Streamlining the Rural Utilities Service Water and Waste Program Regulations
Federal RegisterJun 19, 1997
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Parts 1775, 1777, 1778, 1780, and 1781
Rural Housing Service
Rural Business-Cooperative Service
Rural Utilities Service
Farm Service Agency
7 CFR Parts 1901, 1940, 1942, 1951, and 1956
Rural Business-Cooperative Service
Rural Utilities Service
7 CFR Part 4284
RIN 0572-AB20
Streamlining the Rural Utilities Service Water and Waste Program
Regulations
AGENCIES: Rural Housing Service, Rural Business-Cooperative Service,
Rural Utilities Service, and Farm Service Agency; USDA.
ACTION: Final rule.
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SUMMARY: The Rural Utilities Service (RUS) hereby amends the
regulations utilized to administer the water and waste loan and grant
programs. The final rule will combine the water and waste loan and
grant regulations into one regulation. Unnecessary and burdensome
requirements for entities seeking water and waste loan and grant
financial assistance under the program are eliminated. The streamlining
of the water and waste loan and grant regulation will allow RUS to
provide better service to rural entities needing assistance in
correcting and alleviating health and sanitary problems in their
communities, and in general improve the quality of life in rural areas.
This rule incorporates changes in the water and waste loan and grant
program, the emergency community water assistance grant program, and
the resource conversation and watershed loan programs mandated by the
1996 Farm Bill.
This rule also amends the regulations originally published by the
former Farmers Home Administration (FmHA) and the former Rural
Development Administration (RDA). These amendments implement
legislation directing the Secretary of Agriculture to establish the
Rural Utilities Service (RUS) with responsibility for the water and
waste programs formerly administered by FmHA and RDA. The amendments
published in this document consist solely of nomenclature changes
required by law and of amendments necessary to conform to these
nomenclature changes. The substance of the regulations is not affected
by these amendments.
This rule could impact the amount of water and waste loan and grant
funds an applicant could receive. Therefore, RUS will honor all written
commitments of water and waste loan and grant amounts issued prior to
the effective date of this rule.
EFFECTIVE DATE: June 19, 1997.
FOR FURTHER INFORMATION CONTACT: Jerry W. Cooper, Loan Specialist,
Water and Waste Division, Rural Utilities Service, USDA, South
Agriculture Building, Room 2229, STOP 1570, Washington, DC 20250,
telephone: (202) 720-9589.
SUPPLEMENTARY INFORMATION:
Classification
We are issuing this final rule in conformance with Executive Order
12866 and the Office of Management and Budget has determined that it is
a ``significant regulatory action''.
Intergovernmental Review
These programs are listed in the Catalog of Federal Domestic
Assistance under numbers 10.760, Water and Waste Disposal Systems For
Rural Communities; 10.763, Emergency Community Water Assistance Grants;
10.764, Resource Conversation and Development Loans; 10.765, Watershed
Protection and Flood Preventation Loans; and 10.770, Water and Waste
Disposal Loans and Grants (Section 306C) and are subject to the
provisions of Executive Order 12372 which requires intergovernmental
consultation with State and local officials.
Environmental Impact Statement
This action has been reviewed in accordance with 7 CFR part 1940,
subpart G, ``Environmental Program.'' It has been determined that the
action does not constitute a major Federal action significantly
affecting the quality of the human environment, and in accordance with
the National Environmental Policy Act of 1969, Pub. L. 91-190, an
Environmental Impact Statement is not required.
Compliance With Executive Order 12778
The regulation has been reviewed in light of Executive Order 12778
and meets the applicable standards provided in sections 2(a) and
(2)(b)(2) of that Order. Provisions within this part which are
inconsistent with State law are controlling. All administrative
remedies pursuant to 7 CFR part 11 must be exhausted prior to filing
suit.
Information Collection and Paperwork Requirements
The recordkeeping and reporting burden in this rule, under OMB
control number 0575-0015, is not fully effective until approved by OMB.
For further information contact Jerry W. Cooper, Loan Specialist,
Water and Waste Division, Rural Utilities Service, U.S. Department of
Agriculture, 1400 Independence Ave., SW., STOP 1570, Washington, DC
20250-1548, telephone: (202) 720-9589.
National Performance Review
This regulatory action is being taken as part of the National
Performance Review program to eliminate unnecessary regulations and
improve those that remain in force.
Unfunded Mandate Reform Act
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the Unfunded Mandate Reform Act of 1995) for
State, local, and tribal governments or the private sector. Thus
today's rule is not subject to the requirements of sections 202 and 205
of the Unfunded Mandate Reform Act of 1995.
Cross References of Regulations
The Rural Utilities Service is an Agency resulting from a
reorganization of programs administered by the former Farmers Home
Administration, the former Rural Development Administration, and the
former Rural Electrification Administration. Dual-references or cross-
references to former Farmers Home Administration regulations and forms
are provided for by the Department of Agriculture Reorganization Act of
1994.
Regulatory Flexibility Act Certification
The Administrator of RUS has determined that the Regulatory
Flexibility Act (5. U.S.C. 601 et seq.) does not apply to this rule.
Background
The water and waste loan and grant programs are authorized by
various sections of the Consolidated Farm and Rural Development Act, (7
U.S.C. 1921 et seq.), as amended. The regulations for these programs,
particularly the loan program, have not been completely reviewed for
many years. The recent streamlining and reorganization of the
Department of Agriculture provided an opportunity to review and rewrite
the
[[Page 33463]]
water and waste loan and grant regulations. A task force was formed to
review and rewrite the regulations. The aim of the task force was to
make the regulations easier to understand, eliminate unnecessary
requirements, and continue to protect the interest of the U.S.
taxpayer.
The program provides loan and grant funds for water and waste
disposal projects serving the most financially needy rural communities.
Financial assistance should result in reasonable user costs for rural
residents, rural businesses, and other rural users. The program is
limited to rural areas and small towns with a population of 10,000 or
less.
The final rule will divide the regulation into four subparts: A, B,
C, and D. Subpart A contains the general policies and requirements of
the loan and grant program. Subpart B contains the loan and grant
application processing requirements. Subpart C contains all the
requirements for planning, designing, bidding, contracting,
constructing, and inspections. Subpart D has information required in
the preparation of notes or bonds and bond transcript documents for
public body applicants.
Major changes are:
1. Redirects additional grant funds to communities that truly need
the assistance in order to construct a project. Communities with
incomes over 100 percent of the State nonmetropolitan median household
income will not qualify for any grant funds as in the current
regulations.
2. Stretches the grant dollars appropriated by Congress to help
more communities by changing the maximum percentage of grant funds that
a higher income community can receive from 55 percent to 45 percent of
RUS's share of the project costs. This change could have an indirect
effect of having an incentive for development of regional projects.
3. The process used to select projects for funding has been revised
to direct funds to low income, small communities that need to correct
health problems. Also, the priority points awarded for regional systems
have been increased.
4. The application process has been streamlined to reduce
unnecessary paperwork and improve service to the rural communities.
There will be less regulations and the number of pages will be greatly
reduced.
5. The application process has been shortened by eliminating the
preapplication process. However, an applicant will have the option of
requesting an Agency eligibility review before submitting a complete
application.
6. A preliminary engineering report (PER) must be submitted earlier
in the application process. The requirement of submitting a PER earlier
in the process will assist the staff in making better decisions. Also,
applicants have to have this type of document to help them determine
what, where, and how they are going to build needed facilities. This
change will force applicants to have a clear picture of what they want
to construct prior to applying for assistance. A majority of applicants
have a PER at the preapplication stage now, therefore the change will
tend to put all applicants on a level field.
7. The functions of former Farmers Home Administration (FmHA) and
the Rural Development Administration (RDA) relating to the water and
waste loan and grant programs authorized by various sections of the
Consolidated Farm and Rural Development Act, (7 U.S.C. 1926(a)), as
amended have been transferred to RUS. Therefore in order to enhance the
delivery of customer services and better assist the public, RUS is
amending regulations originally published by FmHA and RDA. These
amendments will replace references to FmHA and RDA and its officials
with references to RUS and to appropriate officials. This action will
also separate the regulation now utilized by RUS and Rural Housing
Service (RHS) to administering the water and waste loan and community
facilities loan programs, respectively. All parts pertaining to the
water and waste loan program will be moved into 7 CFR part 1780. This
action will have no effect on RHS's community facilities loan program
as this action makes no changes in the regulation. The following
programs are affected by these amendments: (1) Water and Waste Loans
and Grants, (2) Technical Assistance and Planning Grants, (3) Emergency
Community Water Assistance Grants, (4) Section 306C WWD Loans and
Grants, and (5) Resource Conservation and Development Loans and
Watershed Loans and Advances.
8. The criteria utilized to allocate water and waste program funds
has been moved from 7 CFR part 1940, subpart L to 7 CFR part 1780.
The major 1996 Farm Bill changes are:
1. Funds made available for these programs may be made available
for a water system that is making significant progress toward meeting
the Safe Drinking Water Act standards.
2. Funds made available for water treatment discharge or waste
disposal system must meet applicable Federal and State water pollution
control standards.
3. Within 60 days of filing an application for loan or grant
assistance, a notice of intent shall be published in a general
circulation newspaper.
4. When applicants hire outside engineers, the applicant shall
publicly announce all requirements for engineering and architectural
services, and negotiate contracts for such services on the basis of
demonstrated competence and qualifications for the type professional
service required and at a fair and reasonable price. When project
design services are procured separately, the selection of the engineer
or architect shall be done by a request for proposal.
5. Assistance under any rural development program administered by
the Secretary or any agency of the Department of Agriculture shall not
be conditioned on any requirement that the recipient of the assistance
accept or receive electric service from any particular utility,
supplier, or cooperative. This is being implemented for the water and
waste loan and grant programs.
6. Section 306B of the Consolidated Farm and Rural Development Act
(7 U.S.C. 1926b) was repealed. References to section 306B were deleted
from the regulations and the amendments to section 306A are included.
