenance costs, shall be entered in the “Contributions in Aid of Construction” section at the bottom of the Construction Work Order. When the Inventory of Work Orders (RUS Form 219) is prepared, enter only enough of the contribution in column 9 to reduce to zero the amount in column 10, “Loan Funds Subject to Advance by RUS.” This entry is made although none of the reimbursement received is recorded in the accounting records as a contribution in aid of construction.
As a result of recent hurricane, flood, and ice storm damage, the Rural Utilities Service (RUS) has received several inquiries concerning the proper accounting for storm damage costs and the associated funds received from the Federal Emergency Management Administration (FEMA).
Storm damage costs should be accounted for under the work order procedure. Units of property destroyed or otherwise removed from service must be reflected on retirement work orders and units of property installed must be shown on construction work orders. To ensure that the accounting for construction and retirement costs is as accurate as possible, an effort should be made to accurately accumulate material, labor, and overhead costs. Even when extreme care has been exercised, however, it may still be necessary to use estimates to develop the appropriate cost figures.
When a storm occurs, a utility typically incurs a large retirement loss, all or a part of which should be charged to the accumulated provision for depreciation. Storm damage costs over and above construction and retirement costs represent maintenance expense. Maintenance costs include the costs of resagging lines, straightening poles, and replacing minor items of property. When extensive damage has occurred, the need to restore the property to an operating condition without delay usually results in excessive costs being incurred. Standard property unit costs may be used as a guide in determining the amount to be capitalized. It should be noted, however, that when standard property unit costs are used, all excess costs are charged to maintenance expense.
Because of the storm's destruction, property is retired prematurely and as a result, extraordinary retirement losses occur. When such extraordinary losses occur, they should be recorded in the year in which the losses are incurred. If the recording of such losses will materially distort the income statement, such losses may be charged to Account 435, Extraordinary Deductions. These costs may be deferred and amortized to future periods only if the provisions of Statement of Financial Accounting Standards No. 71, Accounting for the Effects of Certain Types of Regulation (Statement No. 71), are applied. Under the provisions of Statement No. 71, a utility may defer certain costs, provided such costs are included in the utility's rate base and recovered through future rates. If an RUS borrower elects to apply the provisions of Statement No. 71, RUS approval is required. To obtain RUS approval, a borrower must submit:
a. A detailed description of the plan including the nature of the expense item, the amount of the deferral, the specific time period for rate recovery, and justifying support for the time period selected;
b. The accounting journal entries being used by the cooperative to record the expense deferral and amortization of the deferred costs;
c. A copy of the state Commission order authorizing recovery of the deferred costs through future rates, or in the absence of commission jurisdiction, a resolution from the cooperative's board of directors authorizing such recovery; and
d. A statement from the borrower's certified public accountant (CPA) or CPA firm indicating that the deferral and amortization of these costs is in accordance with generally accepted accounting principles.
To assist in the restoration of the damaged facilities, the Federal government often provides assistance through FEMA. Under current FEMA procedures, FEMA provides funds for the restoration of facilities based upon the cost estimates submitted by the entity requesting assistance. If the FEMA grant is for less than 100 percent of the cost estimates, FEMA does not specify which costs are to be reimbursed. When the funds are received, therefore, they should be accounted for by crediting construction, retirement, maintenance expense, and administrative expense in direct proportion to the total costs incurred. For example, if total storm damage costs are $1,000,000 with $450,000 incurred for maintenance, $300,000 for retirement, $200,000 for construction, and $50,000 for administrative costs, the FEMA reimbursement should be accounted for by applying 45 percent of the funds received as a credit to maintenance expense, 30 percent as a credit to retirement costs, 20 percent as a credit to construction, and 5 percent as a credit to administrative and general costs.
Account 426.5, Other Deductions, should be used to record the retirement loss as a current period expense. Account 435, Extraordinary Deductions, may be used when the loss will materially distort the income statement. Account 182.1, Extraordinary Property Losses, should be used when such costs are being deferred under the provisions of Statement No. 71. Costs recorded in this account should be amortized to Account 407, Amortization of Property Losses, as the costs are recovered through rates.
Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of (Statement No. 121), requires reporting entities to review all long-lived assets and certain identifiable intangibles that are to be held, used, or disposed of by that entity for impairment whenever events and changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying value of the asset, the entity must recognize an impairment loss. The impairment loss is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. The impairment loss is reported as a component of income from continuing operations before income taxes for entities presenting an income statement and in the statement of activities of not-for-profit organizations. Statement No. 121 does not apply to assets included in the scope of Statement of Financial Accounting Standards No. 90, Regulated Enterprises—Accounting for Abandonments and Disallowances of Plant Costs.
Entities are required to review long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. For example:
1. A significant decrease in the market value of an asset;
2. A significant change in the extent or manner in which an asset is used;
3. A significant physical change in an asset;
4. A significant adverse change in legal factors or in the business climate that could affect the value of an asset;
5. An adverse action or assessment by a regulator;
6. An accumulation of costs significantly in excess of the amount originally expected to acquire or construct an asset; and
7. A current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continued losses associated with an asset used for the purpose of producing revenue.
The impairment of the asset is measured by estimating the future cash flows expected to result from the use of the asset and its disposition. Assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. Future cash flows are those cash inflows that are expected to be generated by the asset less the cash outflows expected to be necessary to maintain those inflows. If the future cash flows (undiscounted and without interest charges) are less than the carrying value of the asset, an impairment loss must be recognized. If the expected future cash flows are greater than the carrying value of the asset, no impairment loss exists.
The impairment loss is the amount by which the carrying amount (acquisition cost less accumulated depreciation) of the asset exceeds the fair value of the asset. The fair value of the asset
If an impairment is recognized, the carrying value of the asset is reduced to the lower of its fair value or its carrying value and, if depreciable, depreciated over the remaining useful life. Previously recognized impairment losses cannot be restored. If the asset was acquired in a business combination and there is goodwill resulting from the transaction, the goodwill is included in the asset grouping and reduced or eliminated before any adjustment is made to the carrying value of the asset.
The following financial statement disclosures are required in the period in which the impairment is recognized:
1. A description of the impaired assets and the facts and circumstances surrounding the impairment;
2. The amount of the impairment and how fair value was determined;
3. The caption in the income statement or the statement of activities in which the impairment loss is aggregated if that loss has not been presented as a separate caption or reported parenthetically on the face of the statement; and
4. If applicable, the business segment(s) affected.
Statement No. 121 also applies to all long-lived assets and certain identifiable intangibles for which management, having the authority to approve the action, has committed to a plan of disposal except those assets covered by APB No. 30, Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. An asset to be disposed of is carried at the lower of its carrying amount (acquisition cost less accumulated depreciation) or its fair value less cost to sell.
The fair value of the asset to be disposed of is computed in the same manner as that for an asset to be held or used by the entity. Selling costs include the incremental direct cost to transact the sale—broker commissions, legal fees, title transfer, and other closing costs that must be incurred before legal title can be transferred. Costs such as insurance, security service, and utilities are generally excluded unless these costs are part of a contractual agreement that obligates the entity to incur such costs in the future. If the asset's fair value is based upon current market price or the current selling price for a similar asset, the fair value is considered a current amount and is not discounted. If, however, the fair value is based upon discounted expected future cash flows and if the sale is to occur beyond one year, the cost to sell must also be discounted. Assets covered by this statement are not depreciated (amortized) while being held for disposal.
Subsequent revisions in estimates of fair value less cost to sell are reported as adjustments to the carrying amount of the asset to be disposed of as long as the carrying amount of the asset does not exceed the original carrying amount.
The following financial statement disclosures are required in the period in which the impairment is recognized:
1. A description of the assets to be disposed of including the facts and circumstances leading to the expected disposal, the expected disposal date, and the carrying amount of those assets;
2. If applicable, the business segment(s) in which the assets to be disposed of are held;
3. The amount, if any, of the impairment loss resulting from the adoption of this statement;
4. The gain or loss, if any, resulting from subsequent revisions in the estimates of fair value less cost to sell;
5. The caption in the income statement or statement of activities in which the gains or losses are aggregated if those gains or losses have not been presented as a separate caption or reported parenthetically on the face of the statement; and
6. The results of operations for assets to be disposed of to the extent that those results are included in the entity's results of operations for the period and can be identified.
All borrowers must adopt the accounting prescribed by Statement No. 121.
Statement No. 121 is effective for financial statements for fiscal years beginning after December 15, 1995. Impairment losses resulting from the application of this statement to assets that are held or used by the entity must be reported in the period in which the recognition criteria are first applied and met. Impairment losses attributable to assets to be disposed of must be reported as the cumulative effect of a change in accounting principle as prescribed in Accounting Principles Board Opinion No. 20, Accounting Changes.
If a borrower has impaired assets that are held or used at the implementation date, the following entry should be recorded:
If a borrower has impaired assets to be disposed of at the implementation date, the following entry should be recorded:
If an asset that is either held, used or to be disposed of becomes impaired, the following entry should be recorded:
If a borrower makes a subsequent revision in the estimate of the fair value less the cost to sell of an asset to be disposed of, the following entry should be recorded:
Automatic meter reading systems were developed from technology called power line carrier communication systems. One such system, developed by Hunt Technologies, Inc., is called by its brand name, the Turtle system. In addition to its function as an automated reading device, the Turtle can provide outage detection, power failure counts, and other potential applications. The current Turtle system does not have the capability for applications such as collection of load survey or interval data. A Turtle system consists of:
1. A meter reader mounted (retrofitted) inside the meter;
2. A receiver located in each substation; and
3. Monitoring and programming equipment (software and personal computer) usually located in the headquarters building.
The system transmits continuous information one way from the meter to a receiver located in the substation. The receiver constantly monitors every Turtle meter served by the substation. The substation receiver can be sized to monitor up to 3,000 Turtle meter readers at the same time. The data is then
The technical literature and other information provided by the manufacturer indicates that this system can only be used for remote meter reading, outage detection, power failure counts, and phase identification. At this time, there is no indication that the system supports other functions such as home security. Therefore, the accounting prescribed for the Turtle meter reading devices and support equipment relates only to electric utility operations.
The function of the equipment is the primary factor in determining the account in which the equipment shall be recorded. The components of the Turtle automatic meter reading system shall be recorded in Account 370, Meters. The cost of the meter reader encoding device and retrofitting the meter with the meter reader unit shall be capitalized to the cost of the existing meter. Any associated operating expenses shall be charged to Account 586, Meter Expenses, with maintenance expenses charged to Account 597, Maintenance of Meters.
Separate continuing property records shall be established for the meters, either fitted or retrofitted with the device; the receiver; the personal computer; and the system software. The meters, receivers, and personal computer shall be depreciated over the manufacturer's estimated useful service life. The system software shall be depreciated over the estimated useful service life of the program not to exceed 5 years.
The Global Positioning System (GPS) is a worldwide radio-navigation system formed from a network of 24 satellites and their ground stations. Utilities are using this advanced technology geographic data collection system to update and modernize their system maps. GPS uses a system of satellites orbiting the earth to establish plant locations with pinpoint accuracy. By triangulating from three satellites and using radio signals to measure distances and locate items, system-wide maps can be created of the utility's service area. A field inventory is then taken of the utility's plant and plotted onto the map. The GPS consists of base station equipment, remote station equipment, the GPS program, and mapping conversion software.
All equipment associated with GPS is dedicated to the mapping effort. The base station is installed at a fixed location and ties satellite measurements into a solid local reference. The remote station is a portable receiver that is taken into the field to determine locations and is moved from site to site. The GPS program is the application software that operates the station equipment and is used by layout technicians to gather information of existing and new facilities in the field. The conversion software is used for converting the GPS and inventory information gathered in the field into a form usable by the mapping program.
The function and location of the equipment are the primary factors in determining the account in which the equipment shall be recorded. The components of the GPS shall be accounted for as follows:
1.
2.
3.
Radio-based automatic meter reading technology allows meters equipped with a low-power radio device called an ERT (Encoder, Receiver, Transmitter) to be read from a remote location. The ERT device can either be retrofitted to
The function of the equipment is the primary factor in determining the account in which the equipment shall be recorded. The components of the radio-based automatic meter reading system shall be recorded in Account 370, Meters. The cost of the meter reader encoding device and retrofitting the meter with the meter reader unit shall be capitalized to the cost of the existing meter. Any associated operating expenses shall be charged to Account 586, Meter Expenses, with maintenance expenses charged to Account 597, Maintenance of Meters.
Separate continuing property records shall be established for the meters, either fitted or retrofitted with the device; the handheld computer; and the upload software. The meters and handheld computer shall be depreciated over the manufacturer's estimated useful service life. The upload software shall be depreciated over the estimated useful service life of the program not to exceed 5 years.
Many borrowers secure additional financing from sources other than RUS. CFC was established to provide a source of supplemental financing. Although the accounting provided in this section refers to CFC, it is applicable to other sources of supplemental financing as well.
1.
When a membership fee is paid to CFC, the payment shall be recorded as a debit to Account 123.23, Other Investments in Associated Organizations.
2.
The subscription agreement to purchase Capital Term Certificates (CTCs) is a binding obligation to pay an initial subscription in equal annual payments over the first three years and an additional annual subscription payable in the fourth through fifteenth years.
The annual subscriptions to CFC for the fourth through fifteenth years is 2.0 percent of total operating revenues after deducting the cost of power. Using the best data available, each borrower shall estimate the amount of CTCs that are required to be purchased. Estimates are not expected to be precise and adjustments shall be made when future projections indicate a change is needed. When the agreement to purchase CTCs is made, an entry shall be recorded debiting Account 123.21, Subscriptions to Capital Term Certificates—Supplemental Financing, and crediting Account 224.11, Other Long-Term Debit—Subscriptions. When the CTCs are actually purchased, the following entries shall be recorded:
3.
Interest accrues monthly to the holder of CTCs at a rate in accordance with the terms of the CFC Invitation to Subscribe. The accrual of interest and the receipt of interest proceeds shall be recorded as follows:
Any amounts received in excess of the previous accruals shall be credited to Account 419.
Interest penalties may be charged by CFC for late payments on any subscription from the date that the payment was due to the date that the payment was actually received. Such charges shall be expensed to Account 431, Other Interest Expense.
4.
If a note is due more than one year after the date of the note, the appropriate subaccount of Account 224, Other Long-Term Debt, shall be credited. If the note is due less than one year from the date of the note, Account 231, Notes Payable, shall be credited.
When a loan from CFC has been consummated and a note is executed, Account 224.13, Supplemental Financing Notes Executed—Debit, shall be debited; and Account 224.12, Other Long-Term Debt—Supplemental Financing, credited. When a loan from another source has been consummated, Account 224.15, Notes Executed—Other—Debit, shall be debited; and Account 224.14, Other Long-Term Debt—Miscellaneous, credited.
5.
Cash proceeds from unsecured short-term loans shall be deposited into the General Fund Account. Cash proceeds from all secured loans shall be deposited into the Construction Fund Trustee Account.
From two to seven percent, depending upon the class of borrower and its debt-equity ratio, of each CFC loan is applied to the purchase of Capital Term Certificates. At the time of a borrower's first requisition under the CFC loan, the following entry shall be recorded:
6.
As a result of borrowing from CFC or other lenders organized on a cooperative basis, a borrower may receive capital credit allocations. These allocations are usually based upon the borrower's participation in the lending program with participation measured by the amount of interest expense and conversion costs incurred.
To account for patronage capital allocations from cooperative lenders, the following journal entries shall be recorded:
If any portion of the interest expense was capitalized as a component of construction cost, a similar portion of the capital credit allocation shall be credited to construction rather than to Account 424. The portion credited to construction shall be determined by applying the percentage of interest expense charged to construction for that particular lender to the interest expense incurred for that lender.
Customers may be required to make deposits to guarantee payment of amounts billed for electric service. When a customer discontinues service, the customer's deposit shall first be applied to unpaid energy bills, with the balance remitted by check to the customer. If the check is returned, it shall be voided and the original entry that was made when the check was issued shall be reversed.
Unclaimed balances of customer deposits shall remain in Account 235, Customer Deposits, until the legal liability of the cooperative to make such a refund has elapsed. When there is no further legal liability to refund the deposit and if it does not escheat to the state, it shall be transferred to Account 144, Accumulated Provision for Uncollectible Customer Accounts—Credit, retaining full information of all particulars.
Computer software consists of programs and routines (sets of computer instructions) which direct the operation of the computer. Software may refer to generalized routines useful in computer operations or to programs for specific applications such as payroll.
The distinction between generalized software and application software is important. Generalized software provides operating support for individual
Application software consists of a set of instructions for performing a particular data processing task. Application programs are generally written by the user installation, but are frequently obtained as prewritten packages from software vendors. Application software includes programs such as payroll, billing, general ledger, as well as engineering or managerial applications.
Costs incurred with the purchase or development of computer software shall be accounted for as follows:
1. Capitalize in a subaccount of Account 391, Office Furniture and Equipment, all costs for generalized software. Depreciate the cost over the service life (or remaining life) of the main hardware (i.e., containing central processor). If the purchase invoice does not break out or assign a cost to the “generalized software,” it is appropriate to include the full amount in hardware costs. Capitalize in a separate subaccount of Account 391, all costs for applications software determined to have a service life of over one year. Depreciate the cost over the estimated useful service life of the program. This depreciation period shall not exceed five (5) years. RUS realizes, however, that there may be circumstances that justify a useful life longer than 5 years. When this is the case and it is management's intent to utilize these programs over an extended period, written justification shall be submitted to RUS for approval.
2. Expense in Account 921, Office Supplies and Expenses, in the period incurred, all costs associated with the maintenance, updating, and conversion of files or revision of all software, and all costs for software with a useful life of less than 1 year. Also expense in Account 921, the unamortized cost of all software determined, during the year, to be no longer used by or useful to the cooperative. Such costs that are clearly applicable to any category of operating expenses other than the administrative and general category, however, shall be included in the appropriate account in such category. In accordance with the USoA, no portion of such costs shall be capitalized to construction or retirement activities.
In determining the total cost of purchased or internally developed software, the following items shall be included:
a. Costs incurred for feasibility studies if they result in the purchase or development of software;
b. All costs related to the actual purchase or development of the software. These costs must be specifically identifiable with the software and properly supported by time cards, invoices, or other documents; and
c. All costs incurred in “testing and debugging” the software.
Computer software costs are properly chargeable to Account 107, Construction Work in Progress, provided that the following criteria are met:
1. The computer program is specifically dedicated to performing a construction related activity, and
2. The cost of the software is itemized separate and apart from other hardware and software costs.
The cost of software programs meeting the above requirements and having an estimated useful service life in excess of 1 year shall be recorded in Account 186, Miscellaneous Deferred Debits, and amortized to Account 107, Construction Work in Progress, over the estimated service life of the program not to exceed 5 years.
All costs related to training personnel in the use of software shall be expensed as incurred.
The accounting in this section is not intended to apply to immaterial amounts. When it is deemed that the costs of the recordkeeping necessary to amortize these costs outweigh the benefits to the members, software costs shall be expensed in the year incurred.
For computer costs relating to load control equipment, refer to Item 118 of this section.
Utilities may incur legal expenses which pertain to construction activities, loan activities, or general services. The proper accounting treatment for legal expenses is as follows:
1. Legal fees incurred in connection with a construction project, including the court costs directly related thereto, which can be identified and supported as such, shall be capitalized in Account 107, Construction Work-in-Progress, as a cost of construction.
2. Legal fees specifically identified and properly supported as resulting from activities designed to obtain long-term debt, shall be deferred in Account 181, Unamortized Debt Expense.
3. Legal fees for all other services and fees which cannot be properly identified will require expensing to either Account 417.1, Expenses of Nonutility Operations, or Account 923, Outside Services Employed, as appropriate.
To properly support the capitalization or deferral of legal fees, the attorney shall provide an itemization of services performed and the corresponding costs. Only those costs specifically identified by the attorney as being related to construction or loan activities shall be capitalized or deferred as described above.
Lease transactions shall be accounted for as either a capital lease or an operating lease depending upon whether or not the lease meets the criteria for classification as a capital lease. The definitions for capital and operating leases and the criteria used to determine which method shall be used are as follows:
1.
2.
A lease agreement shall be classified as a capital lease if one or more of the following criteria is met:
1. Ownership of the property is transferred to the lessee by the end of the lease term;
2. The lease contains a bargain purchase option;
3. The lease term is equal to 75 percent or more of the estimated useful life of the leased property; or
4. The present value of the lease payments at the inception of the lease equals or exceeds 90 percent of the fair market value of the leased property.
A lease agreement qualifying as a capital lease shall be recorded in either Account 101.1, Property Under Capital Leases;Account 120.6, Nuclear Fuel Under Capital Leases; or Account 121, Nonutility Property, as appropriate, at the present value (at the beginning of the lease term) of the minimum lease payments. If, however, this amount exceeds the fair value of the leased property at the inception of the lease, the asset shall be recorded at its fair market value. An offsetting credit shall be recorded in Account 227, Obligations Under Capital Leases—Noncurrent, with the current portion recorded in Account 243, Obligations Under Capital Leases—Current. Assets recorded in Account 101.1 shall be classified separately according to the detailed accounts (301-399) provided for electric plant in service.
Monthly payments made under the lease obligation shall be charged to rent expense, fuel expense, or construction work-in-progress as they become payable. Similarly, the leased asset and the associated obligation shall be reduced by the current amount due.
The following journal entries shall be used by the lessee to record capital lease transactions:
Operating leases which are simple rental agreements do not require the recording of an asset or a liability. The entries that are required to record an operating lease by the lessee are as follows:
For purposes of illustration, the journal entries presented in this interpretation debit Account 550, Rents. However, Account 507, Rents (steam power generation); Account 525, Rents (nuclear power generation); Account 540, Rents (hydraulic power generation); Account 550, Rents (other power production); Account 567, Rents (transmission expense); Account 589, Rents (distribution expense); and Account 931, Rents (general and administrative), should be charged, as appropriate, depending upon the function of the equipment being leased.
In October 1987, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 94, Consolidation of All Majority-Owned Subsidiaries (Statement No. 94). For purposes of reporting to RUS, Statement No. 94 shall be applied as follows:
1. An RUS borrower that is a subsidiary of another entity shall prepare and submit to RUS separate financial statements even though this financial information is presented in the parent's consolidated statements.
2. In those cases in which an RUS borrower has a majority-ownership in a subsidiary, the borrower must prepare consolidated financial statements in accordance with the requirements of Statement No. 94. These consolidated statements must also include supplementary schedules presenting a Balance Sheet and Income Statement for each majority-owned subsidiary included in the consolidated statements.
Although Statement No. 94 requires the consolidation of majority-owned subsidiaries, RUS Forms 7 and 12 must be prepared on an unconsolidated basis.
Accounting for patronage capital and margins may vary depending upon the individual cooperative's bylaws. The comments contained in this section relate to the application of the standard bylaw provisions.
The entries required, at year's end, to record patronage capital transactions where there is no major merchandising program are as follows:
The procedure for determining the amount of patronage capital assignable to the individual patron on a total dollar basis is as follows:
1. Determine the total amount to be assigned for the year (Account 201.2).
2. Determine patronage from electric service, the total of consumers’ billings (Accounts 440-447).
3. Determine the percentage factor to be used in calculating patronage capital to be credited to each consumer account. Divide “1” by “2”.
4. Determine the amount of capital to be credited to each consumer. Multiply the individual consumer's billings for the year by the percentage factor obtained in “3” above.
The procedure for determining the amount of patronage capital assignable to the individual patron on a dollar
1. Determine the total amount to be assigned for the year.
2. Determine the total amount of revenue received from each classification of customers.
3. Determine the total cost of power for each classification of customers. (For example, use cost per kWh sold).
4. For each classification of customers subtract the amount obtained in “3” from the amount obtained in “2,” to obtain the total amount received, less cost of power, by classification of customers.
5. Add the amounts obtained in “4” to obtain the total amount of revenue, less cost of power.
6. Divide the total amount received, less cost of power for each classification of customers (amounts obtained in “4”), by the total amount received, less cost of power for all customers (amount obtained in “5”) to obtain the prorata percentage for each classification of customers.
7. Multiply the total amount to be allocated (amount obtained in “1”) by the prorata percentage for each classification of customers (obtained in “6”) to obtain the amount to be assigned each classification of customers.
8. Divide the amount to be assigned each classification of customers (amount obtained in “7”) by the total amount received from the classification of customers (amount obtain in “2”) to obtain the percentage factor for each classification of customers.
9. Determine the total amount received from each individual customer.
10. Multiply the total amount received from each individual customer (amount obtained in “9”) by the percentage factor for his classification (amount obtained in “8”) to obtain the amount of capital to be assigned each individual customer.
After calculating the patronage capital to be credited to each customer, there is usually a small balance remaining. This small balance shall remain in Account 201.2, Patronage Capital Assignable, and shall be added to the amount to be assigned in the following year.
Proper records shall be maintained to support all capital credit transactions. As a minimum, these records shall show, for each patron, the amount of capital credited for each year as well as the amount and date retired for each year.
The process of transferring capital credits from the Patronage Capital Assignable accounts to the Patrons’ Capital Credits Assigned accounts or to the Patrons’ Capital Credits accounts and the making of entries to individual patron's records constitutes an assignment of capital credits. This holds true for recordkeeping purposes as well as from a legal point of view. This assignment shall be followed by formal notification to patrons within a reasonable period of time.
In the event that a distribution cooperative incurs a net loss, that loss shall not be allocated to its members (patrons). The loss shall be accumulated and offset by future nonoperating margins.
As the board of directors has the responsibility for determining whether the financial condition of the cooperative will permit retirement of capital credits and whether the proposed retirement complies with mortgage and bylaw provisions, the authorization for the retirement shall be set forth in the board minutes. The entries to record the general retirement of capital credits shall be as follows:
To provide better control over the payment of patronage capital credits, a special checking account should be established in an amount equal to the authorized general retirement. Special prenumbered checks shall be used for each general retirement of patronage capital.
To strengthen internal control and to facilitate the settlement of estates, the board should adopt a policy specifying
If a capital credit check is returned due to an inability to locate the patron, it shall be held pending a recheck of available records to ascertain the correct address of the patron. If it is determined that the patron cannot be located, the check shall be cancelled and the amount of the check debited to Account 131.1, Cash—General, and credited to Account 217, Retired Capital Credits—Gain. If the state, however, has unclaimed property laws to which the amount is subject, the amount shall be credited to Account 253, Other Deferred Credits, until final disposition has been made. A notation shall be made in the records of the former patron to facilitate payment if his or her whereabouts is subsequently determined.
If the records show that a number of former patrons have moved and left no forwarding address, it is not necessary to prepare a capital credit retirement check for these patrons when a general retirement of capital credits is made. When setting funds aside to make a general retirement, however, appropriate amounts shall be included to cover payments due these patrons. The cooperative shall then make a reasonable effort to locate these patrons through publication of their names in the newsletter or local newspaper. If the patrons are not located, the amounts set aside and the credits to their accounts shall be handled in a manner similar to those for whom payment checks are returned.
Under the standard bylaw provisions recommended by RUS, it is not proper to use capital credits that were assigned to former patrons to liquidate their delinquent bills. When the standard bylaws are in effect and collection efforts have failed, the balance of an uncollectible bill, after application of customers deposits and membership fees, shall be charged against the accumulated provision for uncollectible accounts. If the patron has capital credits assigned to him or her, these remain untouched except for a notation to indicate the amount of the unpaid bill. When a general retirement of capital credits is made at some future date, amounts which would otherwise be due the patron may be applied to satisfy the unpaid bill with the balance refunded to him or her.
Occasionally questions arise concerning the accounting for the balances in Accounts 218, Capital Gains and Losses; 219.3, Other Margins; 219.4, Other Margins and Equities-Prior Periods; 434, Extraordinary Income; and 435, Extraordinary Deductions. The balance in these accounts shall be accounted for as follows:
1. The balance in Account 219.4, Other Margins and Equities—Prior Periods, shall be transferred, at year's end, to Account 219.1 or 219.2, as appropriate. Accounts 219.1 and 219.2 are then closed to Account 201.2, Patronage Capital Assignable, unless otherwise provided for in the bylaws.
2. The balances in Account 434, Extraordinary Income, and Account 435, Extraordinary Deductions, shall be cleared to Account 219.2 at year's end.
3. The balances in Account 219.3, Other Margins, and Account 218, Capital Gains and Losses, shall remain in these accounts unless they are allocated to patrons or used to absorb future losses as provided for in the bylaws of the cooperative.
When a cooperative is engaged in a major merchandising activity, all costs
If, at the time of the adoption of the bylaw provisions for the allocation of nonoperating margins, there are prior years’ losses resulting in debit balances in Accounts 218, Capital Gains and Losses; 219.1, Operating Margins; 219.2, Nonoperating Margins; or 219.3, Other Margins; the credit balances in Accounts 218, 219.2, or 219.3 resulting from prior years’ operations shall be transferred, to the extent necessary, to offset such deficits. If the board determines that amounts shall be allocated to prior years’ patrons, the credit balances remaining in these accounts shall be transferred to Account 201.2, Patronage Capital Assignable.
If there are current year's losses resulting in debit balances in either Account 219.1 or 219.2, credit balances in Accounts 219.2, 219.3, and 218 shall be transferred, to the extent necessary, to offset such deficits. Remaining credit balances allocable to patrons shall be transferred to Account 1.2.
When a cooperative receives capital credits from a G&T cooperative, the transaction shall be recorded by a debit to Account 123.1, Patronage Capital from Associated Cooperatives, and a credit to Account 423, Generation and Transmission Cooperative Capital Credits. This entry shall be made priorto the closing of the cooperative's books even though, in most cases, the notice of the G&T allocation is not received until after the close of the year to which it relates. If precise information cannot be obtained from the G&T within a reasonable time, capital credits shall be recorded on an estimated basis. The difference between the estimated amount and the actual shall be recognized in the following year unless the difference is material.
A distribution cooperative shall not recognize its proportionate share of losses incurred by the G&T. G&T losses shall be accumulated and offset as provided for in the bylaws. Unlike distribution cooperatives, a G&T has the option to offset accumulated losses with future operating and/or nonoperating margins.
Utilities may obtain long-term and short-term loans, telephone or data processing services, or may purchase oil, gasoline, materials, insurance, and various items from cooperative or mutual enterprises. These enterprises often make patronage refunds or provide evidence that an amount equal to such a refund has been credited to the utility as an investment of capital. The refund may be in the form of cash in the year following the purchase or it may be deducted from the next invoice. The notice of patronage credited to the borrower's account may indicate that such capital may be retired at some future date upon certain conditions having been met. The following provides the accounting journal entries for these types of transactions:
1. Insurance policy refunds from mutual companies, in cash or as credits against subsequent purchases, shall be credited to the appropriate expense account. If sufficient information is not available to credit the refunds to the appropriate expense accounts, they shall be credited to Account 165, Prepayments, and reduce premiums for the current year.
2. Patronage capital allocations from cooperatives, other than mutual insurance companies, shall be credited, in the year that the allocation notice is received, to Account 424, Other Capital Credits and Patronage Allocations, or to construction work-in-progress, as appropriate. The allocation of patronage capital credits between Account 424 and construction work-in-progress shall be made on an equitable basis. For example, patronage capital allocations received from a cooperative
3. The face amount of patronage capital certificates received by the cooperative from the purchase of goods or services from cooperative money lenders (CFC), oil dealers, material suppliers, pole treating plants, communications services, and others shall be charged to either Account 123.1, Patronage Capital from Associated Cooperatives, or Account 124, Other Investments, as appropriate. Account 123.1 shall include investments in only those cooperatives, or enterprises, that are directly related to the electric utility industry and controlled by the electric cooperatives. These include statewide cooperatives, power cooperatives, and NRECA. Other investments in oil cooperatives and insurance companies shall be charged to Account 124.
The bylaws of each cooperative prescribe certain rules and regulations concerning membership in the cooperative. Among these are provisions for forfeiture of membership fees. Some bylaws provide for application of membership fees against any unpaid accounts at the time of termination of service. Any remaining balance may be refunded to the member. Balances that cannot be refunded to the member due to an inability to locate the member or due to bylaw restriction, shall be credited to Account 208, Donated Capital, provided they do not escheat to the state. If disposition of the fees cannot be determined immediately, the amount involved shall be transferred to Account 253, Other Deferred Credits, until the determination is made.
The costs of employees’ fringe benefits (hospitalization, retirement, holiday, sick and vacation pay, etc.) shall be accumulated in an appropriate clearing account and allocated monthly on the basis of payroll. Vacation costs shall be accrued monthly by appropriate credits to an accrual account. These monthly accruals shall be allocated on the basis of direct payroll costs to construction, retirement, and the applicable operations, maintenance, and administrative expense accounts.
Sick leave costs are not normally accrued unless the employee is entitled to be paid for accumulated sick leave at the termination of employment. Salary payments and the associated employee pensions and benefits and social security and other payroll taxes for an employee who is actually sick shall be charged to the same account or accounts to which his or her salary is normally charged.
Statement of Financial Accounting Standards No. 43, Accounting for Compensated Absences (Statement No. 43), requires employers to accrue a liability as an employee earns the right to be paid for future absences. Four criteria were established for this accrual:
1. The employer's obligation for payment for future absences is attributable to employees’ services already performed.
2. The obligation relates to employee rights which vest or accumulate. Vested rights are considered those for which the employer is obligated to make payment even if the employee terminates. Rights which accumulate are those earned but unused rights to compensated absences which may be carried forward to one or more periods, subsequent to the period in which they are earned.
3. Payment of the compensation is probable.
4. The amount can be reasonably estimated.
A company's liability shall be estimated based upon payments it expects to make as a result of employees’ work already performed. If a reasonable estimate cannot be made, the company shall disclose that fact in the financial statements.
Statement No. 43 does not apply to severance or termination pay, postretirement benefits, deferred compensation, stock or stock options, group insurance, or other long-term fringe benefits.
The entries required to account for the accrual of compensated absences are as follows:
Some borrowers have group insurance or retirement plans or both for their employees. As a general rule the cost of these programs is borne partially by the cooperative and partially by its employees. The cooperative may pay the full cost in advance and recover the employee's share through payroll deductions. The accounting for these transactions is as follows:
1. The cooperative's advanced payment of premiums on insurance and retirement agreements shall be charged to Account 165, Prepayments, for the employers portion, and Account 143, Other Accounts Receivable, for the employee's portion.
2. The cost of the employer's portion of a retirement and group insurance program shall be charged to construction and retirement activities and the applicable operations, maintenance, and administrative expense accounts based upon a specific identification with employees’ labor costs charged therein or, in the absence of specific employee identification, based upon direct labor dollars or direct labor hours depending upon which allocation technique provides the most equitable distribution of costs.
Many utilities participate in the NRECA Deferred Compensation Program. Based upon the provisions of the program, the following accounting entries shall be made:
If an employee joins the deferred compensation program during the year, use entry
NRECA provides borrowers that participate in the deferred compensation program with an annual account statement disclosing the activity for each Homestead Fund investment including the number of shares owned, interest income, dividend income, capital gains/losses, and the value of the shares owned at statement date. Funds may be invested in the Short-term Bond Fund, the Value Fund, the Short-term Government Securities Fund, and the Daily Income Fund. Depending upon the Homestead Fund selected, invested funds may earn interest and dividend income and may experience unrealized holding gains or losses. Based upon the information provided on the annual
Payments made to participating employees because of retirement or separation for other reasons shall be recorded using the following entries:
If the borrower has elected to bear the market risk of the funds which guarantee that the amount of money an employee receives will not be less than the amount of salary deferred, the following entry shall be recorded if total payment(s) from NRECA are less than the amount of salary deferred:
Appropriate disclosure of the terms of the program shall be made in the notes to the financial statements.
Some borrowers insure the life of the manager and/or key employees with the borrower being named as the beneficiary. Such arrangements shall be accounted for as follows:
1. Charge Account 426.2, Life Insurance, for the net amount of the premium paid each year on the insurance policy.
2. At the anniversary date of the policy each year, charge Account 124, Other Investments, and credit Account 426.2, Life Insurance, with the amount of the annual increase in the cash surrender value of the policy; provided such increase is less than the net premium paid for that year. If the annual increase in the surrender value exceeds the net premium paid for the same year, only that portion of the surrender value increase equal to the net premium paid shall be credited to Account 426.2. The remainder is to be credited to Account 419, Interest and Dividend Income.
3. Upon retirement of the insured employee and surrender of the insurance policy, charge Account 131.1, Cash—General, and credit Account 124, Other Investments, for the amount received from the insurance company. If it is decided to grant to the retiring insured employee all, or any portion, of the cash received upon surrender of the policy, Account 926, Employee Pensions and Benefits, shall be charged and Account 131.1 credited for the amount paid to the retiring employee.
4. If the insured employee dies within his term of service, charge Account 131.1, Cash—General, for the face
With the issuance of Statement of Financial Accounting Standards No. 87, Employers’ Accounting for Pensions (Statement No. 87), there have been significant changes in the accounting and reporting requirements relating to pension costs. This section will highlight the accounting and reporting requirements for the major types of pension plans. It should be noted, however, that the definitions and accounting procedures outlined in this section relate to financial accounting and they may differ from those used for tax accounting.
A defined benefit pension plan is a plan that defines an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of service, or compensation. In a defined benefit plan, the employer promises to provide, in addition to current wages, retirement income payments in future years after the employee retires or terminates service. Generally, the amount of benefit to be paid depends upon a number of future events that are incorporated into the plan's benefit formula, after including how long the employee and any survivors live, how many years of service the employee renders, and the employee's compensation in the years immediately before retirement or termination.
Under a defined benefit plan, the determination of pension costs, assets, liabilities, and the disclosures in the financial statements require many calculations and assumptions to be made. This section provides a general overview of the accounting and reporting requirements associated with a defined benefit pension plan. Consult Statement No. 87 for guidance in making the necessary calculations and assumption.
The accounting and reporting requirements related to a defined benefit pension plan are as follows:
1. The following components shall be included in the periodic recognition of net pension cost by an employer sponsoring a defined benefit pension plan:
a. The service cost component recognized in a period shall be determined as the actuarial present value of benefits attributed by the pension plan formula to employee service during that period. The measurement of the service cost component requires use of an attribution method and assumptions.
b. The interest cost component recognized in a period shall be determined as the increase in the projected benefit obligation due to the passage of time. Measuring the projected benefit obligation as a present value requires accrual of an interest cost at rates equal to the assumed discount rates.
c. For a funded plan, the actual return on plan assets, if any, shall be determined based upon the fair value of plan assets at the beginning and the end of the period, adjusted for contributions and benefit payments.
d. Plan amendments (including initiation of a plan) often include provisions that grant increased benefits based upon services rendered in prior period. Because plan amendments are granted with the expectation that the employer will realize economic benefits in future period, Statement No. 87 does not require the cost of providing such retroactive benefits (prior service cost) to be included in net periodic pension cost entirely in the year of the amendment but provides for recognition during the future service periods of those employees active at the date of the amendment who are expected to receive benefits under the plan.
The cost of retroactive benefits (including benefits that are granted to retirees) is the increase in the projected benefit obligation at the date of the amendment. Except as noted below, prior service cost shall be amortized by assigning an equal amount to each future period of service of each employee active at the date of the amendments who is expected to receive benefits under the plan. If all or almost all of the plan's participants are inactive,
To reduce the complexity and detail of the computations required, consistent use of an alternative amortization approach that more rapidly reduces the unrecognized cost of retroactive amendments is acceptable. For example, a straight-line amortization of the cost over the average remaining service period of employees expected to receive benefits under the plan is acceptable. The alternative method used shall be disclosed.
In some situations, a history of regular plan amendments and other evidence may indicate that the period during which the employee expects to realize economic benefits from an amendment granting retroactive benefits is shorter than the entire remaining service period of the active employees. Identification of such situations requires an assessment of the individual circumstances and the substance of the particular plan situation. In those circumstances, the amortization of prior service cost shall be accelerated to reflect the more rapid expiration of the employer's economic benefits and to recognize the cost in the periods benefited.
A plan amendment can reduce rather than increase the projected benefit obligation. Such a reduction shall be used to reduce an existing unrecognized prior service cost, and the excess, if any, shall be amortized on the same basis as the cost of benefit increases.
e. Gains and losses are changes in the amount of either the projected benefit obligation or plan assets resulting from experience different from that assumed and changes in assumptions. Gains and losses include amounts that have been realized. Because gains and losses may reflect refinements in estimates as well as real changes in economic values, and because some gains in one period may be offset by losses in another or vice versa, the recognition of gains and losses as components of net pension cost of the period in which they arise is not required.
The expected return on plan assets shall be determined based upon the expected long-term rate of return on plan assets and the market-related value of plan assets. The market-related value of plan assets shall be either fair value or a calculated value that recognizes changes in fair value in a systematic and rational manner over not more than 5 years. Different ways of calculating market-related value may be used for different classes of assets but the manner of determining market-related value shall be applied consistently from year to year for each asset class.
Asset gains and losses are the differences between the actual return on assets during a period and the expected return on assets for that period. Assets gains and losses include both changes reflected in the market-related value of assets and changes not yet reflected in the market-related value (that is, the difference between the fair value of assets and the market-related value). Asset gains and losses not yet reflected in market-related values are not required to be amortized.
As a minimum, amortization of an unrecognized gain or loss (excluding asset gains and losses not yet reflected in market-related value) shall be included as a component of net pension cost for a year if, as of the beginning of the year, that unrecognized net gain or loss exceeds 10 percent of the greater of the projected benefit obligation or the market-related value of plan assets. If amortization is required, the minimum amortization shall be that excess divided by the average remaining service period of active employees expected to receive benefits under the plan. If all or almost all of a plan's participants are inactive, the average remaining life expectancy of the inactive participants shall be used instead of average remaining service life.
Any systematic method of amortization of gains and losses may be used in lieu of the minimum specified in the previous paragraph provided that the minimum is used in any period in which the minimum is greater (i.e., reduces the net balance by more), the method is applied consistently, the method is applied similarly to both
The gain or loss component of net periodic pension cost shall consist of the difference between the actual return on plan assets and the expected return on plan assets and amortization of the unrecognized net gain or loss from previous periods.
2. A liability (unfunded accrued pension cost) shall be recognized if the net periodic pension cost recognized pursuant to Statement No. 87 exceeds amounts the employer has contributed to the plan. An asset (prepaid pension cost) shall be recognized if the net periodic pension cost is less than the amounts the employer has contributed to the plan.
If the accumulated benefit obligation exceeds the fair value of plan assets, the employer shall recognize a liability (including unfunded accrued pension cost) that is at least equal to the unfunded accumulated benefit obligation. Recognition of an additional minimum liability is required if an unfunded accumulated benefit obligation exists and an asset has been recognized as a prepaid pension cost, the liability already recognized as unfunded accrued pension cost is less than the unfunded accumulated benefit obligation, or no accrued or prepaid pension cost has been recognized.
If an additional minimum liability is recognized, an equal amount shall be recognized as an intangible asset, provided that the asset does not exceed the amount of unrecognized prior service cost. If an additional liability required to be recognized exceeds unrecognized prior service cost, the excess (which represents a net loss not yet recognized as a net periodic pension cost) shall be reported as a separate component (reduction) of equity.
When a new determination of the amount of additional liability is made to prepare a balance sheet, the related intangible asset and separate component of equity shall be eliminated or adjusted, as necessary.
3. An employer sponsoring a defined benefit pension plan shall disclose the following information:
a. A description of the plan including employee groups covered, type of benefit formula, funding policy, types of assets held and significant nonbenefit liabilities, if any, and the nature and effect of significant matters affecting comparability of information for all period presented.
b. The amount of net periodic pension cost for the period showing separately the service cost component, the interest cost component, the actual return on assets for the period, and the net total of other components.
c. A schedule reconciling the funded status of the plan with amounts reported in the employer's balance sheet, showing separately, the fair value of plan assets, the projected benefit obligation identifying the accumulated benefit obligation and the vested benefit obligation, the amount of unrecognized prior service cost, the amount of unrecognized net gain or loss including asset gains and losses not yet reflected in market-related value), the amount of any remaining unrecognized net obligation or net asset existing at the date of initial application of Statement No. 87, the amount of any additional liability recognized, and the amount of net pension asset or liability recognized in the balance sheet (which is the net result of combining the previous six items).
d. The weighted-average assumed discount rate and rate of compensation increase (if applicable) used to measure the projected benefit obligation and the weighted-average expected long-term rate of return on plan assets.
e. If applicable, the amount and type of securities of the employer and related parties included in plan assets, and the approximate amount of annual benefits of employees and retirees covered by annuity contracts issued by the employer and related parties. Also, if applicable, the alternative amortization periods used.
f. An employer that sponsors two or more separate defined benefit pension plans shall determine net periodic pension cost, liabilities, and assets by separately applying the provisions of Statement No. 87 to each plan. In particular, unless an employer clearly has a right to use the assets of one plan to pay benefits of another, a liability required to be recognized for one plan shall not be reduced or eliminated because another plan has assets in excess
The required disclosures may be aggregated for all of an employer's single-employer defined benefit plans, or plans may be disaggregated into groups so as to provide the most useful information. Plans with assets in excess of the accumulated benefit obligation, however, shall not be aggregated with plans that have accumulated benefit obligations that exceed plan assets.
An annuity contract is a contract in which an insurance company unconditionally undertakes a legal obligation to provide specified benefits to specific individuals in return for a fixed consideration or premium. An annuity contract is irrevocable and involves the transfer of significant risk from the employer to the insurance company. Some annuity contracts (participating annuity contracts) provide that the purchaser (either the plan or the employer) may participate in the experience of the insurance company. Under these contracts, the insurance company ordinarily pays dividends to the purchaser. If the substance of a participating contract is such that the employer remains subject to all or most of the risks and rewards associated with the benefit obligation covered and the assets transferred to the insurance company, that contract is not an annuity contract for purposes of Statement No. 87.
To the extent that benefits currently earned are covered by annuity contracts, the cost of these benefits shall be the cost of purchasing the contracts, except as noted below. That is, if all benefits attributed by the plan's benefits formula to service in the current period are covered by nonparticipating annuity contracts, the cost of the contracts determines the service cost component of net pension cost for that period.
Benefits provided by the pension benefit formula beyond benefits provided by annuity contracts (for example, benefits related to future compensation levels) shall be accounted for according to the provisions applicable to plans not involving insurance contracts.
Benefits covered by annuity contracts shall be excluded from the projected benefit obligation and the accumulated benefit obligation. Except as noted below, annuity contracts shall be excluded from plan assets.
Some annuity contracts provide that the purchaser (either the plan or the employer) may participate in the experience of the insurance company. Under these contracts, the insurance company ordinarily pays dividends to the purchaser, the effect of which is to reduce the cost of the plan. The purchase price of a participating annuity contract ordinarily is higher than the price of an equivalent contract without participation rights. The cost of the participation right shall be recognized, at the date of purchase, as an asset. In subsequent periods, the participation right shall be measured at its fair value if the contract is such that the fair value is reasonably estimable. Otherwise, the participation right shall be measured at its amortized cost (not in excess of its net realizable value), and the cost shall be amortized systematically over the expected dividend period under the contract.
Insurance contracts that are, in substance, equivalent to the purchase of annuities shall be accounted for as such. Other contracts with insurance companies shall be accounted for as investments and measured at fair value. For some contracts, the best available evidence of fair value may be contract value. If a contract has a determinable cash surrender value or conversion value, that is presumed to be its fair value.
A defined contribution pension plan is a plan that provides pension benefits in return for services rendered, provides an individual account for each participant, and has terms that specify how contributions to the individual's accounts are to be determined rather than the amount of pension benefits the individual is to receive. Under a defined contribution plan, the pension
To the extent that a plan's defined contributions to an individual's account are to be made for periods in which that individual renders services, the net pension cost for a period shall be the contribution called for in that period. If a plan calls for contributions for periods after an individual retires or terminates, the estimated cost shall be accrued during the employee's service period.
An employer that sponsors one or more defined contribution plans shall disclose the following separately from its defined benefit plan disclosures:
1. A description of the plan(s) including employee groups covered, the basis for determining contributions, and the nature and effect of significant matters affecting comparability of information for all periods presented.
2. The amount of cost recognized during the period.
A pension plan having characteristics of both a defined benefit plan and a defined contribution plan requires careful analysis. If the substance of the plan is to provide a defined benefit, as may be the case with some “target benefit” plans, the accounting and disclosure requirements shall be determined in accordance with the provisions applicable to a defined benefit plan.
A multiemployer plan is a pension plan to which two or more unrelated employers contribute, usually pursuant to one or more collective-bargaining agreements. A characteristic of multiemployer plans is that assets contributed by one participating employer may be used to provide benefits to employees of other participating employers since assets contributed by an employer are not segregated in a separate account or restricted to provide benefits only to employees of that employer.
An employer participating in a multiemployer plan shall recognize as net pension cost, the required contribution for the period and shall recognize as a liability, any contributions due and unpaid. The required contribution includes both current costs and prior service costs. If an employer elects to fund prior service cost in full at the inception of the plan, the total payment becomes the employer's required contribution, and accordingly, its pension cost for the period.
The following provisions are applicable to RUS borrowers participating in a multiemployer pension plan:
1. An electric utility participating in a multiemployer plan may defer current period pension expenses if the provisions of Statement of Financial Accounting Standards No. 71 (Statement No. 71), Accounting for the Effects of Certain Types of Regulation, are applied.
Under the provisions of Statement No. 71, pension costs may be deferred provided such costs are recovered through future rates.
2. An electric utility instituting an amendment to the NRECA Retirement and Security plan enters into a contractual agreement to pay the costs incurred (prior service pension costs) for the amendment. In such cases, the agreement is noncancelable and payable regardless of continued participation in the plan.
Since the utility is unconditionally committed to making these payments and such payments are not contingent upon the utility's continued participation in the plan, the recognition of that liability is appropriate. The costs associated with this liability shall be expensed, in their entirety, when the liability is recognized.
The accounting journal entries required to record the transactions associated with a multiemployer pension plan are as follows:
The journal entry required to record the normal costs associated with the NRECA Retirement and Security Program is as follows:
This entry shall not be recorded during the moratorium.
The journal entries required to record the prior service costs associated with the NRECA Retirement and Security Program are as follows:
1. If the RUS borrower elects to pay the prior service pension costs in full, and there is no deferral of costs under the provision of Statement No. 71, the following entry shall be recorded:
2. If the RUS borrower elects to finance prior service pension costs over a period of years and there is no deferral of costs under the provisions of Statement No. 71, the following entries shall be recorded:
3. If the RUS borrower elects to finance prior service pension costs over a period of years and such costs are being deferred and amortized in accordance with the provisions of Statement No. 71, the following entries shall be recorded:
4. If the RUS borrower elects to pay the prior service pension costs in full and such costs are being deferred and amortized in accordance with the provisions of Statement No. 71, the following entries shall be recorded:
It should be noted that although the above entries relate specifically to the NRECA Retirement and Security Program, they are applicable to all multiemployer pension plans.
An employer that participates in one or more multiemployer plans shall disclose the following separately from disclosures for a single-employer plan:
1. A description of the multiemployer plan(s) including the employee groups covered, the type of benefits provided (defined benefit or defined contribution), and the nature and effect of significant matters affecting comparability of information for all periods presented.
2. The amount of cost recognized during the period.
A multiple-employer plan is, in substance, aggregations of single-employer plans combined to pool their assets for investment purposes to reduce the cost of plan administration. Under a multiple-employer plan, assets are segregated and specifically identified to an employer. In addition, such plans
Lost time relating to construction, operations and maintenance shall be allocated on the basis of direct payroll costs to the appropriate construction, operations or maintenance accounts in the month incurred. Lost time is defined as time on duty during which productive work is not performed due to inclement weather conditions, material shortages, machine repairs, or other reasons.
If lost time attributable to construction has a material effect on the construction accounts in any one month, these costs shall be deferred and distributed over a reasonable period of time by means of a predetermined percentage based upon direct labor.
Utilities engage in many types of training programs. Seminars are conducted for directors, managers, office managers, attorneys, engineers, and others. Bookkeepers and office managers attend accountants’ meetings. Safety engineers attend safety schools and subsequently conduct regular safety meetings at the cooperative. Costs incurred for the various types of training activities shall be accounted for as follows:
1. Managers’ and directors’ expenses to attend the NRECA national and state conventions shall be charged to Account 930.2, Miscellaneous General Expenses.
2. Management or engineering seminar fees, salary time attending such seminars including the associated pensions and benefits expense and payroll taxes, and the related per diem and expenses shall be charged to the functional expense accounts. Salaries paid to employees shall also be charged to the appropriate functional expense account. Fees and expenses for directors’ attendance shall be charged to Account 930.2, Miscellaneous General Expenses.
3. When the office manager, bookkeeper, or work order clerk attends a state or regional accounting meeting, their salary time and the associated employee pensions and benefits and social security and other payroll taxes shall be charged to the account to which the employees’ time is ordinarily charged.
4. Employees’ salary time employee and the associated pensions and benefits and social security and other payroll taxes spent attending regular safety meetings conducted by the cooperative shall be charged to the account to which the employees’ time is ordinarily charged.
5. A safety engineer's salary time and the associated employee pensions and benefits and social security and other payroll taxes spent attending a statewide safety school shall be charged to Account 925, Injuries and Damages.
6. The salary time and the associated employee pensions and benefits and social security and other payroll taxes spent by a manager or line foreman conducting weekly safely meetings shall be charged to the appropriate functional expense accounts including Account 590, Maintenance, Supervision and Engineering, and Account 920, Administrative and General Services.
