An Act to amend the Consolidated Farmers Home Administration Act of 1961 to authorize the Secretary of Agriculture to make or insure loans to public and quasi public agencies and corporations not operated for profit with respect to water supply, water systems, and waste disposal systems serving rural areas and to make grants to aid in rural community development planning and in connection with the construction of such community facilities, to increase the annual aggregate of insured loans thereunder, and for other purposes
PL 89-240 (S.1766), enacted 10/07/1965

79 STAT. ] 
PUBLIC LAW 89-240-OCT. 7, 1965 
931 
42 u s e :20lnote. 
(b) The Act of July 1, 1944 (58 Stat. 682), as amended, is further 
amended by renumbernig title I X (as in effect prior to the enactment 
of this Act) as title X, and by renumbering sections 901 through 914 
(as in effect prior to the enactment of this Act), and references thereto, 
as sections 1001 through 1014, respectively. 
Approved October 6, 1965, 10:15 a.m. 
Public Law 89-240 
AN A C T 
October 7, 1965 
To amend the Consolidated Farmers Home Administration Act of 1961 to 
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authorize the Secretary of Agriculture to make or insure loans to public and 
quasi-public agencies and corporations not operated for profit with respect to 
water supply, water systems, and waste disposal systems serving rural areas 
and to make grants to aid in rural community development planning and in 
connection with the construction of such community facilities, to increase the 
annual aggregate of insured loans thereunder, and for other purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That section 306(a) p^mers^HlTme'^ 
of the Consolidated Farmers Home Administration Act is amended to Administration 
r e a d as follows : 
amendments 
"(1) The Secretary is also authorized to make or insure loans to ^'75"st'^r."3o'8. 
associations, including corporations not operated for profit, and public 
7 use 1926. 
and quasi-public agencies to provide for the application or establish- citt°ons *co«orL 
ment of soil conservation practices, shifts in land use, the conservation, tions, etc. 
development, use, and control of water, and the installation or im-
provement of drainage or waste disposal facilities, and recreational 
developments, all primarily serving farmers, ranchers, farm tenants, 
farm laborers, and other rural residents, and to furnish financial assist-
ance or other aid in planning projects for such purposes. 
"(2) The Secretarj^ is authorized to make grants aggregating not 
Limitation, 
to exceed $50,000,000 in any fiscal year to such associations to finance 
specific projects tor works for the development, storage, treatment, 
purification, or distribution of water or the collection, treatment, or 
disposal of waste in rural areas. The amount of any grant made 
under the authority of this paragraph shall not exceed 50 per centum 
of the development cost of the project to serve the area which the 
association determines can be feasibly served by the facility and to 
adequately serve the reasonably foreseeable growth needs of the area. 
"(3) No grant shall be made under paragraph 2 of this subsection 
conditions, 
in connection with any facility unless the Secretary determines that 
the project (i) will serve a rural area which is not likely to decline 
in population below that for which the facility was designed, (ii) is 
designed and constructed so that adequate capacity will be 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, or (iii) is necessary for orderly community development 
consistent with a comprehensive community water or sewer develop-
ment plan of the rural area and not inconsistent with any planned 
development under State, countyj or municipal plans approved as 
official plans by competent authority for the area in which the rural 
community is located and the Secretary shall establish regulations 
requiring the submission of all applications for financial assistance 
under this Act to the county or municipal government in which the 
proposed project is to be located for review and comment by such 
agency within a designated period of time. Until October 1, 1968, 
the Secretary may make grants prior to the completion of the com-
prehensive plan, if the preparation of such plan has been undertaken 
for the area. 
932 
PUBLIC LAW 89-240-OCT. 7, 1965 
[79 STAT. 
"Development 
ii^^^ ^^^ rp^^ term 'development cost' means the cost of construc-
tion of a facility and the land, easements, and rights-of-way, and 
water rights necessary to the construction and operation of the 
facility. 
"Project." 
"(B) The term 'project' shall include facilities providing central 
service or facilities serving individual properties, or both. 
"(5) No loan or grant shall be made under this subsection which 
would cause the unpaid principal indebtedness of any association 
75^stat!*3i^8!^' 
uuder this Act and under the Act of August 28, 1937, as amended, 
16 use 59or- 
together with the amount of any assistance in the form of a grant to 
590X.4. 
exceed $4,000,000 at any one time. 
"(6) The Secretary may make grants aggregating not to exceed 
$5,000,000 in any fiscal year to public bodies or such other agencies as 
the Secretary may determine having authority to prepare official 
comprehensive plans for the development of water or sewer systems in 
rural areas which do not have funds available for immediate under-
taking of the preparation of such plan. 
"(7) Rural areas, for the purposes of water and waste disposal 
projects shall not include any area in any city or town which has a 
population in excess of 5,500 inhabitants. 
"(8) In each instance where the Secretary receives two or more 
applications for financial assistance for projects that would serve 
substantially the same group of residents within a single rural area, 
and one such application is submitted by a city, town, county or other 
unit of general local government, he shall, in the absence of substantial 
reasons to the contrary, provide such assistance to such city, town, 
county or other unit of general local government. 
Water pollution 
u/gx ^^ Federal funds shall be authorized for use unless it be cer-
r6 strict ions 
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^ ' 
tified by the appropriate State water pollution control agency that 
the water supply system authorized will not result in pollution of 
waters of the State in excess of standards established by that agency. 
"(10) In the case of sewers and waste disposal systems, no Federal 
funds shall be advanced hereunder unless the appropriate State water 
pollution control agency shall certify that the effluent therefrom shall 
conform with appropriate State and Federal water pollution control 
standards when and where established." 
Real estate 
gj,^, £. (a) Sectlou 308 of the Consolidated Farmers Home Admin-
76^stat. 908. 
istration Act of 1961 is amended by— 
7 use 1
9 28. 
(1) striking out "$200,000,000" and inserting in lieu thereof 
"$450,000,000"; 
(2) in clause (a) striking out "except that no agreement shall 
provide for purchase by the Secretary at a date sooner than three 
years from the date of the note"; and 
(3) striking out clause (b) and inserting in lieu thereof "(b) 
may retain out of payments by the borrower a charge at a rate 
specified in the insurance agreement applicable to the loan". 
75 Stat. 309. 
(b) Section 309(e) of such Act is amended hj striking out "such 
portion of the charge collected in connection with the insurance of 
loans at least equal to a rate of one-half of 1 per centum per annum 
on the outstanding principal obligations and the remainder of such 
charge" and inserting in lieu thereof "all or a portion, not to exceed 
one-half of 1 per centum of the unpaid principal balance of the loan, 
of any charge collected in connection with the insurance of loans; and 
any remainder of any such charge", 
76 Stat. 632. 
(g) Sectiou 309(f)(1) of such Act is amended by striking out 
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'° ° 
"$25,000,000" and inserting in lieu thereof "$50,000,000". 
Approved October 7, 1965, 10:15 a.m. 
loans. 
7 u s e 
1929.