7. The interest rate formula for Resource Conversation and
Development Loans, and Watershed Protection and Flood Preventation
Loans was amended to establish the interest rate on these loans based
on current market yield for outstanding municipal obligations with
remaining periods to maturity comparable to the average maturity for
the loan, adjusted to the nearest 1/8 of 1 percent.
Comments on the Proposed Rule
RUS published a proposed rule in the Federal Register on September
12, 1996, (61 FR 48075) and asked for written comments on or before
October 15, 1996. The Agency received seventy-nine comments from the
public review process. All comments were considered when preparing the
final rule; however, all comments have not been addressed separately
since many could be addressed collectively. Responses to comments
received are grouped according to corresponding sections of the rule
and are as follows:
[[Page 33464]]
Subpart A--General Policies and Requirements
Sec.
1780.1 General.
1. Sec. 1780.1(k)--Include the Brooks Architect-Engineer Act, Title
40 of the U.S. Code subchapter VI, Sections 541, 542, 543, and 544 as
the federal statute applicants should be aware of and comply with
relative to the procurement of engineering services.
Agency response: The Agency has not implemented this suggested
change. The Brooks Architect-Engineer Act only applies to Federal
procurement and would not be applicable to non-profit organizations and
units of local and State government who are the recipients of the
financial assistance.
1780.3 Definitions and grammatical rules of construction.
1. Add a definition of Agency Identified Target Areas referred to
in Sec. 1780.17.
Agency response: The Agency agrees and has added a definition.
2. Sec. 1780.3(a)--Similar System Cost--Recommend establishment of
similar system cost based on a comparison of rate structure for the
same amount of water usage.
Agency response: The Agency does not agree with this
recommendation. While this might be possible for a water system, the
Agency funds other types of projects where this type information would
not be available. The proposed language would be broad enough to cover
all types of projects funded by the Agency, including similar usage
levels.
3. Sec. 1780.3(a)--Equivalent Dwelling Unit--Add after ``typical
rural residential dwelling'' add the following, ``or users whose total
water needs could be met by a single residential sized water meter.'' A
property with a permanent residence and a stop gap housing structure
should only be considered as one connection.
Agency response: The Agency made no change in the definition.
Number of individual meters or residential dwellings are not what
determines an equivalent dwelling unit (EDU). An EDU is based on the
average consumption of a typical rural residential household.
4. Sec. 1780.3(a)--Rural and rural areas--Should be written as
broadly as possible to avoid defining a rural area as a local
government unit.
Agency response: The Agency made no change in the definition of
rural and rural areas. The Agency does not define a rural area outside
a city or town by the type of local governmental unit.
1780.7 Eligibility.
1. Sec. 1780.7(c)(2)--Delete last sentence. The capacity for fire
protection is repeated in Sec. 1780.57(d) and should not be in this
section.
Agency response: The Agency agrees and made the change.
2. Sec. 1780.7(d)--Place a period after the word ``terms'' and
delete ``or other funding sources.''
Agency response: The Agency agreed and made the change.
3. Sec. 1780.7(e)--What is meant by ``reasonable rates and terms?''
Agency response: The words ``and terms'' should have not been
included in that sentence. The applicant would be responsible for
providing continued availability and use of the proposed facility at
reasonable rates. The Agency has made the change.
1780.9 Eligible loan and grant purposes.
1. Sec. 1780.9(e)(1)(iv)--Change to specify that only ``hired''
applicant labor be reimbursable and not for people already on payroll.
Agency response: The Agency agrees and limited the use of funds to
``additional'' applicant labor necessary to install and extend service.
2. Sec. 1780.9(f)(1)--After the word ``obligations for'' add
``engineering and other services used to prepare the application or.''
Agency response: The Agency agrees and changed the word
``construction'' to ``eligible project costs.'' This would cover all
project costs incurred before loan or grant approval.
3. Sec. 1780.9(e)(1)(v)--2 commenters--Should provide clearer
guidance on what circumstances may warrant using funds for connecting
users to the system.
Agency response: The Agency made no change. The wording ``unusual
cases'' means that using loan and grant funds to connect users to the
main service line would be the exception rather than the rule. This
should only be considered in situations where the users cannot pay the
cost or from an engineering standpoint that it is the logical thing to
do.
4. Sec. 1780.9(e)(1)(i)--Revise to include training as an eligible
cost. Would assure that equipment and processes will function as
intended. The lack of technical expertise to properly operate and
maintain new equipment or treatment processes can be a major problem
with small systems.
Agency response: The Agency made no change. The proposed language
is broad enough to allow the use of funds to provide necessary training
to operators to assure proper operation and maintenance of equipment.
1780.10 Limitations.
1. Sec. 1780.10(c)(2)--13 commenters--Do not change the formula
from 55 percent grant to 45 percent grant.
Agency response: The Agency made no change. The Agency has a
limited amount of grant funds available for rural communities. The
Agency is directing these funds to the communities that have the
greatest need for these funds. The reduction from 55 percent to 45
percent will make additional grant funds available to low income
communities that have the greatest need for the limited grant funds.
2. Sec. 1780.10(c)--2 commenters--Revise the requirement that
restricts the amount of grant to RUS's share of project costs. Change
the wording ``RUS funded project development costs'' to ``RUS eligible
project development costs.''
Agency response: The Agency agrees and has made the change.
3. Sec. 1780.10(c)(2)--Allow grants up to 75 percent to all
existing borrowers where funding is considered servicing action.
Agency response: The Agency does not agree with this
recommendation. The amount of grant funds an applicant can receive
should be based on eligibility and not if they are an existing RUS
borrower.
4. Sec. 1780.10(a)(6)--Recommend that the limitation on allowing
rental of applicant owned equipment be deleted. Should allow for
community owned equipment to be rented for the project if it is the
most cost effective option.
Agency response: This recommendation was not adopted. Program funds
should not be used to rent equipment an applicant owns. Program funds
should be used to cover services and equipment not available to the
applicant.
5. Sec. 1780.10(c)(1)--2 commenters--Recommend removing the
requirement regarding health or sanitary problem. If not removed, need
to clarify that if there is no health or sanitary problem, the amount
of grant that could be obtained is based on income only.
Agency response: The Agency made no change. The eligibility for the
maximum 75 percent grant should be based on need as well as income. The
addition of health or sanitary problems makes eligibility for the 75
percent grant consistent with the eligibility for the poverty interest
rate.
6. Sec. 1780.10(c)(2)--Recommend changing 45 percent grant to 50
percent grant.
[[Page 33465]]
Agency response: The Agency made no change. The 45 percent grant
amount will make more grant funds available to communities with a
median household income of less than 80 percent of the nonmetropolitian
median household income of the State. This will allow the Agency to
target grant funds to more low income communities.
7. Sec. 1780.10(c)(1)--Recommend increasing maximum grant
percentage to 85 percent.
Agency response: Agency made no change. The maximum grant is
limited by law to 75 percent.
8. Sec. 1780.10(b)(3)--As written, this section is confusing.
Should rephrase to read: ``Pay project costs when other loan funding
for the project is available at reasonable rates and terms.''
Agency response: The Agency made no change. This is a limitation on
when grant funds can be used. The proposed language would prohibit a
grant being made when the interest rate or length of repayment are not
in line with those received by other communities with similar economic
conditions.
1780.11 Service area requirements.
1. Sec. 1780.11(a)(2)--Recommend that this paragraph be deleted.
System officials should make decisions regarding areas to serve based
on financial, environmental, and design factors.
Agency response: The Agency made no change. The Agency agrees that
in installing a facility the decisions regarding areas to be served
should be based on financial, environmental, and design factors. This
paragraph allows the decisions regarding areas to be served to be based
on these factors.
1780.13 Rates and terms.
1. Sec. 1780.13(d)--There are currently four weekly Bond Buyer
indices used to measure interest rates. This section needs to
specifically identify which index is used.
Agency response: The Agency agrees and has made the change.
2. Sec. 1780.13(e) Add a new paragraph (4) to read as follows:
``Principal and interest may be deferred in whole or in part for a
period not to exceed 36 months prior to the date of the first
installment due. This would be only in those cases where the
development of the water source and treatment facility or sanitary
treatment facilities are needed prior to the water or sewer being
available to the rural users.''
Agency response: The Agency has not made this change. The
regulations allow for deferment of principal and loan funds can be used
to pay interest. By putting these together the same purpose can be
accomplished as the suggested change.
1780.14 Security.
1. Sec. 1780.14(c)--Recommend that the parity security requirement
be deleted.
Agency response: The Agency did not make this change. Eliminating
the parity security requirement would not adequately protect the
security interest of the Government. The Agency should be in a
``parity'' security position with other lenders when jointly financing
a project. If the project is financially sound, there is no problem
with the parity requirement. The government should not guarantee other
lenders loans by taking junior lien positions when jointly funded
projects are developed.
1780.17 Selection priorities and process.
1. Sec. 1780.17(a)(1)--Reduce population from 1,000 to 500 and add
5 points.
Agency response: The Agency agrees to make part of the suggested
change. The Agency agrees to change the population points for
communities with a population not in excess of 1,000 to 25 points. The
Agency did not reduce the population to 500. Leaving the breaking point
at 1,000 or less will give balance between financial feasibility and
population priority.
2. Sec. 1780.17(b)--The points for ``health'' should equal those
for ``income.'' Recommend increasing points in Sec. 1780.17(b) (1) and
(2) to 30 points and increasing points in Sec. 1780.17(b)(3) to 20.
Agency response: The Agency did not make this change. The Agency
agrees that the protection of public health is a high priority.
However, low income communities can least afford to construct the
infrastructure that is needed to improve their health. By giving more
priority to income and equal priority to small populations and health,
funds can be directed to communities with the greatest need.
3. Sec. 1780.17(b)--Recommends that there be a gradation within the
25 points allowed for health priorities for severity of health hazard.
This would give more points to the greatest health hazards and less
points to ``lesser'' health issues.