“Operations” is the general term used to describe activities involved in the delivery of electric service, by means of a distribution system, to the end user. It pertains to the use of the utility's electric plant facilities and does not include activities intended to prevent or remedy an impending or actual breakdown of those facilities. These activities are classified as maintenance.
“Maintenance” is the general term used to describe the activities involved in the upkeep and repair, but not the enlargement or improvement, of property owned or leased and operated by the company. It does not include the replacement of retirement units.
Costs incurred and salaries paid to perform a 10-year financial forecast
The cost of advertising and the cost of informing the public about the electric cooperative's activities shall be charged to Account 930.2, Miscellaneous General Expenses.
Most of a cooperative's advertising is instructional in nature and relates the cooperative's history and current activities. This type of advertising activity should not be confused with that directed towards the enactment of a specific law or laws directed toward obtaining a specific decision from a regulatory body. Political advertising of the type defined above shall be charged to Account 426.4, Expenditures for Certain Civic, Political, and Related Activities.
A special power cost study is defined as a study to determine whether sufficient power will be available in the future. If additional power or power sources are needed, the study determines whether generation or purchase will supply the lesser cost. The study also indicates when additional power will be needed. As costs are incurred, they shall be charged to a subaccount of Account 186, Miscellaneous Deferred Debits. Upon completion of the study, the costs shall be charged to Account 557, Other Expenses, or amortized to Account 557 over a period of time not to exceed 5 years.
The purpose of posting completed work orders to system maps is to improve the operation of the system. These costs shall, therefore, be charged to Account 588, Miscellaneous Distribution Expenses. However, the cost of system mapping in the planning stage of construction is an acceptable overhead cost of the resulting construction.
Many electric cooperatives hire employees whose duties concern a mixture of power use and member relations activities. The salaries for these employees shall be charged to Account 930.2, Miscellaneous General Expenses, except as provided below:
1. Account 912, Demonstrating and Selling Expenses, shall be charged with all labor, material, advertising, and other expenses incurred in promotional, demonstrating, and selling activities; the objective of which is to promote or retain the use of utility services by present or prospective customers.
2. Account 930.1, General Advertising Expenses, shall be charged with labor, material, and other expenses incurred in advertising and related activities, the cost of which by their content and purpose, are not provided for elsewhere.
3. Account 416, Costs and Expenses of Merchandising, Jobbing, and Contract Work, shall be charged with all costs specifically related to merchandising activities when the utility is engaged in a major merchandising program.
4. Account 426.4, Expenditures for Certain Civic, Political, and Related Activities, shall be charged with expenditures for the purpose of influencing public opinion with respect to the election or appointment of public officials, referenda, legislation, or ordinances (either with respect to the possible adoption of new referenda, legislation or ordinances or repeal or modification of existing referenda, legislation or ordinances); or approval, modification, or revocation of franchises; or for the purpose of influencing the decisions of public officials. Account 426.4 shall not include expenditures which are directly related to appearances before regulatory or other governmental bodies in connection with the borrower's existing or proposed operations.
Additional fees collected by a statewide association from its members for construction of a statewide building shall be charged to Account 930.2, Miscellaneous General Expenses. Any
When a power supply cooperative borrows money from a distribution cooperative as the result of a long-term loan agreement, the money shall be recorded on the books of the power supply cooperative as general funds unless restricted to a specific purpose. If restricted, the funds shall be recorded in Account 128, Other Special Funds. The resulting liability shall be recorded in Account 224, Other Long-Term Debt.
The transaction shall be charged to Account 123.23, Other Investments in Associated Organizations, on the books of the distribution cooperative.
A distribution cooperative purchases power from a power cooperative. The distribution cooperative owns and operates the transmission line between the power cooperative's facilities and the distribution facilities. Because of this, power is sold at the standard rate at which the power cooperative sells to other distribution cooperatives who do not own their transmission lines, less a discount. The discount or reduction in rate is based upon the distribution cooperative's expense in operating and maintaining its transmission facilities. The contract between the power cooperative and the distribution cooperative must specifically state that the member shall receive a reduced rate or discount from the seller's rate to other member cooperatives.
Under this type of arrangement, the distribution cooperative shall record the cost of purchased power by charging the net amount to Account 555, Purchased Power.
Utilities may suffer losses as a result of thefts of cash, materials and supplies, equipment, or electric plant-in-service that is not covered by insurance. The charges for nominal uninsured losses shall be recorded in the following accounts:
1. Cash—Account 924, Property Insurance, shall be charged.
2. Plant materials and operating supplies—Account 163, Stores Expense Undistributed, shall be charged.
3. Equipment—Account 163, Stores Expense Undistributed, shall be charged for stores equipment; and Account 184, Transportation Expense—Clearing, for transportation and garage equipment. The appropriate miscellaneous operations or administrative expense account (Account 506, 524, 539, 549, 566, 588, 905, 910, 916, or 930.2, as appropriate) shall be charged for all other equipment.
4. Electric Plant-in-Service—A retirement work order shall be prepared for electric plant constituting a unit of property. The loss due to retirement shall be charged to Account 108.6, Accumulated Provision for Depreciation of Distribution Plant. If the plant does not constitute a retirement unit, the loss shall be charged to the appropriate maintenance expense account.
To maintain the books of accounts on an accrual basis, bills for customers who self bill and have not sent in a reading or remittance, shall be estimated. A journal entry shall be made to record the estimated revenue and kWh sold by debiting accounts receivable and crediting the appropriate revenue accounts. The estimated bill shall be posted to the customer's account and identified by an appropriate symbol indicating that it is an estimate. Reconciliation with the general ledger control is made in the usual manner.
Some vendors from which electric cooperatives purchase plant materials and supplies and merchandise for resale are making purchase rebates based upon the quantity or dollar volume of
In some instances, the rebate may be for material or appliances that are no longer in stock or cannot be identified. If the rebate is based upon the purchase of plant materials and operating supplies that are normally charged to Account 154, Plant Materials and Operating Supplies, a credit shall be made to Account 163, Stores Expense Undistributed. If the rebate is based upon appliances and equipment held for merchandising or contract work, the credit shall be spread over the items in Account 155, Merchandise. To avoid materially distorting the cost of the remaining appliances, if a portion of the items upon which the rebate was based are no longer in stock, a portion of the credit shall be prorated to Account 416, Cost and Expenses of Merchandising, Jobbing, and Contract Work, on the basis of the number of items sold to the quantity remaining in stock.
If the rebate is in the form of a travel package or travel arrangements, the value of the rebate shall be estimated and recorded as a reduction of the cost of the material or appliances upon which it was based in a manner similar to that of the cash rebates discussed above. The beneficiary of the travel or travel allowance shall be designated by or in accordance with policy established by the board of directors. The contra charge to the reduction in cost shall be to an appropriate account depending upon the relationship of the recipient to the cooperative. For employees, this shall be Account 926, Employee Pensions and Benefits; for directors or patrons, Account 930.2, Miscellaneous General Expenses.
The CFC Integrity Fund was established to assist borrowers in their attempts to stop takeover bids by investor-owned utilities. A borrower makes a contribution to the Integrity Fund in the form of cash or patronage capital refunds. CFC retains the contribution for a 5-year period during which time the borrower earns interest on the balance in its account. Each year, the borrower receives a statement indicating (both for the total fund and the individual borrower's share) the amount contributed, interest earned, disbursements made, and the ending balance. The disbursements from the fund are allocated to each contributing borrower's account based upon their individual account balances. At the end of the 5-year period, the balance in the account, if any, is refunded to the contributing borrower.
Since the contributing borrower will receive a refund only if its funds are not totally disbursed, the contribution shall be charged to expense in Account 426.1, Donations. If any part of the contribution is returned at the end of the 5-year period, the refund shall be credited to Account 421, Miscellaneous Nonoperating Income.
An in-substance defeasance has been defined as the process whereby a debtor irrevocably places cash or other assets in a trust to be used solely for the purpose of satisfying scheduled payments of both principal and interest related to a specific debt obligation. Under the structural arrangements of an in-substance defeasance, the probability that the debtor will be required to make additional future debt payments is remote. In these specific circumstances, debt has been determined to be extinguished even though the debtor has not been legally released from his obligations under the debt instrument.
The trust established in a defeasance transaction is restricted as to the nature of the assets held. The trust must be funded with monetary assets that are essentially risk free as to the amount, timing, and collection of interest and principal. For debt denominated in United States dollars, “risk free” assets are limited to:
1. Direct obligations of the United States government;
2. Obligations guaranteed by the United States government; and
3. Securities that are backed by United States government obligations as collateral under an arrangement by
The monetary assets of the trust must provide cash flows sufficient to coincide with the scheduled interest and principal payments on the defeased debt. If the trust is expected to pay the costs associated with the defeasance, such as trustee fees, these costs must be considered in determining the amount of funds required by the trust.
The principles of in-substance defeasance apply only to debt with specific maturities and fixed payment schedules and, as such, do not apply to debt with variable terms in which advance determination of debt service requirements is not possible.
Generally accepted accounting principles (GAAP) address the extinguishment of debt in Accounting Principles Board Opinion No. 26, and Statement of Financial Accounting Standard No. 76, Extinguishment of Debt. In accordance with these two statements, debt which has been defeased remains recorded in the regulated books of account as do the assets placed in the irrevocable trust. They are not, however, recognized as an asset and liability for financial reporting purposes. The transaction, including the total amount of debt outstanding and the total amount of debt that is considered extinguished at the end of the period, must be disclosed in the footnotes to the financial statements as long as the debt remains outstanding.
Debt is frequently extinguished before its scheduled maturity. Debt may be extinguished by the use of the borrower's general funds, or by the reacquisition of another debt issue at a different interest rate or varying terms. As these assets are expected to be revenue producing during those years, both the assets and the revenue they generate may be utilized to meet maturing debt payments. Therefore, in most instances, the dollar value of the assets initially placed in the trust do not equal the dollar value of the outstanding principal balance. The difference represents an “economic ” gain or loss to the borrower.
To provide consistency in reporting among all RUS borrowers, any gain or loss that is recognized for financial statement purposes should be reported in accordance with the provisions of General Instruction No. 17 of this part. Therefore, the gain or loss should be amortized (for reporting purposes) in equal monthly amounts over the remaining life of the original debt issue or the remaining life of the new issue. The gain or loss may be reported in the current period only in those instances in which it is immaterial to the financial statements.
The RUS Form 7, Financial and Statistical Report, and the RUS Form 12, Operating Report—Financial, must, however, reflect the actual amounts recorded in the books and records of the borrower.
Many electric borrowers have become involved in either providing satellite or cable television services or obtaining satellite or cable television services for their own use. This section outlines the accounting to be followed when recording transactions involving satellite or cable television services.
1.
If a borrower provides satellite or cable television services through a separate subsidiary, the investment in the subsidiary shall be recorded in Account 123.11, Investment in Subsidiary Companies. The net income or loss of the subsidiary shall be debited or credited to Account 123.11, as appropriate, with an offsetting entry to Account 418.1, Equity in Earnings of Subsidiary Companies.
2.
If a borrower provides satellite or cable television services as part of its normal operations, the investment in satellite or cable television equipment shall be recorded in Account 121, Nonutility Property. All income associated with these services shall be recorded in Account 417, Revenues from Nonutility Operations, and the associated expenses shall be charged to Account 417.1, Expenses of Nonutility Operations.
3.
If a borrower sells or installs satellite or cable television equipment, the equipment purchased for resale shall be recorded in Account 156, Other Materials and Supplies, until sold. The revenues generated from such sales or installations shall be recorded in Account 415, Revenues from Merchandising, Jobbing, and Contract Work, and the associated expenses shall be charged to Account 416, Costs and Expenses of Merchandising, Jobbing, and Contract Work.
4.
If a borrower purchases satellite or cable television equipment for its own use, the investment in the equipment shall be recorded in Account 397, Communication Equipment.
The construction and installation of pollution control facilities are often financed by issuing tax exempt municipal securities. The funds generated from the sale of these securities are deposited into an account that is controlled by a designated trustee. The funds under the control of the trustee are usually invested, earning interest, until they are needed.
Interest expense accrued on the pollution control bonds during the construction period shall be capitalized in Account 107, Construction Work-in-Progress. After construction is complete, all subsequent accruals of interest expense shall be charged to Account 427, Interest on Long-Term Debt.
Interest income earned during the construction period shall be recorded as a debit to Account 171, Interest and Dividends Receivable, and a credit to Account 107, Construction Work-in-Progress. Upon notification of receipt of the interest in the trustee account, Account 221.XX, Long-Term Debt—Pollution Control Bonds, shall be debited and Account 171, Interest and Dividends Receivable shall be credited. Upon completion of construction, Account 419, Interest and Dividend Income, shall be credited for the amount of interest income earned during the period.
The entries required to account for the transactions associated with the issuance of pollution control bonds are as follows:
Many RUS borrowers have decided to redeem (prepay) their issues of long-term debt. As a result of this redemption, the borrower may incur a gain (discount) or a loss (penalty) on the early extinguishment of debt. The accounting for this gain or loss is highlighted in this section.
If debt is redeemed without refunding (paid with general funds), the gain or loss incurred shall be recorded in Account 189, Unamortized Loss on Reacquired Debt, or Account 257, Unamortized Gain on Reacquired Debt, as appropriate. The borrower shall amortize the recorded deferral on a monthly basis over the remaining life
If the debt is redeemed with refunding (refinanced), the gain or loss incurred shall be recorded in Account 189 or Account 257, as appropriate. The borrower may elect to account for the deferrals as follows:
1. Write them off immediately when the amounts are insignificant;
2. Amortize them by equal monthly amounts over the remaining life of the old debt issue; or
3. Amortize them by equal monthly amounts over the life of the new debt issue.
Once an election has been made, it shall be applied on a consistent basis. Regardless of the option selected, the amortization shall be charged to either Account 428.1 or 429.1, as appropriate.
Where a regulatory authority having jurisdiction over the borrower specifically disallows the rate principle of amortizing gains or losses on the redemption of long-term debt without refunding, and does not apply the gain or loss to interest charges in computing the borrower's rates, the alternative method may be used to account for gains or losses relating to the redemption of long-term debt with or without refunding. The alternative method requires that gains or losses be recorded in Account 421, Miscellaneous Nonoperating Income, or Account 426.5, Other Deductions, as incurred. When the alternative method is used, the borrower shall include a footnote to the financial statements stating the reason for using this method and its treatment for rate making purposes.
On December 21, 1987, Section 313, Cushion of Credits Payments Program, was added to the Rural Electrification Act. Section 313 establishes a Rural Economic Development Subaccount and authorizes the Administrator of the Rural Utilities Service to provide zero interest loans or grants to RE Act borrowers for the purpose of promoting rural economic development and job creation projects.
Subpart B, Rural Economic Development Loan and Grant Program, 7 CFR Part 1703, sets forth the policies and procedures relating to the zero interest loan program and for approving and administering grants.
The accounting journal entries required to record the transactions associated with a rural economic development loan are as follows:
To record the contractual obligation to RUS for the Economic Development Notes.
To record the receipt of the economic development loan funds.
To record the disbursement of Economic development loan funds to the project.
To record payment received from the project for loan servicing charges.
To record the interest earned on the investment of rural economic development loan funds.
To record the payment of interest earned in excess of $500.00 on the investment of rural economic development loan funds.
Interest earned in excess of $500.00 must be used for the rural economic development project for which the loan funds were received or returned to RUS.
To record receipt of the repayment, by the project, of economic development loan funds.
To record the repayment, to RUS, of the economic development loan funds.
The accounting journal entries required to record the transactions associated with a rural economic development grant are as follows:
To record grant funds disbursed by RUS. If the grant agreement requires repayment of the funds upon termination of the revolving loan program, Account 224.18 should be credited. If the grant agreement states that there is absolutely no obligation for repayment upon termination of the revolving loan program, the funds should be accounted for as a permanent infusion of capital by crediting Account 208. If, however, the grant agreement is silent as to the final disposition of the grant funds, Account 421 should be credited.
To record advances of Federal funds to associated organizations for authorized rural economic development projects.
To record advances of Federal funds to nonassociated organizations for authorized rural economic development projects.
To record the accrual of interest on loans made to associated and nonassociated organizations with Federal funds for authorized rural economic development projects.
To record repayment of loans made with Federal funds.
To record advances of non-Federal funds to associated organizations for authorized rural economic development projects.
To record advances of non-Federal funds to nonassociated organizations for authorized rural economic development projects.
To record the accrual of interest on loans made to associated and nonassociated organizations with non-Federal funds for authorized rural economic development projects.
To record repayment of loans made with non-Federal funds.
Statement of Financial Accounting Standards No. 106, Employers’ Accounting for Postretirement Benefits Other than Pensions (Statement No. 106), requires reporting entities to accrue the expected cost of postretirement benefits during the years the employee provides service to the entity. For purposes of applying the provisions of Statement No. 106, members of the board of directors are considered to be employees of the cooperative. Prior to the issuance of Statement No. 106, most reporting entities accounted for postretirement benefit costs on a “pay-as-you-go” basis; that is, costs were recognized when paid, not when the employee provided service to the entity in exchange for the benefits.
As defined in Statement No. 106, a postretirement benefit plan is a deferred compensation arrangement in which an employer promises to exchange future benefits for an employee's current services. Postretirement benefit plans may be funded or unfunded. Postretirement benefits include, but are not limited to, health care, life insurance, tuition assistance, day care, legal services, and housing subsidies provided outside of a pension plan.
This statement applies to both written plans and to plans whose existence is implied from a practice of paying postretirement benefits. An employer's practice of providing postretirement benefits to selected employees under individual contracts with specified terms determined on an employee-by-employee basis does not, however, constitute a postretirement benefit plan under the provisions of this statement.
Postretirement benefit plans generally fall into three categories: single-employer defined benefit plans, multi-employer plans, and multiple-employer plans.
The accounting requirements set forth in this interpretation focus on single-and multiple-employer plans. The accounting requirements set forth in Statement No. 106 for multiemployer plans or defined contribution plans shall be adopted for borrowers electing those types of plans.
Under the provisions of Statement No. 106, there are two components of the postretirement benefit cost: the current period cost and the transition obligation. The transition obligation is a one-time accrual of the costs resulting from services already provided. Statement No. 106 allows the transition obligation to be deferred and amortized on a straight-line basis over the average remaining service period of the active employees. If the average remaining service life of the employees is less than 20 years, a 20-year amortization period may be used.
All RUS borrowers must adopt the accrual accounting provisions and reporting requirements set forth in Statement No. 106. The transition obligation and accrual of the current period cost must be based upon an actuarial study. This study must be updated to allow the borrower to comply with the measurement date requirements of Statement No. 106; however, the study must, at a minimum, be updated every five years. RUS will not allow electric borrowers to account for postretirement benefits on a “pay-as-you-go” basis.
The deferral and amortization of the transition obligation does not require RUS approval provided that it complies with the provisions of Statement No. 106. If, however, a borrower elects to expense the transition obligation in the current period and subsequently defer this expense in accordance with Statement of Financial Accounting Standards No. 71, Accounting for the Effects of Certain Types of Regulation, the deferral must be approved by RUS. In those states in which the commission will not allow the recovery of the transition obligation through future rates, the transition obligation must be expensed, in its entirety, in the year in which Statement No. 106 is adopted. A portion of the transition obligation may be charged to construction and retirement activities provided such charges are properly supported.
For plans outside the United States and for defined benefit plans of employers that (a) are nonpublic enterprises and (b) sponsor defined benefit postretirement plans with no more than 500
RUS borrowers must comply with the implementation dates set forth in Statement No. 106. At the time of the adoption of Statement No. 106, rates must be in place sufficient to recover the current period expense and any amortization of the transition obligation. A copy of a board resolution or commission order, as appropriate, indicating that the transition obligation and current period expense have been included in the borrower's rates must be submitted to RUS.
The journal entries required to record the transition obligation are as follows:
1. If the borrower elects to expense the transition obligation in the current period and there is no deferral of costs, the following entry shall be recorded:
2. If the borrower elects to defer and amortize the transition obligation in accordance with the provisions of Statement No. 71, the following entry shall be recorded:
3. The deferral and amortization of the transition obligation under the provisions of Statement No. 106 is considered to be an off balance sheet item. If, therefore, the borrower elects to defer and amortize the transition obligation on a straight-line basis over the average remaining service period of the active employees or 20 years in accordance with Statement No. 106, no entry is required. Instead, the transition obligation is recognized as a component of postretirement benefit cost as it is amortized. It should be noted, however, that the amount of the unamortized transition obligation must be disclosed in the notes to the financial statements.
The current period postretirement expense should be recorded by the following entry:
If a borrower elects to voluntarily fund its postretirement benefits obligation in an external, irrevocable trust, the following entry shall be recorded:
If a borrower elects to voluntarily fund its postretirement benefits obligation in an investment vehicle other than an external, irrevocable trust, the following entry shall be recorded:
Statement of Financial Accounting Standards No. 112, Employers’ Accounting for Postemployment Benefits (Statement No. 112) establishes the standards of financial accounting and reporting for employers who provide benefits to former or inactive employees after employment but before retirement. Inactive employees are those who are not currently rendering service to the employer but who have not been terminated, including employees who are on disability leave, regardless of whether they are expected to return to active service. For purposes of applying the provisions of Statement No. 112, former members of the board of directors are considered to be employees of the cooperative.
Postemployment benefits include benefits provided to former or inactive employees, their beneficiaries, and covered dependents. They include, but are not limited to, salary continuation, supplemental benefits (including workmen's compensation), health care, job training and counseling, and life insurance coverage. Benefits may be provided in cash or in kind and may be paid upon cessation of active employment or over a specified period of time.
The cost of providing postemployment benefits is considered to be a part of the compensation provided to an employee in exchange for current service and should, therefore, be accrued as the employee earns the right to be paid for future postemployment benefits. Applying the criteria set forth in Statement of Financial Accounting Standards No. 43, Accounting for Compensated Absences, a postemployment benefit obligation is accrued when all of the following conditions are met:
1. The employer's obligation for payment for future absences is attributable to employees’ services already performed;
2. The obligation relates to employee rights that vest or accumulate. Vested rights are considered those rights for which the employer is obligated to make payment even if the employee terminates. Rights that accumulate are those earned, but unused rights to compensated absences that may be carried forward to one or more periods subsequent to the period in which they are earned;
3. Payment of the compensation is probable; and
4. The amount can be reasonably estimated.
If all of these conditions are not met, the employer must account for its postemployment benefit obligation in accordance with Statement of Financial Accounting Standards No. 5, Accounting for Contingencies (Statement No. 5) when it becomes probable that a liability has been incurred and the amount of that liability can be reasonably estimated.
If an obligation for postemployment benefits is not accrued in accordance with the provisions of Statement No. 5 or Statement No. 43 only because the amount cannot be reasonably estimated, the financial statements should disclose that fact.
All RUS borrowers must adopt the accrual accounting provisions and reporting requirements set forth in Statement No. 112 as of the statement's implementation date. A portion of the cumulative effect may be charged to construction and retirement activities provided such charges are properly supported. If a borrower elects to defer the cumulative effect of implementing Statement No. 112 in accordance with the provisions of Statement of Financial Accounting Standards No. 71, Accounting for the Effects of Certain Types of Regulation, the deferral must be approved by RUS.
Statement No. 112 is effective for fiscal years beginning after December 15, 1993. Previously issued financial statements should not be restated.
RUS borrowers must comply with the implementation date set forth in Statement No. 112. At the time of the adoption of Statement No. 112, rates must be in place sufficient to recover the current period expense.
The journal entries required to account for postemployment benefits are as follows:
A portion of the cumulative effect may be charged to construction and retirement activities provided such charges are properly supported. Account 435.1 is closed to Account 219.2, Nonoperating Margins.
If the borrower elects to defer and amortize the cumulative effect in accordance with the provisions of Statement No. 71, the following entry shall be recorded:
If postemployment benefits are accrued under the criteria set forth in Statement No. 43, this journal entry is made on a monthly basis. If, however, the accrual is based upon the provisions of Statement No. 5, this is a one-time entry unless the liability is reevaluated and subsequently adjusted.
Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities (Statement No. 115), establishes the standards of financial accounting and reporting for investments in debt securities and for investments in equity securities that have readily determinable fair values. Statement No. 115 does not apply to investments in equity securities accounted for under the equity method nor to investments in consolidated subsidiaries.
At the time of acquisition, an entity must classify debt and equity securities into one of three categories: held-to-maturity, available-for-sale, or trading. At the balance sheet date, the appropriateness of the classifications must be reassessed.
Investments in debt securities are classified as held-to-maturity and are measured at amortized cost in the balance sheet only if the reporting entity has the positive intent and ability to hold these securities to maturity. Debt securities are not classified as held-to-maturity if the entity has the intent to hold the security only for an indefinite period; for example, if the security would become available for sale in response to changes in market interest rates and related changes in the security's prepayment risk, needs for liquidity, changes in the availability of and the yield on alternative investments, changes in funding sources and terms, and changes in foreign currency risk.
Investments in debt securities that are not classified as held-to-maturity and equity securities that have readily determinable fair values are classified
Statement No. 115 requires unrealized holding gains and losses for trading securities to be included in earnings in the current period. Unrealized holding gains and losses for available-for-sale securities are excluded from earnings; however, they are reported as a net amount in a separate component of shareholders’ equity until realized.
For individual securities classified as either available-for sale or held-to-maturity, an entity must determine whether a decline in the security's fair value below the amortized cost is other than temporary. If the decline in fair value is determined to be permanent, that is, it is probable that the entity will not be able to collect all amounts due under the contractual terms of the security, the realized loss is accounted for in earnings of the current period. The new cost basis is not adjusted upward for subsequent recoveries in the fair value. Subsequent increases in the fair value of available-for-sale securities are included in the separate component of equity. Subsequent decreases are also included in the separate component of equity.
All trading securities are reported as current assets in the balance sheet and individual held-to-maturity and available-for-sale securities are classified as either current or noncurrent, as appropriate. Cash flows from the purchase, sale, or maturity of available-for-sale securities and held-to-maturity securities are classified in the statement of cash flows as cash flows from investing activities and reported gross for each security classification.
All RUS borrowers must adopt the accounting, reporting, and disclosure requirements set forth in Statement No. 115 as of the statement's implementation date. Unrealized holding gains or losses for trading securities shall be recorded in either Account 421, Miscellaneous Nonoperating Income, or Account 426.5, Other Deductions, as appropriate. Unrealized holding gains or losses for available-for-sale securities held by the corporate entity are recognized as a component of stockholder's equity in Account 215.1, Unrealized Gains and Losses—Debt and Equity Securities. A contra account of the investment account shall be debited or credited accordingly. Unrealized gains and losses for available-for-sale securities held in a decommissioning fund shall increase or decrease, as appropriate, the reported value of the fund.
Statement No. 115 is effective for fiscal years beginning after December 15, 1993. At the beginning of the entity's fiscal year, the entity must classify its debt and equity securities on the basis of the entity's current intent. This statement may not be applied retroactively to prior years’ financial statements. For fiscal years beginning prior to December 16, 1993, reporting entities are permitted to apply Statement No. 115 as of the end of a fiscal year for which annual financial statements have not previously been issued.
The National Rural Electric Cooperative Association Split Dollar Life Insurance provides life insurance benefits to cooperative employees. The benefits provided under this policy consist of two components, the face value of the insurance policy and the accumulated cash surrender value. While the employee is the owner of the policy, the employee must sign a collateral assignment giving the cooperative absolute right to the cash surrender value of the policy. Under the terms of this collateral assignment, the employee must reimburse the cooperative for the premiums paid upon the employee's termination of employment or attainment of
Financial Accounting Standards Board Technical Bulletin 85-4, Accounting for Purchase of Life Insurance (Bulletin 85-4), states that the amount that could be realized under an insurance contract as of the date of the financial statements should be reported as an asset. The change in the cash surrender or contract value of that asset during the period should be reported as an adjustment to the premiums paid in determining the expense or income to be recognized for the period. The cooperative shall, therefore, record the cash surrender value of the policy as an asset because of its absolute right to receive that value based upon the employee's collateral assignment. Any receivable that may occur as a result of the employee reimbursement for the premiums paid is contingent upon the employee electing to maintain the insurance coverage after termination of employment or reaching the age of 62 and is not recorded as an asset on the cooperative's records.
The journal entries required to account for the NRECA Split Dollar Life Insurance Program are as follows:
The Special Early Retirement Plan (SERP) being offered through the National Rural Electric Cooperative Association (NRECA) constitutes an amendment to its Retirement and Security (R&S) program. The SERP is often chosen as a vehicle through which the cooperative may reduce the size of its workforce or replace more highly paid employees with lower paid entry level employees. If an employee covered by an NRECA retirement plan chose to retire before his/her normal retirement date, that employee would receive an actuarially reduced benefit. However, when a cooperative elects to offer a SERP, no such reduction is required. The cooperative selects the criteria under which an employee will be eligible to participate such as age, years of service, or a combination of age and benefit service requirements. As with other amendments to the R&S program, NRECA calculates the cost of the plan based upon the criteria selected by the cooperative and allows the cooperative to pay the cost immediately or on an installment basis.
Under this plan, the employee receives full retirement benefits in the form of either an immediate lump-sum settlement or annuity payments. It is not unusual for the cooperative to add an incentive to encourage participation such as medical or life insurance, either in whole or in part, until age 65. The actuarial analysis provided by NRECA includes the cost of the SERP and the estimated reduction and/or increase in costs associated with Statement of Financial Accounting Standards No. 106, Employer's Accounting for Postretirement Benefits Other Than Pensions (Statement No. 106).
In accordance with the provisions of Statement No. 87, the costs associated with an amendment to a multiemployer plan are recognized when they become due and payable. Since NRECA calculates the amount due and payable at the time of the amendment, the entire amount due, whether paid immediately or financed through NRECA or any other institution, must be recognized as an expense at that time. This cost may, however, be deferred in accordance with the provisions of Statement of Financial Accounting Standards No. 71, Accounting for the Effects of Certain Types of Regulation (Statement No. 71).
The journal entry required to record the additional pension costs associated with the SERP is as follows:
If the borrower elects to defer and amortize the cost in accordance with Statement No. 71, the following entries shall be recorded:
In the event that net reductions in postretirement benefits result from this plan amendment, the reductions are recognized as follows:
1. The amount of the reduction shall first reduce any existing unrecognized prior service cost;
2. Any remaining reductions shall next reduce any unrecognized transition obligation; and
3. Any remaining reduction shall be recognized in a manner consistent with the accounting for prior service postretirement benefit costs.
In accordance with Statement No. 106, prior service postretirement benefit costs are recognized in equal amounts in each remaining year of service for active plan participants. Because it is an off-balance sheet item, only a memorandum entry is required to reduce the amount of unrecognized prior service cost.
At adoption, Statement No. 106 permitted the recognition of the transition obligation in one of two ways. The transition obligation was recognized over the longer of the average remaining service period of current plan participants or 20 years, or it may have been recognized immediately. If the delayed recognition option was chosen under Statement No. 106, this, too, was an off-balance sheet item that requires only a memorandum entry to reduce the amount of unrecognized transition obligation. However, if the immediate recognition option was chosen, the cooperative either recorded the expense in that year or, with RUS approval, deferred the expense under the provisions of Statement No. 71. If the expense were recorded, in total, in the year of adoption, no unrecognized transition obligation remains to reduce. If, however, the transition obligation was deferred in accordance with Statement No. 71, the journal entry required to effect the reduction in Statement No. 106 expense is as follows:
The dollar value of this entry must not exceed the deferral shown on the balance sheet.
If, after the two previous reductions have been made, any net credit remains, it shall be recognized in a manner consistent with prior service costs; that is, as an off balance sheet item that is amortized over the remaining service lives (to full eligibility) of the active plan participants. The annual amortization reduces amounts normally charged to the various operations, maintenance, and administrative expense accounts and Account 228.3 as postretirement benefit expenses.
7 U.S.C. 901
This subpart implements provisions of the standard RUS loan documents with respect to the accounting system accounts to be maintained by telecommunications borrowers of the Rural Utilities Service.
(a) Each RUS borrower subject to the jurisdiction of the Federal Communications Commission (FCC) or a State regulatory body shall maintain its accounts and records in accordance with the rules and regulations prescribed by that regulatory body.
(b) Each RUS borrower not subject to regulatory control as specified in § 1770.11(a) shall maintain its accounts and records in accordance with the FCC Uniform System of Accounts as set forth in part 32 of the Commission's Rules and Regulations.
(1) RUS borrowers having annual revenues derived from regulated telecommunications operations of $100,000,000 or more shall maintain the accounts prescribed in part 32 for Class A companies.
(2) RUS borrowers having annual revenues derived from regulated telecommunications operations of less than $100,000,000 shall maintain the accounts prescribed in part 32 for Class B companies.
(3) RUS borrowers maintaining the accounts prescribed for Class B companies may adopt the Class A accounts if they desire more detailed and sophisticated accounting records.
(a) All borrowers shall maintain the supplementary accounts set forth in § 1770.15. These accounts conform in number and title with accounts prescribed in the FCC Uniform System of Accounts. In those instances in which a State regulatory body having jurisdiction over an RUS borrower has prescribed a system of accounts differing from that of the FCC, the account titles prescribed by RUS in § 1770.15 shall remain unchanged; however, the supplementary account numbers shall be changed to conform with the State's accounting system.
(b) In addition to the accounts set forth in § 1770.15, cooperative or other nonprofit borrowers shall maintain the supplementary accounts set forth in § 1770.16.
(c) Borrowers are permitted to deviate from the specific subaccount numbers detailed in §§ 1770.15 and 1770.16 provided that the primary account numbers and account descriptions conform with those prescribed.
(a) Each borrower shall maintain its books of accounts on the accrual basis of accounting. All transactions shall be recorded in the period in which they occur and reconciled monthly. The books of accounts shall be closed at the end of each fiscal year and financial statements shall be prepared for the period and audited in accordance with the provisions of 7 CFR part 1773, RUS Policy on Audits of Electric and Telephone Borrowers.
(b) All books of accounts, records, and memoranda shall be maintained in such a manner as to fully support the journal entries to which they relate. The books and records referred to herein shall include records of a nontechnical nature such as minute books, stock and membership records, reports, correspondence, and memoranda.
(c) Interpretations of Federal or State requirements shall be referred to the applicable commission exercising jurisdiction over the borrower.
(d) Interpretations of RUS accounting requirements shall be referred to the appropriate Telephone Area office of RUS.
Each borrower shall maintain continuing property records which detail the date of placement, location, description of property, and the original cost of the property record units. The continuing property record and other underlying records of construction costs shall be maintained so that upon retirement of one or more retirement units or of minor items without replacement when not included in the costs of retirement units, the actual cost of the plant retired can be determined.
Accounts prescribed in the Stockholders’ Equity and Patronage Capital section shall be maintained by stock companies and cooperatives as appropriate.
(a) The standard provisions of the security instruments utilized by the Rural Utilities Service (RUS) and the Rural Telephone Bank (RTB) for all telecommunications borrowers require borrowers to at all times keep and safely preserve, proper books, records, and accounts in which full and true entries will be made of all of the dealings, business, and affairs of the borrower in accordance with the methods and principles of accounting prescribed by the state regulatory body having jurisdiction over the borrower and by the Federal Communications Commission (FCC) in its Uniform System of Accounts for telecommunications companies (47 CFR part 32), as those methods and principles of accounting are supplemented from time to time by RUS.
(b) This subpart implements those standard provisions of the RUS and RTB security instruments by prescribing accounting principles, methodologies, and procedures applicable to all telecommunications borrowers for particular situations.
As used in this part:
All borrowers shall maintain and keep their books of accounts and all other books and records which support the entries in such books of accounts in accordance with the accounting principles prescribed in this appendix.
A. Statement of Financial Accounting Standards No. 106, Employers’ Accounting for Postretirement Benefits Other than Pensions (Statement No. 106), requires reporting
B. As defined in Statement No. 106, a postretirement benefit plan is a deferred compensation arrangement in which an employer promises to exchange future benefits for an employee's current services. Postretirement benefit plans may be funded or unfunded. Postretirement benefits include, but are not limited to, health care, life insurance, tuition assistance, day care, legal services, and housing subsidies provided outside of a pension plan.
C. Statement No. 106 applies to both written plans and to plans whose existence is implied from a practice of paying postretirement benefits. An employer's practice of providing postretirement benefits to selected employees under individual contracts with specific terms determined on a employee-by-employee basis does not, however, constitute a postretirement benefit plan under the provisions of this statement.
D. Postretirement benefit plans generally fall into three categories: single-employer defined benefit plans, multiemployer plans, and multiple-employer plans.
E. A single-employer plan is a postretirement benefit plan that is maintained by one employer. The term may also be applied to a plan that is maintained by related parties such as a parent and its subsidiaries. A multiemployer plan is a postretirement benefit plan in which two or more unrelated employers contribute, usually pursuant to one or more collective-bargaining agreements. One characteristic of a multiemployer plan is that the assets contributed by one participating employer may be used to provide benefits to employees of other participating employers since assets contributed by an employer are not segregated in a separate account or restricted to provide benefits only to employees of that employer.
F. A multiple-employer plan is a postretirement benefit plan that is maintained by more than one employer but is not a multiemployer plan. A multiple-employer plan is generally not collectively bargained and is intended to allow participating employers to pool their plan assets for investment purposes and reduce the cost of plan administration. A multiple-employer plan maintains separate accounts for each employer so that contributions provide benefits only for employees of the contributing employer.
G. The accounting requirements set forth in this interpretation focus on single- and multiple-employer plans. The accounting requirements set forth in Statement No. 106 for multiemployer plans or defined contribution plans shall be adopted for borrowers electing those types of plans.
H. Under the provisions of Statement No. 106, there are two components of the postretirement benefit cost: the current period cost and the transition obligation. The transition obligation is a one-time accrual of the costs resulting from services already provided. Statement No. 106 allows the transition obligation to be deferred and amortized on a straight-line basis over the average remaining service period of the active employees. If the average remaining service period of the active employees is less than 20 years, a 20-year amortization period may be used.
A. All borrowers shall adopt the accrual accounting provisions and reporting requirements as set forth in Statement No. 106. The transition obligation and accrual of the current period cost must be based upon an actuarial study. This study must be updated to allow the borrower to comply with the measurement date requirements of Statement No. 106; however, the study must, at a minimum, be updated every five years. Borrowers may not account for postretirement benefits on a “pay-as-you-go” basis.
B. Under the provisions of Statement No. 106, an entity may recognize the transition obligation, in its entirety, when Statement No. 106 is first adopted or the entity may elect to delay the recognition of the transition obligation. On December 26, 1991, however, the FCC issued 6 FCC Rcd 7560, which requires telecommunications carriers to recognize the transition obligation on a delayed basis. RUS reviewed this issuance and has determined that borrowers must comply with this ruling and recognize the transition obligation on a delayed basis.
C. The deferral and amortization of the transition obligation on a delayed basis is considered to be an off balance sheet item. As a result, an accounting entry is not required at the time of adoption of Statement No. 106. Instead, the transition obligation is recognized as a component of postretirement benefit cost as it is amortized. The amount of the unamortized transition obligation must be disclosed in the notes to the financial statements.
D. In accordance with the provisions of Responsible Accounting Officer (RAO) Letter 20, released by the FCC on April 24, 1992, Account 4310, Other Long-Term Liabilities, shall be used to record the liability accrued for postretirement benefits. (RAO Letter 20
E. Net periodic postretirement benefit cost includes current period service cost, interest cost, return on plan assets, amortization of prior service cost, gains and losses, and amortization of the transition obligation. If fund payments create a debit balance in the postretirement benefits portion of Account 4310, the debit balance applicable to postretirement benefits shall be reported in Account 1410, Other Noncurrent Assets. Account 1410 shall also be used to record any prepaid postretirement benefit cost.
F. The benefits portion of the expense matrix for the appropriate Part 32 expense accounts shall be used to record the current period service cost component of the current year's net periodic postretirement benefit cost. The interest cost component, return on plan assets, amortization of prior service cost, gains and losses, and amortization of the transition obligation shall be charged to the benefits portion of the expense matrix of Account 6728, Other General and Administrative.
A. For plans outside the United States and for defined benefit plans of employers that (a) are nonpublic enterprises and (b) sponsor defined benefit postretirement plans with no more than 500 plan participants in the aggregate, Statement No. 106 is effective for fiscal years beginning after December 15, 1994. For all other plans, Statement No. 106 is effective for fiscal years beginning after December 15, 1992.
A. Capital stock issued by the Rural Telephone Bank consists of Class A, Class B, and Class C stock. Class A stock is issued only to the Administrator of RUS on behalf of the United States in exchange for capital furnished to RTB.
B. Class B stock is issued only to recipients of loans under Section 408 of the Rural Electrification Act (RE Act). Borrowers receiving loan funds pursuant to Section 408(a) (1) or (2) of the RE Act are required to invest 5 percent of the amount of loan funds approved in Class B stock. No dividends are payable on Class B stock. All holders of Class B stock are entitled to patronage refunds in the form of Class B stock under the terms and conditions specified in the bylaws of the RTB.
C. Class C stock is available for purchase by borrowers, corporations, and public bodies eligible to borrow under Section 408 of the RE Act, or by organizations controlled by such borrowers, corporations and public bodies. The payment of dividends is in accordance with the bylaws of the RTB.
A. The purchase of RTB stock required by the RE Act shall be debited to Account 1402.1, Investments in Nonaffiliated Companies—Class B RTB Stock. Patronage refunds in the form of additional shares of RTB Class B Stock shall be debited to Account 1402.1 and credited to Account 1402.11, Investments in Nonaffiliated Companies—Class B RTB Stock—Cr.
B. Purchases of Class C RTB stock shall be debited to Account 1402.2, Investments in Nonaffiliated Companies—Class C RTB Stock. Cash dividends received on Class C RTB stock shall be credited to Account 7310, Dividend Income.
C. Once a borrower has repaid all of its RTB loans, it may request that its Class B stock be converted to Class C stock. When the conversion is made, Account 1402.2 shall be debited and Account 1402.1 shall be credited for the face value of the stock converted. Account 1402.21, Investments in Nonaffiliated Companies—Class C RTB Stock—Cr., shall be credited and Account 1402.11 shall be debited for the face value of the Class B stock that has been received as patronage refunds.
A. The RUS Cushion of Credit account is an investment account bearing an interest rate of 5 percent. All voluntary payments or overpayments on Rural Electric and Telephone Revolving Fund (RETRF) loans made after October 1, 1987, are deposited into this account in the appropriate borrower's name.
A. The following journal entries shall be used by RUS borrowers to record the transactions associated with cushion of credit payment:
A. On December 21, 1987, Section 313, Cushion of Credit Payments Program (7 U.S.C. 901
B. 7 CFR part 1703, Subpart B, Rural Economic Development Loan and Grant Program, sets forth the policies and procedures relating to the zero interest loan program and for approving and administering grants.
A. The accounting journal entries required to record the transactions associated with a Rural Economic Development grant are as follows:
B. The accounting journal entries required to record the transactions associated with a Rural Economic Development loan are as follows:
A. Many RUS borrowers have become involved in providing either satellite or cable television services to their members and others through subsidiaries, joint ventures, or as segments of their current operations.
A. This section outlines the accounting to be followed when recording transactions involving satellite or cable television services.
1. Separate Subsidiary. If a borrower provides satellite or cable television services through a separate subsidiary, the investment in the subsidiary shall be debited to Account 1401, Investments in Affiliated Companies. The net income or loss of the subsidiary shall be debited or credited to Account 1401, as appropriate, with an offsetting entry to Account 7360, Other Nonoperating Income.
2.
ii. If a borrower has a 20-percent or more ownership interest in the joint venture, the investment is accounted for under the equity method in Account 1401, Investments in Affiliated Companies. The borrower's proportionate share of the joint venture's net income or loss shall be debited or credited to Account 1401, as appropriate, with an offsetting entry to Account 7360, Other Nonoperating Income.
3.
ii. If a borrower provides satellite or cable television service as a segment of current operations and shares assets between this activity and the regulated telecommunications activities of the borrower, the franchise and application fees shall be debited to a subaccount of Account 2690, Intangibles. The cost of the satellite or cable television equipment shall be debited to a subaccount of Account 2231, Radio Systems. Revenues earned from providing satellite or cable service shall be credited to Account 5280, Nonregulated Operating Revenue, while the associated expenses shall be recorded in a subaccount of the applicable regulated expense accounts.
4.
ii. If a borrower sells or installs satellite or cable television equipment as a segment of its current operations and shares assets between this activity and the regulated telecommunications activities of the borrower, the purchase of the equipment shall be debited to Account 1220.2, Property Held for Sale or Lease. Revenues received for the sale or installation of the equipment shall be credited to Account 5280, Nonregulated Operating Revenue, while the associated expenses shall be debited to a subaccount of the applicable regulated expense accounts.
A. In October 1987, FASB issued Statement of Financial Accounting Standards No. 94, Consolidation of All Majority-Owned Subsidiaries (Statement No. 94). (Statement 94 is available from the Financial Accounting Standards Board, 401 Merritt 7, P.O. Box 5116,
1. A borrower that is a subsidiary of another entity shall prepare and submit to RUS separate financial statements even though this financial information is presented in the parent's consolidated statements.
2. In those cases in which a borrower has a majority-ownership in a subsidiary, the borrower shall prepare consolidated financial statements in accordance with the requirements of Statement No. 94. These consolidated statements must also include supplementary schedules presenting a Balance Sheet and Income Statement for each majority-owned subsidiary included in the consolidated statements.
B. Although Statement No. 94 requires the consolidation of majority-owned subsidiaries, the RUS Form 479, Financial and Statistical Report for Telecommunications Borrowers, shall be prepared on an unconsolidated basis by all borrowers.
7 U.S.C. 901
Nomenclature changes to part 1773 appear at 63 FR 38722, July 17, 1998.
(a) This part implements those standard provisions of the security instrument utilized by the Rural Utilities Service (RUS) for both electric and telephone borrowers and by the Rural Telephone Bank (RTB) for its telephone borrowers. The provisions require borrowers to prepare and furnish to RUS, at least once during each 12-month period, a full and complete report of its financial condition, operations, and cash flows, in form and substance satisfactory to RUS, audited and certified by an independent certified public accountant (CPA), satisfactory to RUS, and accompanied by a
(b) This part 1773 applies to both RUS and RTB borrowers. For the purposes of RTB borrowers, as used in this part 1773,
(c) This part complies with the 1994 revision of Government Auditing Standards, issued by the Comptroller General of the United States, United States General Accounting Office.
(d) An auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, and management letter are required to meet the reporting provisions of the RUS security instrument.
(1) The auditor's report must state that the audit was conducted in accordance with generally accepted government auditing standards (GAGAS).
(2) The management letter must state that the audit was conducted in accordance with this part.
(3) A report of the audit, in form and substance satisfactory to RUS, cannot be issued unless and until an audit has been performed in accordance with GAGAS and this part.
(4) A borrower is in violation of provisions of its security instrument with RUS if the borrower fails to provide an audit performed in compliance with GAGAS and this part. RUS security instruments normally provide for notice and an opportunity to cure such violations before RUS can exercise certain remedies.
(5) A report prepared in connection with a review or compilation of financial statements, as defined in Statement of Standards for Accounting and Review Services No. 1, Compilation and Review of Financial Statements, does not satisfy the requirements of the RUS security instrument.
(6) A report, as described in Statement on Auditing Standards (SAS) No. 62, entitled “Special Reports”, or in SAS No. 35, entitled “Special Reports—Applying Agreed-upon Procedures to Specified Elements, Accounts, or Items of a Financial Statement”, does not satisfy the RUS loan security instrument requirements.
(7) An annual report containing audited financial statements does not satisfy the RUS security instrument requirements.
(e) This part further implements those provisions of the standard RUS security instrument by setting forth the criteria for CPAs to be deemed satisfactory to RUS and the audit procedures and documentation standards that must be performed before a report of the audit satisfactory to RUS can be prepared and issued.
As used in this part:
(a) Each borrower must have its financial statements audited annually by a CPA selected by the borrower and approved by RUS as set forth in § 1773.4.
(b) Each borrower must establish an annual as of audit date within twelve months of the date of receipt of the first advance of RUS or FFB loan funds and must prepare financial statements as of the date established.
(c) Until all loans made or guaranteed by RUS have been repaid, the borrower must furnish three copies of the auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, and management letter to RUS within 120 days of the as of audit date.
(d) A borrower that qualifies as a unit of state or local government or Indian tribe as such terms are defined in the Single Audit Act of 1984 (31 U.S.C. 7501
(1) A borrower that expends $300,000 or more in a year in Federal awards must have an audit performed and submit an auditor's report meeting the requirements of the Single Audit Act of 1984 and the Single Audit Act Amendments of 1996.
(2) A borrower that expends less than $300,000 in Federal awards during the year must have an audit performed in accordance with the requirements of this part.
(3) A borrower must notify RUS, in writing, within 30 days of the as of audit date, of the total Federal awards expended during the year and must state whether it will have an audit performed in accordance with the Single Audit Act of 1984 and the Single Audit Act Amendments of 1996, or this part.
(i) A borrower that elects to comply with this part must select a CPA that meets the qualifications set forth in § 1773.5.
(ii) If an audit is performed in accordance with the Single Audit Act of 1984 and the Single Audit Act Amendments of 1996, an auditor's report that meets the requirements of the Single Audit Act of 1984, and the Single Audit Act Amendments of 1996, will be sufficient to satisfy that borrower's obligations under this part.
(e) OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations does not apply to audits of RUS electric and telecommunications cooperatives and commercial telecommunications borrowers.
(a)
(1) The qualifications of CPAs available to do the work;
(2) The CPA's experience in performing audits of utilities; and
(3) The CPA's ability to complete the audit and submit the reports and management letter within 90 days of the as of audit date.
(b)
(1) The CPA meets RUS's qualifications to perform an audit; and
(2) The borrower and CPA will enter into an audit agreement in accordance with § 1773.6.
(c)
(1) RUS will notify the borrower, in writing, within 30 days of the date of receipt of such notice, if the selection or change in CPA is not satisfactory.
(2) Notification to RUS that the same CPA has been selected for succeeding audits of the borrower's financial statements is not required; however, the procedures outlined in this part must be followed for each new CPA selected, even though such CPA may previously have been approved by RUS to audit records of other RUS borrowers. Changes in the name of a CPA firm are considered to be a change in the CPA.
(d)
(e)
(f)
(1) An annual auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, and management letter that
(2) The borrower must, within 60 days of the date of the letter detailing the noncompliance, submit corrected reports to RUS.
(3) If corrected reports are not received within 60 days of the date of the letter detailing the noncompliance, RUS may notify the borrower that a default has occurred under its security instrument or take other appropriate action. The default notice will set forth the period of time during which the default will be remedied.
(g)
(1) A written plan for corrective action taken or planned; and
(2) Comments on the status of corrective action taken on previously reported findings and recommendations.
If corrective action is not necessary, a written statement describing the reason it is not should accompany the auditor's report.
For purposes of the RUS standard security instrument, any CPA that meets the qualifications criteria of this section and enters into an audit agreement with the borrower that complies with § 1773.6, will be considered satisfactory to RUS.
(a)
(b)
(1) Meets the standards for independence contained in the AICPA Code of Professional Conduct in effect at the time the CPA's independence is under review;
(2) Does not have and has not had any direct financial interest or any material indirect financial interest in the borrower during the period covered by the audit; and
(3) Is not and was not, during the period under audit, connected with the borrower as a promoter, underwriter, trustee, director, officer, or employee.
(c)
(1) A CPA that receives an unqualified peer review report will be satisfactory to RUS provided that the CPA meets the other criteria set forth in this section.
(2) If a CPA receives a qualified or adverse peer review report, the CPA must undergo a second peer review within 18 months of the date of the qualified or adverse report. A CPA that receives an unqualified second peer review report will be satisfactory to RUS provided that the CPA meets the other criteria set forth in this section.
(3) A CPA that receives a second qualified or adverse peer review report will not be satisfactory to RUS.
(4)
(i) The peer review programs conducted by the AICPA;
(ii) The peer review program conducted by the regulated audit program
(iii) An independent peer review program that, in RUS's determination, requires its members to:
(A) Ensure that the CPA can legally engage in the practice of certified public accounting;
(B) Adhere to the quality control standards established by the AICPA;
(C) Submit to peer reviews of the CPA's accounting and audit practice every 42 months or at such additional times as designated by its own executive committee; and
(D) Ensure that all professionals in the firm, including CPAs and nonCPAs, take part in the qualifying continuing professional education requirements of GAGAS, as set forth in paragraphs (c)(4)(iii)(D)(
(
(
(5)
(6)
(i) If the peer review report indicates that a follow-up review will be made, the CPA must submit subsequent reports to the Assistant Administrator, Program Accounting and Regulatory Analysis, within 60 days of the date such reports are released by the peer review group.
(ii) A peer review report must be submitted to the Assistant Administrator, Program Accounting and Regulatory Analysis, at least once every 42 months, or more frequently, if required by the peer review program.
(iii) A copy of the peer review report, accompanying letter of comment, and the partners’ inspections must be made available to OIG, upon request.
(7)
(A) The firm has been in existence for less than 1 year from the date of the request and has not been previously organized under a different name;
(B) One of the partners organizing the firm has previously, within 18 months preceding the request, worked for a firm that has been peer reviewed and the partner was partner-in-charge of audits of RUS borrowers in the previous firm;
(C) The firm has enrolled in an approved peer review program; and
(D) The firm agrees to have the peer review conducted within 18 months of the date of the RUS waiver.
