[Federal Register: October 6, 2004 (Volume 69, Number 193)]
[Rules and Regulations]
[Page 59764-59770]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06oc04-3]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1776
RIN 0572-AB93
Household Water Well System Grant Program
AGENCY: Rural Utilities Service, USDA.
ACTION: Direct final rule.
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SUMMARY: The Rural Utilities Service (RUS), an agency delivering the
United States Department of Agriculture's Rural Development Utilities
Programs, is issuing regulations in order to establish the Household
Water System Program as authorized by section 306E of the Consolidated
Farm and Rural Development Act (CONACT). This direct final rule will
establish a lending program for the construction, refurbishing, and
servicing of
[[Page 59765]]
individually-owned household water well systems in rural areas that are
or will be owned by the eligible individuals. In addition, the rule
outlines the process by which applicants can apply for the program and
how RUS will administer the grant program.
DATES: This rule will become effective November 22, 2004, unless RUS
receives written adverse comments or a written notice of intent to
submit adverse comments on or before November 5, 2004. If RUS receives
such comments or notice, RUS will publish a timely notice in the
Federal Register withdrawing the rule. Comments received will be
considered under the proposed rule published in this edition of the
Federal Register in the proposed rule section. A second public comment
period will not be held. Comments must be received by RUS or carry a
postmark or equivalent no later than November 5, 2004.
Comments regarding the information collection requirements under
the Paperwork Reduction Act must be received on or before December 6,
2004, to be assured of consideration.
ADDRESSES: Submit adverse comments or notice of intent to submit
adverse comments by any of the following methods:
Federal eRulemaking Portal: Go to http://www.regulations.gov.
Follow the online instructions for submitting
comments.
Agency Web Site: http://www.usda.gov/rus/index2/Comments.htm.
Follow the instructions for submitting comments. E-mail: RUSComments@usda.gov. Include in the subject line
of the message ``7 CFR 1776.''
Mail: Addressed to Richard Annan, Acting Director, Program
Development and Regulatory Analysis, Rural Utilities Service, United
States Department of Agriculture, 1400 Independence Avenue, SW., STOP
1522, Washington, DC 20250-1522.
Hand Delivery/Courier: Addressed to Richard Annan, Acting
Director, Program Development and Regulatory Analysis, Rural Utilities
Service, United States Department of Agriculture, 1400 Independence
Avenue, SW., Room 5168-S, Washington, DC 20250-1522.
Instructions: All submissions received must include RUS and the
subject heading ``7 CFR 1776''. All comments received must identify the
name of the individual (and the name of the entity, if applicable) who
is submitting the comment. All comments received will be posted without
change to http://www.usda.gov/rus/index2/Comments.htm, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT: Cheryl Francis, Loan Specialist, Water
Programs Division, Rural Utilities Service, U.S. Department of
Agriculture, 1400 Independence Avenue, SW., Room 2239-S, Stop 1570,
Washington, DC 20250-1570. Telephone (202) 720-1937. E-Mail:
Cheryl.Francis@usda.gov.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be not significant for the
purposes of Executive Order 12866 and, therefore, has not been reviewed
by the Office of Management and Budget (OMB).
Executive Order 12372
This program is not subject to the requirements of Executive Order
12372, ``Intergovernmental Review of Federal Programs,'' as implemented
under USDA's regulations at 7 CFR part 3015.
Executive Order 12988
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. RUS has determined that this rule meets the applicable
standards provided in section 3 of the Executive Order. In addition,
all State and local laws and regulations that are in conflict with this
rule will be preempted; no retroactive effect will be given to the
rule; and, in accordance with Section 212(e) of the Department of
Agriculture Reorganization Act of 1994 (7 U.S.C. section 6912(e))
administrative appeal procedures, if any are required, must be
exhausted prior to initiating any action against the Department or its
agencies.
Regulatory Flexibility Act Certification
It has been determined that the Regulatory Flexibility Act is not
applicable to this rule since the Rural Utilities Service is not
required by 5 U.S.C. 551 et seq. or any other provision of the law to
publish a notice of final rule making with respect to the subject
matter of this rule.
