[Title 7 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2016 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          

          Title 7

Agriculture


________________________

Parts 1940 to 1949

                         Revised as of January 1, 2016

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2016
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 7:
    SUBTITLE B--Regulations of the Department of Agriculture 
      (Continued)
          Chapter XVIII--Rural Housing Service, Rural 
          Business-Cooperative Service, Rural Utilities 
          Service, and Farm Service Agency, Department of 
          Agriculture (Continued)                                    5
  Finding Aids:
      Table of CFR Titles and Chapters........................     317
      Alphabetical List of Agencies Appearing in the CFR......     337
      List of CFR Sections Affected...........................     347

[[Page iv]]





                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 7 CFR 1940.301 
                       refers to title 7, part 
                       1940, section 301.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
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    To determine whether a Code volume has been amended since its 
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EFFECTIVE AND EXPIRATION DATES

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OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
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``[RESERVED]'' TERMINOLOGY

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INCORPORATION BY REFERENCE

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This material, like any other properly issued regulation, has the force 
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this volume.

[[Page vii]]

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    Oliver A. Potts,
    Director,
    Office of the Federal Register.
    January 1, 2016.







[[Page ix]]



                               THIS TITLE

    Title 7--Agriculture is composed of fifteen volumes. The parts in 
these volumes are arranged in the following order: parts 1-26, 27-52, 
53-209, 210-299, 300-399, 400-699, 700-899, 900-999, 1000-1199, 1200-
1599, 1600-1759, 1760-1939, 1940-1949, 1950-1999, and part 2000 to end. 
The contents of these volumes represent all current regulations codified 
under this title of the CFR as of January 1, 2016.

    The Food and Nutrition Service current regulations in the volume 
containing parts 210-299, include the Child Nutrition Programs and the 
Food Stamp Program. The regulations of the Federal Crop Insurance 
Corporation are found in the volume containing parts 400-699.

    All marketing agreements and orders for fruits, vegetables and nuts 
appear in the one volume containing parts 900-999. All marketing 
agreements and orders for milk appear in the volume containing parts 
1000-1199.

    For this volume, Cheryl E. Sirofchuck was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of John 
Hyrum Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                          TITLE 7--AGRICULTURE




                 (This book contains parts 1940 to 1949)

  --------------------------------------------------------------------

  SUBTITLE B--Regulations of the Department of Agriculture (Continued)

                                                                    Part

chapter xviii--Rural Housing Service, Rural Business-
  Cooperative Service, Rural Utilities Service, and Farm 
  Service Agency, Department of Agriculture (Continued).....        1940

[[Page 3]]

  Subtitle B--Regulations of the Department of Agriculture (Continued)

[[Page 5]]



    CHAPTER XVIII--RURAL HOUSING SERVICE, RURAL BUSINESS-COOPERATIVE 
SERVICE, RURAL UTILITIES SERVICE, AND FARM SERVICE AGENCY, DEPARTMENT OF 
                         AGRICULTURE (CONTINUED)




  --------------------------------------------------------------------


  Editorial Note: Nomenclature changes to chapter XVIII appear at 61 FR 
1109, Jan. 16, 1996, and at 61 FR 2899, Jan. 30, 1996.

              SUBCHAPTER H--PROGRAM REGULATIONS (CONTINUED)
Part                                                                Page
1940            General.....................................           7
1941

[Reserved]

1942            Associations................................         117
1943

[Reserved]

1944            Housing.....................................         187
1946

[Reserved]

1948            Rural development...........................         287
1949

[Reserved]

[[Page 7]]



              SUBCHAPTER H_PROGRAM REGULATIONS (CONTINUED)





PART 1940_GENERAL--Table of Contents



Subparts A-F [Reserved]

                     Subpart G_Environmental Program

Sec.
1940.301 Purpose.
1940.302 Definitions.
1940.303 General policy.
1940.304 Special policy.
1940.305 Policy implementation.
1940.306 Environmental responsibilities within the National Office.
1940.307 Environmental responsibilities within the State Office.
1940.308 Environmental responsibilities at the District and County 
          Office levels.
1940.309 Responsibilities of the prospective applicant.
1940.310 Categorical exclusions from National Environmental Policy Act 
          (NEPA) reviews.
1940.311 Environmental assessments for Class I actions.
1940.312 Environmental assessments for Class II actions.
1940.313 Actions that normally require the preparation of an 
          Environmental Impact Statement (EIS).
1940.314 Criteria for determining a significant environmental impact.
1940.315 Timing of the environmental review process.
1940.316 Responsible officials for the environmental review process.
1940.317 Methods for ensuring proper implementation of categorical 
          exclusions.
1940.318 Completing environmental assessments for Class II actions.
1940.319 Completing environmental assessments for Class I actions.
1940.320 Preparing EISs.
1940.321 Use of completed EIS.
1940.322 Record of decision.
1940.323 Preparing supplements to EIS's.
1940.324 Adoption of EIS or environmental assessment prepared by another 
          Federal Agency.
1940.325 FmHA or its successor agency under Public Law 103-354 as a 
          cooperating Agency.
1940.326 FmHA or its successor agency under Public Law 103-354 as a lead 
          Agency.
1940.327 Tiering.
1940.328 State Environmental Policy Acts.
1940.329 Commenting on other Agencies' EIS's.
1940.330 Monitoring.
1940.331 Public involvement.
1940.332 Emergencies.
1940.333 Applicability to planning assistance.
1940.334 Direct participation of State Agencies in the preparation of 
          FmHA or its successor agency under Public Law 103-354 EISs.
1940.335 Environmental review of FmHA or its successor agency under 
          Public Law 103-354 proposals for legislation.
1940.336 Contracting for professional services.
1940.337-1940.349 [Reserved]
1940.350 Office of Management and Budget (OMB) control number.

Exhibit A to Subpart G of Part 1940--Departmental Regulation
Exhibit B to Subpart G of Part 1940--Development and Implementation of 
          Natural Resource Management Guide
Exhibit C to Subpart G of Part 1940--Implementation Procedures for the 
          Farmland Protection Policy Act; Executive Order 11988, 
          Floodplain Management; Executive Order 11990, Protection of 
          Wetlands; and Departmental Regulation 9500-3, Land Use Policy
Exhibit D to Subpart G of Part 1940--Implementation Procedures for the 
          Endangered Species Act
Exhibit E to Subpart G of Part 1940--Implementation Procedures for the 
          Wild and Scenic Rivers Act
Exhibit F to Subpart G of Part 1940--Implementation Procedures for the 
          Coastal Barrier Resources Act
Exhibit G to Subpart G of Part 1940 [Reserved]
Exhibit H to Subpart G of Part 1940--Environmental Assessment for Class 
          II Actions
Exhibit I to Subpart G of Part 1940--Finding of No Significant 
          Environmental Impact
Exhibit J to Subpart G of Part 1940--Locations and Telephone Numbers of 
          Federal Emergency Management Administration's Regional Offices
Exhibit K to Subpart G of Part 1940--Locations and Telephone Numbers of 
          U.S. Fish and Wildlife Service's Wetland Coordinators
Exhibit L to Subpart G of Part 1940--Exceptions to Restrictions of 
          Coastal Barrier Resources Act
Exhibit M to Subpart G of Part 1940--Implementation Procedures for the 
          Conservation of Wetlands and Highly Erodible Land Affecting 
          Farmer Program Loans and Loans to Indian Tribes and Tribal 
          Corporations

Subpart H [Reserved]

[[Page 8]]

      Subpart I_Truth in Lending_Real Estate Settlement Procedures

1940.401 Truth in lending.
1940.402-1940.405 [Reserved]
1940.406 Real estate settlement procedures.

Subparts J-K [Reserved]

  Subpart L_Methodology and Formulas for Allocation of Loan and Grant 
                              Program Funds

1940.551 Purpose and general policy.
1940.552 Definitions.
1940.553-1940.559 [Reserved]
1940.560 Guarantee Rural Rental Housing Program.
1940.561-1940.562 [Reserved]
1940.563 Section 502 non-subsidized guaranteed Rural Housing (RH) loans.
1940.564 Section 502 subsidized guaranteed Rural Housing loans.
1940.565 Section 502 subsidized Rural Housing loans.
1940.566 Section 504 Housing Repair loans.
1940.567 Section 504 Housing Repair grants.
1940.568 Single Family Housing programs appropriations not allocated by 
          State.
1940.569-1940.574 [Reserved]
1940.575 Section 515 Rural Rental Housing (RRH) loans.
1940.576 Rental Assistance (RA) for new construction.
1940.577 Rental Assistance (RA) for existing projects.
1940.578 Housing Preservation Grant (HPG) program.
1940.579 Multiple Family Housing appropriations not allocated by State.
1940.580-1940.584 [Reserved]
1940.585 Community Facility loans.
1940.586-1940.587 [Reserved]
1940.588 Business and Industry Guaranteed and Direct Loans, Rural 
          Business Enterprise Grants, Rural Business Opportunity Grants, 
          and Intermediary Relending Program.
1940.589 Rural Energy for America Program.
1940.590 [Reserved]
1940.591 Community Program Guaranteed loans.
1940.592 Community facilities grants.
1940.593 Other Rural Business-Cooperative Service programs.
1940.594-1940.600 [Reserved]

Exhibit A to Subpart L of Part 1940 [Reserved]
Exhibit B to Subpart L of Part 1940--Section 515 Nonprofit Set Aside 
          (NPSA)
Exhibit C to Subpart L of Part 1940--Housing in Underserved Areas

Subparts M-S [Reserved]

   Subpart T_System for Delivery of Certain Rural Development Programs

1940.951 General.
1940.952 [Reserved]
1940.953 Definitions.
1940.954 State participation.
1940.955 Distribution of program funds to designated States.
1940.956 State rural economic development review panel.
1940.957 State coordinator.
1940.958 Designated agency.
1940.959 Area plan.
1940.960 Federal employee panel members.
1940.961 Allocation of appropriated funds.
1940.962 Authority to transfer direct loan amounts.
1940.963 Authority to transfer guaranteed loan amounts.
1940.964 [Reserved]
1940.965 Processing project preapplications/applications.
1940.966-1940.967 [Reserved]
1940.968 Rural Economic Development Review Panel Grant (Panel Grant).
1940.969 Forms, exhibits, and subparts.
1940.970 [Reserved]
1940.971 Delegation of authority.
1940.972-1940.999 [Reserved]
1940.1000 OMB control number.

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989; and 42 U.S.C. 1480.

    Editorial Note: Nomenclature changes to part 1940 appear at 80 FR 
9876, Feb. 24, 2015.

Subparts A-F [Reserved]



                     Subpart G_Environmental Program

    Source: 53 FR 36240, Sept. 19, 1988, unless otherwise noted.



Sec.  1940.301  Purpose.

    (a) This subpart contains the major environmental policies of the 
Farmers Home Administration (FmHA) or its successor agency under Public 
Law 103-354. It also provides the procedures and guidelines for 
preparing the environmental impact analyses required for a series of 
Federal laws, regulations, and Executive orders within one environmental 
document. The timing and use of this environmental document within the 
FmHA or its successor agency under Public Law 103-354 decision-making 
process is also outlined.
    (b) This subpart is intended to be consistent with the Council on 
Environmental Ouality's (CEQ) Regulations

[[Page 9]]

for Implementing the Procedural Provisions of the National Environmental 
Policy Act (NEPA), 40 CFR parts 1500-1508. CEQ's regulations will not be 
repeated in this subpart except when essential for clarification of 
important procedural or substantive points. Otherwise, citations to 
applicable sections of the regulations will be provided. The CEQ 
regulations will be available at all FmHA or its successor agency under 
Public Law 103-354 offices.
    (c) This subpart is designed to integrate the requirements of NEPA 
with other planning and environmental review procedures required by law, 
or by Agency practice, so that all such procedures run concurrently 
rather than consecutively. The environmental document, which results 
from the implementation of this subpart, provides on a project basis a 
single reference point for the Agency's compliance and/or implementation 
of the following requirements and policies:
    (1) The National Environmental Policy Act, 42 U.S.C. 4321;
    (2) Safe Drinking Water Act--Section 1424(e), 42 U.S.C. 300h;
    (3) Endangered Species Act, 16 U.S.C. 1531;
    (4) Wild and Scenic Rivers Act, 16 U.S.C. 1271;
    (5) The National Historic Preservation Act, 16 U.S.C. 470 (See 
subpart F of part 1901 of this chapter for more specific implementation 
procedures);
    (6) Archaeological and Historic Preservation Act, 16 U.S.C. 469 (See 
subpart F of part 1901 of this chapter for more specific implementation 
procedures);
    (7) Coastal Zone Management Act--Section 307(c) (1) and (2), 16 
U.S.C. 1456;
    (8) Farmland Protection Policy Act, subtitle I, Pub. L. 97-98;
    (9) Coastal Barrier Resources Act, Pub. L. 97-348;
    (10) Executive Order 11593, Protection and Enhancement of the 
Cultural Environment (See subpart F of part 1901 of this chapter for 
more specific implementation procedures);
    (11) Executive Order 11514, Protection and Enhancement of 
Environmental Quality;
    (12) Executive Order 11988, Floodplain Management;
    (13) Executive Order 11990, Protection of Wetlands;
    (14) Title 7, parts 1b and 1c, Code of Federal Regulations, 
Department of Agriculture's National Environmental Policy Act; Final 
Policies and Procedures;
    (15) Title 7, part 3100, Code of Federal Regulations, Department of 
Agriculture's Enhancement, Protection, and Management of the Cultural 
Environment (See subpart F of part 1901 of this chapter for more 
specific implementation procedures);
    (16) Title 7, part 658, Code of Federal Regulations, Department of 
Agriculture, Soil Conservation Service, Farmland Protection Policy;
    (17) Title 87, part 12, Code of Federal Regulations, Highly Erodible 
Land and Wetland Conservation;
    (18) Departmental Regulation 9500-3, Land Use Policy (See exhibit A 
of this subpart);
    (19) Departmental Regulation 9500-4, Fish and Wildlife Policy.
    (d) The primary objectives of this subpart are for the Agency to 
make better decisions by taking into account potential environmental 
impacts of proposed projects and by working with FmHA or its successor 
agency under Public Law 103-354 applicants, other Federal agencies, 
Indian tribes, State and local governments, and interested citizens and 
organizations in order to formulate actions that advance the program 
goals in a manner that will protect, enhance, and restore environmental 
quality. To accomplish these objectives, the identification of 
potentially significant impacts on the human environment is mandated to 
occur early in the Agency's planning and decisionmaking processes. 
Important decision points are identified. The completion of the 
environmental review process is coordinated with these decision points, 
and this review must be completed prior to the Agency's first major 
decision on whether or not to participate in the proposal. This early 
availability of the results of the environmental review process is 
intended to ensure that Agency decisions are based on an understanding 
of their environmental consequence, as well as the consequences of 
alternative courses of action.
    (e) Reducing delays, duplication of effort, and superfluous analyses 
are

[[Page 10]]

provided for in this subpart. FmHA or its successor agency under Public 
Law 103-354 environmental documents are to be supported by accurate 
analyses and will concentrate on the issues that are timely and relevant 
to the action in question, rather than amassing needless detail. Such 
documents and their preparation and review will be coordinated with 
other Federal or State agencies jointly participating in proposed 
actions or related actions, in order to avoid duplication of effort, and 
to achieve a coordinated and timely response.
    (f) Public involvement is desirable, and to facilitate public 
involvement, environmental documents will be available to interested 
citizens as early in the decisionmaking process as possible and before 
decisions are made. Provisions are included for citizens or interested 
parties to express their views and any concerns.
    (g) The FmHA or its successor agency under Public Law 103-354 
officials responsible for the environmental review process are 
identified.
    (h) The FmHA or its successor agency under Public Law 103-354 
actions covered by this subpart include:
    (1) Financial assistance to include grants, loans, and guarantees,
    (2) Subdivision approvals,
    (3) The management, leasing and sale of inventory property, and
    (4) Other major federal actions such as proposals for legislation 
and the issuance of regulations.



Sec.  1940.302  Definitions.

    Following is a list of definitions that apply to the implementation 
of this subpart. Please note that Sec.  1940.301(b) of this subpart 
refers to the Council on Environmental Quality's Regulations for 
Implementing the Procedural Provisions of the National Environmental 
Policy Act, 40 CFR parts 1500-1508. Consequently, the definitions 
contained in part 1508 of the Council's regulations apply to this 
subpart, as well as those listed below.
    (a) Emergency circumstance. One involving an immediate or imminent 
danger to public health or safety.
    (b) Environmental review documents. The documents required by this 
subpart for the purpose of documenting FmHA or its successor agency 
under Public Law 103-354's compliance with the environmental laws and 
regulations applicable to the FmHA or its successor agency under Public 
Law 103-354 actions covered in this subpart. These documents include:
    (1) Form FmHA or its successor agency under Public Law 103-3541940-
22, ``Environmental Checklist for Categorical Exclusions,''
    (2) Form FmHA or its successor agency under Public Law 103-354 1940-
21, ``Environmental Assessment of Class I Action,''
    (3) Environmental Assessment for Class II Actions (exhibit H of this 
subpart), and
    (4) Environmental Impact Statements (EIS).
    (c) Flood or flooding. A general and temporary condition of partial 
or complete inundation of land areas, from the overflow of inland and/or 
tidal waters, and/or the rapid accumulation or runoff of surface waters 
from any source. Two important classifications of floods are as follows.
    (1) A one-percent chance flood or based flood--A flood of a 
magnitude that occurs once every 100 years on the average. Within any 
one-year period there is one chance in 100 of the occurrence of such a 
flood. Most importantly, however, the cumulative risk of flooding 
increases with time. Statistically, there is about one chance in five 
that a flood of this magnitude will occur within a 20-year period, the 
length of time commonly defined as the useful life of a facility. Over a 
30-year period, the life of a typical mortgage, the probability of such 
a flood occurring increases to greater than one chance in four.
    (2) A 0.2-percent chance flood--A flood of a magnitude that occurs 
once every 500 years on the average. (Within any one-year period there 
is one chance in 500 of the occurrence of such a flood.) As with the 
one-percent chance flood, the cumulative risk of this flood occurring 
also increases with time.
    (d) Floodplains. Lowland and relatively flat areas adjoining inland 
and coastal waters, including flood-prone areas of offshore islands. At 
a minimum, floodplains consist of those

[[Page 11]]

areas subject to a one percent or greater chance of flooding in any 
given year. The term floodplain will be taken to mean the base 
floodplain, unless the action involves a critical action, in which case 
the critical action floodplain is the minimum floodplain of concern.
    (1) Base floodplain (or 100-year floodplain)--The area subject to 
inundation from a flood of a magnitude that occurs once every 100 years 
on the average (the flood having a one-percent chance of being equalled 
or exceeded in any given year).
    (2) Critical action floodplain (or 500-year floodplain)--The area 
subject to inundation from a flood of a magnitude that occurs once every 
500 years on the average (the flood having 0.2-percent chance of being 
equalled or exceeded in any given year).
    (e) Indirect impacts. Those reasonably foreseeable environmental 
impacts that result from the additional public facility, residential, 
commercial, or industrial development or growth that a federally 
financed project may cause, induce or accommodate. Consequently, 
indirect impacts often occur later in time than the construction of the 
Federal project and can be removed in distance from the construction 
site. For example, a water transmission line may be designed to serve 
additional residential development. The environmental impacts of that 
residential development represent an indirect impact of the federally 
funded water line. Those indirect impacts which deserve the greatest 
consideration include changes in the patterns of land use, population 
density or growth rate, and the corresponding changes to air and water 
quality and other natural systems.
    (f) Mitigation measure. A measure(s) included in a project or 
application for the purpose of avoiding, minimizing, reducing or 
rectifying identified, adverse environmental impacts. Examples of such 
measures include:
    (1) The deletion, relocation, redesign or other modifications of the 
project's elements;
    (2) The dedication to open space of environmentally sensitive areas 
of the project site, which would otherwise be adversely affected by the 
action or its indirect impacts;
    (3) Soil erosion and sedimentation plans to control runoff during 
land-disturbing activities;
    (4) The establishment of vegetative buffer zones between project 
sites and adjacent land uses;
    (5) Protective measures recommended by environmental and 
conservation agencies having jurisdiction or special expertise regarding 
the project's impacts;
    (6) Storm water management plans to control potential downstream 
flooding effects that would result from a project;
    (7) Zoning; and
    (8) Reuse of existing facilities as opposed to new construction.
    (g) No-action alternative. The alternative of not approving an 
application for financial assistance, a subdivision feasibility 
analysis, or an Agency proposal.
    (h) Practicable alternative. An alternative that is capable of 
attainment within the confines of relevant constraints. The test of 
practicability, therefore, depends upon the particulars of the situation 
under consideration and those constraints imposed by environmental, 
economic, legal, social and technological parameters. This test, 
however, is not limited by the temporary unavailability of sufficient 
financial resources to implement an alternative. That is, alternatives 
cannot be rejected solely on the basis of moderately increased costs. 
The range of alternatives that must be analyzed to determine if a 
practicable alternative exists includes the following three categories 
of alternatives:
    (1) Alternative project sites or designs,
    (2) Alternative projects with similar benefits as the proposed 
actions, and
    (3) The no-action alternative.
    (i) Preparer of Environmental Review Documents. The FmHA or its 
successor agency under Public Law 103-354 official who is responsible 
for reviewing the potential environmental impacts of the proposed action 
and for completing the appropriate environmental review document. Under 
the circumstances indicated, the following Agency positions and 
divisions will act as the preparer of

[[Page 12]]

the environmental review documents covered by this subpart.
    (1) County Office. When the approval official for the action under 
review is located at the County Office level, that official will 
prepare, as required, Environmental Checklist for Categorical Exclusions 
and Class I and Class II assessments.
    (2) District Office. When the approval official for the action under 
review is located at the District Office level, that official will 
prepare, as required, Environmental Checklist for Categorical Exclusions 
and Class I and Class II assessments or may delegate this responsibility 
to either:
    (i) The District Office staff member having primary responsibility 
for assembling the associated pre-application, application or other case 
materials, analyzing the materials and developing recommendations for 
the approval official, or
    (ii) A County Office staff member having the same responsibilities 
as the District Office member, if the action is initiated at the County 
Office level.
    (3) State Program Chief. For actions approved within the State 
Office, the Chief will prepare, as required, Environmental Checklist for 
Categorical Exclusions and Class I and II assessments or may delegate 
this responsibility to either:
    (i) The appropriate State Office Loan Specialist, if not the State 
Environmental Coordinator (SEC),
    (ii) An architect or engineer on the Chief's staff who is not the 
SEC, or
    (iii) A District or County Office staff member located within the 
office in which the action is initiated and having the responsibilities 
outlined in paragraph (i)(2)(i) of this section.
    (4) State Environmental Coordinator. EIS's for actions within the 
approval authority of County Supervisors, District Directors, and State 
Office officials.
    (5) Assistant Administrators for Programs. Checklists, assessments, 
and EIS's for all actions initiated within their program office.
    (6) Program Support Staff. Checklists, assessments, and EIS's that 
the Deputy Administrator for Program Operations requests be done.
    (j) Water resource project. Includes any type of construction which 
would result in either impacts on water quality and the beneficial uses 
that water quality criteria are designed to protect or any change in the 
free-flowing characteristics of a particular river or stream to include 
physical, chemical, and biological characteristics of the waterway. This 
definition encompasses construction projects within and along the banks 
of rivers or streams, as well as projects involving withdrawals from, 
and discharges into such rivers or streams. Projects which require Corps 
of Engineers dredge and fill permits are also water resource projects.



Sec.  1940.303  General policy.

    (a) FmHA or its successor agency under Public Law 103-354 will 
consider environmental quality as equal with economic, social, and other 
relevant factors in program development and decision-making processes.
    (b) In assessing the potential environmental impacts of its actions, 
FmHA or its successor agency under Public Law 103-354 will consult early 
with appropriate Federal, State, and local agencies and other 
organizations to provide decision-makers with both the technical and 
human aspects of environmental planning.
    (c) When adverse environmental impacts are identified, either direct 
or indirect, an examination will be made of alternative courses of 
action, including their potential environmental impacts. The objective 
of the environmental review will be to develop a feasible alternative 
with the least adverse environmental impact. The alternative of not 
proceeding with the proposal will also be considered particularly with 
respect to the need for the proposal.
    (d) If no feasible alternative exists, including the no-action 
alternative, measures to mitigate the identified adverse environmental 
impacts will be included in the proposal.
    (e) The performance of environmental reviews and the consideration 
of alternatives will be initiated as early as possible in the FmHA or 
its successor agency under Public Law 103-354 application review process 
so that the Agency will be in the most flexible

[[Page 13]]

and objective position to deal with these considerations.



Sec.  1940.304  Special policy.

    (a) Land use. (1) FmHA or its successor agency under Public Law 103-
354 recognizes that its specific mission of assisting rural areas, 
composed of farms and rural towns, goes hand-in-hand with protecting the 
environmental resources upon which these systems are dependent. Basic 
resources necessary to both farm and rural settlements include important 
farmlands and forestlands, prime rangelands, wetlands, and floodplains. 
The definitions of these areas are contained in the appendix to 
Departmental Regulation 9500-3, Land Use Policy, which is included as 
exhibit A of this subpart. For assistance in locating and defining 
floodplains and wetlands, the locations and telephone numbers of the 
Federal Emergency Management Administration's regional offices have been 
included as exhibit J of this subpart, and similar information for the 
U.S. Fish and Wildlife Service's Wetland Coordinators has been included 
as exhibit K of this subpart. Given the importance of these resources, 
as emphasized in the Departmental Regulation, Executive Order 11988, 
``Floodplain Management,'' and Executive Order 11990, ``Protection of 
Wetlands,'' it is FmHA or its successor agency under Public Law 103-
354's policy not to approve or fund any proposals that, as a result of 
their identifiable impacts, direct or indirect, would lead to or 
accommodate either the conversion of these land uses or encroachment 
upon them. The only exception to this policy is if the approving 
official determines that
    (i) There is no practicable alternative to the proposed action,
    (ii) The proposal conforms to the planning criteria identified in 
paragraph (a)(2) of this section, and
    (iii) The proposal includes all practicable measures for reducing 
the adverse impacts and the amount of conversion/encroachment.
    (A) For Farmer Program loans and guarantees, and loans to Indian 
Tribes and Tribal Corporations, exhibit M of this subpart imposes 
additional and more restrictive requirements regarding wetland and 
highly erodible land conservation.
    (B) Unless otherwise exempted by the provisions of exhibit M, the 
proceeds of any Farmer Program loan or loan to an Indian Tribe or Tribal 
Corporation made or guaranteed by FmHA or its successor agency under 
Public Law 103-354 cannot be used.
    (1) For a purpose that will contribute to excessive erosion of 
highly erodible land (as defined in exhibit M), or
    (2) For a purpose that will contribute to conversion of wetlands (as 
defined in exhibit M) to produce an agricultural commodity.
    (2) It is also recognized that unless carefully reviewed, some 
proposals designed to serve the needs of rural communities can adversely 
affect the existing economic base and settlement patterns of the 
community, as well as create development pressures on land and 
environmental resources essential to farm economies. An example of such 
a proposal might be the extension of utilities and other types of 
infrastructure beyond a community's existing settlement pattern and into 
important farmlands for the purpose of commercial or residential 
expansion, even though there is available space within the existing 
settlement pattern for such expansion. Not only may the loss of 
important farmlands unnecessarily result, but the community may be faced 
with the economic costs of providing public services to outlying areas, 
as well as the deterioration of its central business or commercial area; 
the latter may not be able to compete with the newer, outlying 
commercial establishments. These results are undesirable, and to avoid 
their occurrence, projects designed to meet rural community needs (i.e., 
residential, industrial, commercial, and public facilities) will not be 
approved unless the following conditions are met.
    (i) The project is planned and sited in a manner consistent with the 
policies of this section, the Farmland Protection Policy Act, and 
Departmental Regulation 9500-3 (exhibit A of this subpart).
    (ii) The project is not inconsistent with an existing comprehensive 
and enforceable plan that guides growth and

[[Page 14]]

reflects a realistic strategy for protecting natural resources, and the 
project is compatible, to the extent practicable, with State, unit of 
local government, and private programs and policies to protect farmland. 
(If no such plan or policies exist, there is no FmHA or its successor 
agency under Public Law 103-354 requirement that they either be prepared 
and adopted, as further specified in paragraph (a)(3) of this section.)
    (iii) The project will encourage long-term, economically viable 
public investment by fostering or promoting development patterns that 
ensure compact community development, that is, development that is 
limited to serving existing settlement patterns or is located in 
existing settlement patterns, e.g., the rehabilitation and renovation of 
existing structures, systems and neighborhoods; infilling of 
development; the provision of a range of moderate-to-high residential 
densities appropriate to local and regional needs. When these 
development patterns or types are not practicable, the development must 
be contiguous with the existing settlement pattern and provide for a 
range of moderate-to-high residential densities appropriate to local and 
regional needs. It is recognized that some FmHA or its successor agency 
under Public Law 103-354 Community Programs projects are designed to 
serve rural residents, such as rural water and waste disposal systems 
and, therefore, cannot be limited in service area to these areas 
contiguous with existing settlement patterns. These types of projects 
will be designed to primarily serve existing structures and rural 
residents in noncontiguous areas. Any additional capacity within the 
system will be limited to meet reasonable growth needs, and, to the 
extent practicable, be designed to meet such needs within existing 
settlements and areas contiguous to them.
    (3) The conditions specified in paragraph (a)(2) of this section 
should not be construed as advocating excessive densities, congestion, 
or loss of open space amenities within rural communities. Desirable 
living conditions can be obtained under these objectives, along with 
economic and social benefits for the community and the surrounding farm 
operations. Additionally, these conditions should not be construed as 
requiring localities to develop plans which contain the conditions. In 
any instance in which these planning conditions or criteria do not exist 
within the project area, project reviews will not be postponed until the 
criteria are adopted. Rather, projects will be reviewed and funding 
decisions made in light of a project's consistency with the contents of 
this subpart (excluding paragraph (a)(2)(ii) of this section, which 
would not be applicable).
    (b) Endangered species. FmHA or its successor agency under Public 
Law 103-354 will not authorize, fund, or carry out any proposal or 
project that is likely to
    (1) Jeopardize the continued existence of any plant or wildlife 
species listed by the Secretary of the Interior or Commerce as 
endangered or threatened; or
    (2) Destroy or adversely modify the habitats of listed species when 
such habitats have been determined critical to the species' existence by 
the Secretary of the Interior or Commerce, unless FmHA or its successor 
agency under Public Law 103-354 has been granted an exemption for such 
proposal by the Endangered Species Committee pursuant to paragraph (h) 
of section 7 of the Endangered Species Act.
    (c) Wild and scenic rivers. FmHA or its successor agency under 
Public Law 103-354 will not provide financial assistance or plan 
approval for any water resource project that would have a direct and 
adverse effect on the values for which a river has been either included 
in the National Wild and Scenic Rivers System or is designated for 
potential addition. Additionally, FmHA or its successor agency under 
Public Law 103-354 will not approve or assist developments (commercial, 
industrial, residential, farming or community facilities) located below 
or above a wild, scenic or recreational river area, or on any stream 
tributary thereto which will invade the area or unreasonably diminish 
the scenic, recreational, and fish and wildlife values present in the 
area.
    (d) Historic and cultural properties. As part of the environmental 
review process, FmHA or its successor agency under Public Law 103-354 
will identify

[[Page 15]]

any properties that are listed in, or may be eligible for, listing in 
the National Register of Historic Places and are located within the 
project's area of potential environmental impacts. Consultations will be 
undertaken with State Historic Preservation Officers and the Advisory 
Council on Historic Preservation, through the implementation of subpart 
F of part 1901 of this chapter, in order to determine the most 
appropriate course of action for protecting such identified properties 
or mitigating potential adverse impacts to them.
    (e) Coastal barriers. Under the requirements of the Coastal Barrier 
Resources Act, FmHA or its successor agency under Public Law 103-354 
will not provide financial assistance for any activity to be located 
within the Coastal Barrier Resources System unless
    (1) Such activity meets the criteria for an exception, as defined in 
section 6 of the Act, and
    (2) Consultation regarding the activity has been completed with the 
Secretary of the Interior.
    (f) Water and energy conservation. FmHA or its successor agency 
under Public Law 103-354 will encourage the conservation of water and 
energy in the development of its programs and policies and will 
encourage applicants to incorporate all economically feasible water and 
energy-saving features and designs within their proposals.
    (g) Intergovernmental initiatives on important land resources. On a 
broader scale, FmHA or its successor agency under Public Law 103-354 
will advocate, in cooperation with other USDA agencies (through the USDA 
State-level committee system), the retention of important farmlands and 
forestlands, prime rangeland, wetlands and floodplains whenever proposed 
conversions to other uses
    (1) Are caused or encouraged by actions or programs of a Federal 
Agency, or
    (2) Require licensing or approval by a Federal Agency, unless other 
needs clearly override the benefits derived from retention of such 
lands.
    (h) Water quality. FmHA or its successor agency under Public Law 
103-354 will not provide financial assistance to any activity that would 
either impair a State water quality standard, including designated and/
or existing beneficial uses that water quality criteria are designed to 
protect, or that would not meet antidegradation requirements.



Sec.  1940.305  Policy implementation.

    (a) Environmental impact analysis. The implementation of the 
environmental impact analysis requirements described in this subpart 
serves as the primary mechanism for FmHA or its successor agency under 
Public Law 103-354 as follows:
    (1) Incorporating environmental quality considerations into FmHA or 
its successor agency under Public Law 103-354 program and decision-
making processes,
    (2) Obtaining the views of the public and government agencies on 
potential environmental impacts associated with FmHA or its successor 
agency under Public Law 103-354 projects, and
    (3) Using all practicable means to avoid or to minimize any possible 
adverse environmental effects of FmHA or its successor agency under 
Public Law 103-354 actions.
    (b) Natural resource management. The State Director will develop a 
natural resource management guide. This guide will serve as an essential 
mechanism for implementing Sec.  1940.304 of this subpart; and, 
therefore, the guide must be consistent with and reflect the objectives 
and policies contained in Sec.  1940.304 of this subpart. At the same 
time, however, it must be tailored to take into account important State, 
regional, and local natural resource management objectives. The guide 
will be issued as a State Supplement for prior approval. The basic 
content, purposes, and uses of the guide are enumerated in exhibit B of 
this subpart and can be summarized as follows:
    (1) The guide will serve as a mechanism for assembling an inventory 
of the locations within the State of those natural resources, land uses, 
and environmental factors that have been specified by Federal, State and 
local authorities as deserving some degree of protection or special 
consideration;
    (2) The guide will summarize the various standards or types of 
Federal, State, or local protection that apply to

[[Page 16]]

the natural resources, land uses, and environmental factors listed in 
the inventory; and
    (3) Applications for individual projects must be reviewed for 
consistency with the guide.
    (c) Intergovernmental initiatives. When commenting on proposed 
Federal actions subject to environmental impact statements, FmHA or its 
successor agency under Public Law 103-354 commentors will focus on the 
consistency of these actions with the appropriate State natural resource 
management guide. A similar focus or element will be addressed in FmHA 
or its successor agency under Public Law 103-354's review of the 
Environmental Protection Agency's 201 Wastewater Management Plans.
    (d) Farmland Protection Policy Act and Departmental Regulation 9500-
3, Land Use Policy. The natural resource management guide serves as a 
tool for implementing the requirements of the Act and the Departmental 
Regulation at the broad level of implementing the Agency's programs at 
the State level. These requirements must also be followed in the review 
of applications for financial assistance or subdivision approval, as 
well as the disposal of real property. FmHA or its successor agency 
under Public Law 103-354's implementation procedures for the project 
review process are contained in exhibit C of this subpart.
    (e) Endangered Species. FmHA or its successor agency under Public 
Law 103-354 will implement the consultation procedures required under 
section 7 of the Endangered Species Act as specified in 50 CFR part 402. 
It is important to note that these consultation procedures apply to the 
disposal of real property and all FmHA or its successor agency under 
Public Law 103-354 applications for financial assistance and subdivision 
approval, including those applicants which are exempt from environmental 
assessments. FmHA or its successor agency under Public Law 103-354's 
implementation procedures are contained in exhibit D of this subpart.
    (f) Wild and scenic rivers. Each application for financial 
assistance or subdivision approval and the proposed disposal of real 
property will be reviewed to determine if it will affect a river or 
portion of it, which is either included in the National Wild and Scenic 
Rivers System, designated for potential addition to the system, or 
identified in the Nationwide Inventory prepared by the National Park 
Service (NPS) in the Department of the Interior (DOI). FmHA or its 
successor agency under Public Law 103-354's procedures for completing 
this review are contained in exhibit E of this subpart.
    (g) Historic and cultural properties. (1) As part of the 
environmental review process, FmHA or its successor agency under Public 
Law 103-354 will identify any properties that are listed in or may be 
eligible for listing in the National Register of Historic Places, and 
located within the area of potential environmental impact. 
Identification will consist of consulting the published lists of the 
National Register and formally contacting and seeking the comments of 
the appropriate State Historic Preservation Officer (SHPO). Since it is 
not always possible from the consultation with the SHPO to determine 
whether historic and cultural properties are present within the 
project's area of environmental impact, it may be necessary for FmHA or 
its successor agency under Public Law 103-354 to consult public records 
and other individuals and organizations, such as university 
archaeologists, local historical societies, etc. These latter 
discussions should take place before initiating a detailed site survey 
since they may provide reliable information that obviates the need for a 
survey. However, whenever insufficient information exists to document 
the presence or absence of potentially eligible National Register 
properties and where the potential for previously unidentified 
properties is recognized by FmHA or its successor agency under Public 
Law 103-354, the SHPO, or other interested parties, FmHA or its 
successor agency under Public Law 103-354 will conduct the necessary 
investigations to determine if such properties are present within the 
area of potential environmental impact. FmHA or its successor agency 
under Public Law 103-354 will involve the SHPO in the planning and 
formulation of any historic, cultural, architectural or archaeological 
testing,

[[Page 17]]

studies or surveys conducted to investigate the presence of such 
properties and will utilize persons with appropriate knowledge and 
experience.
    (2) If the information obtained, as a result of the consultation and 
investigations conducted by FmHA or its successor agency under Public 
Law 103-354, indicates the presence of an historic or cultural property 
within the area of potential environmental impact that, in the opinion 
of the SHPO and FmHA or its successor agency under Public Law 103-354, 
appear to meet the National Register Criteria (36 CFR 60.4), the 
property will be considered eligible for the National Register of 
Historic Places. If the SHPO and FmHA or its successor agency under 
Public Law 103-354 do not agree on the property's eligibility for the 
National Register or if the Secretary of the Interior or the Advisory 
Council on Historic Preservation so requests, FmHA or its successor 
agency under Public Law 103-354 will request a determination of 
eligibility from the Keeper of the National Register in accordance with 
36 CFR part 63. Consultations will be initiated with the SHPO and the 
Advisory Council on Historic Preservation in accordance with 36 CFR part 
800, through the implementation of subpart F of part 1901 of this 
chapter, to determine the most appropriate course of action to protect 
all National Register and eligible properties within the area of 
potential environmental impact.
    (3) Further instructions detailing the procedures to be followed in 
considering and protecting historic and cultural properties and the 
responsible Agency officials are contained in subpart F of part 1901 of 
this chapter. These procedures will be followed whenever a proposal, 
considered by FmHA or its successor agency under Public Law 103-354, has 
the potential to affect National Register or eligible properties.
    (h) Coastal barriers. In those States having coastal barriers within 
the Coastal Barrier Resources System, each application for financial 
assistance or subdivision approval, as well as the proposed disposal of 
real property, will be reviewed to determine if it would be located 
within the system, and, if so, whether the action must be denied on this 
basis or meets the Act's criteria for an exception. To accomplish the 
review, all affected State, District and County Offices will maintain a 
current set of maps, as issued by DOI, which depict those coastal 
barriers within their jurisdiction that have been included in the 
system. FmHA or its successor agency under Public Law 103-354's 
implementation procedures for accomplishing this review requirement and 
for consulting as necessary with DOI are contained in exhibit F of this 
subpart. The exceptions to the restrictions of the Coastal Barrier 
Resources Act are contained in exhibit L of this subpart.
    (i) Water and energy conservation. Water and energy conservation 
measures will be considered at both the program and project level in a 
manner consistent with program regulations.
    (j) Noise abatement. For purposes of assessing noise impacts and for 
determining the acceptability of housing sites in terms of their 
exposure to noise, FmHA or its successor agency under Public Law 103-354 
has adopted and follows the standards and procedures developed by the 
U.S. Department of Housing and Urban Development (HUD) and contained in 
24 CFR part 51 of subpart B entitled, ``Noise Abatement and Control.''
    (k) Water quality. Each application for financial assistance or 
subdivision approval and the proposed disposal of real property will be 
reviewed to determine if it would impair a State water quality standard 
or meet antidegradation requirements. When necessary, the proposed 
activity will be modified to protect water quality standards, including 
designated and/or existing beneficial uses that water quality criteria 
are designed to protect, and meet antidegradation requirements.



Sec.  1940.306  Environmental responsibilities within the National Office.

    (a) Administrator. The Administrator of FmHA or its successor agency 
under Public Law 103-354 has the direct responsibility for Agency 
compliance with all environmental laws, Executive orders, and 
regulations that apply to FmHA or its successor agency under

[[Page 18]]

Public Law 103-354's program and administrative actions. As such, the 
Administrator ensures that this responsibility is adequately delegated 
to Agency staff and remains informed on the general status of Agency 
compliance, as well as the need for any necessary improvements. The 
Administrator is also responsible for ensuring that the Agency's 
manpower and financial needs for accomplishing adequate compliance with 
this subpart are reflected and documented in budget requests for 
departmental consideration.
    (b) Deputy Administrator Program Operations. (1) The Deputy 
Administrator for Program Operations has the delegated overall Agency 
responsibility for developing and implementing environmental policies 
and compliance procedures, monitoring their effectiveness, and advising 
the Administrator on the status of compliance, to include 
recommendations for any necessary changes in this subpart. The incumbent 
is also responsible for developing and documenting, as part of the 
Agency's budget formulation process, the manpower and financial needs 
necessary to implement this subpart.
    (2) The specific responsibilities of the Deputy Administrator--
Program Operations are as follows:
    (i) Provide for the Agency an interdisciplinary approach to 
environmental impact analysis and problem resolution, as required by the 
CEQ regulations;
    (ii) Provide the leadership and technical expertise for the 
implementation of the Agency's environmental policies with special 
emphasis being placed on those policies relating to natural resource 
management, energy conservation, and orderly community development;
    (iii) Coordinate the implementation of this subpart with affected 
program offices;
    (iv) Provide policy direction and advice on the implementation of 
this subpart to Agency staff, particularly to SECs and technical support 
personnel within State Offices;
    (v) Consult and coordinate, as needed or upon request, with the 
Department's interagency committees dealing with environmental, land 
use, and historic preservation matters;
    (vi) Monitor the Agency's record in complying with this subpart;
    (vii) Provide training programs and materials for the Agency staff 
assigned the functions identified in this subpart;
    (viii) Review, as necessary, applications for funding assistance, 
proposed policies and regulations, and recommend their approval, 
disapproval, or modification after analyzing and considering their 
anticipated adverse environmental impacts, their benefits, and their 
consistency with the requirements of this subpart;
    (ix) Develop and direct Agency procedures for complying with 
environmental legislation, Executive orders, and regulations, including, 
but not limited to, those listed in Sec.  1940.301(c) of this subpart;
    (x) Maintain a position identified as the Senior Environmental 
Specialist (hereafter called the Environmental Specialist), who will 
serve as the responsible Agency official under the National 
Environmental Policy Act and the National Historic Preservation Act, 
maintain liaison on environmental matters with interested public groups 
and Federal agencies, and serve as the focal point for developing and 
coordinating the Agency's procedures for the requirements listed in 
Sec.  1940.301(c) of this subpart; and
    (xi) Review and evaluate legislative and administrative proposals in 
terms of their environmental impact.
    (c) Assistant Administrators for Programs. The Assistant 
Administrators for Programs will:
    (1) Ensure, as necessary, that environmental assessments and EISs 
for proposed program regulations are prepared by their staff;
    (2) Ensure that all proposed actions that fall under the 
requirements of this subpart, and that are submitted to the National 
Office for approval or concurrence, contain adequate analyses and 
documentation of their potential environmental impacts (Transfer of 
program funds from National Office to State Office control to enable the 
State Office to approve an application is not considered to be National 
Office approval of or concurrence in an application);

[[Page 19]]

    (3) Consider and include, in the development of program regulations, 
feasible policies and mechanisms that promote program goals in a manner 
that either enhances environmental quality or reduces unnecessary 
adverse environmental impacts; and
    (4) Designate one or more staff members to serve as a program 
environmental coordinator, having generally the same duties and 
responsibilities within the program office as the SEC has within the 
State Office (See Sec.  1940.307(b) of this subpart).



Sec.  1940.307  Environmental responsibilities within the State Office.

    (a) State Director. The State Director will:
    (1) Serve as the responsible FmHA or its successor agency under 
Public Law 103-354 official at the State Office level for ensuring 
compliance with the requirements of this subpart; and
    (2) Appoint one individual to serve as the SEC. Thereafter, the SEC 
will report directly to the State Director on the environmental matters 
contained in this subpart.
    (b) State Environmental Coordinator (SEC). The SEC will:
    (1) Act as advisor to the State Director on environmental matters 
and coordinate the requirements of this subpart;
    (2) Review those Agency actions which are not categorically excluded 
from this subpart (see Sec. Sec.  1940.311 and 1940.312 of this subpart) 
and which require the approval and/or clearance of the State Office and 
recommend to the approving official either project approval, 
disapproval, or modification after analyzing and considering the--
    (i) Anticipated adverse environmental impacts,
    (ii) The anticipated benefits, and
    (iii) The action's consistency with this subpart's requirements;
    (3) Represent the State Director at conferences and meetings dealing 
with environmental matters of a State Office nature;
    (4) Maintain liaison on State Office environmental matters with 
interested public groups and local, State, and other Federal agencies;
    (5) Serve as the State Director's alternate on State-level USDA 
committees dealing with environmental, land use and historic 
preservation matters;
    (6) Solicit, whenever necessary, the expert advice and assistance of 
other professional staff members within the State Office in order to 
adequately implement this subpart;
    (7) Provide technical assistance as needed on a project-by-project 
basis to State, District, and County Office staffs;
    (8) Develop controls for avoiding or mitigating adverse 
environmental impacts and monitor their implementation;
    (9) Provide assistance in resolving post-approval environmental 
matters at the State Office level;
    (10) Maintain records for those actions required by this subpart;
    (11) Coordinate for the State Director the development of the State 
Office natural resource management guide;
    (12) Provide direction and training to State, District, and County 
Office staffs on the requirements of this subpart; and
    (13) Coordinate for the State Director the monitoring of the State 
Office's compliance with this subpart and keep the State Director 
advised of the results of the monitoring process.
    (c) Program Chiefs. State Office Program Chiefs will:
    (1) Be responsible for the adequacy of the environmental impact 
reviews required by this subpart for all program actions to be approved 
at the State Office level or concurred in at that level;
    (2) Coordinate the above reviews as early as possible with the SEC, 
so that the latter can assist in addressing the resolution of any 
unresolved or difficult environmental issues in a timely manner; and
    (3) Incorporate into projects and actions measures to avoid or 
reduce potential adverse environmental impacts identified in 
environmental reviews.



Sec.  1940.308  Environmental responsibilities at the District and
County Office levels.

    (a) The District Director will be responsible for carrying out the 
actions required by this subpart to be completed at the District Office 
level.
    (b) The County Supervisor will be responsible for carrying out the 
actions

[[Page 20]]

required by this subpart to be completed at the County Office level.
    (c) In discussing FmHA or its successor agency under Public Law 103-
354 assistance programs with potential applicants, District Directors 
and County Supervisors will inform them of the Agency's environmental 
requirements, as well as the environmental information needs and 
responsibilities that FmHA or its successor agency under Public Law 103-
354 applicants are expected to address. (See Sec.  1940.309 of this 
subpart.)



Sec.  1940.309  Responsibilities of the prospective applicant.

    (a) FmHA or its successor agency under Public Law 103-354 expects 
applicants and transferees (and in the case of the loan guarantee 
programs, borrowers and transferees) to consider the potential 
environmental impacts of their requests at the earliest planning stages 
and to develop proposals that minimize the potential to adversely impact 
the environment. Prospective applicants should contact County 
Supervisors or District Directors, as appropriate, to determine FmHA or 
its successor agency under Public Law 103-354's environmental 
requirements as soon as possible after they decide to pursue FmHA or its 
successor agency under Public Law 103-354 financial assistance.
    (b) As specified in paragraph (c) of this section, applicants for 
FmHA or its successor agency under Public Law 103-354 assistance will be 
required to provide information necessary to FmHA or its successor 
agency under Public Law 103-354 to evaluate their proposal's potential 
environmental impacts and alternatives to them. For example, the 
applicant will be required to provide a complete description of the 
project elements and the proposed site(s) to include location maps, 
topographic maps, and photographs when needed. The applicant will also 
be required to provide data on any expected gaseous, liquid and solid 
wastes to be produced, including hazardous wastes as defined by the 
Resource Conservation and Recovery Act or State law, and all permits 
and/or correspondence issued by the appropriate local, State, and 
Federal agencies which regulate treatment and disposal practices.
    (c) Form FmHA or its successor agency under Public Law 103-354 1940-
20, ``Request for Environmental Information,'' will be used for 
obtaining environmental information from applicants whose proposals 
require an environmental assessment under the requirements of this 
subpart. These same applicants must notify the appropriate State 
Historic Preservation Officer of the filing of the application and 
provide a detailed project description as specified in Item 2 of Form 
FmHA or its successor agency under Public Law 103-354 1940-20 and the 
FMI. If the applicant's proposal meets the definition of a Class II 
action as defined in Sec.  1940.312 of this subpart, all of Form FmHA or 
its successor agency under Public Law 103-354 1940-20 must be completed. 
If the applicant's proposal meets the definition of a Class I action as 
defined in Sec.  1940.311 of this subpart, the entire form need not be 
completed, but just the face of the form and categories (1), (2), (13), 
(15), (16), and (17) of Item 1b of the FMI. As an exception to the 
foregoing statement, an applicant for an action that is normally 
categorically excluded but requires a Class I assessment for any of the 
reasons stated in Sec.  1940.317(e) of this subpart is not required to 
complete Form FmHA or its successor agency under Public Law 103-354 
1940-20. Additionally, for Class I actions within the Farm Programs, a 
site visit by the FmHA or its successor agency under Public Law 103-354 
official completing the environmental assessment obviates the need for 
the applicant to complete any of the form, and the adoption by FmHA or 
its successor agency under Public Law 103-354 of a Soil Conservation 
Service (SCS) environmental assessment or evaluation for the action 
obviates the need to complete the form for either a Class I or Class II 
action.
    (d) Applicants will ensure that all required materials are current, 
sufficiently detailed and complete, and are submitted directly to the 
FmHA or its successor agency under Public Law 103-354 office processing 
the application. Incomplete materials or delayed submittals may 
seriously jeopardize consideration or postponement of a proposed action 
by FmHA or its successor agency under Public Law 103-354.

[[Page 21]]

    (e) During the period of application review and processing, 
applicants will not take any actions with respect to their proposed 
undertakings which are the subject of the application and which would 
have an adverse impact on the environment or limit the range of 
alternatives. This requirement does not preclude development by 
applicants of preliminary plans or designs or performance of other work 
necessary to support an application for Federal, State, or local permits 
or assistance. However, the development of detailed plans and 
specifications is discouraged when the costs involved inhibit the 
realistic consideration of alternative proposals.
    (f) Applicants are required to provide public notification and to 
fully cooperate in holding public information meetings as described in 
Sec. Sec.  1940.318(e), 1940.320 (c) and (g), and 1940.331 (b) and (c) 
of this subpart.
    (g) Any applicant that is directly and adversely affected by an 
administrative decision made by FmHA or its successor agency under 
Public Law 103-354 under this subpart may appeal that decision under the 
provisions of subpart B of part 1900 of this chapter.



Sec.  1940.310  Categorical exclusions from National Environmental 
Policy Act (NEPA) reviews.

    (a) General guidelines. The following actions have been determined 
not to have a significant impact on the quality of the human 
environment, either individually or cumulatively. They will not be 
subject to environmental assessments or impact statements. It must be 
emphasized that even though these actions are excluded from further 
environmental reviews under NEPA, they are not excluded from either the 
policy considerations contained in Sec. Sec.  1940.303 through 1940.305 
of this subpart or from compliance with other applicable local, State, 
or Federal environmental laws. Also, the actions preceded by an asterisk 
(*) are not excluded from further review depending upon whether in some 
cases they would be located within, or in other cases, potentially 
affect:
    (1) A floodplain,
    (2) A wetland,
    (3) Important farmlands, or prime forestlands or rangelands,
    (4) A listed species or critical habitat for an endangered species,
    (5) A property that is listed on or may be eligible for listing on 
the National Register of Historic Places,
    (6) An area within an approved State coastal zone management 
program,
    (7) A coastal barrier or a portion of a barrier within the Coastal 
Barrier Resources System,
    (8) A river or portion of a river included in, or designated for, 
potential addition to the Wild and Scenic Rivers System,
    (9) A sole source aquifer recharge area, or
    (10) A State water quality standard (including designated and/or 
existing beneficial uses and antidegradation requirements).
    (i) Whether location within one of the preceding resource areas is 
sufficient to require a further review or a potential impact to one of 
them must also be identified to require a review is determined by FmHA 
or its successor agency under Public Law 103-354's completion of Form 
FmHA or its successor agency under Public Law 103-354 1940-22 in 
accordance with the FMI and Sec.  1940.317 of this subpart.
    (ii) When the categorical exclusion classification is lost, as 
specified in Sec.  1940.317 of this subpart, the action must be reviewed 
under the requirements of paragraph (g) of that section. This 
requirement serves to implement Sec.  1508.4 of the CEQ regulations 
which requires Federal agencies to detect extraordinary circumstances in 
which a normally excluded action may have a significant environmental 
effect.
    (iii) Further guidance on the use of these exclusions is contained 
in Sec.  1940.317 of this subpart.
    (b) Housing assistance. *(1) The provision of financial assistance 
for the purchase of a single family dwelling or a multi-family project 
serving no more than four families, i.e., units;
    (2) The approval of an individual building lot that is located on a 
scattered site and either not part of a subdivision or within a 
subdivision not requiring FmHA or its successor agency under Public Law 
103-354's approval;
    *(3) Rehabilitation, replacement, or renovation of any existing 
housing

[[Page 22]]

units, with no expansion in the number of units;
    (4) Self-Help Technical Assistance Grants;
    *(5) The approval of a subdivision that consists of four or fewer 
lots and is not part of, or associated with, building lots or 
subdivisions;
    (6) Technical Supervisory Assistance Loans and Grants;
    (7) Weatherization of any existing housing unit(s), unless the 
property is listed in the National Register of Historic Places or may be 
eligible for listing, or is located either within the Coastal Barrier 
Resources System or in a listed or potentially eligible historic 
district, in which case the application will require a Class I 
assessment as specified in Sec.  1940.317(g) of this subpart;
    (8) The financing of housing construction or the approval of lots in 
a previously approved FmHA or its successor agency under Public Law 103-
354 subdivision provided that
    (i) The action is consistent with all previously adopted 
stipulations for the multi-family housing project or subdivision, and
    (ii) The FmHA or its successor agency under Public Law 103-354 
environmental impact review that was previously completed for the 
original application is still current with respect to applicable 
environmental requirements and conditions present at the site, and it 
assessed the lots or expansion for which approval is being requested;
    (9) The purchase of any existing, non-FmHA or its successor agency 
under Public Law 103-354 owned housing unit(s), unless the property is 
listed in the National Register of Historic Places or may be eligible 
for listing, or is located either within a 100-year floodplain, the 
Coastal Barrier Resources System, or in a listed or potentially eligible 
historic district, in which case the application will require a Class I 
assessment as specified in Sec.  1940.317(g) of this subpart; and
    (10) Appraisals of nonfarm tracts and small farms for rural housing 
loans.
    (c) Community and business programs and nonprofit national 
corporations loan and grant program. *(1) Financial assistance directed 
to existing businesses, facilities, and/or structures that does not 
involve new construction or large increases in employment; does not 
involve a facility that presently or previously produced or stored 
hazardous waste or disposed of hazardous waste on the facility's 
property; and does not result in the increased production of gaseous, 
liquid, or solid wastes, or a change in the type or content of such 
wastes as long as waste production, handling, treatment and disposal 
practices presently comply with applicable Federal, State and local 
regulations and there is no history of violations. If any of these waste 
production, handling, treatment, disposal or compliance criteria cannot 
be met, a Class I assessment must be initiated to include a narrative 
discussion of the types and quantities of wastes produced and the 
adequacy of the treatment, storage, and disposal practices, if the 
involved wastes meet the criteria for a Class I assessment contained in 
Sec.  1940.311(b)(3)(iii) of this subpart. If not, a Class II assessment 
must be completed.
    *(2) Projects that solely involve the acquisition, construction, 
reconstruction, renovation, or installation of facilities, structures or 
businesses, for replacement or restoration purposes, with minimal change 
in use, size, capacity, purpose or location from the original facility 
(e.g., replacement in-kind of utilities such as water or sewer lines and 
appurtenances, reconstruction of curbs and sidewalks, street repaving, 
and building modifications, renovations, and improvements);
    (3) Project management actions relating to invitation for bids, 
contract award, and the actual physical commencement of construction 
activities;
    (4) Financial assistance for a technical assistance grant under the 
nonprofit national corporation loan and grant program;
    (5) Projects that solely involve the purchase and installation of 
office equipment, public safety equipment, or motor vehicles; and
    (6) Amendments to approved projects meeting the criteria of 
paragraph (e)(2) of this section.
    (7) Rural Business Investment Program actions, which can be divided 
into:

[[Page 23]]

    (i) Non-leveraged program actions that include licensing by USDA of 
Rural Business Investment Companies (RBIC); and
    (ii) Leveraged program actions that include licensing by USDA of 
RBIC and Federal financial assistance in the form of technical grants or 
guarantees of debentures of an RBIC, unless such federal assistance is 
used to finance construction or development of land.
    (d) Farm programs. (1) Financial assistance for the purchase of an 
existing farm, or an enlargement to one, provided no shifts in land use 
are proposed beyond the limits stated in paragraphs (d) (10) and (11) of 
this section;
    (2) Financial assistance for the purchase of livestock and essential 
farm equipment, including crop storing and drying equipment, provided 
such equipment is not to be used to accommodate shifts in land use 
beyond the limits stated in paragraphs (d) (10) and (11) of this 
section;
    (3) Financial assistance for:
    (i) The payment of annual operating expenses, which does not cover 
activities specifically addressed in this section or Sec.  1940.311 or 
Sec.  1940.312 of this subpart;
    (ii) Family living expenses, and
    (iii) Refinancing debts;
    *(4) Financial assistance for the construction of essential farm 
dwellings and service buildings of modest design and cost, as well as 
repairs and improvements to them;
    (5) Financial assistance for onsite water supply facilities to serve 
a farm dwelling, farm buildings, and livestock needs;
    (6) Financial assistance for the installation or enlargement of 
irrigation facilities, including storage reservoirs, diversion dams, 
wells, pumping plants, canals, pipelines, and sprinklers designed to 
irrigate less than 80 acres, provided that neither a State water quality 
standard, a property listed or potentially eligible for listing on the 
National Register of Historic Places, a river or portion of a river 
included in, or designated for, potential addition to the Wild and 
Scenic Rivers System, nor a wetland is affected. If a wetland is 
affected, the application will fall under Class II as defined in Sec.  
1940.312 of this subpart. Potential effects to a water quality standard, 
an historic property or the Wild and Scenic Rivers System require that a 
review be initiated under a Class I assessment as specified in Sec.  
1940.317(g) of this subpart.
    (7) Financial assistance that solely involves the replacement or 
restoration of irrigation facilities, to include those facilities 
described in paragraph (d)(6) of this section, with minimal change in 
use, size, capacity, or location from the original facility(s) provided 
that neither a State water quality standard, a property listed or 
potentially eligible for listing on the National Register of Historic 
Places, a river or portion of a river included in or designated for 
potential addition to the Wild and Scenic Rivers System, nor a wetland 
is affected. If a wetland is affected, the application will fall under 
Class II as defined in Sec.  1940.312 of this subpart. Potential effects 
to a water quality standard, an historic property, or the Wild and 
Scenic Rivers System require that a Class I assessment be completed as 
specified in Sec.  1940.317(g) of this subpart. Also, to qualify for 
this exclusion, the facilities to be replaced or restored must have been 
used for similar irrigation purposes at least two out of the last three 
consecutive growing seasons. Otherwise, the action will be viewed as an 
installation of irrigation facilities.
    (8) Financial assistance for the development of farm ponds or lakes 
of no more than 5 acres in size, provided that, neither a State water 
quality standard, a property listed or potentially eligible for listing 
on the National Register of Historic Places, a river or portion of a 
river included in or designated for potential addition to the Wild and 
Scenic Rivers System, nor a wetland is affected. If a wetland is 
affected, the application will fall under Class II as defined in Sec.  
1940.312 of this subpart. Potential effects to a water quality standard, 
an historic property, or the Wild and Scenic Rivers System require that 
a review be initiated under a Class I assessment as specified in Sec.  
1940.317(g) of this subpart;
    *(9) Financial assistance for the conversion of:
    (i) Land in agricultural production to pastures or forests, or
    (ii) Pastures to forests;

[[Page 24]]

    *(10) Financial assistance for land-clearing operations of no more 
than 15 acres, provided no wetlands are affected, and financial 
assistance for any amount of land involved in tree harvesting conducted 
on a sustained yield basis and according to a Federal, State or other 
governmental unit approved forestry management and marketing plan; and
    (11) Financial assistance for the conversion of no more than 160 
acres of pasture to agricultural production, provided that in a 
conversion to agricultural production no State water quality standard or 
wetlands are affected. If a wetland is affected, the application will 
fall under Class II as defined in Sec.  1940.312 of this subpart. If a 
water quality standard would be impaired or antidegradation requirement 
not met, a Class I assessment is required as specified in Sec.  
1940.317(g) of this subpart.
    (e) General exclusions. (1) The award of financial assistance for 
planning purposes, management and feasibility studies, or environmental 
impact analyses;
    (2) For actions other than those covered by exhibit M of this 
subpart, loan-closing and servicing activities, transfers, assumptions, 
subordinations, construction management activities and amendments and 
revisions to approved projects, including the provision of additional 
financial assistance that do not alter the purpose, operation, location, 
or design of the project as originally approved;
    (3) The issuance of regulations and instructions, as well as 
amendments to them, describing administrative and financial procedures 
for processing, approving, and implementing the Agency's financial 
assistance programs;
    (4) Procurement activities for goods and services, routine facility 
operations, personnel actions, and other such management activities 
related to the operation of the Agency;
    (5) Reduction in force or employee transfers resulting from workload 
adjustments, reduced personnel or funding levels, skill imbalances, or 
other similar circumstances; and
    *(6) The lease or disposal of real property by FmHA or its successor 
agency under Public Law 103-354 whenever the transaction is either not 
controversial for environmental reasons or will not result in a change 
in use of the real property within the reasonably foreseeable future.

[53 FR 36240, Sept. 19, 1988, as amended at 76 FR 80220, Dec. 23, 2011]



Sec.  1940.311  Environmental assessments for Class I actions.

    The Agency's proposals and projects that are not identified in Sec.  
1940.310 of this subpart as categorical exclusions require the 
preparation of an environmental assessment in order to determine if the 
proposal will have a significant impact on the environment. For purposes 
of implementing NEPA, the actions listed in this section are presumed to 
be major Federal actions. If an action has a potential to create a 
significant environmental impact, an EIS must be prepared. (In 
situations when there is clearly a potential for a significant impact, 
the EIS may be initiated directly without the preparation of an 
assessment.) It is recognized that many of the applications funded 
annually by FmHA or its successor agency under Public Law 103-354 
involve small-scale projects having limited environmental impacts. 
However, because on occasion they have the potential to create a 
significant impact, each must be assessed to determine the degree of 
impact. The scope and level of detail of an assessment for a small-scale 
action, though, need only be sufficient to determine whether the 
potential impacts are substantial and further analysis is necessary. 
Therefore, for the purpose of implementing NEPA, FmHA or its successor 
agency under Public Law 103-354 has classified its smaller scale 
approval actions as Class I actions. The format which will be used for 
accomplishing the environmental assessment of a Class I action is 
provided in Form FmHA or its successor agency under Public Law 103-354 
1940-21. An important aspect of this classification method is that it 
allows FmHA or its successor agency under Public Law 103-354's 
environmental review staff to concentrate most of its time and efforts 
on those actions having the potential for more serious or complex 
environmental impacts. Additional guidance on the application of NEPA to 
Class I

[[Page 25]]

actions is provided in Sec.  1940.319 of this subpart.
    (a) Housing assistance. If either of the following actions is an 
expansion of a previously approved FmHA or its successor agency under 
Public Law 103-354 housing project, see Sec.  1940.310(b)(8) of this 
subpart to determine if it meets the requirements for a categorical 
exclusion. In the case of an expansion for which an environmental 
assessment was not done for the original FmHA or its successor agency 
under Public Law 103-354 project, the size of the proposal for 
assessment purposes is determined by adding the number of units in the 
original project(s) to those presently being requested.
    (1) Financial assistance for a multi-family housing project, 
including labor housing which comprises at least 5 units, but no more 
than 25 units; and
    (2) Financial assistance for or the approval of a subdivision, as 
well as the expansion of an existing one which involves at least 5 lots 
but no more than 25 lots; and
    (3) Financial assistance for a housing preservation grant.
    (b) Community and business programs and nonprofit national 
corporations loan and grant program. Class I assessments will be 
prepared for the following categories:
    (1) Financial assistance for water and waste disposal facilities and 
natural gas facilities that meet all of the following criteria:
    (i) There will not be a substantial increase in the volume of 
discharge or the loading of pollutants from any existing or expanded 
sewage treatment facilities, or a substantial increase in an existing 
withdrawal from surface or ground waters. A substantial increase may be 
evidenced by an increase in hydraulic capacity or the need to obtain a 
new or amended discharge or withdrawal permit.
    (ii) There will not be either a new discharge to surface or ground 
waters or a new withdrawal from surface or ground waters such that the 
design capacity of the discharge or withdrawal facility exceeds 50,000 
gallons per day and provided that the potential water quality impacts 
are documented in a manner required for a Class II assessment and 
attached as an exhibit to the Class I assessment.
    (iii) From the boundaries listed below, there is no extension, 
enlargement or construction of interceptors, collection, transmission or 
distribution lines beyond a one-mile limit estimated from the closest 
point of the boundary most applicable to the proposed service area:
    (A) The boundary formed by the corporate limits of the community 
being served.
    (B) If there are developed areas immediately contiguous to the 
corporate limits of a community, the boundary formed by the limits of 
these developed areas.
    (C) If an unincorporated area is to be served, the boundary formed 
by the limits of the developed areas.
    (iv) The proposal is designed for predominantly residential use with 
other new or expanded users being small-scale commercial enterprises 
having limited secondary impacts.
    (v) For a proposed expansion of sewage treatment or water supply 
facilities, such expansions would serve a population that is no more 
than 20 percent greater than the existing population.
    (vi) The proposal is not controversial for environmental reasons, 
nor have relevant questions been raised regarding its environmental 
impact which cannot be addressed in a Class I assessment.
    (2) Financial assistance for group homes, detention facilities, 
nursing homes, or hospitals, providing a net increase in beds of not 
more than 25 percent or 25 beds, whichever is greater; and
    (3) Financial assistance for the construction or expansion of 
facilities, such as fire stations, real stores, libraries outpatient 
medical facilities, service industries, additions to manufacturing 
plants, office buildings, and wholesale industries, that:
    (i) Are confined to single, small sites; and
    (ii) Are not a source of substantial traffic generation; and
    (iii) Do not produce either substantial amounts of liquid or solid 
wastes or any of the following type(s) of wastes:

[[Page 26]]

    (A) Gaseous, liquid, or solid waste that is hazardous toxic, 
radioactive, or odorous;
    (B) Either a liquid waste, whether or not disposed of on-site, that 
cannot be accepted by a publicly owned treatment works without first 
receiving pretreatment, or a liquid waste discharge that is a point 
source subject to a Federal, or State discharge permit; or
    (C) Gaseous waste or air pollutant that will be emitted either from 
a new source at a rate greater than one hundred tons per year or from an 
expanded source at a rate greater than twenty-five tons per year.
    (4) Financial assistance for a livestock-holding facility or feed-
lot meeting the criteria of Sec.  1940.311(c)(8) of this subpart.
    (c) Farm Programs. In completing environmental assessments for the 
following Class I actions and the Class II actions listed in Sec.  
1940.312(d), special attention will be given to avoiding a duplication 
of effort with other Department agencies, particularly SCS. For 
applications in which the applicant is receiving assistance from other 
agencies, technical assistance from SCS, for example, FmHA or its 
successor agency under Public Law 103-354 will request from that agency 
a copy of any applicable environmental review conducted by it and will 
adopt that review if the requirements of Sec.  1940.324 of this subpart 
are met. FmHA or its successor agency under Public Law 103-354 will work 
closely with the other Federal Agencies to supplement previous or 
ongoing reviews whenever they cannot be readily adopted.
    (1) Financial assistance for the installation or enlargement of 
irrigation facilities including storage reservoirs, diversion dams, 
wells, pumping plants, canals, pipelines, and sprinklers designed to 
irrigate at least 80 acres, but no more than 160 acres and provided that 
no wetlands are affected, in which case the application will fall under 
Class II as defined in Sec.  1940.312 of this subpart:
    (2) Financial assistance for the development of farm ponds or lakes 
of more than 5 acres in size, but no more than 10 acres, provided that 
no wetlands are affected. If wetlands are affected, the application will 
fall under Class II as defined in Sec.  1940.312 of this subpart;
    (3) Financial assistance for land-clearing operations encompassing 
over 15 acres, but no more than 35 acres, provided that no wetlands are 
affected. If wetlands are affected, the application will fall under 
Class II as defined in Sec.  1940.312 of this subpart;
    (4) Financial assistance for the construction of energy producing 
facilities designed for on-farm needs such as methane digestors and fuel 
alcohol production facilities;
    (5) Financial assistance for the conversion of more than 160 acres 
of pasture to agricultural production, but no more than 320 acres, 
provided that in a conversion to agricultural production no wetlands are 
affected, in which case the application will fall under Class II as 
defined in Sec.  1940.312 of this subpart;
    (6) Financial assistance to grazing associations;
    (7) Financial assistance for the use of a farm or portion of a farm 
for recreational purposes or nonfarm enterprises utilizing no more than 
10 acres, provided that no wetlands are affected. If wetlands are 
affected, the application will fall under Class II as defined in Sec.  
1940.312 of this subpart; and
    (8) Financial assistance for a livestock-holding facility or feedlot 
having a capacity of at least one-half of those listed in Sec.  
1940.312(c)(9) of this subpart. (If the facility is located near a 
populated area or could potentially violate a State water quality 
standard, it will be treated as a Class II action as required by Sec.  
1940.312(c)(10) of this subpart.)
    (d) General. (1) Any Federal action which is defined in Sec.  
1940.310 of this subpart as a categorical exclusion, but which is 
controversial for environmental reasons, or which is the subject of an 
environmental complaint raised by a government agency, interested group, 
or citizen;
    (2) Loan-closing and servicing activities, transfers, assumptions, 
subordinations, construction management activities, and amendments and 
revisions to all approved actions listed either in this section or 
equivalent in size or type to such actions and that alter the purpose, 
operation, location or design of the project as originally approved;

[[Page 27]]

    (3) The lease or disposal of real property by FmHA or its successor 
agency under Public Law 103-354 which meets either the following 
criteria:
    (i) The lease or disposal may result in a change in use of the real 
property in the reasonably foreseeable future, and such change is 
equivalent in magnitude or type to either the Class I actions defined in 
this section or the categorical exclusions defined in Sec.  1940.310 of 
this subpart; or
    (ii) The lease or disposal is controversial for environmental 
reasons, and the real property is equivalent in size or type to either 
the Class I actions defined in this section or the categorical 
exclusions defined in Sec.  1940.310 of this subpart.