(ii) Waiver requests must address each of the criteria in paragraph (c)(7)(i) of this section and should be submitted to the Director, Borrower Accounting Division.
(d)
(a) An audit agreement must be entered into between the CPA and the borrower. The audit agreement must set forth the auditor's responsibilities
(1) The borrower and the CPA acknowledge that the audit is being performed and the auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, and management letter is being issued in order to enable the borrower to comply with the provisions of RUS's security instrument;
(2) The borrower and CPA acknowledge that RUS will consider the borrower to be in violation of its security instrument with RUS if the borrower fails to have an audit performed and documented in compliance with GAGAS and this part;
(3) The CPA represents that he/she meets the requirements under this part to be satisfactory to RUS;
(4) The CPA will perform the audit and will prepare the auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, and management letter in accordance with the requirements of this part;
(5) The CPA will document the audit work performed in accordance with GAGAS, the professional standards of the AICPA, and the requirements of this part;
(6) The CPA will make all audit-related documents, including auditor's reports, workpapers, and management letters available to RUS or its representatives (OIG and GAO), upon request, and will permit the photocopying of all audit-related documents; and
(7) The CPA will follow the requirements of reporting irregularities and illegal acts as outlined in § 1773.9.
(b) The audit agreement may include such additional terms and conditions as the CPA and borrower deem appropriate, including, but not limited to:
(1) The CPA will report all audit findings to the board of directors as required in § 1773.20(b); and
(2) The auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, and management letter with copies for transmittal to RUS, and supplemental lenders, if applicable, will be submitted to the borrower's board of directors within 90 days of the as of audit date;
(c) A copy of the audit agreement must be available at the borrower's office for inspection by RUS personnel. One copy of the current audit agreement must be maintained in the CPA's workpapers or permanent file.
(a) The audit must be performed in accordance with GAGAS and this part. The audit must be performed in accordance with GAGAS in effect at the audit date unless the borrower is directed otherwise, in writing, by RUS.
(b) The audit must include such tests of the accounting records and such other auditing procedures that are sufficient to enable the CPA to express an opinion on the financial statements and to issue the required reports on compliance and internal controls and the management letter.
(c)
(2) The security instrument provision requiring the submission of a report of the audit is not satisfied if the CPA must qualify the opinion in the auditor's report due to limitations placed on the scope of the audit by the borrower.
(3) If the CPA determines during the audit that an unqualified opinion cannot be issued due to a scope limitation imposed by the borrower, the CPA
(4) After informing the borrower's management, if the scope limitation is not adequately resolved, the CPA should immediately contact the Assistant Administrator, Program Accounting and Regulatory Analysis, RUS, U.S. Department of Agriculture, Washington, DC 20250-1500. The Assistant Administrator, Program Accounting and Regulatory Analysis, will endeavor to resolve the matter with the borrower.
(a) The annual audit must be performed as of the end of the same calendar month each year unless prior approval to change the as of audit date is obtained, in writing, from RUS.
(1) A borrower may request a change in the as of audit date by writing to the appropriate RUS regional office at least 60 days prior to the newly requested as of audit date.
(2) The time period between the prior as of audit date and the newly requested as of audit date must be no longer than twenty-four months. For example, a borrower that wishes to change its as of audit date from December 31, 19X1, to June 30, must make the change effective no later than June 30, 19X3.
(b) Comparative financial statements must be prepared and audited for the twelve months ending as of the new audit date and for the twelve months immediately preceding that period.
(c) A borrower that changes its as of audit date from December 31, 19X1, to June 30, 19X3, must have the CPA report on statements in the following manner:
(a) In accordance with GAGAS, the CPA must design audit steps and procedures to provide reasonable assurance of detecting errors, irregularities, illegal acts, and noncompliance with the provisions of contracts or grant agreements that could have a direct and material effect on financial statement amounts.
(b) If there is an indication that an irregularity may have occurred or evidence concerning the existence of a possible instance of noncompliance with the provisions of contracts or grant agreements that could have a material direct or indirect effect on the financial statements, the CPA must extend audit steps and procedures to obtain sufficient, competent evidential matter to determine whether, in fact, an irregularity or an instance of noncompliance has occurred and the effect on the borrower's financial statements.
(c) Pursuant to the terms of its audit agreement with the borrower, the CPA must immediately report, in writing, all irregularities and all indications or instances of illegal acts, whether material or not, to:
(1) The president of the borrower's board of directors;
(2) The Assistant Administrator, Program Accounting and Regulatory Analysis; and
(3) OIG, as follows:
(i) For the States of Delaware, District of Columbia, Maryland, Pennsylvania, Virginia, West Virginia, Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Puerto Rico, Rhode Island, Vermont and the Virgin Islands, report to USDA-OIG-Audit, Northeast Region, Regional Inspector General, 6505 Belcrest Road, room 428-A, Hyattsville, Maryland 20782;
(ii) For the States of Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee, report to USDA-OIG-Audit, Southeast Region, Regional Inspector General, 401 W. Peachtree Street, NW., room 2328, Atlanta, Georgia 30365-3520;
(iii) For the States of Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin, report to USDA-OIG-Audit, Midwest Region, Regional Inspector General, 111 N. Canal Street, Suite 1130, Chicago, Illinois 60606;
(iv) For the States of Arkansas, Louisiana, New Mexico, Oklahoma, and Texas, report to USDA-OIG-Audit,
(v) For the States of Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota, Wyoming, and Utah, report to USDA-OIG-Audit, Great Plains Region, Regional Inspector General, P.O. Box 293, Kansas City, Missouri 64141; and
(vi) For the States of Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Territory of Guam, Trust Territories of Pacific, and Washington, report to USDA-OIG-Audit, Western Region, Regional Inspector General, 555 Battery Street, room 511, San Francisco, California 94111.
Pursuant to the terms of the audit agreement, the CPA must make all audit-related documents, including auditors’ reports, workpapers, and management letters available to RUS, or its designated representative, upon request and must permit RUS, or its designated representative, to photocopy all audit-related documents.
(a)
(b)
(c)
(1) The initial selection of and changes in significant accounting policies;
(2) The methods used to account for significant or unusual transactions and the effects of significant accounting policies in controversial or emerging areas;
(3) The process utilized by management to formulate significant accounting estimates and the basis for the CPA's conclusions regarding the reasonableness of these estimates;
(4) Audit findings and recommendations, including audit adjustments that either individually or in the aggregate have a significant effect on the borrower's financial statements;
(5) The CPA's responsibility for other information presented with the audited financial statements, any audit procedures performed, and the results thereof;
(6) Any disagreements with management, whether or not satisfactorily resolved, concerning matters that individually or in the aggregate may be significant to the borrower's financial statements or the auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, or management letter;
(7) Significant matters that were the subject of consultations with other accountants;
(8) Significant issues discussed with management with regard to the initial or recurring retention of the CPA; and
(9) Any serious difficulties encountered in dealing with management during the performance of the audit.
(a) The borrower's board of directors should note and record receipt of the auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, and management letter and any action taken in response to the reports or management letter in the minutes of the board meeting at which such reports and management letter are presented.
(b) The borrower must furnish RUS with three copies of the auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, and management letter within 120 days of the as of audit date. Any provision in RUS's security instrument that requires such documents to be furnished to RUS in a shorter period of time may be disregarded.
(c) The borrower must furnish RUS with three copies of its plan for corrective action, if any, within 180 days of the as of audit date.
(d) The borrower must furnish RUS, within 120 days of the as of audit date, with a copy of each special report, summary of recommendations or similar communications, if any, received from the CPA as a result of the audit.
(a) The CPA must prepare the following:
(1) An auditor's report, examples of which are set forth in appendixes A, exhibit 1 (Electric), and B, exhibit 1 (Telephone) of this part 1773;
(2) A report on compliance and on internal control over financial reporting, examples of which are set forth in appendices A, exhibits 2 and 3 (Electric) and B, exhibits 4 and 5 (Telecommunications) of this part 1773; and
(3) A management letter, an example of which is set forth in appendix C of this part 1773.
(b) The CPA should deliver the auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, and management letter (with copies as required in § 1773.20) to the borrower as soon as possible after completion of the audit but not more than 90 days after the as of audit date.
The CPA must prepare a written report on comparative balance sheets, statements of revenue and patronage capital (or income and retained earnings, depending upon the structure of the borrower) and statements of cash flows. This report must be signed by the CPA, cover all statements presented, and refer to the separate reports on internal controls and on compliance with laws and regulations issued in conjunction with the auditor's report. This report must be signed by the CPA, cover all statements presented, and refer to the separate report on compliance and on internal control
As required by GAGAS, the CPA must prepare a written report on the tests performed for compliance with applicable laws, regulations, contracts, and grants, and on the borrower's internal control structure and on the assessment of control risk made as part of the financial statement audit. This report must be signed by the CPA and must include, as a minimum:
(a) The scope of the CPA's work to obtain an understanding of the borrower's internal control structure and in assessing the control risk;
(b) A description of the reportable conditions noted which include material weaknesses identified as a result of the CPA's work in understanding and assessing control risk;
(c) If no reportable instances of noncompliance and no reportable conditions were found, the CPA must issue a report as illustrated in appendix A, exhibit 2 (Electric), and appendix B, exhibit 4 (Telecommunications) of this part 1773;
(d) If material instances of noncompliance and reportable conditions are identified, the CPA must issue a report as illustrated in appendix A, exhibit 3 (Electric), and appendix B, exhibit 5 (Telecommunications) of this part 1773;
(e) Other nonmaterial instances of noncompliance should not be disclosed in the report on compliance and on internal control over financial reporting, but should be reported in a separate communication to the board of directors, preferably in writing. All such communications must be documented in the workpapers and submitted to RUS in compliance with § 1773.21.
(f) If the CPA has issued a separate letter detailing immaterial instances of noncompliance, the report on compliance and on internal control over financial reporting must be modified to include a statement such as:
We noted certain immaterial instances of noncompliance that we have reported to the management of (borrower's name) in a separate letter dated (month, day, year).
(g) If the CPA has issued a separate letter to management to communicate other matters involving the design and operation of the internal control over financial reporting, the report on compliance and on internal control over financial reporting must be modified to include a statement such as:
However, we noted other matters involving the internal control over financial reporting that we have reported to the management of (borrower's name) in a separate letter dated (month, day, year).
(h) The report must contain the status of known but uncorrected significant or material findings and recommendations from prior audits that affect the current audit objective.
The CPA must prepare a management letter that includes, at a minimum, comments on:
(a)
(b)
(c)
(1) Whether subsidiary plant records agree with the controlling general ledger plant accounts;
(2) Whether construction clearing accounts are cleared promptly of costs of completed construction to the proper classified plant accounts and whether
(3) Whether retirements of plant are currently and systematically recorded and properly priced;
(4) Whether all costs associated with retirements of plant are properly accounted for in the accumulated provision for depreciation accounts and comment on any unusual charges or credits to such accounts; and
(5) Whether RUS approval was obtained for a sale requiring such approval, and whether receipts from sales of plant, material or scrap were not handled in conformance with RUS requirements.
(d)
(e)
(1) For electric borrowers, provisions relating to:
(i) The requirement for funds to be deposited in banks or other depositories designated in the loan documents or approved by RUS. For purposes of this part, funds shall be defined as cash proceeds from loans made or guaranteed by RUS in accordance with 7 CFR 1717.612.
(ii) The requirement for a borrower to obtain written approval of mortgagees to enter into any contract for the management, operation, or maintenance of the borrower's system if the contract covers all or substantially all (90 percent) of the electric system. For purposes of this part, the following contracts shall be deemed as requiring RUS approval:
(A) Management contracts in which the borrower has contracted to have another borrower or other entity manage its affairs;
(B) Management contracts in which the borrower has contracted to manage another borrower or other utility system;
(C) Operations and maintenance contracts in which the borrower has contracted to have another borrower or other entity operate and/or maintain all or substantially all (90 percent) of the physical plant facilities of the borrower.
(D) Operations and maintenance contracts in which the borrower has contracted to operate and maintain the physical plant facilities of another borrower or other utility system; and
(iii) The requirement for a borrower to prepare and furnish mortgagees annual financial and statistical reports on the borrower's financial condition and operations. For borrowers with a December 31 year end, the CPA must state whether the information represented by the borrower as having been submitted to RUS in its most recent December 31 RUS Form 7 or Form 12 is in agreement with the borrower's audited records. For borrowers with a year end other than December 31, the CPA must state whether the information appears reasonable based upon the audit procedures performed. If the borrower represents that an amended report has been filed as of December 31, the comments must relate to the amended report.
(2) For telephone borrowers, provisions relating to:
(i) The requirement for a borrower to obtain written approval of the mortgagees to enter into any contract for the operation or maintenance of property and for the use of mortgaged property by others, or for services pertaining to toll traffic, operator assistance, or switching. For purposes of this part 1773, the following contracts shall be deemed as requiring RUS approval:
(A) Any contract, agreement or lease between the borrower and an affiliate other than as allowed under 7 CFR part 1744, subpart E;
(B) Any lease of a building or land; and
(C) Any other contract as defined in § 1773.34 (e)(2)(i) except:
(
(
(
(
(
(ii) The requirement for funds to be deposited in banks or other depositories designated in the loan documents or approved by RUS. For purposes of this part 1773, funds shall be defined as cash on deposit in demand and time accounts, and certificates of deposit; and
(iii) The requirement for a borrower to prepare and furnish mortgagees annual financial and statistical reports on the borrower's financial condition and operations. For borrowers with a December 31 year end, the CPA must state whether the information represented by the borrower as having been submitted to RUS in its most recent December 31 RUS Form 479 is in agreement with the borrower's audited records. For borrowers with a year end other than December 31, the CPA must state whether the information appears reasonable based upon the audit procedures performed. If the borrower represents that an amended report has been filed as of December 31, the comments must relate to the amended report.
(iv) The requirement that a borrower maintain either a net plant to secured debt ratio or a funded reserve.
(A) For loans approved after June 10, 1991, and before October 7, 1997, if a borrower selected a loan maturity period in excess of the expected economic life of the facilities financed, the borrower must maintain a secured debt ratio of at least 1.2 or a funded reserve. If, during the audit period, the borrower has been issued refunding notes that match the remaining composite economic life of the facilities thus eliminating the requirement, the auditor should so state.
(
(
(B) For loans approved after October 7, 1997, if a borrower selected a loan maturity period in excess of the expected economic life of the facilities financed, the borrower must maintain a funded reserve in such amount that the balance of the reserve plus the value of the facilities less depreciation be at least equal to the remaining principal payments on the loan. Funding of the reserve must begin within one year of approval of release of funds and must continue regularly over the composite economic life of the facilities financed. If, during the audit period, the borrower has been issued refunding notes that match the remaining composite economic life of the facilities thus eliminating the requirement for maintaining the funded reserve requirement, the auditor should so state.
(f)
(g)
(h)
(a) RUS requires that the audit procedures set forth in §§ 1773.39 through 1773.45 be performed annually by the CPA during the audit of the RUS borrowers’ financial statements, which audit procedures may be in addition to the conduct of a GAGAS audit.
(b) The CPA must exercise professional judgment in determining whether any auditing procedures in addition to those mandated by GAGAS or this part should be performed in order to afford a reasonable basis for rendering the auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, and management letter.
(a)
(1) Examined direct labor and material transactions to determine whether the borrower's accounting records reflect a complete accumulation of costs;
(2) Examined indirect costs and overhead charges to determine if they conform to the Uniform System of Accounts;
(3) Reviewed the costs of completed construction and retirement projects to determine if they were cleared promptly from the work in progress accounts to the classified plant in service accounts and the related depreciation reserves;
(4) Examined direct purchases of special equipment and general plant;
(5) Determined the degree of accuracy and control of costing retirements, including tests of salvage and removal costs;
(6) Reviewed the borrower's work order procedures; and
(7) Reviewed depreciation rates for adequate support, compared them to RUS guidelines, and determined if they are in compliance.
(b)
(2) Based upon the CPA's determination of materiality, an appropriate sample of work orders must be selected for testing. The CPA's workpapers must document that he/she:
(i) Reviewed equipment purchases charged to work orders, including payments and receiving reports;
(ii) Reviewed contracts showing the scope of the work, the nature of the contract, the contract amount, and scheduled payments and reviewed supporting documents to determine that all services contracted for were in fact rendered;
(iii) Reviewed time cards and pay rates for several employees who allocate their time to work orders;
(iv) Reviewed the nature of material and supplies issued to the project, traced amounts and quantities to supporting documents, and reviewed the reasonableness of clearing rates for assignment of stores expense to the work order;
(v) Reviewed the accuracy of the computation of overheads applied to the work order; and
(vi) Reviewed other costs charged to the work order for support and propriety.
(3) Based upon the CPA's determination of materiality, an appropriate sample of completed contracts must be selected for testing. The CPA's workpapers must document that he/she:
(i) Scheduled payments to contractors and traced to verify payments and supporting invoices;
(ii) Traced contract costs to final closeout documents, to the general
(iii) Verified the costs of owner furnished materials, if applicable.
(4) The CPA must review the borrower's procedures for unitization and classification of work order and contract costs. Based upon the CPA's determination of materiality, an appropriate sample of transactions must be selected for testing. The CPA's workpapers must document that he/she:
(i) Reviewed the tabulation of record units for construction from the work order staking sheets to the tabulation of record units, to the unitization sheets, and to the continuing property records;
(ii) Reviewed the procedures for unitizing and distributing costs of completed construction to the plant accounts;
(iii) Verified that standard costs were being used;
(iv) Evaluated the basis for development of standard costs; and
(v) Determined that costs of completed construction were cleared promptly from work in progress accounts.
(c)
(1) Determined whether the subsidiary plant records agree with the controlling general ledger plant accounts;
(2) Noted differences in the workpapers; and
(3) Commented, in the management letter, on any discrepancies.
(d)
(1) Determined that plant retirements are currently and systematically recorded and priced on the basis of the continuing property records, and determined that costs of removal have been properly accounted for;
(2) Explained the method used in computing the cost of units of plant retired if continuing property records have not been established and determined whether costs appeared reasonable; and
(3) Determined the manner in which net losses due to retirements were accounted for and traced clearing entries to the depreciation reserve, the plant accounts, and the continuing property records.
(e)
(1) Verified the depreciation accruals for the period, including the depreciation base;
(2) Reviewed the basis of the depreciation rates, any change in rates and the reason therefor, and, if appropriate, determined whether the rates are in compliance with RUS requirements or with the requirements of the state regulatory body having jurisdiction over the borrower's depreciation rates;
(3) Reviewed salvage and removal costs; and
(4) Searched for unrecorded retirements.
(f)
(g)
(1) The nature of construction and other additions;
(2) The control over, and the accuracy of pricing retirements;
(3) The accuracy of distributing costs to classified utility plant accounts;
(4) An evaluation of the method of:
(i) Capitalizing the direct loadings on labor and material costs;
(ii) Distributing transportation costs and other expense clearing accounts; and
(iii) Capitalizing overhead costs;
(5) The tests of depreciation;
(6) A review of agreements such as those relating to acquisitions, property sales, and leases which affect the plant accounts; and
(7) Notations, if applicable, of RUS approval of property sales and the propriety of the disposition of the proceeds.
The CPA's workpapers must document whether all regulatory assets comply with the requirements of SFAS No. 71. For electric borrowers only, the CPA's workpapers must document whether all regulatory assets have received RUS approval.
The CPA's workpapers must contain an analysis of retirement losses, including any required approval by a regulatory commission with jurisdiction in the matter, or RUS, in the absence of commission jurisdiction.
The CPA's workpapers must contain an analysis of all clearing accounts. Based upon the CPA's determination of materiality, an appropriate sample of transactions should be selected for testing. The CPA's workpapers must document that transactions were reviewed for proper allocation between expense and capital accounts.
(a)
(1) Reviewed the subsidiary records and reconciled them to the general ledger control account;
(2) Reviewed authorizations and issuances or redemptions of capital stock for proper approvals by the board of directors, stockholders, and regulatory commissions;
(3) Determined that transactions were made in accordance with the appropriate provisions of the articles of incorporation, bylaws, and RUS loan documents; and
(4) Determined that transactions were recorded in accordance with the Uniform System of Accounts.
(b)
(1) Reviewed the subsidiary records and reconciled them to the general ledger control account; and
(2) Determined that transactions were made in accordance with the appropriate provisions of the articles of incorporation, bylaws, and RUS loan documents.
(c)
(1) Determined that the transactions were made in accordance with the appropriate provisions of the articles of incorporation, bylaws, RUS loan documents, Uniform System of Accounts, or orders of regulatory commissions;
(2) Traced payments to underlying support; and
(3) Determined whether, under the terms of the RUS security instrument, restrictions of retained earnings or margins are required and, if so, whether they have been properly recorded.
The CPA's workpapers must document that he/she:
(a) Confirmed RUS, FFB, and RTB debt to the appropriate confirmation schedule (RUS Form 690, Confirmation Schedule Obligation to the FFB as of: or Form 691, Confirmation Schedule—Long-term Obligation to RUS as of; or RTB Form 12, Confirmation Schedule);
(b) Confirmed other long-term debt directly with the lender;
(c) Examined notes executed or canceled during the audit period; and
(d) Tested accrued interest computations.
The CPA's workpapers must document whether all regulatory liabilities comply with the requirements of SFAS No. 71. For electric borrowers only, the CPA's workpapers must document whether all regulatory liabilities have received RUS approval.
Appendix A includes an example of an auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, financial statements and accompanying notes for an electric distribution cooperative. The sample auditor's report is intended as a guide only and, while it is recommended that the format be followed, each auditor's report should be prepared to adequately cover the circumstances. To the extent possible, it should be used as a guide in preparing auditors’ reports for other types of electric borrowers. For power supply borrowers and for distribution borrowers with production or transmission plant, the same general format should be followed. However, the Statement of Revenue and Patronage Capital must be expanded to show separate totals for operations expenses and maintenance expenses for each class of production plant and for transmission plant.
We have audited the accompanying balance sheets of Center County Electric Cooperative as of December 31, 1998 and 1997, and the related statements of revenue and patronage capital, and cash flows for the years then ended. These financial statements are the responsibility of Center County Electric Cooperative's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards required that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Center County Electric Cooperative as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report dated March 2, 1999, on our consideration of Center County Electric Cooperative's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants.
We have audited the financial statements of Center County Electric Cooperative as of and for the years ended December 31, 1998 and 1997, and have issued our report thereon dated March 2, 1999. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
As part of obtaining reasonable assurance about whether Center County Electric Cooperative's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. [If the CPA has issued a separate letter to the management detailing immaterial instances of noncompliance, modify this paragraph to include a statement such as the following: However, we noted certain immaterial instances of noncompliance which we have reported to the management of Center County Electric Cooperative in a separate letter dated March 2, 1999.]
In planning and performing our audit, we considered Center County Electric Cooperative's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. [If the CPA has issued a separate letter to management to communicate other matters involving the design and operation of the internal control over financial reporting, modify this paragraph to include a statement such as the following: However, we noted other matters involving the internal control over financial reporting which we have reported to the management of Center County Electric Cooperative in a separate letter dated March 2, 1999.]
This report is intended for the information of the audit committee, management, the Rural Utilities Service, and supplemental lenders. However, this report is a matter of public record and its distribution is not limited.
We have audited the financial statements of Center County Electric Cooperative as of and for the years ended December 31, 1998 and 1997, and have issued our report thereon dated March 2, 1999. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
As part of obtaining reasonable assurance about whether Center County Electric Cooperative's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance that are required to be reported under Government Auditing Standards. [A description of the findings should be included in the report.][If the CPA has issued a separate letter to the management detailing immaterial instances of noncompliance, modify this paragraph to include a statement such as the following: We also noted certain immaterial instances of noncompliance which we have reported to the management of Center County Electric Cooperative in a separate letter dated March 2, 1999.]
In planning and performing our audit, we considered Center County Electric Cooperative's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe none of the reportable conditions described above is a material weakness. [If conditions believed to be material weaknesses are disclosed, the last sentence should be deleted and instead the report should identify which of the reportable conditions described above are considered to be material weaknesses.][If the CPA has issued a separate letter to management to communicate other matters involving the design and operation of the internal control over financial reporting, modify this paragraph to include a statement such as the following: We also noted other matters involving the internal control over financial reporting which we have reported to the management of Center County Electric Cooperative in a separate letter dated March 2, 1999.]
This report is intended for the information of the audit committee, management, the Rural Utilities Service, and supplemental lenders. However, this report is a matter of public record and its distribution is not limited.
Appendix B includes an example of a short-form auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, financial statements and accompanying notes for a commercial telephone company. The sample auditor's report is intended as a guide only and, while it is recommended that the format be followed, each auditor's report should be prepared to adequately cover the circumstances. To the extent possible, it should be used as a guide in preparing auditors’ reports for other types of telephone borrowers.
We have audited the accompanying balance sheets of Center Telephone Company as of December 31, 1998 and 1997, and the related statements of revenue and patronage capital, and cash flows for the years then ended. These financial statements are the responsibility of Center Telephone Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our audit.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Center Telephone Company as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended in conformity with general accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated March 2, 1999, on our consideration of Center Telephone Company's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants.
We have audited the financial statements of Center Telephone Company as of and for the years ended December 31, 1998 and 1997, and have issued our report thereon dated March 2, 1999. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
As part of obtaining reasonable assurance about whether Center Telephone Company's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. [If the CPA has issued a separate letter to the management detailing immaterial instances of noncompliance, modify this paragraph to include a statement such as the following: However, we noted certain immaterial instances of noncompliance which we have reported to the management of Center Telephone Company in a separate letter dated March 2, 1999.]
In planning and performing our audit, we considered Center Telephone Company's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. [If the CPA has issued a separate letter to management to communicate other matters involving the design and operation of the internal control over financial reporting, modify this paragraph to include a statement such as the following: However, we noted other matters involving the internal control over financial reporting which we have reported to the management of Center Telephone Company in a separate letter dated March 2, 1999.]
This report is intended for the information of the audit committee, management, the Rural Utilities Service, and supplemental lenders. However, this report is a matter of public record and its distribution is not limited.
We have audited the financial statements of Center Telephone Company as of and for the years ended December 31, 1998 and 1997, and have issued our report thereon dated March 2, 1999. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in
As part of obtaining reasonable assurance about whether Center County Telephone Company's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants,
In planning and performing our audit, we considered Center Telephone Company's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could adversely affect Center Telephone Company's ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements. [A description of the findings pertaining to reportable conditions should be included in the report.]
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe none of the reportable conditions described above is a material weakness. [If conditions believed to be material weaknesses are disclosed, the last sentence should be deleted and instead the report should identify which of the reportable conditions described above are considered to be material weaknesses.][If the CPA has issued a separate letter to management to communicate other matters involving the design and operation of the internal control over financial reporting, modify this paragraph to include a statement such as the following: We also noted other matters involving the internal control over financial reporting which we have reported to the management of Center Telephone Company in a separate letter dated March 2, 1999.]
This report is intended for the information of the audit committee, management, the Rural Utilities Service, and supplemental lenders. However, this report is a matter of public record and its distribution is not limited.
RUS requires that CPAs auditing RUS borrowers provide a management letter in accordance with § 1773.33. This letter must be signed by the CPA, bear the same date as the auditor's report, and be addressed to the borrower's board of directors.
We have audited the financial statements of [Name of Borrower] for the year ended December 31, 1998, and have issued our report thereon dated March 2, 1999. We conducted our audit in accordance with generally accepted auditing standards, the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, and 7 CFR part 1773, Policy on Audits of Rural Utilities Service (RUS) Borrowers. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
In planning and performing our audit of the financial statements of [Name of Borrower] for the year ended December 31, 1998, we considered its internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing an opinion on the financial statements and not to provide assurance on the internal control over financial reporting.
A description of the responsibility of management for establishing and maintaining the internal control over financial reporting and the objectives of and inherent limitations in such control is set forth in our independent auditors’ report on compliance and on internal control over financial reporting dated March 2, 1999, and should be read in conjunction with this report.
Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be
7 CFR 1773.33 requires comments on specific aspects of the internal control over financial reporting, compliance with specific RUS loan and security instrument provisions, and other additional matters. We have grouped our comments accordingly. In addition to obtaining reasonable assurance about whether the financial statements are free from material misstatements, at your request, we performed tests of specific aspects of the internal control over financial reporting, of compliance with specific RUS loan and security instrument provisions, and of additional matters. The specific aspects of the internal control over financial reporting, compliance with specific RUS loan and security instrument provisions, and additional matters tested include, among other things, the accounting procedures and records, materials control, compliance with specific RUS loan and security instrument provisions set forth in 7 CFR 1773.33 (e)(1), related party transactions, depreciation rates, and a schedule of deferred debits and credits, upon which we express an opinion. In addition, our audit of the financial statements also included the procedures specified in 7 CFR 1773.38—.45. Our objective was not to provide an opinion on these specific aspects of the internal control over financial reporting, compliance with specific RUS loan and security instrument provisions, or additional matters, and accordingly, we express no opinion thereon.
No reports (other than our independent auditors’ report and our independent auditors’ report on compliance and on internal control over financial reporting, all dated March 2, 1999) or summary of recommendations related to our audit have been furnished to management.
Our comments on specific aspects of the internal control over financial reporting, compliance with specific RUS loan and security instrument provisions, and other additional matters as required by 7 CFR 1773.33 are presented below.
We noted no matters regarding [Name of Borrower]'s internal control over financial reporting and its operation that we consider to be a material weakness as previously defined with respect to:
Management's responsibility for compliance with laws, regulations, contracts, and grants is set forth in our independent auditors’ report on compliance and on internal control over financial reporting dated March 2, 1999, and should be read in conjunction with this report. At your request, we have performed the procedures enumerated below with respect to compliance with certain provisions of laws, regulations, contracts, and grants. The procedures we performed are summarized as follows:
1. Obtained information from financial institutions with which [Name of Borrower] maintains cash proceeds from loans that indicated that the institutions are insured by an Agency of the Federal government.
1. Obtained and read a borrower-prepared schedule of new written contracts entered into during the year for the operation or maintenance of its property, or for the use of its property by others as defined in § 1773.334 (e)(1)(ii).
2. Reviewed Board of Director minutes to ascertain whether board-approved written contracts are included in the borrower-prepared schedule.
3. Noted the existence of written RUS [and other mortgagee] approval of each contract listed by the borrower.
1. Agreed amounts reported in Form 7 or Form 12 to [Name of Borrower]'s records.
The results of our tests indicate that, with respect to the items tested, [Name of Borrower] complied, except as noted below, in all material respects, with the specific RUS
In connection with our audit of the financial statements of [Name of Borrower], nothing came to our attention that caused us to believe that [Name of Borrower] failed to comply with respect to:
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The detailed schedule of deferred debits and deferred credits required by 7 CFR 1773.33 (h) and provided below is presented for purposes of additional analysis and is not a required part of the basic financial statements. This information has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
[The detailed schedule of deferred debits and deferred credits would be included here. The total amount of deferred debits and deferred credits as reported in the schedule must agree with the totals reported on the Balance Sheet under the specific captions of “Deferred Debits” and “Deferred Credits”. Those items that have been approved, in writing, by RUS should be clearly indicated.]
This report is intended solely for the information and use of the board of directors, management, and the RUS and supplemental lenders. However, this report is a matter of public record and its distribution is not limited.
RUS requires that CPAs auditing RUS borrowers provide a management letter in accordance with § 1773.33. This letter must be signed by the CPA, bear the same date as the auditor's report, and be addressed to the borrower's board of directors.
We have audited the financial statements of [Name of Borrower] for the year ended December 31, 1998, and have issued our report thereon dated March 2, 1999. We conducted our audit in accordance with generally accepted auditing standards, the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, and 7 CFR part 1773, Policy on Audits of Rural Utilities Service (RUS) Borrowers. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
In planning and performing our audit of the financial statements of [Name of Borrower] for the year ended December 31, 1998, we considered its internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing an opinion on the financial statements
A description of the responsibility of management for establishing and maintaining the internal control over financial reporting and the objectives of and inherent limitations in such control is set forth in our independent auditors’ report on compliance and on internal control over financial reporting dated March 2, 1999, and should be read in conjunction with this report.
Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting that we consider to be material weaknesses. [If a material weakness was noted, refer the reader to the independent auditors’ report on compliance and on internal control over financial reporting.]
7 CFR 1773.33 requires comments on specific aspects of the internal control over financial reporting, compliance with specific RUS loan and security instrument provisions, and other additional matters. We have grouped our comments accordingly. In addition to obtaining reasonable assurance about whether the financial statements are free from material misstatements, at your request, we performed tests of specific aspects of the internal control over financial reporting, of compliance with specific RUS loan and security instrument provisions, and of additional matters. The specific aspects of the internal control over financial reporting, compliance with specific RUS loan and security instrument provisions, and additional matters tested include, among other things, the accounting procedures and records, materials control, compliance with specific RUS loan and security instrument provisions set forth in 7 CFR 1773.33 (e)(2), and related party transactions. In addition, our audit of the financial statements also included the procedures specified in 7 CFR 1773.38-.45. Our objective was not to provide an opinion on these specific aspects of the internal control over financial reporting, compliance with specific RUS loan and security instrument provisions, or additional matters, and accordingly, we express no opinion thereon.
No reports (other than our independent auditors’ report, and our independent auditors’ report on compliance and on internal control over financial reporting, all dated March 2, 1999) or summary of recommendations related to our audit have been furnished to management.
Our comments on specific aspects of the internal control over financial reporting, compliance with specific RUS loan and security instrument provisions, and other additional matters as required by 7 CFR 1773.33 are presented below.
We noted no matters regarding [Name of Borrower]'s internal control over financial reporting and its operation that we consider to be a material weakness as previously defined with respect to:
Management's responsibility for compliance with laws, regulations, contracts, and grants is set forth in our independent auditors’ report on compliance and on internal control over financial reporting dated March 2, 1999, and should be read in conjunction with this report. At your request, we have performed the procedures enumerated below with respect to compliance with certain provisions of laws, regulations, contracts, and grants. The procedures we performed are summarized as follows:
1. Obtained information from financial institutions with which [Name of Borrower] maintains funds that indicated that the institutions are insured by an agency of the Federal government.
1. Obtained and read a borrower-prepared schedule of new written contracts entered into during the year for the operation or
2. Reviewed Board of Director minutes to ascertain whether board-approved written contracts are included in the borrower-prepared schedule.
3. Noted the existence of written RUS [and other mortgagee] approval of each contract listed by the borrower.
1. Agreed amounts reported in Form 479 to [Name of Borrower]'s records.
1. Reviewed loan security instrument to ascertain which condition was elected by the borrower.
2. If the funded reserve option was selected, review financial institution records to verify the existence of a separate bank account for the reserve, and determine that it was funded within one year of approval of release of funds and that it remained funded over the composite economic life of the facilities financed.
3. If the net plant to secured debt ratio option was selected, calculate the ratio and confirm that the 1.2 ratio was achieved one year following the first advance of loan funds.
The results of our tests indicate that, with respect to the items tested, [Name of Borrower] complied, except as noted below, in all material respects, with the specific RUS loan and security instrument provisions referred to below. The specific provisions tested, as well as any exceptions noted, include the requirements that:
In connection with our audit of the financial statements of [Name of Borrower], nothing came to our attention that caused us to believe that [Name of Borrower] failed to comply with respect to:
This report is intended solely for the information and use of the board of directors, management, and the RUS and supplemental lenders. However, this report is a matter of public record and its distribution is not limited.
5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.
This part sets forth the policies and procedures for making Technical Assistance grants. Grants for technical assistance and training for water and waste disposal facilities are authorized under section 306(a)(16)(A) of the Consolidated Farm and Rural Development Act, (CONACT), (7 U.S.C. 1926(a)), as amended. Grants for solid waste management are authorized under Section 310B of the CONACT, (7 U.S.C. 1932), as amended. Any processing or servicing activity conducted pursuant to this part involving authorized assistance to Agency employees, members of their families, known close relatives, or business or close personal associates, is subject to the provisions of subpart D of part 1900 of this title. Applicants for this assistance are required to identify any known relationship or association with an Agency employee.
(a) The objectives of the Technical Assistance and Training Grant Program are to:
(1) Identify and evaluate solutions to water and waste disposal problems in rural areas.
(2) Assist applicants in preparing applications for water and waste grants made in accordance with part 1780 of this chapter.
(3) Improve operation and maintenance of existing water and waste disposal facilities in rural areas.
(b) The objectives of the Solid Waste Management Grant Program are to:
(1) Reduce or eliminate pollution of water resources.
(2) Improve planning and management of solid waste sites.
Technical Assistance and Training grants awarded will be made from not less than one (1) percent or, at the discretion of the Agency Administrator, not more than three (3) percent of any appropriations for grants under Section 306(a)(2) of the CONACT, (7 U.S.C. 1926(a)). Technical Assistance and Training grant funds not obligated by September 1 of each fiscal year will be used for water and waste grants made in accordance with part 1780 of this chapter. This section does not apply to Solid Waste Management grants.
Control of Technical Assistance and Training grant and Solid Waste Management grant funds will be retained in
(a) Entities eligible for Technical Assistance and Training (TAT) grants are private nonprofit organizations that have been granted tax exempt status by the Internal Revenue Service (IRS) of the United States.
(b) Entities eligible for Solid Waste Management (SWM) grants are nonprofit organizations, including:
(1) Private nonprofit organizations that have been granted tax exempt status by the IRS; and
(2) Public bodies including local governmental-based multi-jurisdictional organizations.
(c) Applicants for either TAT or SWM grants must also have the proven ability, background, experience, legal authority, and actual capacity to provide technical assistance and/or training on a regional basis to associations as provided in § 1775.3.
(a) Technical Assistance and/or Training Grants may be used to:
(1) Identify and evaluate solutions to water problems of associations in rural areas relating to:
(i) Source.
(ii) Storage.
(iii) Treatment.
(iv) Distribution.
(2) Identify and evaluate solutions to waste problems of associations in rural areas relating to:
(i) Collection.
(ii) Treatment.
(iii) Disposal.
(3) Assist associations that have filed a preapplication with the Agency in the preparation of water and/or waste loan and/or grant applications.
(4) Provide training to association personnel that will improve the management, operation and maintenance of water and waste disposal facilities.
(5) To pay the expenses associated with providing the technical assistance and/or training authorized in paragraphs (a) (1) through (4) of this section.
(b) Solid Waste Management grants may be used to:
(1) Evaluate current landfill conditions to determine threats to water resources.
(2) Provide technical assistance and/or training to enhance operator skills in the maintenance and operation of active landfills.
(3) Provide technical assistance and/or training to help communities reduce the solid waste stream.
(4) Provide technical assistance and/or training for operators of landfills which are closed or will be closed in the near future with the development/implementation of closure plans, future land use plans, safety and maintenance planning, and closure scheduling within permit requirements.
Grant funds may not be used to:
(a) Recruit applications for the Agency's water and waste loan and/or any loan and/or grant program.
(b) Duplicate current services, replacement or substitution of support previously provided such as those performed by an association's consultant in developing a project.
(c) Fund political activities.
(d) Pay for capital assets, the purchase of real estate or vehicles, improve and renovate office space, or repair and maintain privately-owned property.
(e) Pay for construction or operation and maintenance costs.
(f) Pay costs incurred prior to the effective date of grants made under this part.
(g) Pay for technical assistance as defined in this part which duplicates assistance provided to implement an action plan funded by Forest Service (FS) under the National Forest-Dependent Rural Communities Economic Diversification Act (7 U.S.C. 6601 note) for 5 continuous years from the date of grant approval by the FS. To avoid duplicate assistance, the grantee shall coordinate with the FS and RUS to ascertain if a grant has been made in a substantially similar geographical or defined local area in a State for technical assistance under the above program.
The policies and regulations contained in subpart E of part 1901 of this title apply to grants made under this part.
The policies and regulations contained in subpart G of part 1940 of this title apply to grants made for the purposes in § 1775.8.
(a) Applicants will file an original and one copy of SF-424.1, “Application for Federal Assistance (For Non-construction),” with the appropriate Agency office between October 1 and December 31 each fiscal year. This form is available in all Agency offices. Applicants proposing to provide technical assistance and/or training in only one State will apply through the appropriate State Office. The State Office will review and forward preapplications, with their recommendations, within seven working days to the National Office, Attention: Water and Waste Disposal. Applicants providing technical assistance and/or training in more than one State will forward the preapplication to the Assistant Administrator, Water and Waste, Rural Utilities Service, Washington, DC 20250. Preapplications for Solid Waste Management grants that cannot be funded in the fiscal year received will not be retained for consideration for funding in the following fiscal year and will be handled as outlined in paragraph (g) of this section.
(b) All preapplications shall be accompanied by:
(1) Evidence of applicant's legal existence and authority in the form of certified copies of organizational documents and a certified list of directors and officers with their respective terms.
(2) Evidence tax exempt status from the Internal Revenue Service.
(3) Brief written narrative which includes items such as:
(i) The proposed service(s) to be provided, including the benefits of the technical assistance and/or training.
(ii) Area to be served.
(iii) Name of association(s) or type of association(s) that will be served.
(iv) Median household income of the population to be served by each association(s).
(v) Grantee's experience, including experience of key staff members and person(s) providing the technical assistance and/or training.
(vi) The number of months duration of the project or service and the estimated time it will take from grant approval to beginning of service.
(vii) Method used to select the association(s) that will receive the service.
(viii) Brief description of how the service will be provided, such as, through currently employed personnel or some other method.
(ix) Method to be used for delivery of the service, including personnel to be utilized and tasks to be contracted, if any.
(4) Latest financial information to show the organization's financial capacity to carry out the proposed work. As a minimum, the information should include a balance sheet and an income statement. A current audit report is preferred.
(5) Estimated breakdown of costs including those to be funded by grantee as well as other sources.
(6) Budget and accounting system in place or proposed.
(7) Evaluation method to determine if objective(s) of the proposed activity is being accomplished.
(c) Upon receipt of a preapplication, the National Office will:
(1) Review and evaluate the preapplication and accompanying documents;
(2) Request from the Office of General Counsel (OGC), a legal determination
(3) Normally, respond to the applicant within 45 days after December 31 of each year using Form AD-622, “Notice of Preapplication Review Action,” indicating the action taken on the preapplication.
(d) Applicants whose preapplications are found to be ineligible will be given notice by use of Form AD-622 and advised of their appeal rights under subpart B of part 1900 of this title.
(e) Applicants who are eligible, but do not have the priority necessary for further consideration will be notified with Form AD-622, which includes the following statements:
“Your proposal cannot be funded within the available funds.”
“You are advised against incurring obligations which cannot be fulfilled without Agency funds.”
(f) Applicants that are eligible for funding within the available funds will be provided forms and instructions for filing a complete application. Applicants should be advised against incurring obligations which cannot be fulfilled without Agency funds.
(g) Applicants who have filed preapplications for solid waste management grant funds that cannot be funded within the available funds will be notified, using Form AD-622, that their preapplication will not be retained. They will also be notified that they may file a new preapplication when funds again become available using the following statement:
“If the Agency receives funding for the program in FY
(a) The preapplication and supporting information will be used to determine the applicant's priority for available funds for the Technical Assistance and Training Grant program. The following specific criteria will be considered in the competitive selection of Technical Assistance and Training Grant recipients:
(1) Applicant's demonstrated capability and past performance in providing technical assistance and/or training to rural associations.
(2) The extent to which the population of the associations served have low income.
(3) Applicant's financial and if applicable, in-kind resource that will maximize use of technical assistance and/or training funds for direct staffing of activities that are delivered to the associations.
(4) The extent to which the project will be cost effective, including but not limited to the ratio of proposed personnel to the cost of the project, the cost per associations served by the project, and the expected benefits from the project.
(5) How well the proposal coincides with the objectives of the Agency's Water and Waste Disposal program authorized in part 1780 of this chapter.
(6) Applicants proposing to serve multi-state, regional, or nationwide areas.
(7) Applicants whose timeframe for completion of the technical assistance and/or training grant project is 12 months or less.
(b) Preapplications received from local governmental-based, multi- jurisdictional organizations for the SWM grant program will be given priority within the available funds.
(a) Upon notification on Form AD-622 that the applicant is eligible for funding, the following will be submitted to the National Office by the applicant:
(1) SF-424.1.
(2) Proposed scope of work detailing the training and/or technical assistance to be accomplished and timeframes for completion of each task.
(3) Proposed budget.
(4) Other requested information needed by the Agency to make a grant award determination.
(b) The following forms and documents will be part of the grant docket:
(1) Form RD 400-1, “Equal Opportunity Agreement.”
(2) Form RD 400-4, “Assurance Agreement.”
(3) Grant Agreement signed by the applicant.
(4) Scope of work prepared by the applicant.
(5) Form RD 1940-1, “Request for Obligation of Funds.”
(c) If the applicant fails to submit the application and related material by the date shown on Form AD-622 (normally 30 days from the date of Form AD-622), the Agency may discontinue consideration of the application.
(a) The National Office will review the application and other documents to determine whether the proposal complies with this part.
(b) All grants made under this part will be approved and obligated by the Agency Administrator or designee.
(c) The obligation of funds will be handled in accordance with part 1780 of this chapter.
(d) An executed copy of the Grant Agreement and scope of work will be sent to the applicant on the obligation date, along with a copy of Form RD 1940-1. The Agency will retain the executed original of the Grant Agreement. The grant will be considered closed on the obligation date.
(e) If the grant is not approved, the applicant will be notified in writing of the reason(s) for rejection. The notification to the applicant will state that a review of this decision by the Agency may be requested by the applicant under subpart B of part 1900 of this title.
Prior to the advancing of funds, the grantee will provide fidelity bond coverage for the positions of persons entrusted with the receipt and disbursement of its funds and the custody of valuable property. The amount of the bond will be at least equal to the maximum amount of monies that the grantee will have on hand at any one time for technical assistance and/or training provided in accordance with the Grant Agreement. Unless prohibited by State Law, the United States, acting through the Agency, will be named as co-obligee in the bond. The bond must be obtained from a company listed in Department of Treasury Circular 570, as amended. Form RD 440-24, “Position Fidelity Schedule Bond Declarations,” may be used. A certified power-of-attorney with effective date will be attached to the bond.
Grantees will be reimbursed as follows:
(a) Standard Form (SF) 270, “Request for Advance or Reimbursement,” will be completed by the applicant and submitted to the National Office not more frequently than monthly.
(b) Upon receipt of a properly completed SF 270, the funds will be requested through the field office terminal system. Ordinarily, payment will be made within 30 days after receipt of a proper request for reimbursement.
(c) Grantees are encouraged to use minority banks (a bank which is owned by at least 50 percent minority group members) for the deposit and disbursement of funds. A list of minority owned banks can be obtained from the Office of Minority Business Enterprise, Department of Commerce, Washington, DC 20230.
If it is determined that a project will not be funded or if major changes in the scope of the project are made after release of the approval announcement, the Administrator will notify the Director of Legislative Affairs and Public Information Staff (LAPIS) giving the reasons for such action. In the case of a grant cancellation, Form RD 1940-10, “Cancellation of U.S. Treasury Check and/or Obligation,” will not be submitted to the Finance Office until 5 working days after notifying the Director of LAPIS, and grant obligation cancellations will not be submitted to the National Office until 5 working days after notifying the Director of LAPIS.
Standard Form (SF) 269, “Financial Status Report,” SF 272, “Federal Cash Transactions Report,” and a project
(a) A comparison of actual accomplishments to the objectives established for that period;
(b) Reasons why established objectives were not met;
(c) Problems, delays, or adverse conditions which will affect attainment of overall project objectives, prevent meeting time schedules or objectives, or preclude the attainment of particular project work elements during established time periods. This disclosure shall be accompanied by a statement of the action taken or planned to resolve the situation; and
(d) Objectives and timetable established for the next reporting period.
The grantee will provide an audit report prepared in accordance with § 1780.47 of this chapter within 90 days after project completion.
RUS Bulletin 1775-1 is a Grant Agreement which sets forth the procedures for making and servicing grants made under this part. Bulletins, instructions and forms referenced are for use in administering grants made under this part and are available from any USDA/Rural Development office or the Rural Utilities Service, United States Department of Agriculture, Washington, D.C. 20250-1500.
Grants will be serviced in accordance with the grant agreement and subpart E of part 1951 of this title. Subpart B of part 1900 of this title will be followed when grants are terminated for cause.
The authority under this part is redelegated to the Assistant Administrator, Water and Waste, except for the discretionary authority contained in § 1775.5. The Assistant Administrator, Water and Waste may redelegate the authority in this section.
The collection of information requirements contained in this part have been approved by the Office of Management and Budget and have been assigned OMB control number 0575-0123. Public reporting for this collection of information is estimated to vary from 15 minutes to 4 hours per response, with an average of 1 hour per response including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Department of Agriculture, Clearance Officer, OIRM, Room 404-W, Washington, DC 20250; and to the Office of Management and Budget, Paperwork Reduction Project (OMB 0575-0123), Washington, DC 20503.
5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.
(a) This part outlines Rural Utilities Service (RUS) policies and procedures for making Water and Waste Disposal (WWD) loans and grants authorized under section 306C of the Consolidated Farm and Rural Development Act (7 U.S.C. 1926(c)), as amended.
(b) Agency officials will maintain liaison with officials of other Federal, State, regional, and local development agencies to coordinate related programs to achieve rural development objectives.
(c) Agency officials shall cooperate with appropriate State agencies in making loans and/or grants that support State strategies for rural area development.
(d) Funds allocated in accordance with this part will be considered for use by Indian tribes within the State regardless of whether State development strategies include Indian reservations within the State's boundaries. Indians residing on such reservations must have an equal opportunity to participate in this program.
(e) Federal statutes provide for extending the Agency's financial programs without regard to race, color, religion, sex, national origin, marital status, age, or physical/mental handicap (provided the participant possesses the capacity to enter into legal contracts).
The objective of the Section 306C WWD Loans and Grants program is to provide water and waste disposal facilities and services to low-income rural communities whose residents face significant health risks.
Unless specifically modified by this part, loans and/or grants will be made, processed, and serviced in accordance with part 1780 of this chapter.
(a) The provisions of paragraphs (a) (1) and (2) of this section do not apply to a rural area recognized as a colonia. Otherwise, the facility financed under this part must provide water and/or
(1) Per capita income of the residents is not more than 70 percent of the most recent national average per capita income, as determined by the Department of Commerce; and
(2) Unemployment rate of the residents is not less than 125 percent of the most recent national average unemployment rate, as determined by the Bureau of Labor Statistics.
(b) Residents of the rural area to be served must face significant health risks due to the fact that a significant proportion of the community's residents do not have access to, or are not served by, adequate, affordable, water and/or waste disposal systems. The file should contain documentation to support this determination.
Paragraphs (a) through (d) of this section indicate items and conditions which must be considered in selecting preapplications for further development. When ranking eligible preapplications for consideration for limited funds, Agency officials must consider the priority items met by each preapplication and the degree to which those priorities are met.
(a)
(b)
(c)
(d)
(1)
(i) Not in excess of 1,500—30 points.
(ii) More than 1,500 and not in excess of 3,000—20 points.
(iii) More than 3,000 and not in excess of 5,500—10 points.
(2)
(i) Not in excess of 50 percent of the statewide nonmetropolitan median household income—40 points.
(ii) More than 50 percent and not in excess of 60 percent of the statewide nonmetropolitan median household income—20 points.
(iii) More than 60 percent and not in excess of 70 percent of the statewide nonmetropolitan median household income—10 points.
(3)
(i) Twenty percent or more private, local, or State funds except Federal funds channeled through a State agency—10 points.
(ii) Five to 19 percent private, local, or State funds except Federal funds channeled through a State agency—5 points.
(4)
(5)
(a)
(1) Construct, enlarge, extend, or otherwise improve community water and/or waste disposal systems. Otherwise improve would include extending service lines to and/or connecting residence's plumbing to the system.
(2) Make loans and grants to individuals for extending service lines to and/or connecting residences to the applicant's system. The approval official must determine that this is a practical and economical method of connecting individuals to the community water and/or waste disposal system. Loan funds can only be used for loans, and grant funds can only be used for grants.
(3) Make improvements to individual's residence when needed to allow use of the water and/or waste disposal system.
(4) Grants can be made up to 100 percent of eligible project costs.
(b)
(1) Extend service lines to residence.
(2) Connect service lines to residence's plumbing.
(3) Pay reasonable charges or fees for connecting to a community water and/or waste disposal system.
(4) Pay for necessary installation of plumbing and related fixtures within dwellings lacking such facilities. This is limited to one bathtub, sink, commode, kitchen sink, water heater, and outside spigot.
(5) Construction and/or partitioning off a portion of dwelling for a bathroom, not to exceed 4.6 square meters (48 square feet) in size.
(6) Pay reasonable costs for closing abandoned septic tanks and water wells when necessary to protect the health and safety of recipients of a grant in paragraphs (b)(1) or (b)(2) of this section and is required by local or State law.
(a) Applicant loans will bear interest at the rate of 5 percent per annum.
(b) Individual loans will bear interest at the rate of:
(1) Five percent per annum; or
(2) The Federal Financing Bank rate for loans of a similar term at the time of Agency loan approval, whichever is less.
(a) The amount of loan and grant funds approved by the Agency will be based on the need shown in the application and an implementation plan submitted by the applicant. The implementation plan will include such things as: purpose, how funds will be used, proposed application process, construction requirements, control and disbursement of funds, etc. The implementation plan will be attached to RUS Bulletin 1777-1.
