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Diagram Legend On-going activity in the EIS process B, C, D, Discrete events in the Siting Study

and Environmental Analysis path B, C. Discrete events in the Alternative

Evaluation path As the diagram illustrates, there will be two separate but interrelated study processes leading to the preparation of the EIS. One process B, through H, will examine alternatives to building a generating (or transmission or new mining) facility. The other process, B through H will examine a range of potentially acceptable sites for a generating (or transmission or new mining) facility.

In order to facilitate long-range planning and reduce delays, a Borrower may undertake preliminary evaluations of alternative means of providing power and begin the study of a range of potentially acceptable sites for a generation (or transmission or new mining) facility before demonstrating a need for the proposal. However, the obligation to show a need for the proposal will still remain before RUS financing assistance can be obtained.

Equal spacing between points on the diagram is not meant to suggest equal time intervals. Where two letters are the same (except for subscripts), generally the two indicated events should occur within the same time frame. For BD and B,Di, this is only true where the Borrower initiates site selection at a time when there is a specific need to be filled. For major transmission projects, events occurring with reference to the Macro-Corridor Study are analogous to the generation and mining Siting Study procedures.

The flow diagram is intended to indicate the normal sequence of events although some variance may be acceptable in individual cases if good cause is demonstrated. However, in all instances RUS shall assure that the requirements of the NEPA and CEQ regulations are fulfilled.

Discrete Events A: The Borrower presents to RUS the underlying needs which form the basis of its proposal. RUS undertakes for electric generation proposals, when necessary, the preparation or update of the power requirements study (PRS) utilizing RUS procedures. For electric generation and transmission and mining proposals, the need for the proposal shall be presented in the draft and final EIS's (or EA, as applicable).

B and Bi: The Borrower consults with RUS on the procedures and general parameters for the Siting Study and on potential alternative ways to meet the need, including guidance on preparing the Alternative Evaluation. Consultation may be initiated even if a specific need has not been identified.

BČ: Work is performed on the Siting Study by the Borrower and/or consultant. This includes "macroanalysis" in which general criteria, literature search and consultation are used to identify a reasonable range of potentially acceptable sites.

Borrower/consultant contact Soil Conservation Service (SCS), U.S. Environmental Protection Agency (EPA), U.S. Fish and Wildlife Service (FWS), U.S. Army Corps of Engineers (COE), Federal land use agencies and state agencies for early guidance and input.

As soon as practicable during this period, RUS publishes its “Notice of Intent" in the FEDERAL REGISTER and the Borrower publishes similar information in local newspapers of general circulation. (See $1794.51(b)).

B,C,: Borrower does research and consultation, contacts other utilities, etc., to determine whether there are reasonable alternatives to a new generating (or transmission or mining facility). The Alternative Evaluation should include discussion, as appropriate, of joint projects, alternate fuels, alternate energy sources, conservation, etc. Alternatives eliminated from detailed study should be identified and reasons given for the elimination. The Borrower should also indicate which alternatives are reasonably available to it if its recommended alternative is not approved.

C and Ci: Borrower submits draft of Siting Study and Alternative Evaluation to RUS for review. RUS reviews each draft for major flaws. If such flaws are not present, RUS submits both the draft Siting Study and Alternative Evaluation to potentially involved Federal and state agencies (including, but not limited to, all agencies invited to the field investigation) for review and comment.

D and Di: RUS invites other Federal and state agencies to make a field investigation of potentially acceptable siting areas discussed in the draft Siting Study and critique the study methodology, and point out potential problems with these alternative siting areas. The Borrower at this time presents site and nonsite specific alternatives included in the Siting Study and Alternative Evaluation to these agencies for their comments. Participating agencies may critique alternative means of meeting the need and point out potential problems with alternative siting areas. The agencies set up a strategy for conducting the scoping process and tentatively identify the lead and cooperating agencies for the EIS.

