FR Doc 05-13945

[Federal Register: August 5, 2005 (Volume 70, Number 150)]
[Proposed Rules]
[Page 45314-45322]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05au05-8]

========================================================================
Proposed Rules
Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.

========================================================================

[[Page 45314]]

DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1755

RIN 0572-AB40

Telecommunications Policies on Specifications, Acceptable
Materials, and Standard Contract Forms

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Rural Utilities Service (RUS), an agency delivering the
U.S. Department of Agriculture's Rural Development Utilities Programs,
proposes amending certain regulations on telecommunications policies to
include requirements presently contained in RUS Bulletin 345-3,
``Acceptance of Standards, Specifications, Equipment, Contract Forms,
Manual Sections, Drawing, Materials and Equipment for the Telephone
Program.'' This proposed rule would establish and codify provisions for
RUS acceptance and Technical acceptance of materials used in
telecommunications systems. This rule also proposes to integrate the
existing regulatory sections on field trials into the procedure for
product acceptance and inclusion in this codification, as well as to
clarify and reorganize the field trial section. This rule would affect
borrowers that are parties to planning and construction of
telecommunication facilities with RUS funds and manufacturers and
contractors providing products to RUS borrowers.

DATES: Written comments must be received by RUS or must carry a
postmark or equivalent no later than October 4, 2005.

ADDRESSES: You may submit comments by any of the following methods:
Federal eRulemaking Portal: Go to http://www.regulations.gov.
Follow the online instructions for submitting

comments.
Agency Web Site: http://www.usda.gov/rus/index2/Comments.htm.
Follow the instructions for submitting comments. E-mail: RUSComments@usda.gov. Include in the subject line

of the message ``Telecommunications Policies Specifications, Acceptable
Materials, and Standard Contract Forms.''
Mail: Addressed to Richard Annan, Acting Director, Program
Development and Regulatory Analysis, Rural Utilities Services, U.S.
Department of Agriculture, 1400 Independence Avenue, SW., STOP 1522,
Washington, DC 20250-1522.
Hand Delivery/Courier: Addressed to Richard Annan, Acting
Director, Program Development and Regulatory Analysis, Rural Utilities
Services, U.S. Department of Agriculture, 1400 Independence Avenue,
SW., Room 5168-S, Washington, DC 20250-1522.
Instructions: All submissions received must include that agency
name and the subject heading ``Telecommunications Policies
Specifications, Acceptable Materials, and Standard Contract Forms.''
All comments received must identify the name of the individual (and the
name of the entity, if applicable) who is submitting the comment. All
comments received will be posted without change to http://www.usda.gov/rus/index2/Comments.htm
, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Norberto Esteves, Chair, Technical
Standards Committee ``A'' (Telecommunications), Advanced Services
Division, Rural Development Utility Programs, U.S. Department of
Agriculture, STOP 1550, Washington, DC 20250-1550, telephone number
202-720-0699, fax number 202-205-2924, e-mail
norberto.esteves@usda.gov.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be not significant for purposes of
Executive Order 12866 and, therefore has not been reviewed by the
Office of Management and Budget (OMB).

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. RUS has determined that this proposed rule meets
the applicable standards provided in section 3 of the Executive Order.
In addition, all state and local laws and regulations that are in
conflict with this rule will be preempted; no retroactive effect will
be given to the rule, and, in accordance with section 212(e) of the
Department of Agriculture Reorganization Act of 1994 (7 U.S.C.
6912(e)), administrative appeals procedures, if any are required, must
be exhausted before an action against the Department or its agencies
may be initiated.

Regulatory Flexibility Act Certification

RUS has determined that this rule will not have a significant
economic impact on a substantial number of small entities, as defined
by the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The standard
RUS telecommunications loan documents contain provisions on procurement
of products and construction of telecommunications facilities purchased
with loan funds. This ensures that the telecommunications systems
financed with loan funds are adequate to serve the purposes for which
they are to be constructed and that loan funds are adequately secured.
RUS borrowers, as a result of obtaining Federal financing, receive
economic benefits that exceed any direct cost associated with complying
with RUS regulations and requirements.

Information Collection and Recordkeeping Requirements

The information collection and recordkeeping requirements contained
in this proposed rule are cleared under control number 0572-0059
pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35,
as amended).

Executive Order 13132

This regulation will not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on distribution of power and responsibilities among the
various levels of government. Under Executive Order 13132, this rule
does not have sufficient federalism implications requiring the
preparation the preparation of a Federalism Assessment.

Catalog of Federal Domestic Assistance

The program described by this proposed rule is listed in the
Catalog of Federal Domestic Assistance Program under No. 10.851, Rural
Telephone

[[Page 45315]]

Loans and Loan Guarantees; No. 10.852, Rural Telephone Bank Loans, and
No. 10.857, Rural Broadband Access Loans and Loan Guarantees. This
catalog is available on a subscription basis from the Superintendent of
Documents, the United States Government Printing Office, Washington, DC
20402. Telephone: (202) 512-1800.

Executive Order 12372

This proposed rule is excluded from the scope of Executive Order
12372, Intergovernmental Consultation, which may require consultation
with State and local officials. See the final rule related notice
titled ``Department Programs and Activities Excluded from Executive
Order 12372'' (50 FR 47034), advising that RUS and RTB loans and loan
guarantees are excluded from the scope of Executive Order 12372.

Unfunded Mandates

This proposed rule contains no Federal Mandates (under the
regulatory provision of title II of the Unfunded Mandates Reform Act of
1995 (2 U.S.C. Chapter 25)) for State, local, and tribal governments or
the private sector. Thus, this proposed rule is not subject to the
requirements of sections 202 and 205 of the Unfunded Mandates Reform
Act of 1995.

National Environmental Policy Act Certification

The Administrator of RUS has determined that this proposed rule
will not significantly affect the quality of the human environment as
defined by the National Environmental Policy Act of 1969 (42 U.S.C.
4321 et seq.). Therefore, this action does not require an environmental
impact statement or assessment.