(b) RUS Bulletin 1777-1 is a Memorandum of Agreement which sets forth the procedures and regulations for making and servicing loans and grants made by applicants to individuals. The State Program Official is authorized to enter into a Memorandum of Agreement with any applicant providing loans and/or grants to individuals. The Memorandum of Agreement can be amended to comply with State law and recommendations by the Office of General Counsel. It may also be amended to eliminate references to loans and/or grants if no loan and/or grant is involved. The State Program Official is responsible for:
(1) Ensuring that all provisions of the Agreement are understood.
(2) Determining that the applicant has the ability to make and service loans and/or grants in the manner outlined in the Agreement.
(c) Agency funds remaining after providing individual loans and/or grants will be returned to the Agency. The
The State Program Official is responsible for the overall implementation of the authorities contained in this part and may redelegate any such authority to appropriate Agency employees.
RUS Bulletin 1780-12 referenced in part 1780 of this chapter and RUS Bulletin 1777-1, 1777-2 and 1777-3 are for use in administering loans and/or grants made under this part. Bulletins, instructions and forms are available from any USDA/Rural Development office or the Rural Utilities Service, United States Department of Agriculture, Washington, DC 20250-1500.
The reporting and recordkeeping requirements contained in this part have been approved by the Office of Management and Budget and assigned OMB control number 0570-0001. Public reporting burden for this collection of information is estimated to vary from 5 to 30 hours per response with an average of 17.5 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to U.S. Department of Agriculture, Clearance Officer, OIRM, Room 404-W, Washington, DC 20250; and to the Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503.
5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.
(a) This part outlines policies and procedures for making Emergency Community Water Assistance Grants authorized under Section 306A of the Consolidated Farm and Rural Development Act, (7 U.S.C. 1926(a)), as amended. Any processing or servicing activity conducted pursuant to this part involving authorized assistance to Agency employees, members of their families, known close relatives, or business or close personal associates, is subject to the provisions of subpart D of part 1900 of this title. Applicants for this assistance are required to identify any known relationship or association with an Agency employee.
(b) Agency officials will maintain liaison with officials of other Federal, State, regional and local development agencies to coordinate related programs to achieve rural development objectives.
(c) Agency officials shall cooperate with appropriate State agencies in making grants that support State strategies for rural area development.
(d) Funds allocated for use in accordance with this part are also to be considered for use by Indian tribes within the State regardless of whether State development strategies include Indian reservations within the State's boundaries. Indians residing on such reservations must have an equal opportunity along with other rural residents to participate in the benefits of this program. This includes equal application of outreach activities of Field Offices.
(e) Federal statutes provide for extending the Agency financial programs without regard to race, color, religion, sex, national origin, marital status, age, or physical/mental handicap (provided the participant possesses the capacity to enter into legal contracts).
The objective of the Emergency Community Water Assistance Grant Program is to assist the residents of rural areas that have experienced a significant decline in quantity or quality of water to obtain adequate quantities of water that meet the standards set by the Safe Drinking Water Act (42 U.S.C. 300f et seq.) (SDWA).
(a) Grants may be made to public bodies and private nonprofit corporations serving rural areas. Public bodies include counties, cities, townships, incorporated towns and villages, boroughs, authorities, districts, and other political subdivisions of a State. Public bodies also includes Indian tribes on Federal and State reservations and other Federally recognized Indian Tribal groups in rural areas.
(b) In the case of grants made to alleviate a significant decline in quantity or quality of water available from the water supplies of rural residents, the applicant must demonstrate that the decline occurred within two years of the date the application was filed with the Agency. This would not apply to grants made for repairs, partial replacement, or significant maintenance on an established water system.
Paragraphs (a) through (d) of this section indicate items and conditions which must be considered in selecting applications for further development. When ranking eligible applications for consideration for limited funds, Agency officials must consider the priority items met by each application and the degree to which those priorities are met.
(a)
(b)
(c)
(d)
(1)
(i) Not in excess of 1,500—30 points.
(ii) More than 1,500 and not in excess of 3,000—20 points.
(iii) More than 3,000 and not in excess of 5,000—15 points.
(2)
(i) Not in excess of 70% of the statewide nonmetropolitan median household income—30 points.
(ii) More than 70% and not in excess of 80% of the statewide nonmetropolitan median household income—20 points.
(iii) More than 80% and not in excess of 90% of the statewide nonmetropolitan median household income—10 points.
(iv) Over 90% of the statewide nonmetropolitan median household income—0 points.
(3)
(i) Quantity of water available from private individually owned wells or other individual sources of water—30 points; or
(ii) Quantity of water available from an established system's source of water—20 points; or
(iii) Quality of water available from private individually owned wells or other individual sources of water—30 points; or
(iv) Quality of water available from an established system's source of water—20 points.
(4)
(5)
Grant funds may be used for the following purposes:
(a) Waterline extensions from existing systems.
(b) Construction of new waterlines.
(c) Repairs to an existing system.
(d) Significant maintenance to an existing system.
(e) Construction of new wells, reservoirs, transmission lines, treatment plants, and other sources of water.
(f) Equipment replacement.
(g) Connection and/or tap fees.
(h) Pay costs that were incurred within six months of the date an application was filed with the Agency to correct an emergency situation that would have been eligible for funding under this part.
(i) Any other appropriate purpose such as legal fees, engineering fees, recording costs, environmental impact analyses, archaeological surveys, possible salvage or other mitigation measures, planning, establishing or acquiring rights associated with developing sources of, treating, storing, or distributing water.
(j) Assist rural water systems to comply with the requirements of the Federal Water Pollution Control Act (33 U.S.C. 1251
(a) Grant funds may not be used to:
(1) Assist any city or town with a population in excess of 10,000 inhabitants according to the most recent decennial census of the United States.
(2) Assist a rural area that has a median household income in excess of the statewide nonmetropolitan median household income according to the most recent decennial census of the United States.
(3) Finance facilities which are not modest in size, design, cost, and are not directly related to correcting the potable water quantity or quality problem.
(4) Pay loan or grant finder's fees.
(5) Pay any annual recurring costs that are considered to be operational expenses.
(6) Pay rental for the use of equipment or machinery owned by the rural community.
(7) Purchase existing systems.
(8) Refinance existing indebtedness, except for short-term debt incurred in accordance with § 1778.9(h).
(9) Make reimbursement for projects developed with other grant funds.
(10) Finance facilities that are not for public use.
(b) Nothing in paragraph (a)(1) of this section shall preclude rural areas from submitting joint proposals for assistance under this part. Each entity applying for financial assistance under this part to fund their share of a joint project will be considered individually.
(a) Grants made to alleviate a significant decline in quantity or quality of water available from the water supplies in rural areas that occurred within two years of filing an application with the Agency cannot exceed $500,000.
(b) Grants made for repairs, partial replacement, or significant maintenance on an established system to remedy an acute shortage or significant decline in the quality or quantity of potable water cannot exceed $75,000.
(c) Grants under this part, subject to paragraphs (a) and (b) of this section, shall be made for 100 percent of eligible project costs.
(a) At least 70 percent of all grants made under these grant programs shall be for projects funded in accordance with § 1778.11(a).
(b) At least 50 percent of the funds appropriated for this grant program shall be allocated to rural areas with populations not in excess of 3,000 inhabitants according to the most recent decennial census of the United States.
(a)
(b)
(c)
(d)
(e)
(f)
(a) To the extent possible, an application under this part will be approved or disapproved within 60 days of the date that a complete application and all related material is submitted to the Agency.
(b) The material submitted with the application should include the Preliminary Engineer Report, population and median household income of the area to be served, description of project, and nature of emergency that caused the problem(s) being addressed by the project. The documentation must clearly show that the applicant has had a significant decline in the quantity and/or quality of potable water or an acute shortage of potable water and the proposed project will eliminate the problem. For projects to be funded in accordance with § 1778.11(a), evidence must be furnished that a significant decline in quantity or quality occurred within two years of filing the application with the Agency.
(c) The processing office should assist the applicant in application assembly and processing.
(d) Appropriate application review and approval procedures outlined in subpart B of part 1780 of this chapter.
(e) Each application for assistance will be carefully reviewed in accordance with the priorities established in § 1778.7. A priority rating will be assigned to each application by the State Program Official.
(f) When the National Office has allocated funds to the State for a project, applicable provisions outlined in subpart B of part 1780 of this chapter will be followed in preparation of the grant docket. This would include development of an operating budget showing that the applicant can meet all its obligations and provide the intended services.
(g) When favorable action will not be taken on an application, the applicant will be notified in writing by the State Program Official of the reasons why the request was not favorably considered. Notification to the applicant will state that a review of this decision by the Agency may be requested by the applicant in accordance with 7 CFR part 11.
(h) State Program Officials are authorized to approve grants made in accordance with this part and RUS Staff Instruction 1780-1.
(i) Funds will be obligated and approval announcement made in accordance with the provisions of subpart B of part 1780 of this chapter.
Planning development and procurement for grants made under this part will be in accordance with subpart C of part 1780 of this chapter. A certification should be obtained from the State agency or the Environmental Protection Agency if the State does not have primacy, stating that the proposed improvements will be in compliance with requirements of the SDWA.
(a) Grants will be closed in accordance with § 1780.45 of this chapter.
(b) RUS Bulletin 1780-12, “Water or Waste Grant Agreement,” will be executed by all applicants. State Program Officials are authorized to execute the agreement on behalf of the Agency.
(c) The grant will be considered closed on the date RUS Bulletin 1780-12 is signed by the Agency. The Finance Office will be notified of the grant closing date. The Agency will retain the original of the Grant Agreement.
(d) The Agency's policy is not to disburse grant funds from the Treasury until they are actually needed by the applicant. Grant funds will be disbursed by using multiple advances.
(a) Applicable provisions of subpart C of part 1780 of this chapter will be followed in performing development for grants made under this part.
(b) After filing an application in accordance with § 1778.21 and when immediate action is necessary, the State Program Official may concur in an applicant's request to proceed with construction before funds are obligated provided the RUS environmental requirements are complied with. The applicant must be advised in writing that:
(1) Any authorization to proceed or any concurrence in bid awards, contract concurrence, or other project development activity, is not a commitment by the Agency to provide grant funds under this part.
(2) The Agency is not liable for any debt incurred by the applicant in the event that funds are not provided under this part.
The State Program Official may prepare and execute Form RD 1940-10, “Cancellation of U.S. Treasury Check and/or Obligation,” in accordance with the Forms Manual Insert. If the docket has been forwarded to OGC, that office should receive a copy of Form RD 1940-10. The applicant's attorney and engineer may be provided a copy of Form RD 1940-10. A copy should also be sent to the National Office, Attention: Water and Waste Processing.
(a) Grants will be serviced in accordance with § 1951.215 of subpart E of part 1951 of this title and subpart O of part 1951 of this title.
(b) The grantee will provide an audit report in accordance with § 1780.47 of this chapter.
Subsequent grants will be processed in accordance with the requirements set forth in this part. The initial and subsequent grants made to complete a previously approved project must comply with the maximum grant requirements set forth in § 1778.11.
Bulletins, instructions and forms referenced are for use in administering grants made under this part and are available from any USDA/Rural Development office or the Rural Utilities Service, United States Department of Agriculture, Washington, DC 20250-1500.
The reporting and recordkeeping requirements contained in this part have been approved by the Office of Management and Budget and assigned OMB control number 0575-0074. Public reporting burden for this collection of information is estimated to average two hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Department of Agriculture, Clearance Officer, OIRM, Room 404-W, Washington, DC 20250; and to the Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503.
5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.
(a) This part outlines the policies and procedures for making and processing direct loans and grants for water and waste projects. The Rural Utilities Service (RUS) shall cooperate fully with State and local agencies in making loans and grants to assure maximum support to the State strategy for rural development. Agency officials and their staffs shall maintain coordination and liaison with State agency and substate planning districts.
(b) The income data used in this part to determine median household income must be that which most accurately reflects the income of the service area. The median household income of the service area and the nonmetropolitan median household income of the State will be determined from income data from the most recent decennial census
(c) RUS debt instruments will require an agreement that if at any time it shall appear to the Government that the borrower is able to refinance the amount of the indebtedness to the Government then outstanding, in whole or in part, by obtaining a loan for such purposes from responsible cooperative or private credit sources, at reasonable rates and terms for loans for similar purposes and periods of time, the borrower will, upon request of the Government, apply for and accept such loan in sufficient amount to repay the Government and will take all such actions as may be required in connection with such loan.
(d) Funds allocated for use under this part are also for the use of Indian tribes within the State, regardless of whether State development strategies include Indian reservations within the State's boundaries. Native Americans residing on such reservations must have equal opportunity to participate in the benefits of these programs as compared with other residents of the State. Such tribes might not be subject to State and local laws or jurisdiction. However, any requirements of this part that affect applicant eligibility, the adequacy of RUS's security, or the adequacy of service to users of the facility and all other requirements of this part must be met.
(e) RUS financial programs must be extended without regard to race, color, religion, sex, national origin, marital status, age, or physical or mental handicap.
(f) Any processing or servicing activity conducted pursuant to this part involving authorized assistance to Agency employees, members of their families, known close relatives, or business or close personal associates, is subject to the provisions of subpart D of part 1900 of this title. Applicants for assistance are required to identify any known relationship or association with a RUS employee.
(g) Water and waste facilities will be designed, installed, and operated in accordance with applicable laws which include but are not limited to the Safe Drinking Water Act, Clean Water Act and the Resource Conservation and Recovery Act.
(h) RUS financed facilities will be consistent with any current development plans of State, multijurisdictional areas, counties, or municipalities in which the proposed project is located.
(i) Each RUS financed facility will be in compliance with appropriate State or Federal agency regulations which have control of the appropriation, diversion, storage and use of water and disposal of excess water.
(j) Water and waste applicants must demonstrate that they possess the financial, technical, and managerial capability necessary to consistently comply with pertinent Federal and State laws and requirements. In developing water and waste systems, applicants must consider alternatives of ownership, system design, and the sharing of services.
(k) Applicants should be aware of and comply with other Federal statute requirements including but not limited to:
(1)
(2)
(3)
(4)
Provide loan and grant funds for water and waste projects serving the most financially needy communities. Financial assistance should result in reasonable user costs for rural residents, rural businesses, and other rural users.
(a)
(b)
Information about the availability of forms, instructions, regulations, bulletins, OMB Circulars, Treasury Circulars, standards, documents and publications cited in this part is available from any USDA/Rural Development office or the Rural Utilities Service, United States Department of Agriculture, Washington, DC 20250-1500.
(a) The Rural Development State Director in each State will determine the office and staff that will be responsible for delivery of the program (processing office) and designate an approving office. Applications will be accepted by the processing office.
(b) The applicant's governing body should designate one person to act as contact person with the Agency during loan and grant processing. Agency personnel should make every effort to involve the applicant's contact person when meeting with the applicant's professional consultants or agents.
Facilities financed by water and waste disposal loans or grants must serve rural areas.
(a)
(1) A public body, such as a municipality, county, district, authority, or other political subdivision of a state, territory or commonwealth;
(2) An organization operated on a not-for-profit basis, such as an association, cooperative, or private corporation. The organization must be an association controlled by a local public body or bodies, or have a broadly based ownership by or membership of people of the local community; or
(3) Indian tribes on Federal and State reservations and other Federally recognized Indian tribes.
(b)
(c)
(2) Projects must be designed and constructed so that adequate capacity will or can be made available to serve the present population of the area to the extent feasible and to serve the reasonably foreseeable growth needs of the area to the extent practicable.
(3) Projects must be necessary for orderly community development and consistent with a current comprehensive community water, waste disposal, or other current development plan for the rural area.
(d)
(e)
(f)
(g)
Loan and grant funds may be used only for the following purposes:
(a) To construct, enlarge, extend, or otherwise improve rural water, sanitary sewage, solid waste disposal, and storm wastewater disposal facilities.
(b) To construct or relocate public buildings, roads, bridges, fences, or utilities, and to make other public improvements necessary for the successful operation or protection of facilities authorized in paragraph (a) of this section.
(c) To relocate private buildings, roads, bridges, fences, or utilities, and other private improvements necessary for the successful operation or protection of facilities authorized in paragraph (a) of this section.
(d) For payment of other utility connection charges as provided in service contracts between utility systems.
(e) When a necessary part of the project relates to those facilities authorized in paragraphs (a), (b),(c) or (d) of this section the following may be considered:
(1) Loan or grant funds may be used for:
(i) Reasonable fees and costs such as: legal, engineering, administrative services, fiscal advisory, recording, environmental analyses and surveys, possible salvage or other mitigation measures, planning, establishing or acquiring rights;
(ii) Costs of acquiring interest in land; rights, such as water rights, leases, permits, rights-of-way; and other evidence of land or water control or protection necessary for development of the facility;
(iii) Purchasing or renting equipment necessary to install, operate, maintain, extend, or protect facilities;
(iv) Cost of additional applicant labor and other expenses necessary to install and extend service; and
(v) In unusual cases, the cost for connecting the user to the main service line.
(2) Only loan funds may be used for:
(i) Interest incurred during construction in conjunction with multiple advances or interest on interim financing;
(ii) Initial operating expenses, including interest, for a period ordinarily not exceeding one year when the applicant is unable to pay such expenses;
(iii) The purchase of existing facilities when it is necessary either to improve service or prevent the loss of service;
(iv) Refinancing debts incurred by, or on behalf of, an applicant when all of the following conditions exist:
(A) The debts being refinanced are a secondary part of the total loan;
(B) The debts were incurred for the facility or service being financed or any part thereof; and
(C) Arrangements cannot be made with the creditors to extend or modify the terms of the debts so that a sound basis will exist for making a loan; and
(v) Prepayment of costs for which RUS grant funds were obligated.
(3) Grant funds may be used to restore loan funds used to prepay grant obligated costs.
(f) Construction incurred before loan or grant approval.
(1) Funds may be used to pay obligations for eligible project costs incurred before loan or grant approval if such requests are made in writing by the applicant and the Agency determines that:
(i) Compelling reasons exist for incurring obligations before loan or grant approval;
(ii) The obligations will be incurred for authorized loan or grant purposes; and
(iii) The Agency's authorization to pay such obligations is on the condition that it is not committed to make the loan or grant; it assumes no responsibility for any obligations incurred by the applicant; and the applicant must subsequently meet all loan or grant approval requirements, including environmental and contracting requirements.
(2) If construction is started without Agency approval, post-approval in accordance with this section may be considered, provided the construction meets applicable requirements including those regarding approval and environmental matters.
(g) Water or sewer service may be provided through individual installations or small clusters of users within an applicant's service area. The approval official should consider items such as: quantity and quality of the individual installations that may be developed; cost effectiveness of the individual facility compared with the initial and long term user cost on a central system; health and pollution problems attributable to individual facilities; operational or management problems peculiar to individual installations; and permit and regulatory agency requirements.
(1) Applicants providing service through individual facilities must meet the eligibility requirements in § 1780.7.
(2) The Agency must approve the form of agreement between the applicant and individual users for the installation, operation, maintenance and payment for individual facilities.
(3) If taxes or assessments are not pledged as security, applicants providing service through individual facilities must obtain security necessary to assure collection of any sum the individual user is obligated to pay the applicant.
(4) Notes representing indebtedness owed the applicant by a user for an individual facility will be scheduled for payment over a period not to exceed the useful life of the individual facility or the RUS loan, whichever is shorter. The interest rate will not exceed the interest rate charged the applicant on the RUS indebtedness.
(5) Applicants providing service through individual or cluster facilities must obtain:
(i) Easements for the installation and ingress to and egress from the facility if determined necessary by RUS; and
(ii) An adequate method for denying service in the event of nonpayment of user fees.
(a) Loan and grant funds may not be used to finance:
(1) Facilities which are not modest in size, design, and cost;
(2) Loan or grant finder's fees;
(3) The construction of any new combined storm and sanitary sewer facilities;
(4) Any portion of the cost of a facility which does not serve a rural area;
(5) That portion of project costs normally provided by a business or industrial user, such as wastewater pretreatment, etc.;
(6) Rental for the use of equipment or machinery owned by the applicant;
(7) For other purposes not directly related to operating and maintenance of the facility being installed or improved; and
(8) A judgment which would disqualify an applicant for a loan or grant as provided for in § 1780.7(g).
(b) Grant funds may not be used to:
(1) Reduce EDU costs to a level less than similar system cost;
(2) Pay any costs of a project when the median household income of the service area is more than 100 percent of the nonmetropolitan median household income of the State;
(3) Pay project costs when other loan funding for the project is not at reasonable rates and terms; and
(4) Pay project costs when other funding is a guaranteed loan obtained in accordance with subpart I of part 1980 of this title.
(c) Grants may not be made in excess of the following percentages of the RUS eligible project development costs. Facilities previously installed will not be considered in determining the development costs.
(1) 75 percent when the median household income of the service area is below the higher of the poverty line or 80% of the state nonmetropolitan median income and the project is necessary to alleviate a health or sanitary problem.
(2) 45 percent when the median household income of the service area exceeds the 80 percent requirements described in paragraph (c)(1) of this section but is not more than 100 percent of the statewide nonmetropolitan median household income.
(3) Applicants are advised that the percentages contained in paragraphs (c)(1) and (c)(2) of this section are maximum amounts and may be further limited due to availability of funds or the grant determination procedures contained in § 1780.35 (b).
(a) All facilities financed under the provisions of this part shall be for public use. The facilities will be installed so as to serve any potential user within the service area who desires service and can be feasibly and legally served. This does not preclude:
(1) Financing or constructing projects in phases when it is not practical to finance or construct the entire project at one time; and
(2) Financing or constructing facilities where it is not economically feasible to serve the entire area, provided economic feasibility is determined on the basis of the entire system and not by considering the cost of separate extensions to or parts thereof; the applicant publicly announces a plan for extending service to areas not initially receiving service from the system; and potential users located in the areas not to be initially served receive written notice from the applicant that service will not be provided until such time as it is economically feasible to do so.
(b) Should the Agency determine that inequities exist within the applicants service area for the same type service proposed (i.e., water or waste disposal) such inequities will be remedied by the applicant prior to loan or grant approval or included as part of the project. Inequities are defined as unjustified variations in availability, adequacy or quality of service. User rate schedules for portions of existing systems that were developed under different financing, rates, terms or conditions do not necessarily constitute inequities.
(c) Developers are normally expected to provide utility-type facilities in new or developing areas in compliance with appropriate State statutes. RUS financing will be considered to an eligible applicant only in such cases when failure to complete development would result in an adverse economic condition for the rural area (not the community being developed); the proposal is necessary to the success of a current area development plan; and loan repayment can be assured by:
(1) The applicant already having sufficient assured revenues to repay the loan; or
(2) Developers providing a bond or escrowed security deposit as a guarantee sufficient to meet expenses attributable to the area in question until a sufficient number of the building sites are occupied and connected to the facility to provide enough revenues to meet operating, maintenance, debt service, and reserve requirements. Such guarantees from developers will meet the requirements in § 1780.39(c)(4)(ii); or
(3) Developers paying cash for the increased capital cost and any increased
(4) The full faith and credit of a public body where the debt is evidenced by general obligation bonds; or
(5) The loan is to a public body evidenced by a pledge of tax revenue or assessments; or
(6) The user charges can become a lien upon the property being served and income from such lien can be collected in sufficient time to be used for its intended purposes.
(a)
(2) If the interest rate is to be that in effect at loan closing on a loan involving multiple advances of RUS funds using temporary debt instruments, the interest rate charged shall be that in effect on the date when the first temporary debt instrument is issued.
(b)
(1) The primary purpose of the loan is to upgrade existing facilities or construct new facilities required to meet applicable health or sanitary standards; and
(2) The median household income of the service area is below the higher of the poverty line, or 80 percent of the Statewide nonmetropolitan median household income.
(c)
(d)
(e)
(1) Principal payments may be deferred in whole or in part for a period not to exceed 36 months following the date the first interest installment is due. If for any reason it appears necessary to permit a longer period of deferment, the Agency may authorize such deferment. Deferments of principal will not be used to:
(i) Postpone the levying of taxes or assessments;
(ii) Delay collection of the full rates which the borrower has agreed to charge users for its services as soon as those services become available;
(iii) Create reserves for normal operation and maintenance;
(iv) Make any capital improvements except those approved by the Agency which are determined to be essential to the repayment of the loan or to maintain adequate security; and
(v) Make payment on other debt.
(2)
(3) In all cases, including those in which RUS is jointly financing with another lender, the RUS payments of principal and interest should approximate amortized installments.
Loans will be secured by the best security position practicable in a manner which will adequately protect the interest of RUS during the repayment period of the loan. Specific security requirements for each loan will be included in a letter of conditions.
(a)
(1) The full faith and credit of the borrower when the debt is evidenced by general obligation bonds; and/or
(2) Pledges of taxes or assessments; and/or
(3) Pledges of facility revenue and, when it is the customary financial practice in the State, liens will be taken on the interest of the applicant in all land, easements, rights-of-way, water rights, water purchase contracts, water sales contracts, sewage treatment contracts, and similar property rights, including leasehold interests, used or to be used in connection with the facility whether owned at the time the loan is approved or acquired with loan funds.
(b)
(1) Assignments of borrower income will be taken and perfected by filing, if legally permissible; and
(2) A lien will be taken on the interest of the applicant in all land, easements, rights-of-way, water rights, water purchase contracts, water sales contracts, sewage treatment contracts and similar property rights, including leasehold interest, used, or to be used in connection with the facility whether owned at the time the loan is approved or acquired with loan funds. In unusual circumstances where it is not legally permissible or feasible to obtain a lien on such land (such as land rights obtained from Federal or local government agencies, and from railroads) and the approval official determines that the interest of RUS is otherwise adequately secured, the lien requirement may be omitted as to such land rights. For existing borrowers where the Agency already has a security position on real property, the approval official may determine that the interest of the Government is adequately secured and not require additional liens on such land rights. When the subsequent loan is approved or the acquisition of real property is subject to an outstanding lien indebtedness, the next highest priority lien obtainable will be taken if the approval official determines that the loan is adequately secured.
(c)
(1) It is not necessary for loans to have the same repayment terms. Loans made by other lenders involved in joint financing with RUS should be scheduled for repayment on terms similar to those customarily used in the State for financing such facilities.
(2) The use of a trustee or other similar paying agent by the other lender in a joint financing arrangement is acceptable to RUS. A trustee or other similar paying agent will not normally be used for the RUS portion of the
(3) In the event adequate funds are not available to meet regular installments on parity loans, the funds available will be apportioned to the lenders based on the respective current installments of principal and interest due.
(4) Funds obtained from the sale or liquidation of secured property or fixed assets will be apportioned to the lenders on the basis of the pro rata amount outstanding; provided, however, funds obtained from such sale or liquidation for a project that included RUS grant funds will be apportioned as required by the grant agreement.
(5) Protective advances must be charged to the borrower's account and be secured by a lien on the security property. To the extent consistent with State law and customary lending practices in the area, repayment of protective advances made by either lender, for the mutual protection of both lenders, should receive first priority in apportionment of funds between the lenders. To ensure agreement between lenders, efforts should be made to obtain the concurrence of both lenders before one lender makes a protective advance.
Proposals for facilities financed in whole or in part with RUS funds will be coordinated with appropriate Federal, State and local agencies. If there are conflicts between this part and State or local laws or regulatory commission regulations, the provisions of this part will control. Applicants will be required to comply with Federal, State, and local laws and any regulatory commission rules and regulations pertaining to:
(a) Organization of the applicant and its authority to own, construct, operate, and maintain the proposed facilities;
(b) Borrowing money, giving security therefore, and raising revenues for the repayment thereof;
(c) Land use zoning; and
(d) Health and sanitation standards and design and installation standards unless an exception is granted by RUS.
When ranking eligible applications for consideration for limited funds, Agency officials must consider the priority items met by each application and the degree to which those priorities are met. Points will be awarded as follows:
(a)
(2) The proposed project primarily serves a rural area having a population between 1,001 and 2,500—15 points;
(3) The proposed project primarily serves a rural area having a population between 2,501 and 5,500—5 points.
(b)
(1) Needed to alleviate an emergency situation, correct unanticipated diminution or deterioration of a water supply, or to meet Safe Drinking Water Act requirements which pertain to a water system—25 points;
(2) Required to correct inadequacies of a wastewater disposal system, or to meet health standards which pertain to a wastewater disposal system—25 points;
(3) Required to meet administrative orders issued to correct local, State, or Federal solid waste violations—15 points.
(c)
(1) Less than the poverty line if the poverty line is less than 80% of the statewide nonmetropolitan median household income—30 points;
(2) Less than 80 percent of the statewide nonmetropolitan median household income—20 points;
(3) Equal to or more than the poverty line and between 80% and 100%, inclusive, of the State's nonmetropolitan median household income—15 points.
(d)
(2) The proposed project will enlarge, extend, or otherwise modify existing facilities to provide service to additional rural areas—10 points;
(3) Applicant is a public body or Indian tribe—5 points;
(4) Amount of other than RUS funds committed to the project is:
(i) 50% or more—15 points;
(ii) 20% to 49%—10 points;
(iii) 5%—19%—5 points;
(5) Projects that will serve Agency identified target areas—10 points;
(6) Projects that primarily recycle solid waste products thereby limiting the need for solid waste disposal—5 points;
(7) The proposed project will serve an area that has an unreliable quality or supply of drinking water—10 points.
(e) In certain cases the State program official may assign up to 15 points to a project. The points may be awarded to projects in order to improve compatibility and coordination between RUS's and other agencies’ selection systems, to ensure effective RUS fund utilization, and to assist those projects that are the most cost effective. A written justification must be prepared and placed in the project file each time these points are assigned.
(f)
(g)
(a)
(2) The formulas in this part are used to allocate program loan and grant funds to Rural Development State offices so that the overall mission of the Agency can be carried out. Considerations used when developing the formulas include enabling legislation, congressional direction, and administration policies. Allocation formulas ensure that program resources are available on an equal basis to all eligible individuals and organizations.
(3) The actual amounts of funds, as computed by the methodology and formulas contained herein, allocated to a State for a funding period, are distributed to each State office. The allocated amounts are available for review in any Rural Development State office.
(b)
(2)
(3)
(4)
(ii) If the current year's State BFA is not within the transition range in paragraph (b)(4)(i) of this section, the State formula allocation is changed to the amount of the transition range limit closest to the BFA amount. After having performed this transition adjustment for each State, the sum of the funds allocated to all States will differ from the amount of funds available for BFA. This difference, whether a positive or negative amount, is distributed to all States receiving a formula allocation by multiplying the difference by the SF. The end result is the transition formula allocation. The transition range will not exceed 40% (plus or minus 20%), but when a smaller range is used it will be stated in the individual program section.
(5)
(6)
(7)
(8)
(i) Mid-year: Mid-year pooling occurs near the midpoint of the fiscal year.
(ii) Year-end: Year-end pooling usually occurs near the first of August.
(iii) Emergency: The Administrator may pool funds at any time that it is determined the conditions upon the initial allocation was based have changed to such a degree that it is necessary to pool funds in order to efficiently carry out the Agency mission.
(9)
(10)
(c)
(2)
(i) The criteria used in the basic formula are:
(A) State's percentage of national rural population will be 50 percent.
(B) State's percentage of national rural population with incomes below the poverty level will be 25 percent.
(C) State's percentage of national nonmetropolitan unemployment will be 25 percent.
(ii) Data source for each of these criterion is based on the latest census data available. Each criterion is assigned a specific weight according to its relevance in determining need. The percentage representing each criterion is multiplied by the weight factor and summed to arrive at a State factor (SF). The SF cannot exceed .05, as follows:
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(a)
(b)
Appropriate reviews, concurrence, and authorization must be obtained for all loans or grants in excess of the amounts indicated in RUS Staff Instruction 1780-1.
(a)
(b)
The Administrator may, in individual cases, make an exception to any requirement or provision of this part which is not inconsistent with the authorizing statute or other applicable law and is determined to be in the Government's interest.
(a) Applicants are encouraged to contact the Agency processing office early in the planning stages of their project. Agency personnel are available to provide general advice and assistance regarding RUS programs, other funding sources, and types of systems or improvements appropriate for the applicants needs. The Agency can also provide access to technical assistance and other information resources for other project development issues such as public information, income surveys, developing rate schedules, system operation and maintenance, and environmental compliance requirements. Throughout the planning, application processing and construction of the project, Agency personnel will work closely and cooperatively with the applicant and their representatives, other State and Federal agencies and technical assistance providers.
(b) The processing office will handle initial inquiries and provide basic information about the program. They are to provide the application, SF 424.2, “Application for Federal Assistance (For Construction),” assist applicants as needed in completing SF 424.2, and in filing a request for intergovernmental review. Federally recognized Indian tribes are exempt from intergovernmental review. The processing office will explain eligibility requirements and meet with the applicant whenever necessary to discuss application processing.
(c) Applicants can make a written request for an eligibility determination in lieu of filing an SF 424.2 along with
(d) Applications that are not developed in a reasonable period of time taking into account the size and complexity of the proposed project may be removed from the State's active file. Applicants will be consulted prior to taking such action.
(e) Starting with the earliest discussion with prospective applicants, the State Environmental Coordinator shall discuss with prospective applicants and be available for consultation during the application process the environmental review requirements for evaluating the potential environmental consequences of the project. Pursuant to 7 CFR part 1794 and guidance in RUS Bulletin 1794A-602, the environmental review requirements shall be performed by the applicant simultaneously and concurrently with the project's engineering planning and design. This should provide flexibility to consider reasonable alternatives to the project and development methods to mitigate identified adverse environmental effects. Mitigation measures necessary to avoid or minimize any adverse environmental effects must be integrated into project design.
(a) The processing office will determine if the application is properly assembled. If not, the applicant will be notified within fifteen federal working days as to what additional submittal items are needed.
(b) The processing and approval offices will coordinate their reviews to ensure that the applicant is advised about eligibility and anticipated fund availability within 45 days of the receipt of a completed application.
An initial application consists of the following:
(a) One copy of a completed SF 424.2;
(b) A copy of the State intergovernmental comments or one copy of the filed application for State intergovernmental review; and
(c) Two copies of the preliminary engineering report (PER) for the project.
(1) The PER may be submitted to the processing office prior to the rest of the application material if the applicant desires a preliminary review.
(2) The processing office will forward one copy of the PER with comments and recommendations to the State staff engineer for review upon receipt from the applicant.
(3) The State staff engineer will consult with the applicant's engineer as appropriate to resolve any questions concerning the PER. Written comments will be provided by the State staff engineer to the processing office to meet eligibility determination time lines.
(d) Written certification that other credit is not available.
(e) Supporting documentation necessary to make an eligibility determination such as financial statements, audits, organizational documents, or existing debt instruments. The processing office will advise applicants regarding the required documents. Applicants that are indebted to RUS will not need to submit documents already on file with the processing office.
(f)
(1) Upon receipt of the Environmental Report, the processing office shall forward one copy of the report with comments and recommendation to the State Environmental Coordinator for review.
(2) The State Environmental Coordinator will consult with the applicant as appropriate to resolve any environmental concerns. Written comments will be provided by the State Environmental Coordinator to the processing office to meet eligibility determination time lines.
(g) The applicant's Internal Revenue Service Taxpayer Identification Number (TIN). The TIN will be used by the Agency to assign a case number which will be the applicant's or transferee's TIN preceded by State and County Code numbers. Only one case number will be assigned to each applicant regardless of the number of loans or grants or number of separate facilities, unless an exception is authorized by the National Office.
(h) Other Forms and certifications. Applicants will be required to submit the following items to the processing office, upon notification from the processing office to proceed with further development of the full application:
(1) Form RD 442-7, “Operating Budget”;
(2) Form RD 1910-11, “Application Certification, Federal Collection Policies for Consumer or Commercial Debts”;
(3) Form RD 400-1, “Equal Opportunity Agreement”;
(4) Form RD 400-4, “Assurance Agreement”;
(5) Form AD-1047, “Certification Regarding Debarment, Suspension and other Responsibility Matters”;
(6) Form AD-1049, Certification regarding Drug-Free Workplace Requirements (Grants) Alternative I For Grantees Other Than Individuals;
(7) Certifications for Contracts, Grants, and Loans (Regarding Lobbying); and
(8) Certification regarding prohibited tying arrangements. Applicants that provide electric service must provide the Agency a certification that they will not require users of a water or waste facility financed under this part to accept electric service as a condition of receiving assistance.
Review of the application will usually include the following:
(a)
(b)
(1)
(2)
(i) 0.5 percent when the median household income of the service area is equal to or below 80% of the statewide nonmetropolitan median income.
(ii) 1.0 percent when the median household income of the service area exceeds the 0.5 percent requirement but is not more than 100 percent the statewide nonmetropolitan household income.
(3)
(4)
(5)
(c)
Projects may be obligated as their applications are completed and approved.
(a)
(1) Funds available in State allocation;
(2) Anticipated allocation of funds for the next fiscal year; and
(3) Time necessary for applicant to complete the application.
(b)
(2) If it is found that there is no effective way to reduce costs or no other funding sources, the approval official, after consultation with applicant, may submit a request for an additional allocation of funds for the proposed project to the National Office. The request should be submitted during the fiscal year in which obligation is anticipated. Such request will be considered along with all others on hand. A written justification must be prepared and placed in the project file.
If at any time an application is determined ineligible, the processing office will notify the applicant in writing of the reasons. The notification to the applicant will state that an appeal of this decision may be made by the applicant under 7 CFR part 11.
(a)
(b)
(1)
(ii) When project design services are procured separately, the selection of the engineer or architect shall be done by requesting qualification-based proposals and in accordance with this section.
(iii) Applicants may procure engineering and architectural services in accordance with applicable State statutes or local requirements provided the State Director determines that such procurement meets the intent of this section.
(2)
(3)
(4)
(c)
(1) An estimated number of maximum users should not be used when setting user fees and rates since it may be several years before all residents will need service by the system. In establishing rates a realistic number of users should be employed.
(2)
(i) The Agency determines that the potential users as a whole in the applicant's service area cannot make cash contributions; or
(ii) State statutes or local ordinances require mandatory use of the system and the applicant or legal entity having such authority agrees in writing to enforce such statutes, or ordinances.
(3) An enforceable user agreement with a penalty clause is required (RUS Bulletin 1780-9 can be used) except:
(i) For users presently receiving service; or
(ii) Where mandatory use of the system is required.
(4) Individual vacant property owners will not be considered when determining project feasibility unless:
(i) The owner has plans to develop the property in a reasonable period of time and become a user of the facility; and
(ii) The owner agrees in writing to make a monthly payment at least equal to the proportionate share of debt service attributable to the vacant property until the property is developed and the facility is utilized on a regular basis. A bond or escrowed security deposit must be provided to guarantee this monthly payment and to guarantee an amount at least equal to the owner's proportionate share of construction costs. If a bond is provided, it
(5) Applicants must provide a positive program to encourage connection by all users as soon as service is available. The program will be available for review and concurrence by the processing office before loan closing or commencement of construction, whichever occurs first. Such a program shall include:
(i) An aggressive information program to be carried out during the construction period. The applicant should send written notification to all signed users in advance of the date service will be available, stating the date users will be expected to have their connections completed, and the date user charges will begin;
(ii) Positive steps to assure that installation services will be available. These may be provided by the contractor installing the system, local plumbing companies, or local contractors;
(iii) Aggressive action to see that all signed users can finance their connections.
(d)
(e)
(1)
(2)
(f)
(1) The organization is well established and is operating with a sound financial base; or
(2) The members of the organization have all signed an enforceable user agreement with a penalty clause and have made the required meaningful user cash contribution.
(g)
(1) Insurance requirements proposed by the applicant will be accepted if the processing office determines that proposed coverage is adequate to protect the government's financial interest. Applicants are encouraged to have their attorney, consulting engineer, and/or insurance provider(s) review proposed types and amounts of coverage, including any deductible provisions.
(2) The use of deductibles may be allowed by RUS providing the applicant has financial resources which would likely be adequate to cover potential claims requiring payment of the deductible.
(3) Fidelity or employee dishonesty bonds. Applicants will provide coverage for all persons who have access to funds, including persons working under a contract or management agreement. Coverage may be provided either for all individual positions or persons, or through “blanket” coverage providing protection for all appropriate employees. An exception may be granted by the approval official when funds relating to the facility financed are handled by another entity and it is determined that the entity has adequate coverage or the government's interest would otherwise be adequately protected. The amount of coverage required by RUS will normally approximate the total annual debt service requirements for the RUS loans.
(4) Property insurance. Fire and extended coverage will normally be maintained on all structures except as noted below. Ordinarily, RUS should be listed as mortgagee on the policy when RUS has a lien on the property. Normally, major items of equipment or machinery located in the insured structures must also be covered. Exceptions:
(i) Reservoirs, pipelines and other structures if such structures are not normally insured;
(ii) Subsurface lift stations except for the value of electrical and pumping equipment therein.
(5) General liability insurance, including vehicular coverage.
(6) Flood insurance required for facilities located in special flood-and mudslide-prone areas.
(7) Worker's compensation. The borrower will carry worker's compensation insurance for employees in accordance with State laws.
(h) [Reserved]
(i) The processing office will assure that appropriate forms and documents listed in RUS Bulletin 1780-6 are complete. Letters of conditions will not be issued unless funds are available.
(a) The processing office will submit the following to the approval official:
(1) Form RD 1942-45, “Project Summary”;
(2) Form RD 442-7, “Operating Budget”;
(3) Form RD 442-3, “Balance Sheet” or a financial statement or audit that includes a balance sheet;
(4) Form RD 442-14, “Association Project Fund Analysis”;
(5) “Letter of Conditions”;
(6) Form RD 1942-46, “Letter of Intent to Meet Conditions”;
(7) Form RD 1940-1, “Request for Obligation of Funds”;
(8) Completed environmental review documents including copies of public notices and appropriate proof of publication, if applicable; and
(9) Grant determination, if applicable.
(b) Approval and applicant notification will be accomplished by mailing to the applicant on the obligation date a copy of Form RD 1940-1. The date the applicant is notified is also the date the interest rate at loan approval is established.
An obligation of funds established for an applicant may be transferred to a different (substituted) applicant provided:
(a) The substituted applicant is eligible and has the authority to receive the assistance approved for the original applicant; and
(b) The need, purpose(s) and scope of the project for which RUS funds will be used remain substantially unchanged.
(a) Applicants must provide evidence of adequate insurance and fidelity or employee dishonesty bond coverage.
(b)
(c)
(d)
(e)
(f)
(g)
(1)
(i) The applicant must provide a legal opinion relative to the title to rights-of-way and easements. Form RD 442-22, “Opinion of Counsel Relative to Rights-of-Way,” may be used. When a site is for major structures such as a reservoir or pumping station and the applicant is able to obtain only a right-of-way or easement on such a site rather than a fee simple title, the applicant will furnish a title report thereon by the applicant's attorney showing ownership of the land and all mortgages or other lien defects, restrictions, or encumbrances, if any.
(ii) For user connections funded by RUS, applicants will obtain adequate rights to construct and maintain the connection line or other facilities located on the user's property. This right may be obtained through formal easement or user agreements.
(2)
(i) In lieu of receiving title opinions from the applicant's attorney, the applicant may use a title insurance company. If a title insurance company is used, the applicant must provide the Agency a title insurance binder, disclosing all title defects or restrictions, and include a commitment to issue a title insurance policy. The policy should be in an amount at least equal to the market value of the property as improved. The title insurance binder and commitment should be provided to the Agency prior to requesting closing instructions. The Agency will be provided a title insurance policy which will insure RUS's interest in the property without any title defects or restrictions which have not been waived by the Agency.
(ii) The approval official may waive title defects or restrictions, such as utility easements, that do not adversely affect the suitability, successful operation, security value, or transferability of the facility.
(3)
(i) A statement by the applicant's attorney regarding the nature of the water rights owned or to be acquired by the applicant (such as conveyance of title, appropriation and decree, application and permit, public notice and appropriation and use).
(ii) A copy of a contract with another company or municipality to supply water; or stock certificates in another company which represents the right to receive water.
(4)
(h)
(a)
(1) Form RD 440-22, “Promissory Note (Association or Organization),” will ordinarily be used for loans to nonpublic bodies.
(2) RUS Bulletins 1780-27, “Loan Resolution (Public Bodies),” or 1780-28, “Loan Resolution Security Agreement,” will be adopted by public and other-than-public bodies. These resolutions supplement other provisions in this part.
(3) Subpart D of this part contains instructions for preparation of notes and bonds evidencing indebtedness of public bodies.
(b)
(i) Subpart D of this part contains instructions for making multiple advances to public bodies.
(ii) Advances will be requested by the borrower in writing. The request should be in sufficient amounts to pay cost of construction, rights-of-way and land, legal, engineering, interest, and other expenses as needed. The borrower may use Form RD 440-11, “Estimate of Funds Needed for 30 Day Period Commencing XXX,” to show the amount of funds needed during the 30-day period.
(2) RUS loan funds obligated for a specific purpose, such as the paying of interest, but not needed at the time of loan closing will remain in the Finance Office until needed unless State statutes require all funds to be delivered to the borrower at the time of closing. Loan funds may be advanced to prepay costs under § 1780.9 (e)(2)(iv). If all funds must be delivered to the borrower at the time of closing to comply with State statutes, funds not needed at loan closing will be handled as follows:
(i) Deposited in an appropriate borrower account, such as debt service or construction accounts; or
(ii) Deposited in a joint bank account under paragraph (e)(3) of this section.
(c)
(d)
(1) Interim financing of the total estimated amount of loan funds needed during construction is arranged; and
(2) All interim funds have been disbursed; and
(3) RUS grant funds are needed before the RUS loan can be closed.
(e)
(2)
(3)
(4)
(f)
(1) Remaining funds may be used for eligible loan or grant purposes, provided the use will not result in major changes to the facility(s) and the purpose of the loan and grant remains the same;
(2) RUS loan funds that are not needed will be applied as an extra payment on the RUS indebtedness unless other disposition is required by the bond ordinance, resolution, or State statute; and
(3) Grant funds not expended under paragraph (f)(1) of this section will be canceled. Prior to the actual cancellation, the borrower, its attorney and its engineer will be notified of RUS's intent to cancel the remaining funds. The applicant will be given appropriate appeal rights.
(g)
(a) Borrowers are required to provide RUS an annual audit or financial statements.
(b)
(c)
(d)
(e)
(f)
(1)
(2)
(i) Two copies of the management reports and proposed “Annual Budget”.
(ii) Financial information may be reported on Form RD 442-2 which includes Schedule 1, “Statement of Budget, Income and Equity” and Schedule 2, “Projected Cash Flow” or information in similar format.
(iii) A copy of the rate schedule in effect at the time of submission.
(g)
Grants are sometimes made by regional commissions for projects eligible for RUS assistance. RUS has agreed to administer such funds in a manner similar to administering RUS assistance.
(a) When RUS has funds in the project, no charge will be made for administering regional commission funds.
(b) When RUS has no loan or grant funds in the project, an administrative charge will be made pursuant to the Economy Act of 1932 (31 U.C.S. 1535). A fee of 5 percent of the first $100,000 of a regional commission grant and 1 percent of any amount over $100,000 will be paid to RUS by the commission.
(1)
(2)
(c) Regional commission grants should be obligated as soon as possible in accordance with § 1780.41, except that the announcement procedure referred to in RUS Staff Instruction 1780-2 is not applicable. Regional commission grants will be disbursed from the Finance Office in the same manner as RUS funds.
(a)
(2) Unless specifically modified by this section, grants will be made, processed, and serviced in accordance with this subpart.
(b)
(i) Recurring instances of a waterborne communicable disease have been documented; or
(ii) No community-wide water and sewer system exists and individual residents must haul water to or human waste from their homes and/or use pit privies.
(2)
(c)
(2) The median household income of the village cannot exceed 110 percent of the statewide nonmetropolitan household income.
(3) A dire sanitation condition must exist in the village.
(4) The applicant must obtain 25 percent of project development costs from State or local contributions. The local contribution can be from loan funds authorized under this part.
(d)
(e)
(f)
(2) If a loan is made in accordance with this part for part of the local contribution, all of the requirements of this part apply.
This subpart is specifically designed for use by owners including the professional or technical consultants or agents who provide assistance and services such as engineering, environmental, inspection, financial, legal or other services related to planning, designing, bidding, contracting, and constructing water and waste disposal facilities. These procedures do not relieve the owner of the contractual obligations that arise from the procurement of these services. For this subpart, an owner is defined as an applicant, borrower, or grantee.
Owners are responsible for providing the engineering, architect and environmental services necessary for planning, designing, bidding, contracting, inspecting, and constructing their facilities. Services may be provided by the owner's “in house” engineer or architect or through contract, subject to Agency concurrence. Engineers and architects must be licensed in the State where the facility is to be constructed.
Preliminary engineering reports (PERs) must conform to customary professional standards. PER guidelines for water, sanitary sewer, solid waste, and storm sewer are available from the Agency. Environmental Reports must meet the policies and intent of the National Environmental Policy Act and RUS procedures. Guidelines for preparing Environmental Reports are available in RUS Bulletin 1794A-602.
Facilities financed by the Agency will be designed and constructed in accordance with sound engineering practices, and must meet the requirements of Federal, State and local agencies.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
Contract documents must be sufficiently descriptive and legally binding in order to accomplish the work as economically and expeditiously as possible.
(a)
(b)
Applicants proposing to purchase water or other utility service from private or public sources shall have written contracts for supply or service which are reviewed and concurred in by the Agency. To the extent practical, the Agency review and concurrence of such contracts should take place prior to their execution by the owner. OGC advice and guidance may be requested. Form RD 442-30, “Water Purchase Contract,” may be used when appropriate. If the Agency loan will be repaid from system revenues, the contract will be pledged to the Agency as part of the security for the loan. Such contracts will:
(a) Include a commitment by the supplier to furnish, at a specified point, an adequate quantity of water or other service and provide that, in case of shortages, all of the supplier's users will proportionately share shortages.
(b) Set out the ownership and maintenance responsibilities of the respective parties including the master meter if a meter is installed at the point of delivery.
(c) Specify the initial rates and provide a type of escalator clause which will permit rates for the association to be raised or lowered proportionately as certain specified rates for the supplier's regular customers are raised or lowered. Provisions may be made for altering rates in accordance with the decisions of the appropriate State agency which may have regulatory authority.
(d) Cover period of time which is at least equal to the repayment period of the loan. State program officials may approve contracts for shorter periods of time if the supplier cannot legally contract for such period, or if the owner
(1) The supplier is subject to regulations of the Federal Energy Regulatory Commission or other Federal or State agency whose jurisdiction can be expected to prevent unwarranted curtailment of supply; or
(2) The contract contains adequate provisions for renewal; or
(3) A determination is made that in the event the contract is terminated, there are or will be other adequate sources available to the owner that can feasibly be developed or purchased.
(e) Set out in detail the amount of connection or demand charges, if any, to be made by the supplier as a condition to making the service available to the owner. However, the payment of such charges from loan funds shall not be approved unless the Agency determines that it is more feasible and economical for the owner to pay such a connection charge than it is for the owner to provide the necessary supply by other means.
(f) Provide for a pledge of the contract to the Agency as part of the security for the loan.
(g) Not contain provisions for:
(1) Construction of facilities which will be owned by the supplier. This does not preclude the use of money paid as a connection charge for construction to be done by the supplier.
(2) Options for the future sale or transfer. This does not preclude an agreement recognizing that the supplier and owner may at some future date agree to a sale of all or a portion of the facility.
(h) If it is impossible to obtain a firm commitment for either an adequate quantity or sharing shortages proportionately, a contract may be executed and concurred in provided adequate evidence is furnished to enable the Agency to make a determination that the supplier has adequate supply and/or treatment facilities to furnish its other users and the applicant for the foreseeable future; and:
(1) The supplier is subject to regulations of the Federal Energy Regulatory Commission or other Federal or State agency whose jurisdiction can be expected to prevent unwarranted curtailment of supply; or
(2) A suitable alternative supply could be arranged within the repayment ability of the borrower if it should become necessary; or
(3) Concurrence in the proposed contract is obtained from the National Office.
Owners entering into agreements with private or public parties to treat sewage or supply bulk water shall have written contracts for such service and all such contracts shall be subject to the Agency concurrence. Section 1780.62 should be used as a guide to prepare such contracts.
Owners are encouraged to accomplish construction through contracts with qualified contractors. Owners may accomplish construction by using their own personnel and equipment provided the owners possess the necessary skills, abilities and resources to perform the work and provided a licensed engineer prepares design drawings and specifications and inspects construction and furnishes inspection reports as required by § 1780.76. Inspection services may be provided by individuals as approved by the State staff engineer. Payments for construction will be handled under § 1780.76(e).
This part does not relieve the owner of any responsibilities under its contract. The owner is responsible for the settlement of all contractual and administrative issues arising out of procurement entered into in support of a loan or grant. These include, but are not limited to: source evaluation, protests, disputes, and claims. Matters concerning violation of laws are to be referred to the applicable local, State, or Federal authority.
Owner's procurement requirements must comply with the following standards:
(a)
(1) The owner's officers, employees or agents shall neither solicit nor accept gratuities, favors or anything of monetary value from contractors, potential contractors, or parties to subagreements.
(2) To the extent permitted by State or local law or regulations, the owner's standards of conduct shall provide for penalties, sanctions, or other disciplinary actions for violations of such standards by the owner's officers, employees, agents, or by contractors or their agents.
(b)
(c)
(d) Solicitation of offers, whether by competitive sealed bid or competitive negotiation, shall:
(1) Incorporate a clear and accurate description of the technical requirements for the material, product or service to be procured. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a “brand name or equal” description may be used to define the performance or other salient requirements of a procurement. The specific feature of the name brands which must be met by the offeror shall be clearly stated; and
(2) Clearly specify all requirements which offerors must fulfill and all other factors to be used in evaluating bids or proposals.