Sec.  1940.312  Environmental assessments for Class II actions.

    Class II actions are basically those which exceed the thresholds 
established for Class I actions and, consequently, have the potential 
for resulting in more varied and substantial environmental impacts. A 
more detailed environmental assessment is, therefore, required for Class 
II actions in order to determine if the action requires an EIS. The 
format that will be used for completing this assessment is included as 
exhibit H of this subpart. Further guidance on Class II actions is 
contained in Sec.  1940.318 of this subpart. Class II actions are 
presumed to be major Federal actions and are defined as follows:
    (a) Housing assistance. If either of the following actions is an 
expansion of a previously approved FmHA or its successor agency under 
Public Law 103-354 housing project, see Sec.  1940.310(b)(8) of this 
subpart to determine if it meets the requirements for a categorical 
exclusion, otherwise it is a Class II action.
    (1) Financial assistance for a multi-family housing project, 
including labor housing, which comprises more than 25 units; and
    (2) Financial assistance for, or the approval of, a subdivision as 
well as the expansion of an existing one, which involves more than 25 
lots.
    (b) Community and business programs and nonprofit national 
corporations loan and grant program. (1) Class II actions are those 
which either do not meet the criteria for a categorical exclusion as 
stated in Sec.  1940.311 of this subpart, or involve a livestock-holding 
facility or feedlot meeting the criteria for a Class II action as 
defined in paragraphs (c) (9) and (10) of this section; and
    (2) Non-technical assistance grant or loan guarantee under nonprofit 
national corporation loan and grant program.
    (c) Farm programs. In completing environmental assessments for the 
following actions, FmHA or its successor agency under Public Law 103-354 
will first determine if the applicant has sought technical assistance 
from the Soil Conservation Service (SCS). If not, the applicant will be 
requested to do so. Subsequently, an approved loan will be structured so 
as to be consistent with any conservation plan developed with the 
application by SCS. However, the FmHA or its successor agency under 
Public Law 103-354 approving official need not include an element of the 
conservation plan within the loan agreement if that official determines 
that the element is both nonessential to the accomplishment of the 
plan's objectives and so costly as to prevent the borrower from being 
able to repay the loan. The SCS environmental review will be adopted by 
FmHA or its successor agency under Public Law 103-354 if the 
requirements of Sec.  1940.324 of this subpart are met.
    (1) Financial assistance for the installation or enlargement of 
irrigation facilities including storage reservoirs, diversion dams, 
wells, pumping plants, canals, pipelines, and sprinklers either designed 
to irrigate more than 160 acres or that would serve any amount of 
acreage and affects a wetland;
    (2) Financial assistance for the development of farm ponds or lakes 
either larger than 10 acres in size or for any smaller size that would 
affect a wetland;
    (3) Financial assistance for land-clearing operations either 
encompassing more than 35 acres or affecting a wetland, if less than 35 
acres is involved;
    (4) Financial assistance for the construction or enlargement of 
aquaculture facilities;

[[Page 28]]

    (5) Financial assistance for the conversion of more than 320 acres 
of pasture to agricultural production or for any smaller conversion of 
pasture to agricultural production that affects a wetland;
    (6) Financial assistance to an individual farmer or an association 
of farmers for water control facilities such as dikes, detention 
reservoirs, stream channels, and ditches;
    (7) Financial assistance for the use of a farm or portion of a farm 
for recreational purposes or nonfarm enterprises either utilizing more 
than 10 acres or affecting a wetland, if less than 10 acres is involved.
    (8) Financial assistance for alteration of a wetland;
    (9) Financial assistance for a livestock-holding facility or feedlot 
located in a sparsely populated farming area having a capacity as large 
or larger than one of the following capacities; 1,000 slaughter steers 
and heifers; 700 mature dairy cattle (whether milkers or dry cows); 
2,500 swine; 10,000 sheep; 55,000 turkeys; 100,000 laying hens or 
broilers when facility has unlimited continuous flow watering systems; 
30,00 laying hens or broilers when facility has liquid manure handling 
system; 500 horses; and 1,000 animal units from a combination of 
slaughter steers and heifers, mature dairy cattle, swine, and sheep; 
(The term animal unit means a unit of measurement for any animal feeding 
operation calculated by adding the following numbers: the number of 
slaughter and feeder cattle multiplied by 1.0, plus the number of mature 
dairy cattle multiplied by 1.4, plus the number of swine weighing over 
25 kilograms (approximately 55 pounds) multiplied by 0.4, plus the 
number of sheep multiplied by 0.1, plus the number of horses multiplied 
by 2.0) and
    (10) Financial assistance for a livestock-holding facility or 
feedlot which either could potentially violate a State water quality 
standard or is located near a town or collection of rural homes which 
could be impacted by the facility, particularly with respect to noise, 
odor, visual, or transportation impacts and having a capacity of at 
least one-half of those listed in paragraph (c)(9) of this section.
    (d) General. (1) Any action which meets the numerical criteria or 
other restriction for a Class I action contained in Sec.  1940.311 of 
this subpart, but is controversial for environmental reasons. If the 
action is the subject of isolated environmental complaints or any 
questions or concerns that focus on a single impact, air quality, for 
example, the analysis of such a complaint or questions can be handled 
under the assessment format for a Class I action, Form FmHA or its 
successor agency under Public Law 103-354 1940-21, as explained in Sec.  
1940.319 of this subpart. When several potential impacts are questioned, 
however, the assessment format (exhibit H of this subpart) for a Class 
II action must be used to address these questions;
    (2) Loan-closing and servicing activities, transfers, assumptions, 
subordinations, construction management activities and amendments and 
revisions to all approved actions listed either in this section or 
equivalent in size or type to such actions and that alter the purpose, 
operation, location, or design of the project as originally approved;
    (3) The approval of plans and State Investment Strategies for Energy 
Impacted Areas, designated under section 601 Energy Impacted Area 
Development Assistance Program, as well as the applications for 
financial assistance (excluding the award of planning funds) for Energy 
Impact Areas;
    (4) Proposals for legislation as defined in CEQ's regulations, Sec.  
1508.17;
    (5) The issuance of regulations and instructions, as well as 
amendments to these, that described either the entities, proposals and 
activities eligible for FmHA or its successor agency under Public Law 
103-354 financial assistance, or the manner in which such proposals and 
activities must be located, constructed, or implemented; and
    (6) The lease or disposal of any real property by FmHA or its 
successor agency under Public Law 103-354 which either does not meet the 
criteria for a categorical exclusion as stated in Sec.  1940.310(e)(6) 
of this subpart or a Class I action as stated in Sec.  1940.311(d)(3) of 
this subpart.

[[Page 29]]



Sec.  1940.313  Actions that normally require the preparation of an
Environmental Impact Statement (EIS).

    The environmental assessment process will be used, as defined in 
this subpart, to identify on a case-by-case basis those actions for 
which the preparation of an EIS is necessary. Given the variability of 
the types and locations of actions taken by FmHA or its successor agency 
under Public Law 103-354, no groups or set of actions can be identified 
which in almost every case would require the preparation of an EIS.



Sec.  1940.314  Criteria for determining a significant environmental impact.

    (a) EISs will be done for those Class I and Class II actions that 
are determined to have a significant impact on the quality of the human 
environment. The criteria for determining significant impacts are 
contained in Sec.  1508.27 of the CEQ regulations.
    (b) In utilizing the criteria for a significant impact, the 
cumulative impacts of other FmHA or its successor agency under Public 
Law 103-354 actions planned or recently approved in the proposal's area 
of environmental impact, other related or similarly located Federal 
actions, and non-federal related actions must be given consideration. 
This is particularly relevant for frequently recurring FmHA or its 
successor agency under Public Law 103-354 actions that on an individual 
basis may have relatively few environmental impacts but create a 
potential for significantly impacts on a cumulative basis. Housing 
assistance is one such example. Consequently, in reviewing proposals for 
subdivisions and multi-family housing sites, consideration must be given 
to the cumulative impacts of other federally assisted housing in the 
area, including FmHA or its successor agency under Public Law 103-354's. 
The boundaries of the area to be considered should be based upon such 
factors as common utility or public service districts, common 
watersheds, and common commuting patterns to central employment or 
commercial areas. Additionally, the criteria for significant impacts 
utilized by the other involved housing agency(s), (VA and HUD, for 
example) must be reviewed when there is a potential for cumulative 
impacts. FmHA or its successor agency under Public Law 103-354 will 
consult with HUD for determining a significant impact whenever the total 
of HUD and FmHA or its successor agency under Public Law 103-354 housing 
units being planned within a common area of environmental impact exceeds 
the HUD thresholds listed in its NEPA regulations. (See 24 CFR part 50.)
    (c) Because the environmental values and functions of floodplains 
and wetlands are of critical importance to man, and because these areas 
are often extremely sensitive to man-induced disturbances, actions which 
affect wetlands and floodplains will be considered to have a significant 
environmental impact whenever one or more of the following criteria are 
met:
    (1) The public health and safety are identifiably affected, that is, 
whenever the proposed action may affect any standards promulgated under 
the Safe Drinking Water Act (42 U.S.C. 300f et seq.), the Clean Water 
Act (33 U.S.C. 1251 et seq.) or similar State authorities.
    (2) The preservation of natural systems is identifiably affected, 
that is, whenever the proposed action or related activities may 
potentially create or induce changes in the existing habitat that may 
affect species diversity and stability (both flora and fauna and over 
the short and long term) or affect ecosystem productivity over the long 
term.
    (3) The proposal, if located or carried out within a floodplain, 
poses a greater than normal risk for flood-caused loss of life or 
property. Examples of such actions include facilities which produce, 
use, or store highly volatile, toxic, or water-reactive materials or 
facilities which contain occupants who may not be sufficiently mobile to 
avoid the loss of life or injury during flood and storm events (i.e., 
hospitals, nursing homes, schools).



Sec.  1940.315  Timing of the environmental review process.

    (a) The FmHA or its successor agency under Public Law 103-354 office 
to which a potential applicant would go to seek program information and 
request application materials will notify

[[Page 30]]

the applicant of the major environmental requirements applicable to the 
type of assistance being sought. Emphasis should be placed on describing 
FmHA or its successor agency under Public Law 103-354's natural resource 
management policies, the nature and purpose of the environmental impact 
assessment process, and the permissible actions of the applicant during 
this process.
    (b) When a preapplication is either filed by the applicant or 
required by FmHA or its successor agency under Public Law 103-354 for a 
project not categorically excluded, the prospective applicant will be 
requested to complete Form FmHA or its successor agency under Public Law 
103-354 1940-20 at the time of the issuance of Form AD-622, ``Notice of 
Preapplication Review Action,'' or other notice inviting an application. 
Form AD-622 will clearly inform the applicant that during the period of 
application review, the applicant is to take no actions or incur any 
obligations which would either limit the range of alternatives to be 
considered or which would have an adverse effect on the environment, and 
that satisfactory completion of the environmental review process must 
occur prior to the issuance of the letter of conditions for Community 
Programs and prior to loan approval for all other programs where a 
preapplication is used. FmHA or its successor agency under Public Law 
103-354 must make its environmental reviews simultaneously with other 
loan processing actions so that they are an integral part of the loan 
process. Whenever the potential for a major adverse environmental impact 
is recognized, such as issues pertaining to floodplains, wetlands, 
endangered species, or the need for an EIS, priority consideration will 
be given to resolving this issue by appropriate FmHA or its successor 
agency under Public Law 103-354 staff. Loan processing need not cease 
during this resolution period, but loan processing actions will not be 
taken that might limit alternatives to be considered or whose outcome 
may be affected by the environmental review. The environmental impact 
review (whether a categorical exclusion, environmental assessment or 
EIS) must be completed prior to the issuance of the letter of conditions 
for Community Programs, prior to issuance of a conditional commitment 
for the Business and Industry and Farmer Program Guaranteed Loan 
Programs, and either prior to loan approval or obligation of funds, 
whichever occurs first, for all other programs where a preapplication is 
used. As an exception, however, whenever an application must be 
submitted to the National Office for concurrence or approval, the 
environmental review must be completed prior to and included in the 
submission to the National Office. The environmental impact review is 
not completed by FmHA or its successor agency under Public Law 103-354 
until all applicable public notices and associated review periods have 
been completed and FmHA or its successor agency under Public Law 103-354 
has taken any necessary action(s) to address comments received. The 
exception to the provisions of this paragraph is contained in Sec.  
1940.332 of this subpart.
    (c) When a preapplication is not filed, the prospective applicant 
will be required to complete Form FmHA or its successor agency under 
Public Law 103-354 1940-20 at the earliest possible time after FmHA or 
its successor agency under Public Law 103-354 is contacted for 
assistance but no later than when the application is filed with the 
appropriate FmHA or its successor agency under Public Law 103-354 
office. (For the exception to this statement as regards Farm Programs' 
Class I actions, see Sec.  1940.309(c) of this subpart.) FmHA or its 
successor agency under Public Law 103-354 will not consider the 
application to be complete, until FmHA or its successor agency under 
Public Law 103-354 staff have completed the environmental impact review, 
whether an assessment or EIS.
    (d) For those applications that meet the requirements of a 
categorical exclusion, Form FmHA or its successor agency under Public 
Law 103-354 1940-22 will be completed by FmHA or its successor agency 
under Public Law 103-354 as early as possible after receipt of the 
application. The application will not be considered complete until 
either the checklist is successfully completed or

[[Page 31]]

the need for any further environmental review is identified and 
completed.



Sec.  1940.316  Responsible officials for the environmental review process.

    (a) Approving official. With the exception of paragraph (b)(2) of 
this section, the FmHA or its successor agency under Public Law 103-354 
official responsible for executing the environmental impact 
determination and environmental findings for a Class I or Class II 
action will be the official having approval authority for the action as 
specified in subpart A of part 1901 of this chapter (available in any 
the Agency or its successor agency under Public Law 103-354 office).
    (b) State Office level. (1) When the approval official is at the 
State Office level, the responsible Program Chief will have the 
responsibility for preparing the appropriate environmental review 
document. Whenever the Chief delegates this responsibility in accordance 
with Sec.  1940.302(i) of this subpart, the Chief is responsible for 
reviewing the environmental document to ensure that it is adequate, that 
any deficiencies are corrected, and that it is signed by the preparer. 
When the document is satisfactory to the Chief, the Chief will sign it 
as the concurring official. When no delegation occurs, the Chief will 
sign as the preparer. If the environmental review document is either a 
Class I or Class II assessment, it must be provided to the SEC for 
review prior to being submitted to the approval official for final 
determinations. The SEC will review the assessment and provide 
recommendations to the approval official.
    (2) Whenever the preparer and the SEC do not concur on either the 
adequacy of the assessment or the recommendations reached, the State 
Director, whether or not the approving official, will make the final 
decision on the matter or matters in disagreement. The State Director 
will also make the final decision whenever a State Office approving 
official disagrees with the joint recommendations of the preparer and 
the SEC. In either case, should the State Director desire, the matter 
will be forwarded to the National Office for resolution. The Program 
Support Staff will coordinate its resolution with the appropriate 
Assistant Administrator. Failure of these parties to resolve the matter 
will require a final decision by the Administrator. The State Director 
should also request the assistance of the National Office on actions 
that are too difficult to analyze at the State Office level.
    (c) District or County Office level. The approval official for the 
action under review will be responsible for preparing the appropriate 
environmental review document and completing the environmental findings 
and impact determinations for Class I and Class II assessments, except 
in the circumstances outlined in paragraph (d) of this section. Whenever 
the approval official delegates the preparation of the environmental 
review in accordance with Sec.  1940.302(i) of this subpart, the 
approval official must, after exercising the same responsibilities 
assigned to the Program Chief as indicated in paragraph (b)(1) of this 
section, sign the environmental review document as the concurring 
official. Both District Directors and County Supervisors will contact, 
as needed, the SEC for technical assistance in preparing specific 
environmental review documents.
    (d) Multi-level review. When the approval official is at the County 
Office or District Office level but the action must be forwarded to the 
State Office for concurrence, the responsible Program Chief will perform 
the responsibilities of the concurring official with respect to the 
environmental review document and the SEC will review it, if a Class I 
or Class II assessment, in a similar manner as indicated in paragraph 
(b) of this section. Responsibilities similar to those of the Program 
Chief will exist for the District Director when the County Supervisor 
forwards an action to the District Office for concurrence.
    (e) Reservation of authority. The Administrator reserves the right 
to request a State Director to forward to the National Office for review 
and approval any action which is highly controversial for environmental 
reasons, involves the potential for unique or extremely complex 
environmental impacts or is of national, regional, or

[[Page 32]]

great local significance. State Directors have a similar right with 
respect to District and County Offices.



Sec.  1940.317  Methods for ensuring proper implementation of categorical
exclusions.

    (a) The use of categorical exclusions exempts properly defined 
actions or proposals from the review requirements of NEPA. It does not 
exempt proposals from the requirements of other environmental laws, 
regulations or Executive orders. Each proposal must be reviewed to 
determine the applicability of other environmental requirements. 
Extraordinary circumstances may cause an application to lose its 
categorical exclusion and require a Class I environmental assessment, as 
further specified in paragraph (e) of this section. Section 1508.4 of 
CEQ's regulations state that ``any procedures under this section will 
provide for extraordinary circumstances in which a normally excluded 
action may have a significant environmental effect.'' For example, an 
application for approval of a subdivision of four lots is normally 
excluded from a NEPA review (see Sec.  1940.310(b)(5) of this subpart) 
but is not exempt from the requirements of Executive Order 11990, 
``Protection of Wetlands.'' In the processing of this application, FmHA 
or its successor agency under Public Law 103-354 must determine if a 
wetland is to be impacted. Assuming that the development of the proposed 
subdivision site necessitates the filling of 2 acres of wetland, such a 
potential wetland impact, under the requirements of Sec.  1940.310(a) of 
this subpart, represents an extraordinary circumstance that causes the 
application to lose its categorical exclusion. An environmental 
assessment for a Class I action must then be initiated. This assessment 
serves the purposes of providing for the extraordinary circumstance by 
analyzing the degree of potential impact and the need for further study 
as well as completing and documenting FmHA or its successor agency under 
Public Law 103-354's compliance with the Executive order. In this 
particular example, unless an alternative site could not be readily 
located and the approving official wanted to further pursue 
consideration of the application, the environmental assessment would 
determine that there was a significant impact and an EIS would be 
required. (See Sec.  1940.314 of this subpart.)
    (b) The approving official for an action will be responsible for 
ensuring that no action which requires an environmental assessment is 
processed as a categorical exclusion. In order to fulfill this 
responsibility, Form FmHA or its successor agency under Public Law 103-
354 1940-22 will be completed for those actions that would normally be 
categorically excluded and as further defined in paragraph (c) of this 
section. When Form FmHA or its successor agency under Public Law 103-354 
1940-22 must be prepared and the approving official delegates its 
preparation in accordance with Sec.  1940.302(i) of this subpart, the 
approving official must sign the form as the concurring official. If 
that approving official must, prior to approval, forward the action to a 
District or State Office for review, a second concurrence must be 
executed by the Program Chief or District Director, as determined by the 
level of review being conducted. The checklist is filed with the 
application and serves as FmHA or its successor agency under Public Law 
103-354's documentation of compliance with the environmental laws, 
regulations and Executive Orders listed on the checklist. Whenever the 
preparer is within the State Office or is in the National Office, the 
FmHA or its successor agency under Public Law 103-354 office where the 
processing of the application was initiated is responsible for providing 
sufficient site and project information in order to complete the 
checklist.
    (c) Form FmHA or its successor agency under Public Law 103-354 1940-
22 need not be completed for all categorical exclusions as defined in 
Sec.  1940.310 of this subpart but only for those listed below. This 
list identifies the exclusions by their subject heading and paragraph 
number within Sec.  1940.310 of this subpart. Additionally, for the 
housing assistance exclusion identified in Sec.  1940.310(b)(8), for 
farm programs exclusions listed in Sec.  1940.310(d)(2) and (3), and for 
community and business programs exclusions processed under

[[Page 33]]

Sec.  1940.310(e)(2) of this subpart, a notation must be made in the 
docket materials or running record for the action by the processing 
official that the specific criteria of the applicable exclusion have 
been met for the action under review.
    (1) Housing assistance--(b), (1), (2), (3), (5), (7), and (9);
    (2) Community and Business Programs--(c) (1) and (2);
    (3) Farm Programs--(d) (1) through (11);
    (4) General exclusions--(e)(2), if action covered by exhibit M of 
the subpart, and (6).
    (d) In applying the definition of a categorical exclusion to a 
project activity, the preparer must consider the following two elements 
in addition to the specific project elements for which approval is 
requested.
    (1) If the application represents one of several phases of a larger 
proposal, the application will undergo the environmental review required 
for the elements or the size of the total proposal. For example, if 
approval of a four-lot subdivision is requested and the application 
evidences or the reviewer knows that additional phases are planned and 
will culminate in a 16-lot subdivision, the categorical exclusion does 
not apply and an environmental assessment for a Class I action must be 
initiated and must address the impact of developing 16 lots. Should the 
applicant subsequently apply for approval of any of these additional 
phases, no further environmental assessment will be required as long as 
the original assessment still accurately reflects the environmental 
conditions found at the project site and the surrounding areas.
    (2) If the application represents one segment of a larger project 
being funded by private parties or other government agencies, the size 
and elements of the entire project are used in determining the proper 
level of environmental assessment to be conducted by FmHA or its 
successor agency under Public Law 103-354. If an environmental 
assessment is required, it will address the environmental impacts of the 
entire project.
    (e) Under any one of the following circumstances, an action that is 
normally categorically excluded loses its classification as an exclusion 
and must be reviewed in the manner described in paragraph (g) of this 
section. The following listing corresponds to the list of land uses and 
environmental resources contained in part 2 of Form FmHA or its 
successor agency under Public Law 103-354 1940-22.
    (1) Wetlands--the proposed action:
    (i) Would be located adjacent to a wetland or a wetland is within 
the project site, and
    (ii) The action would affect the values and functions of the wetland 
by such means as converting, filling, draining, or directly discharging 
into it;
    (2) Floodplains--the proposed action:
    (i) Includes or involves an existing structure(s) located within a 
100-year floodplain (500-year floodplain if critical action), or
    (ii) Would be located within a 100-year floodplain (500-year 
floodplain if critical action) and would affect the values and functions 
of the floodplain by such means as converting, dredging, or filling or 
clearing the natural vegetation;
    (3) Wilderness (designated or proposed)--the proposed action:
    (i) Would be located in a wilderness area, or
    (ii) Would affect a wilderness area such as by being visible from 
the wilderness area;
    (4) Wild or Scenic River (proposed or designated or identified in 
the Department of the Interior's nationwide Inventory)--the proposed 
action:
    (i) Would be located within one-quarter mile of the banks of the 
river,
    (ii) Involves withdrawing water from the river or discharging water 
to the river via a point source, or
    (iii) Would be visible from the river;
    (5) Historical and Archeological Sites (listed on the National 
Register of Historic Places or which may be eligible for listing)--the 
proposed action:
    (i) Contains a historical or archeological site within the 
construction site, or
    (ii) Would affect a historical or archeological site;
    (6) Critical Habitat or Endangered/Threatened Species (listed or 
proposed)--the proposed action:

[[Page 34]]

    (i) Contain a critical habitat within the project site,
    (ii) Is adjacent to a critical habitat, or
    (iii) Would affect a critical habitat or endangered/threatened 
species;
    (7) Coastal Barrier Included in Coastal Barrier Resources System--
the proposed action would be located within the Coastal Barrier 
Resources System;
    (8) Natural Landmark (listed on National Registry of Natural 
Landmarks)--the proposed action either:
    (i) Contains a natural landmark within the project site, or
    (ii) Would affect a natural landmark;
    (9) Important Farmlands--the proposed action would convert important 
farmland to a nonagricultural use(s) except when the conversion would 
result from the construction of on-farm structures necessary for farm 
operations;
    (10) Prime Forest Lands--the proposed action would convert prime 
forest land to another use(s), except when the conversion would result 
from the construction of on-farm structures necessary for farm 
operations;
    (11) Prime Rangelands--the proposed action would convert prime 
rangeland to another use(s) except when the conversion would result from 
the construction of on-farm structures necessary for farm operations;
    (12) Approved Coastal Zone Management Area--the proposed action 
would be located within such area and no agreement exists with the 
responsible State agency obviating the need for a consistency 
determination for the type of action under consideration;
    (13) Sole Source Aquifer Recharge Area--the proposed action would be 
located within such area and no agreement exists with the Environmental 
Protection Agency (EPA) obviating the need for EPA's review of the type 
of action under consideration; and
    (14) State Water Quality Standard--the proposed action would impair 
a water quality standard, including designated and/or existing 
beneficial uses, or would not meet applicable antidegradation 
requirements for point or nonpoint sources.
    (f) From the above paragraph (e), it should be noted that the 
location within the project site of any of the land uses and 
environmental resources identified in paragraphs (e) (1), (2), (9), 
(10), (11), (12), and (13) of this section is not sufficient for an 
action to lose its categorical exclusion. Rather, the land use or 
resource must be affected in the case of paragraphs (e) (1), (2), (9), 
(10), and (11) of this section. For paragraphs (e) (12), (13) and (14) 
of this section, further review and consultation can be avoided by 
written agreement with the responsible agency detailing the types of 
actions not requiring interagency review.
    (g) Whenever a categorical exclusion loses its status as an 
exclusion for any of the reasons stated in paragraph (e) of this 
section, the environmental impacts of the action must be reviewed 
through the preparation of a Class I assessment, Form FmHA or its 
successor agency under Public Law 103-354 1940-21. Not all of the 
procedural requirements for a Class I assessment apply in this limited 
case, however. The following exemptions exists:
    (1) No public notice provisions of this subpart apply.
    (2) The applicant does not complete Form FmHA or its successor 
agency under Public Law 103-354 1940-20.
    (3) The action does not require a Class II assessment should more 
than one important land resources be affected.



Sec.  1940.318  Completing environmental assessments for Class II actions.

    (a) The first step for the preparer (as defined in Sec. Sec.  
1940.302(i) and 1940.316 of this subpart) is to examine Form FmHA or its 
successor agency under Public Law 103-354 1940-20 submitted by the 
applicant to determine if it is complete, consistent, fully responsive 
to the items, signed, and dated. If not, it will be returned to the 
applicant with a request for necessary clarifications or additional 
data.
    (b) Once adequate data has been obtained, the assessment will be 
initiated in the format and manner described in exhibit H of this 
subpart. In completing the assessment, appropriate experts from State 
and Federal agencies, universities, local and private groups will be 
contacted as necessary for their views. In so doing, the preparer should 
communicate with these agencies or

[[Page 35]]

parties in the most appropriate and expeditious manner possible, 
depending upon the seriousness of the potential impacts and the need for 
formal documentation. Appropriate experts must be contacted whenever 
required by a specific provision of this subpart or whenever the 
preparer does not have sufficient data or expertise available within 
FmHA or its successor agency under Public Law 103-354 to adequately 
assess the degree of a potential impact or the need for avoidance or 
mitigation. Comments from an expert must be obtained in writing whenever 
required by a specific provision of this subpart or the potential 
environmental impact is either controversial, complex, major, or 
apparently major. When correspondence is exchanged, it will be appended 
to the assessment. Oral discussions should be documented in the manner 
indicated in exhibit H of this subpart. On the other hand, there is no 
need for the preparer to seek expert views outside of the Agency when 
there is no specific requirement to do so and the preparer has 
sufficient expertise available within FmHA or its successor agency under 
Public Law 103-354 to assess the degree of the potential impact and the 
need for avoidance or mitigation.
    (c) At the earliest possible stage in the assessment process, the 
preparer will identify the Federal, State, and local parties which are 
carrying out related activities, either planned or under way. 
Discussions with the applicant and FmHA or its successor agency under 
Public Law 103-354 staff familiar with the project area should assist in 
this identification effort. If there is a potential for cumulative 
impacts, the preparer will consult with the involved agencies to 
determine the nature, timing and results of their environmental 
analysis. These consultations will be documented in the assessment and 
considered or adopted when making the environmental impact 
determination. (See Sec.  1940.324 of this subpart concerning adoption 
of assessments.) If it is determined that the cumulative impacts are 
significant, the preparer will further contact the involved Federal 
agencies and attempt to determine the lead Federal Agency as discussed 
in Sec. Sec.  1940.320(b) and 1940.326 of this subpart.
    (d) Consultations similar to those discussed in paragraph (c) of 
this section will also be undertaken with those Federal and State 
agencies which are directly involved in the FmHA or its successor agency 
under Public Law 103-354 action, either through the provision of 
financial assistance or the review and approval of a necessary plan or 
permit. For example, a construction permit from the U.S. Army Corps of 
Engineers may be required for a project. In such an instance, the 
environmental assessment cannot be completed until the preparer has 
either reviewed the other Agency's completed environmental analysis or 
consulted with the other Agency and is reasonably sure of the scope, 
content, and expected environmental impact determination of the 
forthcoming analysis and has so documented for the FmHA or its successor 
agency under Public Law 103-354 assessment this understanding. If the 
other Agency believes that the project will have a significant impact, a 
joint or lead impact statement will be prepared. If the other Agency 
does not believe a significant impact will occur, the preparer will 
consider this finding and its supporting analysis in completing the FmHA 
or its successor agency under Public Law 103-354 environmental impact 
determination. Guidance in adopting an environmental assessment prepared 
by another Federal Agency is provided in Sec.  1940.324 of this subpart.
    (e) For actions having a variety of complex or interrelated impacts 
that are difficult for the preparer to assess, consideration should be 
given to holding a public meeting in the manner described in Sec.  
1940.331(c) of this subpart. Such meetings should not be assumed as 
being limited to projects for which EISs are being prepared. Such a 
meeting can serve a useful purpose in better defining and identifying 
complex impacts, as well as locating expertise with respect to them. The 
results of a public meeting and the follow-up from it can also serve as 
a valuable tool in reaching an early understanding on the potential need 
for an EIS. When identified impacts are difficult to quantify

[[Page 36]]

(such as odor and visual and community impacts) or controversial, a 
public information meeting should be held near the project site and the 
local area's concern about it. Whenever held, it should be announced and 
organized in the manner described in Sec.  1940.331(c). However, a 
transcript of the meeting need not be prepared, but the preparer will 
make detailed notes for incorporation in the assessment. (See Sec.  
1940.331(c) of this subpart.)
    (f) Throughout this assessment process, the preparer will keep in 
mind the criteria for determining a significant environmental impact. If 
at any time in this process it is determined that a significant impact 
would result, the preparer will so notify the approving official. Those 
actions specified in Sec.  1940.320 of this subpart will then be 
initiated, unless the approving official disagrees with the preparer's 
recommended determination, in which case further review of the 
determination may be required as explained in Sec.  1940.316 (b), (d) 
and (e) of this subpart. As soon as possible after the need for an EIS 
is determined, the applicant will also be advised of this in writing, as 
well as reinformed of the limitations on its actions during the period 
that the EIS is being completed. (See Sec.  1940.309(e) of this 
subpart.) The applicant's failure to comply with these limitations will 
be considered as grounds for postponement of further consideration of 
the application until such problem is alleviated.
    (g) Similarly, throughout the assessment process, consideration will 
be given to incorporating mechanisms into the proposed action for 
reducing, mitigating, or avoiding adverse impacts. Examples of such 
mechanisms which are commonly referred to as mitigation measures include 
the deletion, relocation, redesign or other modifications of the project 
elements; the dedication of environmentally sensitive areas which would 
otherwise be adversely affected by the action or its indirect impacts; 
soil erosion and sedimentation plans to control runoff during land-
disturbing activities; the establishment of vegetative buffer zones 
between project sites and adjacent land uses; protective measures 
recommended by environmental and conservation agencies, including but 
not limited to interstate, international, Federal, State, area-wide, and 
local agencies having jurisdiction or special expertise regarding the 
action's impacts; and zoning. Mitigation measures must be tailored to 
fit the specific needs of the action, and they must also be practical 
and enforceable. Mitigation measures which will be taken must be 
documented in the assessment (Item XIX of exhibit H of this subpart), 
and include an analysis of their environmental impacts and potential 
effectiveness and placed in the offer of financial assistance as special 
conditions or in the implementation requirements when the action does 
not involve financial assistance. These measures will be consistent with 
the basic goal of the proposed action and developed in consultation with 
the appropriate program office.
    (h) As part of the assessment process, the preparer will initiate 
the consultation and compliance requirements for the environmental laws, 
regulations, and Executive orders specified in the assessment format. 
The assessment cannot be completed until compliance with these laws and 
regulations is appropriately documented. The project's failure to meet 
the requirements specified in Item 10b of Form FmHA or its successor 
agency under Public Law 103-354 1940-21 for a Class I action and Item 
XXIb of exhibit H of this subpart for a Class II action will result in 
postponement of further consideration of the application until such 
problem is alleviated.
    (i) When the preparer has completed the assessment, the related 
materials and correspondence utilized will be attached. The preparer 
will then either recommend to the approving official that the action has 
the potential for significantly affecting the quality of the human 
environment or will recommend that the action does not have this 
potential and, therefore, the preparation of an EIS is not necessary. 
(Item 10a of Form FmHA or its successor agency under Public Law 103-354 
1940-21 for Class I action and item XXIa of exhibit H of this subpart 
for a Class II action.) The recommended environmental findings will also 
be completed.

[[Page 37]]

(Item 10b of Form FmHA or its successor agency under Public Law 103-354 
1940-21 for a Class I action and Item XXIb of exhibit H of this subpart 
for a Class II action.) In those instances specified in Sec.  1940.316, 
the assessment will then be forwarded to the concurring official and, as 
required, to the SEC for review. The concurring official will 
coordinate, as necessary, with the preparer any questions, concerns or 
clarifications and complete and document the review prior to the 
assessment being submitted to the approving official or the SEC. The SEC 
will coordinate with the concurring official in a similar fashion 
whenever the latter's review is required.
    (j) The approving official will review the environmental file and 
recommendations. The official will then execute the environmental impact 
determination and findings. If the conclusions reached are that there is 
no significant impact and there is compliance with the listed 
requirements, the format contained in exhibit I of this subpart will be 
used. If a significant impact is determined, the steps specified in 
Sec.  1940.320 of this subpart will be initiated for the preparation of 
the EIS. If a determination is made that the proposed action does not 
comply with the environmental requirements that are explained in this 
subpart and listed in Item 10b of Form FmHA or its successor agency 
under Public Law 103-354 1940-21 for a Class I action or Item XXIb of 
exhibit H of this subpart for a Class II action and there are no 
feasible alternatives (practicable alternatives when required by 
specific provisions of this subpart), modifications, or mitigation 
measures which could comply, the action will be denied or disapproved. 
If the approving official's determination or findings differ from the 
recommendations of the preparer, concurring official or the SEC, this 
difference will be addressed in the manner specified in Sec.  1940.316 
of this subpart.
    (k) When there is no need for further review as discussed in 
paragraph (j) of this section and findings of compliance and a 
determination of no significant impact are reached, the assessment 
process is conditionally concluded. To conclude the assessment, the 
applicant will then be requested to provide public notification of these 
results as indicated in Sec.  1940.331(b)(3) of this subpart. The 
approving official will not approve the pending application for at least 
15 days from the date the notification is last published. If comments 
are received as a result of the notification, they will be included in 
the environmental assessment and considered. Any necessary changes 
resulting from this consideration will be made in the assessment, impact 
determinations, and findings. If the changes require further 
implementation steps, such as the preparation of an EIS, they will be 
undertaken. If there are no changes in the findings and determination 
steps, such as the preparation of an EIS, they will be undertaken. If 
there are no changes in the findings and determinations, the approving 
official may continue to process the application. The environmental 
documents, i.e., the assessment, related correspondence, Form FmHA or 
its successor agency under Public Law 103-354 1940-20, and the finding 
of no significant impact will be included with the approval documents 
which are assembled for review and clearance within the approving 
office.
    (l) Whenever changes are made to an action or comments or new or 
changed information relating to the action's potential environmental 
effects is received after the assessment is completed but prior to the 
action's approval, such change, comment, or information will be 
evaluated by the approving official to determine the impact on the 
completed assessment. Whenever the contents or findings of that 
assessment are affected, the assessment process for that action will be 
revised and any other related requirement of this subpart met. Changes 
to an action in terms of its location(s), design, purpose, or operation 
will normally require, at a minimum, modification of the original 
assessment to reflect such change(s) and the associated environmental 
impacts.
    (m) When comments are received after the action has been approved, 
the approving official will consider the environmental importance of the 
comments and the necessity and ability to amend both the action, with 
respect to the issue raised and the action's stage of implementation. 
The National Office

[[Page 38]]

may be consulted to assist in determining whether there are any 
remaining environmental requirements which need to be met under the 
specific circumstances. A similar procedure will be followed when new or 
changed information is received after project approval. Amendments and 
revisions to actions will be handled as specified in Sec. Sec.  1940.310 
through 1940.313 of this subpart.



Sec.  1940.319  Completing environmental assessments for Class I actions.

    (a) As stated in this subpart, a main purpose of Form FmHA or its 
successor agency under Public Law 103-354 1940-21, is to provide a 
mechanism for reviewing actions with normally minimal impacts and for 
documenting a finding of no significant impact, as well as compliance 
determinations for other applicable environmental laws, regulations and 
policies. The second major purpose is to serve as a screening tool for 
identifying those Class I actions which have more than minimal impacts 
and which, therefore, require a more detailed environmental review.
    (b) The approach to reviewing a Class I action under the assessment 
format of Form FmHA or its successor agency under Public Law 103-354 
1940-21 is exactly the same as for a Class II action. The preparer (as 
defined in Sec. Sec.  1940.302(i) and 1940.316 of this subpart) must 
become familiar with the elements of the action, the nature of the 
environment to be affected, the relationship to any other Federal 
actions or related nonfederal actions, and the applicable environmental 
laws and regulations.
    (c) The data submission requirements placed on the applicant for a 
Class I action are not as extensive as for a Class II action. The 
requirements are limited to completing the face of Form FmHA or its 
successor agency under Public Law 103-354 1940-20, as well as categories 
(1), (2), (13), (15), (16), and (17) of Item 1b of the FMI, whenver a 
previously completed environmental analysis covering these categories is 
not available. Should it later be determined that the magnitude of the 
Class I action's impact warrants a more detailed assessment, the 
applicant will be required to submit the remaining items of the data 
request. Additionally, the circumstances under which FmHA or its 
successor agency under Public Law 103-354 does not require the 
submission of Form FmHA or its successor agency under Public Law 103-354 
1940-20 by an applicant whose proposed action requires a Class I 
assessment are specified in Sec.  1940.317(f) of this subpart.
    (d) The preparer must ensure that the data received from the 
applicant is complete, consistent, signed and dated before initiating 
the assessment. If it is not, the applicant will be required to make the 
necessary changes and clarifications. The reviewer must also ensure that 
the application properly meets the definition of a Class I action. 
Phased or segmented projects, as discussed in Sec.  1940.317(d) of this 
subpart, will be identified and the elements and the size of the entire 
project used to classify the action.
    (e) An important element of this assessment is to determine if the 
action affects an environmental resource which is the subject of a 
special Federal consultation or coordination requirement. Such resources 
are listed in the assessment format, Form FmHA or its successor agency 
under Public Law 103-354 1940-21, and include wetlands, floodplains, and 
historic properties, for example. If one of the listed resources is to 
be affected, the preparer must demonstrate the required compliance by 
accomplishing the review and coordination requirements for that 
resource. Documentation of the steps taken and coordination achieved 
will be attached. However, if more than one listed resource is to be 
affected, this will be viewed as the action having more than minimal 
impacts and the environmental assessment format for a Class II action 
will be initiated except if the action under review is an application 
for a Housing Preservation Grant.
    (f) Similarly in completing item 3, General Impacts of Form FmHA or 
its successor agency under Public Law 103-354 1940-21, the assessment 
format for a Class II action must be initiated if more than one category 
of impacts cannot be checked as minimal. If there is a single category 
which needs analysis, this can be accomplished by attaching an 
appropriate exhibit addressing the questions and issues for that

[[Page 39]]

impact, as specified in the environmental assessment format for a Class 
II action. See Sec.  1940.311(b)(1) of this subpart for when an attached 
discussion of water quality impacts is mandatory.
    (g) The comments of State, regional, and local agencies obtained 
through applicable permit reviews or the implementation of Executive 
Order 12372, Intergovernmental Review of Federal Programs, will be 
incorported into the assessment, if this review applies to the action. 
The receipt of negative comments of an environmental nature will warrant 
the initiation of a more detailed assessment under the format for a 
Class II action (exhibit H of this subpart). Also, the issue of 
controversy must be addressed, and if the action is controversial for 
environmental reasons, the environmental assessment format for a Class 
II action (exhibit H of this subpart) will be completed. However, if the 
action is the subject of isolated environmental complaints or any 
questions or concerns that focus on a single impact, air quality, for 
example, the analysis of such complaints or questions can be handled 
under the assessment format for a Class I action. This analysis will 
then be provided by the approving official to the party or parties which 
raised the matter with FmHA or its successor agency under Public Law 
103-354. When several potential impacts are questioned, however, the 
more detailed assessment format will be accomplished to address these 
questions.
    (h) The potential cumulative impacts of this action, particularly as 
it relates to other FmHA or its successor agency under Public Law 103-
354 actions recently approved in the area or planned, will be analyzed. 
If the cumulative impact is not minimal and, for example, cumulatively 
exceeds the criteria and thresholds discussed in paragraphs (e), (f) and 
(g) of this section, the environmental assessment format for a Class II 
action will be completed. The actions of other Federal agencies and 
related nonfederal actions must also be assessed on this basis. When 
there is a Federal action involved, the environmental review conducted 
by that Agency will be requested and, if it sufficiently addresses the 
cumulative impact, can be utilized by the preparer as the FmHA or its 
successor agency under Public Law 103-354 assessment, assuming the 
impacts are not significant. (See Sec.  1940.324 of this subpart.) If 
the other Agency is doing or planning an EIS, the preparer will inform 
that Agency of our action and request to be a cooperating agency.
    (i) The preparer will have the responsibility of initiating the 
assessment format for a Class II action (exhibit H of this subpart) 
whenever the need is identified. This should be done as early as 
possible in the review process. The preparer should not complete the 
assessment for a Class I action when it is obvious that the assessment 
format for a Class II action will be needed. The preparer will simply 
start the more detailed assessment and inform the applicant of the 
additional data requirements.
    (j) Exhibit I will be completed by the approval official in the same 
instances for a Class I assessment as for a Class II assessment. 
However, public notification of FmHA or its successor agency under 
Public Law 103-354's finding of no significant environmental impact will 
not be required for a Class I assessment. Also, special provisions for 
completing a Class I assessment for an action that is normally 
categorically excluded but loses its classification as an exclusion are 
contained in Sec.  1940.317(g) of this subpart. With the exception of 
the two preceding sentences, all other procedural requirements of the 
assessment process, such as the timing of the assessment and the 
limitations on the applicant's actions, apply to a Class I assessment.



Sec.  1940.320  Preparing EISs.

    (a) Responsibility. Whenever the District Director or County 
Supervisor determines there is a need to prepare an EIS, the State 
Director will be notified. The EIS will be prepared at the State Office 
and the State Director will assume the responsibility for preparing it. 
The State will in turn notify the Administrator of these EISs, as well 
as those needed EISs identified by a State Office review. EISs will be 
prepared according to this section. The State Director will be 
responsible for actions initiated within the State. However, in

[[Page 40]]

so doing, the State Director will consult with the National Office to 
determine that the document meets the requirements of NEPA. State 
Directors will be responsible for issuing such EISs. However, unless 
delegated authority by the Administrator, based upon a demonstrated 
capability and experience in preparing EISs, the State Director will not 
issue the EIS until reviewed and approved by the Administrator.
    (b) Organizing the EIS process. Prior to initiating the scoping 
process outlined below, the preparer of the EIS will take several 
organizational steps to ensure that the EIS is properly coordinated and 
completed as efficiently as possible. To accomplish this, the below-
listed parties need to be identified in advance; the list should be 
expanded as familiarity with the project increases. Those parties 
falling within the first four groups should be formally requested to 
serve as cooperating agencies. If any of these agencies appear to be a 
more appropriate lead agency than FmHA or its successor agency under 
Public Law 103-354 (using the criteria contained in Sec.  1501.5(c) of 
the CEQ regulations), consultations should be initiated with that agency 
to determine the lead agency. If difficulties arise in completing this 
determination, the National Office will be consulted for assistance. All 
of the parties identified below will be sent a copy of the notice of 
intent to prepare the EIS and an invitation to the scoping meeting, as 
discussed in paragraph (c) of this section.
    (1) All Federal and State agencies that are being requested to 
provide financial assistance for the project or related projects;
    (2) All Federal agencies that must provide a permit for the project 
should it be approved;
    (3) All Federal agencies that have a specific environmental 
expertise in major environmental issues identified to date;
    (4) The Agency responsible for the implementation of the State's 
environmental impact analysis requirement, if one has been enacted or 
promulgated by the State;
    (5) All Federal, State, and local agencies that will be requested to 
comment on the draft EIS;
    (6) All individuals and organizations that have expressed an 
interest in the project; and
    (7) National, regional, or local environmental organizations whose 
particular area of interest corresponds to the major impacts identified 
to date.
    (c) Scoping process. As soon as possible after a decision has been 
made to prepare an EIS, the following process will be initiated by the 
preparer for identifying the major issues to be addressed in the EIS and 
for developing a coordinated government approach to the preparation and 
review of the EIS.
    (1) The first step in this process will be the publication of a 
notice of intent to prepare the EIS. The notice will indicate that an 
EIS will be prepared and will briefly describe the proposed action and 
possible alternatives; state the name, address, and phone number of the 
preparer, indicating that this person can answer questions about the 
proposed action and the EIS; list any cooperating agencies, and include 
the date and time of the scoping meeting. If the latter information is 
not known at the time the notice of intent is prepared, it will be 
incorporated into a special notice, when available, and published and 
distributed in the same manner as the notice of intent. It will be the 
responsibility of the preparer of the EIS to inform the National Office 
of the need to publish a notice of intent which will coordinate the 
publication of the notice in the Federal Register. For requirements 
relating to the timing the publication of the notice of intent within 
the project area, as well as the applicant's responsibilities for the 
notice, see Sec.  1940.331(b) of this subpart.
    (2) A scoping meeting will be held. To the extent possible, the 
scoping meeting should be integrated with any other early planning 
meetings of the Agency or other involved agencies. The scoping meeting 
will be chaired by the preparer of the EIS and will be organized to 
accomplish the following major purposes (as well as other purposes 
listed in Sec.  1501.7 of the CEQ regulations).
    (i) Invite the participation of affected Federal, State, and local 
agencies, any affected Indian Tribe, the proponent of the action, and 
any interested parties

[[Page 41]]

including those who may disagree with the action for environmental 
reasons;
    (ii) Determine the scope and the significant issues to be analyzed 
in depth in the EIS;
    (iii) Identify and eliminate, from detailed study, the issues which 
are not significant or which have been covered by prior environmental 
review, narrowing the discussion of these issues in the statement to a 
brief presentation of why they will not have a significant effect on the 
human environment or providing a reference to their coverage elsewhere;
    (iv) Allocate assignments for preparation of the EIS among the lead 
and cooperating agencies, with the lead Agency retaining responsibility 
for the statement;
    (v) Indicate any public environmental assessments and other EISs 
which are being or will be prepared that are related to, but are not 
part of, the scope of the impact statement under consideration;
    (vi) Identify other environmental review and consultation 
requirements so the lead and cooperating agencies may prepare other 
required analyses and studies concurrently with, and integrated with, 
the environmental impact statement; and
    (vii) Indicate the relationship between the timing of the 
preparation of environmental analyses and the Agency's tentative 
planning and decisionmaking schedule;
    (3) Minutes of the scoping meeting, including the major points 
discussed and decisions made, will be prepared and retained by the 
preparer of the EIS as part of the environmental file. The preparer will 
offer, during the scoping meeting, to send copies of the minutes to any 
interested party upon written request.
    (d) Interdisciplinary approach. The EIS will be prepared using an 
interdisciplinary approach that will ensure the integrated use of the 
natural and social sciences and the environmental design arts. The 
disciplines of the preparers will be appropriate to address the 
potential environmental impact associated with the project. This can be 
accomplished both in the information collection stage and the analysis 
stage by communication and coordination with environmental experts at 
local, State and Federal agencies (particularly cooperating agencies) 
and universities near the project site. When needed information or 
expertise is not readily available, these needs should be met through 
procurement contracts with qualified consulting firms. Consulting firms 
can be utilized to prepare the entire EIS or portions of it as specified 
in Sec.  1940.336 of this subpart.
    (e) Content and format of EIS. The EIS will be prepared in the 
format and manner described in part 1502 of the CEQ regulations. There 
is a great deal of specific guidance in that part which will not be 
repeated here.
    (f) Circulation of the EIS. FmHA or its successor agency under 
Public Law 103-354 will circulate for review and comment the draft and 
final EIS as broadly as possible. Therefore, it will be necessary for 
the preparer to have sufficient copies printed or reproduced for this 
purpose. In identifying the parties to receive a draft EIS, the same 
process should be utilized as is employed for inviting participants to 
the scoping meeting. (See paragraph (b) of this section.) Special 
emphasis should be given to transmitting the draft to those agencies 
with jurisdiction or expertise on the proposed action's major impacts, 
as well as those parties who have expressed an interest in the action. 
The final EIS will be provided to all parties that commented on the 
draft EIS.
    (g) Filing of the EIS. The Deputy Administrator for Program 
Operations or any State Director that has been delegated the authority 
to prepare an EIS must file the EIS with EPA in accordance with Sec.  
1506.9 of the CEQ regulations. The official filing date for an EIS is 
the day that it is received by EPA's Office of Federal Activities. 
Filing of the EIS cannot occur until copies of the EIS have been 
transmitted to commenting agencies and made available to the public. 
Transmittal of the EIS must, therefore, occur either prior to its being 
filed with EPA (received by EPA) or no later than close of business of 
the same day that it is filed.
    (h) Public information meetings. A public information meeting, as 
specified in Sec.  1940.331(c)(1) of this subpart, will be held near the 
project site to discuss and receive comments on the draft EIS.

[[Page 42]]

    (i) Response to comments. The preparer of the EIS will respond to 
comments on the draft EIS as required by Sec.  1503.4 of the CEQ 
regulations. The major and most frequently raised issues during the 
public information meeting will also be identified and addressed.
    (j) Timing of review. The preparer of the EIS will be responsible 
for ensuring that the timing requirements for FmHA or its successor 
agency under Public Law 103-354 actions and the review periods for draft 
and final EISs are fully met (Sec.  1506.10 of CEQ regulations). 
Prescribed review periods are calculated from the date that EPA's Office 
of Federal activities publishes in the Federal Register a notice of 
availability for the EIS. Any request to reduce a prescribed review 
period will be made to EPA in accordance with Sec.  1506.10(d) of the 
CEQ regulations.



Sec.  1940.321  Use of completed EIS.

    (a) The final EIS will be a major factor in the Agency's final 
decision. Agency staff making recommendations on the action and the 
approving official will be familiar with the contents of the EIS and its 
conclusions and will consider these in formulating their respective 
positions with respect to the action. The final EIS and all comments 
received on the draft will accompany the proposal through the FmHA or 
its successor agency under Public Law 103-354 final clearance process. 
The alternatives considered by the approving official will be those 
addressed in the final EIS.
    (b) As part of this review process, the preparer of the EIS will 
complete the recommendations listed in Item XXIb and c of exhibit H of 
this subpart and provide them to the approving official prior to a final 
decision.



Sec.  1940.322  Record of decision.

    Upon completion of the EIS and its review within FmHA or its 
successor agency under Public Law 103-354 and before any action is taken 
on the decision reached on the proposal, the approving official will 
prepare, in consultation with the preparer of the EIS, a concise record 
of the decision which will be available for public review. The record 
will:
    (a) State the decision reached;
    (b) Certify that the timing requirements for the EIS process have 
been fully met;
    (c) Identify all alternatives considered in reaching the decision 
specifying the alternative or alternatives that were considered to be 
environmentally preferable and discuss the relevant factors 
(environmental, economic, technical, statuatory mission and, if 
applicable, national policy) that were considered in the decision;
    (d) State whether all practicable means to avoid or minimize 
environmental harm from the alternative selected have been adopted, and 
if not, why not; and
    (e) If any mitigation measures have been adopted, specify the 
monitoring and enforcement program that will be utilized.



Sec.  1940.323  Preparing supplements to EIS's.

    (a) Either the State Office or the National Office, as appropriate, 
will prepare supplements to either draft or final EIS's if:
    (1) A substantial change or changes occur in the proposed action and 
such changes are relevant to the environmental impacts previously 
presented; and
    (2) Significant new circumstances or information arise which are 
relevant to environmental concerns and bear on the proposed action or 
its impacts.
    (b) If the preparer of the draft or final EIS determines that the 
changes or new circumstances referenced in paragraph (a) of this section 
do not require the preparation of a supplemental EIS, the preparer will 
complete an environmental assessment for a Class II action which will 
document the reasons for this determination.
    (c) The preparer will be responsible for advising the approving 
official of the need for a supplement. The latter will make the Agency's 
formal determination in a manner consistent with Sec.  1940.316 of this 
subpart.
    (d) All of the requirements of this subpart that apply to the 
completion of an initial EIS apply to the completion of a supplement 
with the exception of the scoping process, which is optional. 
Additionally, if the approving official

[[Page 43]]

believes that there is a need for expedited or special procedures in the 
completion of a supplement, the approval of CEQ must first be obtained 
by the Administrator for any alternative procedures. The final 
supplement will be included in the project file or docket and used in 
the Agency's decisionmaking process in the same manner as a final EIS. 
(See Sec.  1940.321 of this subpart and in particular subparagraphs (f), 
(g), and (j) of that section as well as Sec.  1502.9(c)(4) of the CEQ 
regulations for associated circulation, filing, and timing 
requirements.)



Sec.  1940.324  Adoption of EIS or environmental assessment prepared
by another Federal Agency.

    (a) FmHA or its successor agency under Public Law 103-354 may adopt 
an EIS or portion thereof prepared by another Federal Agency after 
completion if:
    (1) An independent review of the document is conducted by the 
preparer of the FmHA or its successor agency under Public Law 103-354 
environmental review and it is concluded that the document meets the 
requirements of this subpart; and
    (2) If the actions covered in the EIS are substantially the same as 
those proposed by FmHA or its successor agency under Public Law 103-354 
and the environmental conditions in the project area have not 
substantially changed since its publication, FmHA or its successor 
agency under Public Law 103-354 will recirculate the EIS as a ``final'' 
and so notify the public as specified in Sec.  1940.331(b) of this 
subpart. The final EIS will contain an appropriate explanation of the 
FmHA or its successor agency under Public Law 103-354 involvement and 
will be sent to all parties who would typically receive a draft EIS 
published by FmHA or its successor agency under Public Law 103-354. If 
there are differences between the actions or the environmental 
conditions as discussed in the original EIS, that EIS will be updated to 
cover these differences and recirculated as a draft EIS with the public 
so notified. From that point, it will be reviewed and processed in the 
same manner as any other FmHA or its successor agency under Public Law 
103-354 EIS. For circulation, filing, and timing requirements, see 
paragraphs (f), (g), and (j) of Sec.  1940.320 of this subpart as well 
as Sec. Sec.  1506.3(c), 1506.9, and 1506.10 of the CEQ regulations.
    (b) If the adopted EIS is not final within the agency that prepared 
it, or if the action it assesses is the subject of a referral under part 
1504 of the CEQ regulations, or if the statement's adequacy is the 
subject of a judicial action which is not final, FmHA or its successor 
agency under Public Law 103-354 must so specify and provide an 
explanation in the recirculated EIS.
    (c) After recirculation (whether as a draft or final), the EIS will 
be reviewed and processed in the same manner as any other FmHA or its 
successor agency under Public Law 103-354 EIS.
    (d) FmHA or its successor agency under Public Law 103-354 may also 
adopt all or part of environmental assessments or environmental reviews 
prepared by other Federal agencies. In this case, only paragraph (a)(1) 
of this section applies. If the requirements of that paragraph can be 
met except for the fact that the Federal agency whose assessment is to 
be adopted has no preliminary public notice requirements similar to FmHA 
or its successor agency under Public Law 103-354's (see Sec.  
1940.331(b)(4) of this subpart), the assessment can be adopted without 
FmHA or its successor agency under Public Law 103-354 publishing a 
preliminary public notice. Additionally, when all of another Federal 
agency's assessment is adopted, without supplementation, for a Class II 
action and a finding of no significant environmental impact (exhibit I 
of this subpart) is reached by the proper FmHA or its successor agency 
under Public Law 103-354 official, no public notification of FmHA or its 
successor agency under Public Law 103-354's finding of no significant 
environmental impact is required if:
    (1) The other Federal agency or its designee published a similar 
finding in a newspaper of general circulation in the vicinity of the 
proposed action;
    (2) The other Federal agency's or its designee's public notice 
clearly described the action subject to the FmHA or its successor agency 
under Public Law 103-354 environmental review; and

[[Page 44]]

    (3) The other Federal agency's or its designee's public notice was 
published less than eighteen months from the date FmHA or its successor 
agency under Public Law 103-354 adopted the assessment.



Sec.  1940.325  FmHA or its successor agency under Public Law 103-354 
as a cooperating Agency.

    (a) FmHA or its successor agency under Public Law 103-354 will serve 
as a cooperating Agency when requested to do so by the lead Agency for 
an action in which FmHA or its successor agency under Public Law 103-354 
is directly involved or for an action which is directly related to a 
proposed FmHA or its successor agency under Public Law 103-354 action. 
An example of the latter would be a request from EPA to participate in 
an EIS covering its sewage treatment plans for a community, as well as 
the community's water system plans pending before FmHA or its successor 
agency under Public Law 103-354. A memorandum of understanding or other 
written correspondence will be developed with the lead agency in order 
to define FmHA or its successor agency under Public Law 103-354's role 
as the cooperating agency. The State Director will coordinate FmHA or 
its successor agency under Public Law 103-354's participation as a 
cooperating Agency for an action at the State Office level. The 
Administrator will have the same responsibility at the National Office 
level.
    (b) When requested to be a cooperating Agency on a basis other than 
that discussed above, the State Director will consider the expertise 
which FmHA or its successor agency under Public Law 103-354 could add to 
the particular EIS process in question and existing workload 
commitments. If a decision is made on either of these two bases not to 
participate as a cooperating Agency, a copy of the letter signed by the 
State Director or Administrator and so informing the lead Agency will be 
sent to CEQ.
    (c) As a cooperating Agency, FmHA or its successor agency under 
Public Law 103-354 will participate in the development and 
implementation of the scoping process. If requested by the lead Agency, 
provide the lead Agency with staff support and descriptive materials 
with respect to the analyses of the FmHA or its successor agency under 
Public Law 103-354 portion of the action(s) to be covered, review and 
comment on all preliminary draft materials prior to their circulation 
for public review and comment, and attend and participate in public 
meetings called by the lead Agency concerning the EIS.
    (d) The State Director will request the lead Agency to fully 
identify the Agency's involvement in all public documents and 
notifications.
    (e) FmHA or its successor agency under Public Law 103-354 will use 
the EIS as its own as long as FmHA or its successor agency under Public 
Law 103-354's comments and concerns are adequately addressed by the lead 
Agency and the final EIS is considered to meet the requirements of this 
subpart. It will be the responsibility of the preparer of the FmHA or 
its successor agency under Public Law 103-354 environmental review 
document to formally advise the approving official on these two points. 
The failure of the lead Agency's EIS to meet either of these 
stipulations will require FmHA or its successor agency under Public Law 
103-354 to follow the steps outlined in Sec.  1940.324 of this subpart 
prior to the approving official's decision on the FmHA or its successor 
agency under Public Law 103-354 action.



Sec.  1940.326  FmHA or its successor agency under Public Law 103-354
as a lead Agency.

    (a) When other Federal agencies are involved in an FmHA or its 
successor agency under Public Law 103-354 action or related actions that 
require the preparation of an EIS, the preparer will consult with these 
agencies to determine a lead Agency for preparing the EIS. The criteria 
for making this determination will be those contained in Sec.  1505.5 of 
the CEQ regulations. If there is a failure to reach a determination 
within a reasonably short time after consultation is initiated, the 
National Office will be contacted. The assistance of CEQ will then be 
requested by the Administrator in order to conclude the determination of 
a lead Agency.

[[Page 45]]

    (b) When acting as lead Agency, the FmHA or its successor agency 
under Public Law 103-354 preparer will request other Federal and State 
agencies to serve as cooperating agencies on the basis of the guidance 
provided in Sec.  1940.320(b) of this subpart. A memorandum of 
understanding or other written correspondence should be developed with a 
cooperating agency in order to define that agency's role in the 
preparation of the EIS.



Sec.  1940.327  Tiering.

    To the extent possible, FmHA or its successor agency under Public 
Law 103-354 may consider the concept of tiering in the preparation of 
environmental assessments and EISs. Tiering refers to the coverage of 
general matters in broader environmental impact statements, such as one 
done for a national program or regulation, with subsequent narrower 
statements or environmental analyses incorporating by reference the 
broader matters and concentrating on the issues specific to the action 
under consideration. Tiering can be used when the sequence of analysis 
is from the program level to site-specific actions taken under that 
program or from an initial EIS to a supplement which discusses the 
issues requiring supplementation.



Sec.  1940.328  State Environmental Policy Acts.

    (a) Numerous States have enacted environmental policy acts or 
regulations similar to NEPA, hereafter referred to as State NEPA's. It 
is important that FmHA or its successor agency under Public Law 103-354 
staff have an understanding of which States have such requirements and 
how they apply to applicant's proposals. It will be the responsibility 
of each State Director to determine the applicable State requirements 
and to establish a working relationship with the State personnel 
responsible for their implementation.
    (b) In processing projects located within States having State 
NEPA's, the preparer of the FmHA or its successor agency under Public 
Law 103-354 assessment will determine as early as possible in the 
assessment process whether the project falls under the requirements of 
the State NEPA. If it does, one of the following cases will exist and 
the appropriate actions specified will be taken.
    (1) The applicant has complied with the State's NEPA, and it was 
determined under the State's requirements that the proposed project 
would not result in sufficient potential impacts to warrant the 
preparation of an impact statement or other detailed environmental 
report required by the State NEPA. This finding or conclusion by the 
State will be considered in the FmHA or its successor agency under 
Public Law 103-354's review, and any supporting information used by the 
State will be requested. However, the State's finding can never be the 
total basis for FmHA or its successor agency under Public Law 103-354's 
environmental impact determination. An independent and thorough review 
in accordance with the requirements of this subpart must be conducted by 
the preparer.
    (2) The applicant has complied with the State NEPA, and it was 
determined under its implementing guidelines that a significant impact 
will result. This fact will be given great weight in the Agency's 
environmental determination. However, the State's definition of 
significant environmental impact may encompass a much lower threshold of 
impacts compared to FmHA or its successor agency under Public Law 103-
354's. In such a case, if the preparer does not believe that a 
significant impact will result under Agency guidelines for determining 
significant impacts, the environmental assessment will be prepared and 
include a detailed discussion with supporting information as to why the 
environmental reviewer's recommendation differs from that of the 
State's. However, the assessment cannot be completed until the State's 
impact statement requirements have been fulfilled by the applicant and 
the resulting impact statement has been reviewed by the preparer. An 
environmental impact determination will then be executed based upon the 
assessment and the statement.
    (c) It should be emphasized that at no time does the completion of 
an impact statement under the requirements of a State NEPA obviate the 
requirement for FmHA or its successor agency

[[Page 46]]

under Public Law 103-354 to prepare an impact statement. Consequently, 
as soon as it is clear to the preparer that the Agency will have to 
prepare a statement, every attempt should be made to accomplish the 
statement simultaneously with the State's. Coordination with State 
personnel is necessary so that data and expertise can be shared. In this 
manner, duplication of effort and the review periods for the separate 
statements can be minimized. This process clearly requires a close 
working relationship with the appropriate State personnel.



Sec.  1940.329  Commenting on other Agencies' EIS's.