Information Collection and Recordkeeping Requirements
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
chapter 35), RUS invites comments on this information collection for
which RUS intends to request approval from the Office of Management and
Budget (OMB). These requirements have been approved by emergency
clearance under OMB Control Number 0572-0139.
Comments on this notice must be received by December 6, 2004.
Comments are invited on (a) whether the collection of information
is necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility; (b) the
accuracy of the agency's estimate of burden including the validity of
the methodology and assumption used; (c) ways to enhance the quality,
utility and clarity of the information to be collected; and (d) ways to
minimize the burden of the collection of information on those who are
to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology.
Comments may be sent to Michele Brooks, Management Analyst, Program
Development and Regulatory Analysis, Rural Utilities Service, U.S.
Department of Agriculture, 1400 Independence Ave., SW., Stop 1522, Room
5168 South Building, Washington, DC 20250-1522. FAX: (202) 720-4120. E-
mail: michele.brooks@usda.gov.
Title: 7 CFR 1776, Household Water System Program.
Type of Request: Extension of a currently approved collection.
Abstract: The Household Water System program will provide grant
funds to establish a lending program for the construction,
refurbishing, and servicing of individually-owned household water well
systems in rural areas that are or will be owned by the eligible
individuals. The collection of information covered by this Notice
consists of forms, certifications, and written materials in support of
an application for a grant. Failure to collect proper information could
result in improper determinations of eligibility, improper use of
funds, or hindrances in making grant(s) authorized by the Household
Water System Program.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 6 hours per response.
Respondents: Not for profit institutions and Business or other for
profit.
Estimated Number of Respondents: 5.
Estimated Number of Responses per Respondent: 13.
Estimated Total Annual Burden on Respondents: 401 hours.
Copies of this information collection can be obtained from Michele
Brooks, Program Development and Regulatory Analysis, at (202) 690-1078.
All responses to this information collection and recordkeeping
notice will be summarized and included in the request for OMB approval.
All comments will also become a matter of public record.
[[Page 59766]]
National Environmental Policy Act Certification
The Administrator of RUS has determined that this rule will not
significantly affect the quality of the human environment as defined by
the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
Therefore, this action does not require an environmental impact
statement or assessment.
Catalog of Federal Domestic Assistance
The program described by this rule is listed in the Catalog of
Federal Domestic Assistance Programs under number 10.862. This catalog
is available on a subscription basis from the Superintendent of
Documents, the United States Government Printing Office, Washington,
DC, 20402-9325, telephone number (202) 512-1800.
Unfunded Mandates
This rule contains no Federal mandates (under the regulatory
provision of Title II of the Unfunded Mandates Reform Act of 1995) for
State, local, and tribal governments or the private sector. Thus this
rule is not subject to the requirements of section 202 and 205 of the
Unfunded Mandates Reform Act of 1995.
Executive Order 13132, Federalism
The policies contained in this rule do not have any substantial
direct effect on states, on the relationship between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government. Nor does this
rule impose substantial direct compliance costs on state and local
governments. Therefore, consultation with states is not required.
Background
On May 13, 2002, the Farm Security and Rural Investment Act of 2002
(Farm Bill) was signed into law as Public Law 107-171. The CONACT was
amended by section 6012 of the Farm Bill, by adding a grant program to
establish a lending program. For this program, the Secretary may make
grants to private nonprofit organizations for the purpose of providing
loans to eligible individuals for the construction, refurbishing, and
servicing of individual household water well systems in rural areas
that are or will be owned by the eligible individuals.
The CONACT defines an ``eligible individual'' to mean an individual
who is a member of a household the members of which have a combined
income (for the most recent 12-month period for which the information
is available) that is not more than 100 percent of the median
nonmetropolitan household income for the State or territory in which
the individual resides, according to the most recent decennial census
of the United States.
This program is authorized to be appropriated $10,000,000 for
fiscal years (FY) 2003 through 2007.
There was no funding appropriated in FY 2003. However, the
Consolidated Appropriations Act, 2004, Public Law 108-199 (Jan. 23,
2004; 118 Stat.3) includes $1,000,000 for the grant program in FY 2004.