(e) Affirmative steps should be taken to assure that small, minority, and women businesses are utilized when
(f)
(g)
(1) An engineer as an individual or firm who has prepared plans and specifications or who will be responsible for monitoring the construction;
(2) Any firm or corporation in which the owner's engineer is an officer, employee, or holds or controls a substantial interest;
(3) The governing body's officers, employees, or agents;
(4) Any member of the immediate family or partners in the entities referred to in paragraphs (g)(1), (g)(2) or (g)(3) of this section; or
(5) An organization which employs, or is about to employ, any person in the entities referred to in paragraphs (g)(1), (g)(2), (g)(3) or (g)(4) of this section.
(h)
Procurement shall be made by one of the following methods: Small purchase procedures; competitive sealed bids (formal advertising); competitive negotiation; or noncompetitive negotiation. Competitive sealed bids (formal advertising) is the preferred procurement method for construction contracts.
(a)
(b)
(1) The invitation for bids shall be publicly advertised at a sufficient time prior to the date set for opening of bids. The invitation shall comply with the requirements in § 1780.70(d). Bids shall be solicited from an adequate number of qualified sources;
(2) All bids shall be opened publicly at the time and place stated in the invitation for bids;
(3) A firm-fixed-price contract award shall be made by written notice to that responsible bidder whose bid, conforming to the invitation for bids, is lowest. When specified in the bidding documents, factors such as discounts and transportation costs shall be considered in determining which bid is lowest; and
(4) Any or all bids may be rejected by the owner when it is in its best interest.
(c)
(1) Proposals shall be solicited from an adequate number of qualified
(2) The Request for Proposal shall identify all significant evaluation factors and their relative importance;
(3) The owner shall provide mechanisms for technical evaluation of the proposals received, determination of responsible offerors for the purpose of written or oral discussions, and selection for contract award; and
(4) Award may be made to the responsible offeror whose proposal will be most advantageous to the owner. Unsuccessful offerors should be promptly notified.
(d)
(1) The item is available only from a single source; or
(2) There exists a public exigency or emergency and the urgency for the requirement will not permit a delay incident to competitive solicitation; or
(3) After solicitation of a number of sources, competition is determined inadequate; or
(4) No acceptable bids have been received after formal advertising; or
(5) The procurement is for professional services; or
(6) The aggregate amount does not exceed $100,000.
Owners awarding construction or other procurement contracts prior to filing an application, must provide evidence that is satisfactory to the Agency that the contract was entered into without intent to circumvent the requirements of Agency regulations.
(a)
(b)
(c)
In addition to provisions required for a valid and legally binding contract, any recipient of Agency funds shall include the following contract provisions in all contracts.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
Owners shall be responsible for maintaining a contract administration system to monitor the contractors’ performance and compliance with the terms, conditions, and specifications of the contracts.
(a)
(b)
(1) Reasons why approved construction schedules were not met;
(2) Analysis and explanation of cost overruns and how payment is to be made for the same; and
(3) If events occur which have a significant impact upon the project.
(c)
(d)
(e)
(1) Payment of contract retainage will not be made until such retainage is due and payable under the terms of the contact.
(2) Invoices for the payment of construction costs must be approved by the owner, project engineer and concurred in by the Agency.
(3) The review and acceptance of project costs, including construction payment estimates by the Agency shall not attest to the correctness of the amounts, the quantities shown, or that the work has been performed under the terms of agreements or contracts.
(f)
(g)
(h)
(i) Funds are available to cover any additional costs; and
(ii) The change is for an authorized loan or grant purpose; and
(iii) It will not adversely affect the soundness of the facility operation or the Agency's security; and
(iv) The change is within the scope of the contract,
(2) Changes will be recorded on Form RD 1924-7, “Contract Change Order,” or other similar form if approved by the State program official or designee. Regardless of the form, change orders must be approved by the State program official or designee.
(3) Changes should be accomplished only after Agency approval and shall be authorized only by means of contract change order. The change order will include items such as:
(i) Any changes in labor and material;
(ii) Changes in facility design;
(iii) Any decrease or increase in quantities based on final measurements that are different from those shown in the bidding schedule; and
(iv) Any increase or decrease in the time to complete the project.
(4) All changes shall be recorded on chronologically numbered contract change orders as they occur. Change orders will not be included in payment estimates until approved by all parties.
This subpart includes information for use by public body applicants in the preparation and issuance of evidence of debt (bonds, notes, or debt instruments, referred to as bonds in this subpart) and other necessary loan documents.
The applicant is responsible for preparation of bonds and bond transcript documents. The applicant will obtain the services and opinion of recognized bond counsel experienced in municipal financing with respect to the validity of a bond issue, except for issues of $100,000 or less. With prior approval of the approval official, the applicant may elect not to use bond counsel. Such issues will be closed in accordance with the following:
(a) The applicant must recognize and accept the fact that application processing may require additional legal and administrative time;
(b) It must be established that not using bond counsel will produce significant savings in total legal costs;
(c) The local attorney must be able and experienced in handling this type of legal work;
(d) The applicant must understand that it will likely have to obtain an opinion from bond counsel at its expense should the Agency require refinancing of the debt;
(e) Bonds will be prepared in accordance with this regulation and conform as closely as possible to the preferred methods of preparation stated in § 1780.94; and
(f) Closing instructions must be issued by OGC.
Any questions relating to Agency requirements should be discussed with Agency representatives. Bond counsel or local counsel, as appropriate, must furnish at least two complete sets of the following to the applicant, who will furnish one complete set to the Agency:
(a) Copies of all organizational documents;
(b) Copies of general incumbency certificate;
(c) Certified copies of minutes or excerpts from all meetings of the governing body at which action was taken in connection with the authorizing and issuing of the bonds;
(d) Certified copies of documents evidencing that the applicant has complied fully with all statutory requirements incident to calling and holding a favorable bond election, if one is necessary;
(e) Certified copies of the resolutions, ordinances, or other documents such as
(f) Copies of the official Notice of Sale and the affidavit of publication of the Notice of Sale when State statute requires a public sale;
(g) Specimen bond, with any attached coupons;
(h) Attorney's no-litigation certificate;
(i) Certified copies of resolutions or other documents pertaining to the bond award;
(j) Any additional or supporting documents required by bond counsel;
(k) For loans involving multiple advances of Agency loan funds, a preliminary approving opinion of bond counsel (or local counsel if no bond counsel is involved) if a final unqualified opinion cannot be obtained until all funds are advanced. The preliminary opinion for the entire issue shall be delivered at or before the time of the first advance of funds. It will state that the applicant has the legal authority to issue the bonds, construct, operate and maintain the facility, and repay the loan, subject only to changes occurring during the advance of funds, such as litigation resulting from the failure to advance loan funds, and receipt of closing certificates;
(l) Final unqualified approving opinion of bond counsel, (and preliminary approving opinion, if required) or local counsel if no bond counsel is involved, including an opinion as to whether interest on bonds will be exempt from Federal and State income taxes. With approval of the State program official, a final opinion may be qualified to the extent that litigation is pending relating to Indian claims that may affect title to land or validity of the obligation. It is permissible for such opinion to contain language referring to the last sentence of section 306 (a)(1) or to section 309A (h) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1926 (a)(1) or 1929a (h)).
Agency loans will be evidenced by an instrument determined legally sufficient and in accordance with the following order of preference:
(a)
(b)
(1)
(2)
(3)
(c)
(1) The repayment terms concerning interest only installments described in paragraph (b) of this section apply.
(2) The instrument shall contain in substance provisions indicating:
(i) Principal maturities and due dates;
(ii) Regular payments shall be applied first to interest due through the next principal and interest installment due date and then to principal due in chronological order stipulated in the bond; and
(iii) Payments on delinquent accounts will be applied in the following sequence:
(A) Billed delinquent interest;
(B) Past due interest installments;
(C) Past due principal installments;
(D) Interest installment due; and
(E) Principal installment due.
(d)
(e)
Where interim financing from commercial sources is not used, Agency loan proceeds will be disbursed on an “as needed by borrower” basis in amounts not to exceed the amount needed during 30-day periods.
When none of the instruments described in § 1780.87 are legally permissible or practical, a bond anticipation note or similar temporary debt instrument may be used. The debt instrument will provide for multiple advances of Agency funds and will be for the full amount of the Agency loan. The instrument will be prepared by bond counsel, or local counsel if bond counsel is not involved, and approved by the State program official and OGC. At the same time the Agency delivers the last advance, the borrower will deliver the permanent bond instrument and the canceled temporary instrument will be returned to the borrower. The approved debt instrument will show at least the following:
(a) The date from which each advance will bear interest;
(b) The interest rate as determined by § 1780.13;
(c) A payment schedule providing for interest on outstanding principal at least annually; and
(d) A maturity date which shall be no earlier than the anticipated issuance date of the permanent instruments and no longer than the 40-year statutory limit.
The provisions of this section are minimum specifications only and must be followed to the extent legally permissible.
(a)
(b)
(c)
(d)
(e)
(1) If income is available monthly, monthly payments are recommended unless precluded by State law. If income is available quarterly or otherwise more frequently than annually, payments must be scheduled on such basis. However, if State law only permits principal plus interest (P&I) type bonds, annual or semiannual payments will be used.
(2) The payment schedule will be enumerated in the evidence of debt, or if that is not feasible, in a supplemental agreement.
(3) If feasible, the first payment will be scheduled one full month, or other period, as appropriate, from the date of loan closing or any deferment period. Due dates falling on the 29th, 30th, and 31st day of the month will be avoided. When principal payments are deferred, interest-only payments will be scheduled at least annually.
(f)
(1) For loans with amortized debt instruments, extra payments will be applied first to interest accrued to the date of receipt of the payment and second to principal.
(2) For loans with debt instruments with P&I installments, the extra payment will be applied to the final unpaid principal installment.
(3) For borrowers with more than one loan, the extra payment will be applied to the account secured by the lowest priority of lien on the property from which the extra payments was obtained. Any balance will be applied to other Agency loans secured by the property from which the extra payment was obtained.
(4) For assessment bonds, see paragraph (k) of this section.
(g) The place of payments on bonds purchased by the Agency will be determined by the Agency.
(h)
(i)
(j)
(1) Provisions for the holder to manually post each payment to the instrument.
(2) Provisions for returning the permanent or temporary debt instrument to the borrower in order that it, rather than the Agency, may post the date and amount of each advance or repayment on the instrument.
(3) Provisions that amend covenants contained in RUS Bulletins 1780-27 or 1780-28.
(4) Defeasance provisions in loan or bond resolutions. When a bond issue is defeased, a new issue is sold which supersedes the contractual provisions of the prior issue, including the refinancing requirement and any lien on revenues. Since defeasance in effect precludes the Agency from requiring refinancing before the final maturity date, it represents a violation of the statutory refinancing requirement; therefore, it is disallowed. No loan documents shall include a provision of defeasance.
(k)
(l)
(1) When more than one loan type is used in financing a project, each type of loan will be evidenced by a separate debt instrument or series of debt instruments;
(2) Loans obligated in different fiscal years and those obligated with different terms in the same fiscal year will be evidenced by separate debt instruments;
(3) Loans obligated for the same loan type in the same fiscal year with the same term may be combined in the same debt instrument;
(4) Loans obligated in the same fiscal year with different interest rates that will be closed at the same interest rate may be combined in the same debt instrument.
Bonds offered for public sale shall be offered in accordance with State law and in such a manner to encourage public bidding. The Agency will not submit a bid at the advertised sale unless required by State law, nor will reference to Agency's rates and terms be included. If no acceptable bid is received, the Agency will negotiate the purchase of the bonds.
5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.
This part prescribes the policies and procedures for making:
(a) Watershed (WS) loans and Watershed (WS) advances for works of improvement in a watershed project; and
(b) Resource Conservation and Development (RCD) loans for measures or projects needed to implement the RCD area plan to achieve objectives in an RCD area.
(a) Rural Utilities Service (RUS), is an agency of the United States Department of Agriculture established pursuant to section 232 of the Department of Agriculture Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178), successor to the Farmers's Home Administration. Natural Resources Conservation Service (NRCS), is an agency of the United States Department of Agriculture established pursuant to section 232 of the Department of Agriculture Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178), successor to the Soil Conservation Service. RUS will make WS and RCD loans available to sponsoring local public bodies, agencies, and nonprofit organizations to assist them in obtaining the local cost of WS works of improvement and RCD measures. Any processing or servicing activity conducted pursuant to this part involving authorized assistance to RUS employees, members of their families, known close relatives, or business or close personal associates, is subject to the provisions of subpart D of Part 1900 of this title. Applicants for this assistance are required to identify any known relationship or association with an RUS employee. RUS will assist the local sponsors and the NRCS in making loans from NRCS construction funds as WS advances when needed for the development of future water supplies or for site preservation.
(b) Rural Development State and local offices will administer these programs on behalf of RUS and will coordinate application processing with the NRCS and other appropriate State and Federal agencies.
(a) NRCS provides technical and financial assistance to sponsoring local organizations for developing WS and RCD area plans and for individual RCD measures or projects and watershed works of improvement. The watershed work plan for developing, operating, and maintaining watershed works of improvement must be agreed upon by sponsoring local organizations and NRCS. When approved, it is the basis for extending technical and cost sharing assistance from watershed funds. The RCD area plan is prepared for the development of the RCD area by sponsoring local organizations with assistance from NRCS and other agencies, endorsed by the Governor or by the agency designated by the Governor, and accepted by the Secretary of Agriculture or his delegate. It includes objectives, planned courses of action, and RCD measures or projects to be developed. It is amended as necessary to include continuing activities and needs in the RCD area.
(b) RUS receives and processes applications for WS loans and NRCS WS advances and RCD loans and makes and services such loan and advances. WS loans are made by RUS from either Public Law 534 (78th Cong.) funds authorized in the Flood Control Act of
(c) WS loans and WS advances may be made to project sponsors in watershed project areas for which:
(1) A watershed work plan has been approved administratively or by resolutions adopted by the Committee on Agriculture and Forestry of the Senate and by the Committee on Agriculture of the House of Representatives; and
(2) Federal assistance has been authorized for the installation of works of improvement by the Administrator of NRCS.
(d) RCD loans may be made in areas authorized for RCD program assistance by the Secretary of Agriculture and for which an RCD plan design or area plan has been accepted by the State NRCS Conservationist.
(e)
(f) NRCS is responsible for providing technical and financial assistance to sponsoring local organizations for planning and developing WS and RCD areas. This includes development of WS and RCD plans and WS works of improvement and RCD measures or projects.
(g) RUS is responsible for making and servicing WS loans and advances and RCD loans.
(h) The NRCS-RUS Agreements in RUS Bulletin's 1781 and 1781-2 include further responsibilities and functions of NRCS and RUS in WS and RCD areas.
(a)
(1)
(2)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)
(r)
To be eligible for a WS loan, WS advance, or an RCD loan, the sponsoring local organization must meet the following requirements as applicable. Questions on eligibility will be referred to the Regional Attorney, OGC for legal advise prior to development of a loan docket.
(a) Be named in the WS or RCD plan as a sponsor of the development to be financed.
(b) Be legally organized and established in the WS or RCD area with legal authority, responsibility and capability to develop and operate the facility for which assistance is requested.
(c) Have authority under and comply with Federal, State and local laws on such matters as:
(1) Organizing, installing, operating, and maintaining proposed WS works of improvement or RCD measures or projects.
(2) Borrowing money, giving security, levying taxes, making assessments or raising revenues for operation and maintenance of the facility and repayment of loans.
(3) Land use zoning.
(4) Acquiring necessary property, lands, and rights.
(5) Obtaining approval of construction plans and specifications by appropriate Federal, State, and local agencies and construction facilities.
(6) Health and sanitation standards, water pollution control, and environmental regulations.
(7) Design and installation standards.
(8) Public service commission or similar State public body rules and regulations.
(d) Be financially sound and capable of providing service essential to the rural development needs of the area.
(e) If it is a nonprofit corporation.
(1) Membership should be broadly based and representative of the area benefiting from the facility. Membership on the governing board of the corporation will be limited to those living in the area to be benefited unless for justifiable reasons the Rural Development State Director gives prior approval for other than local residents to serve on the board of directors.
(2) The corporation must propose a facility which will primarily serve or generate other substantial, tangible benefits for farmers and other residents of the area. In the case of a recreational development at least two-thirds of the membership must be farmers and other residing in the area.
(3) Nonprofit corporations will not be formed to serve an area which could be served by a public agency which has adequate authority to provide the needed service unless prior approval of the National Office is obtained.
(a)
(1) Water development, storage, treatment and conveyance to farms for irrigation and other farm use, including farmstead, livestock, orchard, and crop spraying.
(2) Drainage systems and facilities in farm areas to sustain agricultural production or protect farmers and rural residents from water damage.
(3) Agricultural water management practices for annual streamflow stabilization, recharging ground water reservoirs, and conserving water supplies by management and control of vegetation along waterways and in drainage basins.
(4) Soil conservation and water control facilities such as dikes, terraces, detention reservoirs, stream channels, ditches, and other special land treatment and stabilization measures needed to protect farms and rural residents from water damage, provided such facilities cannot be installed or improved under, or will not conflict with, other public programs such as those administered by the Corps of Engineers.
(5) Special treatment measures or equipment primarily, though not exclusively, for flood prevention such as:
(i) Facilities and equipment for fire prevention and control.
(ii) Tree planting and establishment of other vegetative cover for stabilizing critical runoff and sediment-producing areas.
(iii) Structural and vegetative measures to stabilize stream channels and gullies.
(iv) Basic farm conservation practices to control runoff, erosion, and sedimentation.
(6) Installing, repairing, and improving water storage facilities, including outlets for immediate and future domestic, municipal and industrial water supply and water quality management, and conveying water to treatment facilities or distribution systems. When payment of loans for such facilities are primarily dependent upon revenues from use of water stored the loan approval official must determine the adequacy of facility for use of the water before a loan is closed.
(7) Public water based recreation and fish and wildlife developer loans will only be made to public bodies for the local share of cost for such developments for which NRCS is providing technical or financial assistance from WS or RCD funds. Loans will not be
(i) Construction of necessary water resource improvements such as storage capacity in multipurpose and single purpose reservoirs, water level control structures in reservoirs and streams, and stream channel improvements necessary for the development of the facilities. This may include practices for improvement of fish and wildlife habitat and environment and related areas and facilities for proper protection and management of the development.
(ii) Essential developments, improvements, equipment and facilities for access, public health and safety, and efficient operation management and maintenance; such as energy utilities, water supply and waste disposal systems, maintenance buildings, fences, cattle guards, roads and trails, parking, picnicking, camping, beaches, playgrounds, and related shelters and equipment.
(iii) Special areas and structures such as forest and other vegetative cover, marshes, pits, shelters and fish ladders to provide protected natural spawning, breeding, nesting, and feeding for fish and wildlife.
(8)
(9) Acquiring fee simple title to lands or perpetual easements, or rights-of-way for sites for works of improvement or project measures and related costs for removal, relocation, or replacement of existing improvements including relocation payments for displaced persons, business enterprises and facilities, and other related purposes. Funds for land acquisition will be limited to costs necessary for WS works of improvement or RCD measures. Final construction plans will indicate minimum essential lands and rights-of-way to be acquired. In some cases, sponsoring local organizations may need to acquire lands in excess of actual needs when it is expedient for planned development. If the Rural Development State Director determines that the acquisition of excess land is necessary or expedient for the orderly development of a WS works of improvement, or RCD measure, he may authorize the action subject to the following conditions:
(i) The applicant must agree to sell excess land as soon as practicable and apply the proceeds, together with any income from excess land, on the debt to RUS.
(ii) The applicant must furnish legal evidence of authority to acquire additional land and dispose of it as agreed.
(iii) Evidence must be provided to justify acquisition of additional land.
(iv) Easements for land or water resource protection structures must be perpetual and must not include clauses that terminate the easement with the dissolution or abandonment of the applicant organization. Loan funds will not be used for an easement that deviates in any way from that provided in the standard NRCS form unless modifications of it are approved by both NRCS and RUS.
(10) Acquisition of water supply or water right by purchase or by appropriation under local, State, and Federal laws. The loan may include funds for the purchase of land on which the water supply or water right is presently being used when:
(i) The water supply or water right cannot be purchased without the land; and
(ii) The value of the land is not the major portion of the cost; and
(iii) Any excess land thus acquired will be sold as soon as possible and the proceeds applied on the loan.
(11) Purchase of equipment and machinery necessary for development and operation of planned WS works of improvement or RCD measures or projects including:
(i)
(A) Such equipment is not otherwise available when needed.
(B) There is sufficient need and local demand to justify ownership or rental.
(C) Rates to be charged include, among other things, an allowance for depreciation, obsolescence, and replacement based upon the recommendations of the equipment manufacturer or the experience of contractors engaged in providing services for similar types of work.
(ii)
(A) Are not readily available when needed.
(B) Will be justified by local need and demand.
(C) Will be available to users at rates sufficient to cover loan amortization, obsolescence, replacement, operation, and cost of supplies.
(D) Will more efficiently serve the group through cooperative effort.
(12) Refinancing debt obligations of the sponsoring local organization that were incurred before application for a WS or RCD loan when that is not the primary purpose of the loan and:
(i) The debt being refinanced was for works of improvement or measures for which loan funds could be used; and
(ii) The debt is a valid obligation of the sponsor; and
(iii) Creditors will not modify payment terms on existing debts, and the organization cannot pay existing debts and a loan from RUS over the same period of time; and
(iv) Long-term debts will not be refinanced unless necessary to provide a sound basis for the loan or WS advance and concurrence is obtained from the National Office.
(13) If repayment is based on revenues, loan funds (not WS advances) can be used for payment of interest installments until the facility is generating enough revenue to make accrued interest payments. Loan funds for interest payments will not exceed the estimated amount that will accrue to the end of the third full calendar year after loan closing without prior approval from the National Office.
(14) Relocation payment to displaced persons, businesses, and farm operations and for relocation assistance advisory services in accordance with the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Public Law 91-646, 84 Stat. 1894), the Regulations issued by the Secretary of Agriculture under the Act (7 CFR part 21), and the Memorandum of Understanding Between NRCS and RUS.
(15) Services of engineers, architects, attorneys, auditors, construction foremen, managers, clerks, and others for organizing, planning, surveying, supervising, analyzing, developing, operating, managing, and accounting for activities related to loan processing and closing and development for which the loan is made.
(16) Buildings, fences, roads, utilities, facilities, and relocation:
(i) To construct buildings of modest design essential for the operation and maintenance of the works of improvement or measure.
(ii) To provide support facilities and utilities such as gas, electricity, water, sewer, and waste disposal.
(iii) To build or relocate roads, bridges, utilities, fences, and other improvements when necessary to acquire rights-of-ways or to construct or operate the facility.
(17) Services and fees. To pay costs for services for any purposes listed under this section such as:
(i) Fees or other legal expenses for establishing a water right through appropriation, agreement, permit, or court decree.
(ii) Purchase of water stock or membership in an incorporated water users’ association to acquire a water supply.
(iii) Costs of labor, technical or professional services, and fees to be incurred in obtaining the loan and in planning and completing the facilities or services to be financed with loan funds.
(iv) Services such as those listed in paragraph (a)(16) of this section.
(b)
(1)
(2)
(3)
(c)
(1) To pay construction costs including cost of engineering and related services for increasing reservoir capacity (including intake and outlet structures) for a future water supply for municipal, domestic, industrial, or agricultural uses.
(2) To preserve sites for authorized watershed works of improvement by acquiring land, easements, and rights-of-ways or other property rights.
(a)
(i) Land treatment measures on individual farms except as provided in § 1781.6(a)(5)(iv).
(ii) Buildings and facilities to be used for lodging, dining or entertainment purposes.
(iii) Building industrial parks or constructing facilities in them, or establishing private industrial or commercial enterprises, or purchasing land to be used primarily for industrial purposes.
(iv) Paying costs allocated to structural measures for flood prevention.
(v) Facilities for the production and harvesting of fish and wildlife such as hatcheries, rearing ponds, and related facilities other than those under natural conditions.
(vi) Facilities primary for treatment and distribution of water or for sewerage, collection and treatment for domestic or industrial use or for municipal or community systems.
(vii) Electric generating, transmission, and distribution facilities, except when provided as part of the minimum basic facilities for recreation and fish and wildlife developments authorized in § 1781.6(a)(7).
(viii) Storm and sanitary sewers and solid waste disposal facilities other than authorized in § 1781.6(b)(1).
(ix) Payment for a tract of land, easements, or rights-of-ways on which NRCS will share the cost if the amount to be paid with loan funds exceeds the difference between the NRCS share and the value on which the NRCS share is based.
(x) Purchasing tracts of land primarily for later resale to private developers or individuals for agricultural or nonagricultural use.
(xii) Buildings for residential, commercial, or industrial, use.
(xiii) Developments on private property primarily for the benefit of the individual property owner.
(xiv) Payment of that part of the cost of facilities, improvements, and practices that could be earned by participation in agricultural conservation programs unless such cost cannot be covered by purchase orders or assignments to material suppliers or contractors. If a loan is made for such purposes for which practice or cost share payments exceed $500, RUS will obtain an assignment on such payments to be paid on the loan.
(xv) Primarily for water and sewage treatment plants and distribution systems.
(xvi) Drainage facilities primarily for the benefit of other than rural areas.
(xvii) Any single RCD measure that requires a loan of more than $500,000.
(xviii) The total amount of principal outstanding for all WS loans made for one or more watershed works of improvement in a single watershed project, whether made to one or more sponsoring organizations, will not exceed $10,000,000.
(b)
(2) A WS advance for increasing reservoir capacity for future water supply will not exceed 30 percent of the total installation cost of one structure.
(3) A WS advance for site preservation will not exceed that determined necessary by NRCS except to purchase land in excess of actual needs in accordance with the provisions of § 1781.6(a)(7).
(4) Before a project agreement is entered into, there must be satisfactory evidence that the borrower will develop the site to be acquired or will use the future water supply and that revenue will be sufficient to meet all scheduled installments.
(c)
(i) The obligations incurred are necessary for planned developments; and
(ii) The obligations are incurred for authorized loan purposes; and
(iii) Contracts and construction plans meet RUS and NRCS standards; and
(iv) The applicant has legal authority to incur the obligations at the time proposed; and
(v) The Rural Development State Director authorizes such action in a letter to the applicant.
(2) The Rural Development State Director's letter will specifically state that the permission is granted on the condition that RUS is not committed to make a loan and assumes no responsibility for any obligation incurred by the applicant because of the permission granted and that the loan will be closed subject to compliance with agency regulations including closing instructions of the Regional Attorney Office of the General Counsel.
(a)
(1) For loans, unless otherwise required by State law, interest will accrue from date of check delivery where Form RD 440-22, “Promissory Note (Association Organization),” is used. Where bonds are used interest will accrue from the applicable dates recorded on the bonds. Where multiple loan disbursements are used interest will accrue from date of check.
(2) Interest on an advance for future water supply will begin as required by State law, when water is first used from the future water storage capacity installed with advance, or ten years from the scheduled date of the completion of the facility, whichever date is the earlier.
(3) Interest on an advance for preservation of sites will begin on the date the advance is closed.
(b)
(1) The statutory limitation on the sponsoring local organization's borrowing authority.
(2) Fifty (50) years for WS loans and WS advances and 30 years for RCD loans from the date when the principal benefits from the WS works of improvement or RCD measure being financed first become available.
(3) The useful life of the WS works of improvement or RCD measure being financed with loan or advance funds.
(c)
(1) Payments need to be delayed until the receipt of income from taxes or other revenues is enough to meet a regular installment but not exceed:
(i) The completion date of the facility; or
(ii) The date when benefits from the facility begins; but
(iii) In no case for more than 5 years for other than future water supply.
(2) Payments will depend on the increased returns expected from planned improvements, or from the installation on individual farms of land development or other soil and water improvements essential for obtaining benefits from the improvement to be installed with loan funds.
(3) They will not be used to permit the accelerated payment of other debts, to make capital improvements, or to create operating reserves.
(4) Where prohibited by State statutes; interest payments will not be deferred even though payments on principal may be deferred.
(5) Loans or advances for future water supply will be repaid within the life of the reservoir structure but in no event later than 50 years for WS and 30 years for RCD after the reservoir structure is built. Payments on the principal amount may be deferred one year after the water is first used from the storage capacity installed with the advance or for 10 years from the scheduled completion date of the structures, whichever occurs first.
(i) Interest will begin for a future water supply as required by State law, or when water is first used from the future storage capacity or 10 years from the scheduled date of completion of the facility, whichever occurs first.
(ii) If State law requires that interest be charged and repaid before water is first used or earlier than 10 years from completion date of the structure, interest payments will be scheduled to comply with State law even though payments of principal may be deferred.
(iii) The borrower should be encouraged to begin repayments as soon as practicable after the reservoir is built even though this liberal deferment policy exists.
(iv) WS advances for preservation of sites must be fully repaid before beginning construction of the works of improvement for which such sites were acquired.
(A) Unless a WS advance is to be repaid with a WS loan, installments will be scheduled at the earliest possible date following the date of closing the advance. The date and amount of each such installment will be fixed to coincide with the receipt of income from taxes or other revenues.
(B) Payments for both principal and interest on a WS advance for preservation of sites may be scheduled for payment in one installment to be paid on the date of the closing of a WS loan which includes funds for the repayment of the WS advance.
(C) Interest on a WS advance for preservation of sites will begin on the date the WS advance is closed.
(d)
(2) Payments will be applied first to interest accrued to the date of the receipt of payment, and second to the principal balance. If the regular payments plus any prepayments exceed the cumulative amount due, the excess payments will be applied on the next installment first to interest, then principal. Loan refunds and proceeds from the sale of security property, however, will be applied on the final unpaid installment.
(3) Payments will be scheduled annually beginning one year following the date of loan closing or one year following the end of any approved deferment period, unless another annual due date is required by State statute or upon prior written authorization from the National Office. In those cases where loans are being made under statutes requiring a repayment date other than this, the Rural Development State Director will send a copy of the Regional Attorney's opinion that such is required, to the Finance Office.
(4) When a single obligation instrument is used, amortized installments will be required. When this cannot be done because of state law, serial bonds or a single bond having installments of principal plus interest, stated separately, will be used. In cases where the payment of interest has been deferred, all collections will be applied to interest until such interest has been paid. Also, when a full installment is not paid when due, the payment made will be applied first to accrued interest.
(5) In cases where the indebtedness will be represented by serial bonds or a single bond having installments of principal plus interest, stated separately, annual payments of principal and interest will be scheduled to permit them to be paid in amounts approximately equal to the amounts that would be required for annual amortized installments.
(6) If the borrower will be retiring other debts represented by bonds or notes, the payment on such bonds may be considered in developing the payment schedule for the RUS loan. In some cases, it may be desirable to reduce the amount of payments to RUS in the early years of the loan in order to preclude the necessity for refinancing the outstanding debt. When such payment schedules are proposed, National Office authorization will be obtained prior to loan approval.
(7)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(2) RUS will specify and approve the form and content of instruments for conveying title to or interest in real estate on which a lien will be taken to secure a WS loan, WS advance, or RCD loan. These should be consistent with the applicable provisions of § 1780.14 of this chapter. The Rural Development State Director will make his decision after consultation with the Regional Attorney and the State Conservationist. He will notify NRCS in writing of his decision. Thereafter, title clearance will be completed under NRCS regulations except that a marketable title must be obtained on any tract of land, a part of which will be sold as excess land in accordance with § 1781.6(a)(9). In addition to the title evidence required by NRCS, applicants will furnish an opinion of legal counsel on all land and interest in land acquired with loan or advance funds.
(h)
(i)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(a)
(ii) The Rural Development State Director will review SF 424.1 along with other necessary information and will coordinate selection of preapplications to be processed with NRCS. He will consult with NRCS State Conservationist concerning the status of the WS plan or RCD measure plan, the estimated time schedule for construction and cost of the proposed works to be installed with the loan, cost sharing funds to be made available to the applicant, and other pertinent information.
(iii) Form AD-622, “Notice of Preapplication Review Action,” will be prepared and signed by the Rural Development State Director within forty-
(2)
(ii) The processing office should arrange needed conferences with the applicant and its legal and engineering consultants, and when necessary, arrange for review of other Rural Development officials, and provide bulletins, forms, instructions and other assistance with assembling and processing the application. A processing checklist and time schedule will be established by using Form RD 1942-40, “Processing Check List (Public Bodies),” or Form RD 1942-39, “Processing Check List (Other than Public Bodies).” The processing office will send a letter and a copy of the processing checklist to the applicant to confirm decisions reached at the conference. The original and a copy of the processing checklist will be kept in the processing office and will be posted current as application processing actions are taken. The copy will be circulated from the processing office to the State Office for use in updating copies of the forms retained, after which it will be returned from the State Office to the processing office.
(3)
(b)
(1) The Rural Development State Director will arrange with the NRCS State Conservationist to be advised when a local sponsoring organization applies to NRCS for a WS advance.
(2) The Rural Development State Director will request the NRCS State Conservationist to provide information justifying the WS advance along with a written recommendation that it be made. This will include:
(i) Economic feasibility of the proposed WS advance.
(ii) Evidence of the legal authority of the sponsoring local organization to incur the obligation and make required payments.
(iii) Any limitations on the issuance of additional bonds or notes which may be imposed by the provisions of bond ordinances or on resolutions which authorize the issuance of any outstanding obligation of the sponsoring local organization.
(iv) The amount of WS advance funds to be provided, purpose for which funds will be used, and date funds will be needed.
(3) When the above information has been made available to the Rural Development State Director, he will send written recommendations concerning further action on the WS advance request to the NRCS State Conservationist including actions to be taken in the preparation of the WS advance docket.
(c)
(d)
(1) Upon receipt of the State Office copy of a review request from the applicant, the Rural Development State Director will furnish a report on the matter to the Administrator.
(2) The Administrator will notify the applicant and the Rural Development State Director in writing of his decision and the reasons therefore.
(a) WS and RCD area plans are developed by sponsoring local agencies and organizations with technical assistance from NRCS and other Federal and State agencies. These plans include WS works of improvement and RCD measures to be developed or constructed for which NRCS construction funds may be made available on a cost share basis along with funds provided by the sponsoring local organization, a portion or all of which may be obtained by a WS loan and/or WS advance or a RCD loan.
(b) Current information on the availability of cost share funds and purposes for which they may be used is provided by NRCS. The amount of NRCS cost share funds and the amount of funds to be provided by the sponsoring local organizations will be indicated in each plan. The estimated amount of WS loan, WS advance or RCD loan anticipated by the sponsoring local organization should also be included.
(c) Plans for the development or construction of individual WS works of improvement and RCD measures will normally be developed with NRCS technical assistance. In every case they will be approved by both the NRCS State conservationist and the Rural Development State Director or their designated agent when a WS loan, WS advance or RCD loan is made.
(d) Options and appraisals related to the purchase of real estate for which a WS loan, WS advance, or RCD loan is made must be developed in accordance with NRCS and RUS requirements and approved by RUS. The determination of present market value will be made in accordance with § 1780.44(g) of this chapter.
Planning and performing development will be handled in accordance with subpart C of part 1780 of this chapter and guidance from NRCS.
(a)
(1)
(2)
(3)
(i) The sponsoring local organization:
(A) Has legal authority to construct and operate the proposed facility, borrow money, give security, incur debt,
(B) Is a sponsor or cosponsor of the WS plan or RCD work plan and is otherwise eligible for assistance.
(ii) Funds will be used for authorized purposes.
(iii) The source of income to be pledged for debt payment and the security proposed is adequate.
(iv) Actions required for loan closing are administratively satisfactory, legally sufficient and properly documented in accordance with Agency regulations.
(4)
(i) A copy of the WS works of improvement agreement or RCD measure agreement.
(ii) A copy of the Operation and Maintenance Agreement between NRCS and the WS or RCD sponsoring local organization for the WS works of improvement or the RCD measure.
(iii) A statement from the NRCS State Conservationist concurring in the feasibility of the WS work of improvement or RCD measure and that NRCS is providing financial and/or technical assistance in accordance with applicable WS or RCD authorities.
(5)
(6)
(b)
(i) All documents are accurate and complete.
(ii) The proposed loan complies with WS and RCD program policies and procedures of both RUS and NRCS.
(iii) Security is adequate and the repayment plan is sound.
(iv) Funds requested are for authorized purposes.
(v) Actions are in compliance with requirements of applicable Federal and State laws.
(2)
(3)
(4)
(c)
(2) If the advance appears to be sound and proper, the Rural Development State Director will send a proposed memorandum of concurrence to the NRCS State Conservationist. The memorandum will state that RUS concurs in the execution of a work of improvement agreement for which NRCS will obligate advance funds and that RUS will accept the proposed obligations of the applicant to repay the advance subject to conditions specified in or attached to the memorandum. These conditions will include all appropriate requirements in accordance with paragraph (b)(2) of this section and will specify compliance with closing instructions issued by the Regional Attorney. It will also indicate that preparation of the WS advance docket will be in accordance with paragraph (a) of this section.
(3) The Rural Development State Director and the NRCS State Conservationist will sign the memorandum of concurrence to NRCS when:
(i) It has been determined that funds for the advance will be obligated by NRCS; and
(ii) The WS advance docket, has been approved; and
(iii) Closing instructions have been issued by the Regional Attorney; and
(iv) The Rural Development State Director and NRCS State Conservationist have determined that the applicant can comply with all requirements of the letter of conditions and closing instructions.
(a) Before WS loan, WS advance, or RCD loan is approved, a determination of feasibility will be made by the Rural Development State Director based upon a review of plans developed in cooperation with NRCS personnel. The feasibility determination must have the concurrence of the NRCS State Conservationist before a WS loan, WS advance, or RCD loan is approved.
(b) A written assessment of the project's feasibility will be made by the processing office, Architect/Engineer, and Program Chief in their recommendations or comments on the Project Summary. These should reflect concurrence of the respective NRCS personnel in counterpart positions with whom they cooperate in administering these programs.
(a) Approval and closing actions will be taken in accordance with the applicable provisions of part 1780 of this chapter and the following requirements have been met:
(1) The WS or RCD plan has been approved for operations by NRCS and the applicant is an official sponsoring or cosponsoring local organization for the plan as evidenced by being included in the list of sponsoring or co-sponsoring local organizations in the plan.
(2) Closing instructions or a preliminary legal opinion has been prepared by the Regional Attorney.
(3) The governing body of the applicant's sponsoring local organization has formally passed and approved the loan resolution.
(4) The Rural Development State Director and NRCS State Conservationist have determined that all planned actions can be carried out as proposed in the project plan and the docket.
(5) The NRCS State Conservationist and Rural Development State Director have mutually agreed on the priority to be given the WS loan or WS advance, or RCD loan. In making this determination, consideration will be given to the relative priority of the WS
(6) Public bodies will be required to use bond counsel in accordance with subpart D of part 1780 of this chapter.
(b) When favorable action is not taken on a WS loan, WS advance, or RCD loan, the Rural Development State Director will notify the NRCS State Conservationist and the applicant in writing and, if possible, arrange for a meeting of RUS and NRCS representatives with the applicant to explain the action. WS loans, WS advances, or RCD loans may be canceled before closing.
(a) WS and RCD loan funds will be disbursed by the processing office in accordance with the applicable provisions of § 1780.45 of this chapter and RUS Bulletin 1781-1, paragraph (5). Funds will be made available to the borrower as needed for payment of development or other costs for which the loan is made. The processing office must determine that the payment is for an authorized purpose and is for benefits accrued to the borrower. This will require evidence from NRCS in accordance with the applicable provisions of RUS Bulletin 1781-1, “Memorandum of Understanding Between RUS and NRCS.”
(b) WS advance funds may be disbursed in the same manner as WS loan funds if such funds are transferred to RUS by NRCS for disbursement or they may be disbursed by NRCS. When WS advance funds are disbursed by NRCS, payments from advance of funds will be reported to the Rural Development State Director each month to be reported to the Finance Office and charged to the borrower's account. This action will be taken in accordance with the applicable provisions of RUS Bulletin 1781-1 or RUS Bulletin 1781-2 and agreement between the NRCS State Conservationist and Rural Development State Director as follows:
(1) When a future water supply is being developed with NRCS, WS advance funds, the NRCS State Conservationist will send the Rural Development State Director a monthly report of funds disbursed. This will include three (3) copies of Form NRCS-AS-49a and 49b, “Contract Payment Estimate and Construction Progress Report,” along with a transmittal Memorandum showing the sequential number (first, second, third, etc.) of the payment, the amount and date of payment, the check number by which the payment was made and the cumulative amount of advance funds disbursed to date. When the works of improvement, for which WS advance funds are used is completed the final report will, in addition to the above, show the date that construction was completed and the total amount of WS advance funds used.
(2) WS advances for construction costs will be set out each month on Form NRCS-49a. The Rural Development State Director should make arrangements with the NRCS State Conservationist to be supplied each month with a copy of Form NRCS 49a when advance funds are included together with an official statement from the NRCS State Administrative Officer giving the date of the check and the exact amount of each advance of funds made under the advance provisions of the project agreement or of any engineering services agreement or other supplementary agreement which further implements the proposal for the advance in the project agreement. The original will be sent immediately to the Finance Office and a copy provided for the processing office file.
(3) When WS advance funds are used to acquire property for site preservation the same reporting procedure as for a future water supply will be used except that Form NRCS-AS-49a and 49b if used, should be adopted to indicate fund use. As payments are made on land on which a mortgage or other security instrument is required, such instruments will be executed in accordance with instructions from the Regional Attorney, OGC.
(4) The Rural Development State Director must send the bond or note evidencing WS advance indebtedness of the borrower to the Finance Office along with reports of payments from advance funds disbursed by NRCS. A copy of the bond or note and copy of each report of payment will be sent to the processing office.
(c)
These activities will be handled in accordance with the provisions of § 1780.47 of this chapter.
Subsequent loans will be processed in accordance with this part.
Servicing will be handled in accordance with the provisions of subpart E of part 1951 of this title.
(a) State supplements will be issued as needed in accordance with applicable provisions of part 1780 of this chapter.
(b) Bulletins, instructions, forms and memorandums are available from any USDA/Rural Development office or the Rural Utilities Service, United States Department of Agriculture, Washington, DC. 20250-1500.
7 U.S.C. 901
This subpart B sets forth policies and procedures on the RUS cushion of creditpayments program. The cushion of credit payments program will be maintained only for insured loans evidenced by obligations of the Fund. A subaccount within the Fund is hereby established for purposes of promoting rural economic development. It shall be known as the “Rural Economic Development Subaccount.” The assets of the subaccount shall be obtained from crediting (on a monthly basis) a sum determined by multiplying the outstanding cushion of credit payments made after October 1, 1987, by the difference (converted on a monthly basis) between the average weighted interest rate paid on outstanding certificates of beneficial ownership issued by the Fund and the 5 percent rate of interest provided to borrowers on cushion of credit payments, repayment of loans made pursuant to Section 313 of the Act, and other sources as provided by law. This subaccount shall be used to provide grants or zero interest loans to borrowers under the Act for the purpose of promoting rural economic development.
A cushion of credit account shall be automatically established by RUS for each borrower who makes a payment after October 1, 1987, in excess of amounts then due on an RUS note. Such account will bear interest at a rate of 5 percent per annum. All payments on RUS notes which are in excess of required payments and not otherwise designated shall be deposited in the borrowers’ respective cushion of credit accounts. Payments received in the month in which an installment is due will be applied to the installment due. However, if the regular installment payment is received at a later date in the month, the first payment received will be applied retroactively to a cushion of credit account and the second will be applied to the installment due.
(a)
(b)
(a) If a maturing installment on an RUS note or a note which has been guaranteed by RUS is not received by its due date, funds will be withdrawn from the borrower's cushion of credit account and applied as of the installment due date beginning with the oldest of such notes as follows: first, to current interest then due on all notes; second, to the accumulated interest due, if any, on all notes; and third, to the principal then due on all notes. In those instances where a borrower has prior to October 2, 1987, maintained an advance payment account with RUS, its cushion of credit account will be applied in accordance with the provisions of this section prior to using any balance remaining in its advance payment account to pay interest and principal installments on notes. Computations required under this section have been made by RUS as of October 2, 1987; however, on or before May 25, 1989 any borrower may make a one time irrevocable election to have all such computations made as of April 5, 1989, by
(b) A borrower may reduce the balance of its cushion of credit account only if the amount obtained from the reduction is used to make scheduled payments on loans made or guaranteed under the Act.
7 U.S.C. 901-950b; Title I, subtitle B, Pub. L. 99-509; Pub. L. 101-624, 104 Stat. 4051; Pub. L. 103-354, 108 Stat. 3178, (7 U.S.C. 6941
7 U.S.C. 901-950b; Title I, Subtitle B, Pub. L. 99-509; Title I, Pub. L. 100-202; Pub. L. 100-203; Title VI, Pub. L. 100-460; Pub. L. 103-354, 108 Stat. 3178 (7 U.S.C. 6941
This subpart contains the general regulations of the Rural Utilities Service (RUS) for implementing the provisions of (a) section 306(A) of the Rural Electrification Act of 1936, as amended (RE Act); (b) section 633 of the Rural Development, Agriculture, and Related Agencies Appropriations Act, 1988 (Pub. L. 100-202) (the continuing resolution); and (c) section 637 of the Rural Development, Agriculture, and Related Agencies Appropriations Act, 1989 (Pub. L. 100-460) (the 1989 Appropriations Act) which permit, in certain circumstances, loans made by the Federal Financing Bank (FFB) and guaranteed by the Administrator of RUS to be prepaid by RUS electric and telephone borrowers by paying the outstanding principal balance due on the FFB loan, using a private loan with the existing RUS guarantees or using internally generated funds.
It is the policy of RUS to facilitate the prepayment of FFB loans in accordance with the provisions of section 306(A) of the RE Act and section 633 of the continuing resolution as modified by section 637 of the 1989 Appropriations Act. Furthermore, consistent with the RE Act, the continuing resolution and the 1989 Appropriations Act, it is the policy of RUS to implement the objectives of the prepayment program in a manner which does not result in an increase in loan guarantee risk or an inappropriate increase in the administrative burden on RUS.
(a)
(1) In the case of telephone borrowers, the period commencing on February 12, 1990 and ending on March 12, 1990;
(2) In the case of financially distressed borrowers, the period commencing October 1, 1990 and ending on July 30, 1993; or
(3) In the case of other borrowers, the period to be announced by RUS.
(1) A lender (i) which has a capital and surplus of at least $50 million; (ii) is a beneficiary of an irrevocable letter of credit, in form and substance satisfactory to the Administrator, payable to it in the amount of $50 million; (iii) is the beneficiary of a guarantee, in form and substance satisfactory to the Administrator, in the amount of $50 million from a lending institution with a capital and surplus of at least $50 million; or (iv) has other credit support, in form and substance satisfactory to the Administrator, in the amount of $50 million; or
(2) In the event of a prepayment totalling less than $100 million, a lender (i) which has a capital and surplus of at least $10 million; (ii) is a beneficiary of an irrevocable letter of credit, in form and substance satisfactory to the Administrator, payable to it in the amount of $10 million; (iii) is the beneficiary of a guarantee, in form and substance satisfactory to the Administrator, in the amount of $10 million from a lending institution with a capital and surplus of at least $10 million; or (iv) has other credit support, in form and substance satisfactory to the Administrator, in the amount of $10 million;
(1) The outstanding principal balance of a loan;
(2) The dollar weighted average interest rate (stated as an annual percentage rate) on a loan;
(3) The final maturity date of a loan;
(4) The annual principal amortization of the loan; and
(5) Any other factor that as determined by RUS increases the magnitude or duration of the guarantee.
(1) The billing and collecting of the private loan payments from the borrower;
(2) Notifying the Administrator promptly of any default in the payment of principal and interest on the private loan and submitting a report, as soon as possible thereafter, setting forth the servicer's views as to the reasons for the default, how long the servicer expects the borrower to be in default, and what corrective actions the borrower states it is taking to achieve a current debt service position;
(3) Notifying the Administrator of any known violations or defaults by the borrower under the lending agreement, loan guarantee agreement, the mortgage, or related security instruments, or conditions of which the servicer or the lender is aware which might lead to nonpayment, violation or other default; and
(4) Such other activities as may be specified in the loan guarantee agreement.
(b)
(a)
(1) Demonstrate that the FFB loan was outstanding on July 2, 1986;
(2) Prepay the FFB loan by:
(i) Using a private loan with the existing loan guarantee;
(ii) Using internally generated funds; or
(iii) Using a combination of a private loan with the existing loan guarantee and internally generated funds; and
(3) Certify that any savings resulting from such prepayment will be passed on to its customers, or used to improve the financial strength of the borrower in cases of financial hardship.
(b)
(1) Be a private legally organized lender, or a lender established pursuant to the Farm Credit Act of 1971, as amended;
(2)(i) Be subject to credit examination and supervision by either an agency of the United States or a state and be in good standing with its licensing authority and have met the requirements, if any, of licensing, lending and loan servicing in the state where the collateral for the Loan is located;
(ii) Be a financially viable lender; or
(iii) Be a trust administered. by an entity meeting the requirements of paragraph (b)(2) (i) or (ii) of this section; and
(3) Have the capability to adequately service the private loan either by using its own resources or by contracting for such resources with a financially viable lender. Under no circumstances may the borrower or an affiliate of the borrower service the private loan. A qualified lender may participate out each private loan to entities other than a Government agency, the borrower, or an affiliate of the borrower, provided that such participation shall be on terms and conditions satisfactory to the Administrator.
(c)
(1) The private loan shall provide for the periodic payment of interest by the borrower not less frequently than annually, at either a variable or fixed rate in a manner which shall not result in an increase in loan guarantee risk. (i.e. The dollar weighted average interest rate on the private loan shall be less than or equal to the dollar weighted average interest rate on the FFB loan being prepaid, so that:
(2) Principal payments on the private loan shall be made either quarterly, semiannually, or annually and shall commence on or before the last day of the calendar year during which the prepayment pursuant to this subpart was made.
(3) With the approval of the Administrator, the lender may refund the private loan with the proceeds of another loan from the same lender, with the existing guarantee and under terms, conditions, and a structure substantially similar to the private loan, on such dates as the lender, the borrower and RUS may agree, provided however, that such a refunding loan shall comply with the provisions of § 1786.28(c) hereof. Additionally, with the approval of the Administrator, the private loan may be prepaid either in whole or in part at any time by the borrower using its general funds.
(4) The private loan and the guaranteed note evidencing the private loan shall not be directly or indirectly part of a transaction the income of which is excluded from gross income for the purposes of Chapter I of the Internal Revenue Code of 1986.
(5) The guaranteed note evidencing the private loan shall not be transferable or assignable except
(i) With the written approval of the Administrator;
(ii) In the event that the guaranteed note evidencing the private loan is held by a trust, to a similar trust, in connection with a refunding loan made by the lender pursuant to § 1786.28(c)(3); or
(iii) As an undivided pro rata interest in a pool of obligations.
(6) The loan documentation shall provide RUS with the right to accelerate the note evidencing the private loan upon the occurrence of any “Event of Default” under the mortgage with the effect that all of the unpaid principal and interest on any such note shall become immediately due and payable to RUS, and RUS shall continue to pay under its guarantee the principal of and interest on such note without taking into account such acceleration. The loan documentation shall also provide RUS with a right, upon the occurrence of such an “Event of Default,” to accelerate payment on its guarantee and accelerate payment on the note evidencing the private loan on the earlier of any date the interest rate on the private loan is reset, without premium or penalty; any date the borrower may prepay in accordance with the terms of the private loan, or the tenth anniversary of the date the private loan first bears interest at a fixed interest rate.
(7) The principal of the private loan shall not include amounts attributable to fees associated with the private loan. At the time it submits its application, a borrower may request that the Administrator approve the inclusion of amounts attributable to fees as part of the interest rate on the private loan, if the net effective interest rate including such fees meets the test contained in § 1786.28(c)(1). For the purposes of these regulations, such financed fees shall be considered “interest”.
(8) Private loans and guaranteed notes evidencing private loans shall otherwise be in form and substance satisfactory to the Administrator.
(d)
(1) The borrower notifies RUS, of its intent to prepay using internally generated funds in accordance with the application procedures set forth in this subpart; and
(2) The borrower submits a certification to RUS that the prepayment does not, materially adversely affect the financial stability of the borrower and its ability to meet all its obligations, including debt service on all loans made, guaranteed or lien accommodated under the RE Act which will remain outstanding after the date of the prepayment.
(e)
(1) The private loans comply with the provisions of paragraph (c) of this section, and
(2) The borrower complies with paragraph (d) of this section.