Background

This proposed rule codifies RUS product acceptance requirements
presently contained in RUS Bulletin 345-3, ``Acceptance of Standards,
Specifications, Equipment Contract Forms, Manual Sections, Drawings,
Materials and Equipment for the Telephone Program,'' (hereinafter ``RUS
Bulletin 345-3.'') RUS Bulletin 345-3 outlines the requirements for
determining acceptability of certain products for use on
telecommunications systems found in Information Publication 344-2,
``List of Materials Acceptable for Use on Telecommunications Systems of
RUS Borrowers'' (hereinafter ``List of Acceptable Materials.'') As a
result, RUS Bulletin 345-3 will be rescinded with the effective date of
the final rule.
This action also proposes the establishment of a policy to provide
RUS product acceptances for no more than three (3) years, necessitating
the periodic requalification of each RUS accepted product pursuant to
proposed Sec. 1755.22. A new section setting-out the procedure for
withdrawal of RUS product acceptance has also been added.
This proposed regulation will be divided into the subparts shown in
the index. The previous Field Trial section, now relocated to subpart
F, has been revised to clarify that successful completion of a field
trial does not imply automatic RUS acceptance of a product, but that
the Technical Standards Committees ``A'' and ``B'' and the RUS
Administrator shall determine the acceptance of such products upon
consideration of applications submitted by the manufacturer requesting
such consideration. Finally, Sec. 1755.97 of this part has been
redesignated as Sec. 1755.65.

Revisions to RUS Forms

RUS Forms 399a, ``Supplemental Agreement to Equipment Contract for
Field Trial (Secondary--Delivery, Installation, Operations)'' has been
revised to streamline the field trial procedure and to make it more
user-friendly. RUS has also revised Article IV(4) of RUS Form 515,
``Telecommunications System Construction Contract (Labor and
Materials,)'' amending the insurance coverage certification to read:
[check box] When checked by the Owner, with respect to the insurance
required by 7 CFR 1788.48 (b) and (c), the Contractor shall include as
additional insured, the Owner, and its personnel, and the Engineer, and
its personnel. The added costs shall be included in the bid price. RUS
Form 773, ``Miscellaneous Construction Work and Maintenance Service
Contract,'' has been revised as well to require the use of RUS Form
744, ``Certification Contractor and Indemnity Agreement.'' Draft copies
of the proposed revisions are available through the RUS
Telecommunications forms Web site at http://www.usda.gov/rus/telecom/publications/forms.htm
.

Rescission of RUS Forms

RUS Form 257a, ``Contractor's Bond,'' RUS Form 397f, ``Contractor's
Bond (Special Telephone Equipment),'' and RUS Form 525a, ``Contractor's
Bond (Central Office Equipment)'' have been replaced by RUS Form 168b,
``Contractor's Bond'' or RUS Form 168c, ``Contractor's Bond'' (less
than $1 million) which are to be used for any RUS funded construction.
Addenda to following RUS Forms: RUS Form 397, ``Special Equipment
Contract (Including Installation)'' (hereinafter ``RUS Form 397,'') RUS
Form 525, ``Central Office Equipment Contract (Including
Installation)'' (hereinafter ``RUS Form 525,'') and RUS Form 545,
``Central Office Equipment Contract (Not Including Installation)''
would no longer be needed, as the proposed revisions of the forms would
incorporate provisions for them.

List of Subjects in 7 CFR Part 1755

Loan programs-communications, Reporting and recordkeeping
requirements, Rural areas, Telephone.

For the reasons set out in the preamble, RUS proposes to amend part
1755, chapter XVII of title 7 of the Code of Federal Regulations, as
follows:

PART 1755--TELECOMMUNICATIONS POLICIES ON SPECIFICATIONS,
ACCEPTABLE MATERIALS, AND STANDARD CONTRACT FORMS

1. The authority citation for part 1755 continues to read as
follows:

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

2. The heading of part 1755 is revised as set out above.
3. The table of contents for Sec. Sec. 1755.1 through 1755.97 is
revised to read as follows:
Subpart A--General
Sec.
1755.1 General.
1755.2 Definitions applicable to Sec. 1755.1 through Sec. 1755.97.
1755.3 List of Acceptable Materials.
1755.4-1755.9 [Reserved]
Subpart B--RUS Technical Committees
1755.10 Technical Standards Committee A (Telecommunications).
1755.11 Technical Standards Committee B (Telecommunications).
1755.12--1755.19 [Reserved]
Subpart C--RUS Acceptance of Products
1755.20 General.
1755.21 Products used in special situations.
1755.22 Requalification.
1755.23 Product design changes.
1755.24 Address or name change.
1755.25-1755.29 [Reserved]
Subpart D--Rescission of RUS Product Acceptable Materials
1755.30 General.
1755.31 Procedure for Rescission of RUS Product Acceptance.
1755.32--1755.39 [Reserved]
Subpart E--Appeals
1755.40 Appeals to Committee B.
1755.41 Appeals to the Administrator.
1755.42--1755.49 [Reserved]

[[Page 45316]]

Subpart F--Field Trials
1755.50 General.
1755.51 Qualifications for Borrower's participation.
1755.52 Procurement.
1755.53 Field trial contract approval.
1755.54 Field trial agreement.
1755.55 Procedures for establishing field trials for the various
product categories.
1755.56 Warranty.
1755.57-1755.59 [Reserved]
Subpart G--Standards, Specifications, Contract Forms, Bulletins,
Drawings, and Products for the Telecommunications Program
1755.60 RUS standard contract forms and specifications.
1755.61 Borrower contractual obligations.
1755.62 Notice and publication of listed standard contract forms and
specifications.
1755.63 Promulgation of new or revised standard contract forms.
1755.64 List of RUS standard contract forms.
1755.65 List of RUS specifications incorporated by reference.
1755.66-1755.97 [Reserved]
* * * * *
4. Subpart A, consisting of Sec. Sec. 1755.1 through 1755.9 is
established, and Sec. Sec. 1755.1 through 1755.9 are revised to read
as follows:

Subpart A--General

Sec. 1755.1 General.