    (a) State Directors are authorized to comment directly on EIS's 
prepared by other Federal agencies. In so doing, comments should be as 
specific as possible. Any recommendations for the development of 
additional information or analyses should indicate why there is a need 
for the material.
    (b) Comments should concentrate on those matters of primary 
importance to FmHA or its successor agency under Public Law 103-354 and 
on areas of Agency expertise, such as rural planning and development. 
Any potential conflicts with FmHA or its successor agency under Public 
Law 103-354 programs, plans, or actions should be clearly identified. 
Special attention should be given to the relationship of the 
alternatives under study to the State Office's natural resource 
management guide and the objectives of the Department's land use 
regulation (exhibit A of this subpart). Copies of comments addressing 
land use questions will be provided to the appropriate chairman of the 
USDA State-level committee dealing with land use matters.
    (c) Whenever a State Director has serious concerns over the 
acceptability of the anticipated environmental impacts, the State 
Director will notify the Administrator.



Sec.  1940.330  Monitoring.

    (a) FmHA or its successor agency under Public Law 103-354 staff who 
normally have responsibility for the postapproval inspection and 
monitoring of approved projects will ensure that those measures which 
were identified in the preapproval stage and required to be undertaken 
in order to reduce adverse environmental impacts are effectively 
implemented.
    (b) This staff, as identified in paragraph (a) of this section, will 
review the action's approval documents and consult with the preparer of 
the action's environmental review document prior to making site visits 
or requesting project status reports in order to determine if there are 
environmental requirements to be monitored.
    (c) The preparer will directly monitor actions containing difficult 
or complex environmental special conditions.
    (d) Before certifying that conditions contained within offers of 
financial assistance have been fully met, the responsible monitoring 
staff will obtain the position of the preparer for those conditions 
developed as a result of the environmental review.
    (e) Whenever noncompliance with an environmental special condition 
is detected by FmHA or its successor agency under Public Law 103-354 
staff, the preparer and the SEC will be immediately informed. The 
approving official will then take appropriate steps, in consultation 
with the responsible program office, the SEC and preparer, to bring the 
action into compliance.



Sec.  1940.331  Public involvement.

    (a) Objective. The basic objective of FmHA or its successor agency 
under Public Law 103-354's public involvement process is threefold. It 
is to ensure that interested citizens can readily obtain knowledge of 
the environmental review status of FmHA or its successor agency under 
Public Law 103-354's funding applications, have the opportunity to input 
into this review process before decisions are made, and have access to 
the environmental documents supporting FmHA or its successor agency 
under Public Law 103-354 decisions.
    (b) Public notice requirements. (1) For projects that undergo the 
preparation of an environmental impact statement, the first element of 
formal public participation in the EIS process involves the publication 
of the notice of intent to prepare an EIS. The content of the

[[Page 47]]

notice of intent and its publication by FmHA or its successor agency 
under Public Law 103-354 in the Federal Register are explained in Sec.  
1940.320 of this subpart. With respect to notification within the 
project area, the applicant will be requested to publish a copy of the 
notice of intent and the date of the scoping meeting in the newspaper of 
general circulation in the vicinity of the proposed action and in any 
local or community-oriented newspapers within the proposed action's area 
of environmental impact. The notice will be published in easily readable 
type in the nonlegal section of the newspaper(s). It will also be 
bilingual if the affected area is largely non-English speaking or 
bilingual. Individual copies of the notice will be sent by the applicant 
to the appropriate regional EPA office, any State and regional review 
agencies established under Executive Order 12372; the State Historic 
Preservation Officer; local radio stations and other news media; any 
State or Federal agencies planning to provide financial assistance to 
this or related actions or required to review permit applications for 
this action, any potentially affected Indian Tribe; any individuals, 
groups, local, State, and Federal agencies known to be interested in the 
project; affected property owners; and to any other parties that FmHA or 
its successor agency under Public Law 103-354 has identified to be so 
notified. It will also be posted at a readable location on the project 
site. The applicant will provide FmHA or its successor agency under 
Public Law 103-354 with a copy of the notice as it appeared in the 
newspaper(s), the date(s) published, and a list of all parties receiving 
an individual notice. Publication and individual transmittal of the 
notice for the scoping meeting will be accomplished at least 14 days 
prior to the date of the meeting.
    (2) Coincident with the distribution of either a draft or final EIS, 
a notice of the statement's availability will be published within the 
project area in the same manner as a notice of intent to prepare an EIS. 
FmHA or its successor agency under Public Law 103-354 will request EPA 
to publish in the Federal Register a notice of the statement's 
availability in accordance with EPA's requirements and pursuant to Sec.  
1506.10 of the CEQ regulations.
    (3) For Class II actions that are determined not to have a 
significant environmental impact, the Agency will require the applicant 
to publish a notification of this determination. This notice will be 
published in the same manner as a notice of intent to prepare an EIS but 
will appear for at least 3 consecutive days if published in a daily 
newspaper or otherwise in two consecutive publications. Individual 
copies will be sent to the same parties that are required to be sent a 
notice of intent, as specified in paragraph (b)(1) of this section, with 
the exception of local radio stations and other news media. Also, there 
is no requirement to post this notice on the project site. The applicant 
will provide FmHA or its successor agency under Public Law 103-354 with 
a copy of this notice, the dates the notice was published, and a list of 
all parties receiving an individual notice. This notification procedure 
does not apply to actions reviewed solely on the basis of a Class I 
assessment.
    (4) The public notice procedures for actions that will affect 
floodplains, wetlands, important farmlands, prime rangelands or prime 
forest lands are contained in exhibit C of this subpart. These 
procedures apply to actions that require either an EIS, Class II 
assessment or Class I assessment. However, whenever an action normally 
classified as a categorical exclusion requires a Class I assessment 
because of the potential impact to one of these important land 
resources, no public notice procedures apply in the course of completing 
the Class I assessment. When applicable to an action, as specified in 
exhibit C of this subpart, these public notice procedures can apply at 
two distinct stages. The first stage, a preliminary notice, applies to 
any of the five important land resources. The second stage, a final 
notice, is followed by a fifteen-day public review period and applies 
only to actions that will impact floodplains or wetlands. For Class II 
actions, this final notice procedure must be combined with any 
applicable finding of no significant environmental impact, which is 
described in paragraph (b)(3) of this section. Individual

[[Page 48]]

copies of the preliminary and final notices will be sent to the same 
parties that are required to be sent a notice of finding of no 
significant impact, as specified in paragraph (b)(3) of this section, 
with the following exception. Whenever property owners affected by 
proposed mitigation measures, such as proposed hook-up restrictions on 
portions of water or sewer lines that will traverse floodplains, are 
advised of these proposed measures in a preliminary notice, these 
property owners need not be sent copies of the final notice as long as 
the mitigation measures in the final notice are unchanged from the 
preliminary notice and no property owners raised objections or concerns 
over the mitigation measures.
    (5) The public notice requirements associated with holding a public 
information meeting are specified in paragraph (c) of this section.
    (c) Public information meetings. (1) Public information meetings 
will be held for an action undergoing an EIS as specified in Sec.  
1940.320 of this subpart. As part of the EIS process, a public 
information meeting will be held near the project site to discuss and 
receive comments on the draft EIS. It will be scheduled no sooner than 
15 days after the release of the draft EIS. It will be announced in the 
same manner as the scoping meeting, and the list of parties receiving an 
individual notification will also be developed in the same manner. The 
meeting will be chaired by the State Director or a designee and will be 
fully recorded so that a transcript can be produced. The applicant will 
be requested to assist in obtaining a facility for holding the meeting. 
To the extent possible, this meeting will be combined with public 
meetings required by other involved agencies.
    (2) Whenever a public information meeting is held as part of the 
completion of an environmental assessment, it will be scheduled, 
announced, and held in generally the same manner as a public information 
meeting for an EIS. However, a minimum of 7 days advance notice of the 
meeting is sufficient, and a transcript of the meeting will not be 
required. Rather a summary of the meeting to include the major issues 
raised will be prepared by the FmHA or its successor agency under Public 
Law 103-354 official who chaired the meeting.
    (d) Distribution of environmental documents. FmHA or its successor 
agency under Public Law 103-354 officials will promptly provide to 
interested parties, upon request, copies of environmental documents, 
including environmental assessments, draft and final environmental 
impact statements, and records of decision. Interested parties can 
request these materials from the appropriate State Director or approval 
official for project activities and from the Administrator on other 
activities subject to environmental review.



Sec.  1940.332  Emergencies.

    (a) Action requiring EIS. When an emergency circumstance makes it 
necessary to take an action with significant environmental impact 
without observing the provisions of this subpart or the CEQ regulations, 
the Administrator will consult with CEQ about alternative arrangements 
before the proposed action is taken. It must be recognized that CEQ's 
regulations limit such arrangements to actions necessary to control the 
immediate impacts of the emergency. Other actions remain subject to NEPA 
review. For purposes of this subpart, an emergency circumstance is 
defined as one involving an immediate or imminent danger to public 
health or safety.
    (b) Action not requiring EIS. When an emergency circumstance makes 
it necessary to take an action with apparent non-significant 
environmental impact without observing the provisions of this subpart or 
the CEQ regulations, the Administrator will be so notified. The 
Administrator reserves the authority to waive or amend all procedural 
aspects of this subpart relating to the preparation of environmental 
assessments including but not limited to the applicant's submission of 
Form FmHA or its successor agency under Public Law 103-354 1940-20, 
public notice requirements and/or their associated comment periods, the 
timing of the assessment process, and the content of environmental 
review documents. Alternative arrangements will be established on a case 
by case basis taking

[[Page 49]]

into account the nature of the emergency and the time reasonably 
available to respond to it. These alternative arrangements will, to the 
extent possible, attempt to achieve the substantive requirements of this 
subpart such as avoiding impacts to important land resources, when 
practicable, and minimizing potential adverse environmental impacts. In 
all cases, the environmental findings and determinations required for 
Class I and Class II assessments must be executed by the appropriate 
FmHA or its successor agency under Public Law 103-354 officials prior to 
approval of the action and be based upon the best information available 
under the circumstances and the prescribed alternative arrangements. 
(Refer to paragraph (a) of this section should the approval official for 
the action determine that an EIS is necessary.) Additionally, all 
applicable consultation and coordination procedures required by law or 
regulation will be initiated with the appropriate Federal or State 
agency(s). Such procedures will be accomplished in the most expeditious 
manner possible and modified to the extent necessary and mutually 
agreeable between FmHA or its successor agency under Public Law 103-354 
and the affected agency(s). The provisions of this paragraph are limited 
to the same emergency circumstances and scope of action as specified in 
paragraph (a) of this section.



Sec.  1940.333  Applicability to planning assistance.

    The award of FmHA or its successor agency under Public Law 103-354 
funds for the purpose of providing technical assistance or planning 
assistance will not be subject to any environmental review. However, 
applicants will be expected to consider in the development of their 
plans and to generally document within their plans:
    (a) The existing environmental quality and the important 
environmental factors within the planning area, and
    (b) The potential environmental impacts on the planning area of the 
plan as well as the alternative planning strategies that were reviewed.



Sec.  1940.334  Direct participation of State Agencies in the preparation
of FmHA or its successor agency under Public Law 103-354 EISs.

    FmHA or its successor agency under Public Law 103-354 may be 
assisted by a State Agency in the preparation of an EIS subject to the 
conditions indicated below. At no time, however, is FmHA or its 
successor agency under Public Law 103-354 relieved of its 
responsibilities for the scope, objectivity, and content of the entire 
statement of any other responsibility under NEPA.
    (a) The FmHA or its successor agency under Public Law 103-354 
applicant for financial assistance is a State Agency having statewide 
jurisdiction and responsibility for the proposed action;
    (b) FmHA or its successor agency under Public Law 103-354 furnishes 
guidance to the State Agency as to the scope and content of the impact 
statement and participates in the preparation;
    (c) FmHA or its successor agency under Public Law 103-354 
independently evaluates the statement and rectifies any major 
deficiencies prior to its circulation by the Agency as an EIS;
    (d) FmHA or its successor agency under Public Law 103-354 provides, 
early in the planning stages of the project, notification to and 
solicits the views of any land management entity (State or Federal 
Agency responsible for the management or control of public lands) 
concerning any portion of the project and its alternatives which may 
have significant impacts upon such land management entities; and
    (e) If there is any disagreement on the impacts addressed by the 
review process outlined in paragraph (d) of this section, FmHA or its 
successor agency under Public Law 103-354 prepares a written assessment 
of these impacts and the views of the land management entities for 
incorporation into the draft impact statement.



Sec.  1940.335  Environmental review of FmHA or its successor agency
under Public Law 103-354 proposals for legislation.

    (a) As stated in Sec.  1940.312(d)(4) of this subpart, all FmHA or 
its successor

[[Page 50]]

agency under Public Law 103-354 proposals for legislation will receive 
an environmental assessment. The definition of such a proposal is 
contained in Sec.  1508.17 of the CEQ regulations.
    (b) The environmental assessment and, when necessary, the EIS will 
be prepared by the responsible Agency staff that is developing the 
legislation.
    (c) If an EIS is required, it will be prepared according to the 
requirements of Sec.  1506.8 of the CEQ Regulations.



Sec.  1940.336  Contracting for professional services.

    (a) Assistance from outside experts and professionals can be secured 
for the purpose of completing EIS, assessments, or portions of them. 
Such assistance will be secured according to the Federal and Agriculture 
Procurement Regulations contained in chapters 1 and 4 of title 48 of the 
Code of Federal Regulations.
    (b) The contractor will be selected by FmHA or its successor agency 
under Public Law 103-354 in consultation with any cooperating agencies. 
In order to avoid any conflict of interest, contractors competing for 
the work will be required to execute a disclosure statement specifying 
that they have no financial or other interest in the outcome of the 
project.
    (c) The Administrator will provide the State Director with a 
proposed scope of work for use in securing such professional services.
    (d) Applicants will not be required to pay the costs of these 
professional services.



Sec. Sec.  1940.337-1940.349  [Reserved]



Sec.  1940.350  Office of Management and Budget (OMB) control number.

    The collection of information requirements in this regulation has 
been approved by the Office of Management and Budget and has been 
assigned OMB control number 0575-0094.



    Sec. Exhibit A to Subpart G of Part 1940--Departmental Regulation

    Number: 9500-3.
    Subject: Land Use Policy.
    Date: March 22, 1983.
    OPI: Land Use Staff, Soil Conservation Service.

                                 Section

1. Purpose
2. Cancellation
3. Policy
4. Abbreviations
5. Definitions
6. Responsibilities
7. Appendix A

                               1. Purpose

    The Nation's farmlands, forest lands, rangelands, flood plains, and 
wetlands are unique natural resources providing food, fiber, wood, and 
water necessary for the continued welfare of the people of the United 
States and protection from floods. Each year, large amounts of these 
lands are converted to other uses. Continued conversion of the Nation's 
farmlands, forest lands, and rangelands may impair the ability of the 
United States to produce sufficient food, fiber, and wood to meet 
domestic needs and the demands of export markets. Continued conversion 
of the Nation's wetlands may reduce the availability of adequate 
supplies of suitable-quality water, indigenous wildlife species, and the 
productive capacity of the Nation's fisheries. Continued encroachments 
on flood plains decrease the natural flood-control capacity of these 
land areas, create needs for expensive manmade flood-control measures 
and disaster-relief activities, and endanger both lives and property.
    Land use allocation decisions are matters of concern to USDA. 
Decisions concerning land use arise from needs to accommodate needed 
growth and development; prevent unwarranted and costly sprawl; avoid 
unwarranted conversion of farm, range, and forest lands and wetlands 
from existing uses and unwarranted encroachment on flood plains; 
maintain and enhance agricultural and forest production capabilities; 
maintain wildlife, fish, and seafood habitat; provide or improve 
community services and facilities; assure appropriate environmental 
quality; and assure adequate supplies of suitable-quality water. These 
needs are highly interdependent and often compete with each other for 
the limited supply of available land and water.
    It is Departmental policy to promote land use objectives responsive 
to current and long-term economic, social, and environmental needs. This 
policy recognizes the rights and responsibilities of State and local 
governments for regulating the uses of land under their jurisdiction. It 
also reflects the Department's responsibility to (a) assure that the 
United States retains a farm, range, and forest land base sufficient to 
produce adequate supplies, at reasonable production costs of high-
quality food, fiber, wood, and other agricultural products that may be 
needed; (b) assist individual landholders and State and local 
governments in defining and

[[Page 51]]

meeting needs for growth and development in such ways that the most 
productive farm, range, and forest lands are protected from unwarranted 
conversion to other uses; and (c) assure appropriate levels of 
environmental quality.
    In accordance with the authority contained in 7 U.S.C. 1010 and 7 
U.S.C. 2204 and consistent with 7 CFR 2.19(f) and provisions of the 
Farmland Protection Policy Act, Subtitle I, Title XV, Pub. L. 97-98, the 
Department sets forth this statement of policy on land use.

                            2. Cancellations

    This regulation supersedes Secretary's Memorandum 9500-2 dated March 
10, 1982.

                                3. Policy

    Federal agencies, in implementing programs, make decisions that 
affect current and potential uses of land. The Department will:
    a. Promote and support planning procedures that allow landholders, 
interest groups, and State and local governments to have input at all 
appropriate stages of the decisionmaking process for public projects, 
programs, or activities; that recognize the rights and responsibilities 
of landholders in making private land use decisions; and that recognize 
the responsibility of governments in influencing how land may be used to 
meet public needs.
    b. Assure that programs of the agencies within the Department 
discourage the unwarranted conversion to other uses of prime and unique 
farmlands, farmlands of statewide or local importance, and prime 
rangelands, as defined in appendix A; the unwarranted alteration of 
wetlands or flood plains; or the unwarranted expansion of the peripheral 
boundaries of existing settlements.
    c. Manage both its land use-related programs and USDA-administered 
land in such manner as to (1) demonstrate leadership in meeting short- 
and long-term needs for growth and development, while assuring adequate 
supplies of needed food, fiber, and forest products; (2) assure 
appropriate levels of environmental quality and adequate supplies of 
water; and (3) discourage unwarranted expansion of peripheral boundaries 
of existing settlements. Whenever practicable, management of USDA-
administered lands shall be coordinated with the management of adjacent 
private and other public lands.
    d. Conduct multidisciplinary land use research and education 
programs responsive to identified State, local, and national needs and, 
when requested, assist State and local governments, citizens groups, and 
individual landholders in determining alternative land use values, 
thereby enabling local officials to make judicious choices to meet 
growth and development needs and to protect the community's farm- and 
forest-related economic base.
    e. Assist landowners and State and Federal agencies in the 
reclamation of abandoned surface-mined lands. This reclamation will help 
eliminate safety, health, and environmental problems.
    f. Assist in planning for the extraction of coal and other 
nonrenewable resources in such manner as to facilitate restoration. This 
restoration would reestablish or enhance food, fiber, or forest 
productivity or contribute to other beneficial uses of the land as 
mining is completed in defined areas as sites.
    g. Advocate among Federal agencies:
    (1) The retention of important farmlands, rangelands, forest lands, 
and wetlands, whenever proposed conversions to other uses (a) are caused 
or encouraged by actions or programs of a Federal agency or (b) require 
licensing or approval by a Federal agency, unless other needs clearly 
override the benefits derived from retention of such lands; and
    (2) Actions that reduce the risk of flood loss and soil erosion; 
that minimize impacts of floods on human safety, health, and welfare; 
that preserve natural flood-control and other beneficial functions and 
values of wetlands and flood plains; and that reduce future need for 
expensive manmade flood-control systems, disaster-relief assistance, or 
Federal rehabilitation assistance in the event of flooding.

                            4. Abbreviations

    USDA--U.S. Department of Agriculture.
    NRE--Natural Resources and Environment Committee.

                             5. Definitions

    Complete definitions for the terms farmlands, forest lands, 
rangelands, wetlands, and flood plains are found in appendix A.

                           6. Responsibilities

    a. The Office of the Secretary is responsible for (1) encouraging, 
assisting, and coordinating efforts of other Federal departments and 
agencies to implement policies and procedures supportive of the 
objectives of this regulation; (2) resolving issues and acting on 
recommendations raised to the Secretary's Policy and Coordination 
Council by the Departmental committees; and (3) raising unresolved 
issues and recommending actions to the appropriate Cabinet Council.
    b. The NRE Committee, created under the Secretary's memorandum dated 
July 22, 1981, will provide departmentwide leadership for the 
implementation of this policy statement. In implementing this policy, 
the NRE Committee will:
    (1) Recommend Departmental guidelines to the Secretary and schedule 
reviews of each agency's procedures for implementation;

[[Page 52]]

    (2) Monitor implementation of this policy;
    (3) Encourage, support, and provide guidance to State- and local-
level USDA committees in implementing this policy;
    (4) Coordinate the work of USDA agencies in carrying out the 
provisions of this regulation; and
    (5) Advise the Secretary annually as to progress and problems 
encountered.
    c. Each USDA agency will review and make the necessary 
administrative changes in existing and proposed rules, regulations, 
guides, practices, or policies and propose needed legislative changes to 
bring agency programs into compliance with the provisions of this 
regulation.
    d. Each USDA agency having programs that will be affected by this 
regulation shall develop implementing procedures, consistent with the 
guidelines provided by the NRE Committee, and shall provide to all 
offices of the agency copies of this policy statement, Departmental 
guidelines, and agency procedures to implement this policy.
    e. USDA agencies will encourage State and local governments and 
individual landholders to retain important farmlands, rangelands, forest 
lands, and wetlands and to avoid encroachments on flood plains when 
practicable alternatives exist to meet developmental needs. Appropriate 
agencies will assist State and local governments, citizens groups, and 
individual landholders in identifying options and determining 
alternative land use values as the basis for making judicious choices in 
meeting growth and development needs.
    f. USDA agencies will encourage other Federal, State, and local 
government agencies to exchange information on plans or projects that 
may impact on important farmlands, rangelands, forest lands, wetlalds, 
or flood plains and to involve appropriate USDA agencies early in the 
planning process. USDA agencies will participate in a timely manner at 
appropriate stages in the planning process on Federal or federally 
assisted projects or activities when requested. Where opportunity for 
such participation is not forthcoming, the Department may intercede, 
consistent with policy contained in this regulation, at appropriate 
stages in the decisionmaking process through review and comments on 
plans, as provided for in authorized administrative review procedures 
for such projects, activities, or actions.
    g. When land held either in public or private ownership will be 
directly affected by USDA actions, the implementing agency will notify 
the affected landholders at the earliest time practicable of the 
proposed action and provide such landholders an opportunity to review 
the elements of the action and to comment on the action's feasibility 
and alternatives to it.
    h. Agencies of USDA will assure that their actions, investments, and 
programs on non-Federal lands will conform, to the extent practicable, 
with the uses permitted under land use regulations adopted by State or 
local governments.
    i. When land use regulations or decisions are inconsistent with USDA 
policies and procedures for the protection of important farmlands, 
rangelands, forest lands, wetlands, or flood plains, USDA agencies shall 
not assist in actions that would convert these lands to other uses or 
encroach upon flood plains, unless (1) there is a demonstrated, 
significant need for the project, program, or facility, and (2) there 
are no practicable alternative actions or sites that would avoid the 
conversion of these lands or, if conversion is unavoidable, reduce the 
number of acres to be converted or encroached upon directly and 
indirectly.

                       7. Appendix A--Definitions

    The following definitions apply to this Departmental Regulation.

                       1. important farmlands \1\
---------------------------------------------------------------------------

    \1\ 7 CFR 657.5.
---------------------------------------------------------------------------

                         a. Prime Farmlands \1\

    (1) General Criteria. Prime farmland is land that has the best 
combination of physical and chemical characteristics for producing food, 
feed, forage, fiber, and oilseed crops and is also available for these 
uses (the land could be cropland, pastureland, rangeland, forest land, 
or other land, but not urban built-up land or water). It has the soil 
quality, growing season, and moisture supply needed to produce, 
economically, sustained high yields of crops when treated and managed, 
including water management, according to acceptable farming methods. In 
general, prime farmlands have an adequate and dependable water supply 
from precipitation or irrigation, a favorable temperature and growing 
season, acceptable acidity or alkalinity, acceptable salt and sodium 
content, and few or no rocks. They are permeable to water and air. Prime 
farmlands are not excessively erodible or saturated with water for a 
long period of time, and they either do not flood frequently or are 
protected from flooding. Examples of soils that qualify as prime 
farmland are Palouse silt loam, 0- to 7-percent slopes; Brookston silty 
clay loam, drained; and Tama silty clay loam, 0- to 5-percent slopes.
    (2) Specific Criteria. Prime farmlands must meet all the following 
criteria. Terms used in this section are defined in these USDA 
publications: ``Soil Taxonomy, Agriculture Handbook 436,'' ``Soil Survey 
Manual, Agriculture Handbook 18,'' ``Rainfall-Erosion Losses from 
Cropland, Agriculture Handbook 282,'' ``Wind Erosion Forces in the 
United States and Their Use in Predicting Soil Loss,

[[Page 53]]

Agriculture Handbook 346,'' and ``Saline and Alkali Soils, Agriculture 
Handbook 60.''
    (a) The soils have:
    1. Aquic, udic, ustic, or xeric moisture regimes and sufficient 
available water capacity within a depth of 40 inches, or in the root 
zone (root zone is the part of the soil that is penetrated by plant 
roots) if the root zone is less than 40 inches deep, to produce the 
commonly grown cultivated crops (cultivated crops include but are not 
limited to grain, forage, fiber, oilseed, sugar beets, sugarcane, 
vegetables, tobacco, orchard, vineyard, and bush fruit crops) adapted to 
the region in 7 or more years out of 10; or
    2. Xeric or ustic moisture regimes in which the available water 
capacity is limited, but the area has a developed irrigation water 
supply that is dependable (a dependable water supply is one in which 
enough water is available for irrigation in 8 out of 10 years for the 
crops commonly grown) and of adequate quality; or
    3. Acidic or torric moisture regimes, and the area has a developed 
irrigation water supply that is dependable and of adequate quality; and
    (b) The soils have a temperature regime that is frigid, mesic, 
thermic, or hyperthermic (pergelic and cryic regimes are excluded). 
These are soils that, at a depth of 20 inches, have a mean annual 
temperature higher than 32 degrees Fahrenheit. In addition, the mean 
summer temperature at this depth in soils with an 0 horizon is higher 
than 47 degrees Fahrenheit; in soils that have no 0 horizon, the mean 
summer temperature is higher than 59 degrees Fahrenheit; and
    (c) The soils have a pH between 4.5 and 8.4 in all horizons within a 
depth of 40 inches or in the root zone if the root zone is less than 40 
inches deep; and
    (d) The soils either have no water table or have a water table that 
is maintained at a sufficient depth during the cropping season to allow 
cultivated crops common to the area to be grown; and
    (e) The soils can be managed so that in all horizons within a depth 
of 40 inches or in the root zone if the root zone is less than 40 inches 
deep, during part of each year the conductivity of the saturation 
extract is less than 4 mmhoc/cm and the exchangeable sodium percentage 
is less than 15; and
    (f) The soils are not flooded frequently during the growing season 
(less often than once in 2 years); and
    (g) The product of K (erodibility factor) times the percent slope is 
less than 2.0, and the product of I (soils erodibility) times C 
(climatic factor) does not exceed 60; and
    (h) The soils have a permeability rate of at least 0.06 inch per 
hour in the upper 20 inches, and the mean annual soil temperature at a 
depth of 20 inches is less than 59 degrees Fahrenheit or higher; and
    (i) Less that 10 percent of the surface layer (upper 6 inches) in 
these soils consists of rock fragments coarser than 3 inches.

                         b. Unique Farmland \1\
---------------------------------------------------------------------------

    \1\ See footnote 1 on previous page.
---------------------------------------------------------------------------

    (1) General Criteria. Unique farmland is land other than prime 
farmland that is used for the production of specific high-value food and 
fiber crops. It has the special combination of soil quality, location, 
growing season, and moisture supply needed to produce, economically, 
sustained high-quality and/or high yields of a specific crop when 
treated and managed according to acceptable farming methods. Examples of 
such crops are citrus, tree nuts, olives, cranberries, fruit, and 
vegetables.
    (2) Specific Characteristics. Unique farmland is used for a specific 
high-value food or fiber crop. It has a moisture supply that is adequate 
for the specific crop; the supply is from stored moisture, 
precipitation, or a developed irrigation system. It combines favorable 
factors of soil quality, growing season, temperature, humidity, air 
drainage, elevation, aspect, or other conditions, such as nearness to 
market, that favor the growth of a specific food or fiber crop.

           c. Additional Farmland of Statewide Importance \1\

    This is land, in addition to prime and unique farmlands, that is of 
statewide importance for the production of food, feed, fiber, forage, 
and oilseed crops. Criteria for defining and delineating this land are 
to be determined by the appropriate State agency or agencies. Generally, 
additional farmlands of statewide importance include those that are 
nearly prime farmland and that economically produce high yields of crops 
when treated and managed according to acceptable farming methods. Some 
may produce as high a yield as prime farmlands if conditions are 
favorable. In some States, additional farmlands of statewide importance 
may include tracts of land that have been designated for agriculture by 
State law.

             d. Additional Farmland of Local Importance \1\

    In some local areas, there is concern for certain additional 
farmlands for the production of food, feed, fiber, forage, and oilseed 
crops, even though these lands are not identified as having national or 
statewide importance. Where appropriate, these lands are to be 
identified by the local agency or agencies concerned.

[[Page 54]]

                        2. prime forest lands \2\
---------------------------------------------------------------------------

    \2\ Prime Forest Land Definition and Criteria, U.S. Forest Service, 
May 26, 1977.
---------------------------------------------------------------------------

    Because of the multiple use of forested lands, several categories, 
e.g., timber, wildlife, and recreation, may be developed. For purposes 
of this regulation only, the following timberland definitions will 
apply.

                         a. Prime Timberland \2\

    Prime timberland is land that has soil capable of growing wood at 
the rate of 85 cubic feet or more/acre/year (at culmination of mean 
annual increment) in natural stands and is not in urban or built-up land 
uses or water. Generally speaking, this is land currently in forest, but 
does not exclude qualifying lands that could realistically be returned 
to forest. Delineation of these lands will be in accordance with 
national criteria.

                        b. Unique Timberland \2\

    Unique timberlands are lands that do not qualify as prime timberland 
on the basis of producing less than 85 cubic feet/acre/year, but are 
growing sustained yields of specific high-value species or species 
capable of producing specialized wood products under a silvicultural 
system that maintains soil productivity and protects water quality. 
Delineation of these lands will be in accordance with national criteria.

                c. Timberland of Statewide Importance \2\

    This is land, in addition to prime and unique timberlands, that is 
of statewide importance for the growing of wood. Criteria for defining 
and delineating these lands are to be determined by State forestry 
planning committees or appropriate State organizations.

                 d. Timberlands of Local Importance \2\

    In some local areas, there is concern for certain additional forest 
lands for the growing of wood, even though these lands are not 
identified as having national or statewide importance. Where 
appropriate, these lands are to be identified by a local agency or 
agencies concerned.

                             3. wetlands \3\
---------------------------------------------------------------------------

    \3\ Definitions contained in Executive Orders 11988 and 11990.
---------------------------------------------------------------------------

    Wetlands are those areas that are inundated by surface or ground 
water with a frequency sufficient to support and, under normal 
circumstances, do or would support a prevalence of vegetative or aquatic 
life that requires saturated or seasonally saturated soil conditions for 
growth and reproduction. Wetlands generally include swamps, marshes, 
bogs, and similar areas, such as sloughs, potholes, wet meadows, river 
overflows, mudflats, and natural ponds.

                           4. flood plains \3\

    The term flood plain means the lowland and relatively flat areas 
adjoining inland and coastal waters, including floodprone areas of 
offshore islands, including, at a minimum, those that are subject to a 
1-percent or greater chance of flooding in any given year.

                         5. prime rangeland \4\
---------------------------------------------------------------------------

    \4\ USDA proposed definition for intradepartmental use only.
---------------------------------------------------------------------------

    Prime rangeland is rangeland which, because of its soil, climate, 
topography, vegetation, and location, has the highest quality or value 
for grazing animals. The (potential) natural vegetation is palatable, 
nutritious, and available to the kinds of herbivores common to the area.



Sec. Exhibit B to Subpart G of Part 1940--Development and Implementation 
                  of Natural Resource Management Guide

    1. The State Director shall complete the natural resource management 
guide within 12 months from the effective date of this subpart and issue 
the guide as a State supplement after prior approval by the 
Administrator. A summary of the basic content, purposes, and uses of the 
guide is contained in Sec.  1940.305 of this subpart. The guide shall be 
prepared in draft form and be provided for review and comment to USDA 
agencies, appropriate Federal and State agencies, State and regional 
review agencies assigned the consulation requirements of Executive Order 
12372, as well as interested localities, groups, and citizens. Also at 
least one public information meeting shall be held on the draft which 
shall be followed by a 30-day period for the submission of public 
comments. Public notification of this meeting shall be made in the same 
manner as the notification process for a scoping meeting. (See Sec.  
1940.320(c) of this subpart). Additionally, the public shall be informed 
that copies of the draft guide will be made available from the State 
Office upon request. After completion of this public review, the draft 
will be revised as necessary in light of the comments received and 
provided as a final draft State Supplement to the Administrator for 
review and approval. Any concerns and comments of the Administrator will 
be addressed by the State Director and the guide completed. Upon the 
Administrator's approval and the fulfillment of the requirements of 
paragraph 4. of this exhibit, the natural resource management guide 
shall then become part of any program investment strategies developed by 
the State Director for the purpose of addressing the

[[Page 55]]

rural needs of the State. Although a 12-month period has been 
established for the completion of a natural resource management guide, 
this deadline is not to be construed as curtailing or postponing the 
implementation of existing environmental laws, regulations, Executive 
orders or the Departmental Regulation 9500-3, Land Use Policy, with 
respect to individual project reviews, nor giving anyone any rights or 
claims with respect to the completion or content of the guide.
    2. The natural resource management guide needs to be developed in 
full recognition of its role as an internal Agency planning tool and 
with sensitivity to the Agency's mission.
    3. After the Administrator approves the natural resource management 
guide, it will become effective 4 months from that date. This interim 
period shall be used to inform local, State, and Federal agencies, 
localities, organizations, and interested citizens of the content of the 
guide. In this manner, those parties intending to seek FmHA or its 
successor agency under Public Law 103-354 assistance or to coordinate 
FmHA or its successor agency under Public Law 103-354 assistance 
programs with their own programs will be able to gain for their planning 
needs an understanding of our guide.
    4. Completed natural resource management guides shall be reviewed 
every 2 years and updated by the State Director to reflect newly 
identified geographical areas of concern or policy revisions at the 
lational, State, regional or local level. They will also be revised, as 
necessary, through appropriate guidance from the Administrator. 
Revisions shall be transmitted to the Administrator for postapproval and 
shall be considered approved if either no comments are raised by the 
Administrator within 30 days of receipt of the State Director's 
transmittal letter or the administrator specifically approves them 
before the 30 days expire. Public review of a revision will not be 
required. However, if in the opinion of the State Director the proposed 
revision will substantially change the previously adopted natural 
resource management guide, a public review shall be conducted of the 
revision in the same manner as that described in paragraph 1 of this 
exhibit for the development of the original guide. Such review shall 
occur prior to the transmittal of the revision to the Administrator. If 
the State Director believes that at the expiration of any 2-year review 
period there is need to update the guide, a statement to this effect 
shall be filed with the Administrator.
    5. The foundation for the natural resource management guide is the 
identification of the types of land uses or environmental factors 
deserving attention and their geographical location within the State. An 
inventory or listing shall be developed, therefore, of the important 
land uses within the State. This inventory will be accomplished by 
assembling existing data and information compiled by those Federal, 
State, and local agencies that have jurisdiction or expertise regarding 
the land uses or environmental factors. At a minimum, the inventory 
shall consist of available documents, listings, maps, or graphic 
materials describing the location of the following:
    a. National Register of Historic Places to include monthly 
supplements as designated by the Department of the Interior (DOI), and 
the State Historic Preservation Plans. This list is issued as a State 
supplement to subpart F or part 1901 of this chapter;
    b. Rivers designated as part of the Wild and Scenic Rivers System 
and rivers under study for inclusion in the system, as published by DOI;
    c. Important farmlands;
    d. Prime rangelands.
    e. Prime forestlands;
    f. Wetland inventory;
    g. Floodplain inventory as issued by the Federal Emergency 
Management Administration;
    h. Endangered Species and Critical Habitats as listed or proposed 
for listing by the Department of Commerce (DOC) and DOI;
    i. Sole source aquifer recharge areas as designated by the 
Environmental Protection Agency (EPA);
    j. Air Quality Control Regions as designated by EPA;
    k. National Registry of Natural Landmarks at published by DOI;
    l. Coastal Barrier Resources System;
    m. State inventories or planning documents identifying important 
land uses, particularly those not covered by the above items, such as 
wildlife refuges, important habitats, and areas of high water quality, 
or scenic or recreational value;
    n. Agricultural districts or other similar zoning classifications 
for agricultural land protection; and
    o. Coastal Zone Management Areas.
    6. The Administrator shall be responsible for assisting State 
Directors in obtaining listings and inventories of resources protected 
by Federal statutes and regulations. The State Director has the 
responsibility for assembling documents on important environmental 
resources or areas identified in State and substate laws, regulations, 
plans, and policies.
    7. Development of the inventory by the State Director will require 
consultation and assistance from a variety of agencies and experts. This 
consultation should begin with Department agencies and be accomplished 
through appropriate, State-level USDA committees. The objective should 
be to determine the land classification data that has been compiled and 
that which is in the process of being compiled either by USDA agencies 
or their counterparts at the state level.

[[Page 56]]

The Memorandum of Understanding executed in May 1979 between the Soil 
Conservation Service (SCS) and FmHA or its successor agency under Public 
Law 103-354 should be utilized as the basis for seeking SCS's assistance 
in this data collection effort. (See FmHA Instruction 2000-D, exhibit A, 
which is available in any FmHA or its successor agency under Public Law 
103-354 Office.) Direct contacts should then be made with State 
agencies, in particular with the appropriate office of State planning, 
to determine the availability of State inventories and State land use 
policies and priorities. Similar discussions should be held with 
substate regional planning agencies and clearinghouses with assistance 
being provided in this effort by District Directors. County Supervisors 
shall contact local officials and shall be responsible for being 
familiar with and for assembling similar inventories, land use policies, 
or protective requirements developed by the local government agencies 
within the supervisor's territorial jurisdiction.
    8. Another important element of the natural resource management 
guide shall be the examination of any major environmental impacts on the 
State or a substate area resulting from the cumulative effects of FmHA 
or its successor agency under Public Law 103-354-assisted project over 
the last several years. In this examination, particular emphasis should 
be given to the cumulative impacts of water resource projects such as 
irrigation systems. This should be done in consultation with experts 
within the appropriate State agencies and the U.S. Geological Survey. 
The housing programs should also be given a particular emphasis with 
respect to their cumulative impacts. More detailed guidance on the 
accomplishment of this cumulative impact section of the natural resource 
management guide, as well as the overall content of the guide, shall be 
provided by the Administrator. In preparing the State's natural resource 
management guide and in assembling inventories of critical resources, 
Agency staff should not lose sight of the basic purposes of this effort. 
The development of lengthy and complex guides and the amassing of huge 
inventories is not our goal. In the end, the material must be useable 
and serve as a tool for better decisionmaking. The basic purposes of 
this guide and inventory, then, are to provide a basis for developing 
comprehensive, statewide, rural development investment strategies that 
(i) do not conflict with Federal, State, and local mandates to preserve 
and protect important land and environmental resources, (ii) that do not 
create short- or long-term development pressures which would lead to the 
unnecessary conversion of these resources, and (iii) which effectively 
support and enhance Federal, State, and local plans to preserve these 
resources.



Sec. Exhibit C to Subpart G of Part 1940--Implementation Procedures for 
 the Farmland Protection Policy Act; Executive Order 11988, Floodplain 
     Management; Executive Order 11990, Protection of Wetlands; and 
             Departmental Regulation 9500-3, Land Use Policy

    1. Background. The Subtitle I of the Agriculture and Food Act of 
1981, Pub. L. 97-98, created the Farmland Protection Policy Act. The Act 
requires the consideration of alternatives when an applicant's proposal 
would result in the conversion of important farmland to nonagricultural 
uses. The Act also requires that Federal programs, to the extent 
practicable, be compatible with State, local government, and private 
programs and policies to protect farmland. The Soil Conservation Service 
(SCS), as required by the Act, has promulgated implementation procedures 
for the Act at 7 CFR part 658 which are hereafter referred to as the SCS 
rule. This rule applies to all federal agencies. The Departmental 
Regulation 9500-3, Land Use Policy (the Departmental Regulation), also 
requires the consideration of alternatives but is much broader than the 
Act in that it addresses the conversion of land resources other than 
farmland. The Departmental Regulation is included as exhibit A to this 
subpart and affects only USDA agencies. For additional requirements that 
apply to some Farmer Program loans and guarantees and loans to an Indian 
Tribe or Tribal Corporation and that cover the conservation of wetlands 
and highly erodible land, see exhibit M of this subpart.
    2. Implementation. Each proposed lease or disposal of real property 
by FmHA or its successor agency under Public Law 103-354 and application 
for financial assistance or subdivision approval will be reviewed to 
determine if it would result in the conversion of a land resource 
addressed in the Act, Executive Orders, or Departmental Regulation and 
as further specified below. Those actions that are determined to result 
in the lease, disposal or financing of an existing farm, residential, 
commercial or industrial property with no reasonably foreseeable change 
in land use and those actions that solely involve the renovation of 
existing structures or facilities would require no further review. \1\ 
Since these actions have no potential to convert land uses, this finding 
would simply be made by the preparer in completing the environmental 
assessment for the action.

[[Page 57]]

Also, actions that convert important farmland through the construction 
of on-farm structures necessary for farm operations are exempt from the 
farmland protection provisions of this exhibit. For other actions, the 
following implementation steps must be taken:
---------------------------------------------------------------------------

    \1\ See special procedures in item 3 of this exhibit if the existing 
structure or real property is located in a floodplain or wetland.
---------------------------------------------------------------------------

    a. Determine whether important land resources are involved. The Act 
comes into play whenever there is a potential to affect important 
farmland. The Departmental Regulation covers important farmland as well 
as the following land resources: prime forest land, prime rangeland, 
wetlands and floodplains. Hereafter, these land resources are referred 
to collectively as important land resources. Definitions for these land 
resources are contained in the appendix to the Departmental Regulation. 
The SCS rule also defines important farmland for purposes of the Act. 
Since the SCS's definition of prime farmland differs from the 
Departmental Regulation's definition, both definitions must be used and 
if either or both apply, the provisions of this exhibit must be 
implemented. It is important to note the definition of important 
farmland in both the SCS rule and the Departmental Regulation because it 
includes not only prime and unique farmland but additional farmland that 
has been designated by a unit of State or local government to be of 
statewide or local importance and such designation has been concurred in 
by the Secretary acting through SCS. In completing the environmental 
assessment or Form FmHA or its successor agency under Public Law 103-354 
1940-22, ``Environmental Checklist For Categorical Exclusions,'' the 
preparer must determine if the project is either located in or will 
affect one or more of the land resources covered by the SCS rule or the 
Departmental Regulation. Methods for determining the location of 
important land resources on a project-by-project basis are discussed 
immediately below. As reflected several times in this discussion, SCS 
personnel can be of great assistance in making agricultural land and 
natural resource evaluation, particularly when there is no readily 
available documentation of important land resources within the project's 
area of environmental impact. It should be remembered that FmHA or its 
successor agency under Public Law 103-354 and SCS have executed a 
Memorandum of Understanding in order to facilitate site review 
assistance. (See FmHA Instruction 2000-D, exhibit A, available in any 
FmHA or its successor agency under Public Law 103-354 office.)
    (1) Important Farmland, Prime Forest Land, Prime Rangeland--The 
preparer of the environmental review document will review available SCS 
important farmland maps to determine if the general area within which 
the project is located contains important farmland. Because of the large 
scale of the important farmland maps, the maps should be used for 
general review purposes only and not to determine if sites of 40 acres 
or less contain important farmland. If the general area contains 
important farmland or if no important farmland map exists for the 
project area, the preparer of the environmental review will request 
SCS's opinion on the presence of important farmland by completing Form 
AD-1006, ``Farmland Conversion Impact Rating,'' according to its 
instructions, and transmitting it to the SCS local field office having 
jurisdiction over the project area. This request will also indicate that 
SCS's opinion is needed regarding the application to the project site of 
both definitions of prime farmland, the one contained within its rule 
and the one contained within the Departmental Regulation. SCS's opinion 
is controlling with respect to the former definition and advisory with 
respect to the latter. No request need be sent to SCS for an action 
meeting one of the exemptions contained in item number 2 of this 
exhibit.
    (2) Floodplain--Review the most current Flood Insurance Rate Map or 
Flood Insurance Study issued for the project area by the Federal 
Emergency Management Administration (FEMA). Information on the most 
current map available or how to obtain a map free of charge is available 
by calling FEMA's toll free number 800-638-6620. When more specific 
information is needed on the location of a floodplain, for example, the 
project site may be near the boundary of a floodplain; or for assistance 
in analyzing floodplain impacts, it is often helpful to contact FEMA's 
regional office staff. Exhibit J of this subpart contains a listing of 
these regional offices and the appropriate telephone numbers.
    If a FEMA floodplain map has not been prepared for a project area, 
detailed assistance is normally available from the following agencies: 
The U.S. Fish and Wildlife Service (FWS), SCS, Corps of Engineers, U.S. 
Geological Survey (USGS), or appropriate regional or State agencies 
established for flood prevention purposes.
    (3) Wetlands--FWS is presently preparing wetland maps for the 
nation. Each FWS regional office has a staff member called a Wetland 
Coordinator. These individuals can provide updated information 
concerning the status of wetland mapping by FWS and information on State 
and local wetland surveys. Exhibit K of this subpart contains a listing 
of Wetland Coordinators arranged by FWS regional office and geographical 
area of jurisdiction. If the proposed project area has not been 
inventoried, information can be obtained by using topographic and soils 
maps or aerial photographs. State-specific lists of wetland soils and 
wetland vegetation are also available from the FWS Regional Wetland 
coordinators. A site visit can disclose evidence of vegetation typically 
associated with wetland areas. Also, the assistance of

[[Page 58]]

FWS field staff in reviewing the site can often be the most effective 
means. Because of the unique wetland definition used in exhibit M of 
this subpart, SCS wetland determinations are required for implementing 
the wetland conservation requirements of that exhibit.
    b. Findings (1) Scope--Although information on the location and the 
classification of important land resources should be gathered from 
appropriate expert sources, as well as their views on possible ways to 
avoid or reduce the adverse effects of a proposed conversion, it must be 
remembered that it is FmHA or its successor agency under Public Law 103-
354's responsibility to weigh and judge the feasibility of alternatives 
and to determine whether any proposed land use change is in accordance 
with the implementation requirements of the Act and the Departmental 
Regulation. Consequently, after reviewing as necessary, the project 
site, applicable land classification data, or the results of 
consultations with appropriate expert agenices, the FmHA or its 
successor agency under Public Law 103-354 preparer must determine, as 
the second implementation step, whether the applicant's proposal:
    (a) Is compatible with State, unit or local government, and private 
programs and policies to protect farmland; and
    (b) Either will have no effect on important land resources; or
    (c) If there will be a direct or indirect conversion of such a 
resource, (i) whether practicable alternatives exist to avoid the 
conversion; and
    (d) If there are no alternatives, whether there are practicable 
measures to reduce the amount of the conversion.
    (2) Determination of No Effect-- If the preparer determines that 
there is no potential for conversion and that the proposal is 
compatible, this determination must be so documented in the 
environmental assessment for a Class II action or the appropriate 
compliance blocks checked in the Class I assessment or Checklist for 
Categorical Exclusions based on whichever document is applicable to the 
action being reviewed.
    (3) Determination of Effect or Incompatibility-- Whenever the 
preparer determines that an applicant's proposal may result in the 
direct or indirect conversion of an important land resource or may be 
incompatible with State, unit of local government, or private programs 
and policies to protect farmland, the following further steps must be 
taken.
    (a) Search for Practicable Alternatives \2\--In consultation with 
the applicant and the interested public, the preparer will carefully 
analyze the availability of practicable alternatives that avoid the 
conversion or incompatibility Possible alternatives include:
---------------------------------------------------------------------------

    \2\ When the action involves the disposal of real property 
determined not suitable for disposition to persons eligible for FmHA or 
its successor agency under Public Law 103-354's financial assistance 
programs, the consideration of alternatives is limited to those that 
would result in the best price.
---------------------------------------------------------------------------

    (i) The selection of an alternative site;
    (ii) The selection of an alternative means to meet the applicant's 
objectives; or
    (iii) The denial of the application, i.e., the no-action 
alternative.
    When the resource that may be converted is important farmland, the 
preparer will follow the Land Evaluation and Site Assessment (LESA) 
point system contained within the SCS rule in order to evaluate the 
feasibility of alternatives. When the proposed site receives a total 
score of less than 160 points, no additional sites need to be evaluated. 
Rather than use the SCS LESA point system, the State Director has the 
authority to use State or local LESA systems that have been approved by 
the governing body of such jurisdiction and the SCS state 
conservationist. After this authority is exercised, it must be used for 
all applicable FmHA or its successor agency under Public Law 103-354 
actions within the jurisdiction of that approved LESA system.
    (b) Inform the Public--The Department Regulation requires us in 
section 6, Responsibilities, to notify the affected landholders at the 
earliest time practicable of the proposed action and to provide them an 
opportunity to review the elements of the action and to comment on the 
action's feasibility and alternatives to it. This notification 
requirement only applies to Class I and Class II actions and not to 
categorical exclusions that lose their status as an exclusion for any of 
the reasons stated in Sec.  1940.317(e) of this subpart. The 
notification will be published and documented in the manner specified in 
Sec.  1940.331 of this subpart and will contain the following 
information:
    (i) A brief description of the application or proposal and its 
location;
    (ii) The type(s) and amount of important land resources to be 
affected;
    (iii) A statement that the application or proposal is available for 
review at an FmHA or its successor agency under Public Law 103-354 field 
office (specify the one having jurisdiction over the project area); and
    (iv) A statement that any person interested in commenting on the 
application or proposal's feasibility and alternatives to it may do so 
by providing such comments to FmHA or its successor agency under Public 
Law 103-354 within 30 days following the date of publication. (Specify 
the FmHA or its successor agency under Public Law 103-354 office 
processing the application or proposal for receipt of comments.)

[[Page 59]]

    Further consideration of the application or proposal must be delayed 
until expiration of the public comment period. Consequently, publication 
of the notice as early as possible in the review process is both in the 
public's and the applicant's interest. Any comments received must be 
considered and addressed in the subsequent Agency analysis of 
alternatives and mitigation measures. It should be understood that 
scheduling a public information meeting is not required but may be 
helpful based on the number of comments received and types of issues 
raised.
    (c) Determine Whether Practicable Alternative Exists--(i) 
Alternative exists--If the preparer concludes that a practicable 
alternative exists, the preparer will complete step 2b(3)(e)(ii) of this 
exhibit and transmit the assessment for the approving official's review 
in the manner specified in Sec.  1940.316 of this subpart. If the 
findings of this review are similar to the preparer's recommendation, 
FmHA or its successor agency under Public Law 103-354 will inform the 
applicant of such findings and processing of the application will be 
discontinued. Should the applicant still desire to pursue the proposal, 
the applicant is certainly free to do so but not with the further 
assistance of FmHA or its successor agency under Public Law 103-354. 
Should the applicant be interested in amending the application to 
reflect the results of the alternative analysis, the preparer will work 
closely with the applicant to this end. Upon receipt of the amended 
application, the preparer must reinstitute this implementation process 
at that point which avoids the duplication of analysis and data 
collection undertaken in the original review process.
    If the results of the approving official(s) review differs from the 
preparer's recommendations, the former will ensure that the findings are 
appropriately documented in step 2b(3)(e)(ii) of this exhibit and any 
remaining consideration given to mitigation measures, step 2b(3)(d) of 
this exhibit.
    (ii) No Practicable Alternative Exists--On the other hand, if the 
preparer concludes that there is no practicable alternative to the 
conversion, the preparer must then continue with step 2b(3)(d) of this 
exhibit, immediately below.
    (d) Search for Mitigation Measures-- Once the preparer determines 
that there is no practicable alternative to avoiding the conversion or 
incompatibility, including the no-action alternative, all practicable 
measures for reducing the direct and indirect amount of the conversion 
must be included in the application. Some examples of mitigation 
measures would include reducing the size of the project which thereby 
reduces the amount of the important land resource to be converted. This 
is a particularly effective mitigation measure when the resource is 
present in a small area, as is often the case with wetlands or 
floodplains. A corresponding method of mitigation would be to maintain 
the project size or number of units but decrease the amount of land 
affected by increasing the density of use. Finally, mitigation can go as 
far as the selection of an alternative site. For example, in a housing 
market area composed almost entirely of important farmland, any new 
proposed subdivision site would result in conversion. However, a 
proposed site within or contiguous to an existing community has much 
less conversion potential, especially indirect potential, than a site a 
mile or two from the community. The LESA system can also be used to 
identify mitigation measures when the conversion of important farmland 
cannot be avoided.
    (e) Document Findings-- Upon completion of the above steps, a 
written summary of the steps taken and the reasons for the 
recommendations reached shall be included in the environmental 
assessment along with either one of the following recommendations as 
applicable. The following example assumes that important farmland is the 
affected resource and that the inappropriate phrase within the brackets 
would be deleted.
    (i) The application would result in the direct or indirect 
conversion of important farmland and (is/is not) compatible with State, 
unit of local government, or private programs and policies to protect 
farmland. It is recommended that FmHA or its successor agency under 
Public Law 103-354 determine, based upon the attached analysis, that 
there is no practicable alternative to this and that the application 
contains all practicable measures for reducing the amount of conversion 
(or limiting the extent of any identified incompatibility.)
    (ii) The application would result in direct or indirect conversion 
of important farmland and (is/is not) incompatible with State, unit of 
local government, or private programs and policies to protect farmland. 
It is recommended that FmHA or its successor agency under Public Law 
103-354 determine, based upon the attached analysis, that there is a 
practicable alternative to this action, and the processing of this 
application be discontinued.
    (f) Implement findings--The completed environmental assessment and 
the Agency's determination of compliance with the Act, the Departmental 
Regulation and Executive orders will be processed and made according to 
Sec.  1940.316 of this subpart. Whenever this determination is as stated 
in step 2b(3)(e)(i) above, the action will be so structured as to ensure 
that any recommended mitigation measures are accomplished. See Sec.  
1940.318(g) of this subpart. Whenever the determination is as stated in 
step 2b(3)(e)(ii) above, the applicant shall be so informed and 
processing of the application discontinued. Any further FmHA or its 
successor agency under Public

[[Page 60]]

Law 103-354 involvement will be as specified in Item 2b(3)(c)(i) of this 
exhibit.
    3. Special Procedures and Considerations When a Floodplain or 
Wetland Is the Affected Resource Under Executive Order 11988 and 11990. 
a. Scope. (1) Geographical Area--The geographical area that must be 
considered when a floodplain is affected varies with the type of action 
under consideration. Normally the implementation procedures beginning in 
Item 2a of this exhibit are required when the action will impact, 
directly or indirectly, the 100-year floodplain. However, when the 
action is determined by the preparer to be a critical action, the 
minimum floodplain of concern is the 500-year floodplain. A critical 
action is an action which, if located or carried out within a 
floodplain, poses a greater than normal risk for flood-caused loss of 
life or property. Critical actions include but are not limited to 
actions which create or extend the useful life of the following 
facilities:
    (a) Those facilities which produce, use, or store highly volatile, 
flammable, explosive, toxic or water-reactive materials;
    (b) Schools, hospitals, and nursing homes which are likely to 
contain occupants who may not be sufficiently mobile to avoid the loss 
of life or injury during flood and storm events;
    (c) Emergency operation centers or data storage centers which 
contain records or services that any become lost or inoperative during 
flood and storm events; and
    (d) Multi-family housing facilities designed primarily (over 50 
percent) for handicapped individuals.
    (2) Threshold of Impact--The Executive orders differ from the Act 
and the Departmental Regulation in that the Executive orders' 
requirements apply not only to the conversion of floodplains or wetlands 
but to any impacts upon them. Impacts are defined as changes in the 
natural values and functions of a wetland or floodplain. Therefore, 
there would be an impact to a floodplain whenever either (a) the action 
or its related activities would be located within a floodplain, or (b) 
the action through its indirect impacts has the potential to result in 
development within a floodplain. The only exception to this statement is 
when the preparer determines that the locational impact is minor to the 
extent that the floodplain's or wetland's natural values and functions 
are not affected.
    b. Treatment of Existing Structures. (1) Non-FmHA or its Successor 
Agency under Public Law 103-354-Owned Properties--The Executive orders 
can apply to actions that are already located in floodplains or 
wetlands; that is, where the conversion has already occurred. The 
implementation procedures beginning in item 2a of this exhibit must be 
accomplished for any action located in a floodplain or wetland and 
involving either (a) the purchase of an existing structure or facility 
or (b) the rehabilitation, renovation, or adaptive reuse of an existing 
structure or facility when the work to be done amounts to a substantial 
improvement. A substantial improvement means any repair, reconstruction, 
or improvement of a structure the cost of which equals or exceeds 50 
percent of the market value of the structure either (a) before the 
improvement or repair is started, or (b) if the structure has been 
damaged, and is being restored, before the damage occurred. The term 
does not include (a) any project for improvement of a structure to 
comply with existing State or local health sanitary or safety code 
specifications which are solely necessary to assure safe living 
conditions or (b) any alteration of a structure listed on the National 
Register of Historic Places or a State Inventory of Historic Places.
    (2) FmHA or its Successor Agency under Public Law 103-354-Owned Real 
Property--The requirement in paragraph 3 b (1) immediately above also 
applies to any substantial improvements made to FmHA or its successor 
agency under Public Law 103-354-owned real property with the exception 
of the public notice requirements of this exhibit. Irrespective of any 
improvements, whenever FmHA or its successor agency under Public Law 
103-354 real property located in a floodplain or wetland is proposed for 
lease or sale, the official responsible for the conveyance must 
determine if the property can be safely used. If not, the property 
should not be sold or leased. Otherwise, the conveyance must specify 
those uses that are restricted under identified Federal, State, and 
local floodplains or wetlands regulations as well as other appropriate 
restrictions, as determined by the FmHA or its successor agency under 
Public Law 103-354 official responsible for the conveyance, to the uses 
of the property by the leasee or purchaser and any successors, except 
where prohibited by law. Appropriate restrictions will be developed in 
consultation with the U.S. Fish and Wildlife Service (FWS) as specified 
in the Memorandum of Understanding with FWS contained in subpart LL of 
part 2000 of this chapter. Applicable restrictions will be incorporated 
into quitclaim deeds with the consent and approval of the Regional 
Attorney, Office of the General Counsel. Upon application by the owner 
of any property so affected and upon determination by the appropriate 
FmHA or its successor agency under Public Law 103-354 official that the 
condition for which a deed restriction was imposed no longer exists, the 
restriction clause may be released. A listing of any restrictions shall 
be included in any notices announcing the proposed sale or lease of the 
property. At the time of first inquiry, prospective purchasers must be 
informed of the property's location in a floodplain or wetland and the 
use restrictions that will apply. A written notification to this effect 
must be provided to the

[[Page 61]]

prospective purchaser who must acknowledge the receipt of the notice. 
See Item 3 d of this exhibit and subpart C of part 1955 of this chapter 
for guidance on the proper formats to be used with respect to notices 
and deed restrictions. The steps and analysis conducted to comply with 
the requirements of this paragraph must be documented in the 
environmental review document for the proposed lease or sale.
    c. Mitigation measures. (1) Alternative Sites--As with the Act and 
the Departmental Regulation, the main focus of the review process must 
be to locate an alternative that avoids the impact to a floodplain or 
wetland. When this is not practicable, mitigation measures must be 
developed to reduce the impact which in the case of a floodplain or 
wetland can include finding another site, i.e., a safer site. The latter 
would be a site at a higher elevation within the floodplain and/or 
exposed to lower velocity floodflows.
    (2) Nonstructural Mitigation Measures--Mitigation measures under the 
Executive orders are intended to serve the following three purposes: 
reduce the risks to human safety, reduce the possible damage to 
structures, and reduce the disruption to the natural values and 
functions of floodplains and wetlands. More traditional structural 
measures, such as filling in the floodplain, cannot accomplish these 
three purposes and, in fact, conflict with the third purpose. 
Nonstructural flood protection methods, consequently, must be given 
priority consideration. These methods are intended to preserve, restore, 
or imitate natural hydrologic conditions and, thereby, eliminate or 
reduce the need for structural alteration of water bodies or their 
associated floodplains and wetlands. Such methods may be either physical 
or managerial in character. Nonstructural flood protection methods are 
measures which:
    (a) Control the uses and occupancy of floodplains and wetlands, 
e.g., floodplain zoning and subdivision regulations;
    (b) Preserve floodplain and wetland values and functions through 
public ownership; e.g., fee title, easements and development rights;
    (c) Delay or reduce the amount of runoff from paved surfaces and 
roofed structures discharged into a floodway, e.g., construction of 
detention basins and use of flow restricting barriers on roofs;
    (d) Maintain natural rates of infiltration in developed or 
developing areas, e.g., construction of seepage or recharge basins and 
minimization of paved areas;
    (e) Protect streambanks and shorelines with vegetative and other 
natural cover, e.g., use of aquatic and water-loving woody plants;
    (f) Restore and preserve floodplain and wetland values and functions 
and protect life and property through regulation, e.g., flood-proofing 
building codes which require all structures and installations to be 
elevated on stilts above the level of the base flood; and
    (g) Control soil erosion and sedimentation, e.g., construction of 
sediment basins, stabilization of exposed soils with sod and 
minimization of exposed soil.
    (3) Avoid Filling in Floodplains--As indicated above, the Executive 
orders place a major emphasis on not filling in floodplains in order to 
protect their natural values and functions. Executive Order 11988 states 
``agencies shall, wherever practicable, elevate structures above the 
base flood level rather than filling in the land.''
    (d) Additional Notification Requirement. (1) Final Notice--Where it 
is not possible to avoid an impact to a floodplain or wetland and after 
all practicable mitigation measures have been identified and agreed to 
by the prospective applicant, a final notice of the proposed action must 
be published. This notice will either be part of the notice required for 
the completion of a Class II assessment or a separate notice if a Class 
I assessment or an EIS has been completed for the action. The notice 
will be published and distributed in the manner specified in Sec.  
1940.331 of this subpart and contain the following information.
    (a) A description of the proposd action, its location, and the 
surrounding area;
    (b) A description of the floodplain or wetland impacts and the 
mechanisms to be used to mitigate them;
    (c) A statement of why the proposed action must be located in a 
floodplain or a wetland;
    (d) A description of all significant facts considered in making this 
determination;
    (e) A statement indicating whether the actions conform to applicable 
State or local floodplain protection standards; and
    (f) A statement listing other involved agencies and individuals.
    (2) Private Party Notification--For all actions to be located in 
floodplains or wetlands in which a private party is participating as an 
applicant, purchaser, or financier, it shall be the responsibility of 
the approving official to inform in writing all such parties of the 
hazards associated with such locations.
    4. The Relationship of the Executive Orders to the National Flood 
Insurance Program. The National Flood Insurance Program establishes the 
floodplain management criteria for participating communities as well as 
the performance standards for building in floodplains so that the 
structure is protected against flood risks. As such, flood insurance 
should be viewed only as a financial mitigation measure that must be 
utilized only after FmHA or its successor agency under Public Law 103-
354 determines that there is no practicable alternative for avoiding 
construction in the floodplain and that all practicable mitigation 
measures have been included in

[[Page 62]]

the proposal. That is, for a proposal to be located in the floodplain, 
it is not sufficient simply to require insurance. The Agency's flood 
insurance requirements are explained in subpart B of part 1806 of this 
chapter (FmHA Instruction 426.2). It should be understood that an 
applicant proposing to build in the floodplain is not even eligible for 
FmHA or its successor agency under Public Law 103-354 financial 
assistance unless the project area is participating in the National 
Flood Insurance Program.