(f)
(1)
(2)
(a)
(b)
(c)
(1)
(2)
(d)
(a)
(1) Applications from telephone borrowers;
(2) Applications from financially distressed borrowers;
(3) Applications from all other borrowers. When assigning priority to such applications, RUS will consider a number of factors, including without limitation, (i) the number of prepayment applications being processed by the area office; (ii) the novelty or complexity of the proposed transaction; (iii) the method of prepayment; and (iv) the availability of resources. In the event that RUS receives during the initial application period, prepayment applications from such borrowers in an amount less than remaining prepayment authority for each respective program, RUS will establish a new application period and publish a notice to that effect in the
(b)
(1) The principal amount of FFB advances under each individual application, which, if prepaid pursuant to this subpart, would result in an economic savings to the borrower, shall be divided by the aggregate principal amount of FFB advances, under all of the applications, which, if prepaid pursuant to this subpart, would result in an economic savings to the borrowers, in order to determine a percentage (hereinafter called a pro-rated percentage) for each borrower;
(2) Each borrower's share of the prepayment authority for its application category shall be equal to the product of (i) the prepayment authority times (ii) the respective pro-rated percentage, and may be used to prepay a portion of any of the borrower's FFB loans listed pursuant to § 1786.31(a)(2);
(3) If any approved prepayment transaction fails to be settled within 180 days of the date the borrower is notified by RUS of its prepayment allocation, RUS may rescind its approval. The unused prepayment authority represented by such a failed transaction is subject to being included in any subsequent notice of a new application period under this subpart; and
(4) In the event that applications from financially distressed borrowers exceed the amount prepayment authority remaining in the financially distressed borrowers’ reserve, the Administrator at his discretion shall select one or more of such applications and allocate the reserve. In making such a selection and allocation, the Administrator may consider various factors, including without limitation, (i) the dollar amount of savings to be realized by the proposed prepayment; (ii) the interest rates on the FFB loans proposed to be prepaid; (iii) the magnitude of the default or potential default; and (iv) whether the borrower has previously completed a prepayment under section 306(A).
(c)
Applications to make a prepayment pursuant to this subpart shall be submitted to RUS on such forms as RUS may prescribe in the following manner:
(a)
(1) “Notice of Intent to Prepay the Federal Financing Bank” in the form specified in § 1786.33 hereof;
(2) A listing of each FFB loan advance to be prepaid by loan designation, RUS note number, RUS account number, advance date, maturity date, original amount, outstanding balance, and interest rate;
(3) Evidence that the borrower meets the qualification provisions of § 1786.28(a) of these regulations;
(4) The certification set forth in part A of the Notice of Intent to Prepay the Federal Financing Bank executed by the chief executive officer of the borrower;
(5) In the event that a borrower submits a prepayment application which proposes to utilize a portion of the financially distressed borrowers’ reserve, a certification signed by the chief executive officer of the system to the effect that the borrower is either (i) in default or near default on interest or principal payments due on loans made or guaranteed under the RE Act, and is making a good faith effort to increase rates and reduce costs to avoid or mitigate default; or (ii) participating in a work out or debt restructuring plan with RUS, either as the borrower being restructured or as a borrower providing assistance as part of the work out or restructuring and stating why the borrower is in default or near default.
(b)
(c)
(1) A completed copy of the Notice of Intent to Prepay the Federal Financing Bank;
(2) In the event that a borrower proposes to utilize a private loan in connection with a prepayment or a portion of a prepayment,
(i) Evidence, in form and substance satisfactory to RUS, that the borrower has an irrevocable commitment from the lender to close the private loan on the settlement date at an interest rate that meets the requirements of § 1786.28(c)(1);
(ii) Evidence that the lender meets the qualification provisions of § 1786.28(b);
(iii) Evidence that the private loan meets the qualification provisions of § 1786.28(c); and
(iv) The final documentation for the private loan;
(3) Estimate of fees, and expenses, including any taxes, in connection with the prepayment transaction;
(4) A certified copy of a resolution of the board of directors of the borrower approving the certification cited above
(5) In the case of financially distressed borrowers, evidence in form and substance satisfactory to the Administrator that the benefits of prepayment will not be used to reduce rates and that any Federal or state regulatory body having jurisdiction over the borrower's rates has acknowledged its awareness of this requirement;
(6) In the event that borrower is unable to deliver final documentation or the evidence specified in accordance with, § 1786.31(c), RUS may reschedule the settlement date at its discretion.
(c)
(a)
(b)
(c)
(d)
(e)
(1) The guaranteed note evidencing the private loan.
(2) The guarantee.
(3) The loan guarantee agreement.
(4) Copy of the private loan agreement between the lender and the borrower.
(5) Evidence that the borrower has received all approvals which are required under Federal or state law, loan agreements, security agreements, existing financing arrangements, or any other agreement to which the borrower is a party.
(6) An amendment in recordable form revising the description of the obligations secured by the mortgage including the obligation of the borrower to reimburse RUS for any amounts that RUS may pay under the guarantee.
(7) An approving opinion of the borrower's legal counsel to the effect that the guaranteed note evidencing the private loan is a valid and legally binding obligation of the borrower which is secured under the mortgage, and the priority of the mortgage, as amended pursuant to paragraph (e)(6) of this section, remains undisturbed.
(8) An approving opinion of the lender's legal counsel to the effect that the loan guarantee agreement is a valid and legally binding obligation of the lender.
(9) Such other opinions of counsel as may be required by the Administrator.
(10) Copies of any other documentation required by the lender.
(11) Copies of any other documentation required by RUS to ensure that the obligations of the borrower to reimburse RUS for any amounts that RUS pays under the guarantee or may advance in connection with the private loan are adequately secured under the mortgage.
Guarantees and loan guarantee agreements executed by RUS pursuant to this subpart will be on forms prescribed by RUS. Such forms will include, without limitation, additional details on servicing, procedures for notifying RUS of a default, the manner for requesting payment on a guarantee. The Notice of Intent to Prepay the Federal Financing Bank shall be substantially in the form specified by RUS. RUS may also prescribe standard forms of certifications to be used in connection with materials required to be furnished pursuant to § 1786.31 of this subpart.
The lender, the servicer, or the trustee will permit representatives of RUS (or other agencies of the U.S. Department of Agriculture authorized by that Department) to inspect and make copies of any of their records pertaining to RUS guaranteed loans. Such inspection and copying may be made during regular office hours of the respective party or any other time the party and RUS find convenient.
(a)
(b)
(1) A certificate of loss properly notarized which includes:
(i) Legal name and present address of the owner, requesting the replacement forms;
(ii) Legal name and address of lender of record;
(iii) Capacity of person certifying;
(iv) Full identification of the guarantee, including the name of the borrower, date of the guarantee, face amount of the evidence of debt purchased, date of evidence of debt and present balance of the loan. Any existing parts of the documents to be replaced should be attached to the certificate;
(v) A full statement of circumstances of the loss, theft, or destruction of the guarantee; and
(vi) The lender or holder, shall present evidence demonstrating current ownership of the guarantee and note. If the present holder is not the same as the original lender, a copy of the endorsement of each successive holder in the chain of transfer from the initial private lender to present holder
(2) An indemnity bond acceptable to RUS shall accompany the request for replacement except when the holder is the United States, a Federal Reserve Bank, a Federal Government Corporation, a state or territory, or the District of Columbia. The bond may be with or without surety. The bond shall be with surety except when the outstanding principal balance and accrued interest due the present holder is less than $1,000,000 verified by the lender in writing in a letter of certification of balance due. The surety shall be a qualified surety company holding a certificate of authority from the Secretary of the Treasury and listed in Treasury Department Circular 580.
(3) All indemnity bonds shall be issued and/or payable to the United States of America acting through the Administrator of the Rural Utilities Service. The bond shall be in an amount not less than the unpaid principal and interest. The bond shall save RUS harmless against any claim or demand which might arise or against any damage, loss, costs, or expenses which might be sustained or incurred by reasons of the loss or replacement of the instruments.
Nothing contained in this subpart shall prohibit a borrower from making prepayments of FFB loans in accordance with the terms thereof.
Nothing contained in this subpart shall affect the validity of prepayments made or guarantees issued pursuant to previous regulations. Those borrowers, however, that completed a prepayment pursuant to section 306(A) of the RE Act and closed loans prior to February 27, 1988, may, in their discretion request RUS approval and if required by prior regulations the concurrence of the Secretary of the Treasury, of any amendments necessary to make the terms and conditions of such loans consistent with, or to consolidate such loans with, loans guaranteed under these regulations.
This subpart is intended to set forth RUS policies and procedures for the orderly administration of the provisions of section 306(A) of the RE Act, section 633 of the continuing resolution, and section 637 of the 1989 Appropriations Act and is not intended to create any right or benefit, substantive or procedural, enforceable at law by a party against the United States, its agencies, its officers or any person.
7 U.S.C. 901-950b; Title I, Subtitle B, Pub. L. 99-509; Pub. L. 103-354, 108 Stat. 3178 (7 U.S.C. 6941
This subpart sets forth the policies and procedures of RUS whereby electric and telephone borrowers may prepay outstanding RUS Notes at the Discounted Present Value of the RUS Notes with private financing.
As used in this subpart:
Through September 30, 1987, the Administrator may, pursuant to this subpart, permit eligible electric and telephone borrowers to prepay all outstanding RUS Notes issued or assumed by such borrowers and held in the Fund, upon paying the lesser of the outstanding balance or the Discounted Present Value.
The Discounted Present Value shall be calculated five business days before prepayment is made by summing the present values of all remaining payments by using the following formula:
To be eligible to prepay RUS Notes at the Discounted Present Value a borrower must comply with the following criteria:
(a) The borrower must be current on all payments due on its outstanding RUS Notes and all other payment obligations owed to RUS and the Rural Telephone Bank.
(b) The borrower must agree to prepay all of its outstanding RUS Notes.
(c) The borrower must identify the source of private financing that will be used to refinance its outstanding RUS Notes, which financing may not include obligations the income of which is exempt from taxation under the Internal Revenue Code of 1986.
(d) The borrower must have expended all funds advanced on account of the RUS Notes for the purposes for which such funds were advanced.
(e) The borrower must agree to a rescission of the unadvanced balance of the RUS Notes.
(f) The borrower must agree that the borrower, its successors or assigns, shall pay to the Government, as a condition of receiving additional loans or loan guarantees pursuant to Titles I, II and III of the Act, an amount equal to the aggregate of the difference with respect to each of the RUS Notes between the amount outstanding on the RUS Note and the Discounted Present Value of the RUS Note upon prepayment with interest accruing quarterly; the interest rates shall be the rates provided in the respective RUS Notes.
(g) If the borrower is a party to a wholesale power contract with a power supplier financed pursuant to the Act, the borrower must provide the Administrator with such assurances as the
Any borrower seeking to prepay its RUS Notes under this subpart should apply to the appropriate RUS Area Director by submitting:
(a) A board resolution that:
(1) Requests approval of the prepayment of the borrower's outstanding RUS Notes, and
(2) States the intent of the borrower to comply with all eligibility criteria set forth in § 1786.54 of this subpart.
(b) A list of all RUS Notes together with the outstanding amount on such notes.
(c) Such additional information as the Administrator shall request.
The applications will ordinarily be reviewed and, if satisfactory, approved, and closing schedule based on the order in which executed prepayment agreements are received. The Administrator may limit the number of applications approved and closings scheduled from time to time taking into account, among other matters, the financial interests and administrative considerations of the Government.
Upon approving an application for prepayment under this subpart, the Administrator shall notify the borrower and deliver to the borrower for its execution a prepayment agreement which shall set forth and provide:
(a) The RUS Notes to be prepaid and when the Discounted Present Value will be calculated.
(b) The place and conditions for closing.
(c) Agreement that the unadvanced balance of RUS Notes shall be rescinded.
(d) Agreement that the borrower, or its successors or assigns, shall pay to the Government, as a condition of receiving additional loans or loan guarantees pursuant to Titles I, II and III of the Act, an amount equal to the aggregate of the difference with respect to each of the RUS Notes between the amount outstanding on the RUS Note and the Discounted Present Value of the RUS Note upon prepayment with interest accruing quarterly; the interest rates shall be the rates provided in the respective RUS Notes.
(e) Assurances that the borrower will meet its obligations to any power supplier financed pursuant to the Act.
(f) Such other terms and conditions as the Administrator deems appropriate.
If, after prepayment of RUS Notes, the Government should continue to hold liens on the borrower's property that secure loans made or guaranteed pursuant to the Act, the Administrator of RUS or the Governor of the Rural Telephone Bank, as the case may be, will consider request for the accommodation of such liens for the purpose of providing security for loans the proceeds of which were used to prepay RUS Notes. Such lien accommodations shall be limited in amount to the Discounted Present Value of the RUS Notes plus such costs, as the Administrator shall determine to be reasonable, incurred by the borrower in obtaining such loans.
Within 6 months of closing RUS shall have the right to audit transactions involving the RUS construction fund established and maintained by the borrower pursuant to the terms of the RUS Loan Agreement and to inspect all books, records, accounts and other documents and papers of the borrower. Should RUS determine that the borrower has made disbursements of funds advanced pursuant to RUS Notes which do not comply with the requirements of the RUS Loan Agreement, the borrower shall be required to pay to the Government an amount equal to the difference between the amount which the borrower prepaid on such RUS Notes evidencing RUS loan funds which were improperly disbursed and the amount which the borrower would otherwise have been required to return to the Government as a result of noncompliance if the borrower had not prepaid such RUS Notes. (See 7 CFR part 1721)
(a) The borrower shall be responsible for obtaining all approvals necessary to consummate the transaction as required by the prepayment agreement including such approvals as may be required by regulatory bodies and other lenders.
(b) The RUS Notes shall be prepaid at a closing to be held in accordance with the prepayment agreement;
RUS loan documentation generally permits borrowers to prepay RUS Notes by paying the outstanding balance due thereon. Nothing in this subpart shall prohibit any borrower from prepaying its outstanding RUS Notes in accordance with the terms thereof. The provisions of this subpart shall not be applicable to such prepayment.
This subpart sets forth the policies and procedures of RUS whereby certain electric borrowers may prepay outstanding RUS Notes at the Discounted Present Value of the RUS Notes with private financing.
As used in this subpart:
(1) The combination, pursuant to state law, of two or more borrower or nonborrower organizations into a new successor organization that takes over the assets and assumes the liabilities of those organizations; or
(2) Any other transaction including an acquisition which has substantially the same effect.
(1) The combination, pursuant to state law, of two or more borrower or nonborrower organizations into an existing survivor organization that takes over the assets and assumes the liabilities of the merged organizations; or
(2) Any other transaction including an acquisition which has substantially the same effect.
There were 29 former RUS electric borrowers that prepaid their direct or insured loans under section 306B(a) of
(a) The Discounted Present Value shall be calculated by RUS before prepayment is made by summing the present values of all remaining payments on all outstanding notes according to the following formula to compute the discounted present value of each note and adjusting as here and after provided for tax exempt financing.
(b) Notwithstanding paragraph (a) of this section, in the event that the borrower shall elect to prepay using tax exempt financing, the calculation of the Discounted Present Value shall be adjusted to make the discount the equivalent of fully taxable financing.
To be eligible to prepay RUS Notes at the Discounted Present Value, a borrower must comply with the following criteria:
(a) The borrower must be current on all payments due on its outstanding RUS Notes and all other payment obligations owed to RUS;
(b) The borrower must agree to prepay all of its outstanding RUS Notes;
(c) The borrower must identify the source of financing that will be used directly or indirectly to refinance its outstanding RUS Notes. The borrower must certify in writing whether such financing will be tax exempt and, if so, shall furnish all information on the financing as RUS may request to enable RUS to adjust the discount to the equivalent to fully taxable financing;
(d) The borrower must have expended all funds advanced on account of the RUS Notes for the purposes for which such funds were advanced or repaid RUS for all unexpended funds;
(e) The borrower must agree to a rescission of the unadvanced balance of any RUS Notes outstanding as of the date of its application for prepayment;
(f) The borrower must agree that the borrower, its successors and assigns,
(g) If the borrower is a party to a wholesale power contract with a power supplier financed pursuant to the Act, the borrower must provide the Administrator with such assurances as the Administrator may request that it will meet its obligations to the power supplier. The borrower must also specifically agree to the following limitation: The borrower agrees that, for so long as the Wholesale Power Contract shall be in effect between the borrower and the power supplier, the borrower will not, without the approval in writing of the power supplier and the Administrator, take or suffer to be taken any steps for reorganization or to consolidate with or merge into any corporation or any other public power district, or to sell, lease or transfer (or make any agreement therefor) all or a substantial portion of its assets, whether now owned or hereafter acquired. Notwithstanding the foregoing, the borrower may take or suffer to be taken any steps for reorganization or to consolidate with or merge into any corporation or any other public power district, or to sell, lease or transfer (or make any agreement therefor) all or a substantial portion of its assets, whether now owned or hereafter acquired, so long as the borrower shall pay such portion of the outstanding indebtedness evidenced by the power supplier's Notes at the time outstanding as shall be determined by the power supplier with the prior written consent of the Administrator and shall otherwise comply with such reasonable terms and conditions as the Administrator and the Power Supplier shall require.
Any borrower seeking to prepay its RUS Notes under this Subpart should apply to the appropriate RUS Area Director not less than 60 days prior to one year after the effective date of the merger or consolidation by submitting:
(a) A board resolution that:
(1) Requests approval of the prepayment of the borrower's outstanding RUS Notes;
(2) States the intent of the borrower to comply with all eligibility criteria set forth in § 1786.99 of this subpart; and
(3) Identifies the source of financing.
(b) A list of all RUS Notes together with the outstanding amount on such notes.
(c) An opinion of counsel as to the effective date of the merger or consolidation.
(d) Such additional information as the Administrator will request.
The applications will be reviewed and, if satisfactory, approved. Closing will be scheduled upon approval.
Upon approving an application for prepayment under this subpart, the Administrator shall notify the borrower and deliver to the borrower for its execution a prepayment agreement which shall set forth and provide:
(a) The RUS Notes to be prepaid and when the Discounted Present Value will be calculated.
(b) The place, date and conditions for closing.
(c) Agreement that the unadvanced balance of RUS Notes shall be rescinded.
(d) Agreement that the borrower, or its successors or assigns, shall pay to the Government, as a condition of receiving additional loans or loan guarantees pursuant to titles I and III of the Act, an amount equal to the aggregate of the difference with respect to each of the RUS Notes between the amount outstanding on the RUS Note and the Discounted Present Value of the prepaid RUS Note; with interest accruing quarterly. The interest rates shall be the rates provided in the respective RUS Notes.
(e) Assurances that the borrower will meet its obligations to any power supplier financed pursuant to the Act.
(f) Such other terms and conditions as the Administrator deems appropriate.
If, after prepayment of RUS Notes, the Government should continue to hold liens on the borrower's property, the Administrator of RUS will consider a request for the accommodation of such liens for the purpose of providing security for loans the proceeds of which were used to prepay RUS Notes. Such lien accommodations shall be limited in amount to the Discounted Present Value of the RUS Notes plus such costs, as the Administrator shall determine to be reasonable, incurred by the borrower in obtaining such loans.
RUS shall have the right to audit within 6 months of closing, transactions involving the RUS construction fund established and maintained by the borrower pursuant to the terms of the RUS Loan Agreement and to inspect all books, records, accounts and other documents and papers of the borrower. Should RUS determine that the borrower has made disbursements of funds advanced pursuant to RUS Notes which do not comply with the requirements of the RUS Loan Agreement, the borrower shall be required to pay the Government an amount equal to the difference between the amount which the borrower prepaid on such RUS Notes evidencing RUS loans funds which were improperly disbursed and the amount which the borrower would otherwise have been required to return to the Government as a result of noncompliance if the borrower had not prepaid such RUS Notes. (See 7 CFR part 1721, Post-Loan Policies and Procedures for Insured Electric Loans.)
(a) The borrower shall be responsible for obtaining all approvals necessary to consummate the transaction as required by the prepayment agreement, including such approvals as may be required by regulatory bodies and other lenders.
(b) The RUS Notes shall be prepaid at a closing to be held in accordance with the prepayment agreement. RUS shall designate the date of closing which in no event shall be later than one year after the effective date of the merger or consolidation. At closing, in addition to paying all current interest due on the date of prepayment, a borrower shall prepay the RUS Notes by paying to the Government an amount equal to the lesser of the outstanding balance or the Discounted Present Value of the RUS Notes. The closing shall otherwise be conducted as prescribed in the prepayment agreement.
RUS loan documentation generally permits borrowers to prepay RUS Notes by paying the outstanding balance due thereon. Nothing in this subpart shall prohibit any borrower from prepaying its outstanding RUS Notes in accordance with the terms thereof. The provisions of this subpart shall not be applicable to such prepayment.
These data are released each Monday. The availability of the release will be announced when the information is available, on (202) 452-3206.
For immediate release February 4, 1991.
Yields on Treasury securities at “constant maturity” are interpolated by the U.S. Treasury from the daily yield curve. This curve, which relates the yield on a security to its time to maturity, is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. These market yields are calculated from composites of quotations reported by five leading U.S. Government securities dealers to the Federal Reserve Bank of New York. The constant maturity yield values are read from the yield curve at fixed maturities, currently 1, 2, 3, 5, 7, 10, and 30 years. This method provides a yield for a 10-year maturity, for example, even if no outstanding security has exactly 10 years remaining to maturity.
7 U.S.C. 901
This subpart sets forth the policies and procedures of RUS whereby borrowers may prepay, with private financing or internally generated funds, outstanding RUS Notes evidencing
(a)
(b)
An electric loan made under the RE Act shall not be sold or prepaid at a value that is less than the outstanding principal balance, except that, on request of a borrower, an electric loan made under the RE Act, or a portion of such a loan, that was advanced before May 1, 1992, or has been advanced for not less than 2 years, shall be prepaid by the borrower at the lesser of the outstanding principal balance of the loan or the discounted present value thereof.
(a) The discounted present value shall be calculated by summing the present values of all remaining payments on all Qualified Notes to be prepaid according to the following formula and adjusted as provided in paragraph (b) of this section if tax exempt financing is used.
The percentage terms used in the above formula will be truncated to two decimal places. For the purpose of the terms A, B, E, and F above the published Treasury rate and term shall mean the Treasury Constant Maturities from the Federal Reserve Statistical Release for 7 years, 10 years, 20 years, and 30 years.
(b)(1) In the event that the borrower prepays a loan under paragraph (a) of this section using, directly or indirectly, tax exempt financing, the discount shall be adjusted to ensure that the borrower receives a benefit that is no greater than the benefit the borrower would receive if the borrower used financing that was not tax exempt. The borrower shall certify in writing whether the financing will be tax exempt.
(2) The discount rate established in paragraph (a) of this section shall be adjusted for a tax exempt financing by substituting for the “I” term in the discount rate formula, a discount rate equal to the interest rate(s) published pursuant to 7 CFR 1714.5, determination of interest rates on municipal rate loans. This is the interest rate established for the new RUS loan program which is based on municipal interest rates for issues of comparable maturity. No interpolation or average will be used. If a note is to be prepaid under this subpart and is subject to this tax exempt adjustment, the discount rate will be determined from the published table in the
An eligible borrower may prepay Qualified Notes under this subpart at the discounted present value. A Qualified Note is a note evidencing an RUS electric loan, all advances of which were made prior to May 1, 1992, or not less than 2 years prior to the date of prepayment closing. See §§ 1786.155(a)(3) and 1786.158 (h) and (j).
(a) To be eligible to prepay an electric loan under this subpart, the borrower must be in compliance with the following:
(1) The borrower shall be current on all payment obligations on outstanding loans made or guaranteed by RUS. For the purpose of determining eligibility for prepayment, a default by a power supply borrower from which a distribution borrower purchases wholesale power shall not be considered a default by the distribution borrower;
(2) There shall exist no material defaults under the borrower's RUS Loan Contract and Mortgage;
(3) The borrower shall have expended all funds advanced pursuant to the RUS Loan Contract for the purposes for which such funds were advanced. A borrower will not be eligible to prepay under this subpart if it has any funds advanced pursuant to the RUS Loan Contract in its Construction Fund Account; and
(4) The borrower shall be current on all obligations under any wholesale power contract with an RUS financed power supply borrower.
(b) The eligibility of borrowers that have had any indebtedness representing loans made or guaranteed by RUS restructured shall be determined on a case by case basis considering the terms and conditions of the restructuring agreement.
Any borrower seeking to prepay Qualified Notes under this subpart should apply to the appropriate RUS Regional Director or the Director of the Power Supply Division. The application shall provide the following:
(a) Borrower's RUS designation;
(b) Borrower's name and address;
(c) A certified copy of a resolution of the board of directors of the borrower that the borrower wishes to enter into a prepayment agreement providing for the prepayment of all or a portion of its Qualified Notes;
(d) Listing of each Qualified Note to be prepaid by loan designation, RUS account number, advance date, maturity date, original amount, and outstanding principal balance;
(e) Evidence that the borrower has the ability to obtain the financing necessary to prepay its Qualified Notes listed in paragraph (d) of this section and identification of the source of financing and the need if any of obtaining a lien accommodation from RUS; and
(f) Such additional information as the Administrator may request.
(a) Ordinarily, within 30 days of receipt, an application will be reviewed and the borrower will be notified as to whether the application has been approved. If the application has not been approved, the borrower will be informed as to the reasons. If the application is approved the borrower shall thereafter be provided with a prepayment agreement for execution.
(b) The Administrator may limit the number of applications approved and closings scheduled from time to time, taking into account, among other matters, administrative considerations of the RUS.
Upon receipt of a satisfactory application, RUS shall provide to the borrower for its execution a prepayment agreement, in form and substance satisfactory to RUS, which may include the following:
(a) Provide for the prepayment of one or more Qualified Notes from time to time, but no more than two closings may be scheduled in any calendar year unless a third closing is for the prepayment of all outstanding electric loans of the borrower;
(b) Set forth procedures and forms through which the borrower will notify the Government of each election it makes to prepay certain Qualified Notes upon a requested closing date and the Government will notify the borrower of the established closing date and prepayment amount for the Qualified Notes for each closing;
(c) Reserve to the Administrator the right to reschedule closing dates to meet administrative considerations;
(d) Set forth closing requirements identifying the location and manner of payment, and all documentation and information to be delivered prior to or at closing, including opinions of counsel and certificates from the borrower;
(e) Provide for notice by either telephone or facsimile to be given by RUS to the borrower not more than 8 nor less than 3 business days before a scheduled closing date of the amount to be paid at closing which shall include all accrued interest and the discounted present value of the Qualified Notes to be prepaid;
(f) Provide for notice of the 120 month period during which the borrower's eligibility for direct or insured loans will be restricted;
(g) Set forth representations and warranties;
(h) Require the borrower to prepay each Qualified Note specified in full;
(i) Require the borrower to identify the source of the financing that will be used directly or indirectly to refinance the Qualified Notes. If the source is other than internally generated funds, the borrower must certify in writing whether such financing will be tax exempt, and if tax exempt financing will be used, furnish all information on the terms and conditions of the financing as RUS may require;
(j) Require the borrower to rescind the unadvanced balance of all outstanding electric loans as of the date of initial closing;
(k) Require the borrower, if it is a party to a wholesale power contract with a power supply borrower, to provide the Administrator with such assurances as the Administrator may require that it is in compliance with and will continue to comply with its obligation to such power supply borrower;
(l) Provide RUS, if the Administrator determines it necessary, with security for all outstanding rural development loans and amendments to any outstanding rural development loan agreements in form and substance, and on terms and conditions, satisfactory to RUS;
(m) Prescribe remedies for violating the terms and conditions of the prepayment agreement;
(n) Provide for termination by RUS of the right for the borrower to prepay thereunder;
(o) Provide evidence that any approvals required from any supplemental lender have been obtained; and
(p) Set forth such other terms and conditions as the Administrator shall deem appropriate.
(a) Upon receipt of the prepayment agreement, the borrower may submit, pursuant to the terms of the prepayment agreement, a closing request which shall request a closing date no less than 30 business days from the date of the request.
(b) The Government will respond to the borrower's closing request by delivering a preclosing notice to the borrower not less than 10 business days prior to the date which the Government, after reviewing the borrower's closing request, selects as a closing date.
(a) Each subsequent prepayment after the initial closing shall be facilitated with the submission of an additional closing request by the borrower. Each closing request must request a closing date no less than 30 business days from the date of the request.
(b) The Government will respond to each subsequent closing request by delivering a preclosing notice to the borrower not less than 10 business days prior to the date which the Government, after reviewing the borrower's closing request, selects as a closing date in each case.
Upon payment to RUS at closing of the full amount specified in the notice delivered by RUS to the borrower pursuant to the terms of the prepayment agreement (see § 1786.158(e)), RUS will deliver to the borrower at closing those Qualified Notes which have been paid in full at such closing, and upon payment and discharge of all outstanding RUS debt obligations by the borrower, RUS will deliver to the borrower at the final closing a release of lien prepared by the borrower pursuant to the terms of the prepayment agreement.
(a) Except as expressly provided in this subpart, the borrower shall comply with all provisions of its RUS Loan Contract, its outstanding notes issued to RUS, and the RUS Mortgage.
(b) Nothing in this subpart shall affect any rights of supplemental lenders under the RUS Mortgage, or other creditors of the borrower.
(c) Nothing in this subpart shall prohibit a borrower from making prepayments of any loans pursuant to the RE Act in accordance with the terms of such loans.
(a) If the borrower is a party to a wholesale power contract with a power
So long as any of the notes evidencing secured loans of the power supply borrower are outstanding, the borrower will not, without the approval in writing of the power supply borrower and the Administrator, take or suffer to be taken any steps for reorganization or dissolution, or to consolidate with or merge into any corporation, or to sell, lease or transfer (or make any agreement therefor) all or a substantial portion of its assets, whether now owned or hereafter acquired. The power supply borrower will not unreasonably withhold or condition its consent to any such, reorganization, dissolution, consolidation, or merger, or to any such sale, lease or transfer (or any agreement therefor) of assets. The power supply borrower will not withhold or condition such consent except in cases where to do otherwise would result in rate increases for the other members of the power supply borrower or impair the ability of the power supply borrower to repay its secured loans in accordance with their terms, or adversely affect system performance in a material way. Notwithstanding the foregoing, the borrower may take or suffer to be taken any steps for reorganization or dissolution or to consolidate with or merge into any corporation or to sell, lease or transfer (or make any agreement therefor) all or a substantial portion of its assets, whether now owned or hereafter acquired without the power supply borrower's consent, so long as the borrower shall pay such portion of the outstanding indebtedness on the power supply borrower's notes or other obligations as shall be determined by the power supply borrower with the prior written consent of the Administrator and shall otherwise comply with such reasonable terms and conditions as the Administrator and power supply borrower may require either: (1) To eliminate any adverse effect that such action seems likely to have on the rates of the other members of the power supply borrower, or
(2) To assure that the power supply borrower's ability to repay the secured loans and other obligations of the power supply borrower in accordance with their terms is not impaired.
The Administrator may require, among other things, that any payment owed under (2) of the preceding sentence that represents a portion of the power supply borrower's indebtedness on Notes shall be paid by the borrower in the manner necessary to accomplish a defeasance of those obligations in accordance with the loan documents relating thereto, or be paid directly to the holders of the Notes for application by them as prepayments in accordance with the provisions of such documents, or be paid to the power supply borrower and held and invested in a manner satisfactory to the Administrator.
(b) The Administrator may exempt a borrower from the requirement to enter into a supplement to its outstanding wholesale power contract if the Administrator determines that such requirement is burdensome and unnecessary in light of the provisions of the existing wholesale power contract, other security arrangements of the power supply borrower, and any other relevant facts and circumstances. Normally such exemption will be granted only with the concurrence of the power supply borrower.
In the event that a borrower shall prepay all its outstanding electric loans RUS shall have the right to audit within six (6) months of closing transactions involving the RUS Construction Fund Account established and maintained by the borrower pursuant to the terms of the RUS Loan Contract and to inspect all books, records, accounts, and other documents and papers of the borrower. Should RUS determine that the borrower has made disbursements of funds advanced pursuant to the RUS Loan Contracts which do not comply with the requirements thereof, the borrower shall be required to pay the RUS an amount equal to the difference between the amount which the borrower prepaid under this subpart with respect to such advances, and the amount which the borrower would otherwise have been required to return to the RUS as a result of noncompliance if the borrower had not prepaid such advances, plus interest. (See 7 CFR part 1721, Post-Loan Policies and Procedures for Insured Electric Loans.)
Borrowers that no longer have any loans made or guaranteed by RUS and are considering applying for other financial assistance pursuant to the RE
The borrower shall be responsible for obtaining all approvals necessary to consummate the transaction as required by the prepayment agreement, including such approvals as may be required by regulatory bodies and other lenders.
(a) No borrower that prepays an electric loan at a discount as provided under this subpart may apply for or receive direct or insured loans during the 120 months from the most recent closing date, except at the discretion of the Administrator. During the 120 month period the Administrator may consider providing an insured loan if, among other matters, it is necessary to assure repayment of, or protect the Government's security for any outstanding loans or loan guarantees, or the borrower's system has suffered severe physical plant related damage due to conditions beyond its control and the borrower is unable to obtain financing at reasonable terms to restore the system from non-RUS sources, including the Federal Emergency Management Agency, and from private sources. Upon expiration of the 120 months, such borrowers may apply for direct or insured loans in the same manner as other borrowers provided that such borrowers may not apply for direct or insured loans for facilities, construction of which commenced prior to the expiration of the 120 months. Special provisions for mergers involving a borrower that has prepaid pursuant to this subpart are in 7 CFR 1717.158.
(b) Borrowers that prepay their direct or insured RUS loans under this subpart remain eligible for certain types of financial assistance under the RE Act, including loan guarantees and rural development loans.
(a) A borrower that had prepaid, prior to the date of enactment of Public Law 102-428 (106 Stat. 2183) on October 21, 1992, at a discount rate as provided at 7 CFR part 1786, subpart C:
(1) Shall not be eligible except at the discretion of the Administrator as stated in paragraph § 1786.167(a), to apply for or receive direct or insured loans during the 180-month period beginning on the date of the prepayment; and
(2) Shall not be eligible to apply for or receive direct or insured loans from RUS until the borrower has repaid to the RUS the sum of:
(i) The amount (if any) by which the discount the borrower received by reason of the prepayment exceeds the discount the borrower would have received had the discount been based on the cost of funds to the Department of the Treasury as calculated at § 1786.153 at the time of the prepayment; and
(ii) Interest on the amount described in paragraph (a)(2)(i) of this section for the period beginning on the date of the prepayment and ending on the date of the repayment, at a rate equal to the average annual cost of borrowing by the Department of the Treasury. This rate will be calculated first on the date of prepayment and at one year intervals from that date based on the same U.S. Treasury issues published in the Federal Reserve Statistical Release closest to that date. The Treasury rate of interest to be applied for each year will be the rate for the Treasury issue of comparable maturity to the number of years from the prepayment date to the repayment date and at one year intervals thereafter.
(b) If a borrower and the Administrator have entered into an agreement with respect to a prepayment occurring before October 21, 1992, this section shall supersede any provision in the agreement relating to the restoration of eligibility for loans under the RE Act.
(c) Borrowers who prepaid prior to October 1, 1987, are eligible for assistance under the RE Act in the same
(d) During the 180 month period described in paragraph (a)(1) of this section the Administrator may consider providing an insured loan, if the conditions described in § 1786.167(a) exist.
(e) Borrowers may not apply for direct or insured loans for facilities, construction of which commenced prior to the expiration of the 180 month period described in paragraph (a)(1) of this section.
It is the intent of this subpart that any failure on the part of RUS to comply with any provisions of this subpart, including without limitation, those provisions setting forth specified timeframes for action by RUS on applications for prepayments or closing requests, shall not give rise to liability of any kind on the part of the Government or any employees of the Government including, without limitation, liability for damages, fees, expenses or costs incurred by or on behalf of a borrower, private lender or any other party.
7 U.S.C. 901
This subpart sets forth the policies and procedures of RUS through the existing FFB program, whereby borrowers may prepay and refinance, outstanding FFB Notes evidencing electric or telephone loans with FFB, pursuant to the provisions of section 306(C) of the RE Act as added by Public Law 103-66, 107 Stat. 312, enacted August 10, 1993.
(a)
(b)
The borrower of an electric or telephone loan made by the FFB and guaranteed by RUS under section 306 of the RE Act may, at the option of the borrower, refinance or prepay a loan or an advance on the loan, or any portion of the loan or advance in accordance with section 306C of the RE Act, after meeting certain conditions using the procedures prescribed in the note. After refinancing existing notes under this section, additional prepayments or refinancings will be governed by the terms of the refinancing note(s).
Generally all FFB borrowers with loans guaranteed by RUS whose FFB notes have not been accelerated are eligible to prepay or refinance under this part. All requests for prepayment or refinancing will be processed in accordance with this subpart except that some requests for refinancing and prepayments are more complicated and thus will involve special considerations. These requests will have to be handled on a case by case basis and include:
(a) Telephone borrowers who are required to meet certain terms of their indenture;
(b) Borrowers who have amended their old form note or have already repriced prior to September 30, 1993;
(c) Borrowers that have been involved in a merger or consolidation;
(d) Borrowers whose obligations to RUS, FFB notes, or security instruments differ from those normally used;
(e) A request to prepay or refinance an amount of less than $100,000 or an amount of less than the full amount of an advance outstanding; or
(f) A request to prepay or refinance a note that includes unadvanced loan funds.
(a) No more than three refinancing notes will be executed for any borrower per calendar year.
(b) The borrower may not select a term for the refinanced advance that ends after the maturity date set for that advance.
(a) Any borrower seeking to prepay or refinance an advance from the FFB under this subpart should apply by letter to the appropriate RUS Regional Director or, in the case of power supply borrowers, to the Director of the Power Supply Division. The borrower will be required to submit applications and elections in a digital format to be supplied by RUS. The application letter shall provide the following:
(1) Borrower's RUS designation;
(2) Borrower's name and address;
(3) Listing of each note to be prepaid by loan designation, RUS note number, RUS account number, advance date, maturity date, original amount, outstanding balance, and date(s) of any substitute FFB note(s) amending the original FFB Note;
(4) A statement of the borrower's intention to finance the premium by an addition to principal balance or to pay the premium in cash or with unsecured debt;
(5) A statement of the maturity options that the borrower wishes to select;
(6) Such additional information as the Administrator may request.
(b) Requests for refinancing or prepayment will ordinarily be processed in the order that they are received. Borrower's may withdraw an application by notifying the appropriate RUS office in which they filed the application.
(c) When the request for prepayment or refinancing is approved for processing the borrower will be provided with appropriate instructions, documents and forms which may include but are not limited to the following:
(1) An FFB refinancing note;
(2) Resolution of Board of Directors;
(3) Legal Opinion;
(4) Certificate of Secretary;
(5) Waiver of Notice;
(6) Notice to borrower electing an effective date other than a scheduled quarterly payment date (if applicable);
(7) Documentation of obligations secured pursuant to section 1786.208 if any; and
(8) Security instrument.
(a) RUS will issue a replacement guaranty for refinancing notes delivered to FFB to replace and substitute for existing FFB notes in connection with any refinancing by FFB pursuant to section 306C of the RE Act.
(b) Generally, refinancing notes will, to the extent practicable, consolidate all of a borrower's existing FFB notes which have been guaranteed by RUS and containing terms and conditions as FFB may require and RUS and the borrower may accept.
(c) Notwithstanding any contrary provision contained in this subpart, RUS will give preference to processing refinancings that utilize a generic form of refinancing note in the event that FFB prescribes one.
(a) A premium shall be assessed against a borrower that refinances or prepays a loan or loan advance, or any portion of a loan or advance, under this section. RUS will collect the prepayment premium as calculated by FFB. FFB will calculate this premium as described in this section. Except as provided in paragraph (b) of this section, the premium shall be equal to the lesser of:
(1) The difference between the outstanding principal balance of the loan being refinanced and the present value of the loan discounted at a rate equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the loan being refinanced or prepaid;
(2) 100 percent of the amount of interest for 1 year on the outstanding principal balance of the loan or loan advance, or any portion of the loan or advance, being refinanced, multiplied by the ratio that:
(i) The number of quarterly payment dates between the date of the refinancing or prepayment and the maturity date for the loan advance; bears to
(ii) The number of quarterly payment dates between the first quarterly payment date that occurs 12 years after the end of the year in which the amount being refinanced was advanced and the maturity date of the loan advance; and
(3)(i) The present value of 100 percent of the amount of interest for 1 year on the outstanding principal balance of the loan or loan advance, or any portion of the loan or advance, being refinanced or prepaid; plus
(ii) For the interval between the date of the refinancing or prepayment and the first quarterly payment date that occurs 12 years after the end of the year in which the amount being refinanced or prepaid was advanced, the present value of the difference between:
(A) Each payment scheduled for the interval on the loan amount being refinanced or prepaid; and
(B) The payment amounts that would be required during the interval on the amounts being refinanced or prepaid if the interest rate on the loan were equal to the then current cost of funds
(b)(1) Except as provided in paragraph (b)(2) of this section, the premium provided by paragraph (a)(1) of this section shall be required for refinancing or prepayment under this section.
(2) In the case of a loan advanced under an agreement that permits the refinancing or prepayment of the loan advance based on the payment of 1 year of interest on the outstanding principal balance of the loan advance, a borrower may, in lieu of the premium required by paragraph (a)(1) of this section, pay a premium as provided by:
(i) Paragraph (a)(2) of this section, if the loan advance has reached the 12-year maturity required under the loan agreement for the refinancing or prepayment; or
(ii) Paragraph (a)(3) of this section, if the loan advance has not reached the 12-year maturity required under the loan agreement for the refinancing or prepayment.
A borrower can meet the premium requirements by increasing the outstanding principal balance of the loan advance that is being refinanced. If it does so the borrower shall make a payment at the time of the refinancing equal to 2.5 percent of the amount of the premium that is added to the outstanding principal balance of the loan.
(a) Except as expressly provided in this subpart, the borrower shall comply with all provisions of its RUS loan contract, its outstanding notes issued to RUS, and the RUS mortgage.
(b) Nothing in this subpart shall affect any rights of supplemental lenders under the RUS mortgage or the rights of any other creditors of the borrower.
(c) Nothing in this subpart shall prohibit a borrower from making prepayments on any loans pursuant to the RE Act in accordance with the terms thereof or as may be otherwise permitted by law.
The borrower shall be responsible for obtaining all approvals necessary to consummate the transaction as required by the refinancing note, including such approvals as may be required by regulatory bodies and other lenders.
7 U.S.C. 901
(a) The standard forms of documents covering loans made or guaranteed by the Rural Utilities Service contain provisions regarding insurance and fidelity coverage to be maintained by each borrower. This part implements those
(b) As used in this part:
(c) RUS may revise these requirements on a case by case basis for borrowers with unusual circumstances.
(a) Borrowers will take out, as the respective risks are incurred, and maintain the classes and amounts of insurance in conformance with generally accepted utility industry standards for such classes and amounts of coverage for utilities of the size and character of the borrower and consistent with Prudent Utility Practice. Prudent Utility Practice shall mean any of the practices, methods, and acts which, in the exercise of reasonable judgment, in light of the facts, including but not limited to, the practices, methods, and acts engaged in or approved by a significant portion of the electric utility industry in the case of an electric borrower or of the telecommunications industry in the case of a telecommunications borrowers prior thereto, known at the time the decision was made, would have been expected to accomplish the desired result consistent with cost-effectiveness, reliability, safety, and expedition. It is recognized that Prudent Utility Practice is not intended to be limited to optimum practice, method, or act to the exclusion of all others, but rather is a spectrum of possible practices, methods, or act which could have been expected to accomplish the desired result at the lowest reasonable cost consistent with cost-effectiveness, reliability, safety, and expedition.
(b) The foregoing insurance coverage shall be obtained by means of bond and policy forms approved by regulatory authorities having jurisdiction, and, with respect to insurance upon any part of the mortgaged property securing an RUS loan, shall provide that the insurance shall be payable to the mortgagees as their interests may appear by means of the standard mortgagee clause without contribution. Each policy or other contract for such insurance shall contain an agreement by the insurer that, notwithstanding any right of cancellation reserved to such insurer, such policy or contract shall continue in force for at least 30 days after written notice to each mortgagee of suspension, cancellation, or termination.
(c) In the event of damage to or the destruction or loss of any portion of the mortgaged property which is used or useful in the borrower's business and which shall be covered by insurance, unless each mortgagee shall otherwise agree, the borrower shall replace or restore such damaged, destroyed, or lost portion so that such mortgaged property shall be in substantially the same condition as it was in prior to such damage, destruction, or loss and shall apply the proceeds of the insurance for that purpose. The borrower shall replace the lost portion of such mortgaged property or shall commence such restoration promptly after such damage, destruction, or loss shall have occurred and shall complete such replacement or restoration as expeditiously as practicable, and shall pay or cause to be paid out of the proceeds of such insurance form all costs and expenses in connection therewith.
(d) Sums recovered under any policy or fidelity bond by the borrower for a loss of funds advanced under a note secured by a mortgage or recovered by any mortgagee or holder of any note secured by the mortgage for any loss under such policy or bond shall, unless applied as provided in the preceding paragraph, be used as directed by the borrower's mortgage.
(e) Borrowers shall furnish evidence annually that the required insurance and fidelity coverage has been in force for the entire year, and that the borrower has taken all steps currently necessary and will continue to take all steps necessary to ensure that the coverage will remain in force until all loans made or guaranteed by RUS are paid in full. Such evidence shall be in a form satisfactory to RUS. Generally a certification included as part of the RUS Financial and Statistical Report filed by the borrower annually (RUS Form 7 or Form 12 for electric borrowers, RUS Form 479 for telecommunications borrowers, or the successors to these forms) is sufficient evidence of this coverage.
(a) Borrowers shall purchase and maintain flood insurance for buildings in flood hazard areas to the extent available and required under the National Flood Insurance Act of 1968, as amended (42 U.S.C. 4001,
(b) The National Flood Insurance Program (see 44 CFR Part 59
(1) That the insurer give 30 days written notice of cancellation or nonrenewal to the insured with respect to the flood insurance coverage. To be effective, such notice must be mailed to both the insured and RUS and other mortgagees if any and must include information as to the availability of flood insurance coverage under the National Flood Insurance Program, and
(2) That the flood insurance coverage is at least as broad as the coverage offered by the Standard Flood Insurance Policy.
(a) Borrowers must immediately report, in writing, all irregularities and all indications or instances of illegal acts in its operations, whether material or not, to RUS and the Office of the Inspector General (OIG). See 7 CFR 1773.9(c)(3) for OIG addresses. The reporting requirements for borrowers are the same as those for CPA's set forth in § 1773.9
(b) Borrowers are required to make full disclosure to the bonding company of the dishonest or fraudulent acts.
In the case of a cooperative or mutual organization, RUS requires that the following:
Endorsement Waiving Immunity From Tort Liability” be included as a part of each public liability, owned, non-owned, hired automobile, and aircraft liability, employers’ liability policy, and boiler policy:
The Insurer agrees with the Rural Utilities Service that such insurance as is afforded by the policy applies subject to the following provisions:
1. The Insurer agrees that it will not use, either in the adjustment of claims or in the defense of suits against the Insured, the immunity of the Insured from tort liability, unless requested by the Insured to interpose such defense.
2. The Insured agrees that the waiver of the defense of immunity shall not subject the Insurer to liability of any portion of a claim, verdict or judgment in excess of the limits of liability stated in the policy.
3. The Insurer agrees that if the Insured is relieved of liability because of its immunity, either by interposition of such defense at the request of the Insured or by voluntary action of a court, the insurance applicable to the injuries on which such suit is based, to the extent to which it would otherwise have been available to the Insured, shall apply to officers and employees of the Insured in their capacity as such; provided that all defenses other than immunity from tort liability which would be available to the Insurer but for said immunity in suits against the Insured or against the Insurer under the policy shall be available to the Insurer with respect to such officers and employees in suits against such officers and employees or against the Insurer under the policy.
If a borrower fails to purchase or maintain the required insurance and fidelity coverage, the mortgagees may place required insurance and fidelity coverage on behalf and in the name of the borrower. The borrower shall pay
(a) Each electric borrower shall include the provisions in this paragraph in its agreements with contractors, engineers, and architects, said agreements that are wholly or partially financed by RUS loans or guarantees. The borrower should replace “Contractor” with “Engineer” or “Architect” as appropriate.
1. The Contractor shall take out and maintain throughout the period of this Agreement insurance of the following minimum types and amounts:
a. Worker's compensation and employer's liability insurance, as required by law, covering all their employees who perform any of the obligations of the contractor, engineer, and architect under the contract. If any employer or employee is not subject to workers’ compensation laws of the governing State, then insurance shall be obtained voluntarily to extend to the employer and employee coverage to the same extent as though the employer or employee were subject to the workers’ compensation laws.
b. Public liability insurance covering all operations under the contract shall have limits for bodily injury or death of not less than $1 million each occurrence, limits for property damage of not less than $1 million each occurrence, and $1 million aggregate for accidents during the policy period. A single limit of $1 million of bodily injury and property damage is acceptable. This required insurance may be in a policy or policies of insurance, primary and excess including the umbrella or catastrophe form.
c. Automobile liability insurance on all motor vehicles used in connection with the contract, whether owned, non-owned, or hired, shall have limits for bodily injury or death of not less than $1 million per person and $1 million each occurrence, and property damage limits of $1 million for each occurrence. This required insurance may be in a policy or policies of insurance, primary and excess including the umbrella or catastrophe form.
2. The Owner shall have the right at any time to require public liability insurance and property damage liability insurance greater than those required in paragraphs (a)(1)(b) and (a)(1)(c) of this section. In any such event, the additional premium or premiums payable solely as the result of such additional insurance shall be added to the Contract price.
3. The Owner shall be named as Additional Insured on all policies of insurance required in (a)(1)(b) and (a)(1)(c) of this section.
4. The policies of insurance shall be in such form and issued by such insurer as shall be satisfactory to the Owner. The Contractor shall furnish the Owner a certificate evidencing compliance with the foregoing requirements that shall provide not less than 30 days prior written notice to the Owner of any cancellation or material change in the insurance.
(b) Electric borrowers shall also ensure that all architects and engineers working under contract with the borrower have insurance coverage for Errors and Omissions (Professional Liability Insurance) in an amount at least as large as the amount of the architectural or engineering services contract but not less than $500,000.
(c) The borrower may increase the limits of insurance if desired.
(d) The minimum requirement of $1 million of public liability insurance does not apply to contractors performing maintenance work, janitorial-type services, meter reading services, rights-of-way mowing, and jobs of a similar nature. However, borrowers shall ensure that the contractor performing the work has public liability coverage at a level determined to be appropriate by the borrower.
(e) If requested by RUS, the borrower shall provide RUS with a certificate from the contractor, engineer, or architect evidencing compliance with the requirements of this section.
Electric borrowers shall require contractors to obtain contractors’ bonds when required by part 1726, Electric System Construction Policies and Procedures, of this chapter. Surety companies providing contractors’ bonds shall be listed as acceptable sureties in the U.S. Department of Treasury Circular No. 570. The circular is maintained through periodic publication in the
This subpart sets forth RUS policies for minimum insurance requirements for contractors, engineers, and architects performing work under contracts which are wholly or partially financed by RUS loans or guarantees with telecommunications borrowers.
(a) Contractors, engineers, and architects performing work for borrowers under construction, engineering, and architectural service contracts shall obtain insurance coverage, as required in § 1788.48, and maintain it in effect until work under the contracts is completed.
(b) Contractors entering into construction contracts with borrowers shall furnish a contractors’ bond, except as provided for in § 1788.49, covering all of the contractors’ undertaking under the contract.
(c) Borrowers shall make sure that their contractors, engineers, and architects comply with the insurance and bond requirements of their contracts.
Contracts entered into between borrowers and contractors, engineers, and architects shall provide that they take out and maintain throughout the contract period insurance of the following types and minimum amounts:
(a) Workers’ compensation and employers’ liability insurance, as required by law, covering all their employees who perform any of the obligations of the contractor, engineer, and architect under the contract. If any employer or employee is not subject to the workers’ compensation laws of the governing state, then insurance shall be obtained voluntarily to extend to the employer and employee coverage to the same extent as though the employer or employee were subject to the workers’ compensation laws.
(b) Public liability insurance covering all operations under the contract shall have limits for bodily injury or death of not less than $1 million each occurrence, limits for property damage of not less than $1 million each occurrence, and $1 million aggregate for accidents during the policy period. A single limit of $1 million of bodily injury and property damage is acceptable. This required insurance may be in a policy or policies of insurance, primary and excess including the umbrella or catastrophe form.
(c) Automobile liability insurance on all motor vehicles used in connection with the contract, whether owned, non-owned, or hired, shall have limits for bodily injury or death of not less than $1 million per person and $1 million per occurrence, and property damage limits of $1 million for each occurrence. This required insurance may be in a policy or policies of insurance, primary and excess including the umbrella or catastrophe form.
(d) When a borrower contracts for the installation of major equipment by other than the supplier or for the moving of major equipment from one location to another, the contractor shall furnish the borrower with an installation floater policy. The policy shall cover all risks of damage to the equipment until completion of the installation contract.
Construction contracts in amounts in excess of $250,000 for facilities shall require contractors to secure a contractors’ bond, on a form approved by RUS, attached to the contract in a penal sum of not less than the contract price, which is the sum of all labor and materials including owner-furnished materials installed in the project. RUS Form 168b is for use when the contract exceeds $250,000. RUS Form 168c is for use when the contractor's surety has accepted a Small Business Administration guarantee and the contract is for $1,000,000 or less. For minor construction contracts under which work will be done in sections and no section will
Surety companies providing contractors’ bonds shall be listed as acceptable sureties in the U.S. Department of Treasury Circular No. 570. The circular is maintained through periodic publication in the
It is the responsibility of the borrower to determine, before the commencement of work, that the engineer, architect, and the contractor have insurance that complies with their contract requirements.
When RUS shall specifically so direct, the borrower shall also require the engineer, the architect, and the contractor, to forward to RUS evidence of compliance with their contract representative of the insurance company and include a provision that no change in or cancellation of any policy listed in the certificate will be made without the prior written notice to the borrower and to RUS.