(a) The standard RUS telecommunications loan documents contain
provisions on procurement of products and construction of
telecommunications facilities purchased with RUS and Rural Telephone
Bank (RTB) loan funds. This part implements certain provisions of the
loan documents and ensures that borrowers' telecommunications systems
financed with RUS loan funds are adequate to serve the purposes for
which they are to be constructed and that RUS loan funds are adequately
secured. Products and construction financed with loan RUS and RTB funds
must meet the specifications established by this part. In addition,
this part lists the RUS bulletins containing the specifications
required for telecommunications facilities. This part also sets forth
policies and procedures to determine specifications, standard contract
forms, drawings, and products for the telecommunications program.
(b) This part applies to products financed with RUS and RTB loan
funds.
(1) Subpart A of this part covers general requirements,
definitions, and the RUS acceptance of materials for use on RUS
borrowers' telecommunications systems, and for the approval of RUS
telecommunications standards, specifications, drawings, and technical
guidance issuances.
(2) Subpart B of this part covers the RUS technical committees
which have the authority to accept or reject all proposals of
standards, specifications, drawings, and products for use in RUS-
financed construction.
(3) Subpart C of this part covers the RUS requirements for the
acceptance of products.
(4) Subpart D of this part covers the withdrawal of RUS acceptance
of products.
(5) Subpart E of this part covers appeal of a decision made by the
RUS technical committees.
(6) Subpart F of this part covers the RUS requirements for field
trials.
(7) Subpart G lists the specifications, standard contract forms,
bulletins, drawings, and products to be used in construction financed
with RUS and/or RTB Loans.
(c) Borrowers may use RUS financing only for RUS accepted products,
unless, pursuant to Sec. 1755.21 or Sec. 1755.52 of this part, they
obtain written prior RUS approval to purchase a product not included
therein.
(d) Borrowers may not finance used or secondhand products with RUS
financing, unless otherwise approved by RUS in writing.
(e) All products financed with loan funds are subject to the ``Buy
American'' requirement of section 401 of the Rural Electrification Act
of 1935 as amended (7 U.S.C. 901 et seq.) (hereinafter the ``RE Act.'')

Sec. 1755.2 Definitions.

For the purpose of this part:
Accept; Acceptance--RUS action of providing the manufacturer of a
product with a letter which indicates that RUS has determined that the
manufacturer's product meets RUS requirements in accordance with this
part, including the technical specifications that RUS has established
for the product.
Administrator--The Administrator of RUS or an RUS staff employee to
whom authority has been delegated.
Borrower--Any organization that has an outstanding RUS and/or RTB
Loan, or that is seeking such financing. See 7 CFR part 1735.
``Buy American'' requirement--The RE Act's ``Buy American''
provision (June 21, 1938, Ch. 554, Title IV, section 401, 52 Stat.
818), as amended.
Central office equipment--Equipment category which includes central
office dial equipment, remote switching equipment, and all other
products associated with switching equipment.
Committee A--Technical Standards Committee ``A''
(Telecommunications). See Sec. 1755.10.
Committee B--Technical Standards Committee ``B''
(Telecommunications). See Sec. 1755.11.
Contract forms--RUS requires the use of RUS standard contracts for
construction, procurement, engineering services, and architectural
services financed with RUS and/or RTB Loans.
Domestic product--For purposes of this part, a domestic product is
one which is manufactured in the United States or in an eligible
country, substantially all from articles, materials, or supplies mined,
produced, or manufactured, as the case may be, in the United States or
in an eligible country. 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 market of that country, as determined by the
United States Trade Representative.
Electronic transmission equipment--Equipment category which
includes line concentrators, subscriber carrier, radio systems, fiber
optic lightwave systems, multiplex equipment, mobile and fixed wireless
systems, and other products of electronic equipment associated with
transmission of telecommunications signals.
List of Acceptable Materials--The latest edition of RUS
Informational Publication 344-2, ``List of Materials Acceptable for Use
on Telecommunications Systems of RUS Borrowers.'' This document
contains a convenient listing of the domestic products which have been
determined to be acceptable by the RUS Technical Committees and the
Administrator. The List of Acceptable Materials is available on the
Internet at http://www. usda. gov/rus/ telecom/ materials/lstomat .htm.

Listed product--Product included in the List of Acceptable
Materials.
Loan--Any telecommunications loan made or guaranteed by RUS and/or
the Rural Telephone Bank. See 7 CFR part 1735, subpart C.
Loan documents--The documents covering a loan made by RUS,
including the loan contract, note and mortgage or other security
documents between the borrower and RUS.
Non-Domestic product--Any product other than a Domestic product.
Product--An item of manufactured material or assembled components,
complete and capable of performing an intended practical purpose.
Sole-source negotiation--Any form of purchasing or contracting
other than sealed competitive bidding with only one manufacturer or
supplier.
Specifications--Standards pertaining to certain types of products
or

[[Page 45317]]

construction which must be met to qualify for RUS loan funds. When
appropriate, a specification may set forth the procedure to determine
whether a particular standard has been satisfied.
Sponsor--A manufacturer or its authorized representative seeking to
have a product considered for RUS Acceptance.
Technical acceptance--A letter of acceptance granted to a Sponsor
of a Non-Domestic product which has been determined by RUS to meet RUS
technical requirements and which complies with the Buy American
exception when the Non-Domestic bid is lower than the lowest domestic
bid by at least six percent of the cost of the material content of the
Non-Domestic bid.
Telecommunications--Any communication service for the transmission
or reception of voice, data, sounds, signals, pictures, writings, or
signs of any kind, by wire, fiber, radio, light, or other visual or
electromagnetic means, including all telephone lines, facilities, or
systems used in the rendition of such service; but shall not be deemed
to mean message telegram service or community antenna television system
services or broadcasting facilities other than those intended
exclusively for educational purposes, or radio broadcasting services or
facilities.

Sec. 1755.3 List of Acceptable Materials.

