Exemptions of RUS Operational Controls under Section 306E of the Rural Electrification Act; Timing of Notification to Borrowers

Section 306E of the Rural Electrification Act of 1936, as amended, directs The Rural Utilities Service (RUS) to minimize approval rights, requirements and prohibitions imposed on the operations of electric borrowers whose net worth exceeds 110 percent of the outstanding loans made or guaranteed to the borrower by RUS. Prior to today's amendment, RUS regulations implementing this provision included a requirement that RUS notify borrowers no later than May 1 of each year whether they meet the 110 percent test in order to qualify for the exemptions listed in the rule. Most of the information needed to determine a borrower's exemption status is contained in Financial and Statistical Reports that each borrower submits to RUS no later than March 1 each year. Because of the short time available to compile the data, RUS has had difficulty meeting the May 1 notification date. Today's rule pushes the date back to July 1. The rule makes no substantive changes to the ``110 percent rule.'' RUS is simply changing the timing of the notification to borrowers. The July 1 date is the same date that RUS is required to notify borrowers of exemption from RUS approval of certain investments. RUS believes that informing borrowers of their exemption status under both rules at the same time will reduce administrative costs to borrowers and to the agency.