Agency response: The Agency did not make this change. The health
priority pertaining to a water system are required by the Federal
statute that authorizes the program. This would make it difficult to
develop an equitable graduation scale within the health priority points
for each category.
4. Sec. 1780.17(b)--Should there be health priority points for
storm drainage?
Agency response: The Agency did not make a change. There could be
measurable health problems associated with a storm drainage project,
the majority are safety related. Storm drainage would receive priority
points under other categories, but would not rank as high as a drinking
water or sewer project that directly corrects a health problem.
5. Sec. 1780.17(c)--Change heading to ``Median Household Income.''
Also, word ``household'' should be in (c)(1).
Agency response: Agency made the change.
6. Sec. 1780.17(f)--Delete the phase ``exceeding 20% of the
development cost at time of loan or grant approval or.'' Placing an
arbitrary limit would further compound the problem at hand and would
hinder the resolution of the funding problem.
Agency response: The Agency made no change. Project cost overruns
that exceed 20 percent should not be given priority for receiving
additional funding from the Agency. The Agency is trying to reduce
funds that go into project cost overruns and by reducing the funding
priority is one way this can be accomplished.
1780.18 Public information.
1. Sec. 1780.18(a)--The publishing of a notice of intent to file an
application is nothing but extra cost to the applicant.
Agency response: The Agency made no change. This is a requirement
of the 1996 Farm Bill.
2. Sec. 1780.18(a)--Should increase the notice of intent from 60
days to 180 days.
Agency response: The Agency made no change. This 60 day requirement
was part of the 1996 Farm Bill.
3. Sec. 1780.18(a)--Recommend allowing alternative means of
notifying public such as fliers or mailers in small communities.
Agency response: The Agency has not made the changed. The 1996 Farm
Bill requires that the notice of intent to file a application be
published in a general circulation newspaper.
4. Sec. 1780.18(b)--Recommend giving applicant's the option to hold
the public meeting prior to the application submittal. Delete ``after
the application is filed and'' add ``The public meeting must be held
not later than loan or grant approval.''
Agency response: The Agency agrees to this change.
5. Sec. 1780.18(b)--2 commenters--Eliminate the requirement for a
public meeting.
Agency response: The Agency made no change. It is extremely
important that applicants keep the general public
[[Page 33466]]
informed about the development of a proposed project. Support from the
general public for a water or waste project is one of the most
important ingredients for success.
Subpart B--Loan and Grant Application Processing
1780.31 General.
1. Sec. 1780.31(d)--Change ``State Environmental Coordinator'' to
State Environmental Coordinator or designee.''
Agency response: The Agency made no change. The State Environmental
Coordinator should be involved in the application process to assure
that important environmental issues are properly addressed.
1780.32 Timeframes for application processing.
1. Sec. 1780.32(a)--2 commenters--Revise to 15 working days or
delete the 15 day requirement for notifying applicants that application
is incomplete.
Agency response: The Agency agrees and has made this change.
1780.33 Application requirements.
1. Should continue with preapplication process--14 commenters--The
preapplication allows determination if a project is workable in RUS's
view before spending time and money on formal application. This makes
the overall funding process more workable and gives time needed to
explore options before an application is formally filed.
Agency response: The Agency has considered this recommendation and
has given communities another option. If a community wishes to know if
they are eligible for financial assistance they can make a written
request to the Agency.
2. Eliminate requiring a PER and 1940-20 at initial stage of
application process.
Agency response: The Agency did not make this change. The
Preliminary Engineering Report contains information on the proposed
project that the Agency must have at this stage of the application
process. Form RD 1940-20 provides the information necessary for the
Agency to start the environmental review process and is needed at this
stage of the application process.
3. Sec. 1780.33(c)--2 commenters--Should delete last sentence as
the completion of a PER is covered in Sec. 1780.55 or insert ``PER
guidelines for water, sanitary sewer, solid waste, and storm drainage
are available from the agency.''
Agency response: The Agency agrees and has deleted the sentence.
4. Sec. 1780.33(c)--Recommend that RUS provide up front funds in
form of a loan to cover cost of preliminary engineering report for
poorest communities.
Agency response: The Agency made no change. The Agency has a
limited amount of loan funds available and uses these funds toward the
total project costs rather than partial up front costs. The Agency
believes that it is important to utilize its limited funds to build
projects, rather than funding a preliminary engineering report for a
project that may never be built.
5. Sec. 1780.33(f)--Delete reference to Form RD 1940-20, insert
``The applicant will consult with the processing office to determine
the appropriate environmental information that should be provided.''
Agency response: The Agency revised to allow applicant to provide
comparable information without using Form RD 1940-20.
6. Sec. 1780.33(h)--2 commenters--Combine all certifications into
one form called ``General Borrower Certification.'' or include a
statement and check off on the application indicating that these
requirements will apply and allowing the applicant to complete such
certificates if and when the loan actually closes.
Agency response: The Agency made no change. However, this is a
issue that will be reviewed in the future to determine what can be done
in this area.
1780.35 Processing office review.
1. Sec. 1780.35(b)(2)--Recommends that a actual monthly rate
ceilings for the poverty and intermediate categories be established.
Agency response: The Agency made no change. While an actual monthly
rate ceiling might work for a small geographic area it would be
impossible to establish one for the entire United States that would be
fair to all areas. When the debt service portion of the annual user
costs exceeds the appropriate percentage of median household income,
the Agency can determine the grant amount based on similar system cost.
2. Sec. 1780.35(b)(2)--Recommend that the relationship to total
debt service and the project O&M cost be considered in determining
grant eligibility.
Agency response: The Agency made no change. The relationship
between median household income and debt service is used because grant
funds can only be used to reduce the debt. However, the similar system
cost method used in (b)(3) does take into consideration other user
costs in determining the grant amount.
1780.39 Application processing.
1. Sec. 1780.39(a)--In first sentence remove ``and after the
applicant selects its professional and technical representative.''
Agency response: The Agency agrees and made the change.
2. Sec. 1780.39(b)(1)--27 commenters--Request for proposals should
be deleted. Could cause potential conflicts and drive cost up.
Applicants should be allowed to choose the engineer based on knowledge
and experience.
Agency response: The Agency has not deleted this requirement. This
is a requirement of the 1996 Farm Bill and must be complied with.
However, the Agency has revised to make it clear that the selection of
the engineer to develop the preliminary engineering report is not
subject to this requirement. Also, clarified is that the selection of
engineering services should be on the basis of all relevant factors.
3. Sec. 1780.39(b)(1)--4 commenters--When applicants hire outside
engineers, the selection of an engineer for a project design shall be
conducted pursuant to state procurement laws or in the absence thereof,
pursuant to the Federal Brooks Act, Public Law 92-582.
Agency response: The Agency revised the paragraph to reflect state
statutes or local requirements. The Brooks Act only applies to Federal
procurement and construction. This act would not apply because the
Federal government is not selecting the engineer. Revised rule to
reflect that the owner may procure engineering services in accordance
with applicable state laws providing the procurement meets the intent
of this section.
4. Sec. 1780.39(b)(1)--4 commenters--Request for proposals should
be required for all engineering services not only project design.
Delete phase ``for project design.''
Agency response: The Agency revised to make this optional, but not
a requirement. It should be left up to the applicant to make this
decision and not made mandatory by the Agency.
5. Sec. 1780.39(b)(1)--Change all references to request for
proposal to ``Request For Qualifications and/or Request for Proposal or
add a definition for Request For Proposal that includes qualification
and request for engineering services.
Agency response: The Agency has revised the selection of
engineering services to reflect all relevant factors.
6. Sec. 1780.39(b)(1)--Consider moving to Sec. 1780.54 and clarify
how engineers are to be selected in (1).
[[Page 33467]]
Agency response: The Agency did not make this change. The section
was revised to clarify how engineers are to be selected. This section
pertains to all professional services and contracts related to the
facility and the Agency believes that this is the best place to address
engineering services.
7. Sec. 1780.39(b)(1)--Suggest that the regulation make provision
to allow an ``ongoing'' contract or relationship with a community to
continue without a new selection procedure.
Agency response: The Agency made no change. The 1996 Farm Bill
requires that when project design is procured separately, the selection
of the engineer shall be done by a request for proposal.
8. Sec. 1780.39(b)(1)--The rule is silent on the procurement of
engineering services for the planning phase of a project.
Agency response: The Agency has revised the rule to require
applicants to publicly announce all requirements for engineering
services.
9. Sec. 1780.39(b)(1)--2 commenters--Should be made clear that if
engineer has already been selected through an RFP then the process does
not have to be repeated for design phase.
Agency response: The Agency agrees that only one public
announcement covering requirements for engineering services is
necessary for a project. The revision will allow for this situation.
10. Sec. 1780.39(b)(1)--If a project is funded in phases, would an
RFP have to be done for each phase? When can noncompetitive
negotiations be utilized for engineering services?
Agency response: If a project has been divided into phases and the
procurement of engineering services covering all phases has been done
in accordance with Agency requirements, the process would not have to
be repeated as each phase is constructed. Noncompetitive negotiations
could be utilized for the planning and preliminary engineering work
done on a project after the applicant publicly announces all
requirements for engineering services.
11. Sec. 1780.39(b)(1)--Honor agreements for engineering services
entered into prior to submitting an application.
Agency response: The Agency made no change. If engineering services
were selected in accordance with Agency requirements, then the process
would not have to be repeated.
12. Sec. 1780.39(c)(2)--What is ``meaningful user cash
contributions?''
Agency response: To clarify the intent of this paragraph, the
Agency has changed the word ``meaningful'' to ``new.'' This should make
it clear that only users not presently receiving service will be
required to make an up front cash payment to indicate interest in
receiving service when it becomes available.
13. Sec. 1780.39(e)(2)--Divide into two paragraphs by adding a
(e)(3) to read as follows and deleting reference to maintenance,
extensions, etc. in (e)(2): Facility Maintenance Reserve. Additional
reserves will need to be established for emergency maintenance,
improvements to facilities, replacement of short-lived assets and other
restricted reserves as deemed necessary by the governing body and
lender.
