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Grant Program To Establish a Revolving Fund for Financing Water and Wastewater Projects

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Rural Utilities Service (RUS), USDA.


Notice of inquiry.


The Rural Utilities Service is seeking comments from the public in its efforts to implement a new program, “Revolving Funds for Financing Water and Wastewater Projects” as authorized by the 2002 Farm Bill. The purpose of the program is to provide grants to qualified private, non-profit entities to capitalize revolving funds for the purpose of providing loans to eligible entities for pre-development costs or small capital improvement costs. RUS is issuing this notice of inquiry to assess the current interest of eligible entities in pursuing applications for grant funds with the purpose of establishing a revolving loan fund taking into consideration the following:

(1) The ability to accomplish the provisions of the 2002 Farm Bill section utilizing current appropriations;

(2) The level of interest of ultimate recipient for the loan funds.


Interested parties must submit written comments on or before March 15, 2004.


Submit written comments to Richard C. Annan, Acting Director, Program Development and Regulatory Analysis, Rural Utilities Service, United States Department of Agriculture, 1400 Independence Avenue, SW., stop 1522, Washington, DC 20250-1570. RUS requires, in hard copy, a signed original and 3 copies of all comments (7 CFR 1700.4). Comments will be available for public inspection during normal business hours (7 CFR part 1).

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Susan Loney, Loan Specialist, Water and Environmental Programs, Rural Utilities Service, United States Department of Agriculture, 1400 Independence Avenue, SW., stop 1570, Washington, DC 20250-1570. Phone: 202-720-9633. Fax: 202-720-0718. E-mail:

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On May 13, 2002, the Farm Security and Rural Investment Act of 2002 (Farm Bill) was signed into law as Pub. L. 107-171. The Consolidated Farm and Rural Development Act was amended by section 6002 of the Farm Bill, by adding a grant program to establish a revolving loan fund. The Secretary may make grants to qualified, private, non-profit entities. The grant recipients will use the grant funds to establish a revolving loan fund. The loans will be made to eligible entities to finance predevelopment costs of water or wastewater projects, or short-term small capital projects not part of the regular operation and maintenance of current water and wastewater systems.

Eligible entities for the revolving loan fund will be the same entities eligible to obtain loans, loan guarantees, or grants from the Rural Utilities Service program. The amount of financing to an eligible entity shall not exceed $100,000 and shall be repaid in a term not to exceed 10 years. The rate shall be determined in the approved grant workplan.

The Act stipulates that, among other provisions, the Administrator of RUS shall prescribe regulations to implement the Act and shall issue and otherwise administer the grant program. No funds were appropriated for the Act for fiscal year (FY) 2002. The appropriations bill for FY 2004 includes $500,000 for the grant program; therefore we are proceeding with the development of a regulation in order to implement the program.

The section also requires the Administrator of RUS to prescribe regulations to implement the provisions. We will be relying heavily on existing regulations within the Rural Development Program in order to develop regulations for this new program. The main referenced regulations will be the following:

(1) Rural Economic Development Loan & Grant Program (REDLG), 7 CFR 1703 Subpart B;​cfr/​retrieve.html

(2) Intermediary Lending Program (IRP), RD Instruction 4274-D​regs/​regs_​toc.html and

(3) Rural Housing regulation for the Housing Preservation Grant Program (HPG), RD Instruction 1944, Subpart N.​regs/​regs_​toc.html

RUS encourages interested parties to review the Act in its entirety on the USDA Web site at​farmbill/​.

Request for Comment

RUS is requesting comment and discussion on the following topics:

(1) RUS is seeking comments on the current lending experience of potential grant applicants;

(2) RUS is also interested in comments regarding a proposed minimum 20 percent matching funds contribution by the grant recipient; in-kind contributions will not be accepted as part of the 20 percent minimum;

(3) RUS is interested in comments regarding the percentage of the grant funds that may be used for administrative or servicing fees;

(4) RUS is seeking comments on the issue of a maximum of 75 percent of the project costs the revolving loan should pay, with the other 25 percent of project costs paid for from non-Federal sources;

(5) RUS is interested in comments regarding the use of the Central Servicing Center for the revolving loans, including processing loan payments, reviewing financial statements, and other responsibilities involved in loan servicing, and

(6) RUS is also seeking comments on the definition of eligible and ineligible projects for the revolving loan funds.

RUS invites interested parties including, but not limited to, financial and lending institutions, non-profit organizations, consumer groups, community organizations, and individuals to comment. Written comments should provide RUS any information or analysis believed to be relevant to the issues discussed in this Notice and to the implementation of the revolving loan program.

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Dated: January 8, 2004.

Hilda Gay Legg,

Administrator, Rural Utilities Service.

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[FR Doc. 04-3113 Filed 2-11-04; 8:45 am]