DE: Federal agencies are given the opportunity to comment on the potentially acceptable alternatives to point out fatal flaws. During this stage the Borrower may secure land, water or other critical factors for potentially acceptable sites by option or other means (subject to the limitations in 81794.21). If RUS's notice of intent and the

Borrower's notice did not give the date and meeting, and also includes new alternatives, time of the scoping meeting, scoping meet- if any, which have developed. RUS submits ing notices are published now.

updated Alternative Evaluation to requestE and Ei: Scoping meeting(s) is held to re- ing cooperating agencies. The Environceive input from the public, interested par- mental Analysis may incorporate the Alterties, and Federal, state and local officials native Evaluation leading to a single review and agencies. Among the topics open to dis- document. cussion are reasonable alternatives to meet FG and F,G: RUS and cooperating agenthe need, potentially acceptable sites, par- cies independently evaluate, for accuracy, ticipation projects or conservation, signifi- scope and content, the information submitcant issues to be addressed in the EIS, and ted to them. RUS collates responses and recthe need for the project.

onciles them with the Borrower. RUS may EF: Borrower submits revised Siting Study begin writing the draft EIS at this point. (or addenda if appropriate) to RUS for review H and H,: RUS Borrower submits, as approafter revising it to reflect input from scoping priate, a final revised Environmental Analymeeting(s). RUS consults with cooperating sis and Alternative Evaluation to RUS. agencies on the scope of the EIS and gives HJ and H,J: RUS independently evaluates the Borrower guidance on scope of the Envi- the revised documents and verifies the inforronmental Analysis. Borrower prepares the mation therein before use in the EIS. During draft Environmental Analysis which includes this time, RUS prepares the draft EIS, utiliza fatal flaw study of potentially acceptable ing the borrower supplied data, interagency sites and a "microanalysis" in which de- expertise, and other information. tailed field work is conducted on the Borrow- J: RUS issues draft EIS for public review er's recommended site(s). The Borrower con- and comment publishing notice of availabiltinues consultation with RUS and other in- ity in the FEDERAL REGISTER. terested Federal, state, and local agencies, K: Public comment period ends on draft and the public, and reflects their comments EIS. This date may be extended in certain in the Environmental Analysis.

instances. D,F,: Borrower updates and expands, as KL: RUS (and cooperating agencies, as apnecessary, the Alternative Evaluation on the propriate) review comments received on basis of comments received from Federal, draft EIS and responds, by modifying alterState and local officials and agencies, input natives, developing alternatives not prefrom participants at the scoping meeting(s), viously given sufficient consideration, the general public and new developments supplementing, improving or modifying the (e.g., negotiations with other electric power analyses, etc. A final EIS or supplemental utilities), RUS provides guidance to the Bor- draft EIS is prepared, as appropriate, with rower during this period based on cooperat- cooperating agencies' assistance. ing agency and public input.

M: Record of decision is issued. RUS will F and F;: The Borrower submits draft En- take no final action on any loan guarantee, vironmental Analysis to RUS for review and etc., sooner than 30 days after issuance of the comment. If the draft Environmental Analy- final Federal EIS. sis has no readily apparent critical flaws, MN: Implementation of mitigation measRUS distributes copies of the Environmental ures is checked, as necessary, by RUS and Analysis to cooperating agencies for review. other Federal, state, and local agencies durBorrower submits Alternative Evaluation, ing construction and operation of the which has been updated after the scoping project.




EDITORIAL NOTE: 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.




Part 1804 1806 1807 1809 1810

Interest rates, terms, conditions, and approval au-






1822 1823

Rural housing loans and grants
Association loans and grantscommunity facili-

ties, development, conservation, utilization




1863-1866 (Reserved)





1890-1899 (Reserved)

EDITORIAL NOTE: 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.




Subpart A-Real Property Insurance Sec. 1806.1 General. 1806.2 Companies and policies. 1808.3 Coverage requirements. 1806.4 Examining and general servicing of

insurance. 1806.5 Losses. 1806.6 Failure of borrower to provide insur



Subpart B-National Flood Insurance

1806.21 General. 1806.22 Areas of responsibility. 1806.23 Definitions. 1806.24 Eligibility. 1806.25 Conditions. 1806.26 Coverage and premium rates. 1806.27 Acceptable policies and servicing. 1806.28 Borrowers required to escrow. EXHIBIT A TO SUBPART BCOVERAGE AND


PANY AUTHORITY: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

(b) Borrower to furnish insurance. The real estate mortgage executed by the borrower provides that he will furnish and continually maintain and pay for insurance on buildings situated or constructed on the property with companies, in amounts, and on terms and conditions satisfactory to the FmHA or its successor agency under Public Law 103-354 until the loan is repaid.