Agency response: The Agency made no change. The rule would allow
for the establishment of debt service reserve and a facility
maintenance reserve. The amount of funds that would be placed in the
reserve accounts would be determined by the applicant and the Agency.
The one-tenth of an average annual loan installment is the minimum
requirement and the requirement could be larger.
14. Sec. 1780.39(e)(2)--2 commenters--Recommend that the reserve be
fully funded over the first 10 years of the loan and not over the life
of the loan.
Agency response: Agency made no change. It is important that
borrowers maintain adequate reserves to cover unexpected short-falls of
revenue and to adequately maintain their systems.
15. Sec. 1780.39(f)--Delete last sentence in (f), and all of (1)
and (2).
Agency response: The Agency has made a revision to clarify, but did
not delete the sentence.
16. Sec. 1780.39(g)(3)--Should require fidelity bond coverage be
specifically for RUS funded project.
Agency response: It is not necessary that a fidelity or employee
dishonesty bond cover only the RUS funded project. However, the amount
of fidelity or employee dishonesty bond coverage must be enough to
cover not only RUS requirements, but other claims that could be made on
the bond.
17. Sec. 1780.39(i)--Should be allowed to issue a Letter of
Conditions when funds are not available or at least some percentage.
Agency response: The Agency made no change. Letter of Conditions
are taken by the general public to mean a commitment has been made by
the Agency to fund a project. By not issuing a Letter of Conditions
until funds are available for a project, problems associated with an
applicant thinking that funds are available when in fact they are not
can be avoided.
1780.44 Actions prior to loan or grant closing or start of
construction, whichever occurs first.
1. Sec. 1780.44(e)--Allow deobligation of funds in the same
percentage as funds were obligated.
Agency response: The Agency did not make this change. The amount of
deobligated funds is based on an reassessment of the need for grant
funds to achieve a reasonable user rate. Deobligation of funds based on
percentage of funds obligated could result in an applicant receiving
more grant funds than needed to have reasonable user rates. With the
limited amount of grant funds that the Agency has available, the funds
must be stretched as far as possible in order to serve the maximum
number of communities who need funds to construct projects.
2. Sec. 1780.44(e)--Provide an incentive for communities to save
money by applying savings against the loan first rather than grant.
Agency response: The Agency made no change. The Agency believes
that the best approach is to work with communities early in the process
to reduce the project costs. Once the Agency has committed funds to a
community to construct a project, both parties have agreed on an amount
of loan that can be repaid. Any reduction in the loan amount at this
point could result in the community receiving more grant funds than
needed in order to have reasonable user rates.
3. Sec. 1780.44(e)--Recommend waiting until completion of
construction before deobligating any unused funds.
Agency response: The Agency made no change. All construction
projects have contingency funds set aside to cover unanticipated
expenses during construction. Therefore, funds that are not needed for
project costs should be deobligated and made available to another
community.
1780.45 Loan and grant closing and delivery of funds.
1. Sec. 1780.45(f)(1)--Revise to allow remaining funds to be used
by a community to improve its existing system.
Agency response: The Agency made a change. The language was
broadened to allow use of Agency funds not needed for the project to be
used for the facility being financed. Any improvements must not result
in major changes to the applicant's facility. For example, if RUS funds
were used to construct a water project, then RUS funds that remain
after completion could be used for any RUS eligible purpose on the
applicant's whole water system.
[[Page 33468]]
2. Sec. 1780.45(f)(3)--Delete the requirement to notify the
attorney and engineer when funds are deobligated.
Agency response: The Agency did not make this change. Many of the
engineer's or attorney's are helping the applicant with completion of a
project. It is important that all interested parties be notified before
funds are canceled.
1780.49 Rural or Native Alaskan villages.
1. Sec. 1780.49(c)(4)--Revise to allow use of federal and non-
federal sources of funds.
Agency response: The Agency made no change. The law that authorizes
the funds for rural or native Alaskan villages requires that the
matching funds be non-federal funds.
2. Sec. 1780.49(f)(1)--Revise to authorize projects of Alaska Area
Native Health Service.
Agency response: The Agency made no change. In order to assure that
the projects are properly constructed the Agency will continue to
restrict the waiver of construction requirements contained in this
subpart to projects that are jointly funded with the State of Alaska.
3. Should contain a specific reference that solid waste disposal
projects are eligible grant purposes.
Agency Response: The Agency made no change. The Agency considers
solid waste disposal to be included in waste disposal services
authorized by this paragraph.
Subpart C--Planning, Designing, Bidding, Contracting, Constructing and
Inspections
1780.54 Technical services.
1. Consider including Architects in this section as they are
sometimes involved in water and waste projects.
Agency response: The Agency agrees and made change.
2. Does ``in house'' mean one on the applicant's staff or one under
previous contract with applicant or both?
Agency response: ``in house'' means one on the applicant's staff.
1780.57 Design policies.
1. Sec. 1780.57(c)--Recommend encouraging the procurement of
environmentally preferable products and services.
Agency response: The Agency revised to reflect both energy-
efficient and environmentally-sound products and services.
2. Sec. 1780.57(b)--Delete words ``or reside.'' Do not construct
occupied dwellings.
Agency response: The Agency made the change.
3. Sec. 1780.57(h)--Delete the wording ``Agency determines.''
Agency response: The Agency made no change. This language is
required by the 1996 Farm Bill.
1780.67 Performing construction.
1. Recommend design build and construction management that is in
existing regulations be added as an option.
Agency response: Agency has made no change. The proposed language
would not exclude design build and construction management.
2. Strengthen language by inserting ``using their own personnel or
designated, qualified, and supervised volunteers.''
Agency response: The Agency did not make this change. This section
does not prohibit use of volunteers in addition to an applicant's own
personnel.
1780.70 Owner's procurement regulations.
1. Sec. 1780.70(b)--Recommend deleting the word ``comprehensive''
or the entire last two sentences.
Agency response: The Agency made no change. The Agency cannot make
this change as it is required by law.
1780.72 Procurement methods.
1. Sec. 1780.72--2 commenters--Recommend that design/build be added
to section as an option for procurement.
Agency response: The Agency made no change. The proposed language
would allow design build as a construction option.
2. Sec. 1780.72(a)--The requirements in 1780.75(b) and (d) should
be included for any small purchase over $10,000.
Agency response: The Agency made no change. The provision for
termination and equal employment opportunity would apply to any
contract exceeding $10,000. The type of procurement would not influence
this requirement.
3. Sec. 1780.72(a)--What does the phrase ``costing in the aggregate
not more than $100,000'' mean?
Agency response: The phrase ``costing in the aggregate not more
than $100,000'' means the total dollar amount of an item or product
that is being purchased for a project. For example, a water system
could utilize the small purchase procedures to procure $90,000 for
water meters and $20,000 for equipment. In this example, each item
procured was under $100,000, but the total was over $100,000.
4. Sec. 1780.72(a) and Sec. 1780.72(d)(6)--Recommend deleting small
purchase and using noncompetitive negotiation in its place.
Agency response: The Agency did not make this change. While these
two procurement methods are similar each has its place in the
construction of water and waste projects.
5. Sec. 1780.72(c)--6 commenters--Delete the competitive
negotiation for engineering services.
Agency response: The Agency has not deleted this requirement. This
is a requirement of the 1996 Farm Bill and must be complied with. The
requirement has been clarified to reflect that the selection of
engineering services should be on the basis of all relative factors.
The Agency moved the selection of engineering services to
Sec. 1780.39(b)(1).
6. Sec. 1780.72(c)--2 commenters--Certain States have enacted
legislation that specifically prohibits State and Local Agencies from
seeking formal or informal submission of verbal or written estimates of
costs or price proposals. The rule should be amended to delete any and
all provisions that require or allow the use of cost or price as a
consideration in the selection of a design professional.
Agency response: The Agency made a change by revising
Sec. 1780.39(b)(1) and deleting engineering procurement from this
section.
7. Sec. 1780.72(c)--2 commenters--Should revise to require only one
competitive negotiation procedure which should be at the ``Step I''
phase and not wait until the design phase. Allow credit to those
applicants that can properly document that their engineer selection in
Step I of a project was in conformance with competitive negotiation and
would not have to be repeated at the ``design phase.''
Agency response: The Agency agrees that only one public
announcement covering requirements for engineering services is
necessary for a project. The revision to Sec. 1780.39(b)(1) will allow
for this situation.
8. Sec. 1780.72(c)--Revise by removing reference to obtaining
proposals from other sources.
Agency response: Agency made no change. The procurement of
engineering services was moved to Sec. 1780.39(b)(1).
9. Sec. 1780.72(c)--Delete reference to engineering services,
implies competitive negotiations can only be used for engineering
services.
Agency response: Agency made the change. The procurement of
engineering services was moved to Sec. 1780.39(b)(1).
10. Sec. 1780.72(c)--Should clarify that the applicant could select
an engineer through the noncompetitive process to perform the PER and
assist in the production of the application.
[[Page 33469]]
Agency response: Agency revised the procurement of engineering
services in Sec. 1780.39(b)(1) to clarify this issue.
11. Sec. 1780.72(c)(2)--3 commenters--Modify by deleting references
to price or cost for obtaining engineering services. The significant
evaluation factors to be based on a firm's professional qualifications,
specialized experience, technical competence and so forth.
Agency response: The Agency made a change by removing reference to
cost or price as a consideration in Sec. 1780.39(b)(1).
12. Sec. 1780.72(c)(5)--Delete the word ``other'' before
``professional services.'' This will clarify that competitive
negotiations is an acceptable method of procurement for any
professional service.
Agency response: Agency removed all references to procurement of
professional service from Sec. 1780.72(c) and moved to
Sec. 1780.39(b)(1). Sec. 1780.39(b)(1) contains all procurement
requirements for engineering and architectural services.
13. Sec. 1780.72(d)(5)--Delete word ``design'' so that it covers
all engineering services.
Agency response: Agency removed all references to procurement of
professional service from Sec. 1780.72(c) and moved to
Sec. 1780.39(b)(1).