[53 FR 36262, Sept. 19, 1988]



Sec. Exhibit D to Subpart G of Part 1940--Implementation Procedures for 
                       the Endangered Species Act

    1. FmHA or its successor agency under Public Law 103-354 shall 
implement the consultation procedures required under Section 7 of the 
Endangered Species Act as specified in 50 CFR 402. It is important to 
note that these consultation procedures apply to the disposal of real 
property by FmHA or its successor agency under Public Law 103-354 and to 
all FmHA or its successor agency under Public Law 103-354 applications 
for financial assistance and subdivision approval, including those 
applications which are exempt from environmental assessments. (See Sec.  
1940.310.) Unless repeated in this paragraph, the definitions for the 
terms utilized are found in 50 CFR 402.02.
    2. State Directors shall ensure that State, District, and County 
Offices maintain current publications of listed and proposed species as 
well as critical habitats found in their respective jurisdictions.
    3. When an application to FmHA or its successor agency under Public 
Law 103-354 involves financial assistance or permit approval from 
another Federal agency(s), the FmHA or its successor agency under Public 
Law 103-354 reviewer shall work with the other Agency to determine a 
lead Agency for the consultation process. When FmHA or its successor 
agency under Public Law 103-354 is not the lead Agency, the reviewer 
shall ensure that the lead Agency informs the approporiate Area Manager, 
U.S. Fish and Wildlife Service (FWS), or Regional Director, National 
Marine Fisheries Service (NMFS), of FmHA or its successor agency under 
Public Law 103-354's involvement.
    4. Each disposal action, application for financial assistance or 
subdivision approval shall be reviewed by the FmHA or its successor 
agency under Public Law 103-354 official responsible for completing 
environmental assessments in order to determine if the proposal either 
may affect a listed species or critical habitat or is likely to 
jeopardize the continued existence of a proposed species or result in 
the destruction or adverse modification of a proposed critical habitat.
    a. For applications subject to environmental assessments, this 
review shall be accomplished as part of the assessment.
    b. For those applications that are excluded from an environmental 
assessment, this review shall be documented as part of Form FmHA or its 
successor agency under Public Law 103-354 1940-22, ``Environmental 
Checklist For Categorical Exclusions,'' and shall be accomplished as 
early as possible after receipt of the application and prior to approval 
of the application.
    c. For applications subject to an environmental impact statement, 
FmHA or its successor agency under Public Law 103-354 shall request from 
the Area Manager, FWS, and the Regional Director, NMFS, a list of the 
proposed and listed species that may be in the area of the proposal. 
Within 30 days, the FWS and NMFS will respond to FmHA or its successor 
agency under Public Law 103-354 with this list. FmHA or its successor 
agency under Public Law 103-354 shall then conduct, as part of the 
process of preparing the draft environmental impact statement, a 
biological assessment of these species to determine which species are in 
the area of the proposal and how they may be affected. This biological 
assessment should be completed within 180 days or a time mutually agreed 
upon between FmHA or its successor agency under Public Law 103-354 and 
FWS or NMFS. Upon completion of the biological assessment, if FmHA or 
its successor agency under Public Law 103-354 determines either that the 
proposal may affect a listed species or critical habitat or is likely to 
jeopardize the continued existence of proposed species or result in the 
destruction or adverse modification of proposed critical habitat, the 
formal consultation procedures shall be initiated as specified in 
paragraph 7b below. To the extent practical, these procedures shall be 
concluded and their results reflected in the draft EIS. For all draft 
EISs in which FmHA or its successor agency under Public Law 103-354 
determines there will be no effect upon a listed or proposed species or 
critical habitat and FWS or NMFS indicated the presence of such species 
upon the initial inquiry, a copy of the draft shall be provided to that 
agency for review and comment.
    5. As indicated in paragraph 4 above, the focus of this review 
process is to determine if the proposal will affect a listed species or 
critical habitat or is likely to jeopardize the continued existence of a 
proposed species or result in the destruction or adverse modification of 
a proposed critical habitat. Because this impact terminology is specific 
to the Act, it is important to understand its meaning.
    a. To jeopardize the continued existence of a species means to 
engage in a project which reasonably would be expected to reduce the

[[Page 63]]

reproduction, numbers, or distribution of a listed species to such an 
extent as to appreciably reduce the likelihood of the survival and 
recovery of that species in the wild. The level of reduction necessary 
to constitute jeopardy would be expected to vary among listed species.
    b. The destruction or adverse modification of a critical habitat 
means a direct or indirect alteration of critical habitat which 
appreciably diminishes the value of that habitat for survival and 
recovery of a listed species. Such alterations include but are not 
limited to those diminishing the following requirements for:
    (i) Space for individual and population growth and for normal 
behavior;
    (ii) Food, water, air, light, minerals, or other nutritional or 
physiological requirements;
    (iii) Cover or shelter;
    (iv) Sites for breeding, reproduction, or rearing of offspring; and
    (v) Habitats that are protected from disturbances or are 
representative of the geographical distribution of listed species.
    6. It is also important to note that the consultation procedures 
differ when the subject of the consultation is a listed species or 
critical habitat as opposed to a proposed species or critical habitat. 
The latter are defined as those that the Secretary of Interior or 
Commerce are considering for listing and have so proposed through 
notification in the Federal Register. When listed species or critical 
habitats are invloved, FmHA or its successor agency under Public Law 
103-354 shall initiate formal consultation procedures whenever it 
determines that a proposed project may affect them, either beneficially 
or adversely. For proposed species or critical habitats, FmHA or its 
successor agency under Public Law 103-354 shall first determine if the 
proposed project is likely to jeopardize the continued existence of 
proposed species or result in the destruction or adverse modification of 
proposed critical habitat. Whenever this determination is made, FmHA or 
its successor agency under Public Law 103-354 shall confer with the 
appropriate agency identified in paragraph 7 of this exhibit and, in so 
doing, shall focus on (i) determining the status of the listing process, 
and (ii) attempting to cooperatively develop alternatives or measures 
for inclusion in the project that avoid or mitigate the identified 
adverse impacts. The results of this process shall be documented in the 
environmental review being done for the proposed project and, if this 
review is an environmental assessment, shall be an important factor in 
determining the need for an environmental impact statement. No action 
shall be taken by the approving official on the application unitl the 
requirement to confer on proposed species or critical habitat has been 
completed. Paragraphs 7 through 9 of this exhibit outline the formal 
consultation procedure for listed species or critical habitats.
    7. In initiating the review process for a project, the list of 
species and critical habitats, including proposed, shall be examined to 
determine the potential for impacts. Projects planned within established 
communities are less likely to affect listed or proposed species or 
their critical habitat. Projects to be located in remote areas, heavily 
forested areas and/or previously undisturbed areas are more likely to 
affect these species. For projects located in such areas, the reviewer 
shall, at a minimum, discuss the project's potential impact on listed or 
proposed species with officials of the appropriate State wildlife 
protection agency or the Area Manager, FWS, or the Regional Director, 
NMFS, as appropriate. The latter organization generally has 
responsibility for marine species. The specific list of species under 
NMFS's jurisdiction can be found at 50 CFR 222.23(a) and 227.4. Such 
discussions shall be considered as informal consultations and are not a 
substitute for the required consultation process outlined below.
    a. Whenever the reviewer, after reviewing the list and contacting 
appropriate experts, formally determines that the proposal will have no 
effect on a listed or proposed species or its critical habitat, these 
review procedures are completed, unless new information comes to light 
as discussed in paragraph 9 of this exhibit, or consultation is 
requested by the appropriate Area Manager, FWS, or Regional Director, 
NMFS.
    b. If the reviewer determines there may be an effect on a listed 
species or a critical habitat or is unable to make a clear 
determination, the reviewer shall so inform the SEC (assuming the 
reviewer is not the SEC). The latter shall either (i) convey a written 
request for consultation, along with available information to the 
appropriate Area Manager, FWS or Regional Director, NMFS, for the 
Federal region where the proposal will be carried out, or (ii) request 
Program Support Staff (PSS) to perform such consultation. FmHA or its 
successor agency under Public Law 103-354 shall initiate this formal 
consultation process and not the applicant. See paragraph 4.c. of this 
exhibit for initiating consultation where an environmental impact 
statement is being done for the application. Until the consultation 
process is completed, as outlined in 50 CFR 402.04, FmHA or its 
successor agency under Public Law 103-354 shall not approve the 
application. Should the need for consultation be identified after 
application approval, FmHA or its successor agency under Public Law 103-
354 shall refrain from making any irreversible or irretrievable 
commitment of resources which would foreclose the consideration of 
modifications or alternatives to the identified activity or program.

[[Page 64]]

    8. Several possible responses may result from initiation of the 
formal consultation process with each requiring further specific 
actions.
    a. Whenever the Area Manager, FWS, or Regional Director, NMFS, 
informs FmHA or its successor agency under Public Law 103-354 that 
insufficient information exists to conclude the consultation process, 
the SEC with assistance as feasible from the FWS or NMFS and State 
sources of expertise shall then obtain additional information and 
conduct, as needed, biological surveys or studies to determine how the 
proposal may affect listed species or their critical habitat. The cost 
and performance of such studies shall be handled in the same manner as 
in the preparation of an Environmental Impact Statement. (See Sec.  
1940.336 of this subpart.)
    b. Whenever the Area Manager, FWS, or Regional Director, NMFS, 
responds that the proposal will either promote the conservation of a 
listed species or is not likely to jeopardize the continued existence of 
a listed or proposed species or result in the destruction or adverse 
modification of its critical habitat, the FmHA or its successor agency 
under Public Law 103-354 reviewer shall formally make a similar 
determination, attaching the response as documentation. This concludes 
the formal consultation process unless new information comes to light as 
discussed in paragraph 9 of this exhibit.
    c. Whenever the results of the consultation process include 
recommendations by the Area Manager, FWS, or Regional Director, NMFS, 
for modifications to the project which would enhance the conservation 
and protection of a listed species or its critical habitat, the State 
Director shall review these recommendations and require that they be 
incorporated into the project as either design changes or special 
conditions to the offer of assistance. If the State Director does not 
believe the recommendations can be so adopted, the Administrator shall 
be requested to review the recommendations and to assist in the further 
resolution of the matter.
    d. Whenever the appropriate Area Manager, FWS, or Regional Director, 
NMFS, determines that the proposal is likely to jeopardize the continued 
existence of a listed species or result in the destruction or adverse 
modification of its critical habitat, the FmHA or its successor agency 
under Public Law 103-354 applicant shall be so informed and the project 
denied on this basis. However, if the State Director believes that 
funding or approval of the application is (i) of national, regional, or 
great local significance, and (ii) that there are no reasonable and 
prudent alternatives to avoiding the listed species impact, the State 
Director can request the Administrator, through PSS, to review the 
proposal and the results of the consultation process. Based upon this 
review, the Administrator shall either inform the State Director that a 
request for an exemption from section 7 of the Endangered Species Act is 
not warranted and the application shall be denied or, if the 
Administrator believes it is warranted, shall request an exemption from 
the Endangered Species Committee established by section 7(e) of the Act. 
No action shall be taken by the State Director on the application until 
the Administrator informs the State Director of the results of the 
exemption request.
    9. Once completed, the consultation process shall be reinitiated by 
FmHA or its successor agency under Public Law 103-354 or upon request of 
the appropriate Area Manager, FWS, or Regional Director, NMFS, if:
    a. New information or modification of the proposal reveals impacts 
that may affect listed or proposed species or their habitats; or
    b. A new species is listed that may be affected by the proposal.
    10. In completing the above compliance procedures, particularly when 
consulting with the referenced agencies, formally or informally, the 
preparer of the environmental review document will request information 
on whether any Category I or Category II species may be present within 
the project area. These are candidate species; they are presently under 
consideration for listing under section 4 of the Endangered Species Act. 
Category I species are those for which FWS currently has substantial 
date on hand to support the biological appropriateness of proposing to 
list the species as endangered or threatened. Currently data are being 
gathered concerning essential habitat needs and, for some species, data 
concerning the precise boundaries of critical habitat designations. 
Development and publication of proposed rules on such species is 
anticipated. Category II comprises species for which information now in 
the possession of the FWS indicates that proposing to list the species 
as endangered or threatened is possibly appropriate but for which 
conclusive data on biological vulnerability and threat(s) are not 
currently available to presently support proposed rules. Whenever a 
Category I or II species may be affected, the preparer of the 
environmental review document will determine if the proposed project is 
likely to jeopardize the continued existence of the species. Whenever 
this determination is made, the same compliance procedures specified in 
paragraph 6 of this exhibit for a proposed species will be followed. The 
purpose of the requirements of this paragraph is to comply with the 
National Environmental Policy Act as well as Departmental Regulation 
9500-4, Fish and Wildlife Policy, which specifies that USDA agencies 
will avoid actions which may

[[Page 65]]

cause a species to become threatened or endangered.

[49 FR 3727, Jan. 30, 1984, as amended at 53 FR 36266, Sept. 19, 1988]



Sec. Exhibit E to Subpart G of Part 1940--Implementation Procedures for 
                     the Wild and Scenic Rivers Act

    1. Each application for financial assistance or subdivision approval 
as well as the proposed disposal of real property by FmHA or its 
successor agency under Public Law 103-354 shall be reviewed to determine 
if it will affect a river or portion of it which is either included in 
the National Wild and Scenic Rivers System, designated for potential 
addition to the system, or identified in the Nationwide Inventory 
prepared by the National Park Service (NPS) in the Department of the 
Interior. The Nationwide Inventory identifies those river segments that, 
after preliminary review, appear to qualify for inclusion in the system. 
(For purposes of this subpart, river segments in the Nationwide 
Inventory shall be treated the same as segments within the system with 
the exception of paragraph 8.) For applications subject to environmental 
assessments, the review shall be accomplished as part of the assessment. 
For applications that are excluded from an environmental assessment, 
this review shall be documented as part of Form FmHA or its successor 
agency under Public Law 103-354 1940-22, ``Environmental Checklist For 
Categorical Exclusions,'' within the reviewing office and shall be 
accomplished as early as possible after receipt of the application and 
prior to approval of the application. The FmHA or its successor agency 
under Public Law 103-354 official responsible for completing the 
environmental assessment shall accomplish this review. (See Sec.  
1940.316 of this subpart.)
    2. In order to effectively implement this review, State Directors 
shall ensure that State, District and County Offices maintain current 
listings of rivers within their respective States that are included in 
or designated for potential addition to the system as well as those 
identified in the Nationwide Inventory prepared by NPS.
    3. For applications for water resources projects, as defined in 
Sec.  1940.302(i) of this subpart, the purpose of this review shall be 
to determine whether the proposal would have a direct and adverse effect 
on the values which served as the basis for the river's inclusion in the 
system or designation for potential addition. For other applications, 
the purpose of the review shall be to determine if the proposal would 
invade the river area or unreasonably diminish the scenic, recreational, 
and fish and wildlife values present in the area. To make these 
determinations, the reviewer shall consult with the appropriate regional 
office of NPS if the proposal (i) would be located within one-quarter 
mile of the banks of the river, (ii) involves withdrawing water from the 
river or discharging water to the river via a point source, or (iii) 
would be visible from the river. The appropriate regional office of the 
Forest Service (FS) shall be contacted under similar circumstances when 
the effected river is on FS lands. Consultation shall be initiated by a 
written request for comments on the potential impacts accompanied by a 
description of the project and its location. The reviewer shall consult 
in other instances when the likelihood of an impact on a river in the 
system is identified as part of the environmental review. When the 
reviewer determines there is no potential impact on such a river, the 
documentation of this determination concludes the review process, unless 
reinitiation is required under paragraph 10 of this exhibit. In all 
other cases, the review is completed as specified below in paragraphs 4 
through 9 of this exhibit.
    4. If the review is at the County or District Office level, the 
reviewer can request the State Director (see Sec.  1940.307 of this 
subpart) to perform the above consultation. The State Director can in 
turn make a similar request of the National Office. If not requested to 
perform the consultation for applications approvable at the County and 
District Office levels, the SEC shall be informed whenever NPS or FS 
advises that there is a potential for an adverse impact on a river 
within the system or that protective measures need to be included or 
designed into the proposal. In all cases, consultation shall be 
initiated by FmHA or its successor agency under Public Law 103-354 and 
not the applicant. Until consultation is complete, FmHA or its successor 
agency under Public Law 103-354 shall not approve the application. 
Should the need for consultation be identified after application 
approval, FmHA or its successor agency under Public Law 103-354 shall, 
if still within its power at the time of identification, refrain from 
making any irreversible or irretrievable commitments of resources which 
would foreclose the consideration of modifications or alternatives to 
the project.
    5. If NPS or FS advises there is no potential for an adverse effect 
as described in paragraph 3 of this exhibit, this review process is 
concluded, unless the need to reinitiate arises. (See paragraph 10 of 
this exhibit.)
    6. Whenever the results of the consultation process include 
recommendations by NPS or FS to modify the proposal in order to avoid an 
adverse effect, as described in paragraph 3 above, the State Director 
shall review these recommendations and require that they be incorporated 
into the project as either design changes or special conditions to the 
offer of assistance. If the State Director does

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not believe that the Regional Director's recommendations can be so 
adopted, the Administrator shall be requested to review the 
recommendations and to assist in the further resolution of the matter.
    7. If NPS or FS advises that the proposal will have an unavoidable 
adverse effect, as described in paragraph 3 of this exhibit, on a river 
segment which is either included in the National Wild and Scenic Rivers 
System or designated for potential addition to the system, the FmHA or 
its successor agency under Public Law 103-354 applicant will be informed 
by the reviewing office and the application denied on this basis. 
However, if the State Director disagrees with this determination, the 
State Director can request the Administrator to review the proposal and 
attempt to further resolve the matter. The specific reasons for 
disagreement along with supporting documentation must be included in 
such a request. Based upon a review of this request, the Administrator 
shall either inform the State Director that no further consultation is 
warranted and the application shall be denied or shall request the 
headquarters staff of NPS or FS to further review the matter. No action 
shall be taken by the State Director on the application until the 
Administrator informs the State Director of the results of this further 
review and consultation.
    8. If NPS or FS advises that the proposal will have an adverse 
effect, as described in paragraph 3 of this exhibit, on a river segment 
identified in the Nationwide Inventory, the reviewer shall further 
consult with NPS or FS in order to formulate adequate measures or 
modification to avoid or mitigate the potential adverse effect. The 
purposes of such measures or modifications is to ensure that the 
proposal does not effectively foreclose the designation of a wild, 
scenic, or recreational river segment. Once concurrence is reached and 
documented with NPS or FS regarding modifications, the State Director 
shall require that they be incorporated into the proposal as either 
design changes or special conditions to the offer of assistance. If the 
State Director is not able to reach an agreement with NPS or FS on 
appropriate modifications, the Administrator shall be requested to 
assist in the further resolution of the matter.
    9. If an application involves financial assistance or permit 
approval from another Federal Agency, the FmHA or its successor agency 
under Public Law 103-354 reviewer shall work with the other agency(s) to 
determine a lead Agency for the consultation process. When FmHA or its 
successor agency under Public Law 103-354 is not the lead Agency, the 
reviewer shall ensure that the lead Agency informs NPS or FS of FmHA or 
its successor agency under Public Law 103-354's involvement.
    10. Once completed, the consultation process shall be reinitiated by 
FmHA or its successor agency under Public Law 103-354 if new information 
or modification of the proposal reveals impacts to a river within the 
System or Nationwide Inventory.



Sec. Exhibit F to Subpart G of Part 1940--Implementation Procedures for 
                    the Coastal Barrier Resources Act

    1. The Act applies to barrier islands that Congress has designated 
for inclusion in the Coastal Barrier Resources System. Since coastal 
barriers are only found in East and Gulf Coast States, no other State 
Offices fall under the requirements of the Act and, therefore, need be 
concerned with these implementation procedures.
    2. On coastal barriers that are included in the system, the Act 
prohibits any new expenditures or new financial assistance by the 
Federal Government. There are some limited exceptions that are contained 
in Section 6 of the Act and listed in exhibit L of this subpart. 
Consequently, all of the following actions must be reviewed by the 
environmental reviewer to determine if they would be located within the 
System: any application for financial assistance, any proposed direct 
expenditure of FmHA or its successor agency under Public Law 103-354 
funds for construction or maintenance purposes, any request for 
subdivision approval, and any proposed disposal of real property that 
includes any form of financial assistance or subsidy to the purchaser. 
The boundaries of the system can be determined by reviewing a series of 
maps passed with the legislation and distributed by the Department of 
the Interior. Each State Director is responsible for ensuring that those 
field offices having components of the system within their jurisdictions 
are aware of the system's boundaries therein.
    3. Exhibit L lists the six categories of exceptions, that is, those 
actions that may be taken within the system. No exception may be 
implemented, however, without first consulting with the Secretary of the 
Interior. It should also be noted that the sixth category is more 
limited than the first five. Besides meeting the consultation 
requirement for this sixth category, the sponsoring Agency must also 
determine whether the proposed exception is consistent with the purposes 
of the Act.
    4. For those actions that are reviewed and determined not to be 
within the System, the environmental reviewer must document this result 
by checking the appropriate compliance blocks on either Form FmHA or its 
successor agency under Public Law 103-354 1940-22, ``Environmental 
Checklist for Categorical Exclusions,'' or Form FmHA or its successor 
agency under Public Law 103-354 1940-21,

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``Environmental Assessment for Class I actions,'' or by so stating this 
result in the environmental assessment for Class II Actions (exhibit H), 
depending upon whichever format is applicable to the action under 
review.
    5. For those actions that would be located within the system, one of 
the following two steps must be taken:
    a. If the environmental reviewer concludes that the action does not 
meet the criteria for an exception, as listed in exhibit L, the reviewer 
shall so inform the approving official and a final determination made in 
the manner indicated in Sec.  1940.316 of this subpart. If this 
determination is consistent with the environmental reviewer's 
conclusion, the action must be denied by the approving official and the 
affected applicant or party informed of the reason for denial. If it is 
determined that the action may qualify for an exception, the steps 
identified in Item b immediately below must be implemented prior to a 
decision on this question.
    b. If the environmental reviewer concludes that the proposed action 
may meet the exception criteria, the approving official must be so 
informed. Whenever the approving official agrees or makes a similar 
determination as a result of the review conducted in Item a immediately 
above, consultation shall be initiated with the Secretary of the 
Interior by either the State Director or the Administrator for a 
National Office activity. FmHA or its successor agency under Public Law 
103-354 shall request the Secretary's views as to whether the exception 
criteria are met and shall provide the Secretary with the following 
information:
    (1) A detailed description of the action and its location;
    (2) A description of the affected environment within the System and 
the impacts of the proposed action;
    (3) The applicable exception criteria and FmHA or its successor 
agency under Public Law 103-354's reasons for believing they apply to 
this action; and
    (4) If a Section 6(a)(6) exception is claimed, FmHA or its successor 
agency under Public Law 103-354's reasons for believing the action to be 
consistent with the purposes of the Act.
    Should the Secretary concur in the exception criteria being met, 
that portion of the environmental assessment relating to compliance with 
the Act shall be completed and the corresponding documentation attached. 
Should the Secretary not concur, a final decision on the approval or 
denial of the action must be made by the Administrator.



           Sec. Exhibit G to Subpart G of Part 1940 [Reserved]



 Sec. Exhibit H to Subpart G of Part 1940--Environmental Assessment for 
                            Class II Actions

    In completing this assessment, it is important to understand the 
comprehensive nature of the impacts which must be analyzed. 
Consideration must be given to all potential impacts associated with the 
construction of the project, its operation and maintenance, the 
operation of all identified primary beneficiaries, and the attainment of 
the project's major objectives, whether they be an increased housing 
stock, community improvement, economic development, or greater 
agricultural productivity. This last category, the attainment of the 
project's major objectives, often induces or supports changes in 
population densities, land uses, community services, transportation 
systems and resource consumption. The scope of the assessment is 
broadened even further when there are related activities involved. The 
impacts of these activities must also be assessed.
    The preparer will consult as indicated in Sec.  1940.318(b) of this 
subpart with appropriate experts from Federal, State, and local 
agencies, universities, and other organizations or groups whose views 
could be helpful in the assessment of potential impacts. In so doing, 
each discussion which is utilized in reaching a conclusion with respect 
to the degree of an impact will be summarized in the assessment as 
accurately as possible and include the name, title, phone number, and 
organization of the individual contacted, plus the date of contact. 
Related correspondence should be attached to the assessment.
    The FmHA or its successor agency under Public Law 103-354 
environmental assessment shall be prepared in the following format. It 
shall address the listed items and questions and contain as attachments 
the indicated descriptive materials, as well as the environmental 
information submitted by the applicant, Form FmHA or its successor 
agency under Public Law 103-354 1940-20, ``Request for Environmental 
Information.''
    The assessment has been designed to cover the wide variety of 
projects and environments with which the Agency deals. Consequently, not 
every issue or potential impact raised in the assessment may be relevant 
to each project. The purpose of the format is to give the preparer an 
understanding of a standard range of impacts, environmental factors, and 
issues which may be encountered. In preparing an assessment, each topic 
heading identified by a Roman numeral and each environmental factor 
listed under topic heading IV, such as air quality, for example, must be 
addressed.
    The amount of analysis and material that must be provided will 
depend upon the type

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and size of the project, the environment in which it is located, and the 
range and complexity of the potential impacts. The amount of analysis 
and detail provided, therefore, must be commensurate with the magnitude 
of the expected impact. The analysis of each environmental factor (i.e., 
water quality) must be taken to the point that a conclusion can be 
reached and supported concerning the degree of the expected impact with 
respect to that factor.
    For example, a small community center may not require detailed 
information on air emissions or solid waste management, but an 
industrial facility would. Similarly, an irrigation project for a 
farming operation would concentrate on such factors as water quality and 
fish and wildlife, rather than land use changes. The extension of a 
water or sewer system or the approval of a subdivision, on the other 
hand, would have to give close attention to all factors, with potential 
land use changes being a particularly important one.

                     I. Project Description and Need

    Identify the name, project number, location, and specific elements 
of the project along with their sizes, and, when applicable, their 
design capacities. Indicate the purpose of the project, FmHA or its 
successor agency under Public Law 103-354's position regarding the need 
for it, and the extent or area of land to be considered as the project 
site.

            II. Primary Beneficiaries and Related Activities

    Identify any existing businesses or major developments that will 
benefit from the project and those which will expand or locate in the 
area because of the project. Specify by name, product, service, and 
operations involved.
    Identify any related activities which are defined as interdependent 
parts of a FmHA or its successor agency under Public Law 103-354 action. 
Such undertakings are considered interdependent parts whenever they 
either make possible or support the FmHA or its successor agency under 
Public Law 103-354 action or are themselves induced or supported by the 
FmHA or its successor agency under Public Law 103-354 action or another 
related activity. These activities may have been completed in the very 
recent past and are now operational, or they may reasonably be expected 
to be accomplished in the near future. Related activities may or may not 
be federally permitted or assisted. When they are, identify the involved 
Federal Agency(s).
    In completing the remainder of the assessment, it must be remembered 
that the impacts to be addressed are those which stem from the project, 
the primary beneficiaries, and the related activities.

                    III. Description of Project Area

    Describe the project site and its present use. Describe the 
surrounding land uses; indicate the directions and distances involved. 
The extent of the surrounding land to be considered depends on the 
extent of the impacts of the project, its related activities, and the 
primary beneficiaries. Unique or sensitive areas must be pointed out. 
These include residential, schools, hospitals, recreational, historical 
sites, beaches, lakes, rivers, parks, floodplains, wetlands, dunes, 
estuaries, barrier islands, natural landmarks, unstable soils, steep 
slopes, aquifer recharge areas, important farmlands and forestlands, 
prime rangelands, endangered species habitats or other delicate or rare 
ecosystems.
    Attach adequate location maps of the project area, as well as (1) a 
U.S. Geological Survey ``15 minute'' (``7\1/2\ minute,'' if available,) 
topographic map which clearly delineates the area and the location of 
the project elements, (2) the Department of Housing and Urban 
Development's floodplain map(s) for the project area, (3) site photos, 
(4), if completed, a standard soil survey for the project, and (5), if 
available, an aerial photograph of the site. When necessary for 
descriptive purposes or environmental analysis, include land use maps or 
other graphic information. All graphic materials shall be of high 
quality resolution.

                        IV. Environmental Impact

    1. Air Quality. Discuss, in terms of the amounts and types of 
emissions to be produced, all aspects of the project including 
beneficiaries' operations and known indirect effects (such as increased 
motor vehicle traffic) which will affect air quality. Indicate the 
existing air quality in the area. Indicate if topographical or 
meteorological conditions hinder or affect the dispersal of air 
emissions. Evaluate the impact on air quality given the types and 
amounts of projected emissions, the existing air quality, and 
topographical and meterological conditions. Discuss the project's 
consistency with the State's air quality implementation plan for the 
area, the classification of the air quality control region within which 
the project is located, and the status of compliance with air quality 
standards within that region. Cite any contacts with appropriate experts 
and agencies which must issue necessary permits.
    2. Water Quality. Discuss, in terms of amounts and types of 
effluents, all aspects of the project including primary beneficiaries' 
operations and known indirect effects which will affect water quality. 
Indicate the existing water quality of surface and/or underground water 
to be affected. Evalute the impacts of the project on this existing 
water quality. Indicate if an aquifer recharge area

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is to be adversely affected. If the project lies within or will affect a 
sole source aquifer recharge area as designated by EPA, contact the 
appropriate EPA regional office to determine if its review is necessary. 
If it is, attach the results of its review.
    Indicate the source and available supply of raw water and the extent 
to which the additional demand will affect the raw water supply. 
Describe the wastewater treatment system(s) to be used and indicate 
their capacity and their adequacy in terms of the degree of treatment 
provided. Discuss the characteristics and uses of the receiving waters 
for any sources of discharge. If the treatment systems are or will be 
inadequate or overloaded, describe the steps being taken for necessary 
improvements and their completion dates. Compare such dates to the 
completion date of the FmHA or its successor agency under Public Law 
103-354 project. Analyze the impacts on the receiving water during any 
estimated period of inadequate treatment.
    Discuss the project's consistency with the water quality planning 
for the area, such as EPA's Section 208 area-wide waste treatment 
management plan. Discuss the project's consistency with applicable State 
water quality standards to include a discussion of whether or not the 
project would either impair any such standard or fail to meet 
antidegradation requirements for point or nonpoint sources. Describe how 
surface runoff is to be handled and the effect of erosion on streams.
    Evaluate the extent to which the project may create shortages for or 
otherwise adversely affect the withdrawal capabilities of other present 
users of the raw water supply, particularly in terms of possible human 
health, safety, or welfare problems.
    For projects utilizing a groundwater supply, evaluate the potential 
for the project to exceed the safe pumping rate for the aquifer to the 
extent that it would (1) adversely affect the pumping capability of 
present users, (2) increase the likelihood of brackish or saltwater 
intrusion, thereby decreasing water quality, or (3) substantially 
increase surface subsidence risks.
    For projects utilizing a surface water supply, evaluate the 
potential for the project to (1) reduce flows below the minimum required 
for the protection of fish and wildlife or (2) reduce water quality 
standards below those established for the stream classification at the 
point of withdrawal or the adjacent downstream section.
    Cite contacts with appropriate experts and agencies that must issue 
necessary permits.
    3. Solid Waste Management. Indicate all aspects of the project 
including primary beneficiaries' operations, and known indirect effects 
which will necessitate the disposal of solid wastes. Indicate the kinds 
and expected quantities of solid wastes involved and the disposal 
techniques to be used. Evaluate the adequacy of these techniques 
especially in relationship to air and water quality. Indicate if 
recycling or resource recovery programs are or will be used. Cite any 
contacts with appropriate experts and agencies that must issue necessary 
permits.
    4. Land Use. Given the description of land uses as previously 
indicated, evaluate (a) the effect of changing the land use of the 
project site and (b) how this change in land use will affect the 
surrounding land uses and those within the project's area of 
environmental impact. Particularly address the potential impacts to 
those unique or sensitive areas discussed under Section III, Description 
of Project Area, which are not covered by the specific analyses required 
in Sections V-XI. Describe the existing land use plan and zoning 
restrictions for the project area. Evaluate the consistency of the 
project and its impacts on these plans. For all actions subject to the 
requirements of exhibit M of this subpart indicate (a) whether or not 
highly erodible land, wetland or converted wetland is present, (b) if 
any exemption(s) applies to the requirements of exhibit M, (c) the 
status of the applicant's eligibility for an FmHA or its successor 
agency under Public Law 103-354 loan under exhibit M and (d) any steps 
the applicant must take prior to loan approval to retain or retain its 
eligibility. Attach a completed copy of Form SCS-CPA-26, ``Highly 
Erodible Land and Wetland Conservation Determination,'' for the action.
    5. Transportation. Describe available facilities such as highways 
and rail. Discuss whether the project will result in an increase in 
motor vehicle traffic and the existing roads' ability to safely 
accommodate this increase. Indicate if additional traffic control 
devices are to be installed. Describe new traffic patterns which will 
arise because of the project. Discuss how these new traffic patterns 
will affect the land uses described above, especially residential, 
hospitals, schools, and recreational. Describe the consistency of the 
project's transportation impacts with the transportation plans for the 
area and any air quality control plans. Cite any contact with 
appropriate experts.
    6. Natural Environment. Indicate all aspects of the project 
including construction, beneficiaries' operations, and known indirect 
effects which will affect the natural environment including wildlife, 
their habitats, and unique natural features. Cite contacts with 
appropriate experts. If an area listed on the National Registry of 
Natural Landmarks may be affected, consult with the Department of 
Interior and document these consultations and any agreements reached 
regarding avoidance or mitigation of potential adverse impacts.
    7. Human Population. Indicate the number of people to be relocated 
and arrangements being made for this relocation. Discuss how impacts 
resulting from the project such as

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changes in land use, transportation changes, air emissions, noise, odor, 
etc. will affect nearby residents and users of the project area and 
surrounding areas. Discuss whether the proposal will accommodate any 
population increases and, if so, describe the potential impacts of these 
increases on the area's public and community services such as schools, 
health care, social services, and fire protection. Cite contacts with 
appropriate experts.
    8. Construction. Indicate the potential effects of construction of 
the project on air quality, water quality, noise levels, solid waste 
disposal, soil erosion and siltation. Describe the measures that will be 
employed to limit adverse effects. Give particular consideration to 
erosion, stream siltation, and clearing operations.
    9. Energy Impacts. Indicate the project's and its primary 
beneficiaries' effects on the area's existing energy supplies. This 
discussion should address not only the direct energy utilization, but 
any major indirect utilization resulting from the siting of the project. 
Describe the availability of these supplies to the project site. Discuss 
whether the project will utilize a large share of the remaining capacity 
of an energy supply or will create a shortage of such supply. Discuss 
any steps to be taken to conserve energy.
    10. Discuss any of the following areas which may be relevant: noise, 
vibrations, safety, seismic conditions, fire-prone locations, radiation, 
and aesthetic considerations. Cite any disucssion with appropriate 
experts.

                     V. Coastal Zone Management Act*
---------------------------------------------------------------------------

    * Complete only if coastal or Great Lakes State.
---------------------------------------------------------------------------

    Indicate if the project is within or will impact a coastal area 
defined as such by the State's approved Coastal Zone Management Program. 
If so, consult with the State agency responsible for the Program to 
determine the project's consistency with it. The results of this 
coordination shall be included in the assessment and considered in 
completing the environmental impact determination and environmental 
findings (Item XXI below).

    VI. Compliance With Advisory Council on Historic Preservation's 
                               Regulations

    In this Section, the environmental reviewer shall detail the steps 
taken to comply with the above regulations as specified in subpart F of 
part 1901 of this chapter. First, indicate that the National Register of 
Historic Places, including its monthly supplements, has been reviewed 
and whether there are any listed properties located within the area to 
be affected by the project. Second, indicate the steps taken such as 
historical/archeological surveys to determine if there are any 
properties eligible for listing located within the affected area. 
Summarize the results of the consultation with the State Historic 
Preservation Officer (SHPO) and attach appropriate documentation of the 
SHPO's views. Discuss the views of any other experts contacted. Based 
upon the above review process and the views of the SHPO, state whether 
or not an eligible or listed property will be affected.
    If there will be an effect, discuss all of the steps and protective 
measures taken to complete the advisory Council's regulations. Describe 
the affected property and the nature of the effect. Attach to the 
assessment the results of the coordination process with the Advisory 
Council on Historic Preservation.

           VII. Compliance With the Wild and Scenic Rivers Act

    Indicate whether the project will affect a river or portion of it 
which is either included in the National Wild and Scenic Rivers System 
or designated for potential addition to the system. This analysis shall 
be conducted through discussions with the appropriate regional office of 
the National Park Service or the Forest Service when its lands are 
involved, as well as the appropriate State agencies having 
implementation authorities. See exhibit E for specific implementation 
instructions for this Act. A summary of discussions held or any required 
formal coordination shall be included in the assessment and considered 
in completing the environmental impact determination and environmental 
findings (Item XXI below).

            VIII. Compliance With the Endangered Species Act

    Indicate whether the project will either (1) affect a listed 
endangered or threatened species or critical habitat or (2) adversely 
affect a proposed critical habitat for an endangered or threatened 
species or jeopardize the continued existence of a proposed endangered 
or threatened species. This analysis will be conducted in consultation 
with the Fish and Wildlife Service and the National Marine Fisheries 
Service, when appropriate. Any formal or informal consultations 
conducted with these agencies as well as any State wildlife protection 
agency will also address impacts to Category I and Category II species. 
See exhibit D of this subpart for specific implementation instructions.
    The results of any required coordination shall be included in the 
assessment along with any completed biological opinion and mitigation 
measures to be required for the project. These factors shall be 
considered in completing the environmental impact determination.

[[Page 71]]

  IX. Compliance With Farmland Protection Policy Act and Departmental 
                   Regulation 9500-3, Land Use Policy

    Indicate whether the project will either directly or indirectly 
convert an important land resource(s) identified in the Act or 
Departmental Regulation, other than floodplains or wetlands which should 
be addressed below in Item X of this exhibit. If a conversion may 
result, determine if there is a practicable alternative to avoiding it. 
If there is no such alternative, determine whether all practicable 
mitigation measures are included in the project. Document as an 
attachment these determinations and the steps taken to inform the 
public, locate alternatives, and mitigate potential adverse impacts. See 
exhibit C of this subpart for specific implementation guidance.

  X. Compliance With Executive Order 11988, Floodplain Management, and 
              Executive Order 11990, Protection of Wetlands

    Indicate whether the project is either located within a 100-year 
floodplain (500-year floodplain for a critical action) or a wetland or 
will impact a floodplain or wetland. If so, determine if there is a 
practicable alternative project or location. If there is no such 
alternative, determine whether all practicable mitigation measures are 
included in the project and document as an attachment these 
determinations and the steps taken to inform the public, locate 
alternatives, and mitigate potential adverse impacts. See the U.S. Water 
Resources Council's Floodplain Management Guidelines for more specific 
guidance as well as exhibit C of this subpart.

            XI. Compliance With Coastal Barrier Resources Act

    Indicate whether the project is located within the Coastal Barrier 
Resources System. If so, indicate whether or not the project meets an 
exception criteria under the Act and the results of any consultation 
with the Secretary of the Interior regarding its qualification as an 
exception. See exhibit F of this subpart for specific implementation 
instructions as well as exhibit L for a listing of the exception 
criteria. (Those States not having any components of the system within 
their jurisdiction need not reference this item in their assessments.)

                   XII. State Environmental Policy Act

    Indicate if the proposed project is subject to a State environmental 
policy act or similar regulation. Summarize the results of compliance 
with these requirements and attach available documentation. (See Sec.  
1940.328 of this subpart for further guidance.)

       XIII. Consultation Requirements of Executive Order 12372, 
              Intergovernmental Review of Federal Programs

    Attach the comments of State, regional, or local agencies (if this 
review process is required for the project) and respond to all comments 
that deal with the subject matters discussed in this assessment format 
or are otherwise of an environmental nature.

       XIV. Environmental Analysis of Participating Federal Agency

    Indicate if another Federal Agency is participating in the project 
either through the provision of additional funds, a companion project, 
or a permit review authority. Summarize the results of the involved 
Agency's environmental impact analysis and attach available 
documentation. (See Sec.  1940.318(d) of this subpart for further 
guidance.)

                         XV. Reaction to Project

    Discuss any negative comments or public views raised about the 
project and the consideration given to these comments. Indicate whether 
a public hearing or public information meeting has been held either by 
the applicant or FmHA or its successor agency under Public Law 103-354 
to include a summary of the results and any objections raised. Indicate 
any other examples of the community's awareness of the project, such as 
newspaper articles or public notifications.

                         XVI. Cumulative Impacts

    Summarize the cumulative impacts of this project and the related 
activities. Give particular attention to land use changes and air and 
water quality impacts. Summarize the results of the environmental impact 
analysis done for any of these related activities and/or your discussion 
with the sponsoring agencies. Attach available documentation of the 
analysis.

                          XVII. Adverse Impact

    Summarize the potential adverse impacts of the proposal as pointed 
out in the above analysis.

                           XVIII. Alternatives

    Discuss the feasibility of alternatives to the project and their 
environmental impacts. These alternatives should include (a) alternative 
locations, (b) alternative designs, (c) alternative projects having 
similar benefits, and (d) no project. If alternatives have been fully 
discussed above in any of Items VI through X, simply reference that 
discussion.

                        XIX. Mitigation Measures

    Describe any measures which will be taken or required by FmHA or its 
successor agency under Public Law 103-354 to avoid or mitigate the 
identified adverse impacts. Analyze

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the environmental impacts and potential effectiveness of the mitigation 
measures. Such measures shall be included as special requirements or 
provisions to the offer of financial assistance or other appropriate 
approval document, if this action does not involve financial assistance.

 XX. Consistency With FmHA or Its Successor Agency Under Public Law 103-
                       354 Environmental Policies

    Discuss the project's consistencies and inconsistencies with the 
Agency's environmental policies and the State Office's Natural Resource 
Management Guide. See Sec. Sec.  1940.304 and 1940.305 for a discussion 
of these policies and exhibit B for a discussion of the guide.

                    XXI. Environmental Determinations

    The following recommendations shall be completed:
    a. Based on an examination and review of the foregoing information 
and such supplemental information attached hereto, I recommend that the 
approving official determine that this project will have () a 
significant effect on the quality of the human environment and an 
Environmental Impact Statement must be prepared; will not have () a 
significant effect on the quality of the human environment.
    b. I recommend that the approving official make the following 
compliance determinations for the below-listed environmental 
requirements.

 
 Not in compliance         In compliance
 
                     .  ...................  .  Clean Air Act.
                     .  ...................  .  Federal Water Pollution
                                                 Control Act.
                     .  ...................  .  Safe Drinking Water Act--
                                                 Section 1424(e).
                     .  ...................  .  Endangered Species Act.
                     .  ...................  .  Coastal Barrier
                                                 Resources Act.
                     .  ...................  .  Coastal Zone Management
                                                 Act--Section 307(c) (1)
                                                 and (2).
                     .  ...................  .  Wild and Scenic Rivers
                                                 Act.
                     .  ...................  .  National Historic
                                                 Preservation Act.
                     .  ...................  .  Archeological and
                                                 Historic Preservation
                                                 Act.
                     .  ...................  .  Subpart B, Highly
                                                 Erodible Land
                                                 Conservation
                     .  ...................  .  Subpart C, Wetland
                                                 Conservation, of the
                                                 Food Security Act.
                     .  ...................  .  Executive Order 11988,
                                                 Floodplain Management.
                     .  ...................  .  Executive Order 11990,
                                                 Protection of Wetlands.
                     .  ...................  .  Farmland Protection
                                                 Policy Act.
                     .  ...................  .  Departmental Regulation
                                                 9500-3, Land Use
                                                 Policy.
                     .  ...................  .  State Office Natural
                                                 Resource Management
                                                 Guide.
 

    c. I have reviewed and considered the types and degrees of adverse 
environmental impacts identified by this assessment. I have also 
analyzed the proposal for its consistency with FmHA or its successor 
agency under Public Law 103-354 environmental policies, particularly 
those related to important farmland protection, and have considered the 
potential benefits of the proposal. Based upon a consideration and 
balancing of these factors, I recommend from an environmental standpoint 
that the project

___ be approved.
___ not be approved because of the attached reasons.
Signature of preparer*__________________________________________________
---------------------------------------------------------------------------

    *See Sec.  1940.316 of this subpart for listing of officials 
responsible for preparing assessment.
---------------------------------------------------------------------------

Date____________________________________________________________________
Title___________________________________________________________________
State Environmental Coordinator's Review (When required by Sec.  
1940.316 of this subpart)
    I have reviewed this environmental assessment and supporting 
documentation. Following are my positions regarding its adequacy and the 
recommendations reached by the preparer. For any matter in which I do 
not concur, my reasons are attached as exhibit __.

 
   Do not concur               Concur
 
                     .  ...................  .  Adequate Assessment.
                     .  ...................  .  Environmental Impact
                                                 Determination.
                     .  ...................  .  Compliance
                                                 Determinations.
                     .  ...................  .  Project Recommendation.
 

Signature of State Environmental Coordinator____________________________
Date____________________________________________________________________

[49 FR 3727, Jan. 30, 1984, as amended at 53 FR 36266, Sept. 19, 1988]

[[Page 73]]



  Sec. Exhibit I to Subpart G of Part 1940--Finding of No Significant 
                          Environmental Impact

SUBJECT: Finding of No Significant Environmental Impact and Necessary 
          Environmental Findings for (insert name, location, and any 
          identification number of project).
TO: Project File.

    The attached environmental assessment has been completed for the 
subject proposal by the FmHA or its successor agency under Public Law 
103-354 environmental reviewer. After reviewing the assessment and the 
supporting materials attached to it, I find that the subject proposal 
will not significantly affect the quality of the human environment. 
Therefore, the preparation of an environmental impact statement is not 
necessary.
    I also find that the assessment properly documents the proposal's 
status of compliance with the environmental laws and requirements listed 
therein.

    Insert signature and title of approving official as specified in 
Sec.  1940.316 of this subpart. ____(Date).

[49 FR 3727, Jan. 30, 1984, as amended at 53 FR 36266, Sept. 19, 1988]



   Sec. Exhibit J to Subpart G of Part 1940--Locations and Telephone 
   Numbers of Federal Emergency Management Administration's Regional 
                                 Offices

------------------------------------------------------------------------
  Federal region           Location           FTS No.*   Commercial No.
------------------------------------------------------------------------
I................  Boston, MA..............   223-4741    (617) 223-4741
II...............  New York, NY............   264-8980    (212) 264-8980
III..............  Philadelphia, PA........   597-9416    (215) 597-9416
IV...............  Atlanta, GA.............   257-2400    (404) 881-2400
V................  Chicago, IL.............   353-1500    (312) 353-1500
VI...............  Dallas, TX..............   749-9201    (817) 387-5811
VII..............  Kansas City, MO.........   758-5912    (816) 374-5912
VIII.............  Denver, CO..............   234-2553    (303) 234-2553
IX...............  San Francisco, CA.......   556-8794    (415) 556-8794
X................  Seattle, WA.............   396-0284    (206) 481-8800
------------------------------------------------------------------------
*This is the main number for the regional office. For floodplain
  information, ask for the Natural and Technological Hazards Division.



   Sec. Exhibit K to Subpart G of Part 1940--Locations and Telephone 
    Numbers of U.S. Fish and Wildlife Service's Wetland Coordinators

    The U.S. Fish and Wildlife Service (FWS) is presently preparing the 
National Wetlands Inventory. Each regional office of the FWS has named a 
staff member as a Wetland Coordinator. These individuals can provide 
updated information concerning existing State and local wetland surveys 
and Federal inventories. Listed below are the FWS regional offices and 
their areas of responsibility.

                                Region I

Portland, OR--FTS 429-6154; Commercial (503) 231-6154.
Areas Covered: California, Hawaii, Idaho, Nevada, Oregon, Washington, 
U.S. Pacific Trust, Territories and Possessions.

                                Region II

Albuquerque, NM--FTS 474-3152; Commercial (505) 766-2914.
Areas Covered: Arizona, New Mexico, Oklahoma, Texas.

                               Region III

Twin Cities, MN--FTS 725-3593; Commercial (612) 725-3593.
Areas Covered: Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin.

                                Region IV

Atlanta, GA--FTS 242-6343; Commercial (404) 221-6343.
Areas Covered: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, 
Mississippi, North Carolina, Panama Canal Zone, Puerto Rico, South 
Carolina, Tennessee, Virgin Islands.

                                Region V

Newton Corner, MA--FTS 829-9379; Commercial (617) 965-5100, Ext. 379.
Areas Covered: Connecticut, Delaware, District of Columbia, Maine, 
Maryland, Massachusetts, New Hampshire, New Jersey, New York, 
Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia.

                                Region VI

Denver, CO--FTS 234-5586; Commercial (303) 234-5586.
Areas Covered: Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, 
North Dakota, South Dakota, Utah, Wyoming.

                           Alaska Area Office

Anchorage, AK--Commercial (907) 263-3403.

                             National Office

St. Petersburg, FL--FTS 826-3624; Commercial (813) 893-3624.

[[Page 74]]



Sec. Exhibit L to Subpart G of Part 1940--Exceptions to Restrictions of 
                      Coastal Barrier Resources Act

                          Section 6 Exceptions*
---------------------------------------------------------------------------

    *Quoted from section 6 of the Act, Pub. L. 97-348.
---------------------------------------------------------------------------

    (a) Notwithstanding section 5, the appropriate Federal officer, 
after consultation with the Secretary, may make Federal expenditures or 
financial assistance available within the Coastal Barrier Resources 
System for--
    (1) Any use or facility necessary for the exploration, extraction, 
or transportation of energy resources which can be carried out only on, 
in, or adjacent to coastal water areas because the use or facility 
requires access to the coastal water body;
    (2) The maintenance of existing channel improvements and related 
structures, such as jetties, and including the disposal of dredge 
materials related to such improvements;
    (3) The maintenance, replacement, reconstruction, or repair, but not 
the expansion, of publicly owned or publicly operated roads, structures, 
or facilities that are essential links in a larger network or system;
    (4) Military activities essential to national security;
    (5) The construction, operation, maintenance, and rehabilitation of 
Coast Guard facilities and access thereto; and
    (6) Any of the following actions or projects, but only if the making 
available of expenditures or assistance therefor is consistent with the 
purposes of this Act:
    (A) Projects for the study, management, protection and enhancement 
of fish and wildlife resources and habitats, including, but not limited 
to, acquisition of fish and wildlife habitats and related lands, 
stabilization projects for fish and wildlife habitats, and recreational 
projects.
    (B) The establishment, operation, and maintenance of air and water 
navigation aids and devices, and for access thereto.
    (C) Projects under the Land and Water Conservation Fund Act of 1965 
(16 U.S.C. 4601-4 through 11) and the Coastal Zone Management Act of 
1972 (16 U.S.C. 1452 et seq.).
    (D) Scientific research, including but not limited to aeronautical, 
atmospheric, space, geologic, marine, fish and wildlife and other 
research, development and applications.
    (E) Assistance for emergency actions essential to the saving of 
lives and the protection of property and the public health and safety, 
if such actions are performed pursuant to sections 305 and 306 of the 
Disaster Relief Act of 1974 (42 U.S.C. 5145 and 5146) and section 1362 
of the National Flood Insurance Act of 1968 (42 U.S.C. 4103) and are 
limited to actions that are necessary to alleviate the emergency.
    (F) The maintenance, replacement, reconstruction, or repair, but not 
the expansion, of publicly owned or publicly operated roads, structures, 
or facilities.
    (G) Nonstructural projects for shoreline stabilization that are 
designed to mimic, enhance, or restore natural stabilization systems.
    (b) For purposes of subsection (a)(2), a channel improvement or a 
related structure shall be treated as an existing improvement or an 
existing related structure only if all, or a portion, of the moneys for 
such improvement or structure was appropriated before the date of the 
enactment of this Act.



Sec. Exhibit M to Subpart G of Part 1940--Implementation Procedures for 
 the Conservation of Wetlands and Highly Erodible Land Affecting Farmer 
    Program Loans and Loans to Indian Tribes and Tribal Corporations

    1. Background. This exhibit implements the requirements of Subtitle 
B, Highly Erodible Land Conservation, and Subtitle C, Wetland 
Conservation, of Title XII of the Food Security Act of 1985, Pub. L. 99-
198. The purposes of these Subtitles are to: Reduce soil loss due to 
wind and water erosion; protect the Nation's long term capability to 
produce food and fiber; reduce sedimentation; improve water quality; 
assist in preserving the Nation's wetlands; create better habitat for 
fish and wildlife through improved food and cover; and curb production 
of surplus commodities by removing certain incentives for persons to 
produce agricultural commodities on highly erodible land or converted 
wetland.
    2. Applicability. The provisions of this exhibit apply to insured 
and guaranteed Farmer Program loans and loans to Indian Tribes and 
Tribal Corporations, subordinations, transfers and assumptions of such 
loans and leases and credit sales of inventory property. For the purpose 
of this exhibit, ``Farmer Program loans'' means Farm Operating Loans, 
Farm Ownership Loans, Emergency Loans, and Soil and Water Loans. As used 
in this exhibit, the word loan is meant to include guarantee as well. 
Applicant means an applicant for either an insured or guaranteed loan 
and borrower means a recipient of either an insured or guaranteed loan.
    3. FmHA or its successor agency under Public Law 103-354 prohibited 
activities. Unless otherwise exempted by the provisions of this exhibit, 
the proceeds of any Farmer Program loan or loan to an Indian Tribe or 
Tribal Corporation made or guaranteed by FmHA or its successor agency 
under Public Law 103-354 will not be used either (a) for a purpose that

[[Page 75]]

will contribute to excessive erosion of highly erodible land, or (b) for 
a purpose that will contribute to conversion of wetlands to produce an 
agricultural commodity. (See Sec.  12.2(a)(1) of subpart A of part 12 of 
subtitle A of title 7, which is attachment 1 of this exhibit and is 
available in any FmHA or its successor agency under Public Law 103-354 
office, for the definition of an agricultural commodity.) Consequently, 
any applicant proposing to use loan proceeds for an activity 
contributing to either such purpose, will not be eligible for the 
requested loan. Any borrower that uses loan proceeds in a manner that 
contributes to either such purpose will be in default on the loan.
    a. U.S. Department of Agriculture (USDA) definitions. In 
implementing this exhibit, FmHA or its successor agency under Public Law 
103-354 will use the USDA's definitions of the terms found at Sec.  12.2 
of subpart A of part 12 of subtitle A of title 7 (attachment 1 of this 
exhibit which is available in any FmHA or its successor agency under 
Public Law 103-354 office).
    b. Highly erodible land conservation. FmHA or its successor agency 
under Public Law 103-354 will conclude that excessive erosion of highly 
erodible land results or would result whenever (1) a field on which 
highly erodible land is predominant, as determined by the Soil 
Conservation Service (SCS), is or would be used to produce an 
agricultural commodity without conformance to a conservation system 
approved either by SCS or the appropriate conservation district, as 
evidenced by a statement from SCS, and (2) such field is not exempt from 
the provisions of this exhibit.
    c. Wetland conservation. FmHA or its successor agency under Public 
Law 103-354 will conclude that a conversion of wetlands to produce an 
agricultural commodity has occurred or will occur whenever, as 
determined by SCS, (1) a wetland has or will be drained, dredged, 
filled, leveled, or otherwise manipulated (including any activity that 
results in impairing or reducing the flow, circulation, or reach of 
water) that makes possible the production of an agricultural commodity 
without further application of the manipulations described herein if (a) 
such production would not have been possible but for such action and (b) 
before such action such land was wetland and was neither highly erodible 
land nor highly erodible cropland; and (2) neither the affected wetland 
nor the activity affecting the wetland is exempt from the provisions of 
this exhibit.
    d. Use of loan proceeds. To use loan proceeds for a purpose that 
contributes to either the excessive erosion of highly erodible land or 
the conversion of wetlands to produce an agricultural commodity means 
that loan proceeds will or have been used in a way that contributes to 
either excessive erosion of highly erodible land or the conversion of 
wetlands to produce an agricultural commodity by paying the costs of any 
of the following:
    (1) The purchase of the affected land;
    (2) Necessary planning, feasibility, or design studies;
    (3) Obtaining any necessary permits;
    (4) The purchase, contract, lease or renting of any equipment or 
materials necessary to carry out the land modification or conversion to 
include all associated operational costs such as fuel and equipment 
maintenance costs;
    (5) Any labor costs;
    (6) The planting, cultivating, harvesting, or marketing of any 
agricultural commodity produced on nonexempt highly erodible land to 
include any associated operational or material costs such as fuel, seed, 
fertilizer, and pesticide costs;
    (7) Within the crop year in which the wetland conversion was 
completed plus the next ten crop years thereafter, the planting, 
cultivating, harvesting, or marketing of any agricultural commodity 
produced on the affected land to include any associated operational or 
materials costs such as fuel, seed, fertilizer and pesticide costs; or
    (8) For the same time period as in subparagraph 3d(7) above, any 
costs associated with using for on-farm purposes an agricultural 
commodity grown on the affected land.
    (9) Additionally, if loan proceeds will be or have been substituted 
to pay other costs at anytime during the life of the loan so that non-
loan funds can be used to pay any of the above costs, it is deemed that 
loan proceeds will be or have been used for a purpose that contributes 
to the prohibited activities described in this paragraph.
    4. Prohibited activities under other USDA financial assistance 
programs. Unless otherwise exempted, a person becomes ineligible for a 
variety of USDA financial assistance programs if that person produces in 
any crop year an agricultural commodity on either a field on which 
highly erodible land is predominant or a converted wetland. This 
ineligibility extends to any commodity produced during the crop year 
that the prohibited action occurs. The programs for which the person 
would be ineligible include price support payments, farm storage 
facility loans, disaster payments, crop insurance, payments made for the 
storage of an agricultural commodity, and payments received under a 
Conservation Reserve Program Contract. Farmer Program applicants and 
borrowers and applicants for, and borrowers of, loans to Indian Tribes 
and Tribal Corporations, therefore, can be affected not only by the FmHA 
or its successor agency under Public Law 103-354 prohibited activities 
but also by the broad USDA sweep of the Subtitles B and C restrictions. 
Should such an applicant rely or plan to rely on any of these other USDA 
financial assistance programs as a source of

[[Page 76]]

funds to repay its FmHA or its successor agency under Public Law 103-354 
loan(s) and then fail to meet the other program(s)' eligibility criteria 
related to wetland or highly erodible land conservation, repayment 
ability to FmHA or its successor agency under Public Law 103-354 or the 
lender of and FmHA or its successor agency under Public Law 103-354 
guaranteed loan may be jeopardized. Consequently, those applicants who 
are applying for a loan and those borrowers who receive a loan after the 
effective date of Subtitles B and C, as designated in part 12 of 
subtitle A of title 7, and who include in their projected sources of 
repayment, potential funds from any USDA program subject to some form of 
Subtitle B or C restrictions will have to demonstrate as part of their 
applications, and for borrowers, as part of their farm plan of 
operation, their ability to meet the other program(s)' eligibility 
criteria. Failure to meet the criteria will require the applicant or 
borrower either to document an alternative, equivalent source of 
revenues or, if possible, agree to undertake any steps necessary to gain 
eligibility for the other program(s). See paragraph 6 of this exhibit 
for a discussion of such steps.
    5. Applicant's responsibilities.
    a. Required information. Every applicant for a Farmer Program loan 
or a loan to an Indian Tribe or Tribal Corporation will be required to 
provide the following information and, as applicable, certification as 
part of the application for financial assistance. An application will 
not be considered to be complete until this information and 
certification are provided to FmHA or its successor agency under Public 
Law 103-354. Once an applicant has provided FmHA or its successor agency 
under Public Law 103-354 with information from SCS on the presence of 
any highly erodible land, wetland, or converted wetland this information 
need not be provided again for a subsequent loan unless there is either 
a change in the property upon which FmHA or its successor agency under 
Public Law 103-354 loan proceeds will be applied or a change in the 
previous information, such as a change in the status of an exemption. 
There is a continuing responsibility on FmHA or its successor agency 
under Public Law 103-354 borrowers using other USDA financial assistance 
programs for repayment purposes to provide the County Supervisor with an 
executed copy of any similar certification required by the other USDA 
agency at the time of each required certification.
    (1) A statement from the SCS indicating whether or not the 
applicant's farm property or properties contain either highly erodible 
land, wetland, or converted wetland and, if so, whether or not the 
applicant qualifies for a particular exemption to the provisions of this 
exhibit and as further detailed in paragraph 11 below. The property or 
properties will be listed and described in accordance with the 
Agriculture Stabilization and Conservation Service's (ASCS) farm records 
system. SCS's execution of Form SCS-CPA-26, ``Highly Erodible Land and 
Wetland Conservation Determination,'' is necessary to meet this 
information requirement.
    (2) If either highly erodible land, wetland, or converted wetland is 
present, the applicant's properly executed original or carbon copy of 
Form AD-1026, ``Highly Erodible Land and Wetland Conservation 
Certification.''
    b. Required actions. If at any time during the application review 
process any of the information or basis for an applicant's certification 
changes, the applicant (or the lender in the case of a guaranteed loan) 
must immediately notify FmHA or its successor agency under Public Law 
103-354. If an applicant intends to produce an agricultural commodity on 
a nonexempt field on which highly erodible land is predominant, the 
applicant must develop a conservation system approved by SCS or the 
appropriate conservation district, demonstrate that it is or will be in 
compliance with the system at the time the field is to be used, and 
provide SCS's concurrence with this position.
    6. FmHA or its successor agency under Public Law 103-354's 
application review. The FmHA or its successor agency under Public Law 
103-354 County Supervisor will review the information provided by the 
applicant from SCS regarding the presence of any highly erodible land, 
wetland, or converted wetland and any possible exemptions and take the 
actions warranted by the presence of one or more of the circumstances 
described below. In carrying out these actions, FmHA or its successor 
agency under Public Law 103-354 will consider the technical decisions 
rendered by the SCS and the ASCS, as assigned to these agencies by 
subparts A, B, and C of part 12 of subtitle A of title 7 and further 
explained in this exhibit, to be final and controlling in the remaining 
FmHA or its successor agency under Public Law 103-354 decisionmaking 
process for this exhibit. It must also be understood that the definition 
of a wetland used by SCS in implementing this exhibit applies only to 
this exhibit and not to other wetland protection provisions of subpart G 
of part 1940.
    a. No highly erodible land, wetland, or converted wetland present. 
The requested loan can be approved under the provisions of this exhibit 
and, except for documenting this result in accordance with paragraph 8 
of this exhibit, no further action is required.
    b. Converted wetland present. The County Supervisor will consult 
with the applicant (and lender, in the case of a guaranteed loan) and 
the appropriate local office of the ASCS in order to determine if the 
converted wetland qualifies for the exemption specified in subparagraph 
c (1) of paragraph 11 of this exhibit. If so, no further action is 
necessary

[[Page 77]]

with respect to the converted wetland except for documenting the result. 
If the converted wetland does not qualify for an exemption, the County 
Supervisor will complete one or both of the following steps as the 
identified circumstances dictate.
    (1) Step one. Review both the date that the wetland was converted 
and the proposed use of loan proceeds in order to determine if loan 
proceeds will be used for a prohibited activity as defined in 
subparagraph d of paragraph 3 of this exhibit. If not, the County 
Supervisor will so document this as specified in paragraph 8 of this 
exhibit; complete step two immediately below; and, if an insured loan 
will be approved, notify the applicant in writing, coincident with the 
transmittal of Form FmHA or its successor agency under Public Law 103-
354 1940-1, ``Request For Obligation of Funds,'' and by using Form 
Letter 1940-G-1, ``Notification of The Requirements of exhibit M of FmHA 
Instruction 1940-G,'' that the loan approval instruments will contain 
compliance requirements affecting the applicant's converted wetland. If 
loan proceeds will be used for a prohibited activity, the applicant (and 
lender, in the case of a guaranteed loan) will be advised of the 
applicant's ineligibility for the FmHA or its successor agency under 
Public Law 103-354 loan being requested. The applicant (and lender, in 
the case of a guaranteed loan) will be advised of any modifications to 
the application that could cure the ineligibility. Not growing an 
agricultural commodity on the converted wetland would cure the 
ineligibility, but the substitution of non-FmHA or its successor agency 
under Public Law 103-354 funds to grow an agricultural commodity on the 
converted wetland would not.
    (2) Step two. The County Supervisor will review the applicant's 
sources of loan repayment to determine if they include funds from a USDA 
financial assistance program(s) subject to wetland conservation 
restrictions. If so, the County Supervisor will implement the actions in 
subparagraph e of this paragraph.
    c. Highly erodible land or wetland present. The County Supervisor 
will discuss with the applicant (and lender, in the case of a guaranteed 
loan) and review the intended uses of the FmHA or its successor agency 
under Public Law 103-354 loan proceeds as evidenced in any relevant 
application materials.
    (1) Proceeds to be used for prohibited activity. If proceeds would 
be used for a prohibited activity, the applicant (and lender, in the 
case of a guaranteed loan) will be advised of its ineligibility for the 
FmHA or its successor agency under Public Law 103-354 loan. The 
applicant (and lender, in the case of a guaranteed loan) will be 
informed of any modifications to its application that could cure the 
ineligibility, including financially feasible eligible loan purposes 
that could be helpful in implementing a conservation plan or installing 
a conservation system, should either be an appropriate cure. 
Substitution of non-FmHA or its successor agency under Public Law 103-
354 monies to accomplish the prohibited activity would not cure the 
ineligibility, but actual elimination of the activity from the 
applicant's farm plan of operation would.
    (2) Proceeds not to be used for a prohibited activity. If loan 
proceeds are not planned to be used for a prohibited activity, the 
County Supervisor will perform the following tasks:
    (a) Document the above determination in the applicant's file as 
specified in paragraph 8 of this exhibit.
    (b) If an insured loan will be approved and the requirements of 
subparagraph c (2)(c) of this paragraph do not apply, notify the 
applicant in writing, coincident with the transmittal of Form FmHA or 
its successor agency under Public Law 103-354 1940-1, ``Request For 
Obligation of Funds,'' and by using Form Letter 1940-G-1, ``Notification 
of The Requirements of Exhibit M of FmHA Instruction 1940-G,'' that the 
loan approval instruments will contain compliance requirements affecting 
the applicant's highly erodible land and/or wetland.
    (c) Review the term of the proposed loan and take the following 
actions, as applicable.
    (i) Loan term exceeds January 1, 1990, but not January 1, 1995. If 
the term of the proposed loan expires within this period and the 
applicant intends to produce an agricultural commodity on highly 
erodible land that is exempt from the restrictions of this exhibit until 
either 1990 or two years after the SCS has completed a soil survey for 
the borrower's land, whichever is later, the County Supervisor will 
determine if it is financially feasible for the applicant, prior to loss 
of the exemption, to actively apply a conservation plan approved by SCS 
or the appropriate conservation district. See Sec.  12.23 of subpart A 
of part 12 of subtitle A of title 7, which is attachment 1 of this 
exhibit and is available in any FmHA or its successor agency under 
Public Law 103-354 office, for a definition of actively applying a 
conservation plan. Prior to loan approval, the applicant, the lender, 
(if a guaranteed loan is involved), FmHA or its successor agency under 
Public Law 103-354 and SCS will resolve any doubts as to what extent 
production would be able to continue under application of a conservation 
plan and as to the financial implications on loan repayment ability from 
both the potential costs of actively applying the conservation plan and 
the potential loss of revenues from any reduced acreage production base. 
The loan approval official will determine the financial implications of 
actively applying a conservation plan to the applicant's highly erodible 
land by developing a projected farm plan of operation or other farm 
financial projections that reflect adequate repayment on

[[Page 78]]

the full scheduled installments for all debt obligations at the time the 
conservation plan is being actively applied. If in making this 
determination, loan repayment ability cannot be demonstrated, FmHA or 
its successor agency under Public Law 103-354 will deny the loan 
application. If loan repayament ability can be demonstrated and an 
insured loan will be approved, the applicant will be advised in writing, 
coincident with the transmittal of Form FmHA or its successor agency 
under Public Law 103-354 1940-1, ``Request For Obligation of Funds,'' 
and using Form Letter 1940-G-1, ``Notification of The Requirements of 
Exhibit M of FmHA Instruction 1940-G,'' that the loan approval 
instruments will contain compliance requirements affecting the 
applicant's highly erodible land. The applicant will also be advised 
that a statement from the SCS issued prior to either January 1, 1990, or 
two years after the SCS has completed a soil survey of the applicant's 
land (whichever is later) and stating that the applicant is actively 
applying an approved conservation plan will be considered adequate 
demonstration of compliance on the highly erodible land affected by the 
1990 deadline.
    (ii) Loan term exceeds January 1, 1995. If the term of the proposed 
loan would exceed this date and the borrower intends to produce an 
agricultural commodity on highly erodible land that is exempt from the 
restrictions of the exhibit up until that date (see subparagraph b (4) 
of paragraph 11 of this exhibit) the County Supervisor will determine if 
it is financially feasible for the applicant, after January 1, 1985, to 
produce an agricultural commodity on the highly erodible land in 
compliance with a conservation system approved by SCS or the appropriate 
conservation district. Prior to loan approval, the applicant, the lender 
(if a guaranteed loan is involved), FmHA or its successor agency under 
Public Law 103-354 and SCS will resolve any doubts as to what extent 
production would be able to continue under a conservation system and as 
to the financial implications on loan repayment ability from both the 
potential costs of the conservation system and the potential loss of 
revenues from any reduced acreage production base. The loan approval 
official will determine the financial implications of compliance with a 
conservation system using the financial projection method(s) indicated 
in subparagraph c (2)(c)(i) of this paragraph. If loan repayment ability 
cannot be demonstrated, the application will be denied. If loan 
repayment ability can be demonstrated and an insured loan will be 
approved, the applicant will be advised in writing, coincident with the 
transmittal of Form 1940-1, ``Request for Obligation of Funds,'' and 
using Form Letter 1940-G-1, ``Notification of The Requirements of 
Exhibit M of FmHA Instruction 1940-G,'' that the loan approval 
instruments will contain compliance requirements affecting the 
applicant's highly erodible land. The applicant will also be advised 
that a statement from SCS issued prior to January 1, 1995, and stating 
that the applicant is in compliance with an approved conservation system 
will be considered adequate demonstration of compliance.
    (d) Implement the actions in subparagraph e of this paragraph if the 
applicant plans to repay a portion of the loan with funds from a USDA 
financial assistance program subject to wetland or highly erodible land 
conservation restrictions.
    d. Highly erodible land present that was or is planted in alfalfa. 
If the applicant plans to cultivate highly erodible land for the purpose 
of producing an agricultural commodity and that highly erodible land 
during each of the 1981 to 1985 crop years was planted in alfalfa in a 
crop rotation determined by SCS to be adequate for the protection of 
highly erodible land, the applicant is exempt until June 1, 1988, from 
the requirement to fully implement an approved conservation system on 
the highly erodible land. The County Supervisor, following procedures 
similar to those indicated in subparagraph c (2)(c)(i) of this 
paragraph, will determine if it is financially feasible for the 
applicant to apply a conservation system to the highly erodible land 
prior to the loss of the exemption on June 1, 1988. If loan repayment 
ability cannot be demonstrated, the application will be denied. If loan 
repayment ability can be demonstrated and an insured loan will be 
approved, the applicant will be advised in writing that the loan 
approval instruments will contain compliance requirements affecting the 
applicant's highly erodible land. The applicant will also be advised 
that a statement from SCS issued prior to June 1, 1988 and stating that 
the applicant is in compliance with an approved conservation system will 
be considered adequate demonstration of compliance with this 
requirement.
    e. Highly erodible land, wetland, or converted wetland present and 
applicant intends to use the USDA financial assistance program(s), 
including crop insurance, to repay FmHA or its successor agency under 
Public Law 103-354 loan. The County Supervisor will consult with the 
applicant (and lender, in the case of a guaranteed loan) and the other 
USDA agency(s) to determine if the applicant is eligible for the 
latter's financial assistance. If not eligible, the applicant will have 
to demonstrate that an alternative source(s) of repayment will be 
available in order for further processing of the application to proceed.
    7. Required provisions in loan approval documents.
    a. Insured loans.
    (1) Promissory Notes. For all loans to which this exhibit applies, 
all promissory notes must contain the provision indicated below: (Form 
FmHA or its successor agency under

[[Page 79]]

Public Law 103-354 1940-17, ``Promissory Note,'' has been revised so 
that the language will no longer be inserted as an addendum, but the 
following provision must be inserted as an addendum to Form FmHA or its 
successor agency under Public Law 103-354 440-22, ``Promissory Note 
(Association or Organization),'' if the loan is being made to an Indian 
Tribe or a Tribal Corporation.)

