Title 7

TITLE 7--AGRICULTURE

CHAPTER 50--AGRICULTURAL CREDIT

SUBCHAPTER I--REAL ESTATE LOANS

Sec. 1926. Water and waste facility loans and grants

(a) In general

(1) The Secretary is also authorized to make or insure loans to

associations, including corporations not operated for profit, Indian

tribes on Federal and State reservations and other federally recognized Indian tribes, and public and quasi-public agencies to provide for the application or establishment of soil conservation practices, shifts in land use, the conservation, development, use, and control of water, and the installation or improvement of drainage or waste disposal facilities, recreational developments, and essential community facilities including necessary related equipment, all primarily serving farmers, ranchers, farm tenants, farm laborers, rural businesses, and other rural residents, and to furnish financial assistance or other aid in planning projects for such purposes. The Secretary may also make or insure loans to communities that have been designated as rural empowerment zones or rural enterprise communities pursuant to part I of subchapter U of chapter 1 of title 26, or as rural enterprise communities pursuant to section 766 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999 (Public Law 105-277; 112 Stat. 2681, 2681-37), to provide for the installation or improvement of essential community facilities including necessary related equipment, and to furnish financial assistance or other aid in planning projects for such purposes. The Secretary may also make loans to any borrower to whom a loan has been made under the Rural Electrification Act of 1936 (7 U.S.C.

901 et seq.), for the conservation, development, use, and control of

water, and the installation of drainage or waste disposal facilities, primarily serving farmers, ranchers, farm tenants, farm laborers, rural businesses, and other rural residents. When any loan made for a purpose specified in this paragraph is sold out of the Agricultural Credit Insurance Fund as an insured loan, the interest or other income thereon paid to an insured holder shall be included in gross income for purposes of chapter 1 of title 26. With respect to loans of less than $500,000 made or insured under this paragraph that are evidenced by notes and mortgages, as distinguished from bond issues, borrowers shall not be required to appoint bond counsel to review the legal validity of the loan whenever the Secretary has available legal counsel to perform such review.

(2) Water, waste disposal, and wastewater facility grants.—

(A) Authority.--

(i) In general.--The Secretary is authorized to make grants

to such associations to finance specific projects for works for

the development, storage, treatment, purification, or

distribution of water or the collection, treatment, or disposal

of waste in rural areas.

(ii) Amount.--The amount of any grant made under the

authority of this subparagraph shall not exceed 75 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.

(iii) Grant rate.--The Secretary shall fix the grant rate

for each project in conformity with regulations issued by the

Secretary that shall provide for a graduated scale of grant

rates establishing higher rates for projects in communities that

have lower community population and income levels.

(B) Revolving funds for financing water and wastewater

projects.--

(i) In general.--The Secretary may make grants to qualified

private, nonprofit entities to capitalize revolving funds for

the purpose of providing financing to eligible entities for--

(I) predevelopment costs associated with proposed water

and wastewater projects or with existing water and

wastewater systems; and

(II) short-term costs incurred for replacement

equipment, small-scale extension services, or other small

capital projects that are not part of the regular operations

and maintenance activities of existing water and wastewater

systems.

(ii) Eligible entities.--To be eligible to obtain financing

from a revolving fund under clause (i), an eligible entity must

be eligible to obtain a loan, loan guarantee, or grant under

paragraph (1) or this paragraph.

(iii) Maximum amount of financing.--The amount of financing

made to an eligible entity under this subparagraph shall not

exceed--

(I) $100,000 for costs described in clause (i)(I); and

(II) $100,000 for costs described in clause (i)(II).

(iv) Term.--The term of financing provided to an eligible

entity under this subparagraph shall not exceed 10 years.

(v) Administration.--The Secretary shall limit the amount of

grant funds that may be used by a grant recipient for

administrative costs incurred under this subparagraph.

(vi) Annual report.--A nonprofit entity receiving a grant

under this subparagraph shall submit to the Secretary an annual

report that describes the number and size of communities served

and the type of financing provided.

(vii) Authorization of appropriations.--There are authorized

to be appropriated to carry out this subparagraph $30,000,000

for each of fiscal years 2002 through 2007.

(3) No grant shall be made under paragraph (2) of this subsection in

connection with any project unless the Secretary determines that the

project (i) will serve a rural area which, if such project is carried out, is not likely to decline in population below that for which the project was designed, (ii) is 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, and (iii) is necessary for an orderly community development consistent with a comprehensive community water, waste disposal, or other development plan of the rural area.

(4)(A) The term ``development cost'' means the cost of construction

of a facility and the land, easements, and rights-of-way, and water

rights necessary to the construction and operation of the facility.

(B) The term ``project'' shall include facilities providing central

service or facilities serving individual properties, or both.

(5) Application requirements.--Not earlier than 60 days before a

preliminary application is filed for a loan under paragraph

(1) or a grant under paragraph (2) for a water or waste disposal purpose, a notice of the intent of the applicant to apply for the loan or grant shall be published in a general circulation newspaper. The selection of engineers for a project design shall be done by a request for proposals by the applicant.

(6) The Secretary may make grants aggregating not to exceed $30,000,000 in any fiscal year to public bodies or such other agencies as the Secretary may determine having authority to prepare comprehensive plans for the development of water or waste disposal systems in rural areas which do not have funds available for immediate undertaking of the preparation of such plan.

(7) Repealed. Pub. L. 107-171, title VI, Sec. 6020(b)(1), May 13,

2002, 116 Stat. 363.

(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.

(9) Conformity with state drinking water standards.--No Federal

funds shall be made available under this section for a water system

unless the Secretary determines that the water system will make

significant progress toward meeting the standards established under

title XIV of the Public Health Service Act (commonly known as the ``Safe Drinking Water Act'') (42 U.S.C. 300f et seq.).

(10) Conformity with federal and state water pollution control

standards.--No Federal funds shall be made available under this section for a water treatment discharge or waste disposal system unless the Secretary determines that the effluent from the system conforms with applicable Federal and State water pollution control standards.