Sec. 1780.39(b)(1) contains all procurement requirements for
engineering and architectural services.
1780.75 Contract provisions.
1. Sec. 1780.75(a)--Should be made clear that liquidated damages
only applies to construction contracts.
Agency response: The Agency made the change.
2. Sec. 1780.75(c)--Change ``be legally doing business in the State
where the facility is located'' to ``the surety must be listed in the
Treasury Circular 570 as amended as having a license to do business in
the State where the facility is located.''
Agency response: The Agency made the change.
3. Sec. 1780.75 (b) and (f)--Recommend raising the $10,000 to
$100,000.
Agency response: The Agency did not make this change. It is
important to have a termination clause in contracts. The $10,000 cut
off point for this requirement is as high as it should be to adequately
protect the owner. The equal employment provision is required by other
Federal regulations.
4. Sec. 1780.75(c)--Recommend retaining U.S. Government as co-
obligee on payment and performance bonds.
Agency response: The Agency made no change. The Agency is not a
party to the contract and should not be included on any payment or
performance bond.
5. Sec. 1780.75(j)--Recommend adding the ability to modify the
retainage amount to match other funding source requirements on jointly
funded projects.
Agency response: The Agency made no change. Five percent retainage
is the minimum amount that should be withheld to assure that
construction is completed in a satisfactorily and timely manner. The
regulations would allow for more than 5 percent, if required by other
funding sources.
6. Sec. 1780.75(j)--Five percent retainage on approved partial pay
estimates is too low. Leave at 10 percent.
Agency response: The Agency made no change. The 5 percent retainage
is in line with the industry standard. Also, the funds retained will be
held until the project is substantially completed and accepted by the
owner.
1780.76 Contract administration.
1. Sec. 1780.76(c)--Should be clearly stated that the Agency, not
the project engineer, have sole authority to grant or refuse the
owner's request for a particular independent resident inspector.
Agency response: The Agency agrees and has revised.
2. Sec. 1780.76(d)--Add at end of last sentence ``or similar form
approved by the Agency.''
Agency response: The Agency made the change.
List of Subjects
7 CFR Parts 1775, 1777, 1778, 1780 and 1781
Business and industry, Community development, Community facilities,
Grant programs--housing and community development, Reporting and
recordkeeping requirements, Rural areas, Waste treatment and disposal,
Water supply, Watersheds.
7 CFR Part 1901
Civil rights, Fair housing, Rural areas.
7 CFR Part 1940
Agriculture, Grant programs--housing and community development,
Loan programs--agriculture, Rural areas.
7 CFR Parts 1942 and 4284
Business and industry, Community development, Community facilities,
Grant programs--housing and community development, Loan programs--
housing and community development, Reporting and recordkeeping
requirements, Rural areas, Soil conservation, Waste treatment and
disposal, Water supply.
7 CFR Part 1951
Accounting, Grant programs--housing and community development,
Reporting and recordkeeping requirements, Rural areas.
7 CFR Part 1956
Accounting, Loan programs--agriculture, Rural areas.
Therefore, RUS amends chapters XVII, XVIII and XLII, title 7, Code
of Federal Regulations as follows:
Part 1942, Subpart J--[Redesignated as Part 1775 and Revised]
1. Subpart J of 7 CFR part 1942 is redesignated as 7 CFR part 1775
and is revised to read as follows:
PART 1775--TECHNICAL ASSISTANCE AND TRAINING GRANTS
Sec.
1775.1 General.
1775.2 [Reserved]
1775.3 Objectives.
1775.4 Definitions.
1775.5 Source of funds.
1775.6 Allocation of funds.
1775.7 Eligibility.
1775.8 Purpose.
1775.9 [Reserved]
1775.10 Limitations.
1775.11 Equal opportunity requirements.
1775.12 Environmental requirements.
1775.13 Preapplications.
1775.14 Priority.
1775.15 [Reserved]
1775.16 Application processing.
1775.17 [Reserved]
1775.18 Grant approval and obligation of funds.
1775.19 Fidelity bond.
1775.20-11775.21 [Reserved]
1775.22 Fund disbursement.
1775.23 Grant cancellation or major changes.
1775.24 Reporting.
1775.25 Audit.
1775.26 Grant Agreement.
1775.27 Grant servicing.
1775.28 Delegation of authority.
1775.29-1775.99 [Reserved]
1775.100 OMB control number.
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.
Sec. 1775.1 General.
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
[[Page 33470]]
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.
Sec. 1775.2 [Reserved]
Sec. 1775.3 Objectives.
(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.
Sec. 1775.4 Definitions.
Association. An entity, including a small city or town, that is
eligible for Rural Utilities Service (RUS) water and waste financial
assistance in accordance with Sec. 1780.7 of this chapter.
Grantee. An entity with whom The Agency has entered into a grant
agreement under this program to provide technical assistance and/or
training to associations as defined in this section.
Low income. Median household income below the poverty line for a
family of four as defined in Section 673(2) of the Community Services
Block Grant Act (42 U.S.C. 9902(2)), or below 80 percent of the
Statewide nonmetropolitan median household income.
Regional. For purposes of the Solid Waste Management grant program,
as implemented through this part, regional is defined as any multi-
jurisdictional area including multi-State or any multi-jurisdictional
area within a State.
Rural area. For water and waste disposal facilities the terms
``rural'' or ``rural area'' will not include any area in a city or town
with population in excess of 10,000 inhabitants according to the latest
decennial census of the United States.
State. Any of the fifty States, the Commonwealth of Puerto Rico,
the Western Pacific Territories, Marshall Islands, Federated States of
Micronesia, Republic of Palau, and the U.S. Virgin Islands.
Sec. 1775.5 Source of funds.
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.
Sec. 1775.6 Allocation of funds.
Control of Technical Assistance and Training grant and Solid Waste
Management grant funds will be retained in the National office and
allocated on a project case basis. These funds are not available for
obligation by States.
Sec. 1775.7 Eligibility.
(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 Sec. 1775.3.
Sec. 1775.8 Purpose.
(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.
Sec. 1775.9 [Reserved]
Sec. 1775.10 Limitations.
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 grantee will provide
[[Page 33471]]
documentation to FS and RUS regarding the contact with each agency.
Under its program, the FS assists rural communities dependent upon
national forest resources by establishing rural forestry and economic
diversification action teams which prepare action plans. Action plans
are intended to provide opportunities to promote economic
diversification and enhance local economies dependent upon national
forest resources.
Sec. 1775.11 Equal opportunity requirements.
The policies and regulations contained in subpart E of part 1901 of
this title apply to grants made under this part.
Sec. 1775.12 Environmental requirements.
The policies and regulations contained in subpart G of part 1940 of
this title apply to grants made for the purposes in Sec. 1775.8.
Sec. 1775.13 Preapplications.
(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 of applicant's legal existence and authority to provide
technical assistance and/or training. The legal opinion will be
obtained from the Regional Attorney servicing the area where the
applicant's headquarters is located; and
(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 __, you
may file a new preapplication on or after October 1, 19__.''
Sec. 1775.14 Priority.
(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-
[[Page 33472]]
jurisdictional organizations for the SWM grant program will be given
priority within the available funds.
Sec. 1775.15 [Reserved]
Sec. 1775.16 Application processing.
(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.
Sec. 1775.17 [Reserved]
Sec. 1775.18 Grant approval and obligation of funds.
(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.
Sec. 1775.19 Fidelity bond.
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.
Secs. 1775.20-1775.21 [Reserved]
Sec. 1775.22 Fund disbursement.
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.
Sec. 1775.23 Grant cancellation or major changes.
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.
Sec. 1775.24 Reporting.
Standard Form (SF) 269, ``Financial Status Report,'' SF 272,
``Federal Cash Transactions Report,'' and a project performance
activity report will be required of all grantees on a quarterly basis.
A final project performance report will be required with the last SF
269. The final report may serve as the last quarterly report. Grantees
shall constantly 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. All multi-state,
regional, and nationwide grantees are to submit an original of each
report to the National Office. Grantees serving only one State are to
submit an original of each report to the State Program Official. The
State Program Official will review and forward to the National Office
the report with comments. The project performance reports shall
include, but not be limited to, the following:
(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.
Sec. 1775.25 Audit.
The grantee will provide an audit report prepared in accordance
with Sec. 1780.47 of this chapter within 90 days after project
completion.
Sec. 1775.26 Grant Agreement.
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.
Sec. 1775.27 Grant servicing.
Grants will be serviced in accordance with the grant agreement and
subpart E
[[Page 33473]]
of part 1951 of this title. Subpart B of part 1900 of this title will
be followed when grants are terminated for cause.
Sec. 1775.28 Delegation of authority.
The authority under this part is redelegated to the Assistant
Administrator, Water and Waste, except for the discretionary authority
contained in Sec. 1775.5. The Assistant Administrator, Water and Waste
may redelegate the authority in this section.
Secs. 1775.29-1775.99 [Reserved]
Sec. 1775.100 OMB control number.
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.
Part 4284, Subpart E [Redesignated as Part 1777 and Revised]
2. Subpart E of 7 CFR part 4284 is redesignated as 7 CFR part 1777
and is revised to read as follows:
PART 1777--SECTION 306C WWD LOANS AND GRANTS
Sec.
1777.1 General.
1777.2 [Reserved]
1777.3 Objective.
1777.4 Definitions.
1777.5-1777.10 [Reserved]
1777.11 Making, processing, and servicing loans and grants.
1777.12 Eligibility.
1777.13 Project priority.
1777.14-1777.20 [Reserved]
1777.21 Use of funds.
1777.22-1777.30 [Reserved]
1777.31 Rates.
1777.32-1777.40 [Reserved]
1777.41 Individual loans and grants.
1777.42 Delegation of authority.
1777.43 Bulletins.
1777.44-1777.99 [Reserved]
1777.100 OMB control number.
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.
Sec. 1777.1 General.
(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).
Sec. 1777.2 [Reserved]
Sec. 1777.3 Objective.
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.