     ``Addendum for Highly Erodible Land and Wetland Conservation''

    Addendum to promissory note dated ________ in the amount of $______ 
at an annual interest rate of __ percent. This agreement supplements and 
attaches to the above note.
    Borrower recognizes that the loan described in this note will be in 
default should any loan proceeds be used for a purpose that will 
contribute to excessive erosion of highly erodible land or to the 
conversion of wetlands to produce an agricultural commodity, as further 
explained in 7 CFR part 1940, subpart G, exhibit M. If (1) the term of 
the loan exceeds January 1, 1990, but not January 1, 1995, and (2) 
Borrower intends to produce an agricultural commodity on highly erodible 
land that is exempt from the restrictions of exhibit M until either 
January 1, 1990 or two years after the U.S. Soil Conservation Service 
(SCS) has completed a soil survey for the Borrower's land, whichever is 
later, the Borrower further agrees that, prior to the loss of the 
exemption from the highly erodible land conservation restrictions found 
in 7 CFR part 12, Borrower must demonstrate that Borrower is actively 
applying on that land which has been determined to be highly erodible a 
conservation plan approved by the SCS or the appropriate conservation 
district in accordance with SCS's requirements. Furthermore, if the term 
of the loan exceeds January 1, 1995, Borrower further agrees that 
Borrower must demonstrate prior to January 1, 1995, that any production 
after that date of an agricultural commodity on highly erodible land 
will be done in compliance with a conservation system approved by SCS or 
the appropriate conservation district in accordance with SCS's 
requirements.
________________________________________________________________________
(Name of Borrower)
________________________________________________________________________
(Signature of Executive Official)
________________________________________________________________________
(Signature of Attesting Official)

    (2) Mortgages, deeds of trust and security agreements. State 
Directors will consult with the Office of General Counsel and ensure 
that for all loans to which this exhibit applies a covenant is included 
in all mortgages, deeds of trust, and security agreements which reads as 
indicated below. Form FmHA or its successor agency under Public Law 103-
354 440-15, ``Security Agreement (Insured Loans to Individuals),'' and 
Form FmHA or its successor agency under Public Law 103-354 440-4, 
``Security Agreement (Chattels and Crops),'' have been revised 
accordingly. Equivalent forms required in State supplements must be 
similarly revised.

                   [For mortgages or deeds of trust:]

    ``Borrower further agrees that the loan(s) secured by this 
instrument will be in default should any loan proceeds be used for a 
purpose that will contribute to excessive erosion of highly erodible 
land or to the conversion of wetlands to produce an agricultural 
commodity, as further explained in 7 CFR part 1940, subpart G, exhibit 
M.''

                       [For security agreements:]

    ``Default shall also exist if any loan proceeds are used for a 
purpose that will contribute to excessive erosion of highly erodible 
land or to the conversion of wetlands to produce an agricultural 
commodity, as further explained in 7 CFR part 1940, subpart G, exhibit 
M.''
    b. Guaranteed loans.
    (1) Form FmHA or its successor agency under Public Law 103-354 449-
14, ``Conditional Commitment for Guarantee,'' and Form FmHA or its 
successor agency under Public Law 103-354 1980-15, ``Conditional 
Commitment for Contract of Guarantee (Line of Credit).'' These forms 
must contain a condition that includes the following provisions:
    (a) Informs the lender that FmHA or its successor agency under 
Public Law 103-354's commitment is conditioned upon loan proceeds not 
being used for a purpose that will contribute to excessive erosion of 
highly erodible land or to the conversion of wetlands to produce an 
agricultural commodity, as explained in this exhibit;
    (b) Informs the lender of the lender's monitoring responsibilities 
under paragraph 10 of this exhibit; and;
    (c) Requires the lender, for all borrowers having highly erodible 
land, wetland, or converted on their farm properties, to include 
provisions in its loan instruments similar to those contained in 
subparagraphs a (1) and (2) of this paragraph.
    (2) Lender's loan and security instruments. These instruments must 
be modified as specified in subparagraph b(1)(c) of this paragraph.
    8. Required FmHA or its successor agency under Public Law 103-354 
documentation. The actions taken and determinations made by FmHA or its 
successor agency under Public Law 103-354 to comply with the provisions 
of this exhibit will be documented as part of the environmental review 
of the application. All actions subject to this exhibit will undergo at 
a minimum the completion of Form FmHA or its successor agency under 
Public

[[Page 80]]

Law 103-354 1940-22, ``Environmental Checklist for Categorical 
Exclusions.'' On the reverse of this form, the preparer will document as 
applicable (a) whether or not highly erodible land, wetland, or 
converted wetland is present, (b) if any exemption(s) applies, (c) the 
status of the applicant's eligibility for an FmHA or its successor 
agency under Public Law 103-354 loan under this exhibit, and (d) any 
steps the applicant must take prior to loan approval to retain or regain 
its eligibility. If the application under review meets the definition of 
a Class I action as defined in Sec.  1940.311 of this subpart, the above 
documentation will be included as an exhibit to Form FmHA or its 
successor agency under Public Law 103-354 1940-21, ``Environmental 
Assessment for Class I Action.'' If the application meets the definition 
of a Class II action as defined in Sec.  1940.312 of this subpart, the 
required documentation will be included within the Class II assessment 
under the discussion of land use impacts. See paragraph IV.4. of exhibit 
H of this subpart. Once an applicant's farm property has undergone an 
environmental review covering the provisions of this exhibit, the County 
Supervisor reviewing a subsequent loan request need not require the 
applicant to obtain further site information from SCS as long as there 
is no change in the farm property to be affected or any applicable 
exemptions.
    9. Borrowers' responsibilities. In addition to complying with any 
loan requirements resulting from FmHA or its successor agency under 
Public Law 103-354's implementation of this exhibit, a borrower must 
within ten days of receipt inform, in writing, the lender of a 
guaranteed loan and the County Supervisor for an insured loan of any 
ineligibility determinations received from other USDA agencies for 
violations of wetland or highly erodible land conservation restrictions. 
A borrower also has the responsibility to consult with the lender or 
County Supervisor, as applicable, if at any time the borrower is 
uncertain as to the borrower's duties and responsibility under the loan 
provisions.
    10. FmHA or its successor agency under Public Law 103-354 and lender 
monitoring. As an element of insured loan servicing, to include 
development of a farm plan of operation for an upcoming crop year, 
scheduled farm visits, or other contracts with borrowers, FmHA or its 
successor agency under Public Law 103-354 staff will review and analyze 
the borrower's compliance with the provisions of this exhibit and any 
related loan requirements. If at anytime FmHA or its successor agency 
under Public Law 103-354 becomes aware of the borrower's violation of 
these provisions or related loan requirements, the borrower will be 
informed that the affected loan(s) is in default. In addition to 
directly monitoring borrowers, the County Supervisor will receive and 
review the monitoring results of other USDA agencies having restrictions 
on wetland and highly erodible land conservation. Whenever these results 
indicate that a borrower may have violated the loan conditions, the 
County Supervisor will further analyze the matter and respond, as 
indicated in this paragraph, should a violation be determined. Lenders 
of FmHA or its successor agency under Public Law 103-354 guaranteed 
loans must also monitor compliance as part of their servicing 
responsibilities.
    11. Exemptions and determining their applicability. Following is a 
list of exemptions from the provisions of this exhibit as well a 
description of how FmHA or its successor agency under Public Law 103-354 
will apply the exemptions to a proposed loan or activity under a loan. 
This list is intended to provide guidance on implementing the exemptions 
contained in subparts A, B, and C of part 12 of subtitle A of title 7 
(attachment 1 of this exhibit which is available in any FmHA or its 
successor agency under Public Law 103-354 office) and does not modify or 
limit any of those exemptions.
    a. Exemption from wetland and highly erodible land conservation. Any 
loan which was closed prior to December 23, 1985, or any loan for which 
either Form FmHA or its successor agency under Public Law 103-354 1940-
1, ``Request for Obligation of Funds,'' Form FmHA or its successor 
agency under Public Law 103-354 449-14, ``Conditional Commitment for 
Guarantee,'' or Form FmHA or its successor agency under Public Law 103-
354 1980-15, ``Conditional Commitment for Contract of Guarantee (Line of 
Credit),'' was executed prior to December 23, 1985, is exempt from the 
provisions of this exhibit.
    b. Exemptions from highly erodible land conservation. The following 
exemptions exist from the restrictions on highly erodible land 
conservation. Whenever the County Supervisor is required to consult with 
another USDA agency in applying these exemptions, the County 
Supervisor's review of a properly completed Form SCS-CPA-26 will be 
considered adequate consultation if the needed information is presented 
on the form and no questions are raised by the FmHA or its successor 
agency under Public Law 103-354 review.
    (1) Any land upon which an agricultural commodity was planted before 
December 23, 1985, is exempt for that particular planting. The County 
Supervisor will consult with the appropriate local ASCS office in 
applying this exemption and the ASCS determination is controlling for 
purposes of this exhibit.
    (2) Any land planted with an agricultural commodity during a crop 
year beginning before December 23, 1985, is exempt for that particular 
planting. FmHA or its successor agency under Public Law 103-354 will 
consult with the ASCS State Executive Director and the latter's position 
will be controlling in determining the date that the crop year began.

[[Page 81]]

    (3) Any land that during any one of the crop years of 1981 through 
1985 was either (a) cultivated to produce an agricultural commodity, or 
(b) set aside, diverted or otherwise not cropped under a program 
administered by USDA to reduce production of an agricultural commodity, 
is exempt until the later of January 1, 1990, or the date that is two 
years after the date that the SCS has completed a soil survey of the 
land. To apply this exemption, the County Supervisor will consult with 
ASCS to determine from the latter's records whether or not the land was 
cultivated or set aside during the required period. The ASCS 
determination will be controlling. However, the date of completion for 
any SCS soil survey will be determined by SCS and used by the County 
Supervisor.
    (4) Beginning on January 1, 1990, or two years after SCS has 
completed a soil survey for the land, whichever is later, and extending 
to January 1, 1995, any land that qualified for the exemption in 
subparagraph b (3) of this paragraph is further exempt if a person is 
actively applying to it a conservation plan that is based on the local 
SCS technical guide and properly approved by the appropriate SCS 
conservation district or the SCS. To apply this exemption as well as the 
exemptions specified in subparagraphs b (5), (6), (7), and (8) of this 
paragraph, the County Supervisor will consult with the appropriate local 
SCS office and the SCS position will be controlling.
    (5) Highly erodible land within a conservation district and under a 
conservation system that has been approved by a conservation district 
after the district has determined that the conservation system is in 
conformity with technical standards set forth in the SCS technical guide 
for such district is exempt.
    (6) Highly erodible land not within a conservation district but 
under a conservation system determined by SCS to be adequate for the 
production of a specific agricultural commodity or commodities on any 
highly erodible land is exempt for the production of that commodity or 
commodities.
    (7) Highly erodible land that is planted in reliance on a SCS 
determination that such land was not highly erodible is exempt. The 
exemption is lost, however, for any agricultural commodity planted after 
SCS determines that such land is highly erodible land.
    (8) Highly erodible land planted or to be planted in an agricultural 
commodity that was planted in alfalfa during each of the 1981 and 1985 
crop years in a crop rotation determined by SCS to be adequate for the 
protection of highly erodible land is exempt until June 1, 1988, from 
the requirement that the highly erodible land be planted in compliance 
with an approved conservation system.
    c. Exemptions from wetland conservation. The following exemptions 
exist from the restrictions on wetland conservation. Whenever the County 
Supervisor is required to consult with another USDA agency in applying 
these exemptions, the County Supervisor's review of a properly completed 
Form SCS-CPA-26 will be considered adequate consultation if the needed 
information is presented on the form and no questions are raised by the 
FmHA or its successor agency under Public Law 103-354 review.
    (1) A converted wetland is exempt if the conversion of such wetland 
was completed or commenced before December 23, 1985. The County 
Supervisor will consult with ASCS whose determination as to when 
conversion of a wetland commenced will be final for FmHA or its 
successor agency under Public Law 103-354 purposes. Additionally, the 
County Supervisor will request evidence of ASCS's consultation with the 
U.S. Fish and Wildlife Service on each commenced determination reached 
for an FmHA or its successor agency under Public Law 103-354 applicant 
or borrower. SCS will determine if a wetland is a converted wetland 
using the criteria contained in Sec.  12.32 of subpart C of part 12 of 
subtitle A of title 7 (attachment 1 of this exhibit which is available 
in any FmHA or its successor agency under Public Law 103-354 office). 
Under these criteria, however, a converted wetland determined to be 
exempt may not always remain exempt. The criteria include the provision 
that if crop production is abandoned on a converted wetland and the land 
again meets the wetland criteria, that land has reverted to a wetland 
and is no longer exempt. For purposes of FmHA or its successor agency 
under Public Law 103-354 inventory farm properties, crop production will 
be considered to have been abandoned on a converted wetland either at 
the earlier of the time the former owner so abandoned crop production or 
at the time FmHA or its successor agency under Public Law 103-354 caused 
crop production to be abandoned after the property came into FmHA or its 
successor agency under Public Law 103-354's inventory. While in its 
inventory FmHA or its successor agency under Public Law 103-354 will not 
lease the converted wetland for the purpose of producing an agricultural 
commodity. Whether or not the wetland criteria are met on the abandoned 
land will be determined by SCS immediately before FmHA or its successor 
agency under Public Law 103-354's lease or sale of the property.
    (2) The following are not considered to be a wetland under the 
provisions of this exhibit: (a) An artificial lake, pond, or wetland 
created by excavating or diking non-wetland to collect and retain water 
for purposes such as water for livestock, fish production, irrigation 
(including subsurface irrigation), a settling basin, colling, rice 
production, or flood control; (b) a wet area created by a water delivery 
system, irrigation, irrigation system, or application of water for 
irrigation

[[Page 82]]

and (c) lands in Alaska identified by SCS as having a predominance of 
permafrost soils. The County Supervisor will consult with SCS regarding 
the application of this exemption as well as the remaining exemptions in 
this paragraph and the SCS position will be controlling.
    (3) A wetland is exempt if the production of an agricultural 
commodity is possible (a) as a result of a natural condition, such as 
drought, and (b) without action by the producer that destroys a natural 
wetland characteristic. This exemption is lost whenever condition (a) or 
(b) no longer exists.
    (4) Production of an agricultural commodity on a converted wetland 
is exempt is SCS determines that the effect of such action, individually 
and in connection with all other similar actions authorized in the area 
by USDA agencies, on the hydrological and biological aspect of wetland 
is minimal.
    12. Appeals. Any applicant or borrower that is directly and 
adversely affected by an administrative decision made by FmHA or its 
successor agency under Public Law 103-354 under this exhibit may appeal 
that decision under the provisions of subpart B of part 1900 of this 
chapter (see especially Sec.  1900.55).
    13. Working with other USDA agencies.
    a. Coordination. FmHA or its successor agency under Public Law 103-
354 State Directors will consult with SCS State Conservationists and 
ASCS State Executive Directors to assess and coordinate loan processing 
workloads in order to minimize delays in responding to FmHA or its 
successor agency under Public Law 103-354 requests for site information 
or for the application of the exemptions contained in paragraph 11 of 
this exhibit. State Directors will ensure that FmHA or its successor 
agency under Public Law 103-354 field staff understand and can use the 
ASCS farm records system and will request ASCS training as needed. Also, 
management systems for sharing the information discussed in subparagraph 
b of this paragraph will be established.
    b. Information exchange. FmHA or its successor agency under Public 
Law 103-354 State Directors will develop with ASCS State Executive 
Directors a system for FmHA or its successor agency under Public Law 
103-354 to routinely receive notification whenever a violation has 
occurred under ASCS's wetland and highly erodible land conservation 
restrictions. FmHA or its successor agency under Public Law 103-354 
State Directors will in turn provide to any interested USDA agency the 
following information:
    (1) Upon request, copies of site information or exemption decision 
made by SCS for FmHA or its successor agency under Public Law 103-354 
application reviews;
    (2) Upon request, copies of exemption decisions made by FmHA or its 
successor agency under Public Law 103-354; and
    (3) Notice of any violations of the provisions of this exhibit 
identified by FmHA or its successor agency under Public Law 103-354 as a 
result of the monitoring activities identified in paragraph 10 of this 
exhibit.
    14. Relationship of the requirements of this exhibit to the wetland 
protection requirements of exhibit C of this subpart. The provisions of 
this exhibit determine (a) whether or not an applicant for a Farmer 
Program insured or guaranteed loan or a loan to an Indian Tribe or 
Tribal Corporation is eligible to be considered for such a loan, and (b) 
whether or not a recipient of such a loan is properly using the loan 
proceeds with respect to the requirements of this exhibit. On the other 
hand, the requirements in exhibit C of this subpart regarding wetland 
protection cover all FmHA or its successor agency under Public Law 103-
354 loan and grant programs and address not questions of eligibility but 
the potential environmental impacts of a proposed action on a wetland 
and alternatives to the action. Consequently, those applications covered 
by this exhibit and which may be approved under this exhibit must also 
meet the requirements of exhibit C of this subpart. For example, an 
application covered by this exhibit (M) that proposed to convert a 
wetland into a tree farm would be exempt from this exhibit (M) because 
trees are not an agricultural commodity, i.e., there is no conversion in 
order to produce an agricultural commodity. However, before FmHA or its 
successor agency under Public Law 103-354 could make the loan, the 
requirements of exhibit C of this subpart would have to be met to 
include an FmHA or its successor agency under Public Law 103-354 finding 
that no practicable alternative exists to the conversion of the wetland. 
In summary, any proposed wetland conversion that is not prohibited by 
this exhibit (M) must next meet the requirements of exhibit C of this 
subpart before FmHA or its successor agency under Public Law 103-354 
approval of the requested financial assistance could be provided.

[53 FR 7333, Mar. 8, 1988, as amended at 53 FR 14778, Apr. 26, 1988]

Subpart H [Reserved]



      Subpart I_Truth in Lending_Real Estate Settlement Procedures

    Source: 48 FR 4, Jan. 3, 1983, unless otherwise noted.



Sec.  1940.401  Truth in lending.

    (a) General. This section provides instructions for compliance with 
the Truth in Lending Act, as implemented by Regulation Z of the Federal 
Reserve

[[Page 83]]

System, to assure that individual Rural Housing (RH) applicants are 
informed of:
    (1) The cost and terms of credit, and
    (2) Their right to cancel certain credit transactions resulting in a 
lien or mortgage on their home.
    (b) Scope. This section applies to all individuals who apply for 
loans, assumptions, or credit sales (hereafter described as 
transactions) for household purposes.
    (1) Special rules for the right to cancel transactions not for 
purchase, acquisition or initial construction of a home broaden the 
scope of this section to include individuals who have an ownership 
interest in, and reside in as a principal dwelling, property which will 
be security for a mortgage, even though they may not execute the 
promissory note or assumption agreement. Such persons have the right to 
receive credit disclosures and the notice of the right to cancel and may 
cancel the transaction.
    (2) This section does not apply to:
    (i) Applicants who are corporations, associations, cooperatives, 
public bodies, partnerships, or other organizations;
    (ii) Individual applicants for multiple family housing transactions 
(rural rental or labor housing), unless for a two-family dwelling in 
which the applicants will reside, and other business and commercial type 
loans; or
    (iii) Applicants involved in credit transactions primarily for 
agricultural purposes.
    (c) Disclosure of the cost and terms of credit--(1) Form and 
content. Form RD 1940-41, ``Truth in Lending Disclosure Statement,'' 
will be used to provide the following required disclosures:
    (i) Annual percentage rate;
    (ii) Finance charge;
    (iii) Amount financed;
    (iv) Total of payments;
    (v) Total sale price (required for credit sales only);
    (vi) Payment schedule;
    (vii) A separate itemization of the amount financed, if the 
applicant requests it. Normally this required disclosure will have been 
met in transactions subject to the Real Estate Settlement Procedures Act 
(RESPA) by providing the applicant with Form RD 440-58, ``Estimate of 
Settlement Costs'';
    (viii) The lender's identity;
    (ix) Prepayment or late payment penalties;
    (x) Security interest;
    (xi) Insurance requirements;
    (xii) Assumption policy; and
    (xiii) Referral to other loan documents.
    (2) Timing, use of estimates and required redisclosure. (i) In 
transactions for the purchase or construction of a home subject to 
RESPA, Form RD 1940-41, completed using ``good faith'' estimates based 
on the best information available, will be delivered or placed in the 
mail to the applicant no later than three (3) business days after 
receipt of a written application in the County Office.
    (ii) In transactions not subject to RESPA, such as RH Section 502 
transactions for repairs or refinancing or RH Section 504 transactions, 
Form RD 1940-41, completed using the actual terms of the transaction, 
will be delivered to each applicant (and in transactions which are 
subject to cancellation, each non-applicant with the right to cancel) at 
the time of loan approval.
    (iii) In the event of a change in rates and terms between the time 
of initial disclosure and closing, whereby the annual percentage rate 
varies by more than one-eighth of one percent, redisclosure must be 
made. This may be done by entering the changes on all copies of the 
initial Form RD 1940-41, or by preparing a new Form RD 1940-41. When 
required, redisclosure may be made at the time the transaction is 
approved or at the time of the change, but the form must be delivered to 
the applicant before the signing of the promissory note or assumption 
agreement.
    (3) Special instructions for assumption, reamortization, refinancing 
and multiple transactions. (i) Assumptions, within the scope of 
paragraph (b) of this section, at new rates and terms or of existing 
obligations which were for purchase, acquisition or initial construction 
of a residence, require new credit disclosure before the assumption 
occurs. Since assumptions are not subject to RESPA, early disclosure is 
not required.

[[Page 84]]

    (ii) Reamortization, as described in 7 CFR part 3550, when the 
borrower is in default or delinquent, does not require new credit 
disclosure. In all other cases reamortization requires new credit 
disclosure.
    (iii) Refinancing of debts in accordance with 7 CFR part 3550, 
though not subject to RESPA or early disclosure, does require credit 
disclosure at the time the transaction is approved.
    (iv) Multiple transactions.
    (A) When a subsequent loan is financed along with another 
transaction and both transactions require credit disclosure, a separate 
Form RD 1940-41 will be prepared for each transaction.
    (B) Transactions with multiple advances will be treated as one 
transaction for the purpose of credit disclosure, in accordance with the 
Forms Manual Insert (FMI) for Form RD 1940-41.
    (d) Notice of the right to cancel. The right to cancel applies only 
to transactions within the scope of paragraph (b) of this section, which 
are not for purchase, acquisition or initial construction of and which 
result in a mortgage on an individual's principal residence, such as RH 
Section 502 transactions for refinancing, repairs or rehabilitation or 
RH Section 504 transactions.
    (1) Form and Content. Form RD 1940-43, ``Notice of Right to 
Cancel'', will be used to notify individuals of their right to cancel 
those transactions, within the scope of paragraphs (b) and (d) of this 
section, which result in a mortgage on their principal residence except 
when the transaction is for its purchase or initial construction. This 
notice will identify the transaction and disclose the following:
    (i) The acquisition of a security interest in the individual's 
principal residence.
    (ii) The individual's right to cancel the transaction.
    (iii) How to exercise the right to cancel the transaction, with a 
form for that purpose.
    (iv) The effects of cancellation.
    (v) The date the cancellation period expires.
    (2) Timing. (i) Two copies of Form RD 1940-43, and one copy of Form 
RD 1940-41, in accordance with the FMI's, will be given to each 
individual entitled to cancel, not later than loan closing.
    (ii) Any entitled individual may cancel the transaction until 
midnight of the third business day following whichever of the following 
events occurs last:
    (A) The date the transaction is closed.
    (B) The date Truth in Lending credit disclosures were made.
    (C) The date notice of the right to cancel was received.
    (3) Disbursement of funds. In a transaction subject to cancellation 
funds will not be disbursed, other than to a designated attorney or 
title insurance company preparatory to closing, until:
    (i) Forms FmHA 1940-43 have been given to the appropriate 
individuals,
    (ii) The three-day cancellation period has expired, and
    (iii) The loan approval official is reasonably assured that the 
transaction has not been cancelled. This assurance may be obtained by:
    (A) Waiting a reasonable period of time after the expiration of the 
cancellation period to allow for the delivery of a mailed notice, or
    (B) Obtaining a written statement from each individual entitled to 
cancel that the right has not been exercised.
    (iv) This delay in disbursing funds may be waived in cases of a 
bonafide personal financial emergency, which must be met within the 
cancellation period, when the individual submits a signed and dated 
statement describing the nature of the emergency and waiving the right 
to cancel. Such a statement must be signed by all individuals entitled 
to cancel.
    (4) Effects of cancellation. (i) When an individual cancels a 
transaction, the mortgage securing the transaction becomes void and the 
borrower will not be liable for any amount, including any finance 
charge.
    (ii) Within twenty (20) calendar days after receipt of a notice of 
cancellation the loan approval official will:
    (A) Notify all interested parties of the cancellation;
    (B) Return, and/or request the return of any money or property given 
to anyone in connection with the transaction; and

[[Page 85]]

    (C) Take the necessary action to terminate the mortgage.
    (iii) Once evidence has been presented to the borrower that the 
mortgage has been terminated, the borrower must return any funds 
advanced by Rural Development to the Rural Development County Office or 
surrender any property at his/her residence within twenty (20) calendar 
days.
    (e) Advertisements. An advertisement is defined as a commercial 
message in any medium that promotes, directly or indirectly, a credit 
transaction. Advertisements for credit sales of Government inventory 
property, within the scope of paragraph (b) of this section, are subject 
to the following requirements.
    (1) If an advertisement states specific credit terms, it shall state 
only those terms that actually are or will be arranged or offered.
    (2) If an advertisement states a rate of finance charge, it shall 
state the rate as an annual percentage rate, using that term.
    (3) Terms requiring additional disclosures.
    (i) If any of the following terms is set forth in an advertisement:
    (A) The amount or percentage of any down payment,
    (B) The number of payments or period of repayment,
    (C) The amount of any payment, or
    (D) The amount of any finance charge,
    (ii) The advertisement must also state:
    (A) The amount or percentage of down payment,
    (B) The terms of repayment, and
    (C) The annual percentage rate, using that term.

[48 FR 4, Jan. 3, 1983, as amended at 60 FR 55123, Oct. 27, 1995; 67 FR 
78328, Dec. 24, 2002]



Sec. Sec.  1940.402-1940.405  [Reserved]



Sec.  1940.406  Real estate settlement procedures.

    (a) General. This section provides the instructions for compliance 
with the Real Estate Settlement Procedures Act (RESPA), as amended, and 
Regulation X of the Department of Housing and Urban Development.
    (b) Scope. (1) This section applies to loans and credit sales, 
including Section 502 Rural Housing, 1-4 family Rural Rental Housing, 1-
4 family Labor Housing, and Farm Ownership involving tracts of less than 
25 acres, whether made to an individual, corporation, partnership, 
association or other entity, which meet the following requirements:
    (i) The proceeds of the loan or the credit extended are used in 
whole or in part to finance the purchase and transfer of title of the 
property to be mortgaged by the borrower, and
    (ii) The loan or credit sale is secured by a first lien covering 
real estate on which is located a structure designed principally for the 
occupancy of from 1-4 families, or on which a structure designed 
principally for the occupancy of from 1-4 families is to be constructed 
using proceeds of the loan.
    (2) Exempt transactions include:
    (i) Loans for repairs, improvements, or refinancing if the proceeds 
are not used to finance the purchase of the property.
    (ii) Loans to finance the construction of a 1-4 family structure if 
the tract of land is already owned by the applicant/borrower.
    (iii) Assumptions or transfers.
    (c) Action required. (1) The information booklet entitled 
``Settlement Costs'' will either be given to the applicant at the time 
the completed application is received, or mailed to the applicant no 
later than three (3) business days after receipt of the application in 
the County Office.
    (i) Form RD 440-58, ``Estimate of Settlement Costs,'' is to be used 
to provide a ``good faith'' statement of estimated closing costs. Form 
RD 440-58 will be completed by the County Supervisor and mailed or 
delivered to the applicant with the Settlement Costs booklet. Costs will 
vary between geographic areas; therefore, information supplied on this 
form must be based upon (A) the County Supervisor's best estimate of 
charges the borrower will pay for each service in connection with the 
transaction, or (B) a range of charges at which such service is 
available to the borrower from all providers in the area.

[[Page 86]]

    (ii) Form RD 440-58 does not replace Truth in Lending forms. 
Appropriate forms listed in Sec.  1940.401 will be used for Truth in 
Lending purposes.
    (2) Form RD 1940-59, ``Settlement Statement,'' will be completed as 
indicated in the form and FMI by the designated attorney or title 
company for all transactions described in paragraph (b) of this section. 
The purpose of this form is to provide a uniform settlement statement 
prescribed by RESPA.
    (i) During the business day immediately preceding the date of 
settlement, the closing agent, if requested by the applicant, must 
permit the applicant to inspect the settlement statement, completed for 
those items which are then known to the closing agent.
    (ii) A copy will be given to both the borrower and seller at the 
time of closing or settlement or will be mailed as soon as practicable 
if the borrower or seller are not present at closing.

Subparts J-K [Reserved]



  Subpart L_Methodology and Formulas for Allocation of Loan and Grant 
                              Program Funds

    Source: 50 FR 24180, June 10, 1985, unless otherwise noted.



Sec.  1940.551  Purpose and general policy.

    (a) The purpose of this subpart is to set forth the methodology and 
formulas by which the Administrator for the Rural Business-Cooperative 
Service or the Administrator for the Rural Housing Service, as 
applicable, allocates program funds to the States. (The term State means 
any of the States of the United States, the Commonwealth of Puerto Rico, 
any territory or possession of the United States, or the Western Pacific 
Areas.) This subpart is inapplicable to Farm Service Agency, Farm Loan 
Programs.
    (b) The formulas in this subpart are used to allocate program loan 
and grant funds to State Offices so that the overall mission of the 
Agency can be carried out. Considerations used when developing the 
formulas include enabling legislation, congressional direction, and 
administration policies. Allocation formulas ensure that program 
resources are available on an equal basis to all eligible individuals 
and organizations.
    (c) The actual amounts of funds, as computed by the methodology and 
formulas contained herein, allocated to a State for a funding period are 
distributed to each State Office by an exhibit to this subpart. The 
exhibit is available for review in any Rural Development State Office. 
The exhibit also contains clarifications of allocation policies and 
provides further guidance to the State Directors on any suballocation 
within the State. Rural Development will publish a Notice of 
Availability of Rural Housing funds in the Federal Register each year.

[49 FR 3727, Jan. 30, 1984, as amended at 53 FR 26229, July 12, 1988; 55 
FR 29560, July 20, 1990; 56 FR 66960, Dec. 27, 1991; 72 FR 64122, Nov. 
15, 2007]



Sec.  1940.552  Definitions.

    (a) Amount available for allocation. Funds appropriated or otherwise 
made availiable to the Agency for use in authorized programs. On 
occasion, the allocation of funds to States may not be practical for a 
particular program due to funding or administrative constraints. In 
these cases, funds will be controlled by the National Office.
    (b) Basic formula criteria, data source and weight. Basic formulas 
are used to calculate a basic state factor as a part of the methodology 
for allocating funds to the States. The formulas take a number of 
criteria that reflect the funding needs for a particular program and 
through a normalization and weighting process for each of the criteria 
calculate the basic State Factor (SF). The data sources used for each 
criteria is believed to be the most current and reliable information 
that adequately quantifies the criterion. The weight, expressed as a 
percentage, gives a relative value to the importance of each of the 
criteria.
    (c) Basic formula allocation. The result of multiplying the amount 
available for allocation less the total of any amounts held in reserve 
or distributed by base or administrative allocation times the basic 
State factor for each State. The basic formula allocation (BFA) for an 
individual State is equal to:


[[Page 87]]


BFA = (Amount available for allocation - NO reserve - Total base and 
          administrative allocations) x SF.

    (d) Transition formula. A formula based on a proportional amount of 
previous year allocation used to maintain program continuity by 
preventing large fluctuations in individual State allocations. The 
transition formula limits allocation shifts to any particular State in 
the event of changes from year to year of the basic formula, the basic 
criteria, or the weights given the criteria. The transition formula 
first checks whether the current year's basic formula allocation is 
within the transition range (+ or -percentage points of the proportional 
amount of the previous year's BFA).
[GRAPHIC] [TIFF OMITTED] TC14NO91.000


If the current year's State BFA is not within this transition range, the 
State formula allocation is changed to the amount of the transition 
range limit closest to the BFA amount. After having performed this 
transition adjustment for each State, the sum of the funds allocated to 
all States will differ from the amount of funds available for BFA. This 
difference, whether a positive or negative amount, is distributed to all 
States receiving a formula allocation by multiplying the difference by 
the SF. The end result is the transition formula allocation. The 
transition range will not exceed 40% (20%), but 
when a smaller range is used it will be stated in the individual program 
section.
    (e) Base allocation. An amount that may be allocated to each State 
dependent upon the particular program to provide the opportunity for 
funding at least one typical loan or grant in each Rural Development 
State, District, or County Office. The amount of the base allocation may 
be determined by criteria other than that used in the basic formula 
allocation such as agency historic data.
    (f) Administrative allocations. Allocations made by the 
Administrator in cases where basic formula criteria information is not 
available. This form of allocation may be used when the Administrator 
determines the program objectives cannot be adequately met with a 
formula allocation.
    (g) Reserve. An amount retained under the National Office control 
for each loan and grant program to provide flexibility in meeting 
situations of unexpected or justifiable need occurring during the fiscal 
year. The Administrator may make distributions from this reserve to any 
State when it determined necessary to meet a program need or agency 
objective. The Administrator may retain additional amounts to fund 
authorized demonstration programs. When such demonstration programs 
exist, the information is outlined in exhibit A of this subpart 
(available in any FmFA State Office).
    (h) Pooling of funds. A technique used to ensure that available 
funds are used in an effective, timely and efficient manner. At the time 
of pooling those funds within a State's allocation for the fiscal year 
or portion of the fiscal year, depending on the type of pooling, that 
have not been obligatedf by the State are placed in the National Office 
reserve. The Administrator will establish the pooling dates for each 
affected program.
    (1) Mid-year: This pooling addresses the need to partially 
redistribute funds based on use/demand. Mid-year pooling occurs near the 
midpoint of the fiscal year.
    (2) Year-end: This pooling is used to ensure maximum use of program 
funds

[[Page 88]]

on a national basis. Year-end pooling usually occurs near the first of 
August.
    (3) Emergency: The Administrator may pool funds at any time that it 
is determined the conditions upon which the initial allocation was based 
have changed to such a degree that it is necessary to pool funds in 
order to efficiently carry out the Agency mission.
    (i) Availability of the allocation. Program funds are made available 
to the Agency on a quarterly basis. In the high demand programs, it is 
necessary that specific instructions by given to the State Offices 
regarding the amount which is available for obligation during each 
quarter.
    (j) Suballocation by the State Director. Dependent upon the 
individual program for which funds are being allocated, the State 
Director may be directed or given the option of suballocating the State 
allocation to District or County Offices. When suballocating the State 
Director may retain a portion of the funds in a State Office reserve to 
provide flexibility in situations of unexpected or justified need. When 
performing a suballocation the State Director will use the same formula, 
criteria and weights as used by the National Office.
    (k) Other documentation. Additional instructions given to field 
offices regarding allocations.

[49 FR 3727, Jan. 30, 1984, as amended at 53 FR 26229, July 12, 1988]



Sec. Sec.  1940.553-1940.559  [Reserved]



Sec.  1940.560  Guarantee Rural Rental Housing Program.

    When funding levels are under $100,000,000, all funds will be held 
in a National Office reserve and made available administratively in 
accordance with the Notice of Funding Availability (NOFA) and program 
regulations. When program levels are sufficient for a nationwide 
program, funds are allocated based upon the following criteria and 
weights.
    (a) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart.
    (b) Basic formula criteria, data source and weight. See Sec.  
1940.552(b) of this subpart .
    Each factor will receive a weight respectively of 40%, 40% and 20%. 
The criteria used in the basic formula are:
    (1) State's percentage of National rural population,
    (2) State's percentage of the National number of rural households 
between 50 and 115 percent of the area median income, and
    (3) State's percentage of National average cost per unit. The data 
source for the criterion specified in paragraph (b)(1) of this section 
is the most recent decennial Census of the United States (decennial 
Census). The data source for the criterion specified in paragraph (b)(2) 
of this section is 5-year income data from the American Community Survey 
(ACS) or, if needed, other Census Bureau data. The data source for the 
criterion specified in paragraph (b)(3) of this section is the cost per 
unit data using the applicable maximum per unit dollar amount 
limitations under section 207(c) of the National Housing Act, which can 
be obtained from the Department of Housing and Urban Development. The 
percentage representing each criterion is multiplied by the weight 
assigned and totaled to arrive at a State factor.
    State Factor = (criterion No. 1 x weight of 40%) + (criterion No. 1 
x weight of 40%) + (criterion No. 1 x weight of 20%)

    (c) Basic formula allocation. See Sec.  1940.552(c).
    (d) Transition formula. See Sec.  1940.552(d).
    (e) Base allocation. See Sec.  1940.552(e). Jurisdictions receiving 
administrative allocations do not receive base allocations.
    (f) Administrative allocations. See Sec.  1940.552(f). Jurisdictions 
receiving formula allocations do not receive administrative allocations.
    (g) Reserve. See Sec.  1940.552(g).
    (h) Pooling of funds. See Sec.  1940.552(h).
    (i) Availability of the allocation. See Sec.  1940.552(i).
    (j) Suballocation by the State Director. See Sec.  1940.552(j).
    (k) Other documentation. Not applicable.

[63 FR 39458, July 22, 1998, as amended at 80 FR 9876, Feb. 24, 2015]

[[Page 89]]



Sec. Sec.  1940.561-1940.562  [Reserved]



Sec.  1940.563  Section 502 non-subsidized guaranteed Rural 
Housing (RH) loans.

    (a) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart.
    (b) Basic formula criteria, data source and weight. See Sec.  
1940.552 (b) of this subpart. The criteria used in the basic formula 
are:
    (1) State's percentage of the National number of rural occupied 
substandard units,
    (2) State's percentage of the National rural population in places of 
less than 2,500 population,
    (3) State's percentage of the national number of rural households 
between 80 and 100 percent of the area median income, and
    (4) State's percentage of the national number of rural renter 
households paying more than 35 percent of income for rent. The data 
source for each criterion is specified in paragraph (b)(5) of this 
section. Each criterion is assigned a specific weight according to its 
relevance in determining need. The percentage representing each 
criterion is multiplied by the weight factor and summed to arrive at a 
basic State factor (SF) as follows:
    SF = (criterion 1 x weight of 30%) + (criterion 2 x weight of 10%) + 
(criterion 3 x weight of 30%) + (criterion 4 x weight of 30%)
    (5) The data source for the criteria specified in paragraphs (b)(1) 
and (b)(2) of this section is the most recent decennial Census. The data 
source for the criteria specified in paragraph (b)(3) and (b)(4) of this 
section is 5-year income data from the American Community Survey (ACS) 
or, if needed, other Census Bureau data.
    (c) Basic formula allocation. See Sec.  1940.552(c) of this subpart.
    (d) Transition formula. See Sec.  1940.552(d) of this subpart. The 
percentage range used for Section 502 guaranteed RH loans is plus or 
minus 15.
    (e) Base allocation. See Sec.  1940.552(e) of this subpart. 
Jurisdictions receiving administrative allocations do not receive base 
allocations.
    (f) Administrative allocations. See Sec.  1940.552(f) of this 
subpart. Jurisdictions receiving formula allocations do not receive 
administrative allocations.
    (g) Reserve. See Sec.  1940.552(g) of this subpart.
    (h) Pooling of funds. See Sec.  1940.552(h) of this subpart.
    (1) Mid-year: If used in a particular fiscal year, available funds 
unobligated as of the pooling date are pooled and redistributed based on 
the formula used to allocate funds initially.
    (2) Year-end: Pooled funds are placed in a National Office reserve 
and are available as determined administratively.
    (i) Availability of the allocation. See Sec.  1940.552(i) of this 
subpart.
    (j) Suballocation by the State Director. See Sec.  1940.552(j) of 
this subpart. Annually, the Administrator will advise State Director's 
whether or not suballocation within the State Office jurisdiction will 
be required for the guaranteed Housing program.
    (k) Other documentation. Not applicable.

[56 FR 10509, Mar. 13, 1991, as amended at 80 FR 9876, Feb. 24, 2015]



Sec.  1940.564  Section 502 subsidized guaranteed Rural Housing loans.

    (a) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart.
    (b) Basic formula criteria, data source and weight. See Sec.  
1940.552(b) of this subpart. The criteria used in the basic formula are:
    (1) State's percentage of the National number of rural occupied 
substandard units,
    (2) State's percentage of the National rural population in places of 
less than 2,500 population,
    (3) State's percentage of the national number of rural households 
below 80 percent of the area median income, and
    (4) State's percentage of the national number of rural renter 
households paying more than 35 percent of income for rent. The data 
source for each criterion is specified in paragraph (b)(5) of this 
section. Each criterion is assigned a specific weight according to its 
relevance in determining need. The percentage representing each 
criterion is multiplied by the weight factor and summed to arrive at a 
basic State factor (SF) as follows:

[[Page 90]]

    SF = (criterion 1 x weight of 30%) + (criterion 2 x weight of 10%) + 
(criterion 3 x weight of 30%) + (criterion 4 x weight of 30%)
    (5) The data source for the criteria specified in paragraphs (b)(1), 
(b)(2), and (b)(4) of this section is the most recent decennial Census. 
The data source for the criterion specified in paragraph (b)(3) of this 
section is 5-year income data from the American Community Survey (ACS) 
or, if needed, other Census Bureau data.
    (c) Basic formula allocation. See Sec.  1940.552(c) of this subpart.
    (d) Transition formula. See Sec.  1940.552(d) of this subpart. The 
percentage range used for section 502 guaranteed RH loans is plus or 
minus 15.
    (e) Base allocation. See Sec.  1940.552(e) of this subpart. 
Jurisdictions receiving administrative allocations do not receive base 
allocations.
    (f) Administration allocations. See Sec.  1940.552(f) of this 
subpart. Jurisdictions receiving formula allocations do not receive 
administrative allocations.
    (g) Reserve. See Sec.  1940.552(g) of this subpart.
    (h) Pooling of funds. See Sec.  1940.552(h) of this subpart.
    (1) Mid-year: If used in a particular fiscal year, available funds 
unobligated as of the pooling date are pooled and redistributed based on 
the formula used to allocate funds initially.
    (2) Year-end: Pooled funds are placed in a National Office reserve 
and are available as determined administratively.
    (i) Availability of the allocation. See Sec.  1940.552(i) of this 
subpart.
    (j) Suballocation by the State Director. See Sec.  1940.552(j) of 
this subpart. Annually, the Administrator will advise State Director's 
whether or not suballocation within the State Office jurisdiction will 
be required for the guaranteed Housing program.
    (k) Other documentation. Not applicable.

[56 FR 10509, Mar. 13, 1991, as amended at 80 FR 9877, Feb. 24, 2015]



Sec.  1940.565  Section 502 subsidized Rural Housing loans.

    (a) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart.
    (b) Basic formula criteria, data source and weight. See Sec.  
1940.552(b) of this subpart. The criteria used in the basic formula are:
    (1) State's percentage of the National number of rural occupied 
substandard units,
    (2) State's percentage of the National rural population,
    (3) State's percentage of the National rural population in places of 
less than 2,500 population,
    (4) State's percentage of the National number of rural households 
between 50 and 80 percent of the area median income, and
    (5) State's percentage of the National number of rural households 
below 50 percent of the area median income.

Data source for each of these criteria is based on the latest census 
data available. Each criterion is assigned a specific weight according 
to its relevance in determining need. The percentage representing each 
criterion is multiplied by the weight factor and summed to arrive at a 
basic State factor (SF)

SF = (criterion 1 x weight of 25%) + (criterion 2 x weight of 10%) + 
(criterion 3 x weight of 15%) + (criterion 4 x weight of 30%) + 
(criterion 5 x weight of 20%)

    (c) Basic formula allocation. See Sec.  1940.552(c) of this subpart.
    (d) Transition formula. See Sec.  1940.552(d) of this subpart. The 
percentage range used for Section 502 subsidized RH loans is plus or 
minus 15.
    (e) Base allocation. See Sec.  1940.552(e) of this subpart. 
Jurisdictions receiving administrative allocations do not receive base 
allocations.
    (f) Administrative allocations. See Sec.  1940.552(f) of this 
subpart. Jurisdictions receiving formula allocations do not receive 
administrative allocations.
    (g) Reserve. See Sec.  1940.552(g) of this subpart.
    (h) Pooling of funds. See Sec.  1940.552(h) of this subpart.
    (1) Mid-year: If used in a particular fiscal year, available funds 
unobligated as of the pooling date are pooled and redistributed based on 
the formula used to allocate funds initially.
    (2) Year-end: Pooled funds are placed in a National Office reserve 
and are

[[Page 91]]

available as determined administratively.
    (i) Availability of the allocation. See Sec.  1940.552(i) of this 
subpart.
    (j) Suballocation by the State Director. See Sec.  1940.552(j) of 
this subpart. The State Director will suballocate funds to the District 
Offices and may, at his/her option, suballocate to the County Offices. 
The State Director will use the same basic formula criteria, data source 
and weight for suballocating funds within the State as used by the 
National Office in allocating to the States as described in Sec.  
1940.565 (b) and (c) of this section. The suballocations to District or 
County Offices will not be reduced or restricted unless written approval 
is received from the National Office in response to a written request 
from the State Director. The State Director's request must include the 
reasons for the requested action (e.g., high housing inventory and/or 
high housing delinquency).
    (k) Other documentation. The percentage distribution of funds to the 
States by income levels is based on prevailing legislation.



Sec.  1940.566  Section 504 Housing Repair loans.

    (a) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart.
    (b) Basic formula criteria, data source and weight. See Sec.  
1940.552(b). The criteria used in the basic formula are:
    (1) State's percentage of the National number of rural occupied 
substandard units, and
    (2) State's percentage of the National number of rural households 
below 50 percent of area median income. The data source for the first 
criterion is the most recent decennial Census data. The data source for 
the second criterion is 5-year income data from the American Community 
Survey (ACS) or, if needed, other Census Bureau data. Each criterion is 
assigned a specific weight according to its relevance in determining 
need. The percentage representing each criterion is multiplied by the 
weight factor and summed to arrive at a basic State factor (SF).
    SF = (criterion No. 1 x weight of 50%) + (criterion No. 2 x weight 
of 50%)
    (c) Basic formula allocation. See Sec.  1940.552(c) of this subpart.
    (d) Transition formula. See Sec.  1940.552(d) of this subpart. The 
percentage range used for section 504 Housing Repair Loans is plus or 
minus 15.
    (e) Base allocation. Not used.
    (f) Administrative allocations. See Sec.  1940.552(f) of this 
subpart. Jurisdictions receiving formula allocations do not receive 
administrative allocations.
    (g) Reserve. See Sec.  1940.552(g) of this subpart.
    (h) Pooling of funds. See Sec.  1940.552(h) of this subpart.
    (1) Mid-year: If used in a particular fiscal year, available funds 
unobligated as of the pooling date are pooled and redistributed based on 
the formula used to allocate funds initially.
    (2) Year-end: Pooled funds are placed in a National Office reserve 
and are available as determined administratively.
    (i) Availability of the allocation. See Sec.  1940.552(i) of this 
subpart.
    (j) Suballocation by the State Director. See Sec.  1940.552(j) of 
this subpart. At the option of the State Director, section 504 loan 
funds may be suballocated to the District Offices. When performing a 
suballocation, the State Director will use the same basic formula 
criteria, data source and weight for suballocating funds within the 
State as used by the National Office in allocating to the States as 
described in Sec.  1940.566 (b) and (c) of this section.
    (k) Other documentation. Not applicable.

[50 FR 24180, June 10, 1985, as amended at 80 FR 9877, Feb. 24, 2015]



Sec.  1940.567  Section 504 Housing Repair grants.

    (a) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart.
    (b) Basic formula criteria, data source and weight. See Sec.  
1940.552(b) of this subpart. The criteria used in the basic formula are:
    (1) State's percentage of the National number of rural occupied 
substandard units,
    (2) State's percentage of the National rural population 62 years and 
older, and
    (3) State's percentage of the National number of rural households 
below 50 percent of area median income. The data source for the first 
two of these

[[Page 92]]

criteria is the most recent decennial Census data. The data source for 
the third criterion is the 5-year data from the American Community 
Survey (ACS) or, if needed, other Census Bureau data. Each criterion is 
assigned a specific weight according to its relevance in determining 
need. The percentage representing each criterion is multiplied by the 
weight factor and summed to arrive at a basic State factor (SF).
    SF = (criterion No. 1 x weight of 33 1/3%) + (criterion No. 2 x 
weight of 33 1/3%) + (criterion No. 3 x weight of 33 1/3%)
    (c) Basic formula allocation. See Sec.  1940.552(c) of this subpart.
    (d) Transition formula. See Sec.  1940.552(d) of this subpart. The 
percentage range used for section 504 Housing Repair grants is plus or 
minus 15.
    (e) Base allocation. Not used.
    (f) Administrative allocations. See Sec.  1940.552(f) of this 
subpart. Jurisdictions receiving formula allocations do not receive 
administrative allocations.
    (g) Reserve. See Sec.  1940.552(g) of this subpart.
    (h) Pooling of funds. See Sec.  1940.552(h) of this subpart.
    (1) Mid-year: If used in a particular fiscal year, available funds 
unobligated as of the pooling date are pooled and redistributed based on 
the formula used to allocate funds initially.
    (2) Year-end: Pooled funds are placed in a National Office reserve 
and are available as determined administratively.
    (i) Availability of the allocation. See Sec.  1940.552(i) of this 
subpart.
    (j) Suballocation by the State Director. See Sec.  1940.552(j) of 
this subpart. At the option of the State Director, section 504 grant 
funds may be suballocated to the District Offices. When performing a 
suballocation, the State Director will use the same basic formula 
criteria, data source and weight for suballocating funds within the 
State as used by the National Office in allocating to the States as 
described in Sec.  1940.567 (b) and (c) of this section.
    (k) Other documentation. Not applicable.

[50 FR 24180, June 10, 1985, as amended at 80 FR 9877, Feb. 24, 2015]



Sec.  1940.568  Single Family Housing programs appropriations not
allocated by State.

    The following program funds are kept in a National Office reserve 
and are available as determined administratively:
    (a) Section 523 Self-Help Technical Assistance Grants.
    (b) Section 523 Land Development Fund.
    (c) Section 524 Rural Housing Site Loans.
    (d) Section 509 Compensation for Construction Defects.
    (e) Section 502 Nonsubsidized Funds.



Sec. Sec.  1940.569-1940.574  [Reserved]



Sec.  1940.575  Section 515 Rural Rental Housing (RRH) loans.

    (a) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart.
    (b) Basic formula criteria, data source and weight. See Sec.  
1940.552(b) of this subpart.
    The criteria used in the basic formula area:
    (1) State's percentage of National rural population,
    (2) State's percentage of National number of rural occupied 
substandard units, and
    (3) State's percentage of National rural families with incomes below 
the poverty level. The data source for the first two of these criterion 
is the most recent decennial Census data. The data source for the third 
criterion is the 5-year data from the American Community Survey (ACS) 
or, if needed, other Census Bureau data. Each criterion is assigned a 
specific weight according to its relevance in determining need. The 
percentage representing each criterion is multiplied by the weight 
assigned and summed to arrive at a State factor (SF).
    SF = (criterion No. 1 x weight of 33 1/3%) + (criterion No. 2 x 
weight of 33 1/3%) + (criterion No. 3 x weight of 33 1/3%)
    (c) Basic formula allocation. See Sec.  1940.552(c) of this subpart.
    (d) Transition formula. See Sec.  1940.522(d) of this subpart.
    (e) Base allocation. See Sec.  1940.552(e) of this subpart. 
Jurisdictions receiving

[[Page 93]]

administrative allocations do not receive base allocations.
    (f) Administrative allocations. See Sec.  1940.552(f) of this 
subpart. Jurisdictions receiving formula allocations do not receive 
administrative allocations.
    (g) Reserve. See Sec.  1940.552(g) of this subpart.
    (h) Pooling of funds. See Sec.  1940.552(h) of this subpart.
    (i) Availability of the allocation. See Sec.  1940.552(i) of this 
subpart.
    (j) Suballocation by the State Director. See Sec.  1940.552(j) of 
this subpart.
    (k) Other documentation. Not applicable.

[53 FR 26229, July 12, 1988, as amended at 80 FR 9877, Feb. 24, 2015]



Sec.  1940.576  Rental Assistance (RA) for new construction.

    (a) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart.
    (b) Basic formula criteria, data source and weight. See Sec.  
1940.575(b) of this subpart.
    (c) Basic formula allocation. See Sec.  1940.552(c) of this subpart.
    (d) Transition formula. See Sec.  1940.552(d) of this subpart.
    (e) Base allocation. See Sec.  1940.552(e) of this subpart.
    (f) Administrative allocations. See Sec.  1940.552(f) of this 
subpart. Jurisdictions receiving formula allocations do not receive 
administrative allocations.
    (g) Reserve. See Sec.  1940.552(g) of this subpart.
    (h) Pooling of funds. See Sec.  1940.552(h) of this subpart.
    (i) Availability of the allocation. See Sec.  1940.552(i) of this 
subpart.
    (j) Suballocation by the State Director. See Sec.  1940.552(j) of 
this subpart.
    (k) Other documentation. Not applicable.

[53 FR 26229, July 12, 1988]



Sec.  1940.577  Rental Assistance (RA) for existing projects.

    (a) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart. RA appropriated for existing projects will first be used to 
replace contracts expiring each fiscal year and for the first few months 
of the following fiscal year. This is done to assure continued RA 
funding. RA units not needed for replacement purposes will be used for 
existing multiple family housing projects experiencing servicing 
problems.
    (b) Basic formula criteria, data source and weight. No formula or 
weighted criteria is used to allocate replacement RA. The basic 
allocation for replacement RA will be made based on the following:
    (1) Criteria. This allocation is based on the estimated need to 
replace RA contracts expiring from the depletion of funds.
    (2) Date source. The most accurate and current information available 
from Rural Development computerized data sources.
    (c) Basic formula allocation. While no formula will be used, the 
basic allocation will be made to each State according to the need 
determined using the basic criteria.
    (d) Transition formula. Not applicable.
    (e) Base allocation. Not applicable.
    (f) Administrative allocation. Not applicable.
    (g) Reserve. See Sec.  1940.552(g) of this subpart. The National 
Office maintains a reserve adequate to compensate for the differences 
between actual and projected replacement activity. Units will be 
administratively distributed for existing housing to either satisfy 
previously unidentified replacement needs or address servicing 
situations. Units will be distributed to any State when the 
Administrator determines that additional allocations are necessary and 
appropriate.
    (h) Pooling of funds. See Sec.  1940.552(h) of this subpart. Units 
will be pooled at the Administrator's discretion.
    (i) Obligation of the allocation. See Sec.  1940.552(i) of this 
subpart.
    (j) Suballocation by the State Director. See Sec.  1940.552(j) of 
this subpart.
    (k) Other documentation. Not applicable.

[49 FR 3727, Jan. 30, 1984, as amended at 53 FR 26229, July 12, 1988]



Sec.  1940.578  Housing Preservation Grant (HPG) program.

    (a) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart.
    (b) Basic formula criteria, data source and weight. See Sec.  
1940.575(b) of this subpart.
    (c) Basic formula allocation. See Sec.  1940.552(c) of this subpart.

[[Page 94]]

    (d) Transition formula. See Sec.  1940.552(d) of this subpart.
    (e) Base allocation. See Sec.  1940.552(e) of this subpart.
    (f) Administrative allocations. See Sec.  1940.552(f) of this 
subpart.
    (g) Reserve. See Sec.  1940.552(g) of this subpart.
    (h) Pooling of funds. See Sec.  1940.552(h) of this subpart. Funds 
may be pooled after all HPG applications have been received and HPG fund 
demand by State has been determined. Pooled funds will be combined with 
the National Office reserve to fund eligible projects. Remaining HPG 
funds will be available for distribution for use under the Section 504 
program.
    (i) Availability of the allocation. See Sec.  1940.552(i) of this 
subpart.
    (j) Suballocation by the State Director. Not applicable.
    (k) Other documentation. Funds for the HPG program will be available 
for a limited period each fiscal year. Due to the requirements by law to 
allocate funds on a formula basis to all States and to have a 
competitive selection process for HPG project selection, Rural 
Development will announce opening and closing dates for receipt of HPG 
applications. After the closing date, Rural Development will review and 
evaluate the proposals, adjust State allocations as necessary to comply 
with the law and program demand, and redistribute remaining unused HPG 
resources for use under Section 504 (as required by statute).

[53 FR 26229, July 12, 1988]



Sec.  1940.579  Multiple Family Housing appropriations not allocated
by State.

    Funds are not allocated to States. The following program funds are 
kept in a National Office reserve and are available as determined 
administratively:
    (a) Section 514 Farm Labor Housing Loans.
    (b) Section 516 Farm Labor Housing Grants.

[64 FR 24480, May 6, 1999]



Sec. Sec.  1940.580-1940.584  [Reserved]



Sec.  1940.585  Community Facility loans.

    (a) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart.
    (b) Basic formula criteria, data source and weight. See Sec.  
1940.552(b) of this subpart.
    (1) The criteria used in the basic formula are:
    (i) State's percentage of national rural population--50 percent.
    (ii) State's percentage of national rural population with incomes 
below the poverty level--25 percent.
    (iii) State's percentage of national nonmetropolitan unemployment--
25 percent.
    (2) The data source for the first criterion is the most recent 
decennial Census data. The data source for the second criterion is the 
5-year data from the American Community Survey (ACS) or, if needed, 
other Census Bureau data. The data source for the third criterion is the 
most recent Bureau of Labor Statistics data. Each criterion is assigned 
a specific weight according to its relevance in determining need. The 
percentage representing each criterion is multiplied by the weight 
factor and summed to arrive at a State factor (SF). The SF cannot exceed 
0.05.
    SF = (criterion (b)(1)(i) x 50 percent) + (criterion (b)(1)(ii) x 25 
percent) + (criterion (b)(1)(iii) x 25 percent)
    (c) Basic formula allocation. See Sec.  1940.552(c) of this subpart. 
States receiving administrative allocations do not receive formula 
allocations.
    (d) Transition formula. See Sec.  1940.552(d) of this subpart. The 
percentage range for the transition formula equals 30 percent (15%).
    (e) Base allocation. See Sec.  1940.552(e) of this subpart. States 
receiving administrative allocations do not receive base allocations.
    (f) Administrative allocation. See Sec.  1940.552(f) of this 
subpart. States participating in the formula base allocation procedures 
do not receive administrative allocations.
    (g) Reserve. See Sec.  1940.552(g) of this subpart. States may 
request funds by forwarding a completed copy of guide 26 of subpart A of 
part 1942 of this chapter (available in any Rural Development office), 
to the National Office. Generally, a request for additional funds will 
not be honored unless the State has insufficient funds to obligate the 
loan requested.

[[Page 95]]

    (h) Pooling of funds. See Sec.  1940.552(h) of this subpart. Funds 
are generally pooled at mid-year and year-end. Pooled funds will be 
placed in the National Office reserve and will be made available 
administratively.
    (i) Availability of the allocation. See Sec.  1940.552(i) of this 
subpart. The allocation of funds is made available for States to 
obligate on an annual basis although the Office of Management and Budget 
apportions it to the Agency on a quarterly basis.
    (j) Suballocation by the State Director. See Sec.  1940.552(j) of 
this subpart. State Director has the option to suballocate to District 
Offices.
    (k) Other documentation. Not applicable.

[50 FR 24180, June 10, 1985, as amended at 58 FR 54485, Oct. 22, 1993; 
80 FR 9877, Feb. 24, 2015]



Sec. Sec.  1940.586-1940.587  [Reserved]



Sec.  1940.588  Business and Industry Guaranteed and Direct Loans,
Rural Business Enterprise Grants, Rural Business Opportunity Grants,
and Intermediary Relending Program.

    The Agency will allocate funds to the States each Federal fiscal 
year for the programs identified in this section using the procedures 
specified in paragraph (a) of this section. If the Agency determines 
that it will not allocate funds to the States for a program identified 
in this section in a particular Federal fiscal year, the Agency will 
announce this decision in a notice published in the Federal Register. 
The conditions under which the Agency will not allocate a program's 
funds to the States are identified in paragraph (b) of this section.
    (a) Procedures for allocating funds to the States. Each Federal 
fiscal year, the Agency will use the amount available to the program and 
the procedures identified in paragraphs (a)(2) through (10) of this 
section to determine the amount of program funds to allocate to each of 
the States. The Agency will make the allocation calculation each Federal 
fiscal year.
    (1) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart.
    (2) Basic formula criteria, data source and weight. See Sec.  
1940.552(b) of this subpart.
    (i) The criteria used in the basic formula are:
    (A) State's percentage of national rural population.
    (B) State's percentage of national rural population with incomes 
below the poverty level.
    (C) State's percentage of national nonmetropolitan unemployment.
    (ii) The data sources for each of the criteria identified in 
paragraph (a) of this section are:
    (A) For the criterion specified in paragraph (a)(2)(i)(A), the most 
recent decennial Census data.
    (B) For the criterion specified in paragraph (a)(2)(i)(B), 5-year 
income data from the American Community Survey (ACS) or, if needed, 
other Census Bureau data.
    (C) For the criterion specified in paragraph (a)(2)(i)(C), the most 
recent Bureau of Labor Statistics data.
    (iii) Each criterion is assigned a specific weight factor according 
to its relevance in determining need. The percentage representing each 
criterion is multiplied by the weight factor and summed to arrive at 
State Factor (SF). The SF cannot exceed 0.05. The Agency may elect to 
use different weight factors than those identified in this paragraph by 
publishing a timely notice in the Federal Register.

SF = (criterion (a)(2)(i)(A) x 25 percent) + (criterion (a)(2)(i)(B) x 
50 percent) + (criterion (a)(2)(i)(C) x 25 percent)

    (iv) The Agency will recalculate, as necessary, each criterion 
specified in paragraph (a)(2)(i) of this section each year. In making 
these recalculations, the Agency will use the most recent data available 
to the Agency as of October 1 of the fiscal year for which the Agency is 
making State allocations. Each criterion's value determined at the 
beginning of a fiscal year for a program will be used for that entire 
fiscal year, regardless of when that fiscal year's funding becomes 
available for the program.
    (3) Basic formula allocation. See Sec.  1940.552(c) of this subpart.
    (4) Transition formula. The transition provisions specified in Sec.  
1940.552(d) of

[[Page 96]]

this subpart apply to the programs identified in this section except as 
follows:
    (i) The transition formula will be used only when the weight factors 
identified in paragraph (a)(2)(iii) of this section are modified; and
    (ii) When the transition formula is used, there will be no upper 
limitation on the amount that a State's allocation can increase over its 
previous year's allocation and the maximum percentage that funding will 
be allowed to decrease for a State will be 10 percent from its previous 
year's allocation.
    (5) Base allocations. See Sec.  1940.552(e) of this subpart.
    (6) Administrative allocations. See Sec.  1940.552(f) of this 
subpart. Jurisdictions receiving formula allocations do not receive 
administrative allocations.
    (7) Reserve. See Sec.  1940.552(g) of this subpart.
    (8) Pooling of funds. See Sec.  1940.552(h) of this subpart.
    (9) Availability of allocation. See Sec.  1940.552(i) of this 
subpart.
    (10) Suballocation by the State Director. Suballocation by the State 
Director is authorized for each program covered by this section.
    (b) Conditions for not allocating program funds to the States. The 
Agency may elect to not allocate program funds to the States whenever 
one of the conditions identified in paragraphs (b)(1) or (b)(2) of this 
section occurs.
    (1) Funds allocated in a fiscal year to a program identified in this 
section are insufficient, as provided for in Sec.  1940.552(a) of this 
subpart.
    (2) The Agency determines that it is in the best financial interest 
of the Federal Government not to make a State allocation for any program 
identified in this section and that the exercise of this determination 
is not in conflict with applicable law.

[79 FR 56218, Sept. 19, 2014]

    Editorial Note: At 79 FR 55967, September 18, 2014, Sec.  1940.588 
was amended by revising paragraph (i); however, paragraph (i) was not 
found in the section.



Sec.  1940.589  Rural Energy for America Program.

    The Agency will allocate funds to the States each Federal fiscal 
year for renewable energy system and energy efficiency improvement 
projects under the Rural Energy for America Program (REAP) using the 
procedures specified in paragraph (a) of this section. If the Agency 
determines that it will not allocate funds to the States for REAP in a 
particular Federal fiscal year, the Agency will announce this decision 
in a notice published in the Federal Register. The conditions under 
which the Agency will not allocate the program's funds to the States are 
identified in paragraph (b) of this section.
    (a) Procedures for allocating funds to the States. Each Federal 
fiscal year, the Agency will use the amount available to the program and 
the procedures identified in paragraphs (a)(2) through (10) of this 
section to determine the amount of program funds to allocate to each of 
the States. The Agency will make this calculation each Federal fiscal 
year.
    (1) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart.
    (2) Basic formula criteria, data source, and weight. See Sec.  
1940.552(b) of this subpart.
    (i) The criteria used in the basic formula are:
    (A) State's percentage of national rural population.
    (B) State's percentage of national rural population with incomes 
below the poverty level.
    (C) State's percentage of energy cost.
    (ii) The data sources for each of the criteria identified in 
paragraph (a)(2)(i) of this section are:
    (A) For the criterion specified in paragraph (a)(2)(i)(A), the most 
recent decennial Census data.
    (B) For the criterion specified in paragraph (a)(2)(i)(B), 5-year 
income data from the American Community Survey (ACS) or, if needed, 
other Census Bureau data.
    (C) For the criterion specified in paragraph (a)(2)(i)(C), the most 
recent U.S. Energy Information Administration data.
    (iii) Each criterion is assigned a specific weight factor according 
to its relevance in determining need. The percentage representing each 
criterion is multiplied by the weight factor and summed to arrive at 
State Factor (SF). The SF cannot exceed 0.05. The Agency

[[Page 97]]

may elect to use different weight factors than those identified in this 
paragraph by publishing a timely notice in the Federal Register.

SF = (criterion (a)(2)(i)(A) x 25 percent) + (criterion (a)(2)(i)(B) x 
50 percent) + (criterion (a)(2)(i)(C) x 25 percent)

    (iv) The Agency will recalculate, as necessary, each criterion 
specified in paragraph (a)(2)(i) of this section each year. In making 
these recalculations, the Agency will use the most recent data available 
to the Agency as of October 1 of the fiscal year for which the Agency is 
making State allocations. Each criterion's value determined at the 
beginning of a fiscal year for a program will be used for that entire 
fiscal year, regardless of when that fiscal year's funding becomes 
available for the program.
    (3) Basic formula allocation. See Sec.  1940.552(c) of this subpart.
    (4) Transition formula. The transition provisions specified in Sec.  
1940.552(d) of this subpart apply to the program(s) identified in this 
section except as follows:
    (i) The transition formula will be used only when the weight factors 
identified in paragraph (a)(2)(iii) of this section are modified; and
    (ii) When the transition formula is used, there will be no upper 
limitation on the amount that a State's allocation can increase over its 
previous year's allocation and the maximum percentage that funding will 
be allowed to decrease for a State will be 10 percent from its previous 
year's allocation.
    (5) Base allocations. See Sec.  1940.552(e) of this subpart.
    (6) Administrative allocations. See Sec.  1940.552(f) of this 
subpart. Jurisdictions receiving formula allocations do not receive 
initial administrative allocations.
    (7) Reserve. See Sec.  1940.552(g) of this subpart.
    (8) Pooling of funds. See Sec.  1940.552(h) of this subpart.
    (9) Availability of the allocation. See Sec.  1940.552(i) of this 
subpart.
    (10) Suballocation by the State Director. Suballocation by the State 
Director is authorized for this program.
    (b) Conditions for not allocating program funds to the States. The 
Agency may elect to not allocate REAP program funds to the States 
whenever one of the conditions identified in paragraphs (b)(1) or (b)(2) 
of this section occurs.
    (1) Funds allocated in a fiscal year to REAP are insufficient, as 
provided for in Sec.  1940.552(a) of this subpart.
    (2) The Agency determines that it is in the best financial interest 
of the Federal Government not to make a State allocation for REAP and 
that the exercise of this determination is not in conflict with 
applicable law.