All domestic products that RUS determines are acceptable for RUS
financing are, for borrower convenience purposes, included in the RUS
List of Acceptable Materials. A product is considered acceptable for
use on RUS-financed projects, if in RUS' opinion, the product meets the
respective specification or other requirements of this part. If the
product is not covered by a specification in this part, the product
will need to meet the specifications of a national standardizing
organization, as determined by RUS, which sets such standards.
(a) RUS Technical Standards Committee A (Telecommunications)
(Committee A) determines whether a product fulfills the requirements of
the applicable specifications and is otherwise acceptable for use on an
RUS-financed project.
(b) RUS' past, present, or future acceptance for inclusion of a
product in the List of Acceptable Materials does NOT:
(1) Constitute an RUS warranty of the product; or
(2) Relieve the manufacturer of any responsibility for the product,
including conformity to guarantees, warranties, specifications, or
other provisions of the sale contract.
(c) RUS includes products in the List of Acceptable Materials under
specific categories. Committee A determines whether to establish or
eliminate categories from the List of Acceptable Materials. RUS may
list the product in a generic category until such a time as a specific
category is created by RUS.
(d) RUS may require that a product undergo a field trial before RUS
determines acceptability of the product. RUS authorization of a field
trial and the successful completion of a field trial shall not be
construed as an automatic RUS acceptance of a product for inclusion in
the List of Acceptable Materials. See subpart F of this part.

Sec. Sec. 1755.4-1755.9 [Reserved]

5. Subpart B, consisting of Sec. Sec. 1755.10 through 1755.19, is
established, and Sec. Sec. 1755.10 through 1755.19 are revised to read
as follows:

Subpart B--RUS Technical Committees

Sec. 1755.10 Technical Standards Committee A (Telecommunications).

(a) Committee A reviews all proposals relating to acceptance of
products. Acceptance by the committee constitutes RUS acceptance of the
proposal. A Sponsor may appeal an adverse decision made by Committee A
to Committee B. See subpart E of this part.
(b) Committee A approves RUS construction practices and RUS
technical issuances, such as RUS technical bulletins and technical
drawings. This approval constitutes RUS approval of such documents.
(c) Committee A reviews and approves all new contract forms and
specifications, or proposed changes thereto, which shall then be
published in the Federal Register.

Sec. 1755.11 Technical Standards Committee B (Telecommunications).

Committee B reviews all cases referred to it by Committee A and all
appeals by a Sponsor from an adverse decision by Committee A. See
Subpart E of this part.

Sec. Sec. 1755.12-1755.19 [Reserved]

6. Subpart C, consisting of Sec. Sec. 1755.20 through 1755.29, is
established, and Sec. Sec. 1755.20 through 1755.29 are revised to read
as follows:

Subpart C--RUS Acceptance of Products

Sec. 1755.20 General.

Sponsors may begin the process for a determination of whether a
product is acceptable by submitting a written request to the Chair of
Committee A.
(a) For product acceptance, Committee A shall require a
certification stating that the Sponsor will make a good faith effort to
sell the product to RUS borrowers during the listing period.
(b) Domestic Products and Non-Domestic Products accepted without
condition may be used in all situations. Products accepted subject to
certain conditions, however, such as limited use to certain areas or
applications, will be accepted on a conditional basis with such
conditions cited as a part of their listing.
(c) Non-Domestic Products accepted by Committee A for use on
telecommunications systems of RUS Borrowers are subject to compliance
with the Buy American requirements and shall not be listed in the List
of Acceptable Materials, but shall instead appear on the RUS
Telecommunications' List of Acceptable Materials web page for
information purposes.

Sec. 1755.21 Products used in special situations.

(a) RUS may approve the use of products not accepted for use on
RUS-financed projects on a case-by-case basis where:
(1) The List of Materials does not include similar products to the
product proposed by the borrower;
(2) The products included in the List of Acceptable Materials are
not reasonably available; or
(3) The Borrower's specific situation calls for a unique design.
(b) Borrowers desiring to use Loan funds for such products shall
obtain RUS approval, in writing, prior to purchase.

Sec. 1755.22 Requalification.

RUS shall grant acceptance to Domestic Products and technical
acceptance to Non-Domestic Products for a maximum period of three
years, or less if indicated in the respective product specification. On
or before the expiration indicated in the product specification,
sponsors must thereafter apply for continued acceptance by submitting a
written request. If no time to apply for requalification has been
indicated in the specification, the Sponsor may apply at least 45
calendar days prior to expiration of the product

[[Page 45318]]

acceptance to allow RUS time for processing of the request. A product
previously accepted by RUS may be requalified for continued acceptance
if RUS receives a letter signed by a company official, certifying that:
(a) For Domestic Products, the product meets the ``Buy American''
requirement. If not, on request by the Sponsor, the product may be
requalified for continued acceptance as a Non-Domestic Product;
(b) The product has not changed and is manufactured as originally
accepted by RUS. If the product has changed, refer to Sec. 1755.23 of
this subpart;
(c) The Sponsor has made a good faith effort to sell the product to
RUS Borrowers while its product was listed. The Sponsor shall provide
on Committee A's request, any evidence, such as proof of sales, bidding
activity, etc., demonstrating that such an effort has been made; and
(d) The Sponsor will continue to make a good faith effort to sell
the product to RUS Borrowers.

Sec. 1755.23 Product design changes.

All changes in design for products listed in the List of Acceptable
Materials shall be promptly submitted to RUS for acceptance of the
changes before these changes are implemented.

Sec. 1755.24 Address or name change.

A manufacturer shall notify Committee A in writing of any change of
name, address of the product's manufacturing site, or the company's
corporate headquarters, no later than 60 days following the change.

Sec. Sec. 1755.25-1755.29 [Reserved]

7. Subpart D, consisting of Sec. Sec. 1755.30 through 1755.39, is
established, and Sec. Sec. 1755.30 through 1755.39 are revised to read
as follows:

Subpart D--Rescission of RUS Product Acceptance

Sec. 1755.30 General.