Due to the modest size of this program and the maximum dollar
amount of loans to be made hereunder, RUS has determined that loans
maybe serviced, if approved by USDA, through the USDA Centralized
Servicing Center to enhance standardized servicing and minimize related
servicing fees. To reduce duplicative promulgation of specific rules
regarding grants and loans hereunder, RUS has referenced existing USDA
rules to the extent practicable, including references to specific
regulations and standard forms.
A notice of inquiry was published in the Federal Register on
February 10, 2004 (69 FR 6251) requesting comments on the Household
Water System grant program. RUS received a total of 15 comments. All
comments received were taken into consideration in developing the
regulation. The following is a brief summary of the comments received.
Grantees' experience with household water systems. All the
commenters felt that the grantee should have extensive experience with
household water systems. Due to the complexity of household water
systems, RUS feels that an organization must have extensive experience
working with household water systems in order to assess solutions,
determine cost factors, and how to best fulfill the needs of the rural
residents utilizing these systems. In accordance with the requirements
in the authorizing legislation of the CONACT, RUS will give priority to
applicants with such experience.
Matching funds. Half of the commenters felt RUS should not require
a matching fund component while the other half were in favor of a
matching fund requirement. Due to the small amount of funding
appropriated to this program, RUS feels it is necessary to require
grant recipients to contribute funds from sources other than the
proceeds of a HWWS grant to pay part of the cost of a loan recipient's
project. As a result of such contributions, the widest number of rural
residents practicable may benefit from this program.
Percentage of financing. Many commenters felt the program should
offer 100 percent financing. They also felt the program should be for
low-income communities and that RUS should not require the eligible
individual to contribute to the cost. RUS will allow 100 percent
financing on these projects; however, the project costs can not exceed
the statutory limit. In situations where the costs exceed the statutory
limit of $8,000 per household water well system, the eligible
individual will be required to cover the additional costs.
Administrative fees. Many commenters felt RUS should allow
administrative fees, and the limit on those fees ranged from 8 percent
to 20 percent. RUS will allow administrative fees to be an eligible
grant purpose; however, the administrative costs cannot exceed 10
percent of the total grant funds loaned annually. These costs also must
be clearly identified in the workplan.
Use of Centralized Servicing Center. The majority of commenters
were in favor of using the Centralized Servicing Center (CSC). Some
felt if the grantee has a similar program in place, the servicing
should remain with the grantee. Due to the modest size of this program
and the maximum dollar amount of loans to be made hereunder, RUS has
determined that loans may be serviced, if approved by USDA, through the
USDA Centralized Servicing Center to enhance standardized servicing and
minimize related servicing fees.
Credit elsewhere. Some commenters felt a denial letter would be
sufficient evidence to show an inability to acquire credit elsewhere.
Others felt RUS should use the credit report and income verification to
satisfy the credit elsewhere requirement. RUS will require the grantee
to obtain sufficient evidence that the eligible individual is unable to
obtain financial assistance at reasonable terms and conditions from
other non-RD sources, and lacks the personal resources to meet their
needs. In addition, the eligible individual must demonstrate adequate
repayment ability as supported by a budget, and they must have a credit
history that indicates reasonable ability and willingness to meet debt
obligations.
Eligible and ineligible purposes. A couple of commenters felt newly
built homes and wells for uses other than potable water should be
eligible for the program. Most felt the repair or replacement of
failing well systems should be eligible. RUS will follow the
authorizing legislation and require that grant proceeds be used solely
for the purpose of providing loans to eligible
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individuals for the construction, refurbishing, and servicing of
individual household water well systems in rural areas that are or will
be owned by the eligible individuals.
List of Subjects in 7 CFR Part 1776
Agriculture, Community development, Community facilities, Credit,
Grant programs-housing and community development, Nonprofit
organizations, Reporting and recordkeeping requirements, Rural areas,
Waste treatment and disposal, Water pollution control, Water resources,
Water supply, Watersheds.
0
For reasons set forth in the preamble, RUS amends 7 CFR chapter XVII of
Title 7 of the Code of Federal Regulations by adding a new part 1776 to
read as follows:
PART 1776--HOUSEHOLD WATER WELL SYSTEM GRANT PROGRAM
Subpart A--General
Sec.