Sec. 1777.4 Definitions.
Applicant. Entity that receives the Agency loan or grant under this
part. The entities can be public bodies such as municipalities,
counties, districts, authorities, or other political subdivisions of a
State, and organizations operated on a not-for-profit basis such as
associations, cooperatives, private corporations, or Indian tribes on
Federal and State reservations, and other Federally recognized Indian
tribes.
Colonia. Any identifiable community designated in writing by the
State or county in which it is located; determined to be a colonia on
the basis of objective criteria including lack of potable water supply,
lack of adequate sewage systems, and lack of decent, safe, and sanitary
housing, inadequate roads and drainage; and existed and was generally
recognized as a colonia before October 1, 1989.
Cooperative. A cooperative formed specifically for the purpose of
the installation, expansion, improvement, or operation of water supply
or waste disposal facilities or systems.
Individual. Recipient of a loan or grant through the applicant to
facilitate use of the applicant's water and/or waste disposal system.
Rural areas. Includes unincorporated areas and any city or town
with a population not in excess of 10,000 inhabitants according to the
most recent decennial census of the United States. They can be located
in any of the 50 States, the Commonwealth of Puerto Rico, the Western
Pacific Territories, Marshall Islands, Federated States of Micronesia,
Republic of Palau, and the U.S. Virgin Islands.
Secs. 1777.5-1777.10 [Reserved]
Sec. 1777.11 Making, processing, and servicing loans and grants.
Unless specifically modified by this part, loans and/or grants will
be made, processed, and serviced in accordance with part 1780 of this
chapter.
Sec. 1777.12 Eligibility.
(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 waste
disposal services to rural areas of a county where, on the date
preapplication is received by the Agency, the:
(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.
Sec. 1777.13 Project priority.
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
[[Page 33474]]
preapplication and the degree to which those priorities are met.
(a) Preapplications. The preapplication and supporting information
submitted with it will be used to determine applicant eligibility and
the proposed project's priority for available funds. Applicants
determined ineligible will be advised of their appeal rights in
accordance with 7 CFR part 11.
(b) State Office review. All preapplications will be reviewed and
scored for funding priority at each State Office using RUS Bulletin
1777-2. Funds will be requested from the National Office, Attention:
Water and Waste Processing, using RUS Bulletin 1777-3. Eligible
applicants that cannot be funded should be advised that funds are not
available and advised of their appeal rights as set forth in 7 CFR part
11.
(c) National Office. The National Office will allocate funds on a
project-by-project basis as requests are received. If the amount of
funds requested exceeds the amount of funds available, the total
project score will be used to select projects for funding. The RUS
Administrator may assign up to 35 additional points that will be
considered in the total points for items such as geographic
distribution of funds, severity of health risks, etc.
(d) Selection priorities. The priorities described below will be
used to rate preapplications and in selecting projects for funding.
Points will be distributed as indicated in paragraphs (d)(1) through
(d)(5) of this section and will be used in selecting projects for
funding. A copy of RUS Bulletin 1777-2, used to rate applications,
should be placed in the case file for future reference.
(1) Population. The proposed project will serve an area with a
rural population:
(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) Income. The median household income of population to be served
by the proposed project is:
(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) Joint financing. The amount of joint financing committed to the
proposed project is:
(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) Colonia. (See definition in Sec. 1777.4). The proposed project
will provide water and/or waste disposal services to the residents of a
colonia--50 points.
(5) Discretionary. In certain cases, the State Program Official may
assign up to 15 points for items such as natural disaster, to improve
compatibility/coordination between the Agency's and other agencies'
selection systems, to assist those projects that are the most cost
effective, high unemployment rate, severity of health risks, etc. A
written justification must be prepared and attached to RUS Bulletin
1777-2 each time these points are assigned.
Secs. 1777.14-1777.20 [Reserved]
Sec. 1777.21 Use of funds.
(a) Applicant. Funds may be used to:
(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) Individuals. Funds may be used to:
(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.
Secs. 1777.22-1777.30 [Reserved]
Sec. 1777.31 Rates.
(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.
Secs. 1777.32-1777.40 [Reserved]
Sec. 1777.41 Individual loans and grants.
(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 funds should be disbursed to
individuals within 1 year from the date water and/or waste disposal
service is available to the individuals. The State Program Official can
make an exception to this 1 year requirement if written justification
is provided by the applicant.
[[Page 33475]]
Sec. 1777.42 Delegation of authority.
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.
Sec. 1777.43 Bulletins.
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.
Secs. 1777.44-1777.99 [Reserved]
Sec. 1777.100 OMB control number.
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.
Part 1942, Subpart K [Redesignated as Part 1778 and Revised]
3. Subpart K of 7 CFR part 1942 is redesignated as 7 CFR part 1778
and is revised to read as follows:
PART 1778--EMERGENCY COMMUNITY WATER ASSISTANCE GRANTS
Sec.
1778.1 General.
1778.2 [Reserved]
1778.3 Objective.
1778.4 Definitions.
1778.5 [Reserved]
1778.6 Eligibility.
1778.7 Project priority.
1778.8 [Reserved]
1778.9 Uses.
1778.10 Restrictions.
1778.11 Maximum grants.
1778.12 [Reserved]
1778.13 Set-aside.
1778.14 Other considerations.
1778.15-1778.20 [Reserved]
1778.21 Application processing.
1778.22 Planning development and procurement.
1778.23 Grant closing and disbursement of funds.
1778.24-1778.30 [Reserved].
1778.31 Performing development.
1778.32 Grant cancellation.
1778.33 [Reserved]
1778.34 Grant servicing.
1778.35 Subsequent grants.
1778.36 [Reserved]
1778.37 Forms, Instructions and Bulletins.
1778.38-1778.99 [Reserved]
1778.100 OMB control number.
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.
Sec. 1778.1 General.
(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).
Sec. 1778.2 [Reserved]
Sec. 1778.3 Objective.
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).
Sec. 1778.4 Definitions.
Emergency. Occurrence of an incident such as, but not limited to, a
drought, earthquake, flood, hurricane, disease outbreak, or chemical
spill.
Rural areas. Includes any area in any city or town with a
population not in excess of 10,000 inhabitants according to the most
recent decennial census of the United States, located in any of the
fifty States, the Commonwealth of Puerto Rico, the Western Pacific
Territories, Marshall Islands, Federated States of Micronesia, Republic
of Palau, and the U.S. Virgin Islands.
Significant decline in quality. A significant decline in quality of
potable water is where the present community source or delivery system
does not meet, as a result of an emergency, the current SDWA
requirements. For a private source or delivery system a significant
decline in quality is where the water is no longer potable as a result
of an emergency.
Significant decline in quantity. A significant decline in the
quantity is caused by a disruption of the potable water supply by an
emergency. The disruption in quantity of water prevents the present
source or delivery system from supplying potable water needs to rural
residents. This would not include a decline in excess water capacity.
Sec. 1778.5 [Reserved]
Sec. 1778.6 Eligibility.
(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.
[[Page 33476]]
This would not apply to grants made for repairs, partial replacement,
or significant maintenance on an established water system.
Sec. 1778.7 Project priority.
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) Applications. The application and supporting information
submitted with it will be used to determine the proposed project's
priority for available funds.
(b) State Office review. All applications will be reviewed and
scored for funding priority using RUS Bulletin 1778-1. The State
Program Official will request funds from the National Office,
Attention: Assistant Administrator, Water and Waste, using RUS
Bulletins 1778-1 and 1778-2. If an application cannot be funded, the
State Program Official will be notified. Eligible applicants that
cannot be funded should be advised that funds are not available.
(c) National Office review. Each year all funding requests will be
reviewed by the National Office starting November 1 and will continue
as long as funds are available except for the first year in which funds
are made available for this grant program. A review of funding requests
the first year will start 30 days after funds are made available.
Projects selected for funding will be considered based on the priority
criteria and available funds. Projects must compete on a national basis
for available funds, and the National Office will allocate funds to
State offices on a project by project basis.
(d) Selection priorities. The priorities described below will be
used by the State Program Official to rate applications and by the
Assistant Administrator of Water and Waste to select projects for
funding. Points will be distributed as indicated in paragraphs (d)(1)
through (d)(5) of this section and will be considered in selecting
projects for funding. A copy of RUS Bulletins 1778-1 and 1778-2 used to
rate applications, should be placed in the case file for future
reference.
(1) Population. The proposed project will serve an area with a
rural population:
(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) Income. The median household income of population to be served
by the proposed project is:
(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) Significant decline. Points will only be assigned for one of
the following paragraphs when the primary purpose of the proposed
project is to correct a significant decline in the:
(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) Acute shortage. Grants made in accordance with Sec. 1778.11(b)
to assist an established water system remedy an acute shortage of
quality water or correct a significant decline in the quantity or
quality of water that is available--10 points.
(5) Discretionary. In certain cases the Administrator may assign up
to 30 points for items such as geographic distribution of funds, rural
residents hauling water, severe contamination levels, etc.
Sec. 1778.8 [Reserved]
Sec. 1778.9 Uses.
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 et seq.)
(FWPCA) or the SDWA when such failure to comply is directly related to
a recent decline in quality of potable water. This would not apply to
changes in the requirements of FWPCA or SDWA.
Sec. 1778.10 Restrictions.
(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 Sec. 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.
Sec. 1778.11 Maximum grants.
(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.
[[Page 33477]]
(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.
Sec. 1778.12 [Reserved]
Sec. 1778.13 Set-aside.
(a) At least 70 percent of all grants made under these grant
programs shall be for projects funded in accordance with
Sec. 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.
Sec. 1778.14 Other considerations.
(a) Civil rights compliance requirements. All grants made under
this part are subject to Title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d et seq.), as outlined in subpart E of part 1901 of this
title.
(b) Environmental requirements. All projects must have appropriate
environmental reviews in accordance with RUS requirements.
(c) Uniform Relocation and Real Property Acquisition Policies Act
(42 U.S.C. 4601 et seq.). All projects must comply with the
requirements set forth in 7 CFR part 21.
