Source: https://www.federalregister.gov/documents/2004/10/06/04-22448/household-water-well-system-grant-program
Timestamp: 2018-09-20 14:32:28
Document Index: 139119404

Matched Legal Cases: ['art 1776', '§\u20091776', 'art 3015', 'art 3019', '§\u20091776', '§\u20091776', '§\u20091776', '§\u20091776', '§\u20091776', '§\u20091776', '§\u20091776', '§\u20091776', '§\u20091776', '§\u20091776', '§\u20091776', '§\u20091776', '§\u20091776', '§\u20091776', '§\u20091776']

Federal Register :: Household Water Well System Grant Program
A Rule by the Rural Utilities Service on 10/06/2004
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.
69 FR 59764
59764-59770 (7 pages)
04-22448
https://www.federalregister.gov/d/04-22448 https://www.federalregister.gov/d/04-22448
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 Start Printed Page 59765individually-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.
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.
E-mail: RUSComments@usda.gov. Include in the subject line of the message “7 CFR 1776.”
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.
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.
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.
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 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.
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.
Respondents: Not for profit institutions and Business or other for profit.
Estimated Total Annual Burden on Respondents: 401 hours.
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. Start Printed Page 59766
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.
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 Start Printed Page 59767individuals 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.
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:
Uniform Federal Assistance Provisions.
Use of grant proceeds.
Eligibility to receive a HWWS loan.
Revolving loan fund maintenance.
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.
§ 1776.2
(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.
Administrative expenses means expenses incurred by a grant recipient that are of the type more particularly described in § 1776.13.
Applicant means a private, nonprofit organization that applies for a HWWS grant under this part.
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.
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.
§ 1776.4
§ 1776.5
(c) The applicant must have legal capacity and lawful authority to perform the obligations of a grant recipient under this part.
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.
If the organization is an unincorporated association, state law may prevent the organization from entering into binding contracts, such as a grant agreement.
(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 Start Printed Page 59768initial 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.
§ 1776.7
(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.
(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.
(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.
§ 1776.9
(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.
(5) Extent to which the goals and objectives are clearly defined, tied to the work plan, and are measurable. Up to 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.
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.
§ 1776.11
The grant recipient shall establish and maintain a revolving loan fund for the purposes set forth in § 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 § 1776.17.
(a) Except as otherwise provided in paragraph (b) of this section, HWWS grant proceeds shall be used solely for Start Printed Page 59769the 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.
§ 1776.13
(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.
(d) Allowability of administrative expense costs shall be determined in accordance with 7 CFR 3019.27.
§ 1776.14
(3) Shall not exceed $8,000 for each household water well system.
§ 1776.16
(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 § 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.
§ 1776.17
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 § 1776.13.
(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.
§ 1776.18
The information collection requirements in this part are approved by the Office of Management and Budget (OMB) and assigned OMB control number 0572-0139.
[FR Doc. 04-22448 Filed 10-5-04; 8:45 am]