7 U.S.C. 901-950b; Pub. L. 103-354, 108 Stat. 3178 (7 U.S.C. 6941
This part sets forth policies and the procedures for implementing subsection (c) of section 18 of the Rural Electrification Act of 1936, as amended (7 U.S.C. 901
As used in this part:
(a) As provided in this subpart, RUS may, at its discretion, use the services of Consultants funded by a Borrower where such services will facilitate timely action on an Application by such Borrower for financial assistance or other approvals. Such Consultants may provide financial, legal, engineering, environmental or other technical advice and services in connection with the review of an Application.
(b) With the approval of RUS, a Borrower may fund the cost of consulting services in connection with the review by RUS of an Application by such Borrower. Such funding shall be provided pursuant to the terms of a Funding Agreement between the Borrower and the Consultant designated by RUS.
(c) RUS may not, without the consent of the Borrower, require, as a condition of processing any Application for approval, that the Borrower agree to pay the costs of a Consultant hired to provide services to RUS.
(d) The government shall retain sole discretion in the selection of Consultants to provide services to RUS and the form of contract utilized. RUS may either use the services of one or more Consultants retained under Retainer Contracts or the government may elect to retain a Consultant not otherwise on retainer. The government shall have sole discretion to prescribe terms and conditions of Consultant Contracts. The Borrower may bring considerations to the attention of the government which the Borrower deems pertinent to the selection process.
(e) RUS shall retain sole discretion as to whether to further pursue use of an outside consultant for the relevant application in the event the Borrower does not enter into the agreements referenced in § 1789.158(c)(3)(iii) within 60 days of the government providing to the Borrower the information set forth in § 1789.158(c)(3).
Borrowers shall use their general funds for the purposes of funding consultant services hereunder. Borrowers may not use the proceeds of loans made
All Borrowers are eligible to fund consultant services under this part.
RUS will consider approving the use of consultant services funded by a Borrower on a case by case basis taking into account, among other matters, the following:
(a) Whether such services are required to facilitate timely action on a Borrower's Application. RUS shall determine what represents timely action with respect to each Application considering, among other matters, the review period normally required for such projects by RUS and other lenders and the consequences to the Borrower of adjusting the review period.
(b) The availability of staff resources, the priorities of other projects then before RUS, and the efficiencies to be realized from the use of consultant services.
(c) Whether it is in the best interest of RUS to use Borrower-funded Consultants. Certain types of projects, such as those involving issues of program-wide significance, may not be well suited for the use of Borrower funded Consultants.
(a) In the event RUS determines that consideration should be given to the use of a Borrower-funded consultant in connection with the review of an Application, the RUS Regional Director or the Director of the Power Supply Division, as appropriate, will discuss with the Borrower the nature of the Application and the projected review period required of RUS. If RUS concludes that the projected review period will not result in timely action on the Application, and after being so notified in writing by RUS the Borrower wishes to fund consultant services to facilitate RUS review, the Borrower shall submit to the same Director a funding proposal. The proposal shall set forth the following:
(1) Identification in the heading or caption as a Notice of Proposal to Fund Consulting Services;
(2) Borrower's REA/RUS designation;
(3) Borrower's legal name and address;
(4) A description of the Application, critical issues and concerns relating to the Application, time deadlines, and the consequences of any delays in RUS review;
(5) A description of the consulting service(s) that would facilitate timely RUS review of the Application; and
(6) Such additional documents and information as RUS may request.
(b) RUS will review the Notice of Proposal to Fund and any additional information RUS deems relevant in determining whether to proceed with procuring Borrower funded Consultants. If RUS proposes to utilize Legal Consultants, RUS must obtain the concurrence of the Office of General Counsel (OGC) of the Department of Agriculture. RUS will notify the Borrower in writing of its determination.
(a) The Federal Acquisition Regulation (FAR), 48 CFR Ch. 1, and the Agriculture Acquisition Regulation (AGAR), 48 CFR Ch. 4, shall apply to all Consultant Contracts entered into pursuant to this part except as provided in this section.
(1) Contracts for Legal Consultants shall provide for a technical representative from OGC.
(2) All Consultant Contracts shall provide for an escrow account funding mechanism pursuant to this part and for the government's sole discretion in determining whether payments are to be made from the Escrow Account to the Consultant.
(3) All Consultant Contracts shall provide that payment of all obligations for work performed thereunder must be satisfied by amounts available in the Escrow Account; with the exception of the annual retainer fee, if any, Consultants shall not be entitled to any payments from the government.
(b) The provisions of paragraph (a) of this section shall be given prominent emphasis in requests for proposals issued under this part.
(a) Upon making a determination to go forward with Borrower funding for consulting services, RUS shall initiate a procurement request for a Consultant to provide the services. The government may either contract with a Consultant on a case by case basis or elect to use a Consultant pursuant to an outstanding Retainer Contract. The Borrower will not be informed of the Consultant selected until such time as the government provides the information set forth in paragraph (c)(3) of this section.
(b) If the government determines to contract with a Consultant on a case by case basis, the government shall notify the Borrower of the applicable procedures.
(c) If the government determines to contract with a Consultant under an outstanding Retainer Contract, the following procedures will normally apply:
(1) Pursuant to the terms of the contract, the government will prepare a draft Task Order requesting consultant services in connection with the review of the Borrower's Application. The draft Task Order shall set forth for the Consultant's review and acceptance, a description of the services to be provided and applicable time frames for the provision of such services.
(2) The government will request that the Consultant:
(i) Notify the government as to the acceptability of the form and substance of the draft Task Order;
(ii) Notify the government as to its ability to provide a satisfactory conflict of interest certification consistent with the requirements of the FAR (48 CFR ch. 1); and
(iii) Provide a cost estimate for the draft Task Order.
(3) When the government is satisfied with the response(s) received pursuant to paragraph (c)(2) of this section, the government shall promptly provide to the Borrower:
(i) A copy of the draft Task Order identifying the Consultant;
(ii) The Consultant's cost estimate for the draft Task Order; and
(iii) Contract information required to enable the Borrower to develop a Funding Agreement, an Escrow Agreement and an Indemnification Agreement (the “agreements”).
(4) The Borrower shall develop and submit to the government for approval executed originals of:
(i) The agreements; and
(ii) A certified copy of a resolution of the board of directors authorizing the Borrower to enter into the agreements and to take such other action as is necessary to effect the purposes of the agreements.
(5) Upon receiving written RUS approval of the agreements and the form and substance of the board resolution, the Borrower shall:
(i) Establish and fund the Escrow Account; and
(ii) Provide written notice to the government of the Escrow Account number, the funding thereof, and such other information as required pursuant to the agreements.
(6) After the Borrower has funded the Escrow Account, the government shall issue Task Order(s) for consultant services in accordance with the terms and conditions of the applicable Retainer Contract.
The government shall be solely responsible for the administration of a Consulting Contract and shall have complete control over the scope of the Consultant's work, the timetable for performance, the standards to be applied in determining the acceptability of deliverables and the approval of payment of Invoices.
The Borrower shall not have rights in nor right of access to the work product of the Consultant. All analyses, studies, opinions, memoranda, and other documents and information provided by the Consultant pursuant to a Consulting Contract may be released and made available to the Borrower only with the approval of RUS. This section does not restrict release of information by RUS pursuant to the Freedom of Information Act (5 U.S.C. 552(a)(2)) or other legal process.
The standard for determining organizational conflicts of interest shall be as
As a condition of approving Borrower funding, the government will require the Borrower to enter into an Indemnification Agreement, in form and substance satisfactory to RUS, providing that the Borrower will indemnify and hold harmless the government and any officers, agents or employees of the government from any and all liability, including costs, fees, and settlements arising out of, or in any way connected with the payment of the Consultant's fee pursuant to the Consultant Contract. The Indemnification Agreement may recognize, as a condition of liability thereunder, the rights of the borrower to prompt notice, to use of counsel of its own choosing, and to participation in any settlement of a claim against which indemnification is sought.
RUS may waive any requirement or procedure of this subpart by determining that its application in a particular situation would not be in the government's interest, except that certain provision that the subject contracts are subject to the provisions of the FAR (48 CFR ch. 1) and AGAR (48 CFR ch. 4).
Funding Agreements between the Borrower and a Consultant shall be in form and substance satisfactory to RUS and provide for, among other matters, the following:
(a) Specific reference by number to the applicable Consulting Contract entered into between the government and the Consultant;
(b) Specific reference by number to the applicable Task Order (where applicable);
(c) A brief description of the Application;
(d) A requirement that Invoices make specific reference to:
(1) The applicable contract and Task Order(s); and
(2) The Escrow Account from which payment is to be made;
(e) A requirement that the Final Invoice for a Task Order be clearly identified as such;
(f) A description of the services to be provided by the Consultant to RUS and the applicable time frames for the provision of such services;
(g) Agreement that the Borrower shall pay for the Consultant services provided to RUS under the applicable contract through an Escrow Account established pursuant to an Escrow Agreement, the Consultant shall not provide services to RUS under the applicable contract unless there are sufficient funds in the Escrow Account to pay for such services, the Consultant shall seek compensation for services provided under the applicable contract from, and only from, funds made available through the Escrow Account, and the Consultant must submit all Invoices to the government for approval.
(h) A form of Escrow Agreement satisfactory to the Borrower, Consultant and the designated Third-party Commercial Institution;
(i) A schedule setting forth when and in what amounts the Borrower shall fund the Escrow Account;
(j) Acknowledgment by the Consultant of the Indemnification Agreement provided by the Borrower to the government; and
(k) The Funding Agreement shall not be effective unless and until approved in writing by RUS.
Escrow Agreements between and among the Borrower, Consultant and Third-party Commercial Institution shall be in form and substance satisfactory to RUS and provide for, among other matters, the following:
(a) Specific reference by number to the applicable contract for services;
(b) Specific reference by number to the applicable Task Order;
(c) Specific reference by number to the Escrow Account into which funds are to be deposited;
(d) Invoices to specifically identify the applicable contract and Task Order(s);
(e) Funds to be held in the Escrow Account by the escrow agent until paid to the Consultant pursuant to the government's authorization;
(f) The Escrow Account to be closed and all remaining funds remitted to the Borrower after payment of the Final Invoice, unless otherwise directed by the government;
(g) The government, the Consultant and the Borrower to have the right to be informed, in a timely manner and in such form as they may reasonably request, as to the status of and activity in the Escrow Account; and
(h) The Escrow Agreement shall not be effective unless and until approved in writing by RUS.
7 U.S.C. 901
(a) The Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 7701
(b) This subpart identifies acceptable seismic standards which must be employed in new building construction funded by loans, grants, or guarantees made by the Rural Utilities Service (RUS) or the Rural Telephone Bank (RTB) (or through lien accommodations or subordinations approved by RUS or RTB).
As used in this subpart, the following terms have the following meaning:
(a) In the design and construction of federally assisted buildings, the borrowers and grant recipients must utilize the seismic provisions of the most recent edition of those standards and practices that are substantially equivalent to or exceed the seismic safety level in the most recent or immediately preceding edition of the NEHRP Recommended Provisions for the Development of Seismic Regulation for New Buildings.
(b) Each of the following model codes or standards has been found to provide a level of seismic safety substantially equivalent to that provided by the use of the 1994 NEHRP Recommended Provisions and appropriate for federally assisted new building construction:
(1) 1997 International Conference of Building Officials (ICBO) Uniform Building Code. Copies are available from ICBO, Austin Regional Office, 9300 Jollyville Road, Suite 101, Austin, Texas 78759-7455.
(2) 1995 American Society of Civil Engineers (ASCE) 7,
(c) The NEHRP Recommended Provisions for the Development of Seismic Regulations for New Buildings is available from the Office of Earthquakes
For each applicable building, borrowers and grant recipients must provide RUS a written acknowledgment from a registered architect or engineer responsible for the design stating that seismic provisions pursuant to § 1792.103(b) will be used in the design of the building. This acknowledgement will include the identification and date of the model code or standard that is used for the seismic design of the seismic design of the building project and the seismic factor for the building location.
7 U.S.C. 6941
(a) This part contains the policies and procedures of the Rural Utilities
(b) The policies and procedures contained in this part are intended to help RUS officials make decisions that are based on an understanding of environmental consequences, and take actions that protect, restore, and enhance the environment. In assessing the potential environmental impacts of its actions, RUS will consult early with appropriate Federal, State, and local agencies and other organizations to provide decision-makers with information on the issues that are truly significant to the action in question.
(a) This part derives its authority from and is intended to be compliant with NEPA, CEQ Regulations for Implementing the Procedural Provisions of NEPA, and other RUS regulations.
(b) Where practicable, RUS will use NEPA analysis and documents and review procedures to integrate the requirements of related environmental statutes, regulations, and orders.
(c) This part integrates the requirements of NEPA with other planning and environmental review procedures required by law, or by RUS practice including but not limited to:
(1) Endangered Species Act of 1973 (16 U.S.C. 1531
(2) The National Historic Preservation Act (16 U.S.C. 470
(3) Farmland Protection Policy Act (7 U.S.C. 4201
(4) E.O. 11593, Protection and Enhancement of the Cultural Environment (3 CFR, 1971 Comp., p. 154);
(5) E.O. 11514, Protection and Enhancement of Environmental Quality (3 CFR, 1970 Comp., p. 104);
(6) E.O. 11988, Floodplain Management (3 CFR, 1977 Comp., p. 117);
(7) E.O. 11990, Protection of Wetlands (3 CFR, 1977 Comp., p. 121); and
(8) E.O. 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (3 CFR, 1994 Comp., p. 859).
(d) Applicants are responsible for ensuring that proposed actions are in compliance with all appropriate RUS requirements. Environmental documents submitted by the applicant shall be prepared under the oversight and guidance of RUS. RUS will evaluate and be responsible for the accuracy of all information contained therein.
The provisions of this part apply to actions by RUS including the approval of financial assistance pursuant to the Electric, Telecommunications, and Water and Waste Programs, the disposal of property held by RUS pursuant to such programs, and the issuance of new or revised rules, regulations, and bulletins. Approvals provided by RUS pursuant to loan contracts and security instruments, including approvals of lien accommodations, are not actions for the purposes of this part and the provisions of this part shall not apply to the exercise of such approvals.
RUS normally will prepare environmental documents using non-metric equivalents with one of the following two options; metric units in parentheses immediately following the non-metric equivalents or a metric conversion table as an appendix. Environmental documents prepared by or for a RUS applicant should follow the same format.
The Administrator of RUS has the responsibility for Agency compliance with all environmental laws, regulations, and EOs that apply to RUS programs and administrative actions. Responsibility for ensuring environmental compliance for actions taken by RUS has been delegated as follows:
(a)
(b)
The following definitions, as well as the definitions contained in 40 CFR part 1508 of the CEQ regulations, apply to the implementation of this part:
(a)
(b)
As described in subpart C of this part, applicants shall prepare the applicable environmental documentation concurrent with a proposed action's engineering, planning, and design activities. RUS shall assist applicants by outlining the types of information required and shall provide guidance and oversight in the development of the documentation. Documentation shall not be considered complete until all public review periods, as applicable, have expired and RUS concurrence, as set forth in the appropriate decision document and associated public notice, has been issued.
The environmental review process requires early coordination with and involvement of RUS. Applicants should consult with RUS at the earliest stages of planning for any proposal that may require RUS action. For proposed actions that normally require an EIS, applicants shall consult with RUS prior to obtaining the services of an environmental consultant.
In determining what are reasonable alternatives, RUS considers a number of factors. These factors may include, but are not limited to, the proposed action's size and scope, state of the technology, economic considerations, legal and socioeconomic concerns, availability of resources, and the timeframe in which the identified need must be fulfilled.
(a) In carrying out its responsibilities under NEPA, RUS shall make diligent efforts to involve the public in the environmental review process through public notices and public hearings and meetings.
(1) All public notices required by this part shall describe the nature, location, and extent of the proposed action and indicate the availability and location of additional information. They shall be published in newspaper(s) of general circulation within the proposed action's area of environmental impact and the county(s) in which the proposed action will take place or such other places as RUS determines.
(2) The number of editions in which the notices should be published will be specified in the Bulletins referenced in § 1794.7 or established on a project-by-project basis. Alternative forms of notice may also be necessary to ensure that residents located in the area affected by the proposed action are notified. The applicant should not publish notices for compliance with this part until so notified by RUS.
(3) A copy of all comments received by the applicant concerning environmental aspects of the proposed action shall be provided to RUS in a timely manner. RUS and applicants shall assess and consider public comments both individually and collectively. Responses to public comments will be appended to the applicable environmental document.
(4) RUS and applicants shall make available to the public those project related environmental documents that
(5) Public hearings or meetings shall be held at reasonable times and locations concerning environmental aspects of a proposed action in all cases where, in the opinion of RUS, the need for hearings or meetings is indicated in order to develop adequate information on the environmental implications of the proposed action. Public hearings or meetings conducted by RUS will be coordinated to the extent practicable with other meetings, hearings, and environmental reviews which may be held or required by other Federal, state and local agencies. Applicants shall, as necessary, participate in all RUS conducted public hearings or meeting.
(6) Scoping procedures, in accordance with 40 CFR 1501.7, are required for proposed actions normally requiring an EA with scoping (§ 1794.24) or an EIS (§ 1794.25). RUS may require scoping procedures to be followed for other proposed actions where appropriate to achieve the purposes of NEPA.
(b) The applicant shall have public notices described in this section published in a newspaper(s). Applicants shall obtain proof of publication from the newspaper(s) for inclusion into the applicable environmental document. Where the proposed action requires an EIS RUS shall, in addition to applicant published notices, publish notice in the
In an attempt to reduce or eliminate duplication of effort with state or local procedures, RUS will, to the extent possible and in accordance with 40 CFR 1506.2, actively participate with any governmental agency to cooperatively or jointly prepare environmental documents so that one document will comply with all applicable laws. Where RUS has agreed to participate as a cooperating agency, in accordance with 40 CFR 1501.6, RUS may rely upon the lead agency's procedures for implementing NEPA procedures. In addition, RUS shall request that:
(a) The lead agency indicates that RUS is a cooperating agency in all NEPA-related notices published for the proposed action;
(b) The scope and content of the EA or EIS satisfies the statutory and regulatory requirements applicable to RUS; and
(c) The applicant shall inform RUS in a timely manner of its involvement in a proposed action where another Federal agency is preparing an environmental document so as to permit RUS to adequately fulfill its duties as a cooperating agency.
(a)
(b)
(1) The activity shall not have an adverse environmental impact and shall not preclude the search for other alternatives. For example, purchase of water rights, optioning or transfer of land title, or continued use of land as historically employed will not have an adverse environmental impact. However, site preparation or construction at or near the proposed site (e.g. rail spur) or development of a related facility (e.g. opening a captive mine) normally will have an adverse environmental impact.
(2) Expenditures are minimal. To be minimal, the expenditure must not exceed the amount of loss which the applicant could absorb without jeopardizing the Government's security interest in the event the proposed action is not approved by the Administrator, and must not compromise the objectivity of RUS environmental review. Not withstanding other considerations, expenditures equivalent to up to 10 percent of the proposed action's cost normally will not compromise RUS objectivity. Expenditures for the purpose of producing documentation required for RUS environmental review are excluded from this limitation.
It is the policy of RUS to prepare programmatic level analysis in order to tier an EIS and an EA where:
(a) It is practicable, and
(b) There will be a reduction of delay and paperwork, or where better decision making will be fostered (40 CFR 1502.20).
(a)
(b)
(2) Mitigation measures shall be included in the letter of conditions.
(3) RUS has the responsibility for the post approval construction or security inspections or monitoring to ensure that all mitigation measures included in the environmental documents have been implemented as specified in the letter of conditions.
(a) Five percent or less of a project is not considered a Federal action subject to this part;
(b) Thirty-three and one-third percent or more of a project shall be treated in its usual category;
(c) More than five percent but less than 33
(1) Whether construction would be completed regardless of RUS financial assistance or approval;
(2) The stage of planning and construction;
(3) Total participation of the applicant;
(4) Participation percentage of each utility; and
(5) Managerial arrangements and contractual provisions.
(a)
(1) The issuance of bulletins and information publications that do not concern environmental matters or substantial facility design, construction, or maintenance practices;
(2) Procurement activities related to the operation of RUS;
(3) Personnel and administrative actions; and
(4) Repairs made because of an emergency situation to return to service damaged facilities of an applicant's system.
(b)
(1) Purchase of land where use shall remain unchanged, or the purchase of existing water rights where no associated construction is involved;
(2) Additional or substitute financial assistance for proposed actions which have previously received environmental review and approval from RUS, provided the scope of the proposal and environmental considerations have not changed;
(3) Rehabilitation or reconstruction of transportation facilities within existing rights-of-way (ROW) or generating facility sites. A description of the rehabilitation or reconstruction shall be provided to RUS;
(4) Changes or additions to microwave sites, substations, switching stations, telecommunications switching or multiplexing centers, buildings, or small structures requiring new physical disturbance or fencing of less than one acre (0.4 hectare). A description of the additions or changes and the area to be impacted by the expansion shall be provided to RUS;
(5) Internal modifications or equipment additions (
(6) Internal or minor external changes to electric generating or fuel processing facilities and related support structures where there is negligible impact on the outside environment. A description of the changes shall be provided to RUS;
(7) Ordinary maintenance or replacement of equipment or small structures (
(8) The construction of telecommunications facilities within the fenced area of an existing substation, switching station, or within the boundaries of an existing electric generating facility site. A description of the facilities to be constructed shall be provided to RUS;
(9) SCADA and energy management systems involving no new external construction;
(10) Testing or monitoring work (
(11) Studies and engineering undertaken to define proposed actions or alternatives sufficiently so that environmental effects can be assessed;
(12) Construction of electric power lines within the fenced area of an existing substation, switching station, or within the boundaries of an electric generating facility site;
(13) Contracts for certain items of equipment which are part of a proposed action for which RUS is preparing an EA or EIS, and which meet the limitations on actions during the NEPA process as established in 40 CFR 1506.1(d) and contained in § 1794.15(b)(2);
(14) Rebuilding of power lines or telecommunications cables where road or highway reconstruction requires the applicant to relocate the lines either
(15) Phase or voltage conversions, reconductoring or upgrading of existing electric distribution lines, or telecommunication facilities. A description of the facilities to be constructed shall be provided to RUS;
(16) Construction of new power lines, substations, or telecommunications facilities on industrial or commercial sites, where the applicant has no control over the location of the new facilities. Related off-site facilities would be treated in their normal category. A description of the facilities to be constructed shall be provided to RUS;
(17) Participation by an applicant(s) in any proposed action where total applicant financial participation will be five percent or less;
(18) Construction of a battery energy storage system at an existing generating station or substation site. A description of the facilities to be constructed shall be provided to RUS.
(19) Additional bulk commodity storage (
(20) Proposals designed to reduce the amount of pollutants released into the environment (e.g., precipitators, baghouse or scrubber installations, and coal washing equipment) which will have no other environmental impact outside the existing facility site. A description of the facilities to be constructed shall be provided to RUS;
(21) Construction of standby diesel electric generators (one megawatt or less total capacity) and associated facilities, for the primary purpose of providing emergency power, at an existing applicant headquarters or district office, telecommunications switching or multiplexing site, or at an industrial, commercial or agricultural facility served by the applicant. A description of the facilities to be constructed shall be provided to RUS;
(22) Construction of onsite facilities designed for the transfer of ash, scrubber wastes, and other byproducts from coal-fired electric generating stations for recycling or storage at an existing coal mine (surface or underground). A description of the facilities to be constructed shall be provided to RUS;
(23) Changes or additions to an existing water well system, including new water supply wells and associated pipelines within the boundaries of an existing well field or generating station site. A description of the changes or additions shall be provided; and
(24) Repowering or uprating of an existing unit(s) at a fossil-fueled generating station in order to improve the efficiency or the energy output of the facility. Repowering or uprating that results in increased fuel consumption or the substitution of one fuel combustion technology with another is excluded from this classification.
(c)
(1) Management actions relating to invitation for bids, award of contracts, and the actual physical commencement of construction activities;
(2) Proposed actions that primarily involve the purchase and installation of office equipment or motorized vehicles;
(3) The award of financial assistance for technical assistance, planning purposes, environmental analysis, management studies, or feasibility studies; and
(4) Loan closing and servicing activities that do not alter the purpose, operation, location, or design of the proposal as originally approved, such as subordinations, amendments and revisions to approved actions, and the provision of additional financial assistance for cost overruns.
(a)
(1) Construction of electric power lines and associated facilities designed for or capable of operation at a nominal voltage of either:
(i) Less that 69 kilovolts (kV);
(ii) Less than 230 kV if no more than 25 miles (40.2 kilometers) of line are involved; or
(iii) 230 kV or greater involving no more than three miles (4.8 kilometers) of line;
(2) Construction of buried and aerial telecommunications lines, cables, and related facilities;
(3) Construction of microwave facilities, SCADA, and energy management systems involving no more than five acres (2 hectares) of physical disturbance at any single site;
(4) Construction of cooperative or company headquarters, maintenance facilities, or other buildings involving no more than 10 acres (4 hectares) of physical disturbance or fenced property;
(5) Changes to existing transmission lines that involve less than 20 percent pole replacement, or the complete rebuilding of existing distribution lines within the same ROW. Changes to existing transmission lines that require 20 percent or greater pole replacement will be considered the same as new construction;
(6) Changes or additions to existing substations, switching stations, telecommunications switching or multiplexing centers, or external changes to buildings or small structures requiring one acre (0.4 hectare) or more but no more than five acres (2 hectares) of new physically disturbed land or fenced property;
(7) Construction of substations, switching stations, or telecommunications switching or multiplexing centers requiring no more than five acres (2 hectares) of new physically disturbed land or fenced property;
(8) Construction of diesel electric generating facilities of five megawatts (MW) (nameplate rating) or less either at an existing generation or substation sites. This category also applies to a diesel electric generating facility of five MW or less that is located at or adjacent to an existing landfill site and supplied with refuse derived fuel. All new associated facilities and related electric power lines shall be covered in the ER;
(9) Additions to or the replacement of existing generating units at a hydroelectric facility or dam which result in no change in the normal maximum surface area or normal maximum surface elevation of the existing impoundment. All new associated facilities and related electric power lines shall be covered in the ER;
(10) Construction of new water supply wells and associated pipelines not located within the boundaries of an existing well field or generating station site; and
(11) Purchase of existing facilities or a portion thereof where use or operation will remain unchanged. The results of a facility environmental audit can be substituted for the ER.
(b)
(1) Rehabilitation of existing facilities, functional replacement or rehabilitation of equipment, or the construction of new ancillary facilities adjacent or appurtenant to existing facilities, including but not limited to, replacement of utilities such as water or sewer lines and appurtenances for existing users with modest or moderate growth potential, reconstruction of curbs and sidewalks, street repaving, and building modifications, renovations, and improvements;
(2) Facility improvements to meet current needs with a modest change in use, size, capacity, purpose or location from the original facility. The proposed action must be designed for predominantly residential use with other new or expanded users being small-
(3) Construction of new facilities that are designed to serve not more than 500 EDUs and with modest growth potential. The proposed action must be designed for predominantly residential use with other users being small-scale, commercial enterprises having limited secondary impacts;
(4) The extension, enlargement or construction of interceptors, collection, transmission or distribution lines within a one-mile (1.6-kilometer) limit from existing service areas estimated from any boundary listed as follows:
(i) The corporate limits of the community being served;
(ii) If there are developed areas immediately contiguous to the corporate limits of a community, the limits of these developed areas; or
(iii) If an unincorporated area is to be served, the limits of the developed areas;
(5) Installation of new water supply wells or water storage facilities that are required by a regulatory authority or standard engineering practice as a backup to existing production well(s) or as reserve for fire protection;
(6) Actions described in § 1794.21(c)(4) which alter the purpose, operation, location, or design of the proposed action as originally approved, and such alteration is equivalent in magnitude or type as described in paragraphs (b)(1) through (b)(5) of this section; and
(7) The lease or disposal of real property by RUS, which may result in a change in use of the real property in the reasonably foreseeable future and such change, is equivalent in magnitude or type as described in paragraphs (b)(1) through (b)(5).
(c)
(1) Will either create a new or relocate an existing discharge to or a withdrawal from surface or ground waters;
(2) Will result in substantial increases in the volume or the loading of pollutants from an existing discharge to receiving waters;
(3) Will cause a substantial increase in the volume of withdrawal from surface or ground waters at an existing site; or
(4) Would provide capacity to serve more than 500 EDUs or a 30 percent increase in the existing population whichever is larger.
RUS will normally prepare an EA for all proposed actions which are neither categorical exclusions (§§ 1794.21 and 1794.22) nor normally requiring an EIS (§ 1794.25). For certain actions within this class, scoping and document procedures contained in §§ 1794.50 through 1794.54 shall be followed (see § 1794.24). The following are proposed actions which normally require an EA and shall be subject to the requirements of §§ 1794.40 through 1794.44.
(a)
(b)
(c)
(1) Construction of combustion turbine or diesel generating facilities of 50 MW (nameplate rating) or less at a new site (no existing generating capacity) except for items covered by § 1794.22(a)(8). All new associated facilities and related electric power lines shall be covered in the EA;
(2) Construction of combustion turbine or diesel generating facilities of 100 MW (nameplate rating) or less at an existing generating site, except for items covered by § 1794.22(a)(8). All new associated facilities and related electric power lines shall be covered in the EA;
(3) Construction of any other type of new electric generating facilities of 10 MW (nameplate rating) or less. All new associated facilities and related electric power lines shall be covered in the EA;
(4) Repowering or uprating of an existing unit(s) at a fossil-fueled generating station where the existing fuel combustion technology of the affected unit(s) is substituted for another (
(5) Installation of new generating units at an existing hydroelectric facility or dam, or the replacement of existing generating units at a hydroelectric facility or dam which will result in a change in the normal maximum surface area or normal maximum surface elevation of the existing impoundment. All new associated facilities and related electric power lines shall be covered in the EA;
(6) A new drilling operation or the expansion of a mining or drilling operation;
(7) Construction of cooperative headquarters, maintenance, and equipment storage facilities involving more than 10 acres (4 hectares) of physical disturbance or fenced property;
(8) The construction of electric power lines and related facilities designed for and capable of operation at a nominal voltage of 230 kV or more involving more than three miles (4.8 kilometers) but not more than 25 miles (40 kilometers) of line;
(9) The construction of electric power lines and related facilities designed for or capable of operation at a nominal voltage of 69 kV or more but less than 230 kV where more than 25 miles (40 kilometers) of power line are involved;
(10) The construction of substations or switching stations requiring greater than five acres (2 hectares) of new physical disturbance at a single site; and
(11) Construction of facilities designed for the transfer and storage of ash, scrubber wastes, and other byproducts from coal-fired electric generating stations that will be located beyond the existing facility site boundaries.
(a)
(b)
(1) The construction of electric power lines and related facilities designed for and capable of operation at a nominal voltage of 230 kV or more where more than 25 miles (40 kilometers) of power line are involved;
(2) Construction of combustion turbines and diesel generators of more than 50 MW at a new site or more than 100 MW at an existing site; and the construction of any other type of electric generating facility of more than 10 MW but not more than 50 MW (nameplate rating). All new associated facilities and related electric power lines shall be covered in any EA or EIS that is prepared.
(c)
Applications for financial assistance for certain proposed actions that may significantly affect the quality of the human environment shall require the preparation of an EIS.
(a)
(1) New electric generating facilities of more than 50 MW (nameplate rating) other than diesel generators or combustion turbines. All new associated facilities and related electric power lines shall be covered in the EIS; and
(2) A new mining operation when the applicants have effective control (e.g., dedicated mine or purchase of a substantial portion of the mining equipment).
(b) Proposals listed above are subject to the requirements of §§ 1794.60, 1794.61, 1794.63, and 1794.64. Preparation of a supplemental draft or final EIS in accordance with 40 CFR 1502.9 shall be subject to the requirements of §§ 1794.62 and 1794.64.
(c)
The procedures of this subpart which apply to proposed actions classified as CEs in §§ 1794.21 and 1794.22 provide RUS with information necessary to determine if the proposed action meets the criteria for a CE. Where, because of extraordinary circumstances, a normally categorically excluded action may have a significant effect on the quality of the human environment, RUS may require additional environmental documentation.
(a)
(b)
(a) For proposed actions listed in § 1794.21(b) and (c), the applicant is normally not required to submit an ER.
(b) For proposed actions listed in § 1794.22(a) and (b), the applicant shall normally submit an ER. Guidance in preparing the ER for Electric and Telecommunication proposals is contained in RUS Bulletin 1794A-600. Guidance in preparing the ER for Water and Waste proposals is contained in RUS Bulletin 1794A-602. The applicant may be required to publish public notices and provide evidence of such if the proposed action is located in, impacts, or converts important land resources.
RUS may act on an application for financial assistance upon determining, based on the review of documents as set forth in § 1794.32 and such additional information as RUS deems necessary, that the project is categorically excluded.
This subpart applies to proposed actions described in § 1794.23. Where appropriate to carry out the purposes of NEPA, RUS may impose, on a case-by-case basis, additional requirements associated with the preparation of an EA. If at any point in the preparation of an EA, RUS determines that the proposed action will have a significant effect on the quality of the human environment, the preparation of an EIS shall be required and the procedures in subpart G of this part shall be followed.
Applicants will provide an ER in accordance with the appropriate guidance documents referenced in § 1794.7. After RUS has evaluated the ER and has determined the ER adequately addresses all applicable environmental issues, the ER will normally serve as RUS’ EA. However, RUS reserves the right to prepare its own EA from the information provided in the ER. RUS will take responsibility for the scope and content of an EA.
Prior to RUS making a finding in accordance with § 1794.43 and upon RUS authorization and guidance, the applicant shall have a notice published
(a)
(b)
RUS may take its final action on proposed actions requiring an EA (§ 1794.23) at any time after publication of the RUS and applicant notices that a FONSI has been made and any required review period has expired. When substantive comments are received on the EA, RUS may provide an additional period (15 days) for public review following the publication of its FONSI determination. Final action shall not be taken until this review period has expired.
For proposed actions covered by § 1794.24 and other actions determined by the Administrator to require an EA with Scoping, RUS and the applicant will follow the same procedures for scoping and the requirements for notices and documents as for proposed actions normally requiring an EIS through the point at which the Environmental Analysis (EVAL) is submitted (see § 1794.54). After the EVAL has been submitted, RUS will make a judgment to utilize the EVAL as its EA and issue a FONSI or prepare an EIS.
(a) As soon as practicable after RUS and the applicant have developed a schedule for the environmental review process, RUS shall have its notice of intent to prepare an EA or EIS (§ 1794.13) published in the
(b) As part of the early planning, the applicant should consult with appropriate Federal, state, and local agencies to inform them of the proposed action, identify permits and approvals which must be obtained, and administrative procedures which must be followed.
(c) Before formal scoping is initiated, RUS will require the applicant to submit an Alternative Evaluation Study and either a Siting Study (generation) or a Macro-Corridor Study (transmission lines).
(d) The applicant is encouraged to hold public information meetings in the general location of the proposed action and any reasonable alternatives when such applicant meetings will make the scoping process more meaningful. A written summary of the comments made at such meetings must be submitted to RUS as soon as practicable after the meetings.
(a) Both RUS and the applicant shall have a notice published which announces a public scoping meeting is to be conducted, either in conjunction with the notice of intent or as a separate notice.
(b) The RUS notice shall be published in the
(c) Where an environmental document is the subject of the hearing or meeting, that document will be made available to the public at least 10 days in advance of the meeting.
(d) The scoping meeting(s) will be held in the area of the proposed action at such place(s) as RUS determines will
(e) As soon as practicable after the scoping meeting(s), RUS, as lead agency, shall determine the significant issues to be analyzed in depth and identify and eliminate from detailed study the issues which are not significant or which have been covered by prior environmental review. RUS will develop a proposed scope for further environmental study and review. RUS shall send a copy of this proposed scope to cooperating agencies and the applicant, and allow recipients 30 days to comment on the scope's adequacy and emphasis. After expiration of the 30-day period, RUS shall provide written guidance to the applicant concerning the scope of environmental study to be performed and information to be gathered.
(a) After scoping procedures have been completed, RUS shall require the applicant to develop and submit an EVAL. The EVAL shall be prepared under the supervision and guidance of RUS staff and RUS shall evaluate and be responsible for the accuracy of all information contained therein.
(b) The EVAL will normally serve as the RUS EA. The EVAL can also serve as the basis for an EIS, and under such circumstances will be made an appendix to the EIS. After RUS has reviewed and found the EVAL to be satisfactory, the applicant shall provide RUS with a sufficient number of copies of the EVAL to satisfy the RUS distribution plan.
(c) The EVAL shall include a summary of the construction and operation monitoring and mitigation measures for the proposed action. These measures may be revised as appropriate in response to comments and other information. and shall be incorporated by summary or reference into the FONSI or ROD.
Following the scoping process and the development of a satisfactory EA, RUS shall determine whether the proposed action is a major Federal action significantly affecting the quality of the human environment. If RUS determines the action is significant, RUS will continue with the procedures in subpart G of this part. If RUS determines the action is not significant, RUS will proceed in accordance with §§ 1794.42 through 1794.44.
For proposed actions requiring an EIS (see § 1794.25), the NEPA process shall proceed in the same manner as for proposed actions requiring an EA with scoping through the point at which the scoping process is completed (see § 1794.52).
(a)
(1) After a draft or final EIS has been prepared, RUS and the applicant shall concurrently have a notice of availability for the document published. The time period allowed for review will be a minimum of 45 days for a draft EIS and 30 days for a final EIS. This period is measured from the date that the U.S. Environmental Protection Agency (EPA) publishes a notice in the
(2) In addition to circulation required by 40 CFR 1502.19, the draft and final EIS (or summaries thereof, at RUS discretion) shall be circulated to the appropriate state, regional, and metropolitan clearinghouses.
(3) Where a final EIS does not require substantial changes from the draft EIS, RUS may document required changes through errata sheets, insertion pages, and revised sections to be incorporated into the draft EIS. In such cases, RUS shall circulate such changes together with comments on the draft EIS, responses to comments, and other appropriate information as its final EIS. RUS will not circulate the draft EIS again, although RUS will provide the draft EIS if requested within 30 days of publication of notice of availability of the final EIS.
(b)
(a) A supplement to a draft or final EIS shall be prepared, circulated, and given notice by RUS and the applicant in the same manner (exclusive of scoping) as a draft and final EIS (see § 1794.61).
(b) Normally RUS and the applicant will have published notices of intent to prepare a supplement to a final EIS in those cases where a ROD has already been issued.
(c) RUS, at its discretion, may issue an information supplement to a final EIS where RUS determines that the purposes of NEPA are furthered by doing so even though such supplement is not required by 40 CFR 1502.9(c)(1). RUS and the applicant shall concurrently have a notice of availability published. The notice requirements shall be the same as for a final EIS and the information supplement shall be circulated in the same manner as a final EIS. RUS shall take no final action on any proposed modification discussed in the information supplement until 30 days after the RUS notice of availability or the applicant's notice is published, whichever occurs later.
(a) Upon completion of the review period for a final EIS, RUS will have its ROD prepared in accordance with 40 CFR 1505.2.
(b) Separate RUS and applicant notices of availability shall be published concurrently. The notices shall summarize the RUS decision and announce the availability of the ROD. Copies of the ROD will be made available upon request from the point of contact identified in the notice.
(a) RUS may take its final action or execute commitments on proposed actions requiring an EIS or Supplemental EIS at any time after the ROD has been published.
(b) For budgetary purposes some financial assistance may be approved conditionally with a stipulation that no funds shall be advanced until a ROD has been prepared.
This subpart covers the adoption of environmental documents prepared by other Federal agencies. Where applicants participate in proposed actions for which an EA or EIS has been prepared by or for another Federal agency, RUS may adopt the existing EA or EIS in accordance with 40 CFR 1506.3.
RUS may adopt a Federal EA or EIS or a portion thereof as its EA. RUS shall make the EA available and assure that notice is provided in the same manner as if RUS had prepared the EA.
(a) Where RUS determines that an existing Federal EIS requires additional information to meet the standards for an adequate statement for RUS proposed action, RUS may adopt all or a portion of the EIS as a part of
(b) If RUS was not a cooperating agency but determines that another Federal agency's EIS is adequate, RUS shall adopt that agency's EIS as its final EIS. RUS and the applicant shall have separate notices published advising of RUS adoption of the EIS and independent determination of its adequacy.
(c) If the adopted EIS is generally available and meets RUS standards, RUS shall have a public notice published informing the public of its action and availability of the EIS to interested parties upon request. If the adopted EIS is not generally available, RUS shall have a public notice published informing the public of its action and will circulate copies of the EIS in accordance with 40 CFR 1502.19 and 40 CFR 1506.3.
Where RUS has adopted another agency's environmental documents, the timing of the action shall be subject to the same requirements as if RUS had prepared the required EA or EIS.
RUS may incorporate into its environmental documents, environmental documents or portions thereof prepared by state, or local agencies or other parties for purposes other than compliance with the requirements of NEPA. RUS will circulate the incorporated documents as a part of its EA or draft and final EIS in the same manner as if prepared by RUS.
Nomenclature changes to Chapter XVIII appear at 59 FR 66443, Dec. 27, 1994; 61 FR 1109, Jan. 16, 1996; and 61 FR 2899, Jan. 30, 1996.
Chapter XVIII-Farmers Home Administration or its successor agency under Public Law 103-354 is continued in the volumes containing 7 CFR parts 1900 to 1939, 1940 to 1949, 1950 to 1999, and 2000 to End.
5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
7 U.S.C. 1989; 42 U.S.C. 1480; 42 U.S.C. 2942; 5 U.S.C. 301; delegation of authority by the Sec. of Agri., 7 CFR 2.23; delegation of authority by the Asst. Sec. for Rural Development, 7 CFR 2.70; delegations of authority by Dir., OEO 29 FR 14764, 33 FR 9850.
(a)
(b)
(c)
(d)
(e)
Property insurance policies or other evidence of insurance will be accepted from borrowers when the requirements outlined herein are complied with fully.
(a)
(b)
(2)
(i) “Homeowner's” policies, “All Physical Loss” policies, “Broad Form” policies, and other such all-inclusive policies are acceptable if they otherwise meet the requirements of this Instruction.
(ii) A builder's risk policy naming the borrower as the insured or a builder's risk endorsement for a policy issued to the borrower may be accepted during the period a building is under construction if the policy otherwise meets the requirements of this Instruction. If such a policy or endorsement does not automatically convert to full coverage when the building is completed, acceptable insurance must be obtained simultaneously with the expiration of the builder's isk provisions of the policy.
(iii) A builder's risk insurance policy issued to a contractor only may not be substituted for the property insurance, the borrower is required to provide.
(iv) Borrowers eligible for insurance under the National Flood Insurance Act of 1968, as amended by the Flood Disaster Act of 1973, will be serviced in accordance with subpart B of this part.
(3)
(4)
(5)
(ii) For Single Family Housing (SFH) loans secured by a first lien, the original policy or declaration page must be delivered to the closing agent.
(iii) In cases where an FP or SFH loan is secured by other than a first lien and the mortgage clauses include the names of the prior mortgagees, a certificate of insurance, copy of the policy, or other evidence of insurance is acceptable.
(iv) The County Supervisor will process an advance to pay for insurance only in strict compliance with provisions of § 1806.6 of this subpart.
(6)
(i) One complete master set of the different insurance forms for policies issued by the insurance company must be on file in each County Office where the company insures property of FmHA or its successor agency under Public Law 103-354 borrowers.
(ii) The “Declaration Page” furnished by the insurance company for each borrower insured, in lieu of a complete policy, will be filed in the borrower's case folder. When a “Declaration Page” in the form of a computer printout is used by an insurance company an endorsement on every policy issued by that company or a letter from that company will be obtained and attached to the printout. However, a letter signed by an authorized official of the company and addressed to the State Director may cover all policies issued by that company in the State. Any such endorsements or letters should clearly state that the company considers the printout to be an original “Declaration Page”. Such endorsements or letters are not necessary if the printout itself clearly states that it is an original “Declaration Page.”
(7)
(8)
(9)
(10)
(11)
(i) If the use of a mortgage clause, other than the standard mortgage clause (without contribution), has been made mandatory by State laws or insurance regulations, a State Instruction will be issued, after prior approval is obtained from the National Office, authorizing the use of such a form.
(ii) When an approved mortgage clause is printed in the policy a “Loss Payable Clause” is acceptable provided the FmHA or its successor agency under Public Law 103-354, as mortgagee, would receive payment in case of loss even though the company would not be liable to the borrower. A “Loss Payable Clause” which contains the statement that the mortgagee is “subject to all terms and conditions of the policy” is not acceptable.
(iii) Whenever a new mortgage clause including the interest of the FmHA or its successor agency under Public Law 103-354 is issued after the policy has been in force, the new mortgage clause must be signed by an authorized agent or officer of the company that issued the policy. Form FmHA or its successor agency under Public Law 103-354 426-6, “Transmittal of Property Insurance Mortgage Clause,” may be used to transmit the mortgage clause to the insurance official.
(iv) The FmHA or its successor agency under Public Law 103-354 and all other mortgagees whose interests are insured by the policy will be shown either in the mortgage clause or in the “Declaration Page” in the order of priority of their mortgages.
(A) “United States of America (Farmers Home Administration or its successor agency under Public Law 103-354)” will be named in the mortgage clause for direct and insured loan mortgages naming FmHA or its successor agency under Public Law 103-354 as mortgagee, whether in its own right or as trustee under a 2(f) or other agreement with a State Rural Rehabilitation Corporation.
(B) “United States of America (Farmers Home Administration or its successor agency under Public Law 103-354), as first mortgagee or as statutory agent and insurer of such mortgagee,” will be named in the mortgage clause for insured FO mortgages naming the lender as mortgagee, whether the mortgage is held by the original or a subsequent lender or by the insurance fund or by FmHA or its successor agency under Public Law 103-354 under a trust agreement or declaration of trust.
(C) If the designation is not identical to that set forth in paragraphs (b)(11)(iv)(A) or (B) of this section, whichever is applicable, it will be sufficient if the mortgagee is readily identifiable as the Farmers Home Administration or its successor agency under Public Law 103-354.
(c)
(2) [Reserved]
(d)
(i)
(ii)
(iii)
(B) For RRH, RCH, and LH organization loans this clause generally provides that loss to each project to the extent of the limitation is not recoverable. The company is liable only for loss to each project in excess of such limitation stated in the clause. This clause may be accepted where the limitation does not exceed the option shown below that is chosen by the borrower and agreed to by the Loan Approving Official and properly annotated in the borrower file. The borrower and FmHA or its successor agency under Public Law 103-354 Official should consider the economic impact to the project when selecting the appropriate option.
(
(
(
(
(
(
(iv)
(v)
(vi)
(2) Policies generally will not be accepted if, under the terms of the policies or local laws, contributions or assessments may be made against the FmHA or its successor agency under Public Law 103-354. However, policies which impose assessments on the borrower may be accepted only if the FmHA or its successor agency under Public Law 103-354 mortgage will be recorded prior to any failure of the borrower to pay any such assessments. Policies also will not be accepted if, by their terms or other conditions, loss payments are contingent upon collective action by the Board of Directors, or the stockholders, or the members.
(e)
The County Supervisor should encourage the borrower for his own protection to insure for their depreciated replacement value (actual cash value) all essential buildings. Essential buildings include the dwelling and any other buildings that are necessary for the operation of the property or that provide income to assure orderly repayment of the loan. If insurance is for less than the depreciated replacement value of all essential buildings, the County Supervisor will see that the coverage is obtained on one or more of the most essential buildings. The minimum amount of coverage will be furnished as prescribed below:
(a)
(2) When the unpaid balance of the loan is less than the sum of the depreciated replacement value of the essential buildings to be insured, the total amount of insurance must be at least equal to the lesser of (i) the unpaid balance of the loan, or (ii) the cost of adequate essential buildings which can be constructed for amounts less than the depreciated replacement value of the existing buildings to be insured.
(3) When, by the use of loan funds or otherwise, buildings are erected or substantial improvements are made to essential buildings, the amount of insurance will be adjusted in accordance with paragraphs (a)(1) or (2) of this section, whichever is applicable.
(b)
(c)
(i) That is not essential.
(ii) In such a state of disrepair that the cost of insurance would be prohibitive.
(iii) Which has a depreciated replacement value of $2,500 or less.
(iv) Which is being or has been repaired with a section 504 loan of $7,500 or less. Families receiving section 504 loans should be encouraged but not required to carry insurance on their home.
(v) On LH security property which was not built or repaired with FmHA or its successor agency under Public Law 103-354 loan funds provided that the State Director determines that the
(vi) On which the hazards are so slight because of the character and construction of the building, or the cost of the insurance is so high in comparison with the value of the building that, according to common standards of judgment, it should not be insured, including but not limited to windmills, silos, and fire-cured tobacco barns.
(vii) In cases where the unpaid balance of the FmHA or its successor agency under Public Law 103-354 loans and any prior liens have been reduced to $2,500 or less, property insurance need not be required if the borrower wants to discontinue it, provided the County Supervisor determines that the value of the land security itself is sufficient to protect the FmHA or its successor agency under Public Law 103-354 in its collection of the amount of the outstanding indebtedness.
(viii) If insurance for windstorm and hail to meet all FmHA or its successor agency under Public Law 103-354 requirements is not available in a hurricane area, the County Supervisor may accept from the borrower or applicant the windstorm and hail insurance policy that most nearly conforms to FmHA or its successor agency under Public Law 103-354 requirements. If such an exception is made, the situation should be fully documented in the borrower's case file. However, if the best insurance policy a borrower or applicant can obtain at the time he receives a loan contains a loss deductible clause for windstorm and hail damage exceeding $250 or 10 percent of the actual cash value of the buildings, whichever amount is greater, the insurance policy, with an explanation of the reasons why more adequate insurance is not available will be submitted to the State Office for prior approval.
(2) [Reserved]
(a)
(1)
(ii) If the borrower does not furnish acceptable insurance by the date the previous policy expired or was canceled, the County Supervisor will proceed as provided in § 1806.6.
(2)
(i) In cases other than those involving FP or section 502 RH borrowers, the County Supervisor will notify the borrower of the expiration of his insurance at least 30 days in advance of such expiration unless he has received written evidence that the insurance has been renewed.
(ii) FP and Section 502 RH borrowers will be informed during the tenth month after the date of loan closing of their responsibility to carry insurance. Form FmHA or its successor agency under Public Law 103-354 426-4 will be sent to these borrowers, regardless of whether there is evidence that the insurance has been renewed. Thereafter, the County Supervisor will not be required to further determine whether
(3)
(4)
(5)
(b)
(2)
(ii) In a transfer with assumption, insurance will be required in the same amount and according to the same provisions as for an initial loan of the same type.
(3)
(a)
(1) Check the borrower's casefile for an insurance policy or other evidence of insurance. When a policy or other evidence of insurance has not been retained by the FmHA or its successor agency under Public Law 103-354, such as for FP and section 502 RH borrowers, the County Supervisor will determine whether the property was insured and whether FmHA or its successor agency under Public Law 103-354 was named as mortgagee in the insurance policy.
(2) Determine that the borrower has taken such steps as are necessary to protect the interest of the FmHA or its successor agency under Public Law 103-354 in the security property against further damage. When serious problems arise with respect to protecting the property from further damage, the borrower cannot or will not arrange adequate protection for the property, or when legal action appears to be necessary, the County Supervisor will arrange for emergency protection and immediately refer the case with complete information to the State Director.
(b)
(2) If the FmHA or its successor agency under Public Law 103-354 is not listed as mortgagee in the insurance policy, the County Supervisor will contact the borrower to determine whether he has received the loss proceeds. If the borrower has received the loss proceeds but not yet paid for improvements to repair or replace the property, or has not received the loss proceeds the County Supervisor will:
(i) Notify the insurance company in writing of the FmHA or its successor agency under Public Law 103-354's interest in the security property and request that the loss proceeds be made payable jointly to the FmHA or its successor agency under Public Law 103-354 and the borrower.
(ii) Inform the borrower of his responsibility for repairing or replacing the damaged or destroyed property or for authorized disposition of the loss proceeds as outlined in paragraph (b)(1) of this section.
(c)
(i) Where the amount of the loss is $1,000 or less and the borrower will use the funds for repairing or replacing an essential building, the loss draft may be endorsed without recourse and given to the borrower upon satisfactory proof that the repairs or replacements have been made, or upon satisfactory assurance that the work will be performed.
(ii) When (A) the essential buildings are not to be repaired or replaced and other suitable buildings are not to be erected, or (B) a balance remains after all repairs, replacements, and other authorized disbursements have been made, such insurance funds will be applied on prior liens or as an extra payment to the borrower's loan accounts secured by the real estate or disposed
(iii) An insurance payment for loss or damage to a nonessential building the borrower voluntarily insured will be (A) applied on prior liens, or to current delinquencies to FmHA or its successor agency under Public Law 103-354 or as an extra payment on the borrower's loan accounts secured by real estate, (B) disposed of as authorized by the State Director in accordance with the general principles applicable to the use of proceeds from the sale of a part of the security contained in applicable security servicing regulations for the type loan involved, or (C) used for other purposes as authorized by the State Director if the loan is adequately secured and the loan account is current.
(iv) When the indebtedness secured by the insured property has been paid in full or the draft is in payment for loss of property on which the FmHA or its successor agency under Public Law 103-354 has no claim, a loss draft which includes the FmHA or its successor agency under Public Law 103-354 as a joint payee may be endorsed without recourse and delivered to the borrower.