(d) Flood and mudslide hazard area precautions. If the project is
located in a flood or mudslide area, then flood or mudslide insurance
must be provided as required in subpart A of part 1806 of this title
(RD Instruction 426.2).
(e) Governmentwide debarment and suspension (nonprocurement) and
requirements for drug-free work place. All projects must comply with
the requirements set forth in the U.S. Department of Agriculture
regulations 7 CFR part 3017 and RD Instruction 1940-M.
(f) Intergovernmental review. All projects funded under this part
are subject to Executive Order 12372 (3 CFR, 1983 Comp., p. 197), which
requires intergovernmental consultation with State and local officials.
These requirements are set forth in U.S. Department of Agriculture
regulations 7 CFR part 3015, subpart V, and RD Instruction 1940-J.
Secs. 1778.15-1778.20 [Reserved]
Sec. 1778.21 Application processing.
(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
Sec. 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 Sec. 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.
Sec. 1778.22 Planning development and procurement.
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.
Sec. 1778.23 Grant closing and disbursement of funds.
(a) Grants will be closed in accordance with Sec. 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.
Secs. 1778.24-1778.30 [Reserved]
Sec. 1778.31 Performing development.
(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 Sec. 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.
Sec. 1778.32 Grant cancellation.
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
[[Page 33478]]
Form RD 1940-10. A copy should also be sent to the National Office,
Attention: Water and Waste Processing.
Sec. 1778.33 [Reserved]
Sec. 1778.34 Grant servicing.
(a) Grants will be serviced in accordance with Sec. 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
Sec. 1780.47 of this chapter.
Sec. 1778.35 Subsequent grants.
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 Sec. 1778.11.
Sec. 1778.36 [Reserved]
Sec. 1778.37 Forms, Instructions and Bulletins.
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.
Secs. 1778.38-1778.99 [Reserved]
Sec. 1778.100 OMB control number.
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.
4. Part 1780, is added to read as follows:
PART 1780--WATER AND WASTE LOANS AND GRANTS
Subpart A--General Policies and Requirements
Sec.
1780.1 General.
1780.2 Purpose.
1780.3 Definitions and grammatical rules of construction.
1780.4 Availability of forms and regulations.
1780.5 [Reserved]
1780.6 Application information.
1780.7 Eligibility.
1780.8 [Reserved]
1780.9 Eligible loan and grant purposes.
1780.10 Limitations.
1780.11 Service area requirements.
1780.12 [Reserved]
1780.13 Rates and terms.
1780.14 Security.
1780.15 Other Federal, State, and local requirements.
1780.16 [Reserved]
1780.17 Selection priorities and process.
1780.18 Allocation of program funds.
1780.19 Public information.
1780.20-1780.23 [Reserved]
1780.24 Approval authorities.
1780.25 Exception authority.
1780.26-1780.30 [Reserved]
Subpart B--Loan and Grant Application Processing
1780.31 General.
1780.32 Timeframes for application processing.
1780.33 Application requirements.
1780.34 [Reserved]
1780.35 Processing office review.
1780.36 Approving official review.
1780.37 Applications determined ineligible.
1780.38 [Reserved]
1780.39 Application processing.
1780.40 [Reserved]
1780.41 Loan or grant approval.
1780.42 Transfer of obligations.
1780.43 [Reserved]
1780.44 Actions prior to loan or grant closing or start of
construction, whichever occurs first.
1780.45 Loan and grant closing and delivery of funds.
1780.46 [Reserved]
1780.47 Borrower accounting methods, management reporting and
audits.
1780.48 Regional commission grants.
1780.49 Rural or Native Alaskan villages.
1780.50-1780.52 [Reserved]
Subpart C--Planning, Designing, Bidding, Contracting, Constructing and
Inspections
1780.53 General.
1780.54 Technical services.
1780.55 Preliminary engineering reports.
1780.56 [Reserved]
1780.57 Design policies.
1780.58-1780.60 [Reserved]
1780.61 Construction contracts.
1780.62 Utility purchase contracts.
1780.63 Sewage treatment and bulk water sales contracts.
1780.64-1780.66 [Reserved]
1780.67 Performing construction.
1780.68 Owner's contractual responsibility.
1780.69 [Reserved]
1780.70 Owner's procurement regulations.
1780.71 [Reserved]
1780.72 Procurement methods.
1780.73 [Reserved]
1780.74 Contracts awarded prior to applications.
1780.75 Contract provisions.
1780.76 Contract administration.
1780.77-1780.79 [Reserved]
Subpart D--Information Pertaining to Preparation of Notes or Bonds and
Bond Transcript Documents for Public Body Applicants
1780.80 General.
1780.81 Policies related to use of bond counsel.
1780.82 [Reserved]
1780.83 Bond transcript documents.
1780.84-1780.86 [Reserved]
1780.87 Permanent instruments for Agency loans.
1780.88 [Reserved]
1780.89 Multiple advances of Agency funds using permanent
instruments.
1780.90 Multiple advances of Agency funds using temporary debt
instruments.
1780.91-1780.93 [Reserved]
1780.94 Minimum bond specifications.
1780.95 Public bidding on bonds.
1780.96-1780.100 [Reserved]
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.
Subpart A--General Policies and Requirements
Sec. 1780.1 General.
(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 of the United
States. If there is reason to believe that the census data is not an
accurate representation of the median household income within the area
to be served, the reasons will be documented and the applicant may
furnish, or the Agency may obtain, additional information regarding
such median household income. Information will consist of reliable data
from local, regional, State or Federal sources or from a survey
conducted by a reliable
[[Page 33479]]
impartial source. The nonmetropolitan median household income of the
State may only be updated on a national basis by the RUS National
Office. This will be done only when median household income data for
the same year for all Bureau of the Census areas is available from the
Bureau of the Census or other reliable sources. Bureau of the Census
areas would include areas such as: Counties, County Subdivisions,
Cities, Towns, Townships, Boroughs, and other places.
(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) Section 504 of the Rehabilitation Act of 1973. Under section
504 of the Rehabilitation Act of 1973, as amended (29 U.S.C. 794 et
seq.), no handicapped individual in the United States shall, solely by
reason of their handicap, be excluded from participation in, be denied
the benefits of, or be subjected to discrimination under any program or
activity receiving RUS financial assistance;
(2) Civil Rights Act of 1964. All borrowers are subject to, and
facilities must be operated in accordance with, title VI of the Civil
Rights Act of 1964 (42 U.S.C. 2000d et seq.) and subpart E of part 1901
of this title, particularly as it relates to conducting and reporting
of compliance reviews. Instruments of conveyance for loans and/or
grants subject to the Act must contain the covenant required by
Sec. 1901.202(e) of this title;
(3) The Americans with Disabilities Act (ADA) of 1990. This Act (42
U.S.C. 12101 et seq.) prohibits discrimination on the basis of
disability in employment, State and local government services, public
transportation, public accommodations, facilities, and
telecommunications. Title II of the Act applies to facilities operated
by State and local public entities which provides services, programs
and activities. Title III of the Act applies to facilities owned,
leased, or operated by private entities which accommodate the public;
and
(4) Age Discrimination Act of 1975. This Act (42 U.S.C. 6101 et
seq.) provides that no person in the United States shall on the basis
of age, be excluded from participation in, be denied the benefits of,
or be subjected to discrimination under any program or activity
receiving Federal financial assistance.
Sec. 1780.2 Purpose.
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.
Sec. 1780.3 Definitions and grammatical rules of construction.
(a) Definitions. For the purposes of this part:
Agency means the Rural Utilities Service and any United States
Department of Agriculture (USDA) employee acting on behalf of the Rural
Utilities Service in accordance with appropriate delegations of
authority.
Agency identified target areas means an identified area in the
State strategic plan or other plans developed by the Rural Development
State Director.
Approval official means the USDA official at the State level who
has been delegated the authority to approve loans or grants.
Equivalent Dwelling Unit (EDU) means the level of service provided
to a typical rural residential dwelling.
Parity bonds means bonds which have equal standing with other bonds
of the same Issuer.
Poverty line means the level of income for a family of four, as
defined in section 673(2) of the Community Services Block Grant Act (42
U.S.C. 9902(2)).
Processing office means the office designated by the State program
official to accept and process applications for water and waste
disposal assistance.
Project means all activity that an applicant is currently
undertaking to be financed in whole or part with RUS assistance.
Protective advances are payments made by a lender for items such as
insurance or taxes in order to preserve and protect the security or the
lien or priority of the lien securing the loan.
Rural and rural areas means any area not in a city or town with a
population in excess of 10,000 inhabitants, according to the latest
decennial census of the United States.
Rural Development means the mission area of the Under Secretary for
Rural Development. Rural Development State and local offices will
administer this water and waste program on behalf of the Rural
Utilities Service.
RUS means the Rural Utilities Service, an agency of the United
States
[[Page 33480]]
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 Farmer's Home Administration and the
Rural Development Administration with respect to certain water and
waste disposal loan and grant programs.
Service area means the area reasonably expected to be served by the
project.
Servicing office means the office designated by the State program
official to service water and waste disposal loans and grants.
Similar system cost means the average annual EDU user cost of a
system within a community having similar economic conditions and being
served by the same type of established system. Similar system cost
shall include all charges, taxes, and assessments attributable to the
system including debt service, reserves and operation and maintenance
costs.
State program official means the USDA official at the State level
who has been delegated the responsibility of administering the water
and waste disposal programs under this regulation for a particular
State or States.
Statewide nonmetropolitan median household income means the median
household income of all rural areas of a state.
(b) Rules of grammatical construction. Unless the context otherwise
indicates, ``includes'' and ``including'' are not limiting, and ``or''
is not exclusive. The terms defined in paragraph (a) of this section
include the plural as well as the singular, and the singular as well as
the plural.
Sec. 1780.4 Availability of forms and regulations.
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.
Sec. 1780.5 [Reserved]
Sec. 1780.6 Application information.
(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.
Sec. 1780.7 Eligibility.