[79 FR 56219, Sept. 19, 2014]



Sec.  1940.590  [Reserved]



Sec.  1940.591  Community Program Guaranteed loans.

    (a) Amount available for allocations. See Sec.  1940.552(a) of this 
subpart.
    (b) Basic formula criteria, data source and weight. See Sec.  
1940.552(b) of this subpart.
    (1) The criteria used in the basic formula are:
    (i) State's percentage of national rural population--50 percent.
    (ii) State's percentage of national rural population with incomes 
below the poverty level--25 percent.
    (iii) State's percentage of national nonmetropolitan unemployment--
25 percent.
    (2) The data source for the first criterion is the most recent 
decennial Census data. The data source for the second criterion is the 
5-year data from the American Community Survey (ACS) or, if needed, 
other Census Bureau data. The data source for the third criterion is the 
most recent Bureau of Labor Statistics data. Each criterion is assigned 
a specific weight according to its relevance in determining need. The 
percentage representing each criterion is multiplied by the weight 
factor and summed to arrive at a State factor (SF). The SF cannot exceed 
0.05.
    SF = (criterion (b)(1)(i) x 50 percent) + (criterion (b)(1)(ii) x 25 
percent) + (criterion (b)(1)(iii) x 25 percent)
    (c) Basic formula allocation. See Sec.  1940.552(c) of this subpart. 
States receiving administrative allocations do not receive formula 
allocations.

[[Page 98]]

    (d) Transition formula. The transition formula for Community Program 
Guaranteed loans is not used.
    (e) Base allocation. See Sec.  1940.552(e) of this subpart. States 
receiving administrative allocations do not receive base allocations.
    (f) Administrative allocation. See 1940.552(f) of this subpart. 
States participating in the formula base allocation procedures do not 
receive administrative allocations.
    (g) Reserve. See Sec.  1940.522(g) of this subpart. States may 
request funds by forwarding a request following the format found in 
guide 26 of subpart A of part 1942 of this chapter to the National 
Office. Generally, a request for additional funds will not be honored 
unless the State has insufficient funds from the State's allocation to 
obligate the loan requested.
    (h) Pooling of funds. See Sec.  1940.522(h) of this subpart. Funds 
are generally pooled at mid-year and year-end. Pooled funds will be 
placed in the National Office reserve and will be made available 
administratively.
    (i) Availability of the allocation. See Sec.  1940.552(i) of this 
subpart. The allocation of funds is made available for States to 
obligate on an annual basis although the Office of Management and Budget 
apportions it to the Agency on a quarterly basis.
    (j) Suballocation by State Director. See Sec.  1940.552(j) of this 
subpart. State Director has the option to suballocate to District 
Offices.
    (k) Other documentation. Not applicable.

[55 FR 11134, Mar. 27, 1990, as amended at 58 FR 54486, Oct. 22, 1993; 
80 FR 9877, Feb. 24, 2015]



Sec.  1940.592  Community facilities grants.

    (a) Amount available for allocations. See Sec.  1940.552(a).
    (b) Basic formula criteria, data source, and weight. See Sec.  
1940.552(b).
    (1) The criteria used in the basic formula are:
    (i) State's percentage of National rural population--50 percent.
    (ii) State's percentage of National rural population with income 
below the poverty level--50 percent.
    (2) The data source for the first criterion is the most recent 
decennial Census data. The data source for the second criterion is the 
5-year data from the American Community Survey (ACS) or, if needed, 
other Census Bureau data. Each criterion is assigned a specific weight 
according to its relevance in determining need. The percentage 
representing each criterion is multiplied by the weight factor and 
summed to arrive at a State factor (SF).
    SF (criterion (b)(1)(i) x 50 percent) + (criterion (b)(1)(ii) x 50 
percent)
    (c) Basic formula allocation. See Sec.  1940.552(c). States 
receiving administrative allocations do not receive formula allocations.
    (d) Transition formula. The transition formula for Community 
Facilities Grants is not used.
    (e) Base allocation. See Sec.  1940.552(e). States receiving 
administrative allocations do not receive base allocations.
    (f) Administrative allocation. See Sec.  1940.552(f). States 
participating in the formula base allocation procedures do not receive 
administrative allocations.
    (g) Reserve. See Sec.  1940.552(g).
    (h) Pooling of funds. See Sec.  1940.522(h). Funds will be pooled at 
midyear and yearend. Pooled funds will be placed in the National Office 
reserve and will be made available administratively.
    (i) Availability of the allocation. See Sec.  1940.552(i).
    (j) Suballocation by State Director. See Sec.  1940.552(j).
    (k) Other documentation. Not applicable.

[62 FR 16468, Apr. 7, 1997, as amended at 80 FR 9877, Feb. 24, 2015]



Sec.  1940.593  Other Rural Business-Cooperative Service programs.

    If the Agency determines that it is in the best interest of the 
Federal government to allocate funds to States for existing RBS programs 
other than those identified in Sec. Sec.  1940.588 and 1940.589 of this 
subpart and for programs new to RBS (e.g., through new legislation), the 
Agency will use the process identified in paragraph (a) or (b) of this 
section.
    (a) If the Agency determines that one of the State allocation 
procedures in Sec.  1940.588 and Sec.  1940.589 is appropriate for the 
program, the Agency will publish a Federal Register notice identifying

[[Page 99]]

the program and which State allocation procedure will be used for the 
program.
    (b) If the Agency determines that none of the procedures specified 
in Sec.  1940.588 and Sec.  1940.589 is appropriate for the program, the 
Agency will implement the following steps:
    (1) The Agency will either develop a preliminary state allocation 
formula and administrative procedures specific to the requirements of 
the new program or use whichever of the procedures in Sec.  1940.588 and 
Sec.  1940.589 the Agency determines most closely matches the purpose of 
the program. The Agency will publish in the Federal Register the State 
allocation formula and adminstrative procedures that it will use 
initially for the new program.
    (2) The Agency will develop a State allocation formula and 
administrative provisions specific to the new program and publish them 
as a proposed rule change to this part in the Federal Register for 
public comment.
    (3) Until the program's State allocation formula and administrative 
requirements are finalized, the Agency will use the preliminary State 
allocation formula established under paragraph (b)(1) of this section to 
make State allocations and administer the new program.

[79 FR 56220, Sept. 19, 2014]



Sec. Sec.  1940.594-1940.600  [Reserved]



           Sec. Exhibit A to Subpart L of Part 1940 [Reserved]



  Sec. Exhibit B to Subpart L of Part 1940--Section 515 Nonprofit Set 
                              Aside (NPSA)

    I. Objective: To provide eligible nonprofit entities with a 
reasonable opportunity to utilize section 515 funds.
    II. Background: The Cranston-Gonzalez National Affordable Housing 
Act of 1990 established the statutory authority for the section 515 NPSA 
funds.
    III. Eligible entities. Amounts set aside shall be available only 
for nonprofit entities in the State, which may not be wholly or 
partially owned or controlled by a for-profit entity. An eligible entity 
may include a partnership, including a limited partnership, that has as 
its general partner a nonprofit entity or the nonprofit entity's for-
profit subsidiary which will be receiving low-income housing tax credits 
authorized under section 42 of the Internal Revenue Code of 1986. For 
the purposes of this exhibit, a nonprofit entity is an organization 
that:
    A. Will own an interest in a project to be financed under this 
section and will materially participate in the development and the 
operations of the project; and
    B. Is a private organization that has nonprofit, tax exempt status 
under section 501(c)(3) or section 501(c)(4) of the Internal Revenue 
Code of 1986; and
    C. Has among its purposes the planning, development, or management 
of low-income housing or community development projects; and
    D. Is not affiliated with or controlled by a for-profit 
organization; and
    E. May be a consumer cooperative, Indian tribe or tribal housing 
authority.
    IV. Nondiscrimination. Rural Development reemphasizes the 
nondiscrimination in use and occupancy and location requirements of 7 
CFR 3560.104.
    V. Amount of Set Aside. See Attachment 1 of this exhibit (available 
in any FmHA or its successor agency under Public Law 103-354 State 
Office):
    A. Small State Allocation Set Aside (SSASA). The allocation for 
small States has been reserved and combined to form the SSASA, as shown 
in Attachment 1 of this exhibit (available in any FmHA or its successor 
agency under Public Law 103-354 State Office). The definition of small 
State is included in Attachment 1 of this exhibit (available in any FmHA 
or its successor agency under Public Law 103-354 State Office).
    B. Large State Allocation Set Aside (LSASA). The allocation for 
large States has been reserved in the amounts shown in Attachment 1 of 
this exhibit (available in any FmHA or its successor agency under Public 
Law 103-354 State Office). The definition of large State is included in 
Attachment 1 of this exhibit (available in any FmHA or its successor 
agency under Public Law 103-354 State Office).
    C. NPSA Rental Assistance (RA). NPSA RA has been reserved in the 
National Office as shown in Attachment 1 of this exhibit (available in 
any FmHA or its successor agency under Public Law 103-354 State Office).
    VI. Access to NPSA funds and RA. RA is available and may be 
requested, as needed, with eligible loan requests. NPSA funds and RA 
should be requested by the State Director using a format similar to 
Attachment 2 of this exhibit (available in any FmHA or its successor 
agency under Public Law 103-354 State Office). Funds are available as 
follows:
    A. SSASA: The SSASA is available to any SSASA State on a first-come-
first-served basis until pooling. See Attachment 3 of this exhibit 
(available in any FmHA or its successor agency under Public Law 103-354 
State Office) for information regarding pooling.

[[Page 100]]

    B. LSASA: LSASA states may request LSASA funds up to the amount the 
state contributed to LSASA until pooling. See Attachment 3 of this 
exhibit (available in any FmHA or its successor agency under Public Law 
103-354 State Office) for information regarding pooling.
    VII. General Information on priority/processing of Preapplications.
    A. Preapplications/applications for assistance from eligible 
nonprofit entities under this subpart must continue to meet all loan 
making requirements of 7 CFR part 3560, subpart B.
    B. A separate processing list will be maintained for NPSA loan 
requests.
    C. The State Director may issue Form AD-622, ``Notice of 
Preapplication Review Action'', requesting a formal application to the 
highest ranking preapplication(s) from eligible nonprofit entities 
defined in paragraph III of this exhibit as follows:
    1. LSASA. In LSASA States, AD-622s may not exceed 150 percent of the 
amount the State contributed to the LSASA. No single Form AD-622 may 
exceed the amount of funds the State contributed to LSASA.
    2. SSASA. In SSASA States, AD-622s should not exceed the greater of 
$750,000 or 150 percent of the amount the State contributed to the 
SSASA; except that the State Director in a SSASA State may request 
authorization to issue a Form AD-622, in an amount in excess of $750,000 
if additional funds are necessary to finance an average-size proposal 
based upon average construction costs in the state. For example, if the 
average size proposal currently being funded in the state is 24 units, 
and the average construction cost in the state is $35,000 per unit, the 
state may request authorization to issue an AD-622 for $840,000. The 
State Director will submit such requests to the National Office 
including data reflecting average size/cost projects in the State. No 
single Form AD-622 may exceed the amount of funds the State may receive 
from SSASA.
    D. All AD-622s issued for proposals to be funded from NPSA will be 
subject to the availability of NPSA funds. Form AD-622 should contain 
the following or similar language: ``This Form AD-622 is issued subject 
to the availability of Nonprofit Set-Aside (NPSA) funds.''
    E. If a preapplication requesting NPSA funds has sufficient priority 
points to compete with non-NPSA loan requests based upon the District or 
State allocation (as applicable), the preapplication will be maintained 
on both the NPSA and non-NPSA rating/ranking lists.
    F. Provisions for providing preference to loan requests from 
nonprofit organizations is contained in 7 CFR 3560.56. Limited 
partnerships, with a nonprofit general partner, do not qualify for 
nonprofit preference.
    VIII. Exception authority. The Administrator, or his/her designee, 
may, in individual cases, make an exception to any requirements of this 
exhibit which are not inconsistent with the authorizing statute, if he/
she finds that application of such requirement would adversely affect 
the interest of the Government or adversely affect the intent of the 
authorizing statute and/or Rural Rental Housing program or result in an 
undue hardship by applying the requirement. The Administrator, or his/
her designee, may exercise this authority upon the request of the State 
Director, Assistant Administrator for Housing, or Director of the Multi-
Family Housing Processing Division. The request must be supported by 
information that demonstrates the adverse impact or effect on the 
program. The Administrator, or his/her designee, also reserves the right 
to change pooling dates, establish/change minimum and maximum fund usage 
from NPSA, or restrict participation in the set aside.

[58 FR 38950, July 21, 1993, as amended at 69 FR 69104, Nov. 26, 2004]



 Sec. Exhibit C to Subpart L of Part 1940--Housing in Underserved Areas

                              I. Objective

    A. To improve the quality of affordable housing by targeting funds 
under Rural Housing Targeting Set Aside (RHTSA) to designated areas that 
have extremely high concentrations of poverty and substandard housing 
and have severe, unmet rural housing needs.
    B. To provide for the eligibility of certain colonias for rural 
housing funds.

                             II. Background

    The Cranston-Gonzalez National Affordable Housing Act of 1990 
(herein referred to as the ``Act'') requires that Farmers Home 
Administration (FmHA) or its successor agency under Public Law 103-354 
set aside section 502, 504, 514, 515, and 524 funds for assistance in 
targeted, underserved areas. An appropriate amount of section 521 new 
construction rental assistance (RA) is set aside for use with section 
514 and 515 loan programs. Under the Act, certain colonias are now 
eligible for FmHA or its successor agency under Public Law 103-354 
housing assistance.

                              III. Colonias

    A. Colonia is defined as any identifiable community that:
    1. Is in the State of Arizona, California, New Mexico or Texas;
    2. Is in the area of the United States within 150 miles of the 
border between the United States and Mexico, except that the term does

[[Page 101]]

not include any standard metropolitan statistical area that has a 
population exceeding 1 million;
    3. Is designated by the State or county in which it is located as a 
colonia;
    4. Is determined to be a colonia on the basis of objective criteria, 
including lack of potable water supply, lack of adequate sewage systems, 
and lack of decent, safe, and sanitary housing; and
    5. Was in existence and generally recognized as a colonia before 
November 28, 1990.
    B. Requests for housing assistance in colonias have priority as 
follows:
    1. When the State did not obligate its allocation in one or more of 
its housing programs during the previous 2 fiscal years (FYs), priority 
will be given to requests for assistance, in the affected program(s), 
from regularly allocated funds, until an amount equal to 5 percent of 
the current FY program(s) allocation is obligated in colonias. This 
priority takes precedence over other processing priority methods.
    2. When the State did obligate its allocation in one or more of its 
housing programs during the previous 2 FYs, priority will be given to 
requests for assistance, in the affected program(s), from RHTSA funds, 
until an amount equal to 5 percent of the current FY program(s) 
allocation is obligated in colonias. This priority takes precedence over 
other processing priority methods.
    C. Colonias may access pooled RHTSA funds as provided in paragraph 
IV G of this exhibit.

                                IV. RHTSA

    A. Amount of Set Aside. Set asides for RHTSA, from the current FY 
allocations, are established in attachment 1 of this exhibit (available 
in any FmHA or its successor agency under Public Law 103-354 State 
Office).
    B. Selection of Targeted Counties--1. Eligibility. Eligible counties 
met the following criteria: (1) 20 percent or more of the county 
population is at, or below, poverty level; (2) 10 percent or more of the 
occupied housing units are substandard; and (3) the average funds 
received on a per capita basis in the county, during the previous 5 FYs, 
were more than 40 percent below the State per capita average during the 
same period. Data from the most recent available Census was used for all 
three criteria, with criteria (2) and (3) based on the FmHA or its 
successor agency under Public Law 103-354 rural area definition.
    2. Selection. The Act requires that 100 of the most underserved 
counties be initially targeted for RHTSA funds. In establishing the 100 
counties, those with 28 percent or more of their population at, or 
below, poverty level and 13 percent or more of their occupied housing 
units substandard, have preference. If less than 100 counties meet this 
criteria, the remaining counties meeting the criteria in paragraph IV B 
1 of this exhibit will be ranked, based upon a total of their 
substandard housing and poverty level percentages. The highest-ranking 
counties are then selected until the list reaches 100. The remaining 
counties are eligible for pool funds only.
    C. State RHTSA Levels. In the section 502, 504, and 515 programs, 
each State's RHTSA level will be based on its number of eligible 
counties, with each county receiving a pro rata share of the total funds 
available. In order to ensure that a meaningful amount of assistance is 
available to each State, minimum funding levels may be established. When 
minimum levels are established, they are set forth on Attachment 1 of 
this exhibit (available in any FmHA or its successor agency under Public 
Law 103-354 State Office).
    D. Use of Funds. To maximize the assistance to targeted counties, 
allocated program funds should be used in addition to RHTSA funds, where 
possible. The State Director has the discretion to determine the most 
effective delivery of RHTSA funds among the targeted counties within 
his/her jurisdiction. The 100 counties listed in attachment 2 of this 
exhibit (available in any FmHA or its successor agency under Public Law 
103-354 State Office) are eligible for RHTSA funding consideration 
immediately. Colonias are also eligible for RHTSA funds as described in 
paragraph III of this exhibit.
    E. National Office RHTSA Reserve. A limited National Office reserve 
is available on an individual case basis when the State is unable to 
fund a request from its regular or RHTSA allocation. The amount of the 
reserve, and the date it can be accessed and any conditions thereof, if 
applicable, are contained in attachment 1 of this exhibit (available in 
any FmHA or its successor agency under Public Law 103-354 State Office).
    F. Requests for Funds and RA. All RHTSA funds are reserved in the 
National Office and requests for these funds and/or RA units must be 
submitted by the State Director, using the applicable format shown on 
attachment 4 or 5 of this exhibit (available in any FmHA or its 
successor agency under Public Law 103-354 State Office). The State 
Director is responsible for notifying the Director of Single Family 
Housing Processing Division (SFHPD) or Multi-Family Housing Processing 
Division (MFHPD) of any RHTSA funds and RA units authorized, but not 
obligated, by RHTSA pooling date.
    G. Pooling. Unused RHTSA funds and RA will be pooled. Pooling dates 
and any pertinent information thereof are available on attachment 1 of 
this exhibit (available in any FmHA or its successor agency under Public 
Law 103-354 State Office). Pooled funds will be available on a first-
come, first-served basis to all eligible colonias and all counties

[[Page 102]]

listed on attachments 2 and 3 of this exhibit (available in any FmHA or 
its successor agency under Public Law 103-354 State Office). Pooled 
RHTSA funds will remain available until the year-end pooling date.
    H.-I. [Reserved]
    J. Requests for Assistance. Requests for assistance in targeted 
counties must meet all loan making requirements of the applicable 
program Instructions, except as modified for colonias in paragraph III 
of this exhibit. For section 515, States may:
    1. Issue Form AD-622, ``Notice of Preapplication Review Action,'' up 
to 150 percent of the amount shown in attachment 1 of this exhibit 
(available in any FmHA or its successor agency under Public Law 103-354 
State Office).
    2. All AD-622s issued for applicants in targeted counties will be 
annotated, in Item 7, under ``Other Remarks,'' with the following: 
``Issuance of this AD-622 is contingent upon receiving funds from the 
Rural Housing Targeting Set Aside (RHTSA). Should RHTSA funds be 
unavailable, or the county in which this project will be located is no 
longer considered a targeted county, this AD-622 will no longer be 
valid. In these cases, the request for assistance will need to compete 
with other preapplications in non-targeted counties, based upon its 
priority point score.''

                              V. [Reserved]

[57 FR 3924, Feb. 3, 1992]

Subparts M-S [Reserved]



   Subpart T_System for Delivery of Certain Rural Development Programs

    Source: 57 FR 11559, Apr. 6, 1992, unless otherwise noted.



Sec.  1940.951  General.

    This subpart sets forth Rural Development policies and procedures 
for the delivery of certain rural development programs under a rural 
economic development review panel established in eligible States 
authorized under sections 365, 366, 367, and 368 of the Consolidated 
Farm and Rural Development Act (7 U.S.C. 1921 et seq.), as amended.
    (a) If a State desires to participate in this pilot program, the 
Governor of the State may submit an application to the Under Secretary 
for Small Community and Rural Development, U.S. Department of 
Agriculture, room 219-A, Administration Building, Washington, DC 20250 
in accordance with Sec.  1940.954 of this subpart.
    (b) The Under Secretary shall designate not more than five States in 
which to make rural economic development review panels applicable during 
any established time period for the purpose of reviewing and ranking 
applications submitted for funding under certain rural development 
programs. The following time periods have been established for 
participation in this pilot program:

First period--Balance of fiscal year (FY) 1992 to September 30, 1993;
Second period--October 1, 1993 to September 30, 1994;
Third period--October 1, 1994 to September 30, 1995; and
Fourth period--October 1, 1995 to September 30, 1996.

    The State will be bound by the provisions of this pilot program only 
during the established time period(s) for which the State is designated. 
If a designated State does not remain an eligible State during the 
established time period(s) for which the State was designated, the State 
will not be eligible to participate in this program and cannot revert to 
the old ranking and applicant selection process.
    (c) Assistance under each designated rural development program shall 
be provided to eligible designated States for qualified projects in 
accordance with this subpart.
    (d) Federal statutes provide for extending Rural Development 
financially supported programs without regard to race, color, religion, 
sex, national origin, marital status, age, familial status, or physical/
mental handicap (provided the participant possesses the capacity to 
enter into legal contracts.)



Sec.  1940.952  [Reserved]



Sec.  1940.953  Definitions.

    For the purpose of this subpart:
    Administrator. The Administrator of Rural Business--Cooperative 
Service, Rural Housing Service, or Rural Utilities Service.
    Area plan. The long-range development plan developed for a local or 
regional area in a State.
    Designated agency. An agency selected by the Governor of the State 
to

[[Page 103]]

provide the panel and the State Coordinator with support for the daily 
operation of the panel.
    Designated rural development program. A program carried out under 
sections 304(b), 306(a), or subsections (a) through (f) and (h) of 
section 310B of the Consolidated Farm and Rural Development Act (7 
U.S.C. 1926(a)), as amended, or under section 1323 of the Food Security 
Act of 1985, for which funds are available at any time during the FY 
under such section, including, but not limited to, the following:
    (1) Water and Waste Disposal Insured or Guaranteed Loans;
    (2) Development Grants for Community Domestic Water and Waste 
Disposal Systems;
    (3) Technical Assistance and Training Grants;
    (4) Emergency Community Water Assistance Grants;
    (5) Community Facilities Insured and Guaranteed Loans;
    (6) Business and Industry Guaranteed Loans;
    (7) Industrial Development Grants;
    (8) Intermediary Relending Program;
    (9) Drought and Disaster Relief Guaranteed Loans;
    (10) Disaster Assistance for Rural Business Enterprises;
    (11) Nonprofit National Rural Development and Finance Corporations.
    Designated State. A State selected by the Under Secretary, in 
accordance with Sec.  1940.954 of this subpart, to participate in this 
program.
    Eligible State. With respect to a FY, a State that has been 
determined eligible in accordance with Sec.  1940.954 (e) of this 
subpart.
    Nondesignated State. A State that has not been selected to 
participate in this pilot program.
    Qualified project. Any project: (1) For which the designated agency 
has identified alternative Federal, State, local or private sources of 
assistance and has identified related activities in the State; and
    (2) To which the Administrator is required to provide assistance.
    State. Any of the fifty States.
    State coordinator. The officer or employee of the State appointed by 
the Governor to carry out the activities described in Sec.  1940.957 of 
this subpart.
    State Director. The head of Rural Development at the local level 
charged with administering designated rural development programs.
    State rural economic development review panel or ``panel''. An 
advisory panel that meets the requirements of Sec.  1940.956 of this 
subpart.
    Under Secretary. In the U.S. Department of Agriculture, the Under 
Secretary for Small Community and Rural Development.



Sec.  1940.954  State participation.

    (a) Application. If a State desires to participate in this pilot 
program, the Governor may submit an original and one copy of Standard 
Form (SF) 424.1, ``Application for Federal Assistance (For Non-
construction),'' to the Under Secretary. The five States designated by 
the Under Secretary to participate in the first established time period 
will be selected from among applications received not later than 60 
calendar days from the effective date of this subpart. If a designated 
State desires to participate in additional time periods, applications 
are not required to be resubmitted; however, the Governor must notify 
the Under Secretary, in writing, no later than July 31 of each FY, and 
the State must submit evidence of eligibility requirements each FY in 
accordance with Sec.  1940.954 (e)(2) of this subpart. Beginning in FY 
1993, applications must be submitted to the Under Secretary no later 
than July 31 if a State desires to be selected to fill vacancies that 
occur when designated States do not roll over into another established 
time period. States should include the following information with SF 
424.1:
    (1) A narrative signed by the Governor including reasons for State 
participation in this program and reasons why a project review and 
ranking process by a State panel will improve the economic and social 
conditions of rural areas in the State. The narrative will also include 
the time period(s) for which the State wishes to participate.
    (2) A proposal outlining the method for meeting all the following 
eligibility requirements and the timeframes established for meeting each 
requirement:

[[Page 104]]

    (i) Establishing a rural economic development review panel in 
accordance with Sec.  1940.956 of this subpart. When established, the 
name, title, and address of each proposed member should be included and 
the chairperson and vice chairperson should be identified.
    (ii) Governor's proposed designation of a State agency to support 
the State coordinator and the panel. The name, address, and telephone 
number of the proposed agency's contact person should be included.
    (iii) Governor's proposed selection of a State coordinator in 
accordance with Sec.  1940.957 of this subpart, including the title, 
address, and telephone number.
    (iv) Development of area development plans for all areas of the 
State that are eligible to receive assistance from designated rural 
development programs.
    (v) The review and evaluation of area development plans by the panel 
in accordance with Sec.  1940.956 of this subpart.
    (vi) Development of written policy and criteria used by the panel to 
review and evaluate area plans in accordance with Sec.  1940.956 of this 
subpart.
    (vii) Development of written policy and criteria the panel will use 
to evaluate and rank applications in accordance with Sec.  1940.956 of 
this subpart.
    (3) Preparation of a proposed budget that includes 3 years 
projections of income and expenses associated with panel operations. If 
funds from other sources are anticipated, sources and amounts should be 
identified.
    (4) Development of a financial management system that will provide 
for effective control and accountability of all funds and assets 
associated with the panel.
    (5) A schedule to coordinate the submission, review, and ranking 
process of preapplications/applications in accordance with Sec.  
1940.956(a) of this subpart.
    (6) Other information provided by the State in support of its 
application.
    (b) Selecting States. The Under Secretary will review the 
application and other information submitted by the State and designate 
not more than five States to participate during any established time 
period.
    (c) Notification of selection. (1) The Under Secretary will notify 
the Governor of each State whether or not the State has been selected 
for further consideration in this program. If a State has been selected, 
the notification will include the additional information that the 
Governor must submit to the Under Secretary in order for the State to 
meet eligibility requirements in accordance with paragraph (d) of this 
section.
    (2) A copy of the notification to the Governor will be submitted to 
the Administrator along with a copy of the State's application and other 
material submitted in support of the application.
    (d) Determining State eligibility. (1) The Governor will provide the 
Under Secretary with evidence that the State has complied with the 
eligibility requirements of paragraph (a)(2) of this section not later 
than September 1, 1992, for the first established time period and not 
later than September 1 for each of the remaining established time 
periods.
    (2) The Under Secretary will review the material submitted by the 
Governor in sufficient detail to determine if a State has complied with 
all eligibility requirements of this subpart. The panel will not begin 
reviewing and ranking applications until the Governor has been notified 
in writing by the Under Secretary that the State has been determined 
eligible and is designated to participate in this program. A copy of the 
notification will be sent to the Administrator. The Under Secretary's 
decision is not appealable.
    (e) Eligibility requirements. (1) With respect to this subpart, the 
Under Secretary may determine a State to be an eligible State provided 
all of the following apply not later than October 1 of each FY:
    (i) The State has established a rural economic development review 
panel that meets the requirements of Sec.  1940.956 of this subpart;
    (ii) The Governor has appointed an officer or employee of the State 
government to serve as State coordinator to carry out the 
responsibilities set forth in Sec.  1940.957 of this subpart; and
    (iii) The Governor has designated an agency of the State government 
to provide the panel and State coordinator with support for the daily 
operation of the panel.

[[Page 105]]

    (2) If a State is determined eligible initially and desires to 
participate in additional time periods established for this program, the 
Governor will submit documents and information not later than September 
1 of each subsequent FY in sufficient detail for the Under Secretary to 
determine, prior to the beginning of the additional time period, that 
the State is still in compliance with all eligibility requirements of 
this subpart.



Sec.  1940.955  Distribution of program funds to designated States.

    (a) States selected to participate in the first established time 
period will receive funds from designated rural development programs 
according to applicable program regulations until the end of FY 1992, if 
necessary for States to have sufficient time to meet the eligibility 
requirements of this subpart, and to be designated to participate in 
this program. No funds will be administered under this subpart to an 
ineligible State.
    (b) If a State becomes an eligible State any time prior to the end 
of FY 1992, any funds remaining unobligated from a State's FY 1992 
allocation, may be administered under this subpart.
    (c) Beginning in FY 1993 and for each established time period 
thereafter, all designated rural development program funds received by a 
designated State will be administered in accordance with Sec. Sec.  
1940.961 through 1940.965 of this subpart, provided the State is 
determined eligible prior to the beginning of each FY in accordance with 
Sec.  1940.954 of this subpart. No assistance will be provided under any 
designated rural development program in any designated State that is not 
an eligible State.



Sec.  1940.956  State rural economic development review panel.

    (a) General. In order for a State to become or remain an eligible 
State, the State must have a rural economic development panel that meets 
all requirements of this subpart. Each designated State will establish a 
schedule whereby the panel and Rural Development will coordinate the 
submission, review, and ranking process of preapplications/applications. 
The schedule will be submitted to the Under Secretary for concurrence 
and should consider the following:
    (1) Timeframes should assure that applications selected for funding 
from the current FY's allocation of funds can be processed by Rural 
Development and funds obligated prior to the July 15 pooling established 
in Sec.  1940.961(c) of this subpart;
    (2) Initial submission of preapplications/applications from Rural 
Development to the panel and any subsequent submissions during the first 
year;
    (3) How often during each FY thereafter should Rural Development 
submit preapplications/applications to the panel for review and ranking;
    (4) Number of working days needed by the panel to review and rank 
preapplications/applications;
    (5) Number of times during the FY the panel will submit a list of 
ranked preapplications/applications to Rural Development for funding 
consideration;
    (6) Consider the matching of available loan and grant funds to 
assure that all allocated funds will be used;
    (7) How to consider ranked preapplications/applications at the end 
of the FY that have not been funded; and
    (8) How to consider requests for additional funds needed by an 
applicant to complete a project that already has funds approved; i.e., 
construction bid cost overrun.
    (b) Duties and responsibilities. The panel is required to advise the 
State Director on the desirability of funding applications from funds 
available to the State from designated rural development programs. In 
relation to this advice, the panel will have the following duties and 
responsibilities:
    (1) Establish policy and criteria to review and evaluate area plans 
and to review and rank preapplications/applications. (i) Area plan. The 
panel will develop a written policy and criteria to use when evaluating 
area plans. The criteria to be used when evaluating area plans will 
assure that the plan includes, as a minimum, the technical information 
included in Sec.  1940.959 of this subpart. The criteria will be in 
sufficient detail for the panel to determine

[[Page 106]]

that the plan is technically and economically adequate, feasible, and 
likely to succeed in meeting the stated goals of the plan. The panel 
will give weight to area-wide or regional plans and comments submitted 
by intergovernmental development councils or similar organizations made 
up of local elected officials charged with the responsibility for rural 
area or regional development. A copy of the policy and evaluating 
criteria will be provided to Rural Development.
    (ii) Applications. The panel will annually review the policy and 
criteria used by the panel to evaluate and rank preapplications/
applications in accordance with this subpart. The panel will assure that 
the policy and criteria are consistent with current rural development 
needs, and that the public has an opportunity to provide input during 
the development of the initial policy and criteria. The Governor will 
provide a copy of the initial policy and criteria established by the 
panel when submitting evidence of eligibility in accordance with Sec.  
1940.954 of this subpart. Annually, thereafter, and not later than 
September 1 of each FY, the State coordinator will send the Under 
Secretary evidence that the panel has reviewed the established policy 
and criteria. The State coordinator will also send the Under Secretary a 
copy of all revisions.
    (A) The policy and criteria used to rank applications for business 
related projects will include the following, which are not necessarily 
in rank order:
    (1) The extent to which a project stimulate rural development by 
creating new jobs of a permanent nature or retaining existing jobs by 
enabling new small businesses to be started, or existing businesses to 
be expanded by local or regional area residents who own and operate the 
businesses.
    (2) The extent to which a project will contribute to the enhancement 
and the diversification of the local or regional area economy.
    (3) The extent to which a project will generate or retain jobs for 
local or regional area residents.
    (4) The extent to which a project will be carried out by persons 
with sufficient management capabilities.
    (5) The extent to which a project is likely to become successful.
    (6) The extent to which a project will assist a local or regional 
area overcome severe economic distress.
    (7) The distribution of assistance to projects in as many areas as 
possible in the State with sensitivity to geographic distribution.
    (8) The technical aspects of the project.
    (9) The market potential and marketing arrangement for the projects.
    (10) The potential of such project to promote the growth of a rural 
community by improving the ability of the community to increase the 
number of persons residing in the community and by improving the quality 
of life for these persons.
    (B) The policy and criteria used to rank preapplications/
applications for infrastructure and all other community facility-type 
projects will include the following which are not necessarily in rank 
order:
    (1) The extent to which the project will have the potential to 
promote the growth of a rural community by improving the quality of life 
for local or regional residents.
    (2) The extent to which the project will affect the health and 
safety of local or regional area residents.
    (3) The extent to which the project will improve or enhance cultural 
activities, public service, education, or transportation.
    (4) The extent to which the project will affect business 
productivity and efficiency.
    (5) The extent to which the project will enhance commercial business 
activity.
    (6) The extent to which the project will address a severe loss or 
lack of water quality or quantity.
    (7) The extent to which the project will correct a waste collection 
or disposal problem.
    (8) The extent to which the project will bring a community into 
compliance with Federal or State water or waste water standards.
    (9) The extent to which the project will consolidate water and waste 
systems and utilize management efficiencies in the new system.

[[Page 107]]

    (2) Review and evaluate area plans. Each area plan submitted for a 
local or regional area will be reviewed and evaluated by the panel. 
After an area plan has been reviewed and evaluated in accordance with 
established policy and criteria:
    (i) The panel will accept any area plan that meets established 
criteria unless the plan is incompatible with any other area plan for 
that area that has been accepted by the panel; or
    (ii) The panel will return any area plan that is technically or 
economically inadequate, not feasible, is unlikely to be successful, or 
is not compatible with other panel-accepted area plans for that area. 
When an area plan is returned, the panel will include an explanation of 
the reasons for the return and suggest alternative proposals.
    (iii) The State coordinator will notify the State Director, in 
writing, of the panel's decision on each area plan reviewed.
    (3) Review and rank preapplications/applications. The panel will 
review, rank, and transmit a ranked list of preapplications/applications 
according to the schedule prepared in accordance with paragraph (a) of 
this section, and the following:
    (i) Review preapplications/applications. The panel will review each 
preapplication/application for assistance to determine if the project to 
be carried out is compatible with the area plan in which the project 
described in the preapplication/application is proposed, and either:
    (A) Accept any preapplication/application determined to be 
compatible with such area plan; or
    (B) Return to the State Director any preapplication/application 
determined not to be compatible with such area plan. The panel will 
notify the applicant when preapplication/applications are returned to 
the State Director.
    (ii) Rank preapplications/applications. The panel will rank only 
those preapplications/applications that have been accepted in accordance 
with paragraph (b)(3)(i)(A) of this section. The panel will consider the 
sources of assistance and related activities in the State identified by 
the designated agency. Applications will be ranked in accordance with 
the written policy and criteria established in accordance with paragraph 
(b)(1)(ii) of this section and the following:
    (A) Priority ranking for projects addressing health emergencies. In 
addition to the criteria established in paragraph (b)(1)(ii) of this 
section, preapplications/applications for projects designed to address a 
health emergency declared so by the appropriate Federal or State agency, 
will be given priority by the panel.
    (B) Priority based on need. If two or more preapplications/
applications ranked in accordance with this subpart are determined to 
have comparable strengths in their feasibility and potential for growth, 
the panel will give priority to the applications for projects with the 
greatest need.
    (C) If additional ranking criteria for use by a panel are required 
in any designated rural development program regulation, the panel will 
give consideration to the criteria when ranking preapplications/
applications submitted under that program.
    (iii) Transmit list of ranked preapplications/applications. After 
the preapplications/applications have been ranked, the panel will submit 
a list of all preapplications/applications received to the State 
coordinator. The list will clearly indicate each preapplication/
application accepted for funding and will list preapplications/
applications in the order established for funding according to priority 
ranking by the panel. The list will not include a preapplication/
application that is to be returned to the applicant in accordance with 
paragraph (b)(3)(i)(B) of this section. The State coordinator will send 
a copy of the list to the State Director for further processing of the 
preapplication/application in accordance with Sec.  1940.965 of this 
subpart. Once the panel has ranked and submitted the list to Rural 
Development and the State Director has selected a preapplication/
application for funding, the preapplication/application selected will 
not be replaced with a preapplication/application received at a later 
date that may have a higher ranking.
    (4) Public availability of list. If requested, the State coordinator 
will make the list of ranked

[[Page 108]]

preapplications/applications available to the public and will include a 
brief explanation and justification of why the project preapplications/
applications received their priority ranking.
    (c) Membership--(1) Voting members. The panel will be composed of 
not more than 16 voting members who are representatives of rural areas. 
The 16 voting members will include the following:
    (i) One of whom is the Governor of the State or the person 
designated by the Governor to serve on the panel, on behalf of the 
Governor, for that year;
    (ii) One of whom is the director of the State agency responsible for 
economic and community development or the person designated by the 
director to serve on the panel, on behalf of the director, for that 
year:
    (iii) One of whom is appointed by a statewide association of banking 
organizations;
    (iv) One of whom is appointed by a statewide association of 
investor-owned utilities;
    (v) One of whom is appointed by a statewide association of rural 
telephone cooperatives;
    (vi) One of whom is appointed by a statewide association of 
noncooperative telephone companies;
    (vii) One of whom is appointed by a statewide association of rural 
electric cooperatives;
    (viii) One of whom is appointed by a statewide association of health 
care organizations;
    (ix) One of whom is appointed by a statewide association of existing 
local government-based planning and development organizations;
    (x) One of whom is appointed by the Governor of the State from 
either a statewide rural development organization or a statewide 
association of publicly-owned electric utilities, neither of which is 
described in any of paragraphs (c)(1)(iii) through (ix);
    (xi) One of whom is appointed by a statewide association of 
counties;
    (xii) One of whom is appointed by a statewide association of towns 
and townships, or by a statewide association of municipal leagues, as 
determined by the Governor;
    (xiii) One of whom is appointed by a statewide association of rural 
water districts;
    (xiv) The State director of the Federal small business development 
center or, if there is no small business development center in place 
with respect to the State, the director of the State office of the Small 
Business Administration;
    (xv) The State representative of the Economic Development 
Administration of the Department of Commerce; and
    (xvi) One of whom is appointed by the State Director from among the 
officers and employees of Rural Development.
    (2) Nonvoting members. The panel will have not more than four 
nonvoting members who will serve in an advisory capacity and who are 
representatives of rural areas. The four nonvoting members will be 
appointed by the Governor and include:
    (i) One from names submitted by the dean or the equivalent official 
of each school or college of business, from colleges and universities in 
the State;
    (ii) One from names submitted by the dean or the equivalent official 
of each school or college of engineering, from colleges and universities 
in the State;
    (iii) One from names submitted by the dean or the equivalent 
official, of each school or college of agriculture, from colleges and 
universities in the State; and
    (iv) The director of the State agency responsible for extension 
services in the State.
    (3) Qualifications of panel members appointed by the Governor. Each 
individual appointed to the panel by the Governor will be specially 
qualified to serve on the panel by virtue of the individual's technical 
expertise in business and community development.
    (4) Notification of selection. Each statewide organization that 
selects an individual to represent the organization on the panel must 
notify the Governor of the selection.
    (5) Appointment of members representative of statewide organization 
in certain cases. (i) If there is no statewide association or 
organization of the entities described in paragraph (c)(1) of this 
section, the Governor of the State will appoint an individual to fill 
the position or positions, as the case may be, from among nominations 
submitted by local groups of such entities.

[[Page 109]]

    (ii) If a State has more than one of any of the statewide 
associations or organizations of the entities described in paragraph 
(c)(1) of this section, the Governor will select one of the like 
organizations to name a member to serve during no more than one 
established time period. Thereafter, the Governor will rotate selection 
from among the remaining like organizations to name a member.
    (d) Failure to appoint panel members. The failure of the Governor, a 
Federal agency, or an association or organization described in paragraph 
(c) of this section, to appoint a member to the panel as required under 
this subpart, shall not prevent a State from being determined an 
eligible State.
    (e) Panel vacancies. A vacancy on the panel will be filled in the 
manner in which the original appointment was made. Vacancies should be 
filled prior to the third panel meeting held after the vacany occurred. 
The State coordinator will notify the State Director, in writing, when 
the vacancy is filled or if the vacancy will not be filled.
    (f) Chairperson and vice chairperson. The panel will select two 
members of the panel who are not officers or employees of the United 
States to serve as the chairperson and vice chairperson of the panel. 
The term shall be for 1 year.
    (g) Compensation to panel members--(1) Federal members. Except as 
provided in Sec.  1940.960 of this subpart, each member of the panel who 
is an officer or employee of the Federal Government may not receive any 
compensation or benefits by reason of service on the panel, in addition 
to that which is received for performance of such officer or employee's 
regular employment.
    (2) NonFederal members. Each nonfederal member may be compensated by 
the State and/or from grant funds established in Sec.  1940.968 of this 
subpart.
    (h) Rules governing panel meetings--(1) Quorum. A majority of voting 
members of the panel will constitute a quorum for the purpose of 
conducting business of the panel.
    (2) Frequency of meetings. The panel will meet not less frequently 
than quarterly. Frequency of meetings should be often enough to assure 
that applications are reviewed and ranked for funding in a timely 
manner.
    (3) First meeting. The State coordinator will schedule the first 
panel meeting and will notify all panel members of the location, date, 
and time at least seven days prior to the meeting. Subsequent meetings 
will be scheduled by vote of the panel.
    (4) Records of meetings. The panel will keep records of the minutes 
of the meetings, deliberations, and evaluations of the panel in 
sufficient detail to enable the panel to provide interested agencies or 
persons the reasons for its actions.
    (i) Federal Advisory Committee Act. The Federal Advisory Committee 
Act shall not apply to any State rural economic development review 
panel.
    (j) Liability of members. The members of a State rural economic 
development review panel shall not be liable to any person with respect 
to any determination made by the panel.



Sec.  1940.957  State coordinator.

    The Governor will appoint an officer or employee of State government 
as State coordinator in order for a State to become and remain an 
eligible State under this subpart. The State coordinator will have the 
following duties and responsibilities:
    (a) Manage, operate, and carry out the instructions of the panel;
    (b) Serve as liaison between the panel and the Federal and State 
agencies involved in rural development;
    (c) Coordinate the efforts of interested rural residents with the 
panel and ensure that all rural residents in the State are informed 
about the manner in which assistance under designated rural development 
programs is provided to the State pursuant to this subpart, and if 
requested, provide information to State residents; and
    (d) Coordinate panel activities with Rural Development.



Sec.  1940.958  Designated agency.

    The Governor will appoint a State agency to provide the panel and 
the State coordinator with support for the daily operation of the panel. 
In addition to providing support, the designated agency is responsible 
for identifying:
    (a) Alternative sources of financial assistance for project 
preapplications/

[[Page 110]]

applications reviewed and ranked by the panel, and
    (b) Related activities within the State.



Sec.  1940.959  Area plan.

    Each area plan submitted to the panel for review in accordance with 
Sec.  1940.956 of this subpart shall identify the geographic boundaries 
of the area and shall include the following information:
    (a) An overall development plan for the area with goals, including 
business development and infrastructure development goals, and time 
lines based on a realistic assessment of the area, including, but not 
limited to, the following:
    (1) The number and types of businesses in the area that are growing 
or declining;
    (2) A list of the types of businesses that the area could 
potentially support;
    (3) The outstanding need for water and waste disposal and other 
public services or facilities in the area;
    (4) The realistic possibilities for industrial recruitment in the 
area;
    (5) The potential for development of tourism in the area;
    (6) The potential to generate employment in the area through 
creation of small businesses and the expansion of existing businesses; 
and
    (7) The potential to produce value-added agricultural products in 
the area.
    (b) An inventory and assessment of the human resources of the area, 
including, but not limited to, the following:
    (1) A current list of organizations in the area and their special 
interests;
    (2) The current level of participation of area residents in rural 
development activities and the level of participation required for 
successful implementation of the plan;
    (3) The availability of general and specialized job training in the 
area and the extent to which the training needs of the area are not 
being met;
    (4) A list of area residents with special skills which could be 
useful in developing and implementing the plan; and
    (5) An analysis of the human needs of the area, the resources in the 
area available to meet those needs, and the manner in which the plan, if 
implemented, would increase the resources available to meet those needs.
    (c) The current degree of intergovernmental cooperation in the area 
and the degree of such cooperation needed for the successful 
implementation of the plan.
    (d) The ability and willingness of governments and citizens in the 
area to become involved in developing and implementing the plan.
    (e) A description of how the governments in the area apply budget 
and fiscal control processes to the plan. This process is directed 
toward costs associated with carrying out the planned development. When 
plans are developed, the financial condition of all areas covered under 
the plan should be fully recognized and planned development should 
realistically reflect the area's immediate and long-range financial 
capabilities.
    (f) The extent to which public services and facilities need to be 
improved to achieve the economic development and quality of life goals 
of the plan. At a minimum, the following items will be considered:
    (1) Law enforcement;
    (2) Fire protection;
    (3) Water, sewer, and solid waste management;
    (4) Education;
    (5) Health care;
    (6) Transportation;
    (7) Housing;
    (8) Communications; and
    (9) The availability of and capability to generate electric power.
    (g) Existing area or regional plans are acceptable provided the plan 
includes statements that indicate the degree to which the plan has met 
or is meeting all the requirements in paragraphs (a) through (f) of this 
section.



Sec.  1940.960  Federal employee panel members.

    (a) The State Director will appoint one Rural Development employee 
to serve as a voting member of the panel established in Sec.  
1940.956(c)(1) of this subpart.

[[Page 111]]

    (b) The Administrator may appoint, temporarily and for specific 
purposes, personnel from any department or agency of the Federal 
Government as nonvoting panel members, with the consent of the head of 
such department or agency, to provide official information to the panel. 
The member(s) appointed shall have expertise to perform a duty described 
in Sec.  1940.956(b) of this subpart that is not available among panel 
members.
    (c) Federal panel members will be paid per diem or otherwise 
reimbursed by the Federal Government for expenses incurred each day the 
employee is engaged in the actual performance of a duty of the panel. 
Reimbursement will be in accordance with Federal travel regulations.



Sec.  1940.961  Allocation of appropriated funds.

    (a) Initial allocations. (1) Each FY, from sums appropriated for 
direct loans, loan guarantees, or grants for any designated rural 
development program, funds will be allocated to designated States in 
accordance with RD Instruction subpart L of part 1940, exhibit A, 
attachment 4, of this chapter (available in any RD State or District 
Office).
    (2) Each FY, and normally within 30 days after the date Rural 
Development receives an appropriation of designated rural development 
program funds, the Governor of each designated State will be notified of 
the amounts allocated to the State under each designated program for 
such FY. The Governor will also be notified of the total amounts 
appropriated for the FY for each designated rural development program.
    (3) The State Director will fund projects from a designated State's 
allocation of funds, according to appropriate program regulations giving 
great weight to the order in which the preapplications/applications for 
projects are ranked and listed by the panel in accordance with Sec.  
1940.956(b)(3) of this subpart.
    (b) Reserve. A percentage of the National Office reserve established 
in subpart L of part 1940 of this chapter will be used to establish a 
reserve for designated States that is separate and apart from that of 
nondesignated States. The percent reserved will be based upon the same 
criteria used in subpart L of part 1940 of this chapter to allocate 
program funds.
    (c) Pooling. (1) On July 15 of each FY, and from time to time 
thereafter during the FY, as determined appropriate, unobligated funds 
will be pooled from among the designated States. Pooled funds will be 
made a part of the reserve established for designated States and will 
revert to National Office control.
    (2) Funds pooled from designated States can be requested by 
designated States, pursuant to subsection (d) of this section. The 
designated States' pool; however, will not be available to nondesignated 
States until September 1 of each year.
    (d) Request for funds. (1) Designated States may request designated 
States' reserve funds, and funds for other designated rural development 
programs controlled by the National Office, as shown in RD Instruction 
subpart L of part 1940, exhibit A, attachment 4, of this chapter, in 
accordance with applicable program regulations.
    (2) Designated States may request funds from the nondesignated 
reserve account when:
    (i) All allocated and reserve funds to designated states have been 
used, or
    (ii) Sufficient funds do not remain in any designated State 
allocation and in the designated States' reserve account to fund a 
project.



Sec.  1940.962  Authority to transfer direct loan amounts.

    (a) Transfer of funds. If the amounts allocated to a designated 
State for direct Water and Waste Disposal or Community Facility loans 
for a FY are not sufficient to provide the full amount requested for a 
project in accordance with this subpart, the State Director may transfer 
part or all of the funds allocated to the State, from one program to 
another, subject to paragraphs (b) and (c) of this section.
    (b) Limitation on amounts transferred. (1) Amounts transferred 
within a designated State. The amount of direct loan funds transferred 
from a program under this section shall not exceed the

[[Page 112]]

amount left unobligated after obligating the full amount of assistance 
requested for each project that ranked higher in priority on the panel's 
list.
    (2) Amounts transferred on a National basis. The amount of direct 
loan funds transferred in a FY, among the designated States, from a 
program under this subpart (after accounting for any offsetting 
transfers into such program) shall not exceed $9 million, or an amount 
otherwise authorized by law.
    (c) National Office concurrence. The State Director may transfer 
direct loan funds authorized in this section, after requesting and 
receiving concurrence from the National Office. If permitted by law, the 
National Office will concur in requests on a first-come-first-served 
basis.



Sec.  1940.963  Authority to transfer guaranteed loan amounts.

    (a) Transfer of funds. If the amounts allocated to a designated 
State for guaranteed Water and Waste Disposal, Community Facility, or 
Business and Industry loans for a FY are not sufficient to provide the 
full amount requested for a project in accordance with this subpart, the 
State Director may transfer part or all of the funds allocated to the 
State, from one program to another, subject to paragraphs (b) and (c) of 
this section.
    (b) Limitation on amounts transferred. The amount of guaranteed loan 
funds transferred from a program under this section shall not exceed the 
amount left unobligated after obligating the full amount of assistance 
requested for each project that ranked higher in priority on the panel's 
list.
    (c) National Office concurrence. The State Director may transfer 
guaranteed loan funds authorized in this section, after requesting and 
receiving concurrence from the National Office. If permitted by law, the 
National Office will concur in requests on a first-come-first-served 
basis.



Sec.  1940.964  [Reserved]



Sec.  1940.965  Processing project preapplications/applications.

    Except for the project review and ranking process established in 
this subpart, all requests for funds from designated rural development 
programs will be processed, closed, and serviced according to applicable 
Rural Development regulations, available in any Rural Development 
office.
    (a) Preapplications/applications. All preapplications/applications 
on hand that have not been selected for further processing will be 
submitted initially to the panel for review and ranking. 
Preapplications/applications on hand that had been selected for further 
processing prior to the time a State was selected to participate in this 
program may be funded by Rural Development without review by the panel. 
Preapplications/applications selected for further processing by Rural 
Development will not exceed the State's previous year's funding level. 
The State Director will provide the State coordinator a list of 
preapplications/applications that are in process and will be considered 
for funding without review by the panel. This list will be provided at 
the same time preapplications/applications are initially submitted to 
the State coordinator in accordance with paragraph (d) of this section.
    (b) Rural Development review. Preapplications/applications will be 
reviewed in sufficient detail to determine eligibility and, if 
applicable, determine if the applicant is able to obtain credit from 
other sources at reasonable rates and terms. Normally, within 45 days 
after receiving a complete preapplication/application, Rural Development 
will notify the applicant of the eligibility determination. A copy of 
all notifications will be sent to the State coordinator.
    (c) Applicant notification. The notification to eligible applicants 
will contain the following statements:

    Your application has been submitted to the State coordinator for 
review and ranking by the State rural economic development review panel. 
If you have questions regarding this review process, you should contact 
the State coordinator. The address and telephone number are: (insert).
    You will be notified at a later date of the decision reached by the 
panel and whether or not you can proceed with the proposed project.
    You are advised against incurring obligations which cannot be 
fulfilled without Rural Development funds.


[[Page 113]]



These statements should be included in notifications to applicants with 
preapplications/applications on hand that had not been selected for 
further processing prior to the time a State was selected to participate 
in this program.
    (d) Information to State coordinator. Rural Development will forward 
a copy of the preapplication/application and other information received 
from the applicant to the State coordinator according to a schedule 
prepared in accordance with Sec.  1940.956(a) of this subpart. The State 
coordinator will be advised that no further action will be taken on 
preapplications/applications until they have been received and ranked by 
the panel, and a priority funding list has been received from the State. 
Applications forwarded to the State coordinator will be reviewed and 
ranked for funding in accordance with Sec.  1940.956 of this subpart.
    (e) The Rural Development review of priority funding list. Rural 
Developmentwill review the list of ranked applications received from the 
State coordinator and determine if projects meet the requirements of the 
designated rural development program under which the applicant seeks 
assistance. Any project that does not meet program regulations will be 
removed from the list. Applicants will be notified of the decision 
reached by the panel and whether or not the applicant should proceed 
with the project. Rural Development will provide a copy of all 
notifications to the State coordinator. The decisions of the panel are 
not appealable.
    (f) Obligation of funds. Rural Development will provide funds for 
projects whose application remains on the list, subject to available 
funds. Consideration will be given to the order in which the 
applications were ranked and prioritized by the panel. If Rural 
Development proposes to provide assistance to any project without 
providing assistance to all projects ranked higher in priority by the 
panel than the project to be funded, 10 days prior to requesting an 
obligation of funds, the State Director will submit a report stating 
reasons for funding such lower ranked project to the following:
    (1) Panel.
    (2) National Office. The National Office will submit a copy of the 
notification to:
    (i) Committee on Agriculture of the House of Representatives, 
Washington, DC.
    (ii) Committee on Agriculture, Nutrition, and Forestry of the 
Senate, Washington, DC.



Sec. Sec.  1940.966-1940.967  [Reserved]



Sec.  1940.968  Rural Economic Development Review Panel Grant (Panel Grant).

    (a) General. Panel Grants awarded will be made from amounts 
appropriated for grants under any provision of section 306(a) of the 
CONACT (7 U.S.C 1926(a)), not to exceed $100,000 annually to each 
eligible State. This section outlines Rural Development's policies and 
authorizations and sets forth procedures for making grants to designated 
States for administrative costs associated with a State rural economic 
development review panel.
    (b) Objective. The objective of the Panel Grant program is to make 
grant funds available annually to each designated State to use for 
administrative costs associated with the State rural economic 
development review panels meeting requirements of Sec.  1940.956 of this 
subpart.
    (c) Authorities, delegations, and redelegations. The State Director 
is responsible for implementing the authorities in this section and to 
issue State supplements redelegating these authorities to appropriate 
Rural Development employees. Grant approval authorities are contained in 
subpart A of part 1901 of this chapter.
    (d) Joint funds. Rural Development grant funds may be used jointly 
with funds furnished by the grantee or grants from other sources.
    (e) Eligibility. A State designated by the Under Secretary to 
participate in this program is eligible to receive not more than 
$100,000 annually under this section. A State must become and remain an 
eligible State in order to receive funds under this section.
    (f) Purpose. Panel Grant funds may be used to pay for reasonable 
administrative costs associated with the panel, including, but not 
limited to, the following:

[[Page 114]]

    (1) Travel and lodging expenses;
    (2) Salaries for State coordinator and support staff;
    (3) Reasonable fees and charges for professional services necessary 
for establishing or organizing the panel. Services must be provided by 
individuals licensed in accordance with appropriate State accreditation 
associations;
    (4) Office supplies, and
    (5) Other costs that may be necessary for panel operations.
    (g) Limitations. Grant funds will not be used to:
    (1) Pay costs incurred prior to the effective date of the grant 
authorized under this subpart;
    (2) Recruit preapplications/applications for any designated rural 
development loan or grant program or any loan or grant program;
    (3) Duplicate activities associated with normal execution of any 
panel member's occupation;
    (4) Fund political activities;
    (5) Pay costs associated with preparing area development plans;
    (6) Pay for capital assets; purchase real estate, equipment or 
vehicles; rent, improve, or renovate office space; or repair and 
maintain State or privately owned property;
    (7) Pay salaries to panel members; or
    (8) Pay per diem or otherwise reimburse panel members unless 
distance traveled exceed 50 miles.
    (h) Other considerations--(1) Equal opportunity requirements. Grants 
made under this subpart are subject to title VI of the Civil Rights Act 
of 1964 as outlined in subpart E of part 1901 of this chapter.
    (2) Environmental requirements. The policies and regulations 
contained in subpart G of part 1940 of this chapter apply to grants made 
under this subpart.
    (3) Management assistance. Grantees will be provided management 
assistance as necessary to assure that grant funds are used for eligible 
purposes for the successful operation of the panel. Grants made under 
this subpart will be administered under and are subject to the U.S. 
Department of Agriculture regulations, 7 CFR, parts 3016 and 3017, as 
appropriate.
    (4) Drug-free work place. The State must provide for a drug-free 
workplace in accordance with the requirements of RD Instruction 1940-M 
(available in any Rural Development office). Just prior to grant 
approval, the State must prepare and sign Form AD-1049, ``Certification 
Regarding Drug-Free Workplace Requirements (Grants) Alternative I--For 
Grantees Other Than Individuals.''
    (i) Application processing. (1) The State Director shall assist the 
State in application assembly and processing. Processing requirements 
should be discussed during an application conference.
    (2) After the Governor has been notified that the State has been 
designated to participate in this program and the State has met all 
eligibility requirements of this subpart, the State may file an original 
and one copy of SF 424.1 with the State Director. The following 
information will be included with the application:
    (i) State's financial or in-kind resources, if applicable, that will 
maximize the use of Panel Grant funds;
    (ii) Proposed budget. The financial budget that is part of SF 424.1 
may be used, if sufficient, for all panel income and expense categories;
    (iii) Estimated breakdown of costs, including costs to be funded by 
the grantee or from other sources;
    (iv) Financial management system in place or proposed. The system 
will account for grant funds in accordance with State laws and 
procedures for expending and accounting for its own funds. Fiscal 
control and accounting procedures of the State must be sufficient to 
permit preparation of reports required by Federal regulations and permit 
the tracing of funds to a level of expenditures adequate to establish 
that grant funds are used solely for authorized purposes;
    (v) Method to evaluate panel activities and determine if objectives 
are met;
    (vi) Proposed Scope-of-Work detailing activities associated with the 
panel and time frames for completion of each task, and
    (vii) Other information that may be needed by Rural Development to 
make a grant award determination.

[[Page 115]]

    (3) The applicable provisions of Sec.  1942.5 of subpart A of part 
1942 of this chapter relating to preparation of loan dockets will be 
followed in preparing grant dockets. The docket will include at least 
the following:
    (i) Form RD 400-4, ``Assurance Agreement;''
    (ii) Scope-of-work prepared by the applicant and approved by Rural 
Development;
    (iii) Form RD 1940-1, ``Request for Obligation of Funds,'' with 
exhibit A, and
    (iv) Certification regarding a drug-free workplace in accordance 
with RD Instruction 1940-M (available in any Rural Development office).
    (j) Grant approval, obligation of funds, and grant closing. (1) The 
State Director will review the application and other documents to 
determine whether the proposal complies with this subpart.
    (2) Exhibit A of this subpart (available from any Rural Development 
State Office) shall be attached to and become a permanent part of Form 
RD 1940-1 and the following paragraphs will appear in the comment 
section of that form:

    The Grantee understands the requirements for receipt of funds under 
the Panel Grant program. The Grantee assures and certifies that it is in 
compliance with all applicable laws, regulations, Executive Orders, and 
other generally applicable requirements, including those set out in 7 
CFR, part 1940, subpart T, and 7 CFR, parts 3016 and 3017, including 
revisions through ___ (date of grant approval). The Grantee further 
agrees to use grant funds for the purposes outlined in the Scope-of-Work 
approved by Rural Development. Exhibit A is incorporated as a part 
hereof.

    (3) Grants will be approved and obligated in accordance with the 
applicable parts of Sec.  1942.5(d) of subpart A of part 1942 of this 
chapter.
    (4) An executed copy of the Scope-of-Work will be sent to the State 
coordinator on the obligation date, along with a copy of Form RD 1940-1 
and the required exhibit. Rural Development will retain the original of 
Form RD 1940-1 and the exhibit.
    (5) Grants will be closed in accordance with the applicable parts of 
subpart A of part 1942 of this chapter, including Sec.  1942.7. The 
grant is considered closed on the obligation date.
    (6) A copy of Form RD 1940-1, with the required exhibit, and the 
Scope-of-Work will be submitted to the National Office when funds are 
obligated.
    (7) If the grant is not approved, the State coordinator will be 
notified in writing of the reason(s) for rejection. The notification 
will state that a review of the decision by Rural Development may be 
requested by the State under subpart B of part 1900 of this chapter.
    (k) Fund disbursement. Grant funds will be disbursed on a 
reimbursement basis. Requests for funds should not exceed one advance 
every 30 days. The financial management system of the State shall 
provide for effective control and accountability of all funds, property, 
and assets.
    (1) SF 270, ``Request for Advance or Reimbursement,'' will be 
completed by the State coordinator and submitted to the State Director 
not more frequently than monthly.
    (2) Upon receipt of a properly completed SF 270, the State Director 
will request funds through the Automated Discrepancy Processing System. 
Ordinarily, payment will be made within 30 days after receipt of a 
properly prepared request for reimbursement.
    (3) States are encouraged to use minority banks (a bank which is 
owned by at least 50 percent minority group members) for the deposit and 
disbursement of funds. A list of minority owned banks can be obtained 
from the Office of Minority Business Enterprises, Department of 
Commerce, Washington, DC 20230.
    (l) Title. Title to supplies acquired under this grant will vest, 
upon acquisition, in the State. If there is a residual inventory of 
unused supplies exceeding $5,000 in total aggregate fair market value 
upon termination or completion of the grant awarded, and if the supplies 
are not needed for any other federally sponsored programs, the State 
shall compensate Rural Development for its share.
    (m) Costs. Costs incurred under this grant program are subject to 
cost principles established in Office of Management and Budget Circular 
A-87.

[[Page 116]]

    (n) Budget changes. Rebudgeting within the approval direct cost 
categories to meet unanticipated requirements which do not exceed 10 
percent of the current total approved budget shall be permitted. The 
State shall obtain prior approval from the State Director for any 
revisions which result in the need for additional funding.
    (o) Programmatic changes. The State shall obtain prior written 
approval from the State Director for any change to the scope or 
objectives for which the grant was approved or for contracting out or 
otherwise obtaining services of a third party to perform activities 
which are central to the purposes of the grant. Failure to obtain prior 
approval of changes to the scope can result in suspension or termination 
of grant funds.
    (p) Financial reporting. SF 269, ``Financial Status Report,'' and a 
Project Performance Report are required on a quarterly basis. The 
reports will be submitted to the State Director not later than 30 days 
after the end of each quarter. A final SF 269 and Project Performance 
Report shall be due 90 days after the expiration or termination of grant 
support. The final report may serve as the last quarterly report. The 
State coordinator will constantly monitor performance to ensure that 
time schedules are met, projected work by time periods is accomplished, 
and other performance objectives are achieved. Program outlays and 
income will be reported on an accrual basis. Project Performance Reports 
shall include, but not be limited to, the following:
    (1) A comparison of actual accomplishments to the objectives 
established for that period;
    (2) Reasons why established objectives were not met;
    (3) Problems, delays, or adverse conditions which will affect the 
ability to meet the objectives of the grant during established time 
periods. This disclosure must include a statement of the action taken or 
planned to resolve the situation; and
    (4) Objectives and timetable established for the next reporting 
period.
    (q) Audit requirements. Audit reports will be prepared and submitted 
in accordance with Sec.  1942.17(q)(4) of subpart A of part 1942 of this 
chapter. The audit requirements only apply to the year(s) in which grant 
funds are received. Audits must be prepared in accordance with generally 
accepted government auditing standards using publication, ``Standards 
for Audits of Governmental Organizations, Programs, Activities and 
Functions.''
    (r) Grant cancellation. Grants which have been approved and funds 
obligated may be cancelled by the grant approval official in accordance 
with Sec.  1942.12 of subpart A of part 1942 of this chapter. The State 
Director will notify the State coordinator that the grant has been 
cancelled.
    (s) Grant servicing. Grants will be serviced in accordance with 
subparts E and O of part 1951 of this chapter.
    (t) Subsequent grants. Subsequent grants will be processed in 
accordance with the requirements of this subpart for each additional 
time period a State is designated to participate in this program.



Sec.  1940.969  Forms, exhibits, and subparts.

    Forms, exhibits, and subparts of this chapter (all available in any 
Rural Development office) referenced in this subpart, are for use in 
establishing a State economic development review panel and for 
administering the Panel Grant program associated with the panel.



Sec.  1940.970  [Reserved]



Sec.  1940.971  Delegation of authority.

    The authority authorized to the State Director in this subpart may 
be redelegated.



Sec. Sec.  1940.972-1940.999  [Reserved]



Sec.  1940.1000  OMB control number.

    The collection of information requirements contained in this 
regulation has been approved by the Office of Management and Budget and 
assigned OMB control number 0575-0145. Public reporting burden for this 
collection of information is estimated to vary from 30 minutes to 48 
hours per response with an average of 4 hours per response, including 
the time for reviewing instructions, searching existing

[[Page 117]]

data sources, gathering and maintaining the data needed, and completing 
and reviewing the collection of information. Send comments regarding 
this burden estimate or any other aspect of this collection of 
information, including suggestions for reducing this burden, to 
Department of Agriculture, Clearance Officer, OIRM, Room 404-W, 
Washington, DC 20250; and to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Washington, DC 20503.

                          PART 1941 [RESERVED]



PART 1942_ASSOCIATIONS--Table of Contents



                   Subpart A_Community Facility Loans

Sec.
1942.1 General.
1942.2 Processing applications.
1942.3 Preparation of appraisal reports.
1942.4 Borrower contracts.
1942.5 Application review and approval.
1942.6 Preparation for loan closing.
1942.7 Loan closing.
1942.8 Actions subsequent to loan closing.
1942.9 Planning, bidding, contracting, and constructing.
1942.10-1942.11 [Reserved]
1942.12 Loan cancellation.
1942.13 Loan servicing.
1942.14 Subsequent loans.
1942.15 Delegation and redelegation of authority.
1942.16 State supplements and guides.
1942.17 Community facilities.
1942.18 Community facilities--Planning, bidding, contracting, 
          constructing.
1942.19 Information pertaining to preparation of notes or bonds and bond 
          transcript documents for public body applicants.
1942.20 Community Facility Guides.
1942.21 Statewide nonmetropolitan median household income.
1942.22-1942.49 [Reserved]
1942.50 OMB control number.