1776.1 Purpose.
1776.2 Uniform Federal Assistance Provisions.
1776.3 Definitions.
1776.4 [Reserved]
Subpart B--HWWS Grants
1776.5 Eligibility to receive a grant.
1776.6 Notice of availability of funds.
1776.7 Grant application process.
1776.8 Methods for submitting applications.
1776.9 Scoring applications.
1776.10 Grant agreement.
1776.11 Revolving loan fund.
1776.12 Use of grant proceeds.
1776.13 Administrative expenses.
Subpart C--HWWS Loans
1776.14 Eligibility to receive a HWWS loan.
1776.15 Terms of loans.
1776.16 Loan servicing.
1776.17 Revolving loan fund maintenance.
1776.18 OMB control number.
Authority: 7 U.S.C. 1926e.
Subpart A--General
Sec. 1776.1 Purpose.
This part sets forth the policies and procedures for making grants
to private, nonprofit organizations to finance the construction,
refurbishing and servicing of individually-owned household water well
systems in rural areas for individuals with low or moderate income.
Sec. 1776.2 Uniform Federal Assistance Provisions.
(a) This program is subject to the general provisions that apply to
all grants made by USDA and that are set forth in 7 CFR Part 3015--
Uniform Federal Assistance Regulations.
(b) This program is subject to the uniform administrative
requirements that apply to all grants made by USDA to non-profit
organizations and that are set forth in 7 CFR Part 3019--Uniform
Administrative Requirements for Grants And Agreements with Institutions
of Higher Education, Hospitals, and Other Non-Profit Organizations.
(c) This program is subject to OMB Circular No. A-122 (Revised):
Cost Principles for Non-Profit Organizations.
Sec. 1776.3 Definitions.
Administrative expenses means expenses incurred by a grant
recipient that are of the type more particularly described in Sec.
1776.13.
Applicant means a private, nonprofit organization that applies for
a HWWS grant under this part.
Centralized Servicing Center (CSC) means the centralized loan
servicing center within the United States Department of Agriculture,
Rural Development. CSC provides nationwide services for borrowers that
have received financing from Rural Development programs.
Construction means building or assembling a water well system or
portion thereof, that is not a water well system or portion thereof
being constructed in connection with a new building.
Eligible individual means an individual who is a member of a
household the members of which have a combined income (for the most
recent 12-month period for which the information is available) that is
not more than 100 percent of the median nonmetropolitan household
income for the State of territory in which the individual resides,
according to the most recent decennial census of the United States.
Grant agreement means the contract between RUS and the grant
recipient which sets forth the terms and conditions governing a
particular grant awarded under this part.
Grant recipient means an applicant that has been awarded a HWWS
grant under this part.
HWWS means household water well system.
HWWS grant means a grant awarded by RUS to a grant recipient under
this part.
HWWS loan means a loan made by a grant recipient to a loan
recipient using the direct or indirect proceeds of a HWWS grant awarded
under this part.
Loan recipient means an eligible individual who has received a HWWS
loan.
Refurbishing means to renovate or to restore a water well system or
portion thereof to near new condition.
Revolved funds means the cash portion of the revolving loan fund
that is not composed of HWWS grant funds, including repayments of
revolving HWWS loans, fees and interest collected on HWWS loans.
Revolving loan fund means the loan fund established by the grant
recipient to carry out the purposes of this part, such fund comprising
the proceeds of a HWWS grant and other related assets.
Rural area means any area other than a city or town that has a
population of greater than 50,000 inhabitants; and the urbanized area
contiguous and adjacent to such city or town.
RUS means the Rural Utilities Service, a Federal agency delivering
the United States Department of Agriculture's Rural Development
Utilities Program.
Servicing means making repairs or performing maintenance on a water
well system or portion thereof.
USDA means the United States Department of Agriculture.
Sec. 1776.4 [Reserved]
Subpart B--HWWS Grants
Sec. 1776.5 Eligibility to receive a grant.
(a) The applicant must be a private organization.
(b) The applicant must be organized as a non-profit organization.
(c) The applicant must have legal capacity and lawful authority to
perform the obligations of a grant recipient under this part.
Example 1 to paragraph (c): If the organization is incorporated
as a non-profit corporation, it must have corporate authority under
state law and its corporate charter to engage in the practice of
making loans to individuals.