(a) Committee A shall initiate the procedure for withdrawal of a
product's RUS acceptance (and a subsequent removal of a product from
the List of Acceptable Materials) upon the following conditions:
(1) The product has not performed according to specification or has
been misrepresented by the Sponsor to a Borrower and/or RUS;
(2) The manufacturer or authorized representative does not apply
for requalification;
(3) The committee determines, upon consideration of the
manufacturer's requalification submittal, that the manufacturer's
product or requalification submittal does not meet the minimum
requirements for requalification listed in Sec. 1755.22 of this part;
(4) RUS learns that the RUS accepted product received by RUS
borrowers has a material change in design of the product, as determined
by Committee A, which had not been previously accepted by Committee A;
(5) The manufacturer's submittal responding to RUS' request to
certify an accepted product complies with revised specification
requirements adopted by RUS indicates that the product does not meet
revised specification requirements;
(6) Continued RUS acceptance of a product might immediately impair
the RE Act purposes, endanger public health and safety, or undermine
the security of RUS and/or RTB Loans; or
(b) Committee A may, in its discretion, initiate the procedure for
withdrawal of RUS acceptance (and subsequent removal of a product from
the List of Acceptable Materials) under the following conditions:
(1) The manufacturer fails to notify Committee A of a change in
address, as required by Sec. 1755.24 of this part;
(2) The manufacturer sells the company or the right to manufacture
the product to another entity; or
(3) RUS is unable to contact the manufacturer; or
(4) RUS determines that the manufacturer no longer manufactures the
product.

Sec. 1755.31 Procedure for rescission of RUS product acceptance.

(a) The following procedure will be used to withdraw RUS acceptance
of a product (and subsequent removal of the product from the List of
Acceptable Materials):
(1) RUS shall inform the Sponsor in writing of the proposed
withdrawal of RUS acceptance of a product (and subsequent removal of
the product from the List of Materials,) providing the Sponsor with all
available information relating to the proposed withdrawal of
acceptance, unless the reason(s) for withholding such information is
given, and
(2) The Sponsor has fourteen (14) calendar days after receipt of
such notification to notify Committee A, in writing, of its intent to
submit information relevant to Committee A's decision to withdraw
acceptance of the product. The Sponsor shall submit such information
within thirty (30) calendar days from the date the sponsor received
RUS' notice of intent to withdraw RUS acceptance of the product.
Notwithstanding the following deadlines, Committee A, in its
discretion, may make a decision after expiration of said deadlines.
(b) Upon request of the Sponsor, or on its own accord, Committee A
may grant additional opportunity for presentation or consideration of
relevant information; including, without limitation, a meeting between
Committee A and the Sponsor at such time, place, and manner as
Committee A may determine. In making this decision, Committee A shall
consider, among other things, the best interest of RUS, its Borrowers,
and the manufacturer; and
(c) If Committee A determines that removal of the product is
appropriate, it may:
(1) Immediately withdraw RUS acceptance of the product (and
subsequent removal from the List of Acceptable Materials);
(2) Establish conditions for the continued acceptance (and listing)
of such product;
(3) Recommend a settlement which adequately protects the interest
of RUS and/or the Federal government;
(4) Request further information to reach a decision; or
(5) Order the withdrawal of RUS acceptance of the product (and
subsequent removal from the List of Acceptable Materials) within
fourteen (14) days, which order shall be stayed if the Sponsor timely
appeals to Committee B.
(d) Committee A shall consider all relevant information presented
to it in determining removal of a product from the List of Acceptable
Materials, and shall give written notice of its decision and the
reasons therefor.

Sec. Sec. 1755.32-1755.39 [Reserved]

8. Subpart E, consisting of Sec. Sec. 1755.40 through 1755.49, is
established, and Sec. Sec. 1755.40 through 1755.49 are revised to read
as follows:

Subpart E--Appeals

Sec. 1755.40 Appeals to Committee B.

A Sponsor may appeal Committee A's decision to remove a product, in
writing, to Committee B within fourteen (14) calendar days after
receipt of notification of said decision. Committee B shall base its
determination on the record developed by Committee A.
(a) If Committee B determines that withdrawal of RUS acceptance of
the product (and subsequent removal of the product from the List of
Materials) is appropriate, Committee B may:
(1) Immediately withdraw RUS acceptance of the product (and
subsequent removal of the product from the List of Acceptable
Materials);

[[Page 45319]]

(2) Establish conditions for the continued RUS acceptance (and
listing) of such product;
(3) Recommend a settlement which adequately protects the interest
of RUS and/or the Federal government;
(4) Request further information to reach a decision; or
(5) Order the withdrawal of RUS acceptance of the product (and
subsequent removal of the product from the List of Materials) within
fourteen (14) days, which order shall be stayed if the Sponsor timely
appeals to the Administrator.
(b) Written notice of Committee B's decision and the reasons
therefor shall be provided to the Sponsor.
(c) If Committee B determines that removal of a product is not
appropriate, the product's listing shall be continued.

Sec. 1755.41 Appeals to the Administrator.

A Sponsor may appeal a Committee B's decision, in writing, to the
Administrator of RUS within fourteen (14) calendar days after receipt
of notification of said decision, specifying the reasons for such a
request. The Administrator's determination shall be based on the record
developed by Committee A and Committee B, should the Administrator
choose to review decisions of the Committees; however, at the
Administrator's discretion, the Administrator may decline to conduct
such review, in which case the decision of the Committees will stand.
(a) The Administrator's determination may be based on any
additional information provided; and
(b) If, after review, the Administrator determines that withdrawal
of RUS acceptance of the product (and subsequent removal of the product
from the List of Materials) is appropriate, the Administrator may:
(1) Order the immediate withdrawal of RUS acceptance of the product
(and subsequent removal of the product from the List of Acceptable
Materials);
(2) Establish conditions for the continued RUS acceptance (and
listing) of such product; or
(3) Recommend a settlement which adequately protects the interest
of RUS and/or the Federal government;
(c) Written notice of the Administrator's decision and the reasons
therefor shall be provided to the Sponsor.
(d) If, after review, the Administrator determines that removal is
not appropriate, the product's listing shall be continued.

Sec. Sec. 1755.42-1755.49 [Reserved]

9. Subpart F, consisting of Sec. Sec. 1755.50 through 1755.59, is
established, and Sec. Sec. 1755.50 through 1755.59 are revised to read
as follows:

Subpart F--Field Trials

Sec. 1755.50 General.