Subpart B [Reserved]

 Subpart C_Fire and Rescue and Other Small Community Facilities Projects

1942.101 General.
1942.102 Nondiscrimination.
1942.103 Definitions.
1942.104 Application processing.
1942.105 Environmental review.
1942.106 Intergovernmental review.
1942.107 Priorities.
1942.108 Application docket preparation and review.
1942.109-1942.110 [Reserved]
1942.111 Applicant eligibility.
1942.112 Eligible loan purposes.
1942.113 Rates and terms.
1942.114 Security.
1942.115 Reasonable project costs.
1942.116 Economic feasibility requirements.
1942.117 General requirements.
1942.118 Other Federal, State, and local requirements.
1942.119 Professional services and borrower contracts.
1942.120-1942.121 [Reserved]
1942.122 Actions prior to loan closing and start of construction.
1942.123 Loan closing.
1942.124-1942.125 [Reserved]
1942.126 Planning, bidding, contracting, constructing, procuring.
1942.127 Project monitoring and fund delivery.
1942.128 Borrower accounting methods, management reports and audits.
1942.129 Borrower supervision and servicing.
1942.130-1942.131 [Reserved]
1942.132 Subsequent loans.
1942.133 Delegation and redelegation of authority.
1942.134 State supplements and guides.
1942.135-1942.149 [Reserved]
1942.150 OMB control number.

Subparts D-H [Reserved]

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989.

    Editorial Notes: 1. Nomenclature changes to part 1942 appear at 80 
FR 9878, Feb. 24, 2015.

    2. At 80 FR 9884, Feb. 24, 2015, sections in subpart G (Sec. Sec.  
1942.301-1942.350) were affected by amendatory instructions 180-189; 
however, the amendments could not be incorporated because the subpart 
was removed and reserved at 80 FR 15667, Mar. 25, 2015.



                   Subpart A_Community Facility Loans

    Source: 50 FR 7296, Feb. 22, 1985, unless otherwise noted.



Sec.  1942.1  General.

    (a) This subpart outlines the policies and procedures for making and 
processing insured loans for Community Facilities except fire and rescue 
and other small essential community facility loans and water and waste 
disposal facilities. This subpart applies to Community Facilities loans 
for fire and rescue and other small essential community facility loans 
only as specifically provided for in subpart C of this part.

[[Page 118]]

Water and waste loans are provided for in part 1780 of this title. The 
Agency shall cooperate fully with State and local agencies in making 
loans to assure maximum support to the State strategy for rural 
development. State Directors and their staffs shall maintain 
coordination and liaison with State agency and substate planning 
districts. Funds allocated for use under this subpart are also for the 
use of Indian tribes within the State, regardless of whether State 
development strategies include Indian reservations within the State's 
boundaries. Indians residing on such reservations must have equal 
opportunity to participate in the benefits of these programs as compared 
with other residents of the State. Federal statutes provide for 
extending Agency financial programs without regard to race, color, 
religion, sex, national origin, marital status, age, or physical/mental 
handicap. The participants must possess the capacity to enter into legal 
contracts under State and local statutes. Any processing or servicing 
activity conducted pursuant to this subpart involving authorized 
assistance to Agency employees, members of their families, known close 
relatives, or business or close personal associates, is subject to the 
provisions of subpart D of part 1900 of this chapter. Applicants for 
this assistance are required to identify any known relationship or 
association with an Agency employee.
    (b) Indian tribes on Federal and State reservations and other 
Federally recognized Indian tribes are eligible to apply for and are 
encouraged to participate in this program. Such tribes might not be 
subject to State and local laws or jurisdiction. However, any 
requirements of this subpart that affect applicant eligibility, the 
adequacy of Agency's security or the adequacy of service to users of the 
facility and all other requirements of this subpart must be met.
    (c) Loans sold without insurance by RD to the private sector will be 
serviced in the private sector and will not be serviced under this 
subpart. The provisions of this subpart are not applicable to such 
loans. Future changes to this subpart will not be made applicable to 
such loans.
    (d) The District Office will normally be the entry point for 
preapplications and serve as a local point. Applications will be filed 
with the District Office and loans will be processed to the maxium 
extent possible by the District Office staff. The applicant's governing 
body should designate one person to coordinate the activities of its 
engineer, architect, attorney, and any other professional employees and 
to act as contact person during loan processing. Agency personnel should 
make every effort to involve the applicant's contact person when meeting 
with the applicant's professional consultants and/or agents. The State 
Office staff will monitor community programs loanmaking and servicing, 
and will provide assistance to District Office personnel to the extent 
necessary to assure that the activities are being accomplished in an 
orderly manner consistent with Agency regulations.
    (e) The Office of Management and Budget (OMB) issued guidance on 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards at 2 CFR part 200 on December 26, 2013. 
In 2 CFR 400.1, the Department adopted OMB's guidance in subparts A 
through F of 2 CFR part 200 as the Department's policies and procedures 
for uniform administrative requirements, cost principles, and audit 
requirements for federal awards. As a result, this regulation contains 
references to 2 CFR part 200 as it has regulatory effect for the 
Department's programs and activities.

[50 FR 7296, Feb. 22, 1985, as amended at 52 FR 38908, Oct. 20, 1987; 52 
FR 43725, Nov. 16, 1987; 52 FR 47097, Dec. 11, 1987; 57 FR 21193, May 
19, 1992; 58 FR 226, Jan. 5, 1993; 62 FR 33510, June 19, 1997; 68 FR 
65830, Nov. 24, 2003; 79 FR 76007, Dec. 19, 2014]



Sec.  1942.2  Processing applications.

    (a) Preapplications. (1) The District Office may handle initial 
inquiries and provide basic information about the program. They are to 
provide the preappllcation, SF 424.2, ``Application for Federal 
Assistance (For Construction).'' The District Director will assist 
applicants as needed in completing SF 424.2, and in filing written 
notice of intent and priority recommendation with

[[Page 119]]

the appropriate clearinghouse. The District Director will inform the 
applicant that it may be necessary to apply for credit from commercial 
sources. It will be explained that if credit for the project is 
available from commercial sources at reasonable rates and terms the 
applicant is not eligible for RD financing. The District Director will 
meet with the applicant, whenever appropriate to discuss RD 
preapplication processing. Guidance and assistance will be provided by 
the State Director, as needed, for orderly application processing. The 
District Director will determine that the preapplication is property 
completed and fully reviewed. The District Director will then forward to 
the State Director:
    (i) Eligibility determination and recommendations.
    (ii) One copy of SF 424.2.
    (iii) State intergovernmental review comments and recommendations 
(clearinghouse comments), as outlined in 2 CFR part 400, if applicable.
    (iv) Priority recommendations.
    (v) Supporting documentation necessary to make an eligibility 
determination such as financial statements, audits, or copies of 
organizational documents or existing debt instruments. The District 
Director will advise applicants on what documents are necessary. 
Applicants should not be required to expend significant amounts of money 
or time developing supporting documentation at the preapplication stage.
    (2) The State Director will review each SF 424.2 along with other 
information that is deemed necessary to determine whether financing from 
commercial sources at reasonable rates and terms is available. If credit 
elsewhere is indicated, the State Director will instruct the District 
Director to so inform the applicant and recommend the applicant apply to 
commercial sources for financing. Projects may be funded jointly with 
other lenders provided the requirements of Sec.  1942.17 (g) of this 
subpart are met. Joint financing occurs when two or more lenders make 
separate loans to supply the funds required by one applicant for a 
project.
    (i) In order to provide a basis for referral of preapplications of 
only those applicants who may be able to finance projects through 
commercial sources, State Directors should maintain liaison with 
representatives of banks, investment bankers, financial advisors, and 
other lender representatives in the State. State Directors with their 
assistance, should maintain criteria for determining preapplications 
which should be referred to commercial lenders. A list of lender 
representatives interested in receiving such referrals should be 
maintained.
    (ii) The State Director shall maintain a working relationship with 
the State Office or official that has been designated as the single 
point of contact for the intergovernmental review process and give full 
consideration to their comments when selecting preapplications to be 
processed.
    (iii) The State Director will review the District Director's 
eligibility determination and recommendations in sufficient time for the 
District Director's use in preparing and issuing Form AD-622.
    (iv) Form AD-622 will be prepared by the District Director within 
forty-five (45) calendar days from receipt of the preapplication by RD, 
stating the results of the review action. The original will be signed 
and delivered to the applicant with a copy to the State Director.
    (3) For preapplications eligible for Agency funding which have the 
necessary priority to compete with similar preapplications, the Agency 
will issue Form AD-622 inviting an application containing the following 
statement:

    You are advised against taking any actions or incurring any 
obligations which would either limit the range of alternatives to be 
considered, or which would have an adverse effect on the environment. 
Satisfactory completion of the environmental review process must occur 
prior to the issuance of the letter of conditions.

    (4) The following statement must be added to Form AD-622 when 
notifying preapplicants who are eligible, but do not have the priority 
necessary for further consideration at this time:

    You are advised against incurring obligations which would limit the 
range of alternatives to be considered, or which cannot be fulfilled 
without Rural Development funds until the funds are actually made 
available.

[[Page 120]]

Therefore, you should refrain from such actions as initiating 
engineering and legal work, taking actions which would have an adverse 
effect on the environment, taking options on land rights, developing 
detailed plans and specifications, or inviting construction bids until 
notified by Rural Development to proceed.

    (b) Environmental review. Environmental requirements will be 
documented in accordance with subpart G of part 1940 of this chapter and 
submitted to the State Director. Starting with the earliest discussions 
with prospective applicants or review of preapplications and continuing 
throughout application processing, environmental issues must be 
considered. This should provide flexibility to consider alternatives to 
the project and develop methods to mitigate identified adverse 
environmental impacts. Documentation of the appropriate environmental 
review should be completed as soon as possible; however, the State 
Director will ensure that the appropriate environmental review is 
completed prior to issuing the letter of conditions.
    (c) Applications. The District Director should assist the applicant 
in application assembly and processing.
    (1) State Directors should have applications in process representing 
approximately 150 percent of the current State allocation.
    (2) The application docket will include SF 424.2, and related forms, 
materials, and information. The application will be assembled in 
accordance with guide 15 of this subpart or State guides developed under 
Sec.  1942.16 of this subpart.
    (3) When an applicant is notified to proceed with an application, 
the District Director should arrange for a conference with the applicant 
to provide copies of appropriate appendices and forms; furnish guidance 
necessary for orderly application processing; and to initiate a 
processing checklist for establishing a time schedule for completing 
items using Form RD 1942-39, ``Processing Check List (Other Than Public 
Bodies),'' or Form RD 1942-40, ``Processing Check List (Public 
Bodies),'' or other checklist adopted for use in the State. The District 
Director will confirm decisions made at this conference by letter to the 
applicant and by a copy of the processing checklist. The original and a 
copy of the processing checklist will be retained in the District Office 
and a copy will be forwarded to the State Office. The original and copy 
of the checklist retained in the District Office will be kept current as 
application processing actions are taken. The copy will be sent to the 
State Office to use in updating its copy of this form. The State Office 
will then return the District Office's copy. As the application is being 
processed, and the need develops for additional conferences, the 
District Director will arrange with the applicant for such conference to 
extend and update the processing checklist.
    (d) Review of decision. If at any time prior to loan approval it is 
decided that favorable action will not be taken on a preapplication or 
application, the District Director will notify the applicant in writing 
of the reasons why the request was not favorably considered. The 
notification to the applicant will state that a review of this decision 
by Rural Development may be requested by the applicant under subpart B 
of part 1900 of this chapter. The following statement will also be made 
on all notifications of adverse action.

    The Federal Equal Credit Opportunity Act prohibits creditors from 
discriminating against credit applicants on the basis of race, color, 
religion, national origin, sex, marital status, age (provided that the 
applicant has the capacity to enter into a binding contract); because 
all or part of the applicant's income is derived from any public 
assistance program; or because the applicant has in good faith exercised 
any right under the Consumer Credit Protection Act. The Federal agency 
that administers compliance with this law is the Federal Trade 
Commission, Equal Credit Opportunity, Washington, DC 20580.

    (e) Joint funding. Rural Development may finance projects jointly 
with funds from other sources, such as, commercial/private lenders, 
Federal agencies, State and local Governments, etc. Other departments, 
agencies, and executive establishments of the Federal Government may 
participate and provide financial and technical assistance jointly with 
Rural Development to any applicant to whom Rural Development is 
providing assistance. The amount of participation by the other 
department,

[[Page 121]]

agency, or executive establishment shall only be limited by its 
authorities except that any limitation on joint participation itself is 
superseded by section 125 of Pub. L. 95-334 (Section 347, Consolidated 
Farm and Rural Development Act, as amended).

[50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6786, Mar. 3, 1988; 54 
FR 47197, Nov. 13, 1989; 55 FR 13503, 15304, Apr. 11, 1990; 57 FR 21194, 
May 19, 1992; 61 FR 6309, Feb. 20, 1996; 79 FR 76007, Dec. 19, 2014]



Sec.  1942.3  Preparation of appraisal reports.

    When the loan approval official requires an appraisal, Form RD 442-
10, ``Appraisal Report--Water and Waste Disposal Systems,'' may be used 
with appropriate supplements. Form RD 442-10 may be modified as 
appropriate or other appropriate format may be used for facilities other 
than water and waste disposal. Appraisal reports prepared for use in 
connection with the purchase of existing essential community facilities 
or when required by Sec.  1942.17 (g)(2)(iii)(B)(2), (g)(3)(iii)(B)(2), 
and (j)(4) of this subpart, may be prepared by the RD engineer/architect 
or, if desired by the State Director, some other qualified appraiser. 
The loan approval official may require an applicant to provide an 
appraisal prepared by an independent qualified appraiser; however, the 
loan approval official must determine that the appraised value shown in 
such reports reflects the present market value.

[50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6786, Mar. 3, 1988]



Sec.  1942.4  Borrower contracts.

    The State Director will, with assistance as necessary by the Office 
of the General Counsel (OGC), concur in agreements between borrowers and 
third parties such as contracts for professional and technical services 
and contracts for the purchase of water or treatment of waste. State 
Directors are expected to work closely with representatives of 
engineering and architectural societies, bar associations, commercial 
lenders, accountant associations, and others in developing standard 
forms of agreements, where needed, and other such matters in order to 
expedite application processing, minimize referrals to OGC, and resolve 
problems which may arise.



Sec.  1942.5  Application review and approval.

    (a) Procedures for review. The Rural Development staff review will 
proceed as applications are being developed. An overall review of the 
applicant's financial status, including a review of all assets and 
liabilities, will be a part of the docket review process by the staff 
and approval officials. The engineering/architect reports and associated 
data are to be reviewed by the Rural Development staff engineer or 
architect, as appropriate, as soon as available but prior to the 
District Director's completion of the project summary. During the review 
the District Director in all cases will make certain that no low income 
or minority community within the service area has been omitted or 
discouraged from participating in the proposed project. The District 
Director will also determine how the service area was defined to assure 
that gerrymandering of specific communities or areas has not occurred. 
The findings should be documented in the running record. Prior to 
presenting the assembled application to the approval official, the 
assembled application ordinarily will be processed in the following 
sequence:
    (1) The Rural Development manager will complete the project summary, 
including written analysis and recommendations, and will prepare a draft 
letter of conditions listing all the requirements that the applicant 
must agree to meet within a specific time.
    (i) Requirements listed in letters of conditions will include the 
following unless inappropriate due to the particular type of funding or 
entity involved: Maximum amount of loan and/or grant which may be 
considered, scheduling of payments, term of loan and any deferment of 
principal which may be allowed, reserve requirements, compliance with 
section 504 of the Rehabilitation Act of 1973, number of users (members) 
and verification required, contributions rates and charges, interim 
financing, disbursement of funds, security requirements, graduation 
requirements, debt collection policies execution of Form RD

[[Page 122]]

1910-11, ``Application Certification, Federal Collection Policies for 
Consumer or Commercial Debts,'' organization, business operations, 
insurance and bonding (including applicant/borrower and contractor), 
construction contract documents and bidding, accounts, records, and 
audit reports required (including requirements of OMB Circulars A-128 
and A-110), adoption of Form RD 1942-47, ``Loan Resolution (Public 
Bodies),'' for public bodies or Form RD 1942-9, ``Loan Resolution 
(Security Agreement),'' for other than public bodies, closing 
instructions, and other requirements.
    (ii) Each letter of conditions will contain the following 
paragraphs:

    This letter establishes conditions which must be understood and 
agreed to by you before further consideration may be given to the 
application. Any changes in the project cost, source of funds, scope of 
services, or any other significant changes in the project or applicant 
must be reported to and approved by RDwritten amendment to this letter. 
Any changes not approved by RD shall be cause for discontinuing 
processing of the application.
    This letter is not to be considered as loan approval or as 
representation to the availability of funds. The docket may be completed 
on the basis of a loan not to exceed $___.
    If (insert agency name) makes the loan, you may make a written 
request that the interest rate be the lower of the rate in effect at the 
time of loan approval or the time of loan closing. If you do not request 
the lower of the two interest rates, the interest rate charged will be 
the rate in effect at the time of loan approval. The loan will be 
considered approved on the date a signed copy of Form RD 1940-1, 
``Request for Obligation of Funds,'' is mailed to you. If you want the 
lower of the two rates, your written request should be submitted to RD 
as soon as practical. In order to avoid possible delays in loan closing 
such a request should ordinarily be submitted at least 30 calendar days 
before loan closing.
    Please complete and return the attached Form RD 1942-46, ``Letter of 
Intent to Meet Conditions,'' if you desire that further consideration be 
given your application.

    (iii) Rural Development Managers may add the following:

    If the conditions set forth in this letter are not met within ___ 
days from the date hereof, FmHA or its successor agency under Public Law 
103-354 reserves the right to discontinue the processing of the 
application.

    (2) The State staff engineer or architect, as appropriate, will 
include a written analysis and recommendations on the project summary.
    (3) The Chief, Community Programs or Community and Business 
Programs, will review the assembled application and include in the 
project summary a written analysis and recommendations, including the 
availability of other credit and other eligibility determinations. The 
draft letter of conditions will be reviewed and any necessary 
modifications made.
    (b) Project requiring National Office review. Prior National Office 
review is required for certain proposals (See subpart A of part 1901 of 
this chapter).
    (1) The Rural Development Manager should assemble applications for 
the National Office review in the following order from top to bottom and 
forward them to the State Director for review and recommedation prior to 
submission to the National Office:
    (i) Transmittal memorandum including:
    (A) Recommendation.
    (B) Date of expected obligation.
    (C) Any unusual circumstances.
    (ii) Copies of the following:
    (A) Proposed letter of conditions.
    (B) Applicable State Intergovernmental Review comments, if the 
program or activity has been selected under the State. RD Instruction 
1970-I, available in any Rural Development office.
    (C) Community Facilities Project Summary.
    (D) Preliminary architectural or engineering report.
    (E) Form RD 442-3, ``Balance Sheet,'' or a financial statement or 
audit that includes a balance sheet.
    (F) For other essential community facility loan applicants whose 
proposals do not meet the assured income or tax based security 
requirements of Sec.  1942.17 (g)(2)(iii) and (g)(3)(iii) of this 
subpart, financial information for the last five years of operation will 
be submitted if available. The type of financial information to be 
submitted should be determined based on what is available and the 
following order of preference:
    (1) Complete audits;

[[Page 123]]

    (2) Unaudited financial statements including balance sheets and 
statements of income and expenses;
    (3) Lists of income and expenses.
    (G) For other essential community facility loans secured under 
paragraph (b)(1)(ii)(F) of this section, submit a detailed explanation 
of the proposed security; evidence that the application cannot be 
processed and the loan secured under paragraph (b)(1)(ii)(F) of this 
section; evidence supporting the efforts by the applicant in persuading 
appropriate public bodies to provide the proposed facility and services 
and the results, and comments of the Regional Attorney concurring in the 
applicants' legal authority to give the proposed security.
    (H) Financial Feasibility Report when required by Sec.  1942.17 
(h)(1).
    (I) Proposed lease agreements, management agreements, or other 
agreements when facility management will be provided by other than the 
applicant.
    (J) Other forms and documents on which there are specific questions.
    (K) Environmental impact analysis and documentation.
    (2) For applications to be reviewed in the State or field, at least 
those items in paragraph (b)(1)(ii) of this section, should be 
available.
    (c) For all applications. All letters of conditions will be 
addressed to the applicant, signed by the Rural Development Manager or 
other Agency representative designated by the State Director, and 
delivered to the applicant. Upon signing the letter of conditions, the 
Rural Development Manager will send two copies of the letter of 
conditions and two copies of the project summary to the State Director. 
The State Director will immediately send one copy of the project summary 
and a copy of the letter of conditions to the National Office, 
Attention: Community Programs. The Rural Development Manager, with 
assistance as needed from the State Office, will discuss the 
requirements of the letter of conditions with the applicant's 
representatives and afford them an opportunity to execute Form RD 1942-
46.
    (1) The letter of conditions should not ordinarily be issued unless 
the State Director expects to have adequate funds in the State 
allocation to fund the project within the next 12 months based on 
historic allocations or other reliable projections.
    (2) If the applicant declines to execute Form RD 1942-46, the Rural 
Development Manager will immediately notify the State Director and 
provide complete information as to the reasons for such declination.
    (3) If the applicant accepts the letter of conditions, the Rural 
Development Manager will forward the executed Form RD 1942-46 and a 
signed and an unsigned copy of Form RD 1940-1 to the State Director.
    (d) Loan approval and obligating funds. Loans will be approved under 
this subpart and subpart A of part 1901 of this chapter (available in 
any Rural Development office). The loan will be considered approved on 
the date the signed copy of Form RD 1940-1 is mailed to the applicant. 
The State Director or designee may request an obligation of funds when 
available within their State allocation and according to the following:
    (1) Form RD 1940-1, authorizing funds to be reserved, may be 
executed by the loan approval official providing the applicant has the 
legal authority to contract for a loan and to enter into required 
agreements and has signed Form RD 1940-1.
    (2) If approval was concurred in by the National Office, a copy of 
the concurring memorandum will be attached to the original of Form RD 
1940-1.
    (3) The State Director or designee will request an obligation of 
loan and/or grant funds via the automated terminal system after signing 
Form RD 1940-1. The requesting official will furnish security 
identification as necessary. The requesting official will record the 
date, time of request, and their initials on the original Form RD 1940-
1.
    (4) The date the applicant is notified of loan and/or grant approval 
is six working days from the date funds are reserved unless an exception 
is granted by the National Office.
    (5) Immediately after verifying that funds have been reserved, 
utilizing the Rural Development Field Office terminal system status 
inquiry function,

[[Page 124]]

the State Director or designee will notify by telephone, the Legislative 
and Public Affairs Staff in the Rural Development National Office as 
required by RD Instruction 2015-C, ``Announcement of Approval of Loans, 
Grants, or Guaranteed Loans for Rural Project,'' (available in any FmHA 
or its successor agency under Public Law 103-354 State Office).
    (6) Loan approval and applicant notification will be accomplished by 
the State Director or designee by mailing to the applicant, 6 working 
days from the obligation date, a copy of Form RD 1940-1 which has been 
previously signed by the applicant and loan approval official. The date 
the applicant is notified is also the date the interest rate at loan 
approval is established. The State Director or designee will record the 
date of applicant notification and the interest rate in effect at that 
time on the original of Form RD 1940-1 and include it as a permanent 
part of the District Director project file with a copy placed in the 
State Office file.
    (7) If a transfer of obligation of funds is necessary, complete Form 
RD 450-10, ``Advice of Borrower's Change of Address, Name, Case Number, 
or Loan Number,'' and process via the Rural Development Field Office 
terminal system. An obligation of funds established for an applicant may 
be transferred to a different (substituted) applicant provided:
    (i) The substituted applicant is eligible to receive the assistance 
approved for the original applicant; and
    (ii) The substituted applicant bears a close and genuine 
relationship to the original applicant (such as two organizations that 
are controlled by the same individuals); and
    (iii) The need for and scope of the project and the purpose(s) for 
which Rural Development funds will be used remain substantially 
unchanged.

[50 FR 7296, Feb. 22, 1985, as amended at 50 FR 33332, Aug. 19, 1985; 50 
FR 43378, Oct. 25, 1985; 53 FR 6787, Mar. 3, 1988; 54 FR 47196, Nov. 13, 
1989; 63 FR 16089, Apr. 2, 1998; 67 FR 60584, Sept. 27, 2002; 67 FR 
63019, Oct. 9, 2002; 76 FR 80730, Dec. 27, 2011; 79 FR 76007, Dec. 19, 
2014; 79 FR 55967, Sept. 18, 2014]

    Editorial Note: At 80 FR 9879, Feb. 24, 2015, Sec.  1942.5 was 
amended in paragraph (a)(1)(ii) by removing ``FmHA or its successor 
agency under Public Law 103-354 reserves'' and adding ``Rural 
Development reserves'' in its place; however, the amendment could not be 
incorporated because the phrase did not exist in the paragraph.



Sec.  1942.6  Preparation for loan closing.

    (a) Obtaining closing instructions. Completed dockets will be 
reviewed by the State Director. The information required by OGC will be 
transmitted to OGC with a request for closing instructions. Upon receipt 
of the closing instructions from OGC, the State Director will forward 
them along with any appropriate instructions to the District Director. 
Upon receipt of closing instructions, the District Director will discuss 
with the applicant and its architect or engineer, attorney, and other 
appropriate representatives, the requirements contained therein and any 
actions necessary to proceed with closing.
    (b) Verification of users and other funds. (1) In connection with a 
loan for a utility type project to be secured by a pledge of user fees 
or revenues, the District Director will authenticate the number of users 
prior to loan closing or the commencement of construction, whichever 
occurs first. Such individual will review each signed user agreement and 
check evidence of cash contributions. If during the review any 
indication is received that all signed users may not connect to the 
system, there will be such additional investigation made as deemed 
necessary to determine the number of users who will connect to the 
system. The District Director will record the determination in a 
memorandum to the State Director.
    (2) In all cases the availability and amounts of other funds to be 
used in the project will be verified by Rural Development.
    (c) Initial compliance review. An initial compliance review should 
be completed under subpart E of part 1901 of this chapter.
    (d) Ordering loan checks. Checks will not be ordered until:
    (1) The applicant has complied with approval conditions and closing 
instructions, except for those actions which are to be completed on the 
date of loan closing or subsequent thereto; and

[[Page 125]]

    (2) The applicant is ready to start construction or funds are needed 
to pay interim financing obligations.
    (e) Multiple advances of Rural Development funds. When Rural 
Development provides loan funds during the construction period using 
interim (temporary) instruments described in Sec.  1942.19(g) of this 
subpart, the following action will be taken prior to the issuance of the 
permanent instruments:
    (1) The Finance Office will be notified of the anticipated date for 
retirement of the interim instruments and issuance of permanent 
instruments of debt.
    (2) The Finance Office will prepare a statement of account including 
accrued interest through the proposed date of retirement and also show 
the daily interest accrual. The statement of account and the interim 
financing instruments will be forwarded to the District Director.
    (3) The District Director will collect interest through the actual 
date of the retirement and obtain the permanent instrument(s) of debt in 
exchange for the interim financing instruments. The permanent 
instruments and the cash collection will be forwarded to the Finance 
Office immediately, except that for promissory notes and single 
instrument bonds fully registered as to principal and interest, the 
original will be retained in the District Office and a copy will be 
forwarded to the Finance Office. In developing the permanent 
instruments, the sequence of preference set out in Sec.  1942.19(e) of 
this subpart will be followed.

[50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6787, Mar. 3, 1988; 53 
FR 26589, July 14, 1988]



Sec.  1942.7  Loan closing.

    Loans will be closed in accordance with the closing instructions 
issued by the OGC and Sec.  1942.17(o) of this subpart and as soon as 
possible after receiving the check.
    (a) Authority to execute, file, and record legal instruments. Area 
Office employees are authorized to execute and file or record any legal 
instruments necessary to obtain or preserve security for loans.
    (b) Preparation of mortgages. Unless otherwise required by State law 
or unless an exception is approved by the State Director with advice of 
the OGC, only one mortgage will be taken even though the indebtedness is 
to be evidenced by more than one instrument.
    (c) Source of funds for insured loans. All loans will be made from 
the Rural Development Insurance Fund (RDIF).
    (d) Unused funds. Obligated funds planned for project development 
which remain after all authorized costs have been provided for will be 
disposed of in accordance with Sec.  1942.17(p)(6) of this subpart.
    (e) Loan disbursements. Whenever a loan disbursement is received, 
lost, or destroyed, the Rural Development Manager will take appropriate 
actions outlined in Rural Development Instruction 2018-D.
    (f) Supervised bank accounts. Supervised bank accounts will be 
handled under subpart A of part 1902 of this chapter.

[50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6787, Mar. 3, 1988; 59 
FR 54788, Nov. 2, 1994; 68 FR 61331, Oct. 28, 2003; 70 FR 19253, Apr. 
13, 2005]



Sec.  1942.8  Actions subsequent to loan closing.

    (a) Mortgages. Real estate or chattel mortages or security 
instruments will be delivered to the recording office for recordation or 
filing, as appropriate. A copy of such instruments will be delivered to 
the borrower. The original instrument, if returnable after recording or 
filing, will be retained in the borrower's case folder.
    (b) Notes and bonds. When the debt instrument is a promissory note 
or single instrument bond fully registered as to principal and interest, 
a conformed copy will be sent to the Finance Office immediately after 
loan closing and the original instrument will be stored in the District 
Office. When other types of bonds are used, the original bond(s) will be 
forwarded to the Finance Office immediately after loan closing.
    (c) Multiple advances--bond(s). When temporary paper, such as bond 
anticipation notes or interim receipts, is used to conform with the 
multiple advance requirement, the original temporary paper will be 
forwarded to the

[[Page 126]]

Finance Office after each advance is made to the borrower. The 
borrower's case number will be entered in the upper righthand corner of 
such paper by the District Office. The permanent debt instrument(s) 
should be forwarded to the Finance Office as soon as possible after the 
last advance is made except that for promissory notes and single 
instrument bonds fully registered as to principal and interest, the 
original will be retained in the District Office and a copy will be 
forwarded to the Finance Office.
    (d) Bond registration record. Form RD 442-28, ``Bond Registration 
Book,'' may be used as a guide to assist borrowers in the preparation of 
a bond registration book in those cases where a registration book is 
required and a book is not provided in connection with the printing of 
the bonds.
    (e) Disposition of title evidence. All title evidence other than the 
opinion of title, mortgage title insurance policy, and water stock 
certificates will be returned to the borrower when the loan has been 
closed.
    (f) Material for State Office. When the loan has been closed, the 
District Director will submit to the State Director:
    (1) The complete docket; and
    (2) A statement covering information other than the completion of 
legal documents showing what was done in carrying out loan closing 
instructions.
    (g) State Office review of loan closing. The State Director will 
review the District Director's statement concerning loan closing, the 
security instruments, and other documents used in closing to determine 
whether the transaction was closed properly. All material submitted by 
the District Director, including the executed contract documents (if 
required by OGC) with the certification of the borrower's attorney, 
along with a statement by the State Director that all administrative 
requirements have been met, will be referred to OGC for post-closing 
review. OGC will review the submitted material to determine whether all 
legal requirements have been met. OGC's review of Rural Development's 
standard forms will be only for proper execution thereof, unless the 
State Director brings specific questions or deviations to the attention 
of OGC. It is not expected that facility development including 
construction will be held up pending receipt of the opinion from OGC. 
When the opinion from OGC is received, the State Director will advise 
the District Director of any deficiencies that must be corrected and 
return all material that was submitted for review.
    (h) Safeguarding bond shipments. Rural Development's personnel will 
follow the procedures for safeguarding mailings and deliveries of bonds 
and coupons outlined in FmHA Instruction 2018-E (available in any FmHA 
or its successor agency under Public Law 103-354 office), whenever they 
mail or deliver these items.
    (i) Water stock certificates. Water stock certificates will be filed 
in the loan docket in the District Office.

[50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6787, Mar. 3, 1988]

    Editorial Note: At 80 FR 9879, Feb. 24, 2015, Sec.  1942.8 was 
amended in paragraph (h) by removing ``FmHA or its successor agency 
under Public Law 103-354 Instruction'' and adding ``RD Instruction'' in 
its place; however, the amendment could not be incorporated because the 
phrase did not occur in the paragraph.



Sec.  1942.9  Planning, bidding, contracting, and constructing.

    (a) Review of construction plans and specifications. All plans and 
specifications will be submitted as soon as available to the State 
Office for review and comments.
    (b) Contract approval. The State Director or designee is responsible 
for approving all construction contracts using legal advice and guidance 
of OGC as necessary. The National Office must concur with the use of a 
contracting method under Sec.  1942.18(l) of this subpart exceeding 
$250,000. When an applicant requests such concurrence, the State 
Director will submit the following to the National Office:
    (1) State Director's and Rural Development engineer/architect's 
comments and recommendations, and if noncompetitive negotiation per 
Sec.  1942.18(k)(4) is accepted by the Agency, submit an evaluation of 
previous work of the proposed construction firm.

[[Page 127]]

    (2) Regional attorney's opinion and comments regarding the legal 
adequacy of the proposed procurement method and proposed contract 
documents.
    (3) Copy of owner's written request and description of the 
procurement method proposed.
    (4) Copy of the proposed contract.
    (c) Bid irregularities. Any irregularities in the bids received or 
other matters pertaining to the contract award having legal implications 
will be cleared with OGC before the State Director consents to the 
contract award.
    (d) Noncompliance. State Directors, upon receipt of information 
indicating borrowers or their officers, employees, or agents are not 
performing in compliance with Sec.  1942.18(j)(1) of this subpart, may 
request the Regional Office of the Inspector General (OIG) to 
investigate the matter and provide a report. The State Director is 
responsible for resolving the issue.

[50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6787, Mar. 3, 1988; 77 
FR 29539, May 18, 2012]



Sec. Sec.  1942.10-1942.11  [Reserved]



Sec.  1942.12  Loan cancellation.

    Loans which have been approved and obligations which have been 
established may be canceled before closing as follows:
    (a) Form Rural Development 1940-10, ``Cancellation of U.S. Treasury 
Check and/or Obligation.'' The Rural Development Manager or State 
Director may prepare and execute Form Rural Development 1940-10, 
Cancellation of U.S. Treasury Check and/or Obligation, in accordance 
with the Forms Manual Insert (FMI). If the disbursement has been 
received or is subsequently received in the Area Office, the Rural 
Development Manager will return it as prescribed in Rural Development 
Instruction 2018-D.
    (b) Notice of cancellation. If the docket has been forwarded to 
Office of General Counsel that office will be notified of the 
cancellation by copy of Form Rural Development 1940-10. Any application 
for title insurance, if ordered, will be cancelled. The borrower's 
attorney and engineer/architect, if any, should be notified of the 
cancellation. The Rural Development Manager may provide the borrower's 
attorney and engineer/architect with a copy of the notification to the 
applicant. The State Director will notify the Director of Legislative 
Affairs and Public Information by telephone or electronic mail and give 
the reasons for such cancellation.

[50 FR 7296, Feb. 22, 1985, as amended at 53 FR 26589, July 14, 1988; 54 
FR 39727, Sept. 28, 1989; 59 FR 54788, Nov. 2, 1994; 70 FR 19254, Apr. 
13, 2005]



Sec.  1942.13  Loan servicing.

    Loans will be serviced under subpart E of part 1951 of this chapter.



Sec.  1942.14  Subsequent loans.

    Subsequent loans will be processed under this subpart.



Sec.  1942.15  Delegation and redelegation of authority.

    The State Director is responsible for implementing the authorities 
in this subpart and for issuing State supplements redelegating 
authorities. Loan and grant approval authority is in Subpart A of Part 
1901 of this chapter. Except for loan and grant approval authority, 
Rural Development Manager may redelegate their duties to qualified staff 
members.

[70 FR 19254, Apr. 13, 2005]



Sec.  1942.16  State supplements and guides.

    State Directors will obtain National Office clearance for all State 
supplements and guides under RD Instruction 2006-B (available in any 
Rural Development office).
    (a) State supplements. State Directors may supplement this subpart 
to meet State and local laws and regulations and to provide for orderly 
application processing and efficient service to applicants. State 
supplements shall not contain any requirements pertaining to bids, 
contract awards, and materials more restrictive than those in Sec.  
1942.18 of this subpart.
    (b) State guides. State Directors may develop guides for use by 
applicants if the guides to this subpart are not adequate. State 
Directors may prepare guides for items needed for the application; items 
necessary for the docket;

[[Page 128]]

and items required prior to loan closing or start of construction.



Sec.  1942.17  Community facilities.

    (a) General. This section includes information and procedures 
specifically designed for use by applicants, including their 
professional consultants and/or agents who provide such assistance and 
services as architectural, engineering, financial, legal, or other 
services related to application processing and facility planning and 
development. This section is made available as needed for such use. It 
includes Rural Development policies and requirements pertaining to loans 
for community facilities. It provides applicants with guidance for use 
in proceeding with their application. Rural Development shall cooperate 
fully with appropriate State agencies to give maximum support of the 
State's strategies for development of rural areas.
    (b) Eligibility. Financial assistance to areas or communities 
adjacent to, or closely associated with, nonrural areas is limited by 
Sec.  1942.17(c) of this subpart.
    (1) Applicant. (i) A public body, such as a municipality, county, 
district, authority, or other political subdivision of a state.
    (A) Loans for water or waste disposal facilities will not be made to 
a city or town with a population in excess of 10,000 inhabitants. The 
population figure is obtained from the most recent decennial Census of 
the United States (decennial Census). If the applicable population 
figure cannot be obtained from the most recent decennial Census, RD will 
determine the applicable population figure based on available population 
data.
    (B) Loans for essential community facilities will not be made to a 
city or town with a population in excess of 20,000 inhabitants according 
to the most recent decennial Census.
    (ii) An organization operated on a not-for-profit basis, such as an 
association, cooperative, and private corporation. Applicants organized 
under the general profit corporation laws may be eligible if they 
actually will be operated on a not-for-profit basis under their charter, 
bylaws, mortgage, or supplemental agreement provisions as may be 
required as a condition of loan approval. Essential community facility 
applicants other than utility-type must have significant ties with the 
local rural community. Such ties are necessary to ensure to the greatest 
extent possible that a facility under private control will carry out a 
public purpose and continue to primarily serve rural areas. Ties may be 
evidenced by items such as:
    (A) Association with or controlled by a local public body or bodies, 
or broadly based ownership and controlled by members of the community.
    (B) Substantial public funding through taxes, revenue bonds, or 
other local Government sources, and/or substantial voluntary community 
funding, such as would be obtained through a community-wide funding 
campaign.
    (iii) Indian tribes on Federal and State reservations and other 
Federally recognized Indian tribes.
    (2) Facility. (i) Facilities must be located in rural areas, except 
for utility-type services such as water, sewer, natural gas, or 
hydroelectric, serving both rural and non-rural areas. In such cases, 
Rural Development funds may be used to finance only that portion serving 
rural areas, regardless of facility location.
    (ii) Essential community facilities must primarily serve rural 
areas.
    (iii) For water or waste disposal facilities, the terms rural and 
rural area will not include any area in any city or town with a 
population in excess of 10,000 inhabitants. The population figure is 
obtained from the most recent decennial Census. If the applicable 
population figure cannot be obtained from the most recent decennial 
Census, RD will determine the applicable population figure based on 
available population data.
    (iv) For essential community facilities, the terms rural and rural 
area will not include any area in any city or town with a population in 
excess of 20,000 inhabitants. The population figure is obtained from the 
most recent decennial Census. If the applicable population figure cannot 
be obtained from the most recent decennial Census, RD will determine the 
applicable population figure based on available population data.

[[Page 129]]

    (3) Credit elsewhere. Applicants must certify in writing and Rural 
Development shall determine and document that the applicant is unable to 
finance the proposed project from their own resources or through 
commercial credit at reasonable rates and terms.
    (4) Legal authority and responsibility. Each applicant must have or 
will obtain the legal authority necessary for constructing, operating, 
and maintaining the proposed facility or service and for obtaining, 
giving security for, and repaying the proposed loan. The applicant shall 
be responsible for operating, maintaining, and managing the facility, 
and providing for its continued availability and use at reasonable rates 
and terms. This responsibility shall be exercised by the applicant even 
though the facility may be operated, maintained, or managed by a third 
party under contract, management agreement, or written lease. Leases may 
be used when this is the only feasible way to provide the service and is 
the customary practice. Management agreements should provide for at 
least those items listed in guide 24 of this subpart (available in any 
Rural Development office). Such contracts, management agreements, or 
leases must not contain options or other provisions for transfer of 
ownership.
    (5) Refinancing debt. The Government shall require an agreement that 
if at any time it shall appear to the Government that the borrower is 
able to refinance the amount of the indebtedness then outstanding, in 
whole or in part, by obtaining a loan for such purposes from responsible 
cooperative or private credit sources, at reasonable rates and terms for 
loans for similar purposes and periods of time, the borrower will, upon 
request of the Government, apply for and accept such loan in sufficient 
amount to repay the Government and will take all such actions as may be 
required in connection with such loan.
    (6) Expanded eligibility for timber-dependent communities in Pacific 
Northwest. In the Pacific Northwest, defined as an area containing 
national forest covered by the Federal document entitled, ``Forest Plan 
for a Sustainable Economy and a Sustainable Environment,'' dated July 1, 
1993; the population limits contained Sec.  1942.17(b) are expanded to 
include communities with not more than 25,000 inhabitants until 
September 30, 1998, if:
    (i) Part or all of the community lies within 100 miles of the 
boundary of a national forest covered by the Federal document entitled, 
``Forest Plan for a Sustainable Economy and a Sustainable Environment,'' 
dated July 1, 1993; and
    (ii) The community is located in a county in which at least 15 
percent of the total primary and secondary labor and proprietor income 
is derived from forestry, wood products, or forest-related industries 
such as recreation and tourism.
    (c) Priorities--(1) Truly rural areas. Rural Development program 
assistance will be directed toward truly rural areas and rural 
communities. Normally, priority will not be given to preapplications for 
projects that will serve other than truly rural areas. Truly rural areas 
are areas other than densely settled areas or communities adjacent to, 
or closely associated with, a city or town with a population exceeding 
10,000 residents for water or waste disposal assistance, or 20,000 
residents for essential community facility assistance. When determining 
whether a rural area or rural community is adjacent to, or closely 
associated with, a city or town with a population exceeding 10,000 
residents for water and waste disposal, or 20,000 residents for 
essential community facility assistance, minor open spaces such as those 
created by physical or legal barriers, commercial or industrial 
development, parks, areas reserved for convenience or appearance, or 
narrow strips of cultivated land, will be disregarded. An area or 
community shall be considered adjacent to or closely related with a 
nonrural area when it constitutes for general, social, and economic 
purposes a single community having a contiguous boundary.
    (2) Project selection process. The following paragraphs indicate 
items and conditions which must be considered in selecting 
preapplications for further development. When ranking eligible 
preapplications for consideration for limited funds, Rural Development 
officials must consider the priority items

[[Page 130]]

met by each preapplication and the degree to which those priorities are 
met, and apply good judgement.
    (i) Preapplications. The preapplication and supporting information 
submitted with it will be used to determine the proposed project's 
priority for available funds.
    (ii) State Office review. All preapplications will be reviewed and 
scored and Form AD-622, ``Notice of Preapplication Review Action,'' 
issued within the time limits in Sec.  1942.2(a)(2)(iv) of this subpart. 
When considering authorizing the development of an application for 
funding, the State Director should consider the remaining funds in the 
State allocation, and the anticipated allocation of funds for the next 
fiscal year as well as the amount of time necessary to complete that 
application. Applicants whose preapplications are found to be ineligible 
will be so advised. These applicants will be given adverse notice 
through Form AD-622 and advised of their appeal rights under subpart B 
of part 1900 of this chapter. Those applicants with eligible lower 
scoring preapplications which obviously cannot be funded within an 
eighteen month period of time, and are not within 150 percent of the 
State's allocation, should be notified that funds are not available; and 
requested to advise whether they wish to have their preapplication 
maintained in an active file for future consideration. The State 
Director may request an additional allocation of funds from the National 
Office for such preapplications. Such requests will be considered along 
with all others on hand.
    (iii) Selection priorities. The priorities described below will be 
used by the State Director to rate preapplications. The priorities 
should be applied to water and waste disposal or community facilities 
preapplications as directed. The format found in part I of guide 26 of 
this subpart should be followed in scoring each preapplication. A copy 
of the score sheet should be placed in the case file for future 
reference.
    (A) Population priorities. The following priorities apply to both 
Water and Waste Disposal and Community Facilities preapplications. 
Points will be distributed as indicated.
    (1) The proposed project is located in a rural community having a 
population not in excess of 2,500--25 points.
    (2) The proposed project is located in a rural community having a 
population not in excess of 5,500--20 points. (Points under this 
priority should not be assigned to a preapplication if points were 
assigned under paragraph (c)(2)(iii) (A)(1) of this section.)
    (B) Health priorities. Points will be distributed as indicated.
    (1) Water and Waste Disposal preapplications only. The proposed 
project is:
    (i) Needed to alleviate the sudden unexpected diminution or 
deterioration of a water supply, or to meet health or sanitary standards 
which pertain to a community's water supply--25 points.
    (ii) Required to correct an inadequate waste disposal system due to 
unexpected occurrences, or to meet health or sanitary standards which 
pertain to a community's waste disposal system--25 points.
    (2) Community Facility preapplication only. The proposed project is 
required either to correct a health or sanitary problem, or to meet a 
health or sanitary standard--25 points.
    (C) Income priorities. The following priorities apply to both Water 
and Waste Disposal and Community Facilities preapplications. Points will 
be distributed as indicated. The median income of the population to be 
served by the proposed facility is:
    (1) Less than the poverty line for a family of four, as defined in 
Section 673(2) of the Community Services Block Grant Act (42 U.S.C. 
9902(2)), or less than 80 percent of the statewide nonmetropolitan 
median household income--25 points.
    (2) Equal to or more than the poverty line and between 80% and 100%, 
inclusive, of the State's nonmetropolitan median household income--20 
points.
    (D) Other factors. Points will be distributed as indicated.
    (1) Water and Waste Disposal preapplications only. The proposed

[[Page 131]]

project will: merge ownership, management, and operation of smaller 
facilities providing for more efficient management and economical 
service; and/or enlarge, extend, or otherwise modify existing facilities 
to provide service to additional rural residents--10 points.
    (2) Community Facilities preapplications only. The purpose of the 
proposed project is to construct, enlarge, extend or otherwise improve 
the following types of facilities. (Select only the factor most 
applicable to the proposed project.)
    (i) Public safety--10 points. (Examples include police services and 
fire, rescue and ambulance services as authorized by subpart C of this 
part 1942.)
    (ii) Health care--5 points. (Examples include clinics, nursing 
homes, convalescent facilities, and hospital projects designed to make 
the facility conform with life/safety codes, medicare and medicaid 
requirements, and minor expansions needed to meet the immediate 
requirements of the community. Points under this authority should not be 
awarded to a preapplication if points were awarded under Sec.  
1942.17(c)(2)(iii)(B)(2) of this subpart.)
    (3) Water and Waste Disposal and Community Facilities 
preapplications.
    (i) Applicant is a public body or Indian tribe--5 points.
    (ii) Project is located in a ``truly rural area'' as described in 
Sec.  1942.17(c)(1) of this subpart--10 points.
    (iii) Amount of joint financing committed to the project is:
    (a) 20% or more private, local or state funds except federal funds 
channeled through a state agency--10 points.
    (b) 5%-19% private, local or state funds except federal funds 
channeled through a state agency--5 points.
    (E) In certain cases the State Director may assign up to 15 points 
to a preapplication, in addition to those that may be scored under 
paragraphs (c)(2)(iii) (A) through (D), of this section. These points 
are primarily intended to address an unforeseen exigency or emergency, 
such as the loss of a community facility due to accident or natural 
disaster or the loss of joint financing if Rural Development funds are 
not committed in a timely fashion. However, the points may also be 
awarded to projects in order to improve compatibility/coordination 
between Rural Development's and other agencies' selection systems and to 
assist those projects that are the most cost effective. A written 
justification must be prepared and placed in the project file each time 
the State Director assigns these points.
    (iv) Results of State Office review. After completing the review, 
the State Director will normally select the eligible preapplications 
with the highest scores for further processing. In cases where 
preliminary cost estimates indicate that an eligible, high scoring 
preapplication is unfeasible or would require an amount of funding from 
Rural Development that exceeds either 25 percent of a State's current 
annual allocation or an amount greater than that remaining in the 
State's allocation, the State Director may instead select the next lower 
scoring preapplication(s) for futher processing provided the high 
scoring applicant is notified of this action and given an opportunity to 
revise the proposal and resubmit it. If it is found that there is no 
effective way to reduce costs, the State Director, after consultation 
with applicant, may submit a request for an additional allocation of 
funds for the proposed project to the National Office. The request 
should be submitted during the fiscal year in which obligation is 
anticipated. Such request will be considered along with all others on 
hand. A written justification must be prepared and placed in the project 
file when an eligible preapplication with a higher rating is not 
selected for further processing. The State Director will notify the 
District Director of the results of the review action. The State 
Director will return the preapplication information with an 
authorization for the District Director to prepare and issue Form AD-622 
in accordance with Sec.  1942.2(a)(2)(iv) of this subpart. Priority will 
be given to those preapplications and applications for funding which 
meet criteria in Sec.  1942.17(c)(2)(iii)(A) (1) or (2); and the 
criteria in Sec.  1942.17(c) (2)(iii)(B)(1) (i) or (ii) or (B)(2) of 
this subpart.
    (v) Application development. Applications should be developed 
expeditiously

[[Page 132]]

following good management practices. Applications that are not developed 
in a reasonable period of time taking into account the size and 
complexity of the proposed project may be removed from the State's 
active file. Applicants will be consulted prior to taking such action.
    (vi) Project obligations. To ensure efficient use of resources, 
obligations should occur in a timely fashion throughout the fiscal year. 
Projects may be obligated as their applications are completed and 
approved.
    (vii) Requests for additional funding. All requests for additional 
allocations of funds submitted to the National Office must follow the 
formats found in parts I and II of guide 26. In selecting projects for 
funding at the National Office level, additional points may be scored 
based on the priority assigned to the project by the State Office. These 
points will be scored in the manner shown below. Only the three highest 
priority projects can score points. In addition, the Administrator may 
assign up to 15 additional points to account for items such as 
geographic distribution of funds and emergency conditions caused by 
economic problems or natural disasters.

------------------------------------------------------------------------
                        Priority                              Points
------------------------------------------------------------------------
1.......................................................               5
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    (viii) Cost overruns. A preapplication may receive consideration for 
funding before others at the State Office level or at the National 
Office level, if funds are not available in the State Office, when it is 
a subsequent request for a previously approved project which has 
encountered cost overruns due to high bids or unexpected construction 
problems that cannot be reduced by negotiations, redesign, use of bid 
alternatives, rebidding or other means.
    (d) Eligible loan purposes. (1) Funds may be used:
    (i) To construct, enlarge, extend, or otherwise improve water or 
waste disposal and other essential community facilities providing 
essential service primarily to rural residents and rural businesses. 
Rural businesses would include facilities such as educational and other 
publicly owned facilities.
    (A) Water or waste disposal facilities include water, sanitary 
sewerage, solid waste disposal, and storm waste-water facilities.
    (B) Essential community facilities are those public improvements 
requisite to the beneficial and orderly development of a community 
operated on a nonprofit basis including but not limited to:
    (1) Health services;
    (2) Community, social, or cultural services;
    (3) Transportation facilities, such as streets, roads, and bridges;
    (4) Hydroelectric generating facilities and related connecting 
systems and appurtenances, when not eligible for Rural Electrification 
Administration (REA) financing;
    (5) Supplemental and supporting structures for other rural 
electrification or telephone systems (including facilities such as 
headquarters and office buildings, storage facilities, and maintenance 
shops) when not eligible for Rural Electrification Administration 
financing;
    (6) Natural gas distribution systems; and
    (7) Industrial park sites, but only to the extent of land 
acquisition and necessary site preparation, including access ways and 
utility extensions to and throughout the site. Funds may not be used in 
connection with industrial parks to finance on-site utility systems, or 
business and industrial buildings.
    (C) Otherwise improve includes but is not limited to the following:
    (1) The purchase of major equipment, such as solid waste collection 
trucks and X-ray machines, which will in themselves provide an essential 
service to rural residents;
    (2) The purchase of existing facilities when it is necessary either 
to improve or to prevent loss of service;
    (3) Payment of tap fees and other utility connection charges as 
provided in utility purchase contracts prepared under Sec.  1942.18(f) 
of this subpart.
    (ii) To construct or relocate public buildings, roads, bridges, 
fences, or utilities, and to make other public improvements necessary to 
the successful

[[Page 133]]

operation or protection of facilities authorized in paragraph (d)(1)(i) 
of this section.
    (iii) To relocate private buildings, roads, bridges, fences, or 
utilities, and other private improvements necessary to the successful 
operation or protection of facilities authorized in paragraph (d)(1)(i) 
of this section.
    (iv) To pay the following expenses, but only when such expenses are 
a necessary part of a loan to finance facilities authorized in 
paragraphs (d)(1)(i), (d)(1)(ii) and (d)(1)(iii) of this section.
    (A) Reasonable fees and costs such as legal, engineering, 
architectural, fiscal advisory, recording, environmental impact 
analyses, archeological surveys and possible salvage or other mitigation 
measures, planning, establishing or acquiring rights.
    (B) Interest on loans until the facility is self-supporting, but not 
for more than three years unless a longer period is approved by the 
National Office; interest on loans secured by general obligation bonds 
until tax revenues are available for payment, but not for more than two 
years unless a longer period is approved by the National Office; and 
interest on interim financing, including interest charges on interim 
financing from sources other than Rural Development.
    (C) Costs of acquiring interest in land; rights, such as water 
rights, leases, permits, rights-of-way; and other evidence of land or 
water control necessary for development of the facility.
    (D) Purchasing or renting equipment necessary to install, maintain, 
extend, protect, operate, or utilize facilities.
    (E) Initial operating expenses for a period ordinarily not exceeding 
one year when the borrower is unable to pay such expenses.
    (F) Refinancing debts incurred by, or on behalf of, a community when 
all of the following conditions exist:
    (1) The debts being refinanced are a secondary part of the total 
loan;
    (2) The debts are incurred for the facility or service being 
financed or any part thereof;
    (3) Arrangements cannot be made with the creditors to extend or 
modify the terms of the debts so that a sound basis will exist for 
making a loan.
    (G) Prepay costs for which Rural Development grant funds were 
obligated provided there is:
    (1) No conflict with the loan resolution, State statutes, or any 
other loan requirements; and
    (2) Full documentation showing that:
    (i) Loan funds will only be utilized on a temporary basis; and
    (ii) All Rural Development loan funds are restored at a later date 
for purpose(s) for which they were obligated.
    (v) To pay obligations for construction incurred before loan 
approval. Construction work should not be started and obligations for 
such work or materials should not be incurred before the loan is 
approved. However, if there are compelling reasons for proceeding with 
construction before loan approval, applicants may request Rural 
Development approval to pay such obligations. Such requests may be 
approved if Rural Development determines that:
    (A) Compelling reasons exist for incurring obligations before loan 
approval; and
    (B) The obligations will be incurred for authorized loan purposes; 
and
    (C) Contract documents have been approved by Rural Development; and
    (D) All environmental requirements applicable to Rural Development 
and the applicant have been met; and
    (E) The applicant has the legal authority to incur the obligations 
at the time proposed, and payment of the debts will remove any basis for 
any mechanic, material, or other liens that may attach to the security 
property. Rural Development may authorize payment of such obligations at 
the time of loan closing. Rural Development's authorization to pay such 
obligations, however, is on the condition that it is not committed to 
make the loan; it assumes no responsibility for any obligations incurred 
by the applicant; and the applicant must subsequently meet all loan 
approval requirements. The applicant's request and Rural Development 
authorization for paying such obligations shall be in writing. If 
construction is started without Rural Development approval, post 
approval in accordance with this section may be considered.
    (2) Funds may not be used to finance:

[[Page 134]]

    (i) On-site utility systems or business and industrial buildings in 
connection with industrial parks.
    (ii) Facilities to be used primarily for recreation purposes.
    (iii) Community antenna television services or facilities.
    (iv) Electric generation or transmission facilities or telephone 
systems, except as provided in paragraph (d)(1)(i)(B)(4), or 
(d)(1)(i)(B)(5) of this section; or extensions to serve a particular 
essential community facility as provided in paragraph (d)(1)(ii) or 
(d)(1)(iii) of this section.
    (v) Facilities which are not modest in size, design, and cost.
    (vi) Loan or grant finder's fees.
    (vii) Projects located within the Coastal Barriers Resource System 
that do not qualify for an exception as defined in section 6 of the 
Coastal Barriers Resource Act, Pub. L. 97-348.
    (viii) New combined sanitary and storm water sewer facilities.
    (ix) That portion of a water and/or waste disposal facility normally 
provided by a business or industrial user.
    (e) Facilities for public use. All facilities financed under the 
provisions of this subpart shall be for public use.
    (1) Utility-type service facilities will be installed so as to serve 
any user within the service area who desires service and can be feasibly 
and legally served. Applicants and borrowers must obtain written 
concurrence of the Rural Development prior to refusing service to such 
user. Upon failure to provide service which is reasonable and legal, 
such user shall have direct right of action against the applicant/
borrower. A notice of the availability of this service should be given 
by the applicant/borrower to all persons living within the area who can 
feasibly and legally be served by the phase of the project being 
financed.
    (i) If a mandatory hookup ordinance will be adopted, the required 
bond ordinance or resolution advertisement will be considered adequate 
notification.
    (ii) When any portion of the income will be derived from user fees 
and a mandatory hookup ordinance will not be adopted, each potent user 
will be afforded an opportunity to request service by signing a Users 
Agreement.


Those declining service will be afforded an opportunity to sign a 
statement to such effect. Rural Development has guides available for 
these purposes in all Rural Development offices.
    (2) In no case will boundaries for the proposed service area be 
chosen in such a way that any user or area will be excluded because of 
race, color, religion, sex, marital status, age, handicap, or national 
origin.
    (3) This does not preclude:
    (i) Financing or constructing projects in phases when it is not 
practical to finance or construct the entire project at one time; and
    (ii) Financing or constructing facilities where it is not 
economically feasible to serve the entire area, provided economic 
feasibility is determined on the basis of the entire system and not by 
considering the cost of separate extensions to or parts thereof; the 
applicant publicly announces a plan for extending service to areas not 
initially receiving service from the system; and potential users located 
in the areas not to be initially served receive written notice from the 
applicant that service will not be provided until such time as it is 
economically feasible to do so, and
    (iii) Extending services to industrial areas when service is made 
available to users located along the extensions.
    (4) The State Director will determine that, when feasibly and 
legally possible, inequities within the proposed project's service area 
for the same type service proposed (i.e., water or waste disposal) will 
be remedied by the owner on or before completion of the project that 
includes Rural Development funding. Inequities are defined as flagrant 
variations in availability, adequacy or quality of service. User rate 
schedules for portions of existing systems that were developed under 
different financing, rates, terms or conditions, as determined by the 
State Director, do not necessarily constitute inequities.
    (5) Before a loan is made to an applicant other than a public body, 
for other than utility type projects, the articles of incorporation or 
loan agreement will include a condition similar to the following:

    In the event of dissolution of this corporation, or in the event it 
shall cease to carry out the objectives and purposes herein set

[[Page 135]]

forth, all business, property, and assets of the corporation shall go 
and be distributed to one or more nonprofit corporations or public 
bodies as may be selected by the board of directors of this corporation 
and approved by at least 75 percent of the users or members to be used 
for, and devoted to, the purpose of a community facility project or 
other purpose to serve the public welfare of the community. In no event 
shall any of the assets or property, in the event of dissolution 
thereof, go or be distributed to members, directors, stockholders, or 
others having financial or managerial interest in the corporation either 
for the reimbursement of any sum subscribed, donated or contributed by 
such members or for any other purposes, provided that nothing herein 
shall prohibit the corporation from paying its just debts.

    (f) Rates and terms--(1) General. Each loan will bear interest at 
the rate prescribed in RD Instruction 440.1, exhibit B (available in any 
Rural Development office). The interest rates will be set by Rural 
Development at least for each quarter of the fiscal year. All rates will 
be adjusted to the nearest one-eighth of 1 percent. The applicant may 
submit a written request prior to loan closing that the interest rate 
charged on the loan be the lower of the rate in effect at the time of 
loan approval or the rate in effect at the time of loan closing. If the 
interest rate is to be that in effect at loan closing, the interest rate 
charged on a loan involving multiple advances of Rural Development 
funds, using temporary debt instruments, shall be that in effect on the 
date when the first temporary debt instrument is issued. If no written 
request is received from the applicant prior to loan closing, the 
interest rate charged on the loan will be the rate in effect at the time 
of loan approval.
    (2) Poverty line rate. The poverty line interest rate will not 
exceed 5 per centum per annum. The provisions of paragraph (f)(2)(i) of 
this section do not apply to health care and related facilities that 
provide direct health care to the public. Otherwise, all loans must 
comply with the following conditions:
    (i) The primary purpose of the loan is to upgrade existing 
facilities or construct new facilities required to meet applicable 
health or sanitary standards. Documentation will be obtained from the 
appropriate regulatory agency with jurisdiction to establish the 
standard, to verify that a bonafide standard exists, what that standard 
is, and that the proposed improvements are needed and required to meet 
the standard; and
    (ii) The median household income of the service area is below the 
poverty line for a family of four, as defined in section 673(2) of the 
Community Services Block Grant Act (42 U.S.C. 9902(2)), or below 80 
percent of the Statewide nonmetropolitan median household income.
    (3) Intermediate rate. The intermediate interest rate will be set at 
the poverty line rate plus one-half of the difference between the 
poverty line rate and the market rate, not to exceed 7 percent per 
annum. It will apply to loans that do not meet the requirements for the 
poverty line rate and for which the median household income of the 
service area is below the poverty line or not more than 100 percent of 
the nonmetropolitan median household income of the State.
    (4) Market rate. The market interest rate will be set using as 
guidance the average of the Bond Buyer Index for the four weeks prior to 
the first Friday of the last month before the beginning of the quarter. 
The market rate will apply to all loans that do not qualify for a 
different rate under paragraph (f)(2) or (f)(3) of this section. It may 
be adjusted as provided in paragraph (f)(5) of this section.
    (5) Prime farmland. For essential community facilities loans, the 
rate indicated by paragraphs (f)(2), (f)(3) or (f)(4) of this section 
will be increased by two per centum per annum if the project being 
financed will involve the use of, or construction on, prime or unique 
farmland in accordance with RD Instruction 440.1, exhibits B and J 
(available in any Rural Development office).
    (6) Income determination. The income data used to determine median 
household income should be that which most accurately reflects the 
income of the service area. The service area is that area reasonably 
expected to be served by the facility being financed by Rural 
Development. The median household income of the service area and the 
nonmetropolitan median household income of the State will be determined 
from 5-year income data from the American Community Survey (ACS) or, if 
needed,

[[Page 136]]

other Census Bureau data. If there is reason to believe that the ACS or 
other Census Bureau data does not accurately represent the median 
household income within the area to be served, the reasons will be 
documented and the applicant may furnish, or Rural Development 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. The nonmetropolitan median household income of the 
State may only be updated on a national basis by the Rural Development 
National Office. This will be done only when median household income 
data for the same year for all Bureau of the Census areas is available 
from the Bureau of the Census or other reliable sources. Bureau of the 
Census areas would include areas such as: Counties, County Subdivisions, 
Cities, Towns, Townships, Boroughs, and other places.
    (7) Repayment terms. The loan repayment period shall not exceed the 
useful life of the facility, State statute or 40 years from the date of 
the note(s) or bond(s), whichever is less. Where FmHA or its successor 
agency under Public Law 103-354 grant funds are used in connection with 
a Rural Development loan, the loan will be for the maximum term 
permitted by this subpart, State statute, or the useful life of the 
facility, whichever is less, unless there is an exceptional case where 
circumstances justify making a Rural Development loan for less than the 
maximum term permitted. In such cases, the reasons must be fully 
documented. In all cases, including those in which the Rural Development 
is jointly financing with another lender, the Rural Development payments 
of principal and interest should approximate amortized installments.
    (i) Principal payments may be deferred in whole or in part for a 
period not to exceed 36 months following the date the first interest 
installment is due. If for any reason it appears necessary to permit a 
longer period of deferment, the State Director may authorize such 
deferment with the prior approval of the National Office. Deferments of 
principal will not be used to:
    (A) Postpone the levying of taxes or assessments.
    (B) Delay collection of the full rates which the borrower has agreed 
to charge users for its services as soon as major benefits or the 
improvements are available to those users.
    (C) Create reserves for normal operation and maintenance.
    (D) Make any capital improvements except those approved by Rural 
Development determined to be essential to the repayment of the loan or 
to the obtaining of adequate security thereof.
    (E) Accelerate the payment of other debts.
    (ii) Payment date. Loan payments will be scheduled to coincide with 
income availability and be in accordance with State law. If consistent 
with the foregoing, monthly payments will be required and will be 
enumerated in the bond, other evidence of indebtedness, or other 
supplemental agreement. However, if State law only permits principal 
plus interest (P&I) type bonds, annual or semiannual payments will be 
used. Insofar as practical monthly payments will be scheduled one full 
month following the date of loan closing; or semiannual or annual 
payments will be scheduled six or twelve full months, respectively, 
following the date of loan closing or any deferment period. Due dates 
falling on the 29th, 30th or 31st day of the month will be avoided.
    (g) Security. Loans will be secured by the best security position 
practicable in a manner which will adequately protect the interest of 
Rural Development during the repayment period of the loan. Specific 
requirements for security for each loan will be included in a letter of 
conditions.
    (1) Joint financing security. For projects utilizing joint 
financing, when adequate security of more than one type is available, 
the other lender may take one type of security with the United States 
taking another type. For projects utilizing joint financing with the 
same security to be shared by the United States and another lender, the 
United States will obtain at least a parity position with the other 
lender. A parity position is to ensure that with joint security, in the 
event of default,

[[Page 137]]

each lender will be affected on a proportionate basis. A parity position 
will conform with the following unless an exception is granted by the 
National Office:
    (i) Terms. It is not necessary for loans to have the same repayment 
terms to meet the parity requirements. Loans made by other lenders 
involved in joint financing with the United States for facilities should 
be scheduled for repayment on terms similar to those customarily used in 
the State for financing such facilities.
    (ii) Use of trustee or other similar paying agent. The use of a 
trustee or other similar paying agent by the other lender in a joint 
financing arrangement is acceptable to the United States. A trustee or 
other similar paying agent will not normally be used for the United 
States portion of the funding unless required to comply with State law. 
The responsibilities and authorities of any trustee or other similar 
paying agent on projects that include United States funds must be 
clearly specified by written agreement and approved by the State 
Director and Regional Attorney. The United States must be able to deal 
directly with the borrower to enforce the provisions of loan and grant 
agreements and perform necessary servicing actions.
    (iii) Regular payments. In the event adequate funds are not 
available to meet regular installments on parity loans, the funds 
available will be apportioned to the lenders based on the respective 
current installments of principal and interest due.
    (iv) Disposition of property. Funds obtained from the sale or 
liquidation of secured property or fixed assets will be apportioned to 
the lenders on the basis of the pro rata amount loaned, but not to 
exceed their respective outstanding balances; provided, however, funds 
obtained from such sale or liquidation for a project that included grant 
funds will be apportioned as may be required by the grant agreement.
    (v) Protective advances. Protective advances are payments made by a 
lender for items such as insurance or taxes, to protect the financial 
interest of the lender, and charged to the borrower's loan account. To 
the extent consistent with State law and customary lending practices in 
the area, repayment of protective advances made by either lender, for 
the mutual protection of both lenders, should receive first priority in 
apportionment of funds between the lenders. To ensure agreement between 
lenders, efforts should be made to obtain the concurrence of both 
lenders before one lender makes a protective advance.
    (2) Public bodies. Loans to such borrowers will be evidenced by 
notes, bonds, warrants, or other contractual obligations as may be 
authorized by relevant State statutes and by borrower's documents, 
resolutions, and ordinances.
    (i) Utility-type facilities such as water and sewer systems, natural 
gas distribution systems, electric systems, etc., will be secured by:
    (A) The full faith and credit of the borrower when the debt is 
evidenced by general obligation bonds; and/or
    (B) Pledges of taxes or assessments; and/or
    (C) Pledges of facility revenue and, when it is the customary 
financial practice in the State, liens will be taken on the interest of 
the applicant in all land, easements, rights-of-way, water rights, water 
purchase contracts, water sales contracts, sewage treatment contracts, 
and similar property rights, including leasehold interest, used or to be 
used in connection with the facility whether owned at the time the loan 
is approved or acquired with loan funds; and/or
    (D) In those cases involving water and waste disposal projects where 
there is a substantial number of other than full-time users and facility 
costs result in a higher than reasonable rate for such full-time users, 
the loan will be secured by the full faith and credit of the borrower or 
by an assignment or pledge of taxes or assessments from public bodies or 
other organizations having the authority to issue bonds or pledge such 
taxes or assessments.
    (ii) Solid waste systems. The type of security required will be 
based on State law and what is determined adequate to protect the 
interest of the United States during the repayment period of the loan.
    (iii) Other essential community facilities other than utility type, 
such as those

[[Page 138]]

for public health and safety, social, and cultural needs and the like 
will meet the following security requirements:
    (A) Such loans will be secured by one or a combination of the 
following and in the following order of preference:
    (1) General obligation bonds.
    (2) Assessments.
    (3) Bonds which pledge other taxes.
    (4) Bonds pledging revenues of the facility being financed when such 
bonds provide for the mandatory levy and collection of taxes in the 
event revenues later become insufficient to properly operate and 
maintain the facility and to retire the loan.
    (5) Assignment of assured income which will be available for the 
life of the loan, from such sources as insurance premium rebates, income 
from endowments, irrevocable trusts, or commitments from industries, 
public bodies, or other reliable sources.
    (6) Liens on real and chattel property when legally permissible and 
an assignment of the borrowers income from applicants who have been in 
existence and are able to present evidence of a financially successful 
operation of a similar facility for a period of time sufficient to 
indicate project success. National Office concurrence is required when 
the applicant has been in existence for less than five years or has not 
operated on a financially successful basis for five years immediately 
prior to loan application.
    (7) Liens on real and chattel property when legally permissible and 
an assignment of income from an organization receiving Health and Human 
Services (HHS) operating grants under the ``Memorandum of Understanding 
Between Health Resources and Services Administration, U.S. Department of 
Health and Human Services and Rural Development, U.S. Department of 
Agriculture'' (see RD Instruction 2000-T, available in any Rural 
Development office.)
    (8) Liens on real and chattel property when legally permissible and 
an assignment of income from an organization proposing a facility whose 
users receive reliable income from programs such as social security, 
supplemental security income (SSI), retirement plans, long-term 
insurance annuities, medicare or medicaid. Examples are homes for the 
handicapped or institutions whose clientele receive State or local 
government assistance.
    (9) When the applicant cannot meet the criteria in paragraph 
(g)(2)(iii)(A) (1) through (8) of this section, such proposals may be 
considered when all the following are met:
    (i) The applicant is a new organization or one that has not operated 
the type of facility being proposed.
    (ii) There is a demonstration of exceptional community support such 
as substantial financial contributions, and aggressive leadership in the 
formation of the organization and proposed project which indicates a 
commitment of the entire community.
    (iii) The State Director has determined that adequate and dependable 
revenues will be available to meet all operation expenses, debt 
repayment, and the required reserve.
    (iv) Prior National Office review and concurrence is obtained.
    (B) Real estate and chattel property taken as security in accordance 
with paragraphs (g)(2)(iii)(A) (6) through (9) of this section:
    (1) Ordinarily will include the property that is used in connection 
with the facility being financed; and
    (2) Will have an as-developed present market value determined by a 
qualified appraiser equal to or exceeding the amount of the loan to be 
obtained plus any other indebtedness against the proposed security; and
    (3) May have one of the lien requirements deleted when the loan 
approval official determines that the loan will be adequately secured 
with a lien on either the real estate or chattel property.
    (C) When security is not available in accordance with paragraphs 
(g)(2)(iii)(A) (1) through (5) of this section and State law precludes 
securing the loan with liens on real or chattel property, the loan will 
be secured in the best manner consistent with State law and customary 
security taken by private lenders in the State, such as revenue bonds, 
and any other security the loan approval official determines necessary 
for a sound loan. Such loans will otherwise meet the requirements of 
(g)(2)(iii)(A) (6) through (9) of this section as appropriate.