Example 2 to paragraph (c): If the organization is an
unincorporated association, state law may prevent the organization
from entering into binding contracts, such as a grant agreement.
(d) The applicant must have sufficient expertise and experience in
lending and in promoting the safe and productive use of individually-
owned household water well systems and ground water to assure the
likelihood that the objectives of this part can be achieved.
Sec. 1776.6 Notice of availability of funds.
(a) In Fiscal Year 2004, applications will be accepted for this
program from October 6, 2004, until December 6, 2004, at which time the
initial application period shall close. An applicant may withdraw,
substitute, amend or supplement its application at any time prior to
the closing of the initial application period. Once the
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initial application period has closed, all applications shall be
considered final.
(b) For subsequent fiscal years, if any funds for this program are
available, the Secretary will publish a notice to that effect. The
notice will establish the period during which applications for such
funds may be submitted for consideration.
Sec. 1776.7 Grant application process.
(a) The applicant must complete and submit the following standard
forms to RUS to apply for a HWWS grant under this part:
(1) Application for Federal Assistance: Standard Form 424,
(2) Budget Information--Non-Construction Programs: Standard Form
424A, and
(3) Assurances--Non-Construction Programs: Standard Form 424B.
(b) The applicant must submit a written work plan that demonstrates
the feasibility of the applicant's lending program to meet the
objectives of this part.
(c) The applicant should submit a narrative establishing the basis
for any claims that it has substantial expertise in promoting the safe
and productive use of individually-owned household water well systems.
The Secretary will give priority to an applicant that demonstrates it
has substantial experience of this type.
(d) The applicant must submit:
(1) A pro forma balance sheet at start-up and projected balance
sheets for at least 3 additional years,
(2) Financial statements for the last 3 years, or from inception of
the operations of the grant recipient if less than 3 years, and
(3) Projected cash flow and earnings statements for at least 3
years, supported by a list of assumptions showing the basis for the
projections. The projected earnings statement and balance sheets must
include one set of projections specific to the revolving loan fund, and
a separate set of projections that detail the proposed applicant
organization's total operations.
(e) The applicant may submit such additional information as it
elects to support and describe its plan for achieving the objectives of
this part.
Sec. 1776.8 Methods for submitting applications.
(a) Applications for HWWS grants may be submitted by U.S. Mail.
Applications submitted by mail must be addressed as follows: Rural
Utilities Service, U.S. Department of Agriculture, 1400 Independence
Avenue, SW., STOP 1548, Washington, DC 20250-1548. The outside of the
application should be marked: ``Attention: Assistant Administrator,
Water and Environmental Programs.'' Applications submitted by mail must
be postmarked not later than the filing deadline to be considered
during the period for which the application was submitted.
(b) In lieu of submitting an application by U.S. Mail, an applicant
may file its application electronically by using the Federal
Government's eGrants Web site (Grants.gov) at http://www.grants.gov.
Applicants should refer to instructions found on the Grants.gov Web
site for procedures for registering and using this facility. Applicants
who have not previously registered on Grants.gov should allow a
sufficient number of business days to complete the process necessary to
be qualified to apply for Federal Government grants using electronic
submissions. Electronic submissions must be filed not later than the
filing deadline to be considered during the period for which the
application was submitted.
(c) The methods of submitting applications may be changed from time
to reflect changes in addresses and electronic submission procedures.
Applicants should refer to the most recent notice of funding
availability for notice of any such changes. In the event of any
discrepancy, the notice must be followed.
Sec. 1776.9 Scoring applications.
(a) Applications that are incomplete or ineligible will be returned
to the applicant, accompanied by a statement explaining why the
application is being returned.
(b) Promptly after an application period closes, all applications
that are complete and eligible will be ranked competitively based on
the following scoring criteria:
(1) Degree of expertise and experience in promoting the safe and
productive use of individually-owned household water well systems and
ground water. Up to 30 points
(2) Degree of expertise and successful experience in making and
servicing loans to individuals. Up to 20 points
(3) Percentage of applicant contributions. Points allowed under
this paragraph will be based on written evidence of the availability of
funds from sources other than the proceeds of a HWWS grant to pay part
of the cost of a loan recipient's project. In-kind contributions will
not be considered. Funds from other sources as a percentage of the HWWS
grant and points corresponding to such percentages are as follows:
(i) Less than 25 percent--ineligible;
(ii) Greater than 25 percent but not more than 30 percent of the
total project costs--5 points;
(iii) Greater than 30 percent but not more than 50 percent of the
total project costs--10 points; and
(iv) Over 50 percent of the total project costs--20 points.