(d)
(2) When the loss draft includes the interest of a prior mortgagee, the County Supervisor is authorized to endorse and process the draft as follows:
(i) When the prior mortgagee will permit the use of such loss funds to repair or replace the damaged building, the draft may be endorsed without recourse upon satisfactory proof that the repairs or replacements have been made or upon satisfactory assurance that the work will be performed.
(ii) When the amount of the draft does not exceed the amount of the indebtedness then secured by the prior mortgage as stated in writing by the holder of the prior mortgage, and the holder of the prior mortgage has agreed in a written statement to the County Supervisor that he will apply such funds as a payment on the borrower's prior mortgage indebtedness, the draft may be endorsed without recourse.
(iii) When the amount of the draft exceeds the amount of the indebtedness then secured by the prior mortgage, as stated in writing by the holder, and he has agreed in writing to pay such indebtedness from the loss funds, the draft will be endorsed without recourse only after all parties named as payees in the draft have signed an agreement to deliver the draft “in escrow” to a bank acceptable to the named parties. The agreement will specify the manner in which the funds will be disbursed by the bank, as escrow agent, to the several mortgagees named in the draft. After the loss funds have been collected by the bank, it will issue cashier's checks in the manner prescribed in the escrow agreement (see exhibit A for suggested form). If this procedure is found to be impractical in an individual instance, the State Director may authorize an alternative method for disbursing the loss funds to protect the Government's financial interest.
(iv) Drafts which have been endorsed by all other payees will be endorsed immediately without recourse. Such drafts or other loss funds will be processed in accordance with the methods described in paragraph (c) of this section.
(e)
(2)
(f)
(g)
(1) The County Supervisor will maintain a proper followup on all losses until satisfactory settlement has been made by the company.
(2) Where the County Supervisor has evidence that the adjustment agreed to by the borrower is significantly less than the amount of damage to which the borrower is entitled under the terms of the policy, the loss draft accompanied by a report will be sent to the State Director so that he may reopen the adjustment, if he considers it is in the interest of the FmHA or its successor agency under Public Law 103-354 to do so.
(3) When it appears evident that the amount of the loss is $1,000 or less, the County Supervisor may rely on estimates of contractors, building supply firms, reliable carpenters, or other evidence rather than personal inspection in determining whether the adjustment is equitable and the Government's interest is protected.
(h)
(i)
(1) Inform the borrower that he has violated the security instrument by not providing insurance coverage and that it is his responsibility to make the needed replacements or repairs.
(2) If the borrower is unable or unwilling to make needed repairs or replacements from his own resources, the County Supervisor will submit complete information to the FmHA or its successor agency under Public Law 103-354 official authorized to determine whether FmHA or its successor agency under Public Law 103-354 will or will not continue with the loan. The County Supervisor's report will include recommendations on the following items:
(i) The advisability and possibility of making a subsequent loan to pay for needed repairs.
(ii) Subordination of the FmHA or its successor agency under Public Law 103-354 real estate lien to permit the borrower to obtain funds for needed repairs from another source.
(iii) The possibility of the borrower obtaining funds secured by a junior lien from another source.
(iv) Whether an advance is needed to protect the Government's interest in the property.
(3) If the loan will not be continued with the borrower, it must be serviced in accordance with the applicable Instructions.
(4) If the borrower has improperly disposed of loss proceeds, the County Supervisor will refer the case with complete information and recommendations to the State Director.
When a borrower fails to provide and maintain property insurance which meets the requirements set forth in § 1806.2 of this subpart, every effort will be made to have the borrower provide coverage acceptable to FmHA or its successor agency under Public Law 103-354. It will be emphasized that under the terms of the security instrument, it is the borrower's responsibility to provide and maintain proper insurance coverage. Existing borrowers required to escrow will be notified by letter at least 90 days prior to initiating escrowing for insurance. Failure to provide insurance is a nonmonetary default and will be a consideration in determining if the loan is to be continued. For FP or SFH borrowers
(a)
(i) The new policy will be effective as of the date of the County Supervisor's contact with the insurance agency or broker or as soon thereafter as possible, and will be for a term of one year. If State insurance regulations require a longer term, the State Director will issue a State Instruction authorizing County Supervisors to obtain policies for the minimum period permitted by State insurance regulations.
(ii) The FmHA or its successor agency under Public Law 103-354 will be shown in the loss payable clause and in the mortgage clause in the proper order of priority.
(iii) Insurance coverage on each building usually will be the same as shown on the expired policy if it meets or exceeds FmHA or its successor agency under Public Law 103-354 requirements. If the coverage shown on the expired policy does not meet FmHA or its successor agency under Public Law 103-354 requirements, proper coverage will be obtained.
(iv) The County Supervisor will, if possible, have an automatic renewal provision included in the policy.
(v) If the borrower refuses to pay the insurance premium with his own funds or arrange with the agent for subsequent payment by premium not or otherwise, the County Supervisor will pay the amount of the insurance premium in accordance with FmHA or its successor agency under Public Law 103-354 Instruction 2024-A. The amount of the
(vi) If the insurance agency or broker who issued the expired policy refuses to issue a new policy, the County Supervisor will have the borrower designate in writing another insurance agency or broker from whom the insurance can be obtained.
(vii) After the County Supervisor and the borrower exhaust all efforts to obtain acceptable insurance, the County Supervisor will request advice from the State Office as to companies issuing acceptable policies in the State and from which the borrower might be able to obtain an acceptable policy. If the borrower still cannot obtain an acceptable policy from any such company, and the determination has been made to continue with the borrower, the County Supervisor will temporarily accept from the borrower the available insurance policy the FmHA or its successor agency under Public Law 103-354 determines most nearly conforms to the requirements of § 1806.2 of this subpart.
(A) In making this determination, the following deficiencies become more objectionable in the order from (
(
(
(
(
(
(B) Whenever adequate insurance becomes available, the County Supervisor will require the borrower to deliver to the County Office an acceptable insurance policy. The temporary policy will be returned to the borrower for cancellation after all losses claimed under the policy have been settled.
(C) If the borrower is unable to furnish a property insurance policy of any kind, he is still responsible for the debt in the event of loss.
(D) If the County Supervisor accepts an inadequate insurance policy under these conditions or the borrower fails to furnish any insurance policy, the County Supervisor will include in his report to the State Director an explanation of the efforts he and the borrower made to obtain acceptable insurance and his justification for accepting an inadequate policy, or for not obtaining an insurance policy of any kind.
(b)
(2) If the borrower fails to provide acceptable insurance before the cancellation is effective, the County Supervisor will contact the insurance agency or broker who issued the insurance policy to determine the reasons for cancellation and, if possible, have the policy reinstated.
(3) If the insurance company will not reinstate the policy, the County Supervisor will attempt to obtain an acceptable insurance policy from another agency or broker in accordance with the provisions of paragraph (a) of this section.
(c)
(2) If the borrower does not pay or arrange to pay the premium before the policy cancellation is effective, the County Supervisor will, before the cancellation becomes effective, notify the insurance company or broker by certified mail (return receipt requested), that the FmHA or its successor agency under Public Law 103-354 as mortgagee (or trustee) will pay the premium for one year to continue the policy in effect for that period. The County Supervisor will, in accordance with FmHA or
(3) If a property insurance mortgage clause other than Form FmHA or its successor agency under Public Law 103-354 426-2 is used in connection with the policy and the insurance company or broker refuses to accept payment from the FmHA or its successor agency under Public Law 103-354 in this manner to reinstate or continue the policy, the County Supervisor will attempt to obtain an acceptable insurance policy from another insurance company or broker in accordance with the provisions of paragraph (a) of this section.
Gentlemen: Attached is Draft No. ———, for $———, issued by the —————— Insurance Company in payment of ——— loss which damage the buildings on the farm of —————————, of ——————— County, State of ———————.
This draft has been endorsed by the undersigned payees who request that you collect these funds and issue cashier's checks to the following payees for the following amounts:
The balance only, if any, will be paid to ————————, the owner of the property.
7 U.S.C. 1989; 42 U.S.C. 1480; 40 U.S.C. 442; 42 U.S.C. 2942; 5 U.S.C. 301; delegation of authority by the Sec. of Agri., 38 FR 14944 (7 CFR 2.23); delegation of authority by the Asst. Sec. for Rural Development, 38 FR 14944, 14952 (7 CFR 2.70).
(a)
(b)
(c)
(a)
(2) Notify affected communities of their designations and encourage them to adopt and enforce land use and other control measures and to adopt ordinances or laws which will regulate and control construction in areas designated as having special flood or mudslide hazards.
(3) Make flood insurance available at reasonable rates in sufficient amounts, within the statutory limits, to adequately protect owners against loss to their buildings and contents when those buildings are located in or will be located in designated special flood and mudslide prone areas in communities participating in the National Flood Insurance Program.
(b)
(c)
(d)
For the purpose of this subpart, the following definitions apply:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
In addition to an applicant meeting the requirements for the type of financial assistance requested, the following requirements for eligibility of applicants for financial assistance for acquisition and construction purposes in designated special flood and mud-slide prone areas must be met:
(a) If flood insurance is available, to be eligible after March 1, 1974, the applicant must have purchased a flood insurance policy at the time the loan or grant is closed.
(b) Applicants will not receive financial assistance in those communities that have been notified as having special flood and mudslide prone areas and where flood insurance is not available within 1 year after such notification or by July 1, 1975, whichever is later.
FmHA or its successor agency under Public Law 103-354 financial assistance may be extended to eligible applicants meeting the eligibility requirements of § 1806.24 of this subpart, provided the following conditions are also met:
(a)
(i) The first floor elevation of the habitable space of the dwelling or housing unit must be above the 100-year flood level.
(ii) The housing must be served by public utilities and facilities, such as sewer, gas, electrical and water systems that are located and constructed to minimize or eliminate flood damage, or have an onsite water supply system and waste disposal system located so as to avoid impairment of such systems and contamination from the waste disposal system to the water supply system from flooding.
(2) If the financial assistance is to build or provide substantial improvement, the requirements of paragraph (a)(1) of this section must be met and all construction must meet requirements of the applicable development standards, and:
(i) A building permit must be issued by the appropriate governing officials having jurisdiction in the area and compliance must be had with the zoning code or other established legal requirements of the area for reducing or eliminating flood or mudslide damage.
(ii) The structure must be designed and anchored to prevent flotation, collapse or lateral movement of the structure.
(iii) Construction materials and utility equipment that are resistant to flood damage must be used.
(iv) Construction methods and practices that will minimize flood damage must be followed.
(3) If the financial assistance is to make minor repairs, the conditions of paragraphs (a)(1) (i) and (ii) and (2) (i), (ii) and (iii) of this section must be met or the building must have existed on the site prior to the date the area was identified as having special flood or mudslide hazards and the loan approval official must determine that the dwelling is suitable as a residence.
(4) When applications for financial assistance are received in areas identified as having special flood and mud-slide hazards, the loan approval official will consider the expected severity and frequency of floods and mudslides in determining whether any housing loans should be made in the area. He should be sure, if loans are made, that the objectives of the loans can be accomplished and the Government's financial interest will be adequately protected.
(b)
(c)
(2) The contents of a building must be insured separately from a building but coverage cannot be written on the contents of a three-walled machinery shed or similar type open building.
(3) Flood insurance shall not be required on any state owned property that is covered under an adequate state policy of self-insurance satisfactory to the Secretary of HUD, who will publish a list of states with such policies.
(4) It will be emphasized that under the terms of the security instrument it is the borrower's responsibility to provide and maintain proper flood insurance coverage. If flood insurance is not provided on any property for which it is required, the flood insurance premium will be paid to protect the Government's security interest. For borrowers required to escrow for flood insurance, payment of the premium will be handled in accordance with § 1806.28 of this subpart. Existing borrowers required to escrow will be notified by letter at least 90 days prior to initiating escrowing for flood insurance. If FmHA or its successor agency under Public Law 103-354 pays the flood insurance premium for borrowers not required to escrow, the cost will be charged to the borrower's account as a recoverable cost. Failure to provide flood insurance is a nonmonetary default and will be a consideration in determining if the loan is to be continued.
Exhibit A sets forth limits of coverage and chargeable premium rates under the program. Insurance policies under the program can be obtained from any licensed property insurance agent or broker serving the eligible community or from the National Flood Insurers Association Serving Company (Serving Company) for the state. The Servicing Company for each state is shown in exhibit B.
The general acceptance of policies and servicing of insurance will be performed in accordance with Subpart A of this part. Any unusual situations that may arise with respect to obtaining or servicing flood insurance should be referred to the State Director. The
For borrowers required to use escrow accounts for the payment of real estate taxes and insurance, the flood insurance premium will be paid when due from funds contained in the escrow account. If the escrow account contains insufficient funds to pay the flood insurance premium when due, the County Supervisor will request the borrower to pay an amount equal to the difference between the premium due and the escrow balance in a lump sum within 30 days after notification. If the borrower fails to remit the amount requested, the amount will be advanced and charged to the borrower's account as a recoverable cost. The amortization period for an advance due to an escrow shortage will be one year. Amortization of the charge will be handled in accordance with § 1951.310 of subpart G of part 1951 of this chapter. When a borrower has more than one loan secured by the real estate on which the flood insurance premium is being paid, the advance will be charged to the initial or lowest numbered loan.
1. The following table sets forth the limits of coverage available under the program:
2. The following table sets forth the applicable premium rates:
The servicing company office to be contacted for information relative to the availability of coverage under the national flood insurance program, flood hazard boundary maps, insurance rate tables, and related material.
7 U.S.C. 1989; 14 U.S.C. 1480; 7 CFR 2.23; 7 CFR 2.70.
(a) Tables for computing the interest rates (including the annual charge rates and length of fixed period for initial repurchase agreement for insured loans), tables for use in determining the amounts of interest on loans at different rates, tables providing factors in amortizing loans, and the guarantee fee for guaranteed loans, may be obtained from any County, District, or State Office of FmHA or its successor agency under Public Law 103-354 or from its National Office at 14th and Independence Avenue SW., Washington, DC 20250.
(b) In the event that the tables provided for in paragraph (a) of this section do not furnish adequate information, questions should be directed to the Assistant Administrator, Finance Office, Farmers Home Administration or its successor agency under Public Law 103-354, 1520 Market Street, St. Louis, Missouri 63103.
(a) For essential community facility loans, insured farm ownership loans for recreation or non-farm enterprises, insured farm operating loans for recreation enterprises, soil and water loans for recreation purposes, individual recreation loans, and insured business and industry loans, the interest rate will be increased by two per centum per annum if the project being financed will involve the use of, or construction on, prime or unique farmland. Prime or unique farmland is as defined in § 657.5 (a) and (b) of title 7, Code of Federal Regulations (1980).
(b) The two per centum interest rate increase will not apply if the applicant/borrower is a public body or Indian tribe and has demonstrated to FmHA or its successor agency under Public Law 103-354 that there are no suitable options for locating the proposed essential community facility project on land that is not prime or unique farmland.
(c) For each essential community facility loan and insured business and industry loan the District Director, after consultation with the Soil Conservation Service (SCS), will determine whether the proposed project will involve the use of, or construction on, prime or unique farmland. For each insured farm ownership loan for a recreation or non-farm enterprise, insured farm operating loan for a recreation enterprise, soil and water loan for a recreational purpose, or individual recreation loan, the County Supervisor, after consultation with SCS, will determine whether the proposed project will involve the use of, or construction on, prime or unique farmland. The determination will be documented by FmHA or its successor agency under Public Law 103-354 and made a part of the official case file.
42 U.S.C. 1480; 5 U.S.C. 301; 7 CFR 2.23; 7 CFR 2.70.
Sec. 523, 82 Stat. 553, 42 U.S.C. 1490c; sec. 524, 83 Stat. 399; sec. 502, 63 Stat. 433, as amended, 42 U.S.C. 1472; sec. 101(a), 82 Stat. 477, 12 U.S.C. 1715z; sec. 201, 82 Stat. 498, 12 U.S.C. 1715z-1; Orders of Secy. of Agr., 29 FR 16210, 32 FR 6650.
This subpart sets forth the policies and procedures and delegates authority for making Rural Housing Site (RHS) loans under sections 523 and 524 of the Housing Act of 1949. Any processing or servicing activity conducted pursuant to this subpart involving authorized assistance to FmHA or its successor agency under Public Law 103-354 employees, members of their families, known close relatives, or business or close personal associates, is subject to the provisions of subpart D of part 1900 of this chapter. Applicants for this assistance are required to identify any known relationship or association with an FmHA or its successor agency under Public Law 103-354 employee. Section 523 loans are direct loans for the purchase and development of building sites for housing to be built by the self-help method; they have additional requirements which are contained in § 1822.278.
The basic objective of RHS loans is to assist public or private nonprofit organizations interested in providing sites for housing, to acquire and develop land in rural areas. This land will be subdivided into adequate building sites and sold on a nonprofit basis to (a) families eligible for low and moderate income section 502 Rural Housing (RH) loans, including self-help housing; (b) cooperative Rural Cooperative Housing (RCH) applicants and broadly based nonprofit Rural Rental Housing (RRH) applicants; and (c) applicants eligible for Housing and Urban Development (HUD) sections 235 and 236 insured mortgages.
As used in this subpart:
(a) A
(b) A
(c)
(d)
(e)
(f)
(g)
(a)
(1) If it is a private nonprofit organization as defined in § 1822.263(a), it should also:
(i) Have a membership of at least 10 community leaders.
(ii) Plan to adopt, if it is being newly organized, articles of incorporation and bylaws that generally conform to model articles and bylaws provided by the State director which will be consistent with State law and with changes appropriate to the purposes and powers of an eligible applicant under this subpart.
(2) [Reserved]
(b)
RHS loans may be made to qualified applicants:
(a) For the purchase and development of adequate sites, including the construction of essential access roads, streets, utility lines, and necessary equipment which will become a permanent part of the development. If public water and waste disposal facilities are not available and cannot reasonably be provided on a community basis with other financing, including FmHA or its successor agency under Public Law 103-354 Water and Waste Disposal Association loans, funds may be included for this purpose.
(b) For the payment of necessary engineering fees, legal fees, and closing costs.
(c) For the payment of actual cash cost of incidental administrative expenses such as postage, telephone, advertising, and temporary secretarial help, if funds to pay these expenses are not otherwise available. The estimated cost of these items should be identified and shown in the budget.
(d) To provide for needed landscaping, planting, seeding, or sodding, or other necessary facilities related to buildings such as walks, parking areas, and driveways.
(e) When legally required by proper local, county, and State Governmental bodies as a condition for subdivision approval, RHS loan funds may be used to provide common areas playgrounds and tot lots, provided such facilities
(a)
(b)
(1) The purchase of land in excess of the immediate and identified needs in the locality.
(2) The purchase of land from a member of an applicant-organization, or from another organization in which any member of the applicant-organization has an interest, without prior consent of the national office.
(3) Refinancing of debts, except in accordance with paragraph (e) of this section.
(4) Payment of any fee, charge, or commission to any broker, negotiator, or other person for the referral of a prospective applicant or solicitation of a loan.
(5) Payment of any fee, salary, commission, profit, or compensation to an applicant, or to any officer, director, trustee, stockholder, member or agent of an applicant, except as provided in § 1822.265(b). No contract or agreement for services to be paid for with loan funds should be executed by the applicant without prior approval by the State director.
(c)
(1) Individuals with low and moderate incomes eligible for HUD mortgages.
(2) Individuals with low and moderate incomes eligible for VA guaranteed loans.
(3) Individuals with low or moderate incomes eligible for a loan from any private lender which is authorized by law to provide financial assistance for housing.
(4) Nonprofit organizations funded by Federal, State, or local governments carrying out programs for low- and moderate-income families to obtain housing.
(5) State or local public agencies such as a housing authority or a housing finance development agency carrying out programs for low- and moderate-income families to obtain housing.
(d)
(e)
(1) The obligations were incurred after the applicant filed a written application for a loan.
(2) The applicant is unable to pay such obligations from its own resources or to obtain credit from other sources, and failure to authorize the use of loan
(3) The obligations were incurred for authorized loan purposes.
(4) Contracts, materials, development and any land purchase meet FmHA or its successor agency under Public Law 103-354 standards and requirements.
(5) Payment of the obligations will remove any liens which have attached, and any basis for liens that may attach, to the property on account of such obligations or such work, materials, or land purchase.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(1) Suitable workman's compensation insurance will be carried by the applicant for all its employees.
(2) The applicant will be advised of the possibility of incurring liability and encouraged, or required when appropriate, to obtain liability insurance.
(k)
(2) The applicant will provide fidelity bond coverage for its officers and employees entrusted with the receipt, custody, and disbursement of its funds and the custody of any other negotiable or readily saleable personal property. The amount of the bond will be at least equal to the maximum amount of such funds including funds in bank accounts, and property that the applicant will have in its possession or control at any one time. If permitted by State law, the United States will be named coobligee in the bond. Form FmHA or its successor agency under Public Law 103-354 440-24, “Position Fidelity Schedule Bond,” may be used if permitted by State law.
(l)
(1) The requirements of § 1944.45 of part 1944, subpart A must be met and a conditional commitment issued prior to the start of construction of the home.
(2) The conditional commitment must be issued to an RHS borrower who can legally provide the proposed housing and has the experience and training in construction to the extent necessary to assure that the housing will be built or jointly to the RHS loan borrower and a builder who has the legal capacity, training and experience necessary to construct the housing. In all cases the following language will be added under “other conditions” on Form FmHA or its successor agency under Public Law 103-354 1944-11, “Conditional Commitment”:
(i) “Not withstanding the other provisions of this commitment the sale of completed homes on sites developed with section 524 Rural Housing Site loans will be limited to families eligible for assistance under any section of title V of the Housing Act of 1949 or under any other law which provides financial assistance for housing low- and moderate-income families. The approval of FmHA or its successor agency under Public Law 103-354 will be obtained prior to the sale of each home. The request for approval shall be submitted to the local FmHA or its successor agency under Public Law 103-354 office along with an application for an RH 502 loan or a financial statement from the purchaser and verification of the other credit that is available.”
(ii) The benefits of the nonprofit development of the site(s) must be passed on to the purchaser. This will result in this site being sold for $___ (price to be determined as provided for in (§ 1822.275(b))).
(3) In arriving at the commitment price for the site and the completed home, the value will be based on the present market value of the house only, plus the nonprofit selling price of the lot.
(4) If in order to obtain interim financing for the construction of the homes, the RHS loan borrower requests
(5) FmHA or its successor agency under Public Law 103-354's lien on any lot will be released only at the time of sale to an eligible purchaser.
(6) The County Supervisor should provide the necessary supervision to assure that the RHS loan borrower takes the necessary action to assure that all qualified builders in the area are aware of the availability of rural housing sites and are given an equal opportunity to participate in this conditional commitment program. As a minimum, the borrower will be required to submit a signed statement indicating the actions taken including names and dates of contacts with builders.
(a)
(b)
(c)
Each loan will be secured by a mortgage on the property purchased or improved with the loan, and a security interest in the funds held by the corporation in trust for the Government, in accordance with the provisions of the required Loan Resolution.
(a)
(1) The fair market value of the total property “as is”.
(2) The aggregate fair market value of the building sites after development.
(i) In determining the value of the property, the appraiser will consider the value and selling prices of similar building sites in the area. The selling prices of similar sites must be fully documented.
(ii) [Reserved]
(b)
(c)
(d)
(a)
(1) Name and address of applicant.
(2) A copy of, or an accurate citation to, the specific provisions of State law under which the applicant is organized; a copy of the applicant's articles of incorporation, bylaws, and other authorizing documents; the names and addresses of the applicant's members, directors, and officers; and if another organization is a member of the applicant organization its name, address, and principal business.
(3) A current, dated, and signed financial statement showing assets, and liabilities, together with information on the repayment schedule and status of each debt.
(4) Evidence of inability to obtain credit from other sources.
(5) General description of the proj-ect.
(i) Location and size of tract or tracts to be bought and/or developed.
(ii) Number and size of individual sites planned together with a detailed plot plan.
(iii) Preliminary engineering plans, if available.
(6) Estimated cost and amount of loan needed.
(7) Explanation of applicant's financial contribution to the project.
(8) A map showing the location of and other supporting information on neighborhood and existing facilities such as distance to shopping area, neighborhood churches, available transportation, drainage, sanitation facilities, water supply available or planned, and access to essential services such as doctors, dentists, and hospitals.
(9) If facilities such as water and sewage systems, paved streets, and utilities are not currently available, information on when and how they will be provided.
(10) Evidence of the need for the proposed sites in the locality by low- and moderate-income families and other qualified applicants that are likely to be able to obtain financing for a home.
(11) Written evidence of any State, county, or local planning, zoning, or other ordinances imposing additional restrictions or requirements upon the proposed sites.
(b)
(1) Determine that the applicant meets the eligibility requirements of § 1822.264.
(2) Verify that the information provided is accurate and complete.
(3) Determine that:
(i) The sites will be located in a good residential area and that essential facilities and services will be provided.
(ii) The lots will be reasonable in cost and of a type FmHA or its successor agency under Public Law 103-354 can appropriately finance.
(iii) There is an immediate and ready market for the proposed sites in the planned location.
(iv) The total number of sites planned does not exceed the number of loans the county supervisor can reasonably expect to include in the rural housing program or for which other credit is reasonably assured when the sites are developed.
(v) Proposed subdivisions will comply with the local codes and ordinances and also meet the requirements of subpart C of part 1924 of this chapter.
(4) Evaluate the manner in which the applicant plans to conduct its business and financial affairs.
(5) Comment on the background of the members, directors and officials.
(6) If he has questions about the proposal, send the incomplete docket to the State office for advice.
(7) If for any reason the loan cannot be made, inform the applicant.
(c)
(1) A plot plan and detailed preliminary plans and specifications for development of the building sites.
(2) A detailed cost breakdown of the project for such items as land and rights-of-way, utility installations or connections, on-site improvements, engineering and legal services, and estimated interest.
(3) If water and sanitary facilities are not publicly owned, a complete statement as to how they will be provided and details about their ownership and operation.
(4) Satisfactory evidence of review and approval of the proposed development by applicable State and local officials whose approval is required by State or local laws, ordinances, or regulations.
(5) Satisfactory evidence that the appropriate public bodies will accept and maintain all public facilities, including common areas, playgrounds, and tot lots, when dedicated to such bodies.
(d)
(2)
(e)
(f)
(g)
(1) Utilize the services of technicians on his staff and from other agencies in evaluating the application.
(2) Review the applicant's articles of incorporation and bylaws. If they conform to approved forms for the State as provided in § 1822.264(a)(1)(ii), the State director need not obtain a preliminary opinion from the OGC. In all other cases the State director will, and in any case may, submit the docket with any comments or questions to the OGC for a preliminary opinion as to whether the applicant and the proposed loan meet or can meet the requirements of State law and this subpart.
(3) If additional information is needed to adequately evaluate the application, return the loan docket to the District Director with any comments and recommendations for further processing.
(4) If the docket is sufficiently complete to enable the State Director to determine that the applicant is eligible and the loan would be sound and proper, issue a proposed memorandum of approval listing any specific conditions that must be met before loan closing.
(5) If the applicant is not eligible or the loan would not be sound and proper and the deficiencies cannot be corrected, inform the District Director accordingly.
The provisions of part 1944, subpart E of this chapter will be followed.
After the loan is approved, actions to be taken will be in accordance with § 1944.235.
(a)
(b)
The borrower agrees not to discriminate in the sale of the dwelling financed under this mortgage due to a prospective purchaser's race, color, national origin, sex, religion, age, marital status, or handicap. The borrower further agrees to comply with all Federal, State, or local laws and ordinances prohibiting discrimination in the sale of housing. The borrower's failure or refusal to comply with this agreement will be a basis for the FmHA or its successor agency under Public Law 103-354 to deny future requests for participation in its rural housing programs and activities.
This instrument also secures the obligations and covenants of borrower set forth in Borrower's Loan Resolution of
(c)
(1) The total amount to be shown in the note will be the amount of the loan shown on Form FMHA or its successor agency under Public Law 103-354 1944-51. The note will be dated the date of the loan closing.
(2) The note will be signed in accordance with subpart B of part 1927 of this
(3) Payments shall not be deferred.
(d)
(e)
The building sites will be sold on a nonprofit basis to eligible families or organizations as described in § 1822.266(c).
(a) An option, Form FmHA or its successor agency under Public Law 103-354 440-34, “Option to Purchase Real Property,” will be executed. The site will be clearly identified by a land survey.
(b) The sale price of each individual site will not be more than a sufficient amount to pay a proportionate part of the RHS loan and any other actual costs of buying, developing, and selling the building site.
(c) The proceeds from sale of the building sites will be applied on the RHS loan and any prior lien or, with the prior approval of the National Office, used in a manner consistent with the purpose of the loan and the security interest of the Government. The sites will be released from the mortgage in accordance with § 1965.110 of subpart C of part 1965 of this chapter or otherwise in accordance with prior approval of the National Office.
A subsequent RHS loan is an RHS loan to an applicant indebted for an initial RHS loan. Subsequent RHS loans will be made on the same basis as initial RHS loans.
Any applicant wishing to purchase a site financed by an RHS loan who believes he or she has been discriminated against because of race, color, national origin, religion, sex, handicap, or age, may file a complaint with the County Supervisor or State Director. Any such complaint will be handled in accordance with § 1944.239 of part 1944, subpart E of this chapter.
Loans to organizations which will provide sites for self-help housing (RHS sec. 523 loans) will be made under the provisions of this subpart with the following exceptions:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
The borrower agrees not to discriminate in the sale of the dwelling financed under this mortgage due to a prospective purchaser's race, color, national origin, sex, religion, age, marital status, or handicap. The borrower further agrees to comply with all Federal, State, or local laws and ordinances prohibiting discrimination in the sale of housing. The borrower's failure or refusal to comply with this agreement will be a basis for the FmHA or its successor agency under Public Law 103-354 to deny future requests for participation in its rural housing programs and activities.
This instrument also secures the obligations and covenants of borrower set forth in Borrower's Loan Resolution of
Loan supervision will be provided according to subpart C of part 1930 of this chapter. Loan servicing will be provided according to subpart B of part 1965 of this chapter.
Whereas, The United States of America acting through the Farmers Home Administration or its successor agency under Public Law 103-354 (hereinafter called the “Government”) is the holder of the following-described instrument(s) executed by
And whereas, ———————— (hereinafter called the “Lender”) has agreed to provide a loan to the borrower or to a builder designated by the borrower to construct a home on the property described in this instrument.
Now Therefore, in consideration of the Lender's agreement to make such loan to the borrower, the Government hereby consents to the Borrower obtaining said loan from the lender, and agrees to and hereby subordinates in favor of the Lender and his successors and assigns its liens or security interests created or evidenced by the above-described instrument(s) insomuch as they cover the following described property:
Except That, The Government shall retain a first lien or security interest in the above-described property in an amount of $———. Such first lien will be released only when satisfactory evidence is provided indicating that the lot with completed home is being sold to a family eligible for assistance under any section of Title V of the Housing Act of 1949 or under any other law which provides financial assistance for housing low- and moderate-income families and that the benefits of the nonprofit development of the site are being passed on to the eligible purchaser and that the amount of that first lien is paid on the Borrower's Rural Housing Site Loan debt to the Government.
This subordination is limited to the amount actually loaned by the Lender to the Borrower for the foregoing purpose, but shall not exceed $———.
Only the above described property is affected by this subordination. This subordination shall not otherwise affect or modify the obligations secured by the aforesaid lien instrument(s), and the said obligations shall continue in force and effect until fully paid, satisfied, and discharged.
No member of Congress shall be admitted to any share or part of this agreement or to any benefit that may arise thereupon.
In Witness Whereof, The United States of America has caused these presents to be signed on the ———— day of ————, 19—, pursuant to delegated authority published in 7 CFR, Part 1800.
7 U.S.C. 1989, 5 U.S.C. 301, 7 CFR 2.23, 7 CFR 2.70.
This subpart contains policies and procedures of the Farmers Home Administration (FmHA)or its successor agency under Public Law 103-354 applicable to making initial and subsequent insured loans to Indian tribes or tribal corporations for the acquisition of land within tribal reservations and Alaskan communities. Any processing or servicing activity conducted pursuant to this subpart involving authorized assistance to FmHA or its successor agency under Public Law 103-354 employees, members of their families, known close relatives, or business or close personal associates, is subject to the provisions of subpart D of part 1900 of this chapter. Applicants for this assistance are required to identify any known relationship or association with an FmHA or its successor agency under Public Law 103-354 employee. The Secretary of the Interior or authorized representative will determine whether lands lie within a tribal reservation or community.
The following definitions are applicable to the subsequent provisions of this subpart.
(a)
(b)
(c)
(d)
(e)
To be eligible for a loan, the tribe must:
(a) Be without adequate uncommitted funds to acquire needed land within the reservation.
(b) Be unable to obtain sufficient credit elsewhere at reasonable rates and terms to finance the proposed land acquisition.
(c) Show reasonable prospects of repaying the loan as determined by:
(1) A feasible plan for the use of the tribe's land.
(2) Satisfactory evidence of financial ability to develop and operate the land.
(3) A satisfactory management and repayment plan.
Loan funds may be used by the tribe to:
(a) Acquire land within the reservation for use of the tribe or its members. The land acquisition may be made for purposes such as elimination of fractional heirships and rounding out farming and ranching units.
(b) Pay costs incidental to land acquisition, such as those for appraisals, title clearance, legal services, land surveys, and loan closing.
Loan funds may not be used for any improvement or development purposes, acquisition or repair of buildings or personal property, payment of operating costs, refinancing of debts, payment of finder's fees, or similar costs. Loans also may not be made for any purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity, as further explained in exhibit M of subpart G of part 1940 of this chapter.
Each loan will be amortized over a period not to exceed 40 years. Upon request of the applicant, the interest rate charged by FmHA or its successor agency under Public Law 103-354 will be the lower of the interest rates in effect at the time of loan approval or loan closing. If an applicant does not indicate a choice, the loan will be closed at the interest rate in effect at the time of loan approval. Interest rates are specified in exhibit B of FmHA or its successor agency under Public Law 103-354 Instruction 440.1 (available in any FmHA or its successor agency under Public Law 103-354 office) for the type assistance involved.
The land acquired with the FmHA or its successor agency under Public Law 103-354 loan may be leased or sold to tribal members for dwelling, farming, grazing, recreational, and other purposes approved by the National Office as beneficial to the tribe or its members. The plan for use of the land must have the approval of the tribal council or other authorized governing body, and should be in accordance with the recommendations of appropriate Bureau of Indian Affairs (BIA) officials. It should also be consistent with the land use in the area unless other uses are justified. The plan should make maximum use of cost sharing and technical assistance of Federal and State programs.
(a)
(b)
(c)
(d)
(1) Give assignments or pledges to other parties of income, revenue, or other property assigned or pledged to FmHA or its successor agency under Public Law 103-354.
(2) Mortgage, sell, or otherwise dispose of any land (except sales to tribal members for market value) regardless of whether it is or is not mortgaged to FmHA or its successor agency under Public Law 103-354.
(3) This agreement will be submitted to the Office of the General Counsel (OGC) for review as to content and validity. For trust lands, a copy will be forwarded to the BIA. For other than trust lands, it will be recorded in the land records if OGC advises that such recordation is legally necessary.
(e)
(1)
(2)
(3)
(i) Funds in the reserve account may be used to make repayments on the loan when the tribe cannot meet the installments from other sources as they fall due. Any funds used for that purpose will be replaced as soon as possible before the next installment due date.
(ii) The reserve fund may be invested in short-term investments that are issued, guaranteed, or insured by the Federal or a State Government and name FmHA or its successor agency under Public Law 103-354 as co-owner.
All loans will be secured in a manner that will adequately protect the interests of FmHA or its successor agency under Public Law 103-354. Ordinarily, the security will include a lien on land acquired with loan funds plus assignment(s) of income. However, the security may consist only of assignments of income if the State Director determines that it will provide as good or better security than the land acquired with loan funds. Such security may be supplemented by security interests in
(a)
(b)
(1)
(2)
(3)
(c)
The amount of loan funds used to acquire property will not exceed its market value as determined by FmHA or its successor agency under Public Law 103-354. Market value will be based on an appraisal made by authorized FmHA or its successor agency under Public Law 103-354 personnel, BIA appraisers or appraisers approved by the State Director. The value of any existing buildings that pass with the land will be deducted from the market value.
Title to land acquired may, with the approval of the Secretary of the Interior or his designee, be in the name of the United States in trust for the tribe.
The loan docket will consist of those items set forth in exhibit A. Forms and guides are available in all FmHA or its successor agency under Public Law 103-354 County Offices. Part of the docket will be prepared by the tribe with the assistance of BIA in accordance with exhibits A(1), B, C, and D of this subpart N. FmHA or its successor agency under Public Law 103-354 will provide items in exhibit A(2) of subpart N.
State Directors are authorized to approve all loans except those in excess of $500,000 which must first be authorized by the National Office. Information to be furnished the National Office will include the completed loan docket, proposed letter of conditions to be met by the applicant, any comments of OGC, and the State Director's recommendations. The State Director will forward an executed Form FmHA or its successor agency under Public Law 103-354 440-1, “Request for Obligations of Funds,” to the Finance Office for each loan approved. If approval was authorized by the National Office, a copy of the memorandum authorizing approval will be attached to the Form FmHA or its successor agency under Public Law 103-354 440-3. An executed Form FmHA or its successor agency under Public Law 103-354 440-1 will be forwarded to the applicant on the same date the loan is approved, that is, on the same date it is forwarded to the Finance Office.
The applicant will provide evidence of title satisfactory to the FmHA or its successor agency under Public Law 103-354 for all property that will serve as security for the loan.
(a)
(i) If administrative closing requirements can be met, BIA will prepare the deeds and obtain the needed signatures. The County Supervisor will supply BIA with Forms 1927-1, “Real Estate Mortgage for (State)”, and FmHA or its successor agency under Public Law 103-354 440-22, “Promissory Note (Association or Organization).” BIA will insert the appropriate land descriptions.
(ii) The partly completed real estate mortgage and note will be returned to the County Supervisor. The loan check can then be ordered and the loan closed. The mortgage and note will be completed and signed, but no funds will be disbursed.
(iii) A conformed copy of the note with the original mortgage and two copies will be forwarded to BIA. They will insert a certification on the mortgage and return it to the County Supervisor. BIA will also indicate that the deeds have been recorded and the priority of the Government's lien in a continuation of the Title Status Report. However, the certification about the lien priority may be made on the old Status Report if BIA prefers this.
(iv) The certified original mortgage will then be recorded by the County Supervisor in the county where the land is located if OGC determines that such recordation is necessary. Funds can be disbursed as soon as the mortgage is recorded or the determination is made that recordation is not necessary.
(2)
(b)
(1) A copy of the form of right-of-way instrument to be used if it differs from Form FmHA or its successor agency under Public Law 103-354 442-20, “Right-of-Way Easement.” Rights-of-way with restrictive provisions should be accepted only in very unusual circumstances. Whenever the form of the instrument differs from Form FHA or its successor agency under Public Law 103-354 442-20 or contains special provisions that are required by either the applicant or the grantor, copies of such instruments will be submitted to the FHA or its successor agency under Public Law 103-354 for review prior to acceptance and recording. Either specific rights-of-way containing a legal property description of a centerline description of the rights-of-way or general rights-of-way containing only a description of the tract or parcel of land affected, may be used.
(2) A certificate by a duly authorized official of the applicant that it has obtained and presently holds adequate and sufficient legal title to all rights-of-way, permits and other authorizations deemed necessary by the applicant and its attorney for an uninterrupted right-of-way for the operation and maintenance of the property. Use Form FmHA or its successor agency under Public Law 103-354 442-21, “Right-of-Way Certificate.”
(3) An opinion by the applicant's attorney relating to the adequacy and legality of the rights-of-way covered by the right-of-way certificate. Use Form FmHA or its successor agency under Public Law 103-354 442-22, “Opinion of Counsel Relative to Rights-of-Way,” to the extent possible.
(c)
(d)
(1) Description of the property for use in preparing security instruments.
(2) Form FmHA or its successor agency under Public Law 103-354 440-13,
(e)
Borrowers will be supervised in accordance with subpart A of part 1942 of this chapter. Loans will be serviced in accordance with subpart E of part 1951 of this chapter. The cooperation, assistance, and advice of appropriate BIA officials will be sought at all times.
Before any loan can be closed, the District Director must notify the State Director in writing that all loan closing conditions have been met. Checks will be requested and loans will be closed in accordance with subpart A of part 1942 of this chapter.
Indian tribes, for the purpose of this subpart, are not subject to title VI of the Civil Rights Act of 1964 so long as the expected use of land acquired does not include operation of a facility which would be open to the public. Therefore, such tribes are not subject to part 1816 of this chapter.
Each State Director will, with the assistance of OGC, supplement this Subpart with State regulations, forms, worksheets, sample documents, and such other guidance as necessary to successfully carry out the program.
(1) The tribe with the assistance of BIA will provide the following:
SF 424.1: Application for Federal Assistance (For Non-construction).
Form FmHA or its successor agency under Public Law 103-354 1910-11: Applicant Certification, Federal Collection Policies for Consumer or Commercial Debts. (O & 1C—Sign O);
Official audit report of the preceding 4 years including income and expenses;
List of tribal officers, including title and addresses and signature identifications;
Copy of tribe's constitution and bylaws or charter or other evidence of organization and rules of operation;
Legal services contract approved by BIA if a private law firm. A written statement will be provided when a BIA attorney performs the legal services.
Land Utilization Plan including:
(a) A short narrative description of why the land is being purchased, what use is to be made of it, and the annual net income expected to be derived from the land. If it has proven income record, that information should be included. If not, it should be so stated. If any development work is contemplated by the tribe, this should be explained, including assurance of the source of funds to carry out such development. If the land is to be operated by the tribe, this should be described, including assurance of availability of the necessary money to meet operating costs and method of management. If the land is to be leased, there should be a description of how it will be used and assurance that its intended use will conform to the overall land use pattern of the reservation or any variations justified; (b) Recommendation of BIA Soil Conservation Specialist.
Form FmHA or its successor agency under Public Law 103-354 440-34: Option to Purchase Real Property or similar purchase agreement containing the provisions of the option.
Form FmHA or its successor agency under Public Law 103-354 440-35: Acceptance of Option.
Form FmHA or its successor agency under Public Law 103-354 442-7: Operating Budget or Statement of Income and Expenses including income and expenses from all sources.
Resolution of Tribal Council or other governing body approving and providing for the proposed land acquisition and any actions necessary to carry it out, such authority to encumber real estate and waiver of immunity and, where legally necessary, evidence of any required tribal election or referendum. The resolution should substantially conform with Exhibit B.
Subordination Agreement by BIA using Exhibit D as a guide.
Form FmHA or its successor agency under Public Law 103-354 1942-46: Letter of Intent to Meet Loan Conditions Fidelity Bond for tribal officers authorized to handle monies.
Form FmHA or its successor agency under Public Law 103-354 1927-9: Preliminary Title Opinion, if required.
Form FmHA or its successor agency under Public Law 103-354 442-20: Right-of-Way easement, or right-of-way instrument, if appropriate.
Form FmHA or its successor agency under Public Law 103-354 442-21: Right-of-Way Certificate, if appropriate.
Form FmHA or its successor agency under Public Law 103-354 442-22: Opinion of Counsel Relative to Right-of-Way, if appropriate.
Form FmHA or its successor agency under Public Law 103-354 440-13: Report of Lien Search, if appropriate.
Form FmHA or its successor agency under Public Law 103-354 1927-10: Final Title Opinion, if required.
(2) The FmHA or its successor agency under Public Law 103-354 County Supervisor will provide the following:
Form FmHA or its successor agency under Public Law 103-354 1922-1: Appraisal Report— Farm Tract if BIA or commercial appraisers have not provided a present market appraisal.
Form FmHA or its successor agency under Public Law 103-354 1927-13: Waiver of Encumbrances, Exceptions and Reservations, if required.
Form FmHA or its successor agency under Public Law 103-354 440-2: County Committee Certification or Recommendation.
Form FmHA or its successor agency under Public Law 103-354 424-49: Project Summary (Loans to Indian Tribes and Tribal Corporations).
Form FmHA or its successor agency under Public Law 103-354 1942-14: Association Project Fund Analysis Letter of Conditions.
Form FmHA or its successor agency under Public Law 103-354 1940-1: Request for Obligation of Funds.
Form FmHA or its successor agency under Public Law 103-354 440-22: Promissory Note.
Form FmHA or its successor agency under Public Law 103-354 440-9: Supplementary Payment Agreement, if required.
Form FmHA or its successor agency under Public Law 103-354 1927-1 (State): Real Estate Mortgage.
Form FmHA or its successor agency under Public Law 103-354 402-1: Deposit Agreement, if required.
A RESOLUTION OF THE TRIBAL COUNCIL OF THE _________ TRIBE AUTHORIZING AND PROVIDING FOR: (1) THE ISSUANCE OF AN INSTALLMENT PROMISSORY NOTE IN THE PRINCIPAL AMOUNT OF ____ TO FINANCE THE PURCHASE OF LAND, (2) THE GIVING OF SECURITY, (3) THE COLLECTION, HANDLING, AND DISPOSITION OF REVENUES OF THE LAND TO BE PURCHASED AND ANY OTHER LAND TO BE ENCUMBERED AS SECURITY, AND (4) RELATED ACTIONS AND MATTERS.
The _____, (hereafter referred to as “Tribe”), is an Indian Tribe recognized by the Secretary of the Interior or is a tribal corporation established pursuant to the Indian Reorganization Act;
The Tribe wishes to acquire interests in approximately _____ acres of real estate (hereinafter called “the land”) within its reservation or community for the use of and the improvement of the economic standing of the Tribe or its members but does not have adequate uncommitted funds for such acquisition.
A meeting of the tribal council or other governing body (hereafter called the “Council”) with the required number of Council members present was held at _____ on the _____ day of _____, 19__, pursuant to notice thereof as required by its constitution, by-laws, corporate charter, or other organizational documents, (hereafter called the “constitution”) to consider a plan to finance the proposed land acquisition.
The Tribe has the authority to acquire lands or interests therein.
The Tribe is authorized to mortgage or otherwise hypothecate its land either by its constitution, or by a tribal referendum whereby such mortgage or other hypothecation was approved by at least a majority of the qualified voters at an election in which at least 20 percent of those eligible voted, or under such other rules as may be prescribed by the constitution of the Secretary of the Interior.
The Secretary of the Interior or his authorized representative has approved the mortgaging or hypothecation of the land.
As shown by the minutes of said meeting, of the ______ (Number) Council members of record of the Tribe there were present and voting ______ Council Members and by a recorded majority vote, determinations were made and actions authorized as follows:
That in order to acquire the land, the Council was authorized and empowered, in its discretion, for and in the name of the Tribe, to make application to the Farmers
Now therefore, it is hereby resolved by the Council of the Tribe as follows:
A.
B.
C.
A. Comply with applicable Federal, State, and Tribal laws and regulations and maintain the land in good condition.
B. Impose and collect such rates and charges that gross revenues will be sufficient at all times for the maintenance of the land and the funding of the Debt Service and Reserve Accounts.
C. Cause to be levied and collected such taxes or assessments as may be necessary to maintain the land in good condition, meet payments on the loan, and make the deposits required by Sections 5 B and C, if for any reason gross revenues are insufficient.
D. Maintain complete books and records relating to the operation and maintenance of the land and its financial affairs and will cause such books and records to be audited annually at the end of each fiscal year and an audit report prepared, and will furnish the Government without request a copy of each annual audit report. The audit will be conducted by independent Certified Public Accountants or by licensed Public Accountants, licensed before December 31, 1970, who are certified or licensed by a regulatory authority of a state or other political subdivision of the United States. At all reasonable times, the Government shall have the right to inspect the land and to inspect and copy the records, accounts, and data of the Tribe relating thereto.
E. Maintain such insurance coverage as may be required by the Government.
F. Not borrow any money from any source or enter into any contract or agreement or incur any other liabilities in connection with making improvements to the land (exclusive of normal maintenance) without obtaining the prior written consent of the Government.
G. Not cause or permit any voluntary dissolution of its organization; merge or consolidate with any other organization; dispose of, transfer, or convey its title to any land or any part thereof or interest therein, by sale, mortgage, lease or other encumbrance, without obtaining the prior written consent of the Government.
H. Not modify or amend its constitution in any way that would affect the Government's security without the written consent of the Government.
The vote was:
I, the undersigned, as _______ (Appropriate Official) of the _____ hereby certify that the Tribal Council or such Tribe is composed of ___ members, of whom ___ (constituting a quorem) were present at a meeting thereof duly called and held on the ___ day of ____, 19 ___: that the foregoing resolution was adopted at such meeting by the affirmative vote of ___ members of such Council and that said resolution
Dated this ___ day of _____, 19 ___.
Whereas, the United States of America, acting through the Farmers Home Administration or its successor agency under Public Law 103-354, United States Department of Agriculture (hereinafter called the “FmHA or its successor agency under Public Law 103-354”) is the holder or insurer of a promissory note (hereinafter called the “Note”) in the sum of _______ bearing interest at the rate of _____ percent per annum; and
Whereas, ther Note was given by _______ (hereinafter called the “Tribe”) to evidence the indebtedness incurred by the Tribe under a loan (hereinafter call the “Loan” made or insured by the FmHA or its successor agency under Public Law 103-354, and
Whereas, Tribal Council Resolution No. _____ dated _______, authorized the acceptance of the Loan and the issuance of the Note and pledged and assigned income and funds as security for the payment thereof; and
Whereas, the Tribe has entered into a subordination agreement with the United States Department of the Interior, Bureau of Indian Affairs (hereinafter called the BIA), whereby the General Assignment of Income dated _______ and an Assignment of Income dated _______ in favor of the BIA is fully subordinated to the Assignment made herein;
Now, therefore, in consideration of the FmHA or its successor agency under Public Law 103-354's making or insuring the Loan and to secure the payment when due of the installments on the Note, the Tribe does hereby grant, convey, pledge and assign to the FmHA or its successor agency under Public Law 103-354 (1) all annual gross income from the land purchased with the loan, and (2) all annual gross income from other sources. If the Tribe shall pay the entire principal of and interest on the Note, this Assignment shall terminate and be of no further force and effect.
In Witness Whereof, the _______ Tribe of the _______ Reservation causes this Assignment to be executed by its President and its Tribal seal to be affixed and duly attested.
The terms and conditions of the foregoing Assignment are hereby agreed to as of the date hereof.
This Agreement, dated _________, between the United States of America, Department of the Interior (hereinafter called the “BIA”, and the _________ tribe of the _________ Reservation (hereinafter called the “Tribe”), for the benefit of the Tribe and to induce the United States of America, acting through the Farmers Home Administration or its successor agency under Public Law 103-354, United States Department of Agriculture (hereinafter called the “FmHA or its successor agency under Public Law 103-354”), to make or insure a loan to the Tribe:
Witnesseth:
Whereas, under date of _________, the Tribe executed and delivered to the BIA a “General Assignment and Assignment of Income” (hereinafter called the “General Assignment”), a copy of which is attached hereto and marked Exhibit A; and under date of _________ an “Assignment of Specific Income” a copy of which is attached hereto and marked Exhibit B, and Whereas, the FmHA or its successor agency under Public Law 103-354 has offered to loan or insure a loan to the Tribe in the sum of ____ for the purpose of paying part or all of the cost of acquiring interests in approximately ____ acres of real estate within its reservation pursuant to the provisions of the Act of April 11, 1970, Pub. L. 91-229; and
Whereas, FmHA or its successor agency under Public Law 103-354 requires that the annual gross income from the real estate purchased with the loan and the annual gross income from all other sources in such amount as may be necessary to pay debt service on such loan be pledged to pay the principal and interest on the loan; and
Whereas, the BIA is willing to subordinate to FmHA or its successor agency under Public Law 103-354 as security for said loan its rights under the General Assignment and under the Assignment of Specific Income to a lien on the income of the Tribe from all sources;
Now, Therefore, the BIA does agree as follows:
1. That the right it has under the General Assignment and under the Assignment of
2. That this subordination Agreement shall be effective as of the date hereof.
Dated this ____ day of ______, 19__.
A list of CFR titles, subtitles, chapters, subchapters and parts and an alphabetical list of agencies publishing in the CFR are included in the CFR Index and Finding Aids volume to the Code of Federal Regulations which is published separately and revised annually.
Material Approved for Incorporation by Reference
Table of CFR Titles and Chapters
Alphabetical List of Agencies Appearing in the CFR
Redesignation Tables
List of CFR Sections Affected
The Director of the Federal Register has approved under 5 U.S.C. 552(a) and 1 CFR Part 51 the incorporation by reference of the following publications. This list contains only those incorporations by reference effective as of the revision date of this volume. Incorporations by reference found within a regulation are effective upon the effective date of that regulation. For more information on incorporation by reference, see the preliminary pages of this volume.
At 55 FR 39393, Sept. 27, 1990, RUS amended 7 CFR chapter XVII by redesignating, reorganizing, adding and reserving certain parts. For the convenience of the user, a redesignation table follows:
At 55 FR 49249, Nov. 27, 1990, RUS combined parts 1784, 1786, and 1787 into subparts of new part 1786. For the convenience of the user, a redesignation table follows for the parts, subparts, and sections redesignated.
All changes in this volume of the Code of Federal Regulations which were made by documents published in the
For the period before January 1, 1986, see the “List of CFR Sections Affected, 1949-1963, 1964-1972, and 1973-1985” published in seven separate volumes.