7 CFR 1776, Household Water Well System Grant Program

eCFR —Code of Federal Regulations

10/16/2017

ELECTRONIC CODE OF FEDERAL REGULATIONS
As of October 20, 2017 links or bookmarks to ecfr.gpo.gov
will no longer work.
The current Web address is www.ecfr.gov.

e-CFR data is current as of October 12, 2017
Title 7 —> Subtitle B —> Chapter XVII —> Part 1776
Title 7: Agriculture
PART 1776—HOUSEHOLD WATER WELL SYSTEM GRANT PROGRAM
Contents
Subpart A—General
§1776.1 Purpose.
§1776.2 Uniform Federal Assistance Provisions.
§1776.3 Definitions.
§1776.4 [Reserved]
Subpart B—HVVWS Grants
§1776.5 Eligibility to receive a HWWS grant.
§1776.6 Notice of availability of funds.
§1776.7 HVVWS 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 H1NWS grant proceeds.
§1776.13 Administrative expenses.
Subpart C—HVVWS Loans
§1776.14 Eligibility to receive a HVVWS loan.
§1776.15 Terms of loans.
§1776.16 Loan servicing.
§1776.17 Revolving loan fund maintenance.
AUTHORITY: 7 U.S.C. 1926e.
SOURCE: 70 FR 28788, May 19, 2005, unless otherwise noted.
t Back to Top

Subpart A—General
t Back to Top
§1776.1 Purpose.
This part sets forth the policies and procedures for making grants to private, non-profit 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.
t Back to Top
https://www.ecfrgov/cgi-bin/text-idx?SlD=779ab1c5d9b4b1dd787a671d1 e71fcd4&node=pt7.12.1776&rgo=div5#sp7.12.1776.a

1/7

10/16/2017

eCFR — Code of Federal Regulations

§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 2
CFR part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, as
adopted by USDA through 2 CFR part 400, as well as the following:
(1) 2 CFR part 415—General Program Administrative Requirements.
(2) 2 CFR part 180, as adopted by USDA through 2 CFR part 417, Nonprocurement Debarment and Suspension,
implementing Executive Order 12549 on debarment and suspension.
(3) 2 CFR part 418, New Restrictions on Lobbying, prohibiting the use of appropriated funds to influence Congress or
a Federal agency in connection with the making of any Federal grant and other Federal contracting and financial
transactions.
(4) 2 CFR part 421, Requirements for Drug-Free Workplace (Financial Assistance), implementing the Drug-Free
Workplace Act of 1988 (41 U.S.0 8102).
(b) [Reserved]
[81 FR 7697, Feb. 16, 2016]
t Back to Top
§1776.3 Definitions.
Administrative expenses means expenses incurred by a grant recipient that are of the type more particularly
described in Section 13 of this part.
Applicant means a private, non-profit 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 or territory in which the individual resides, according to 5-year
income data from the American Community Survey (ACS) or, if needed, other Census Bureau data. If there is reason to
believe that the ACS or other Census Bureau data does not accurately represent the median nonmetropolitan household
income for the State or territory in which the individual resides, the reasons will be documented and the applicant may
furnish, or RD may obtain, additional information regarding such median household income data. Information must consist
of reliable data from local, regional, State or Federal sources or from a survey conducted by a reliable impartial source.
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.

https://www.ecfr.gov/cgi-bin/text-idx?SID=779ab1c5d9b4b1dd787a671d1 e71fcd4&n0de=pt7.12.1776&rgn=div5#sp7.12.1776.a

2/7

10/16/2017

eCFR — Code of Federal Regulations

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.
[70 FR 28788, May 19, 2005, as amended at 80 FR 9862, Feb. 24, 2015]
t Back to Top
§1776.4 [Reserved]
t Back to Top

Subpart B—HWWS Grants
t Back to Top
§1776.5 Eligibility to receive a HWWS 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: 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: 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.
t Back to Top
§1776.6 Notice of availability of funds.
(a) In Fiscal Year 2005, applications will be accepted for this program from May 19, 2005, until July 18, 2005, at which
time the application period will close. An applicant may withdraw, substitute, amend or supplement its application at any
time before the application period closes. Once the application period has closed, all applications will be 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.
t Back to Top
§1776.7 HWWS 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 4248.
(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.
https://www.ecfr.gov/cgi-bin/text-idx?SID=779ab1c5d9b4b1dd787a671d1e71fcd4&node=pt7.12.17768agn=div5#sp7.12.1776.a