RUS may, at its option, require a product to undergo one or more
field trials when considering products for acceptance. RUS may also
require a field trial when design changes of an accepted or Listed
Product involve such major modifications that the product's suitability
cannot be determined based on laboratory data. A field trial normally
consists of limited field installations of the product in one or more
closely monitored situations designed to determine, to RUS'
satisfaction, the product's operational effectiveness. 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.
(a) The use of products derived from new inventions or concepts
untried within the telecommunications 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) RUS may limit the quantity of new products installed on any
field trial and may also limit the number of field trials for a given
product to a number it considers needed to provide the necessary
information.
(c) The test site for the field trial shall be, in RUS' opinion,
readily accessible and provide the conditions, such as temperature
extremes, high probability of lightning damage, etc., for which the
product is being evaluated.
(d) An RUS specification, or a suitable industry specification
acceptable to RUS, shall cover the product involved. The Sponsor is
required to submit test data to show conformance with the applicable
specification or standard. RUS may require additional testing.
(e) A field trial shall normally continue for a minimum of six
months, or for a longer period if so determined by RUS, to obtain
conclusive data that the product either fulfills all requirements or is
unacceptable.
(f) Either the Borrower or Sponsor may terminate a field trial at
any time, in accordance with their contractual agreement. Such
termination shall constitute withdrawal of the product from
consideration by RUS.
(g) RUS may terminate field trials based on its determination that
the product is not performing satisfactorily, and that such performance
may, in RUS' opinion, cause service degradation or hazard to life or
property.

Sec. 1755.51 Qualifications for Borrower's participation.

A Borrower may participate in a field trial only if, in RUS'
opinion, the Borrower possesses:
(a) Adequate financial resources to ensure that no delays in any
RUS funded project will result from lack of funds or difficulties which
may result from an unsuccessful field trial. In the event the Sponsor
fails to meet its financial obligations with respect to the field
trial, the Borrower must be able to maintain or restore service;
(b) Qualified personnel to enable it to discharge its
responsibilities;
(c) A record satisfactory to RUS for maintaining equipment and
plant facilities and for providing RUS with information when requested;
and
(d) Willingness to participate in the field trial and awareness of
the effort and responsibility it entails.

Sec. 1755.52 Procurement.

Borrowers wishing to use RUS and/or RTB Loan funds for a product
not included in the List of Acceptable Materials must contact RUS to
find out if a field trial is required as a condition for product
acceptance. If the product is already undergoing a field trial, RUS
will inform the Borrower if RUS will approve another field trial.
Generally, to be eligible for RUS financing, products required by RUS
to undergo a field trial must be procured under the procedures set
forth in 7 CFR part 1753. If a Borrower desires a product undergo a
field trial on a Sole-Source Negotiation basis, it must obtain prior
written approval from RUS before soliciting a quote, and shall follow
the procedures set forth in this section instead of those in 7 CFR part
1753. RUS may allow the Borrower to negotiate with the Sponsor on a
Sole-Source Negotiation basis if the product complies with the
following conditions when compared to products currently available in
the marketplace:
(a) The product significantly improves performance;
(b) The product has a broader application, and
(c) The product advances technology in rural telecommunications.

Sec. 1755.53 Field trial contract approval.

For contract approval RUS requires an executed RUS Form 399,
``Supplemental Agreement to Equipment Contract for Field Trial,''
together with other required contract documents.

Sec. 1755.54 Field trial agreement.

RUS shall have received an executed RUS Form 399a, ``RUS

[[Page 45320]]

Telecommunications Equipment Field Trial'' (hereinafter ``RUS Form
399a,'') between the Borrower and the Sponsor prior to approval of the
contract covering the products to be used in the field trial.
(a) RUS may require that the Sponsor provide a plan, satisfactory
to RUS, which maintains or restores service in the event that the
product fails to meet established performance requirements. This plan
shall be included in RUS Form 399a.
(b) Field trials shall be conducted in accordance with the
instructions set forth in this subpart and with the agreement relating
to the specific application, as indicated in RUS Form 399a.
(c) Both the Sponsor and the Borrower shall keep RUS informed of
the status of a field trial. These reports shall provide complete
information on the progress of the field trial and shall also include
details of all problems or failures encountered during installation and
subsequent operation. If these reports are not received in accordance
with the requirements of RUS Form 399a, RUS may suspend advances of
loan funds related to these products until satisfactory reports are
received.

Sec. 1755.55 Procedures for establishing field trials for the various
product categories.

The procedures for establishing field trials are:
(a) Electronic transmission equipment. The procedure set forth in
subpart H of 7 CFR part 1753 shall be followed, except that RUS Form
397 shall be used in all purchases of electronic equipment for field
trials.
(b) Central office equipment. The procedure set forth in subpart E
of 7 CFR part 1753, shall be followed, except that RUS Form 525 shall
be used to purchase switching equipment for field trials.
(c) Other types of products. All products not covered in paragraphs
(a) and (b) of this section, including protection, outside plant, and
all other products, shall be handled as described in 7 CFR part 1753,
except that the Borrower's purchase order form shall be used for
purchasing products in these categories.

Sec. 1755.56 Warranty.

Warranty for products undergoing field trials shall be provided as
follows:
(a) For all products except electronic and central office
equipment. Suppliers and manufacturers must furnish warranties,
satisfactory to RUS, which cover the failure of a product in its field
trial.
(1) Terms of such warranties must be at least equivalent to the
standard warranty included in RUS Form 515, ``Telephone System
Construction Contract.''
(2) In lieu of a warranty, products may be furnished to RUS
Borrowers on a reduced or no cost basis. Terms of such arrangements are
subject to RUS approval and must be fully covered in the field trial
proposals forwarded by Borrowers to the RUS for review and approval.
(b) For electronic and central office equipment. Suppliers and
manufacturers are to provide warranties as set forth in RUS Form 397
for electronic equipment and in RUS Form 525 for central office
equipment.

