PART 1721—POST-LOAN POLICIES AND PROCEDURES FOR INSURED ELECTRIC LOANS Authority: 7 U.S.C. 901 et seq.; et seq.; et seq. Source: 50 FR 5368, Feb. 8, 1985, unless otherwise noted. Redesignated at 64 FR 72489, Dec. 28, 1999. Subpart A—Advance of Funds § 1721.1 Advances. (a) Purpose and amount. (b) Minor project. (c) Certification. (1) If applicable, state that the project is a categorical exclusion of a type described in § 1970.53 of this title; or (2) If applicable, state that the project is a categorical exclusion of a type that normally requires the preparation of an environmental report (see § 1970.54 of this title) and then submit the environmental report with the request for funds to be approved for advance. (d) Noncompliance. [64 FR 72489, Dec. 28, 1999, as amended at 78 FR 73370, Dec. 5, 2013; 81 FR 11026, Mar. 2, 2016; 86 FR 36197, July 9, 2021; 89 FR 17274, Mar. 11, 2024] Subpart B—Extensions of Payments of Principal and Interest Source: 67 FR 485, Jan. 4, 2002, unless otherwise noted. § 1721.100 Purpose. This subpart contains RUS procedures and conditions under which Borrowers of loans made by RUS may request RUS approval for extensions for the payment of principal and interest. § 1721.101 General. (a) The procedures in this subpart are intended to provide Borrowers with the flexibility to request an extension of principal and interest as authorized under section 12(a) of the RE Act and section 236 of the Disaster Relief Act of 1970 (Public Law 91-606). (b) The total amount of interest that has been deferred, including interest on deferred principal, will be added to the principal balance, and the total amount of principal and interest that has been deferred will be reamortized over the remaining life of the applicable note beginning in the first year the deferral period ends. (c) Payment of principal and interest will not be extended more than 5 years after such payment is due as originally scheduled. However, in cases where the extension is being granted because, at the sole discretion of the Administrator, a severe hardship has been experienced, the Administrator may grant a longer extension provided that the maturity date of any such loan does not extend to a date beyond forty (40) years from the date of the note. [67 FR 485, Jan. 4, 2002, as amended at 68 FR 37953, June 26, 2003] § 1721.102 Definitions. The definitions contained in 7 CFR 1710.2 are applicable to this subpart unless otherwise stated. § 1721.103 Policy. (a) In reviewing requests for extension of payment of principal and interest, consideration shall be given to the effect of such extensions on the security of the Government's loans, and on the ability of the Borrower to achieve program objectives. It is the policy of RUS to extend the time for payment of principal and interest on the basis of findings that such extension does not impair the security and feasibility of the Government's loans and: (1) Is essential to the effectiveness of the Borrower's operations in achieving RUS program objectives which include providing reliable, affordable electricity to RE Act beneficiaries; (2) Is necessary to help a Borrower place its operations on a more stable financial basis and thereby provide assurance of repayment of loans within the time when payments of such loans are due under the terms of the note or notes as extended; or (3) Is otherwise in the best interest of the Government. (b) Extensions will be given in the minimum amount to achieve the purpose of the extension. (c) The maximum interest rate a RUS Borrower can charge on deferments for programs relating to consumer loans, e.g., [67 FR 485, Jan. 4, 2002, as amended at 68 FR 37953, June 26, 2003] § 1721.104 Eligible purposes. (a) Deferments for financial hardship. (2) RUS will determine whether a Borrower qualifies for the deferment on a case-by-case basis, considering such factors as the following: (i) Substantial unreimbursed or uninsured expenses relating to storm damage; (ii) Loss of large power load (as defined in § 1710.7(c)(6)(ii) of this chapter, Large retail power contracts); or (iii) Substantial loss of consumers or load due to hostile annexations and condemnations, without adequate compensation. (b) Deferments for energy resource conservation (ERC) loans. (i) Caulking; (ii) Weather-stripping; (iii) Heat pump systems (including water source heat pumps); (iv) Heat pumps, water heaters, and central heating or central air conditioning system replacements or modifications, which reduce energy consumption; (v) Ceiling insulation; (vi) Wall insulation; (vii) Floor insulation; (viii) Duct insulation; (ix) Pipe