Facilities financed by water and waste disposal loans or grants
must serve rural areas.
(a) Eligible applicant. An applicant must be:
(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) Eligible facilities. Facilities financed by RUS may be located
in non-rural areas. However, loan and grant funds may be used to
finance only that portion of the facility serving rural areas,
regardless of facility location.
(c) Eligible projects. (1) Projects must serve a rural area which,
if such project is completed, is not likely to decline in population
below that for which the project was designed.
(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) Credit elsewhere. Applicants must certify in writing and the
Agency shall determine and document that the applicant is unable to
finance the proposed project from their own resources or through
commercial credit at reasonable rates and terms.
(e) Legal authority and responsibility. Each applicant must have or
will obtain the legal authority necessary for owning, constructing,
operating, and maintaining the proposed facility or service and for
obtaining, giving security for, and repaying the proposed loan. The
applicant shall be responsible for operating, maintaining, and managing
the facility, and providing for its continued availability and use at
reasonable user rates and charges. This responsibility shall be
exercised by the applicant even though the facility may be operated,
maintained, or managed by a third party under contract or management
agreement. Guidance for preparing a management agreement is available
from the Agency. Such contracts, management agreements, or leases must
not contain options or other provisions for transfer of ownership.
(f) Economic feasibility. All projects financed under the
provisions of this section must be based on taxes, assessments, income,
fees, or other satisfactory sources of revenues in an amount sufficient
to provide for facility operation and maintenance, reasonable reserves,
and debt payment. If the primary use of the facility is by business and
the success or failure of the facility is dependent on the business,
then the economic viability of that business must be assessed.
(g) Federal Debt Collection Act of 1990 (28 U.S.C. 3001 et seq.).
An outstanding judgment obtained by the United States in a Federal
Court (other than in the United States Tax Court), which has been
recorded, shall cause the applicant to be ineligible to receive a loan
or grant until the judgment is paid in full or otherwise satisfied.
(h) Expanded eligibility for timber-dependent communities in
Pacific Northwest. In the Pacific Northwest, defined as an area
containing national forest covered by the Federal document entitled,
``Forest Plan for a Sustainable Economy and a Sustainable
Environment,'' dated July 1, 1993, the population limits contained in
Sec. 1780.3(a) are expanded to include communities with not more than
25,000 inhabitants until September 30, 1998, if:
(1) Part or all of the community lies within 100 miles of the
boundary of a national forest covered by the Federal document entitled,
``Forest Plan for a Sustainable Economy and a Sustainable
Environment,'' dated July 1, 1993; and
(2) The community is located in a county in which at least 15
percent of the total primary and secondary labor and proprietor income
is derived from forestry, wood products, or forest-related industries
such as recreation and tourism.
Sec. 1780.8 [Reserved]
Sec. 1780.9 Eligible loan and grant purposes.
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.
[[Page 33481]]
(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 Sec. 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.
Sec. 1780.10 Limitations.
(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 Sec. 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 and 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
[[Page 33482]]
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 Sec. 1780.35 (b).
Sec. 1780.11 Service area requirements.
(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
Sec. 1780.39(c)(4)(ii); or
(3) Developers paying cash for the increased capital cost and any
increased operating expenses until the developing area will support the
increased costs; or
(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.
Sec. 1780.12 [Reserved]
Sec. 1780.13 Rates and terms.
(a) General. (1) Each loan will bear interest at the rate
prescribed in RD Instruction 440.1, exhibit B. The interest rates will
be set by the Agency for each quarter of the fiscal year. All rates
will be adjusted to the nearest one-eighth of one per centum. The rate
will be the lower of the rate in effect at the time of loan approval or
the rate in effect at the time of loan closing unless the applicant
otherwise chooses.
(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) Poverty rate. The poverty interest rate will not exceed 5 per
centum per annum. All poverty rate loans must comply with the following
conditions:
(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) Intermediate rate. The intermediate interest rate will be set
at the poverty rate plus one-half of the difference between the poverty
rate and the market rate, not to exceed 7 percent per annum. It will
apply to loans that do not meet the requirements for the poverty rate
and for which the median household income of the service area is not
more than 100 percent of the nonmetropolitan median household income of
the State.
(d) Market rate. The market interest rate will be set using as
guidance the average of the Bond Buyer (11-GO Bond) Index for the four
weeks prior to the first Friday of the last month before the beginning
of the quarter. The market rate will apply to all loans that do not
qualify for a different rate under paragraph (b) or (c) of this
section.
(e) Repayment terms. The loan repayment period shall not exceed the
useful life of the facility, State statute or 40 years from the date of
the note or bond, whichever is less. Where RUS grant funds are used in
connection with an RUS loan, the loan will be for the maximum term
permitted by this part, State statute, or the useful life of the
facility, whichever is less, unless there is an exceptional case where
circumstances justify making an RUS loan for less than the maximum term
permitted. In such cases, the reasons must be fully documented.
(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) Payment date. Loan payments will be scheduled to coincide with
income availability and be in accordance with State law. If State law
only permits principal plus interest (P&I) type bonds, annual or
semiannual payments will be used. Insofar as practical monthly payments
will be scheduled one full month following the date of loan closing; or
semiannual or annual payments will be scheduled six or twelve full
months, respectively,
[[Page 33483]]
following the date of loan closing or any deferment period. Due dates
falling on the 29th, 30th or 31st day of the month will be avoided.
(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.
Sec. 1780.14 Security.
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) Public bodies. Loans to such borrowers, including Federally
recognized Indian tribes as appropriate, will be evidenced by notes,
bonds, warrants, or other contractual obligations as may be authorized
by relevant laws and by borrower's documents, resolutions, and
ordinances. Security, in the following order of preference, will
consist of:
(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) Other-than-public bodies. Loans to other-than-public body
applicants and Federally recognized Indian tribes, as appropriate, will
be secured in the following order of preference:
(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) Joint financing security. For projects utilizing joint
financing, when adequate security of more than one type is available,
the other lender may take one type of security with RUS taking another
type. For projects utilizing joint financing with the same security to
be shared by RUS and another lender, RUS will obtain at least a parity
position with the other lender. A parity position is to ensure that
with joint security, in the event of default, each lender will be
affected on a proportionate basis. A parity position will conform with
the following unless an exception is granted by the approval official:
(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 funding unless required to comply with State law. The
responsibilities and authorities of any trustee or other similar paying
agent on projects that include RUS funds must be clearly specified by
written agreement and approved by the State program official and the
Office of the General Counsel (OGC). RUS must be able to deal directly
with the borrower to enforce the provisions of loan and grant
agreements and perform necessary servicing actions.
(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.
Sec. 1780.15 Other Federal, State, and local requirements.
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.
Sec. 1780.16 [Reserved]
Sec. 1780.17 Selection priorities and process.
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) Population priorities. (1) The proposed project will primarily
serve a rural area having a population not in excess of 1,000--25
points;
(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) Health priorities. The proposed project is:
(1) Needed to alleviate an emergency situation, correct
unanticipated diminution or deterioration of a water supply, or to meet
Safe Drinking Water
[[Page 33484]]
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) Median household income priorities. The median household income
of the population to be served by the proposed project is:
(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) Other priorities. (1) The proposed project will: merge
ownership, management, and operation of smaller facilities providing
for more efficient management and economical service--15 points;
(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) Cost overruns. An application may receive consideration for
funding before others at the State or National Office level when it is
a subsequent request for a previously approved project which has
encountered construction cost overruns. The cost overruns must be due
to high bids or unexpected construction problems that cannot be reduced
by negotiations, redesign, use of bid alternatives, rebidding or other
means. Cost overruns exceeding 20% of the development cost at time of
loan or grant approval or where the scope of the original purpose has
changed will not be considered under this paragraph.
(g) National office priorities. In selecting projects for funding
at the National Office level State program official points may or may
not be considered. The Administrator may assign up to 15 additional
points to account for items such as geographic distribution of funds,
the highest priority projects within a state, and emergency conditions
caused by economic problems or natural disasters. The Administrator may
delegate the authority to assign the 15 points to appropriate National
Office staff.
Sec. 1780.18 Allocation of program funds.
(a) General. (1) The purpose of this part is to set forth the
methodology and formulas by which the Administrator of the RUS
allocates program funds to the States. (The term ``State'' means any of
the States of the United States, the Commonwealth of Puerto Rico, any
territory or possession of the United States, or the Western Pacific
Areas.)
(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) Definitions.--(1) Amount available for allocations. Funds
appropriated or otherwise made available to the Agency for use in
authorized programs. On occasion, the allocation of funds to States may
not be practical for a particular program due to funding or
administrative constraints. In these cases, funds will be controlled by
the National Office.
(2) Basic formula criteria, data source and weight. Basic formulas
are used to calculate a basic State factor as a part of the methodology
for allocating funds to the States. The formulas take a number of
criteria that reflect the funding needs for a particular program and
through a normalization and weighting process for each of the criteria
calculate the basic State factor (SF). The data sources used for each
criteria are believed to be the most current and reliable information
that adequately quantifies the criterion. The weight, expressed as a
percentage, gives a relative value to the importance of each of the
criteria.
(3) Basic formula allocation. The result of multiplying the amount
available for allocation less the total of any amounts held in reserve
or distributed by base or administrative allocation times the basic
State factor for each State. The basic formula allocation (BFA) for an
individual State is equal to:
BFA=(Amount available for allocation-NO reserve-total base and
administrative allocations) x SF.
(4) Transition formula. (i) A formula based on a proportional
amount of previous year allocation used to maintain program continuity
by preventing large fluctuations in individual State allocations. The
transition formula limits allocation shifts to any particular State in
the event of changes from year to year of the basic formula, the basic
criteria, or the weights given the criteria. The transition formula
first checks whether the current year's basic formula allocation is
within the transition range (plus or minus 20 percentage points of the
proportional amount of the previous year's BFA). The formula follows:
[GRAPHIC] [TIFF OMITTED] TR19JN97.000
(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
[[Page 33485]]
performed this transition adjustment for each State, the sum o
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