3/7

10/16/2017

eCFR — Code of Federal Regulations

(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 three additional years,
(2) Financial statements for the last three years, or from inception of the operations of the grant recipient if less than
three years, and
(3) Projected cash flow and earnings statements for at least three 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.
t Back to Top
§1776.8 Methods for submitting applications.
(a) Applications may be filed in either paper or electronic format. RUS will not accept applications by fax or e-mail.
(b) Paper applications for HWWS grants may be delivered by the U.S. Postal Service (US PS) or courier delivery
services. Applications submitted by mail or courier must be postmarked no later than the filing deadline to be considered
for the grant period. Applications delivered by mail or courier must be addressed to the attention of the Assistant
Administrator, Water and Environmental Programs as follows: ATTN: Assistant Administrator, WEP, Rural Utilities Service,
Stop 1548 Room 5145 South, 1400 Independence Ave. SW., Washington, DC 20250-1548.
(c) Electronic applications may be filed through Grants.gov, the official Federal Government Web site at
http://www.grants.gov. The applicant must be registered with Grants.gov before they can submit a grant applicant. The
applicant should refer to instructions found on the Grants.gov Web site for procedures for registering and using this facility.
An applicant who is not registered on Grants.gov should allow a sufficient number of business days to complete the
process. Applications submitted electronically must be show an electronic date and time stamp on or before the filing
deadline to be considered for the grant period.
(d) The methods of submitting applications may be changed from time to reflect changes in addresses and electronic
submission procedures. The applicant 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.
t Back to Top
§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) 0 to 9 percent—ineligible;
(ii) 10 to 25 percent-5 points;
https://www.ecfrgov/cgi-bin/text-idx?SID=779ab1 c5d9b4b1dd787a671d1e71fcd4&node=pt7.12.17768agn=div5#sp7.12.1776.a

4/7

10/16/2017

eCFR — Code of Federal Regulations

(iii) 26 to 30 percent-10 points;
(iv) 31 to 50 percent-15 points; and
(v) 51 percent or more-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 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 demonstrated 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. All
applicants will be notified in writing of the score each application receives.
t Back to Top
§1776.10 Grant agreement.
(a) RUS and the grantee will enter into an agreement 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.
(b) The grantee or RUS may initiate an amendment or modification to the grant agreement to provide for a loan limit
up to $11,000. No change in the grant agreement requested by the grant recipient will be effective unless approved in
writing by RUS.
[73 FR 68294, Nov. 18, 2008]

t Back to Top
§1776.11 Revolving loan fund.
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. The loans shall be serviced, and the revolving loan
fund shall be maintained, as set forth in §1776.17.
• Back to Top
§1776.12 Use of HWWS grant proceeds.
(a) Except as otherwise provided in the next paragraph, HWWS grant proceeds shall be used solely 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.
(b) A grant recipient may use HWWS grant funds to pay administrative expenses associated with providing the
assistance described in the immediately preceding paragraph.
(c) A grant recipient may not use grant funds in any manner inconsistent with the terms of the grant agreement.
t Back to Top
§1776.13 Administrative expenses.
(a) Subject to the limitations provided in paragraphs (b), (c) and (d) of this section, the grant recipient may use grant
funds to pay administrative expenses associated with providing HWWS loans.
https://www.ecfr.gov/cgi-bin/text-idx?SID=779ab1c5d9b4b1dd787a671d le7 1 fcd4&node=pt7.12.17768agn=div5#sp7.12.1776.a

5/7

10/16/2017

eCFR — Code of Federal Regulations

(b) Administrative expenses incurred in any calendar year which exceed 10 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 2 CFR part 200, as adopted
by USDA through 2 CFR part 400.
[70 FR 28788, May 19, 2005, as amended at 79 FR 76005, Dec. 19, 2014]
t Back to Top

Subpart C—HWWS Loans
t Back to Top
§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.
t Back to Top
§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 $11,000 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.
[70 FR 28788, May 19, 2005, as amended at 73 FR 68295, Nov. 18, 2008]
t Back to Top
§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
§1776.13.
https://www.ecfr.gov/cgi-bin/text-idx?SID=779ab1 c5d9b4b1dd787a671d1e71fcd4&node=pt7.12.17768agn=d1v5#sp7.12.1776.a

6/7

10/16/2017

eCFR — Code of Federal Regulations

(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 RUS approved when the grant was awarded. It will
continue as long as any loan made in whole or in part with RUS grant funds is outstanding.
t Back to Top
§1776.17 Revolving loan fund maintenance.
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.
(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 revolving loan fund will consist of 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.
(h) The portion of the revolving loan fund that consists of HWWS grant funds, on a last-in-first-out basis, may be used
for only 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 three 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.
(I) 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.
t Back to Top

Need assistance?

https://www.ecfr.gov/cgi-bin/text-idx?SID=779ab1 c5d9b4b1dd787a671d1 e71fcd4&node=pt7.12.1776&rgn=div5#sp7.12.1776.a

7/7