Sec. Sec. 1755.57-1755.59 [Reserved]

10. Subpart G, consisting of Sec. Sec. 1755.60 through 1755.64, is
established, and Sec. Sec. 1755.60 through 1755.64 are revised to read
as follows:

Subpart G--Standards, Specifications, Contract Forms, Bulletins,
Drawings, and Products for the Telecommunications Program

Sec. 1755.60 RUS standard contract forms and specifications.

This section implements provisions of the RUS loan documents and
prescribes the procedures that RUS follows in promulgating standard
contract forms that Borrowers are required to use and meet,
respectively. The standard loan agreement between RUS and its Borrowers
provides that, in accordance with applicable RUS regulations, Borrowers
must:
(a) Use standard contract forms promulgated by RUS for
construction, procurement, engineering services, and architectural
services financed by an RUS and/or RTB Loan. These standard contract
forms are identified in Sec. 1755.64(c) of this part. Title 7 CFR part
1753 prescribes when and how Borrowers must use these standard contract
forms.
(b) Use RUS and/or RTB Loan funds only for materials, equipment,
and construction that meet the specifications promulgated by RUS. RUS
may establish its own specifications or may utilize, to the greatest
extent possible, standards of national standardizing organizations,
such as the American National Standards Institute (ANSI), National
Electrical Safety Code (NESC), etc. RUS telecommunications
specifications that are approved by the Director of the Federal
Register for incorporation by reference (IBR) therein are listed in
Sec. 1755.65 of this part.

Sec. 1755.61 Borrower contractual obligations.

(a) Loan documents. As a condition of an RUS and/or RTB Loan,
Borrowers are required to enter into RUS loan agreements pursuant to
which the Borrowers agree to use and comply with:
(1) Standard contract forms. RUS standard contract forms for
construction, procurement, engineering services, and architectural
services identified in the List of telecommunications standard contract
forms under Sec. 1755.64(c) of this part.
(i) If a Borrower is required under 7 CFR part 1753 to use a listed
contract form, it shall use the form available from RUS, such as a
hardcopy format or an OMB-approved electronic format. Except as
permitted by paragraph (a)(1)(ii) of this section, the forms shall not
be retyped, changed, modified, or altered in any manner not
specifically authorized in this part or approved in writing by RUS. Any
modifications approved by RUS must be clearly indicated.
(ii) The Borrower may use an exact electronic reproduction of a
contract form if such reproduction is submitted to RUS for prior
approval and the following certification by the Borrower is included:

``I (insert name), certify that the attached (insert contract
form name), between (insert name of parties), dated (insert date),
is an exact reproduction of RUS Form (insert contract form number),
dated (insert date of RUS form).''
-----------------------------------------------------------------------

(Signature)
-----------------------------------------------------------------------

(Title)
-----------------------------------------------------------------------

(Employer's Address)

(iii) Where a Borrower has entered into a standard contract form
required by this part, no changes to the terms of the contract may be
made by amendment, waiver, or otherwise, without the prior written
consent of RUS.
(2) RUS-promulgated specifications. RUS specifications for
materials, equipment, and construction.
(b) Waiver. RUS may waive for good cause, on a-case-by-case basis,
a specific requirement imposed on a Borrower pursuant to this part.
Borrowers seeking an RUS waiver must provide RUS with a written request
explaining the need for such waiver.
(c) Violations. A failure on the part of the Borrower to use
standard contract forms and RUS Specifications for materials,
equipment, and construction as prescribed in 7 CFR parts 1753 and 1755
is a violation of the terms of the

[[Page 45321]]

loan documents, and the RUS and/or RTB may exercise any and all
remedies available under the terms therein.

Sec. 1755.62 Notice and publication of listed standard contract forms
and specifications.

(a) Notice. Upon initiating a loan agreement with RUS, Borrowers
and their consulting engineers will be given citation to all applicable
regulations and all listed specifications and contract forms.
Manufacturers seeking RUS acceptance of their products are also
provided citation to the appropriate specifications applicable to their
products. Thereafter, new or revised standard contract forms and
specifications promulgated by RUS, including RUS-approved exceptions
and alternatives, will be sent by regular or electronic mail to
Borrowers, consulting engineers, and manufacturers, as appropriate.
(b) Availability. Standard contract forms and specifications are
published by RUS. Interested parties may obtain these from the U.S.
Department of Agriculture, Rural Utilities Services, Program
Development and Regulatory Analysis, Stop 1522, Washington, DC 20250-
1522, telephone number (202) 720-8674. Industry specifications
incorporated by reference by RUS are listed in Sec. 1755.65 of this
part.

Sec. 1755.63 Promulgation of new or revised standard contract forms.

RUS may, from time to time, promulgate new standard contract forms,
or revise or eliminate existing standard contract forms. In so doing,
RUS shall publish a notice of rulemaking in the Federal Register
announcing, as appropriate, a revision in, or a proposal to amend Sec.
1755.64(c) of this part. The amendment may change the existing
identification of a listed standard contract form, such as the issuance
date, or identify an entirely new required standard contract form. The
notice of rulemaking will describe the new standard contract form, or
any substantive change in the one, as the case may be. The standard
contract form, or relevant portions thereof, may be appended to the
supplementary information section of the notice of rulemaking. As
appropriate, the notice of rulemaking shall provide an opportunity for
interested persons to provide comments. RUS shall send, by regular or
electronic mail, a copy of each such Federal Register document to all
Borrowers, manufacturers and other interested parties.

Sec. 1755.64 Lists of RUS standard contract forms.