insulation; (x) Water heater insulation; (xi) Storm windows; (xii) Thermal windows; (xiii) Storm or thermal doors; (xiv) Electric system coordinated customer-owned devices that reduce the maximum kilowatt demand on the electric system; (xv) Clock thermostats; or (xvi) Attic ventilation fans. (2) ERC loans will be amortized over not more than 84 months, without penalty for prepayment of principal. (c) Deferments for renewable energy projects. (i) Energy conversion technology; (ii) Electric power system interfaces; (iii) Delivery equipment; (iv) Control equipment; and (v) Energy consuming devices. (2) A Borrower may request that RUS defer principal payments for the purpose of enabling the Borrower to provide its consumers with loans to install all or part of customer-owned renewable energy systems up to 5kW. (3) A renewable energy system is defined in § 1710.2 of this chapter. (4) For the purpose of this subpart, a renewable energy project consists of one or more renewable energy systems. (d) Deferments for distributed generation projects. (i) The Borrower will own and operate, or (ii) The consumer owns, provided the system owned by the consumer does not exceed 5KW. (2) A distributed generation project may include one or more individual systems. (e) Deferments for contributions-in-aid of construction. (2) Amounts available for this purpose will be limited to the amount of the construction costs that are in excess of the average cost per residential consumer incurred by the Borrower to connect new full time residential consumers during the last calendar year for which data are available. The average cost per residential consumer is the total cost incurred by the Borrower and will not be reduced by the amounts received as a contribution-in-aid of construction. [67 FR 485, Jan. 4, 2002, as amended at 68 FR 37954, June 26, 2003] § 1721.105 Application documents. (a) Deferments for financial hardship. (1) A summary of the financial position of the Borrower, based on the latest information available (usually less than 60 days old). (2) A copy of the board resolution requesting an extension due to financial hardship. (3) A 10-year financial forecast of revenues and expenses on a cash basis, by year, for the period of the extension and 5 years beyond to establish that the remaining payments can be made as rescheduled. (4) A listing of notes or portions of notes to be extended, the effective date for the beginning of the extension, and the length of the extension. (5) A narrative description of the nature and cause of the hardship and the strategy that will be instituted to mitigate or eliminate the effects of the hardship. (b) Deferments for energy resource conservation loans. (c) Deferments for renewable energy projects. (d) Deferments for distributed generation projects. (e) Deferments for contribution-in-aid of construction. (1) A letter from the Borrower's General Manager requesting an extension of principle payments for the purpose of offering an ERC loan program to its members and describing the details of the program. (2) A summary of the calculations used to determine the average cost per residential customer. (See § 1721.104(e)(2)). [67 FR 485, Jan. 4, 2002, as amended at 68 FR 37954, June 26, 2003; 84 FR 32616, July 9, 2019] § 1721.106 Repayment of deferred payments. (a) Deferments relating to financial hardship. (b) Deferments relating to the ERC loan program, renewable energy project(s), distributed generation project(s), and the contribution(s)-in-aid of construction. [67 FR 485, Jan. 4, 2002, as amended at 68 FR 37954, June 26, 2003] § 1721.107 Agreement. After approval of the Borrower's request for a deferment of principal and interest, an extension agreement, containing the terms of the extension, together with associated materials, will be prepared and forwarded to the Borrower by RUS. The extension agreement will then be executed and returned to RUS by the Borrower. § 1721.108 Commencement of the deferment. The deferment of principal and interest will not begin until the extension agreement and other supporting materials, in form and substance satisfactory to RUS, have been executed by the Borrower and returned to RUS. Examples of other supporting materials are items such as approving legal opinions from the Borrower's attorney and approvals from the relevant regulatory body for extending the maturity of existing debt and for the additional debt service payment incurred. § 1721.109 OMB control number. The information collection requirements in this part are approved by the Office of Management and Budget and assigned OMB control number 0572-0123.