(c) Borrower's selection of company. The borrower may select the insurance company provided that the company and insurance policy comply with all the requirements set forth in this Instruction.

(d) Responsibility. The County Supervisor is responsible for taking all actions in connection with insurance as may be necessary to protect the security interest of the FmHA or its successor agency under Public Law 103– 354. Any unusual situation that may arise with respect to obtaining or servicing insurance should be referred to the State Director. The State Director will refer any questions of a legal nature to the Office of the General Counsel (OGC).

(e) Use of Form FmHA or its successor agency under Public Law 103–354 426-1, "Valuations of Buildings." The minimum insurance required will be indicated in the appraisal report by the employee who makes the appraisal of property that includes insurable buildings. In the case where no real estate appraisal is required or the appraisal report does not indicate the minimum insurance coverage, Form FmHA or its successor agency under Public Law 103 354 426-1 will be prepared by the County Supervisor. Reevaluation of the buildings will not be done on appraisal reports; however, when new buildings are constructed or values increase or decrease materially and reevaluation is necessary to properly reflect the buildings' security interest of the FmHA or its successor agency under Public Law 103–354, the County Supervisor will prepare or revise Form FmHA or its successor agency under Public Law 103_354 426_1 as appropriate. Changes made on an existing Form FmHA or its successor agency under Public Law 103_354

Subpart A-Real Property


AUTHORITY: 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.

$ 1806.1 General.

(a) Authority. This subpart sets forth the policies and procedures regarding insurance requirements on real property which serves as security for a debt under the Farm Credit Programs of the Farm Service Agency (FSA) or the Multi-Family Housing Programs of the Rural Housing Service (RHS). Any references herein to the Farmers Home Administration (FmHA) or its employees are intended to mean FSA or RHS, as applicable, and their employees.

426-1 will be dated and initialed. The reason for any deletion will be noted on the Form. (41 FR 34571, Aug. 16, 1976, as amended at 61 FR 59777, Nov. 22, 1996)

$ 1806.2 Companies and policies.

Property insurance policies or other evidence of insurance will be accepted from borrowers when the requirements outlined herein are complied with fully.

(a) Companies. It is desirable that companies be licensed to do business in the particular State or other jurisdiction where the property is located, or

hat they be otherwise authorized by law to transact business within such State or other jurisdiction (hereinafter called “State"). If the required insurance is not available locally at comparable rates from an insurance company licensed or otherwise authorized to do business in the State, insurance may be accepted from another company if (1) the OGC advises that policies issued by such company will not be rendered unenforceable by virtue of the company's failure to be licensed or otherwise authorized to transact business in the State and that the company is a legal entity which may be-sued in the State where the insured property is located, and (2) the State Director determines that the company is reputable and financially sound. In making the above determinations, the State Director will consider all relevant available information such as that which may be obtained from financial statements, Best's Insurance Reports, State insurance authorities, and other lending institutions.

(b) Insurance policies—(1) Standardpolicies. If a standard fire insurance policy has been adopted for the State, it should be used unless State statutes exempt the company from the regulations requiring its use. The standard policy is one containing substantially the same standard provisions adopted or recommended by legislative action or by order of the supervisory insurance authorities of the State in which the security is located.

(2) Other policies. To be acceptable, any other insurance policies must conform to the requirements of this Instruction.

(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) State instructions. If the State Director and the OGC consider it advisable, a State Instruction may be issued to help County Supervisors identify standard insurance policies adopted for the State. The Instruction should also furnish a guide to assist in identifying other acceptable insurance policy forms that are commonly used by insurance companies in the State, recognizing that such information is not all inclusive.

(4) Binders. Whenever there is a justifiable reason for not issuing a policy or endorsement, as required, a written binder will be acceptable for a period not to exceed 60 days from the effective date of the insurance. The written binder must have attached thereto the approved form of mortgage clause. Such a binder will be submitted to the County Supervisor in lieu of an insurance policy or endorsement and the insurance policy or endorsement will be submitted on or before the expiration date of the binder. The State Director, with the advice of the OGC and subject

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