(a) General. By the terms of the RUS loan documents, an RUS
Borrower is required to use telecommunications standard contract forms
issued by RUS, as well as use materials, equipment, and construction
which meet specifications issued by RUS, or industry specifications
incorporated by reference. Paragraph (c) of this section lists RUS
telecommunications program standard contract forms for procurement,
construction, engineering services, and architectural services.
(b) Version of standard contract form. Where required by 7 CFR part
1753 in connection with an RUS and/or RTB Loan, the Borrower shall use
the version of the standard form contract identified in paragraph (c)
which was issued as of the date the Borrower released the plans and
specifications to solicit bids or price quotes on an RUS financed
project.
(c) List of telecommunications standard contract forms.
(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 02-04, ``Contractor's Bond.''
(5) RUS Form 168c, issued 02-04, ``Contractor's Bond.''
(6) RUS Form 181, issued 02-95, ``Certification of Completion,
Contract Construction Buildings.''
(7) RUS Form 181a, issued 03-66, ``Certification of Completion
(Force Account Construction.)''
(8) RUS Form 187, issued 02-04, ``Certification of Completion,
Contract Construction.''
(9) RUS Form 213, issued 02-04, ``Certificate (Buy American.)''
(10) RUS Form 216, issued 07-67, ``Construction Change Order.''
(11) RUS Form 217, issued 03-97, ``Post-loan Engineering Services
Contract-Telecommunications Systems.''
(12) RUS Form 220, issued 06-98, ``Architectural Services
Contract.''
(13) RUS Form 224, issued 02-04, ``Waiver and Release of Lien.''
(14) RUS Form 231, issued 02-04, ``Certificate of Contractor.''
(15) RUS Form 238, issued 02-04, ``Construction or Equipment
Contract Amendment.''
(16) RUS Form 242, issued 11-58, ``Assignment of Engineering
Service Contract.''
(17) RUS Form 245, issued 11-75, ``Engineering Services Contract,
Special Services-Telephone.''
(18) RUS Form 257, issued 02-04, ``Contract to Construct
Buildings.''
(19) RUS Form 270, issued 07-70, ``Equal Opportunity Addendum.''
(20) RUS Form 271, issued 07-70, ``Notice to Contractors &
Sellers.''
(21) RUS Form 274, issued 06-81, ``Bidder's Qualifications.''
(22) RUS Form 276, issued 02-59, ``Bidder's Qualifications for
Buried Plant Construction.''
(23) RUS Form 281, issued 05-61, ``Tabulation of Materials
Furnished by Borrower.''
(24) RUS Form 282, issued 11-53, ``Subcontract (Under Construction
or Equipment Contracts.)''
(25) RUS Form 284, issued 04-72, ``Final Statement of Cost for
Architectural Service and Certificate of Architect.''
(26) RUS Form 307, issued 02-04, ``Bid Bond.''
(27) RUS Form 375, issued 01-03, ``Interim Financing.''
(28) RUS Form 390, issued 01-03, ``Software License Agreement.''
(29) RUS Form 396, issued 03-64, ``Certificate of Completion-
Special Equipment Contract (Including Installation.)''
(30) RUS Form 396a, issued 03-64, ``Certificate of Completion-
Special Equipment Contract (Not Including Installation.)''
(31) RUS Form 397, issued 08-00, ``Special Equipment Contract
(Including Installation.)''
(32) RUS Form 398, issued 11-62, ``Special Equipment Contract (Not
Including Installation.)''
(33) RUS Form 399, issued 08-82, ``Supplement Agreement to
Equipment Contract for Field Trial.''
(34) RUS Form 399a, issued [EFFECTIVE DATE OF FINAL RULE],
``Telecommunications Equipment Field Trial.''
(35) RUS Form 506, issued 12-96, ``Statement of Engineering Fee-
Telecommunications.''
(36) RUS Form 515, [EFFECTIVE DATE OF FINAL RULE],
``Telecommunications System Construction Contract (Labor and
Materials.)''
(37) RUS Form 517, issued 09-64, Results of Acceptance Tests.
(38) RUS Form 525, issued 07-94, ``Central Office Equipment
Contract (Including Installation.)''
(39) RUS Form 526, issued 08-66, ``Construction Contract
Amendment.''
(40) RUS Form 527, issued 03-71, ``Statement of Construction,
Telephone System-Outside Plant.''
(41) RUS Form 545, issued 11-99, ``Central Office Equipment
Contract (Not Including Installation.)''
(42) RUS Form 724, issued 10-63, ``Final Inventory, Telephone
Construction Contract.''
(43) RUS Form 724a, issued 04-61, ``Final Inventory, Telephone

[[Page 45322]]

Construction-Telephone Construction Contract (Labor and Materials),
Columns 1-8.''
(44) RUS Form 724b, issued 03-61, ``Final Inventory, Telephone
Construction-Telephone Construction Contract (Labor and Materials),
Columns 9-14.''
(45) RUS Form 744, issued 02-62, ``Certificate of Contractor and
Indemnity Agreement.''
(46) RUS Form 752, issued 04-66, ``Certificate of Completion
Central Office Equipment Contract.''
(47) RUS Form 752a, issued 05-66, ``Certificate of Completion
Central Office Equipment-Not Including Installation.''
(48) RUS Form 754, issued 06-66, ``Certificate of Completion and
Certificate of Contractor and Indemnity Agreement.''
(49) RUS Form 756, issued 01-03, ``Contract Closeout
Certification.''
(50) RUS Form 771, issued 10-75, ``Summary of Work Orders
(Inspected by RUS Field Engineers.)''
(51) RUS Form 771a, issued 10-75, ``Summary of Work Orders
(Inspected by Licensed Engineer or Borrower's Staff Engineer.)''
(52) RUS Form 773, issued [EFFECTIVE DATE OF FINAL RULE],
``Miscellaneous Construction Work and Maintenance Services Contract.''
(53) RUS Form 787, issued 03-95, ``Supplement A to Construction
Contract.''
(54) RUS Form 817, issued 06-60, ``Final Inventory, Telephone Force
Account Construction.''
(55) RUS Form 817a, issued 06-60, ``Final Inventory, Telephone
Force Account Construction, Columns 1-8.''
(56) RUS Form 817b, issued 06-60, ``Final Inventory, Telephone
Force Account Construction, Columns 9-14.''
(57) RUS Form 835, issued 03-66, ``Pre-loan Engineering Service
Contract, Telephone System Design.''

Sec. 1755.97 [Redesignated]

11. Redesignate Sec. 1755.97 as Sec. 1755.65.

Dated: April 28, 2005.
Curtis M. Anderson,
Acting Administrator, Rural Utilities Service.
[FR Doc. 05-13945 Filed 8-4-05; 8:45 am]

BILLING CODE 3410-15-P