(4) Extent to which the work plan demonstrates a well thought out,
comprehensive approach to accomplishing the objectives of this part,
clearly defines who will be served by the project, and appears likely
to be sustainable. Up to 20 points
(5) Extent to which the goals and objectives are clearly defined,
tied to the work plan, and are measurable. Up to 10 points
(6) Lowest ratio of projected administrative expenses to loans
advanced. 10 points
(7) Administrator's discretion, considering such factors as
creative outreach ideas for marketing HWWS loans to rural residents,
the amount of funds requested in relation to the amount of needs
demonstrate in the work plan, previous experiences demonstrating
excellent utilization of a revolving loan fund grant, and optimizing
the use of agency resources. Up to 10 points
(c) All qualifying applications under this part will be scored
based on the criteria contained in this section. Awards will be made
based on the highest ranking applications and the amount of financial
assistance available for HWWS grants. Each applicant will be notified
in writing of the score its application receives.
Sec. 1776.10 Grant agreement.
RUS and the grant recipient will enter into a contract setting
forth the terms and conditions governing a particular HWWS grant award.
RUS will furnish the form of grant agreement. No funds awarded under
this part shall be disbursed to the grant recipient before the grant
agreement is binding and RUS has received a fully executed counterpart
of the grant agreement.
Sec. 1776.11 Revolving loan fund.
The grant recipient shall establish and maintain a revolving loan
fund for the purposes set forth in Sec. 1776.12. All loans made to
loan recipients shall be drawn from the revolving loan fund. Such loans
shall be serviced, and the revolving loan fund shall be maintained, as
set forth in Sec. 1776.17.
Sec. 1776.12 Use of grant proceeds.
(a) Except as otherwise provided in paragraph (b) of this section,
HWWS grant proceeds shall be used solely for
[[Page 59769]]
the purpose of providing loans to eligible individuals for the
construction, refurbishing, and servicing of individual household water
well systems in rural areas that are or will be owned by the eligible
individuals.
(b) A grant recipient may use HWWS grant funds to pay
administrative expenses associated with providing the assistance
described in paragraph (a) of this section.
(c) A grant recipient may not use grant funds in any manner
inconsistent with the terms of the grant agreement.
Sec. 1776.13 Administrative expenses.
(a) Subject to the limitations provided in the paragraphs (b), (c)
and (d) of this section, the grant recipient may use grant funds to pay
administrative expenses associated with providing HWWS loans.
(b) Administrative expenses incurred in any calendar year which
exceed ten percent of the HWWS loans made by the grant recipient during
that same period do not qualify for reimbursement.
(c) Administrative expenses incurred prior to the execution of the
grant agreement by RUS do not qualify for reimbursement.
(d) Allowability of administrative expense costs shall be
determined in accordance with 7 CFR 3019.27.
Subpart C--HWWS Loans
Sec. 1776.14 Eligibility to receive a HWWS loan.
(a) The loan recipient must be an eligible individual.
(b) The loan recipient must either own and occupy the home being
improved with the proceeds of the HWWS loan, or be occupying the home
as the purchaser under a legally enforceable land purchase contract
which is not in default by either the seller or the purchaser.
(c) The home using the water well system being funded from proceeds
of the HWWS loan must be located in a rural area.
(d) The water well system being funded from the proceeds of the
HWWS loan may not be associated with the construction of a new
dwelling.
(e) The water well system being funded from the proceeds of the
HWWS loan may not be used to substitute for water service available
from collective water systems. Example: Loan recipient wishes to
restore an old well which had been abandoned when the dwelling was
connected to a water line belonging to a water district.
(f) A loan recipient must not be suspended or debarred from
participation in Federal programs.
Sec. 1776.15 Terms of loans.
(a) HWWS loans under this part--
(1) Shall have an interest rate of 1 percent;
(2) Shall have a term not to exceed 20 years; and
(3) Shall not exceed $8,000 for each household water well system.
(b) The grant recipient must set forth the HWWS loan terms in
written documentation signed by the loan recipient.
(c) Grant recipients must develop and use HWWS loan documentation
that conforms to the terms of this part, the grant agreement, and the
laws of the state or states having jurisdiction.
Sec. 1776.16 Loan servicing.
(a) If RUS determines that HWWS loans may be serviced by CSC, then
the grant recipient will enter into an agreement with the Centralized
Servicing Center for servicing all HWWS loans made from the revolving
loan fund. All HWWS loan payments will be received by and processed at
the Centralized Servicing Center. The grant recipient will be charged a
fee for this service, and such fee should be included in the projected
financial statements and work plan submitted as part of the grant
application. This fee may be reimbursed as an administrative expense as
provided in Sec. 1776.13.
(b) If RUS determines that CSC is not able to service HWWS loans,
then the grant recipient shall be responsible for servicing, or causing
to be serviced, all HWWS loans. Servicing will include preparing loan
agreements, processing loan payments, reviewing financial statements
and debt reserves balances, and other responsibilities such as
enforcement of loan terms. Loan servicing will be in accordance with
the work plan approved by RUS when the grant is awarded for as long as
any loan made in whole or in part with RUS grant funds is outstanding.
Sec. 1776.17 Revolving loan fund maintenance.
For as long as any part of the HWWS grant remains available for
lending, and loans made from the revolving loan fund have an
outstanding balance due, the grant recipient must maintain the
revolving loan fund for the purposes set forth in Sec. 1776.13.
(a) All HWWS grant funds received by a grant recipient must be
deposited into the revolving loan fund.
(b) The grant recipient may transfer additional assets into the
revolving loan fund.
(c) All cash and other assets of the revolving loan fund shall be
deposited in a separate bank account or accounts.
(d) No cash or other assets of any other fund maintained by the
grant recipient shall be commingled with the cash and other assets of
the revolving loan fund.
(e) All moneys deposited in such bank account or accounts shall be
money of the revolving loan fund.
(f) Loans to loan recipients are advanced from the revolving loan
fund.
(g) The receivables created by making loans, the grant recipient's
security interest in collateral pledged by loan recipients, collections
on the receivables, interest, fees, and any other income or assets
derived from the operation of the revolving loan fund are a part of the
revolving loan fund.
(h) The portion of the revolving loan fund that consists of HWWS
grant funds, on a last-in-first-out basis, may only be used for those
purposes set forth in this part.
(i) The grant recipient must submit an annual budget of proposed
administrative costs for RUS approval. The amount removed from the
revolving loan fund for administrative costs in any year must be
reasonable, must not exceed the actual cost of operating the revolving
loan fund, including loan servicing and providing technical assistance,
and must not exceed the amount approved by RUS in the grant recipient's
annual budget.
(j) A reasonable amount of revolved funds must be used to create a
reserve for bad debts. Reserves should be accumulated over a period of
years. The total amount should not exceed maximum expected losses,
considering the quality of the grant recipient's portfolio of loans.
Unless the grant recipient provides loss and delinquency records that,
in the opinion of RUS, justifies different amounts, a reserve for bad
debts of 6 percent of outstanding loans must be accumulated over 3
years and then maintained as set forth in the grant agreement.
(k) Any cash in the revolving loan fund from any source that is not
needed for debt service, approved administrative costs, or reasonable
reserves must be available for additional loans to loan recipients.
(l) All reserves and other cash in the revolving loan fund not
immediately needed for loans to loan recipients or other authorized
uses must be deposited in accounts in banks or other financial
institutions. Such accounts must be fully covered by Federal deposit
insurance or fully collateralized with U.S. Government obligations, and
must be interest bearing. Any interest earned thereon remains a part of
the revolving loan fund.
[[Page 59770]]
Sec. 1776.18 OMB control number.
The information collection requirements in this part are approved
by the Office of Management and Budget (OMB) and assigned OMB control
number 0572-0139.
Dated: September 2, 2004.
Curtis M. Anderson,
Acting Administrator, Rural Utilities Service.
[FR Doc. 04-22448 Filed 10-5-04; 8:45 am]
BILLING CODE 3410-15-P