[[Page 139]]

    (3) Other-than-public bodies. Loans to other-than-public body 
applicants will be secured as follows:
    (i) Utility-type facilities eligible for Rural Development 
assistance under paragraph (d) of this section such as water and sewer 
systems, natural gas distribution systems, electric systems, etc., will 
be secured as follows:
    (A) Assignments of borrower income will be taken and perfected by 
filing, if legally permissable; and
    (B) A lien will be taken on the interest of the applicant in all 
land, easements, rights-of-way, water rights, water purchase contracts, 
water sales contracts, sewage treatment contracts and similar property 
rights, including leasehold interest, used, or to be used in connection 
with the facility whether owned at the time the loan is approved or 
acquired with loan funds. In unusual circumstances where it is not 
feasible to obtain a lien on such land (such as land rights obtained 
from Federal or local government agencies, and from railroads) and the 
loan approval official `determines that the interest of the United 
States otherwise is secured adequately, the lien requirement may be 
omitted as to such land rights.
    (C) When the loan is approved or the acquisition of real property is 
subject to an outstanding lien indebtedness, the next highest priority 
lien obtainable will be taken if the loan approval official determines 
that the loan is adequately secured.
    (D) Other security. Promissory notes from individuals, stock or 
membership subscription agreements, individuals member's liability 
agreements, or other evidences of debt, as well as mortgages or other 
security instruments encumbering the private property of members of the 
association may be pledged or assigned to the United States as 
additional security in any case in which the interest of the United 
States will not be otherwise adequately protected.
    (E) In those cases where there is a substantial number of other than 
full-time users and facility costs result in a higher than reasonable 
rate for such full-time users, the loan will be secured by an assignment 
or pledge of general obligation bonds, taxes, or assessments from public 
bodies or other organizations having the authority to issue bonds or 
pledge such taxes, or assessments.
    (ii) Solid waste systems. The type of security required will be 
based on State law and what is determined adequate to protect the 
interest of the United States during the repayment period of the loan.
    (iii) Essential community facilities other than utility type such as 
those for public health and safety, social, and cultural needs and the 
like will meet the following security requirements:
    (A) Such loans will be secured by one or a combination of the 
following and in the following order of preference:
    (1) An assignment of assured income that will be available for the 
life of the loan, from sources such as insurance premium rebates, income 
from endowments, irrevocable trusts, or commitments from industries, 
public bodies, or other reliable sources.
    (2) Liens on real and chattel property with an assignment of income 
from applicants who have been in existence and are able to present 
evidence of a financially successful operation of a similar facility for 
a period of time sufficient to indicate project success. National Office 
concurrence is required when the applicant has been in existence for 
less than five years or has not operated on a financially successful 
basis for at least the five years immediately prior to loan application.
    (3) Liens on real and chattel property and an assignment of income 
from an organization receiving HHS operating grants under the 
``Memorandum of Understanding Between Health Resources and Services 
Administration, U.S. Department of Health and Human Services and Rural 
Development, U.S. Department of Agriculture'' (see RD Instruction 2000-
T, available in any Rural Development office).
    (4) Liens on real and chattel property when legally permissible and 
an assignment of income from an organization proposing a facility whose 
users receive reliable income from programs such as social security, 
supplemental security income (SSI), retirement plans, long-term 
insurance annuities, medicare or medicaid. Examples are homes for the

[[Page 140]]

handicapped or institutions whose clientele receive State or local 
government assistance.
    (5) When the applicant cannot meet the criteria in paragraphs 
(g)(3)(iii)(A) (1) through (4) of this section, such proposals may be 
considered when all the following are met:
    (i) The applicant is a new organization or one that has not operated 
the type of facility being proposed.
    (ii) There is a demonstration of exceptional community support such 
as substantial financial contributions, and aggressive leadership in the 
formation of the organization and proposed project which indicates a 
commitment of the entire community.
    (iii) The State Director has determined that adequate and dependable 
revenues will be available to meet all operation expenses, debt 
repayment, and the required reserve.
    (iv) Prior National Office review and concurrence is obtained.
    (6) Additional security may be taken as determined necessary by the 
loan approval official.
    (B) Real estate and chattel property taken as security:
    (1) Ordinarily will include the property that is used in connection 
with the facility being financed; and
    (2) Will have an as-developed present market value determined by a 
qualified appraiser equal to or exceeding the amount of the loan to be 
obtained plus any other indebtedness against the proposed security; and
    (3) May have one of the lien requirements deleted when the loan 
approval official determines that the loan will be adequately secured 
with a lien on either the real estate or the chattel property.
    (h) Economic feasibility requirements. All projects financed under 
the provisions of this section must be based on taxes, assessments, 
revenues, fees, or other satisfactory sources of revenues in an amount 
sufficient to provide for facility operation and maintenance, a 
reasonable reserve, and debt payment. An overall review of the 
applicant's financial status, including a review of all assets and 
liabilities, will be a part of the docket review process by the Rural 
Development staff and approval official. If the primary use of the 
facility is by business and the success or failure of the facility is 
dependent on the business, then the economic viability of that business 
must be assessed. The number of users for a rural business will be based 
on equivalent dwelling units, which is the level of service provided to 
a typical rural residential dwelling.
    (1) Financial feasibility reports. All applicants will be expected 
to provide a financial feasibility report prepared by a qualified firm 
or individual. These financial feasibility reports will normally be:
    (i) Included as part of the preliminary engineer/architectural 
report using guides 6 through 10 as applicable; or
    (ii) Prepared by a qualified firm or individual not having a direct 
interest in the management or construction of the facility using guide 5 
when:
    (A) The project will significantly affect the applicant's financial 
operations and is not a utility-type facility but is dependent on 
revenues from the facility to repay the loan; or
    (B) It is specifically requested by Rural Development.
    (2) Applicants for loans for utility-type facilities dependent on 
users fees for debt payment shall base their income and expense forecast 
on realistic user estimates in accordance with the following:
    (i) In estimating the number of users and establishing rates or fees 
on which the loan will be based for new systems and for extensions or 
improvements to existing systems, consideration should be given to the 
following:
    (A) An estimated number of maximum initial users should not be used 
when setting user fees and rates since it may be several years before 
all residents in the community will need the services provided by the 
system. In establishing rates a realistic number of initial users should 
be employed.
    (B) User agreements from individual vacant property owners will not 
be considered when determining project feasibility unless:
    (1) The owner has plans to develop the property in a reasonable 
period of time and become a user of the facility; and

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    (2) The owner agrees in writing to make a monthly payment at least 
equal to the proportionate share of debt service attributable to the 
vacant property until the property is developed and the facility is 
utilized on a regular basis. A bond or escrowed security deposit must be 
provided to guarantee this monthly payment and to guarantee an amount at 
least equal to the owner's proportionate share of construction costs. If 
a bond is provided, it must be executed by a surety company that appears 
on the Treasury Department's most current list (Circular 570, as 
amended) and be authorized to transact business in the State where the 
project is located. The guarantee shall be payable jointly to the 
borrower and the Rural Development; and
    (3) Such guarantee will mature not later than 4 years from the date 
of execution and will be finally due and payable upon default of a 
monthly payment or at maturity, unless the property covered by the 
guarantee has been developed and the facility is being utilized on a 
regular basis.
    (C) Income from other vacant property owners will be considered only 
as extra income.
    (ii) Realistic user estimates will be established as follows:
    (A) Meaningful potential user cash contributions. Potential user 
cash contributions are required except:
    (1) For users presently receiving service, or
    (2) Where Rural Development determines that the potential users as a 
whole in the applicant's service area cannot make cash contributions, or
    (3) Where State statutes or local ordinances require mandatory use 
of the system and the applicant or legal entity having such authority 
agrees in writing to enforce such statutes, or ordinances.
    (B) The amount of cash contributions required in paragraph 
(h)(2)(ii)(A) of this section will be set by the applicant and concurred 
in by Rural Development. Contribtions should be an amount high enough to 
indicate sincere interest on the part of the potential user, but not so 
high as to preclude service to low income families. Contributions 
ordinarily should be an amount approximating one year's minimum user 
fee, and shall be paid in full before loan closing or commencement of 
construction, whichever occurs first. Once economic feasibility is 
ascertained based on a demonstration of meaningful potential user cash 
contributions, the contribution, membership fee or other fees that may 
be imposed are not a requirement of Rural Development under this 
section. However, borrowers do have an additional responsibility 
relating to generating sufficient revenues as set forth in paragraph 
(n)(2)(iii) of this section.
    (C) Enforceable user agreement. Except for users presently receiving 
service, an enforceable user agreement with a penalty clause is required 
unless State statutes or local ordinances require mandatory use of the 
system and the applicant or legal entity having such authority agrees in 
writing to enforce such statutes or ordinances.
    (iii) In those cases where all or part of the borrower's debt 
payment revenues will come from user fees, applicants must provide a 
positive program to encourage connection by all users as soon as service 
is available. The program will be available for review and approval by 
Rural Development before loan closing or commencement of construction, 
whichever occurs first. Such a program shall include:
    (A) An aggressive information program to be carried out during the 
construction period. The borrower should send written notification to 
all signed users at least three weeks in advance of the date service 
will be available, stating the date users will be expected to have their 
connections completed, and the date user charges will begin.
    (B) Positive steps to assure that installation services will be 
available. These may be provided by the contractor installing the 
system, local plumbing companies, or local contractors.
    (C) Aggressive action to see that all signed users can finance their 
connections. This might require collection of sufficient user 
contributions to finance connections. Extreme cases might necessitate 
additional loan funds for this purpose; however, loan funds should be 
used only when absolutely necessary and when approved by Rural 
Development prior to loan closing.

[[Page 142]]

    (3) Utility-type facilities for new developing communities or areas. 
Developers are normally expected to provide utility-type facilities in 
new or developing areas and such facilities shall be installed in 
compliance with appropriate State statutes and regulations. Rural 
Development will be considered to an eligible applicant in such cases 
when failure to complete development would result in an adverse economic 
condition for the rural area (not the community being developed); the 
proposal is necessary to the success of an area development plan; and 
loan repayment can be assured by:
    (i) The applicant already having sufficient assured revenues to 
repay the loan; or
    (ii) Developers providing a bond or escrowed security deposit as a 
guarantee sufficient to meet expenses attributable to the area in 
question until a sufficient number of the building sites are occupied 
and connected to the facility to provide enough revenues to meet 
operating, maintenance, debt service, and reserve requirements. Such 
guarantees from developers will meet the requirements in paragraph 
(h)(2)(i)(B) of this section; or
    (iii) Developers paying cash for the increased capital cost and any 
increased operating expenses until the developing area will support the 
increased costs; or
    (iv) The full faith and credit of a public body where the debt is 
evidenced by general obligation bonds; or
    (v) The loan is to a public body evidenced by a pledge of tax 
assessments; or
    (vi) The user charges can become a tax lien upon the property being 
served and income from such lien can be collected in sufficient time to 
be used for its intended purposes.
    (i) Reserve requirements. Provision for the accumulation of 
necessary reserves over a reasonable period of time will be included in 
the loan documents and in assessments, tax levies, or rates charged for 
services. In those cases where statutes providing for extinguishing 
assessment liens of public bodies when properties subject to such liens 
are sold for delinquent State or local taxes, special reserves will be 
established and maintained for the protection of the borrower's 
assessment lien.
    (1) General obligation or special assessment bonds. Ordinarily, the 
requirements for reserves will be considered to have been met if general 
obligation or other bonds which pledge the full faith and credit of the 
political subdivision are used, or special assessment bonds are used, 
and if such bonds provide for the annual collection of sufficient taxes 
or assessments to cover debt service, operation and maintenance, and a 
reasonable amount for emergencies and to offset the possible nonpayment 
of taxes or assessments by a percentage of the property owners, or a 
statutory method is provided to prevent the incurrence of a deficiency.
    (2) Other than general obligation or special assessment bonds. Each 
borrower will be required to establish and maintain reserves sufficient 
to assure that loan installments will be paid on time, for emergency 
maintenance, for extensions to facilities, and for replacement of short-
lived assets which have a useful life significantly less than the 
repayment period of the loan. It is expected that borrowers issuing 
bonds or other evidences of debt pledging facility revenues as security 
will ordinarily plan their reserve to provide for a total reserve in an 
amount at least equal to one average loan installment. It is also 
expected the ordinarily such reserve will be accumulated at the rate of 
at least one-tenth of the total each year until the desired level is 
reached.
    (j) General requirements--(1) Membership authorization. For 
organizations other than public bodies, the membership will authorize 
the project and its financing except that the State Director may, with 
the concurrence of OGC, accept the loan resolution without such 
membership authorization when State statutes and the organization's 
charter and bylaws do not require such authorization; and
    (i) The organization is well established and is operating with a 
sound financial base; or
    (ii) For utility-type projects the members of the organization have 
all signed an enforceable user agreement with a penalty clause and have 
made

[[Page 143]]

the required meaningful user cash contribution, except for members 
presently receiving service or when State statutes or local ordinances 
require mandatory use of the facility.
    (2) Planning, bidding, contracting, constructing. (See Sec.  
1942.18).
    (3) Insurance and fidelity bonds. The purpose of RD's insurance and 
fidelity bond requirements is to protect the government's financial 
interest based on the facility financed. The requirements below apply to 
all types of coverage determined necessary. The National Office may 
grant exceptions to normal requirements when appropriate justification 
is provided establishing that it is in the best interest of the 
applicant/borrower and will not adversely affect the government's 
interest.
    (i) General. (A) Applicants must provide evidence of adequate 
insurance and fidelity bond coverage by loan closing or start of 
construction, whichever occurs first. Adequate coverage in accordance 
with this section must then be maintained for the life of the loan. It 
is the responsibility of the applicant/borrower and not that of Rural 
Development to assure that adequate insurance and fidelity bond coverage 
is maintained.
    (B) Insurance and fidelity bond requirements by Rural Development 
shall normally not exceed those proposed by the applicant/borrower if 
the Rural Development loan approval or servicing official determines 
that proposed coverage is adequate to protect the government's financial 
interest. Applicants/borrowers are encouraged to have their attorney, 
consulting engineer/architect, and/or insurance provider(s) review 
proposed types and amounts of coverage, including any deductible 
provisions. If the FmHA or its successor agency under Public Law 103-354 
official and the applicant/borrower cannot agree on the acceptability of 
coverage proposed, a decision will be made by the State Director.
    (C) The use of deductibles, i.e., an initial amount of each claim to 
be paid by the applicant/borrower, may be allowed by Rural Development 
providing the applicant/borrower has financial resources which would 
likely be adequate to cover potential claims requiring payment of the 
deductible.
    (D) Borrowers must provide evidence to Rural Development that 
adequate insurance and fidelity bond coverage is being maintained. This 
may consist of a listing of policies and coverage amounts in yearend 
reports submitted with management reports required under Sec.  
1942.17(q)(2) or other documentation. The borrower is responsible for 
updating and/or renewing policies or coverage which expire between 
submissions to Rural Development. Any monitoring of insurance and 
fidelity bond coverage by FmHA or its successor agency under Public Law 
103-354 is solely for the benefit of FmHA or its successor agency under 
Public Law 103-354, and does not relieve the applicant/borrower of its 
obligation under the loan resolution to maintain such coverage.
    (ii) Fidelity bond. Applicants/borrowers will provide fidelity bond 
coverage for all persons who have access to funds. Coverage may be 
provided either for all individual positions or persons, or through 
``blanket'' coverage providing protection for all appropriate employees 
and/or officials. An exception may be granted by the State Director when 
funds relating to the facility financed are handled by another entity 
and it is determined that the entity has adequate coverage or the 
government's interest would otherwise be adequately protected.
    (A) The amount of coverage required by Rural Development will 
normally approximate the total annual debt service requirements for the 
Rural Development loans.
    (B) Form RD 440-24, ``Position Fidelity Schedule Bond'' may be used. 
Similar forms may be used if determined acceptable to Rural Development. 
Other types of coverage may be considered acceptable if it is determined 
by Rural Development that they fulfill essentially the same purpose as a 
fidelity bond.
    (C) Fidelity bonds must be obtained from companies holding 
certificates of authority as acceptable sureties, as prescribed in 31 
CFR part 223, ``Surety Companies doing Business with the United 
States.''

[[Page 144]]

    (iii) Insurance. The following types of coverage must be maintained 
if appropriate for the type of project and entity involved. Insurance 
must be in amounts acceptable to the Agency and at least equivalent to 
coverage for real property and equipment acquired without Federal funds.
    (A) Property insurance. Fire and extended coverage will normally be 
maintained on all structures except as noted in paragraphs 
(j)(3)(iii)(A)(1) and (2) of this section. Ordinarily, Rural Development 
should be listed as mortgagee on the policy when Rural Development has a 
lien on the property. Normally, major items of equipment or machinery 
located in the insured structures must also be covered. Exceptions:
    (1) Reservoirs, standpipes, elevated tanks, and other structures 
built entirely of noncombustible materials if such structures are not 
normally insured.
    (2) Subsurface lift stations except for the value of electrical and 
pumping equipment therein.
    (B) Liability and property damage insurance, including vehicular 
coverage.
    (C) Malpractice insurance. The need and requirements for malpractice 
insurance will be carefully and thoroughly considered in connection with 
each health care facility financed.
    (D) Flood insurance. Facilities located in special flood- and 
mudslide-prone areas must comply with the eligibility and insurance 
requirements of subpart B of part 1806 of this chapter (RD Instruction 
426.2).
    (E) Worker's compensation. The borrower will carry worker's 
compensation insurance for employees in accordance with State laws.
    (4) Acquisition of land, easements, water rights, and existing 
facilities. Applicants are responsible for acquisition of all property 
rights necessary for the project and will determine that prices paid are 
reasonable and fair. Rural Development may require an appraisal by an 
independent appraiser or Rural Development employee.
    (i) Title for land, rights-of-way, easements, or existing 
facilities. The applicant must certify and provide a legal opinion 
relative to the title to rights-of-way and easements. Form RD 442-21, 
``Rights-of-Way Certificate,'' and Form RD 442-22, ``Opinion of Counsel 
Relative to Rights-of-Way,'' may be used.
    (A) Rights-of-way and easements. Applicants are responsible for and 
will obtain valid, continuous and adequate rights-of-way and easements 
needed for the construction, operation, and maintenance of the facility. 
Form RD 442-20, ``Right-of-Way Easement,'' may be used. When a site is 
for major structures for utility-type facilities such as a reservoir or 
pumping station and the applicant is able to obtain only a right-of-way 
or easement on such a site rather than a fee simple title, the applicant 
will furnish a title report thereon by the applicant's attorney showing 
ownership of the land and all mortgages or other lien defects, 
restrictions, or encumbrances, if any. It is the responsibility of the 
applicant to obtain and record such releases, consents or subordinations 
to such property rights from holders of outstanding liens or other 
instruments as may be necessary for the construction, operation, and 
maintenance of the facility and give Rural Development the required 
security.
    (B) Title for land or existing facilities. Title to land essential 
to the successful operation of facilities or title to facilities being 
purchased, must not contain any restrictions that will adversely affect 
the suitability, successful operation, security value, or 
transferability of the facility. Title opinions must be provided by the 
applicant's attorney. The opinions must be in sufficient detail to 
assess marketability of the property. Form RD 1927-9, ``Preliminary 
Title Opinion,'' and Form RD 1927-10, ``Final Title Opinion,'' may be 
used to provide the required title opinions. If other forms are used 
they must be reviewed and approved by Rural Development and OGC.
    (1) In lieu of receiving title opinions from the applicant's 
attorney, the applicant may use a title insurance company. If a title 
insurance company is used, the company must provide RD a title insurance 
binder, disclosing all title defects or restrictions, and include a 
commitment to issue a title insurance policy. The policy should be in an 
amount at least equal to the market value of the property as improved. 
The title insurance binder and commitment

[[Page 145]]

should be provided to RD prior to requesting closing instructions. RD 
will be provided a title insurance policy which will insure RD's 
interest in the property without any title defects or restrictions which 
have not been waived by RD.
    (2) The loan approval official may waive title defects or 
restrictions, such as utility easements, that do not adversely affect 
the suitability, successful operation, security value, or 
transferability of the facility. If the District Director is the loan 
approval official and is unable to waive the defect or restriction, the 
title opinion or title insurance binder will be forwarded to the State 
Director. If the State Director, with the advice of the OGC, determines 
that the defect or restriction cannot be waived, the defect or 
restriction must be removed.
    (ii) Water rights. When legally permissible, an assignment will be 
taken on water rights owned or to be acquired by the applicant. The 
following will be furnished as applicable:
    (A) A statement by the applicant's attorney regarding the nature of 
the water rights owned or to be acquired by the applicant (such as 
conveyance of title, appropriation and decree, application and permit, 
public notice and appropriation and use).
    (B) A copy of a contract with another company or municipality to 
supply water; or stock certificates in another company which represents 
the right to receive water.
    (iii) Land purchase contract: (A) A land purchase contract (known in 
some areas as a contract for deed) is an agreement between two or more 
parties which obligates the purchaser to pay the purchase price, gives 
the purchaser the rights of immediate possession, control, and 
beneficial use of the property, and entitles the purchaser to a deed 
upon paying all or a specified part of the purchase price.
    (B) Applicants may obtain land through land purchase contracts when 
all of the following conditions are met:
    (1) The applicant has exhausted all reasonable means of obtaining 
outright fee simple title to the necessary land.
    (2) The applicant cannot obtain the land through condemnation.
    (3) There are not other suitable sites available.
    (4) National Office concurrence is obtained in accordance with 
paragraph (j)(4)(iii)(D)(2) of this section.
    (C) The land purchase contract must provide for the transfer of 
ownership by the seller without any restrictions, liens or other title 
defects. The contract must not contain provisions for future advances 
(except for taxes, insurance, or other costs needed to protect the 
security), summary cancellations, summary forfeiture, or other clauses 
that may jeopardize the Government's interest or the purchaser's ability 
to pay the Rural Development loan. The contract must provide that if the 
purchaser fails to make payment that Rural Development will be given at 
least 90 days written notice with an option to cure the default before 
the contract can be cancelled, terminated or foreclosed. Then Rural 
Development must have the option of making the payment and charging it 
to the purchaser's account, making the payment and taking over the 
ownership of the purchase contract, or taking any other action necessary 
to protect the Government's interest.
    (D) Prior to loan closing or the beginning of construction, 
whichever occurs first, the following actions must be taken in the order 
listed below:
    (1) The land purchase contract and any appropriate title opinions 
must be reviewed by the Regional Attorney to determine if they are 
legally sufficient to protect the interest of the Government.
    (2) The land purchase contract, the Regional Attorney's comments, 
and the State Director's recommendations must be submitted to the 
National Office for concurrence.
    (3) The land purchase contract must be recorded.
    (5) Lease agreements. Where the right of use or control of real 
property not owned by the applicant/borrower is essential to the 
successful operation of the facility during the life of the loan, such 
right will be evidenced by written agreements or contracts between the 
owner(s) of the property and the applicant/borrower. Lease agreements 
shall not contain provisions for restricted use of the site of facility, 
forfeiture or

[[Page 146]]

summary cancellation clauses and shall provide for the right to transfer 
and lease without restriction. Lease agreements will ordinarily be 
written for a term at least equal to the term of the loan. Such lease 
contracts or agreements will be approved by the Rural Development loan 
approval official with the advice and counsel of the Regional Attorney, 
OGC, as to the legal sufficiency of such documents. A copy of the lease 
contract or agreement will be included in the loan docket.
    (6) Notes and bonds. Notes and bonds will be completed on the date 
of loan closing except for the entry of subsequent multiple advances 
where applicable. The amount of each note will be in multiples of not 
less than $100. The amount of each bond will ordinarily be in multiples 
of not less than $1,000.
    (i) Form RD 440-22, ``Promissory Note (Association or 
Organization),'' will ordinarily be used for loans to nonpublic bodies.
    (ii) Section 1942.19 contains instructions for preparation of notes 
and bonds evidencing indebtedness of public bodies.
    (7) Environmental requirements. Environmental requirements will be 
documented by Rural Development in accordance with subpart G part 1940 
of this chapter. The applicant will provide any information required.
    (8) Health care facilities. The applicant will be responsible for 
obtaining the following documents:
    (i) A statement from the responsible State agency certifying that 
the proposed health care facility is not inconsistent with the State 
Medical Facilities Plan.
    (ii) A statement from the responsible State agency or regional 
office of the Department of Health and Services certifying that the 
proposed facility meets the standards in Sec.  1942.18(d)(4).
    (9) Public information. Applicants should inform the general public 
regarding the development of any proposed project. Any applicant not 
required to obtain authorization by vote of its membership or by public 
referendum, to incur the obligations of the proposed loan or grant, will 
hold at least one public information meeting. The public meeting must be 
held after the preapplication is filed and not later than loan approval. 
The meeting must give the citizenry an opportunity to become acquainted 
with the proposed project and to comment on such items as economic and 
environmental impacts, service area, alternatives to the project, or any 
other issue identified by Rural Development. The applicant will be 
required, at least 10 days prior to the meeting, to publish a notice of 
the meeting in a newspaper of general circulation in the service area, 
to post a public notice at the applicant's principal office, and to 
notify Rural Development. The applicant will provide Rural Development a 
copy of the published notice and minutes of the public meeting. A public 
meeting is not normally required for subsequent loans which are needed 
to complete the financing of the project.
    (10) Service through individual installation. Community owned water 
or waste disposal systems may provide service through individual 
installations or small clusters of users within the applicant's service 
area. When individual installations or small clusters are proposed, the 
loan approval official should consider items such as: quantity and 
quality of the individual installations that may be developed; cost 
effectiveness of the individual facility compared with the initial and 
long term user cost on a central system; health and pollution problems 
attributable to individual facilities; operational or management 
problems peculiar to individual installations; and permit and regulatory 
agency requirements.
    (i) Applicants providing service through individual facilities must 
meet the eligibility requirements in Sec.  1942.17(b).
    (ii) Rural Development must approve the form of agreement between 
the owner and individual users for the installation, operation and 
payment for individual facilities.
    (iii) If taxes or assessments are not pledged as security, owners 
providing service through individual facilities must obtain security as 
necessary to assure collection of any sum the individual user is 
obligated to pay the owner.
    (iv) Notes representing indebtedness owed the owner by a user for an 
individual facility will be scheduled for

[[Page 147]]

payment over a period not to exceed the useful life of the individual 
facility or the loan, whichever is shorter. The interest rate will not 
exceed the interest rate charged the owner on the Rural Development 
indebtedness.
    (v) Owners providing service through individual or cluster 
facilities must obtain:
    (A) Easements for the installation and ingress to and egress from 
the facility; and
    (B) An adequate method for denying service in the event of 
nonpayment of user fees.
    (11) Funds from other sources. Rural Development loan funds may be 
used along with or in connection with funds provided by the applicant or 
from other sources. Since ``matching funds'' is not a requirement for 
Rural Development loans, shared revenues may be used with Rural 
Development funds for project construction.
    (k) Other Federal, State, and local requirements. Each application 
shall contain the comments, necessary certifications and recommendations 
of appropriate regulatory or other agency or institution having 
expertise in the planning, operation, and management of similar 
facilities. Proposals for facilities financed in whole or in part with 
Rural Development funds will be coordinated with appropriate Federal, 
State, and local agencies in accordance with the following:
    (1) Compliance with special laws and regulations. Except as provided 
in paragraph (k)(2) of this section applicants will be required to 
comply with Federal, State, and local laws and any regulatory commission 
rules and regulations pertaining to:
    (i) Organization of the applicant and its authority to construct, 
operate, and maintain the proposed facilities;
    (ii) Borrowing money, giving security therefore, and raising 
revenues for the repayment thereof;
    (iii) Land use zoning; and
    (iv) Health and sanitation standards and design and installation 
standards unless an exception is granted by Rural Development.
    (2) Compliance exceptions. If there are conflicts between this 
subpart and state or local laws or regulatory commission regulations, 
the provisions of this subpart will control.
    (3) State Pollution Control or Environmental Protection Agency 
Standards. Water and waste disposal facilities will be designed, 
installed, and operated in such a manner that they will not result in 
the pollution of water in the State in excess of established standards 
and that any effluent will conform with appropriate State and Federal 
Water Pollution Control Standards. A certification from the appropriate 
State and Federal agencies for water pollution control standards will be 
obtained showing that established standards are met.
    (4) Consistency with other development plans. Rural Development 
financed facilities will not be inconsistent with any development plans 
of State, multijurisdictional areas, counties, or municipalities in 
which the proposed project is located.
    (5) State agency regulating water rights. Each Rural Development 
financed facility will be in compliance with appropriate State agency 
regulations which have control of the appropriation, diversion, storage 
and use of water and disposal of excess water. All of the rights of any 
landowners, appropriators, or users of water from any source will be 
fully honored in all respects as they may be affected by facilities to 
be installed.
    (6) Civil Rights Act of 1964. All borrowers are subject to, and 
facilities must be operated in accordance with, title VI of the Civil 
Rights Act of 1964 and subpart E of part 1901 of this chapter, 
particularly as it relates to conducting and reporting of compliance 
reviews. Instruments of conveyance for loans and/or grants subject to 
the Act must contain the covenant required by Sec.  1901.202(e) of 
subpart E of part 1901 of this chapter.
    (7) Title IX of the Education Amendments of 1972. No person in the 
United States shall, on the basis of sex, be excluded from participation 
in, be denied the benefits of, or be subjected to discrimination under 
any education program or education activity receiving Agency financial 
assistance except as otherwise provided for in the Education Amendments 
of title IX. The State Director will provide guidance

[[Page 148]]

and technical assistance to carry out the intent of this paragraph.
    (8) Section 504 of the Rehabilitation Act of 1973. Under section 504 
of the Rehabilitation Act of 1973, as amended (29 U.S.C. 794), no 
handicapped individual in the United States shall, solely by reason of 
their handicap, be excluded from participation in, be denied the 
benefits of, or be subjected to discrimination under any program or 
activity receiving Agency financial assistance.
    (9) Age Discrimination Act of 1975. This Act provides that no person 
in the United States shall on the basis of age, be excluded from 
participation in, be denied the benefits of, or be subjected to 
discrimination under any program or activity receiving Federal financial 
assistance. This Act also applies to programs or activities funded under 
the State and Local Fiscal Assistance Act of 1972 (31 U.S.C. 1221 et. 
seq.). This Act does not apply to: (i) age distinctions contained in 
Federal, State or local statutes or ordinances adopted by an elected, 
general purpose legislative body which provide benefits or assistance 
based on age; (ii) establish criteria for participation in age-related 
terms; (iii) describe intended beneficiaries or target groups in age-
related terms; and, (iv) any employment practice of any employer, 
employment agency, labor organization, or any labor-management joint 
apprenticeship training program except for any program or activity 
receiving Federal financial assistance for public service employment 
under the Comprehensive Employment and Training Act of 1974 (CETA) (29 
U.S.C. 801 et. seq.).
    (l) Professional services and contracts related to the facility--(1) 
Professional services. Applicants will be responsible for providing the 
services necessary to plan projects including design of facilities, 
preparation of cost and income estimates, development of proposals for 
organization and financing, and overall operation and maintenance of the 
facility. Professional services of the following may be necessary: 
Engineer, architect, attorney, bond counsel, accountant, auditor, 
appraiser, and financial advisory or fiscal agent (if desired by 
applicant). Contracts or other forms of agreement between the applicant 
and its professional and technical representatives are required and are 
subject to Agency concurrence. Form RD 1942-19, ``Agreement for 
Engineering Services,'' may be used when appropriate. Guide 20, 
``Agreement for Engineering Services (Agency/EPA--Jointly Funded 
Projects)'' may be used on projects jointly funded by RD and EPA. Guide 
14 may be used in the preparation of the legal services agreement.
    (2) Bond counsel. Unless otherwise provided by Sec.  1942.19(b), 
public bodies are required to obtain the service of recognized bond 
counsel in the preparation of evidence of indebtedness.
    (3) Contracts for other services. Contracts or other forms of 
agreements for other services including management, operation, and 
maintenance will be developed by the applicant and presented to the 
Agency for review and approval. Management agreements should provide at 
least those items in guide 24.
    (4) Fees. Fees provided for in contracts or agreements shall be 
reasonable. They shall be considered to be reasonable if not in excess 
of those ordinarily charged by the profession for similar work when the 
Agency financing is not involved.
    (m) Applying for the Agency loans--(1) Preapplication. Applicants 
desiring loans will file SF 424.2 and comments from the appropriate A-95 
clearinghouse agency normally with the appropriate Agency County Office. 
The County Supervisor will immediately forward all documents to the 
District Office. The District Director has prime responsibility for all 
community program loan making and servicing activities within the 
District.
    (2) Preapplication review. Upon receipt of the preapplication, RD 
will tentatively determine eligibility including the likelihood of 
credit elsewhere at reasonable rates and terms and availability of 
agency loan funds. The determination as to availability of other credit 
will be made after considering present rates and terms available for 
similar proposals (not necessarily based upon rates and terms available 
from Rural Development); the repayment potential of the applicant; long-
term cost to the applicant; and average user or other charges. In those 
cases where Rural Development determines that loans at reasonable rates 
and

[[Page 149]]

terms should be available from commercial sources, Rural Development 
will notify the applicant so that it may apply for such financial 
assistance. Such applicants may be reconsidered for Rural Development 
loans upon their presenting satisfactory evidence of inability to obtain 
commercial financing at reasonable rates and terms.
    (3) Incurring obligations. Applicants should not proceed with 
planning nor obligate themselves for expenditures until authorized by 
Rural Development.
    (4) Results of preapplication review. After Rural Development has 
reviewed the preapplication material and any additional material that 
may be requested, Form AD-622 will be sent to the applicant. Ordinarily 
the review will not exceed 45 days.
    (5) Application conference. Before starting to assemble the 
application and after the applicant selects its professional and 
technical representatives, it should arrange with Rural Development for 
an application conference to provide a basis for orderly application 
assembly. Rural Development will provide applicants with a list of 
documents necessary to complete the application. Guide 15 may be used 
for this purpose. Applications will be filed with the District Office.
    (6) Application completion and assembling. This is the 
responsibility of the applicant with guidance from Rural Development. 
The applicant may utilize their professional and technical 
representatives or other competent sources.
    (7) Review of decision. If an application is rejected, the applicant 
may request a review of this decision under subpart B of part 1900 of 
this chapter.
    (n) Actions prior to loan closing and start of construction--(1) 
Excess Rural Development loan and grant funds. If there is a significant 
reduction in project cost, the applicant's funding needs will be 
reassessed before loan closing or the start of construction, whichever 
occurs first. In such cases applicable Rural Development forms, the 
letter of conditions, and other items will be revised. Decreases in 
Rural Development funds will be based on revised project costs and 
current number of users, however, other factors including Rural 
Development regulations used at the time of loan/grant approval will 
remain the same. Obligated loan or grant funds not needed to complete 
the proposed project will be deobligated.
    (2) Loan resolutions. Loan resolutions will be adopted by both 
public and other-than-public bodies using Form RD 1942-47, ``Loan 
Resolution (Public Bodies),'' or Form RD 1942-9, ``Loan Resolution 
(Security Agreement).'' These resolutions supplement other provisions in 
this subpart. The applicant will agree:
    (i) To indemnify the Government for any payments made or losses 
suffered by the Government on behalf of the association. Such 
indemnification shall be payable from the same source of funds pledged 
to pay the bonds or any other legally permissible source.
    (ii) To comply with applicable local, State and Federal laws, 
regulations, and ordinances.
    (iii) To provide for the receipt of adequate revenues to meet the 
requirements of debt service, operation and maintenance, establishment 
of adequate reserves, and to continually operate and maintain the 
facility in good condition. Except for utility-type facilities, free 
service use may be permitted. If free services are extended no 
distinctions will be made in the extension of those services because of 
race, color, religion, sex, national origin, marital status, or physical 
or mental handicap.
    (iv) To acquire and maintain such insurance coverage including 
fidelity bonds, as may be required by the Government.
    (v) To establish and maintain such books and records relating to the 
operation of the facility and its financial affairs and to provide for 
required audit thereof in such a manner as may be required by the 
Government and to provide the Government without its request, a copy of 
each such audit and to make and forward to the Government such 
additional information and reports as it may, from time to time, 
require.
    (vi) To provide the Government at all reasonable times, access to 
all books and records relating to the facility and access to the 
property of the system so

[[Page 150]]

that the Government may ascertain that the association is complying with 
the provisions hereof and of the instruments incident to the making or 
insuring of the loan.
    (vii) To provide adequate service to all persons within the service 
area who can feasibly and legally be served and to obtain Rural 
Development's concurrence prior to refusing new or adequate services to 
such persons. Upon failure of the applicant to provide services which 
are feasible and legal, such person shall have a direct right of action 
against the applicant organization.
    (viii) To have prepared on its behalf and to adopt an ordinance or 
resolution for the issuance of its bonds or notes or other debt 
instruments or other such items and in such forms as are required by 
State statutes and as are agreeable and acceptable to the Government.
    (ix) To refinance the unpaid balance, in whole or in part, of its 
debt upon the request of the Government if at any time it should appear 
to the Government that the association is able to refinance its bonds by 
obtaining a loan for such purposes from responsible cooperative or 
private sources at reasonable rates and terms.
    (x) To provide for, execute, and comply with Form RD 400-4, 
``Assurance Agreement,'' and Form RD 400-1, ``Equal Opportunity 
Agreement,'' including an ``Equal Opportunity Clause,'' which is to be 
incorporated in or attached as a rider to each construction contract and 
subcontract in excess of $10,000.
    (xi)(A) To place the proceeds of the loan on deposit in a manner 
approved by the Government. Funds must be deposited and maintained in 
insured accounts whenever possible. Funds must be maintained in interest 
bearing accounts, unless the following apply:
    (1) The borrower receives less than $120,000 in Federal awards per 
year;
    (2) The best reasonably available interest-bearing account would not 
be expected to earn interest in excess of $500 per year on Federal cash 
balances;
    (3) The depository would require an average or minimum balance so 
high that it would not be feasible within the expected Federal and non-
Federal cash resources; and,
    (4) A foreign government or banking system prohibits or precludes 
interest bearing accounts.
    (B) Interest earned on Federal payments deposited in interest-
bearing accounts must be remitted annually to the Department of Health 
and Human Services, Payment Management System, Rockville, MD 20852. 
Interest amounts up to $500 per year may be retained by the non-Federal 
entity for administrative expense.
    (xii) Not to sell, transfer, lease, or otherwise encumber the 
facility or any portion thereof or interest therein, and not to permit 
others to do so, without the prior written consent of the Government.
    (xiii) Not to borrow any money from any source, enter into any 
contract or agreement, or incur any other liabilities in connection with 
making enlargements, improvements or extensions to, or for any other 
purpose in connection with the facility (exclusive of normal 
maintenance) without the prior written consent of the Government if such 
undertaking would involve the source of funds pledged to repay the debt 
to Rural Development.
    (xiv) That upon default in the payments of any principal and accrued 
interest on the bonds or in the performance of any covenant or agreement 
contained herein or in the instruments incident to making or insuring 
the loan, the Government, at its option, may:
    (A) Declare the entire principal amount then outstanding and accrued 
interest, due and payable;
    (B) For the account of the association (payable from the source of 
funds pledged to pay the bonds or notes or any other legally 
permissiable source), incur and pay reasonable expenses for repair, 
maintenance and operation of the facility and such other reasonable 
expenses as may be necessary to cure the cause of default; and/or
    (C) Take possession of the facility, repair, maintain and operate, 
or otherwise dispose of the facility. Default under the provisions of 
the resolution

[[Page 151]]

or any instrument incident to the making or insuring of the loan may be 
construed by the Government to constitute default under any other 
instrument held by the Government and executed or assumed by the 
association and default under any such instrument may be construed by 
the Government to constitute default hereunder.
    (3) Interim financing. In all loans exceeding $50,000, where funds 
can be borrowed at reasonable interest rates on an interim basis from 
commercial sources for the construction period, such interim financing 
will be obtained so as to preclude the necessity for multiple advances 
of Rural Development funds. Guide 1 or guide 1a, as appropriate, may be 
used to inform the private lender of Rural Development's commitment. 
When interim commercial financing is used, the application will be 
processed, including obtaining construction bids, to the stage where the 
Rural Development loan would normally be closed, that is immediately 
prior to the start of construction. The Rural Development loan should be 
closed as soon as possible after the disbursal of all interim funds. 
Interim financing may be for a fixed term provided the fixed term does 
not extend beyond the time projected for completion of construction. For 
this purpose, a fixed term is when the interim lender cannot be repaid 
prior to the end of the stipulated term of the interim instruments. When 
a Rural Development Water and Waste Disposal grant is included, any 
interim financing involving a fixed term must be for the total Rural 
Development loan amount. Multiple advances may be used in conjunction 
with interim commercial financing when the applicant is unable to obtain 
sufficient funds through interim commercial financing in an amount equal 
to the loan. The Rural Development loan proceeds (including advances) 
will be used to retire the interim commercial indebtedness. Before the 
Rural Development loan is closed, the applicant will be required to 
provide Rural Development with statements from the contractor, engineer, 
architect, and attorney that they have been paid to date in accordance 
with their contracts or other agreements and, in the case of the 
contractor, that any suppliers and subcontractors have been paid. If 
such statements cannot be obtained, the loan may be closed provided:
    (i) Statements to the extent possible are obtained;
    (ii) The interest of Rural Development can be adequately protected 
and its security position is not impaired; and
    (iii) Adequate provisions are made for handling the unpaid accounts 
by withholding or escrowing sufficient funds to pay such claims.
    (4) Obtaining closing instructions. After loan approval, the 
completed docket will be reviewed by the State Director. The information 
required by OGC will be transmitted to OGC with request for closing 
instructions. Upon receipt of the closing instructions from OGC, the 
State Director will forward them along with any appropriate instructions 
to the District Director. Upon receipt of closing instructions, the 
District Director will discuss with the applicant and its architect or 
engineer, attorney, and other appropriate representatives, the 
requirements contained therein and any actions necessary to proceed with 
closing.
    (5) Applicant contribution. An applicant contributing funds toward 
the project cost shall deposit these funds in its construction account 
on or before loan closing or start of construction, whichever occurs 
first. Project costs paid prior to the required deposit time with 
applicant funds shall be appropriately accounted for.
    (6) Evidence of and disbursement of other funds. Applicants 
expecting funds from other sources for use in completing projects being 
partially financed with Rural Development funds will present evidence of 
the commitment of these funds from such other sources. This evidence 
will be available before loan closing, or the start of construction, 
whichever occurs first. Ordinarily, the funds provided by the applicant 
or from other sources will be disbursed prior to the use of Rural 
Development loan funds. If this is not possible, funds will be disbursed 
on a pro rata basis. Rural Development funds will not be used to pre-
finance funds committed to the project from other sources.

[[Page 152]]

    (o) Loan closing--(1) Closing instructions. Loans will be closed in 
accordance with the closing instructions issued by OGC.
    (2) Obtaining insurance and fidelity bonds. Required property 
insurance policies, liability insurance policies, and fidelity bonds 
will be obtained by the time of loan closing or start of construction, 
whichever occurs first.
    (3) Distribution of recorded documents. The originals of the 
recorded deeds, easements, permits, certificates of water rights, 
leases, or other contracts and similar documents which are not to be 
held by Rural Development will be returned to the borrower. The original 
mortgage(s) and water stock certificates, if any, if not required by the 
recorder's office will be retained by Rural Development.
    (4) Review of loan closing. In order to determine that the loan has 
been properly closed the loan docket will be reviewed by the State 
Director and OGC.
    (p) Project monitoring and fund delivery during construction--(1) 
Coordination of funding sources. When a project is jointly financed, the 
State Director will reach any needed agreement or understanding with the 
representatives of the other source of funds on distribution of 
responsibilities for handling various aspects of the project. These 
responsibilities will include supervision of construction, inspections 
and determinations of compliance with appropriate regulations concerning 
equal employment opportunities, wage rates, nondiscrimination in making 
services or benefits available, and environmental compliance. If any 
problems develop which cannot be resolved locally, complete information 
should be sent to the National Office for advice.
    (2) Multiple advances. In the event interim commercial financing is 
not legally permissible or not available, multiple advances of Rural 
Development loan funds are required. An exception to this requirement 
may be granted by the National Office when a single advance is 
necessitated by State law or public exigency. Multiple advances will be 
used only for loans in excess of $50,000. Advances will be made only as 
needed to cover disbursements required by the borrower over a 30-day 
period. Advances should not exceed 24 in number nor extend longer than 
two years beyond loan closing. Normally, the retained percentage 
withheld from the contractor to assure construction completion will be 
included in the last advance.
    (i) Section 1942.19 contains instructions for making multiple 
advances to public bodies.
    (ii) Advances will be requested by the borrower in writing. The 
request should be in sufficient amounts to pay cost of construction, 
rights-of-way and land, legal, engineering, interest, and other expenses 
as needed. The applicant may use Form RD 440-11, ``Estimate of Funds 
Needed for 30 Day Period Commencing ___,'' to show the amount of funds 
needed during the 30-day period.
    (iii) Rural Development loan funds obligated for a specific purpose, 
such as the paying of interest, but not needed at the time of loan 
closing will remain in the Finance Office until needed unless State 
statutes require all funds to be delivered to the borrower at the time 
of closing. Loan funds may be advanced to prepay costs under paragraph 
(d)(1)(iv)(G) of this section. If all funds must be delivered to the 
borrower at the time of closing to comply with State statutes, funds not 
needed at loan closing will be handled as follows:
    (A) Deposited in an appropriate borrower account, such as the debt 
service account, or
    (B) Deposited in a supervised bank account under paragraph (p)(3)(i) 
of this section.
    (3) Use and accountability of funds--(i) Supervised bank account. 
Rural Development loan funds and any funds furnished by the applicant/
borrower to supplement the loan including contributions to purchase 
major items of equipment, machinery, and furnishings may be deposited in 
a supervised bank account if determined necessary as provided in subpart 
A of part 1902 of this chapter. When Rural Development has a Memorandum 
of Understanding with another agency that provides for the use of 
supervised bank accounts, or when Rural Development is the primary 
source of funds for a project and has determined that the use of a 
supervised bank account is necessary,

[[Page 153]]

project funds from other sources may also be deposited in the supervised 
bank account. Rural Development shall not be accountable to the source 
of the other funds nor shall Rural Development undertake responsibility 
to administer the funding program of the other entity. Supervised bank 
accounts should not be used for funds advanced by an interim lender.
    (ii) Other than supervised bank account. If a supervised bank 
account is not used, arrangements will be agreed upon for the prior 
concurrence by Rural Development of the bills or vouchers upon which 
warrants will be drawn, so that the payments from loan funds can be 
controlled and Rural Development records kept current. If a supervised 
bank account is not used, use Rural Development 402-2, ``Statement of 
Deposits and Withdrawals,'' or similar form to monitor funds. Periodic 
reviews of nonsupervised accounts shall be made by Rural Development at 
the times and in the manner as Rural Development prescribes in the 
conditions of loan approval. State laws regulating the depositories to 
be used shall be complied with.
    (iii) Use of minority owned banks. Applicants are encouraged to use 
minority banks (a bank which is owned at least 50 percent by minority 
group members) for the deposit and disbursement of funds. A list of 
minority owned banks can be obtained from the Office of Minority 
Business Enterprise, Department of Commerce, Washington, DC 20230 and is 
also available in all Rural Development offices.
    (4) Development inspections. The District Director will be 
responsible for monitoring the construction of all projects being 
financed, wholly or in part, with Rural DevelopmentFmHA or its successor 
agency under Public Law 103-354 funds. Technical assistance will be 
provided by the State Director's staff. Project monitoring will include 
construction inspections and a review of each project inspection report, 
each change order and each partial payment estimate and other invoices 
such as payment for engineering/architectural and legal fees and other 
materials determined necessary to effectively monitor each project. 
These activities will not be performed on behalf of the applicant/
borrower, but are solely for the benefit of Rural Development and in no 
way are intended to relieve the applicant/borrower of corresponding 
obligations to conduct similar monitoring and inspection activities. 
Project monitoring will include periodic inspections to review partial 
payment estimates prior to their approval and to review project 
development in accordance with plans and specifications. Each inspection 
will be recorded using Form RD 1924-12, ``Inspection Report.'' The 
original Form RD 1924-12 will be filed in the project case folder and a 
copy furnished to the State Director. The State Director will review 
inspection reports and will determine that the project is being 
effectively monitored. The District Director is authorized to review and 
accept partial payment estimates prepared by the contractor and approved 
by the borrower, provided the consulting engineer or architect, if one 
is being utilized for the project, has approved the estimate and 
certified that all material purchased or work performed is in accordance 
with the plans and specifications, or if a consulting engineer or 
architect is not being utilized, the District Director has determined 
that the funds requested are for authorized purposes. If there is any 
indication that construction is not being completed in accordance with 
the plans and specifications or that any other problems exist, the 
District Director should notify the State Director immediately and 
withhold all payments on the contract.
    (5) Payment for construction. Each payment for project costs must be 
approved by the borrower's governing body. Payment for construction must 
be for amounts shown on payment estimate forms. Form RD 1924-18, 
``Partial Payment Estimate,'' may be used for this purpose or other 
similar forms may be used with the prior approval of the State Director 
or designee. However, the State Director or designee cannot require a 
greater reporting burden than is required by Form RD 1924-18. Advances 
for contract retainage will not be made until such retainage is due and 
payable under the terms of the contract. The review and acceptance of 
project costs, including construction partial payment estimates by

[[Page 154]]

the Agency, does not attest to the correctness of the amounts, the 
quantities shown, or that the work has been performed under the terms of 
agreements or contracts.
    (6) Use of remaining funds. Funds remaining after all costs incident 
to the basic project have been paid or provided for will not include 
applicant contributions. Applicant contributions will be considered as 
funds initially expended for the project. Funds remaining, with 
exception of applicant contributions, may be considered in direct 
proportion to the amount obtained from each source. Remaining funds will 
be handled as follows:
    (i) Agency loan and/or grant funds. Remaining funds may be used for 
purposes authorized by paragraph (d) of this section, provided the use 
will not result in major changes to the facility design or project and 
that the purposes of the loan and/or grant remains the same.
    (A) On projects that only involve an agency loan and no agency 
grant, funds that are not needed will be applied as an extra payment on 
the RD indebtedness unless other disposition is required by the bond 
ordinance, resolution, or State statute.
    (B) On projects that involve an agency grant, all remaining agency 
funds will be considered to be grant funds up to the full amount of the 
grant. Grant funds not expended under paragraph (p)(6)(i) of this 
section will be deobligated.
    (ii) Funds from other sources. Funds remaining from other sources 
will be handled according to rules, regulations and/or the agreement 
governing their participation in the project.
    (q) Borrower accounting methods, management reporting and audits. 
(1) Annual financial statements. Borrowers are required to provide the 
Agency with annual financial statements for the life of the loan as 
outlined in the Letter of Conditions issued by the Agency. The financial 
statements are the responsibility of the borrower's governing body. The 
type of statement required is dependent on the amount of Federal 
financial assistance received during the borrower's fiscal year. Federal 
financial assistance includes Federal assistance that a non-Federal 
entity received or administered during the entity's fiscal year in the 
form of grants, loans, and loan guarantees. A Federal award is Federal 
financial assistance a non-Federal entity received directly from Federal 
awarding agencies or indirectly from pass-through entities. Federal 
awards expended generally pertain to events that require the non-Federal 
entity to comply with Federal Statues, regulations, and terms and 
conditions of federal awards, such as: expenditure/expense transactions 
associated with grants, cost-reimbursement contracts, cooperative 
agreements, and direct appropriations; the disbursement of funds passed 
through to sub-recipients; the use of loan proceeds under loan and loan 
guarantee programs; the receipt of property; the receipt of surplus 
property; the receipt or use of program income; the distribution or 
consumption of food commodities; the disbursement of amounts entitling 
the non-Federal entity to an interest subsidy; and, the period when 
insurance is in force.
    (2) Method of accounting and preparation of financial statements. 
Annual organization-wide financial statements must be prepared on the 
accrual basis of accounting, in accordance with Generally Accepted 
Accounting Principles (GAAP), unless State statute, tribal law or 
regulatory agencies provide otherwise, or an exception is granted by the 
Agency. An organization may maintain its accounting records on a basis 
other than accrual accounting, and make the necessary adjustments so 
that annual financial statements are presented on the accrual basis.
    (3) Record retention. Each Applicant will retain all records, books, 
and supporting material for 3 years after the issuance of the audit or 
management reports, or for a time period required by other agencies or 
common business practice, whichever is longer. Upon request, this 
material will be made available to Rural Development, OIG, USDA, the 
Comptroller General, or to their assignees.
    (4) Audits. Any applicant that expends $750,000 or more in Federal 
financial assistance during their fiscal year must submit an audit 
report conducted in accordance with 2 CFR part 200, subpart F, ``Audit 
Requirements.'' Applicants expending less than $750,000 in

[[Page 155]]

Federal financial assistance per fiscal year are exempt from 2 CFR part 
200 audit requirements. All audits are to be performed in accordance 
with the latest revision of the Generally Accepted Government Accounting 
Standards (GAGAS), developed by the Comptroller General of the United 
States. Further guidance on preparing an acceptable audit can be 
obtained from any Agency office. It is not intended that audits required 
by this part be separate and apart from audits performed in accordance 
with State and local laws. To the extent feasible, the audit work should 
be done in conjunction with those audits. Audits should be supplied to 
the Processing Official within the timeframes stated in paragraph (f) of 
this section. OMB Circulars and Agency Compliance Supplements are 
available in any USDA/Agency office or OMB's Web site. Any state, local 
government, or Indian tribe that is required by constitution or state 
statute, in effect on January 1, 1987, to undergo its audits less 
frequently than annually, is permitted to undergo its audits biennially, 
pursuant to 2 CFR 200.504(a). This requirement must still be in effect 
for the biennial period. Any nonprofit organization that had biennial 
audits for all biennial periods ending between July 1, 1992, and January 
1, 1995, is permitted to undergo its audits biennially, pursuant to 2 
CFR 200.504(b). All biennial audits must cover both years within the 
biennial period.
    (5) Exemption from audits. Except as noted in 2 CFR 200.503, 
Relation to other audit requirement, public bodies or nonprofits 
expending less than $750,000 in Federal awards during its fiscal year, 
whose payments are current, and are having no signs of operational or 
financial difficulty may submit a management report. A management 
report, at a minimum, will include a balance sheet and income and 
expense statement. Financial information may be reported on Form RD 442-
2, ``Statement of Budget, Income and Equity'' and RD Form 442-3, 
``Balance Sheet'', or similar. The following management data will be 
submitted by the borrower to the servicing office. Records must be 
available for review or audit by appropriate officials of the Federal 
agency, pass-through entity, and Government Accountability Office (GAO).
    (i) Annual management reports. Thirty days prior to the beginning of 
each fiscal year the following will be submitted to the Servicing 
Official:
    (A) One copy of the proposed annual budget. The borrower will submit 
two copies of Form RD 442-2, or equivalent, Statement of Budget, Income 
and Equity, Schedule 1, page 1; and Schedule 2, Projected Cash Flow. The 
only data required at this time is Schedule 1, page 1, Column 3, annual 
budget, and all of Schedule 2, Projected Cash Flow.
    (B) An annual audit report may be submitted in lieu of Forms RD 442-
2 and 442-3.
    (ii) [Reserved]
    (6) Deadlines for submitting audits and management reports. In 
accordance with 2 CFR part 200, audits must be submitted no later than 9 
months after the end of the fiscal year or 30 days after the borrower's 
receipt of the auditor's reports, whichever is earlier. Management 
reports must be submitted no later than 2 months after the end of the 
borrower's fiscal year.
    (7) Additional information to be submitted with audits and 
management reports. (i) Insurance. Agency borrowers will maintain 
adequate insurance coverage as required by the loan resolution and Sec.  
1942.17(j)(3). The servicing official is required to monitor insurance 
annually after the initial insurance verification.
    (ii) Reserve account(s). Borrowers will provide documentation that 
the Agency required reserve account(s) is properly funded;
    (iii) Property tax information. If applicable, documentation that 
property taxes have been paid and are current.
    (iv) A list of directors and officers.
    (8) Quarterly reports. A quarterly management report will be 
required for the first full year of operations for new borrowers, and 
existing borrowers operating a new facility, starting a new type of 
operation or proposing a significant expansion of an existing facility. 
Borrowers should submit the following to the Servicing Official:
    (i) One copy of Form RD 442-2, or equivalent, Schedule 1, page 1, 
columns

[[Page 156]]

4-6, as appropriate, and page 2. This information should be received in 
the Servicing Office 30 days after the end of each of the first three 
quarters of the fiscal year.
    (ii) The Servicing Office may request a borrower experiencing 
financial or management problems to submit quarterly copies of Form RD 
442-2, or equivalent, Schedule 1, pages 1 and 2.

[50 FR 7296, Feb. 22, 1985]

    Editorial Note: For Federal Register citations affecting Sec.  
1942.17, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and at www.fdsys.gov.



Sec.  1942.18  Community facilities--Planning, bidding, contracting,
constructing.

    (a) General. This section is specifically designed for use by owners 
including the professional or technical consultants and/or agents who 
provide assistance and services such as architectural, engineering, 
inspection, financial, legal or other services related to planning, 
bidding, contracting, and constructing community facilities. These 
procedures do not relieve the owner of the contractual obligations that 
arise from the procurement of these services. For this section, an owner 
is defined as an applicant, borrower, or grantee.
    (b) Technical services. Owners are responsible for providing the 
engineering or architectural services necessary for planning, designing, 
bidding, contracting, inspecting, and constructing their facilities. 
Services may be provided by the owner's ``in house'' engineer or 
architect or through contract, subject to Rural Development concurrence. 
Architects and engineers must be licensed in the State where the 
facility is to be constructed.
    (c) Preliminary reports. Preliminary architectural and engineering 
reports must conform with customary professional standards. Preliminary 
report guidelines for water, sanitary sewer, solid waste, storm sewer, 
and other essential community facilities are available from Rural 
Development.
    (d) Design policies. Facilities financed by Rural Development will 
be designed and constructed in accordance with sound engineering and 
architectural practices, and must meet the requirements of Federal, 
State and local agencies.
    (1) Natural resources. Facility planning should be responsive to the 
owner's needs and should consider the long-term economic, social and 
environmental needs as set forth in this section. Rural Development's 
environmental considerations are under subpart G of part 1940 of this 
chapter.
    (i) Floodplains and wetlands. Facilities must avoid, to the extent 
possible, the long- and short-term adverse impacts associated with the 
occupancy and modification of floodplains and wetlands, and avoid direct 
or indirect support of floodplain and wetland development whenever there 
is a practicable alternative. This subject is more fully discussed in 
Executive Order 11988, Executive Order 11990, and Water Resources 
Council's Floodplain Management Guidelines (43 FR 6030) which is 
available in all Rural Development offices. Facilities located in 
special flood and mudslide prone areas must comply with the Rural 
Development's eligibility and insurance requirements in subpart B of 
part 1806 of this chapter (RD Instruction 426.2).
    (ii) Coastal zone management. Facilities shall be designed and 
constructed in a manner consistent with approved State management 
programs, under the Coastal Zone Management Act of 1972 (Pub. L. 92-583 
section 307 (c)(1) and (2)) as supplemented by the Department of 
Commerce regulations 15 CFR part 930.
    (iii) Wild and scenic rivers. Facilities shall be designed and 
constructed in order that designated wild and scenic rivers be preserved 
in free-flowing condition and that they and their immediate environments 
be protected for the benefit and enjoyment of present and future 
generations under the Wild and Scenic Rivers Act of 1978 (Pub. L. 95-
625).
    (iv) Endangered species. Facilities shall be designed and 
constructed in a manner to conserve, to the extent practicable, the 
various endangered and threatened species of fish or wildlife and 
plants, and will not jeopardize their continued existence and will not 
result in destruction or modification of

[[Page 157]]

the habitat of species in the Endangered Species Act of 1973 (Pub. L. 
93-205).
    (2) Historic preservation. Facilities should be designed and 
constructed in a manner which will contribute to the preservation and 
enhancement of sites, structures, and objects of historical, 
architectural, and archaeological significance. All facilities must 
comply with the National Historic Preservation Act of 1966 (16 U.S.C 
470) as supplemented by 36 CFR part 800 and Executive Order 11593, 
``Protection and Enhancement of the Cultural Environment.'' subpart F of 
part 1901 of this chapter sets forth procedures for the protection of 
Historic and Archaeological Properties.
    (3) Architectural barriers. All facilities intended for or 
accessible to the public or in which physically handicapped persons may 
be employed or reside must be developed in compliance with the 
Architectural Barriers Act of 1968 (Pub. L. 90-480) as implemented by 
the General Services Administration regulations 41 CFR 101-19.6 and 
section 504 of the Rehabilitation Act of 1973 (Pub. L. 93-112) as 
implemented by 7 CFR parts 15 and 15b.
    (4) Health care facilities. The proposed facility must meet the 
minimum standards for design and construction contained in the American 
Institute of Architects Press Publication No. ISBN 0-913962-96-1, 
``Guidelines for Construction and Equipment of Hospital and Medical 
Facilities,'' 1987 Edition. The facility must also meet the life/safety 
aspects of the 1985 edition of the National Fire Protection Association 
(NFPA) 101 Life Safety Code, or any subsequent code that may be 
designated by the Secretary of HHS. All publications referenced in this 
section are available in all Rural Development State Offices. Under 
Sec.  1942.17(j)(8)(ii) of this subpart, a statement by the responsible 
regulatory agency that the facility meets the above standards will be 
required. Any exceptions must have prior National Office concurrence.
    (5) Energy conservation. Facility design should consider cost 
effective energy saving measures or devices.
    (6) Lead base paints. Lead base paints shall not be used in 
facilities designed for human habitation. Owners must comply with the 
Lead Base Paints Poisoning and Prevention Act of 1971 (42 U.S.C. 4801) 
and the National Consumer Health Information and Health Promotion Act of 
1976 (Pub. L. 94-317) with reference to paint specifications used 
according to exhibit H of subpart A of part 1924 of this chapter.
    (7) Fire protection. Water facilities must have sufficient capacity 
to provide reasonable fire protection to the extent practicable.
    (8) Growth capacity. Facilities must have sufficient capacity to 
provide for reasonable growth to the extent practicable.
    (9) Water conservation. Owners are encouraged, when economically 
feasible, to incorporate water conservation practices into a facility's 
design. For existing water systems, evidence must be provided showing 
that the distribution system water losses do not exceed reasonable 
levels.
    (10) Water quality. All water facilities must meet the requirements 
of the Safe Drinking Water Act (Pub. L. 93-523) and provide water of a 
quality that meets the current Interim Primary Drinking Water 
Regulations (40 CFR part 141).
    (11) Combined sewers. New combined sanitary and storm water sewer 
facilities will not be financed by Rural Development. Extensions to 
existing combined systems can only be financed when separate systems are 
impractical.
    (12) Compliance. All facilities must meet the requirements of 
Federal, State, and local agencies having the appropriate jurisdiction.
    (13) Dam safety. Projects involving any artificial barrier which 
impounds or diverts water, or the rehabilitation or improvement of such 
a barrier, should comply with the provisions for dam safety as discussed 
in the Federal Guidelines for Dam Safety (Government Printing Office 
stock No. 041-001-00187-5) as prepared by the Federal Coordinating 
Council for Science, Engineering and Technology.
    (14) Pipe. All pipe used shall meet current American Society for 
Testing Materials (ASTM) or American Water Works Association (AWWA) 
standards.
    (15) Water system testing. For new water systems or extensions to 
existing

[[Page 158]]

water systems, leakage shall not exceed 10 gallons per inch of pipe 
diameter per mile of pipe per 24 hours when tested at 1\1/2\ times the 
working pressure or rated pressure of the pipe, whichever is greater.
    (16) Metering devices. Water facilities financed by Rural 
Development will have metering devices for each connection. An exception 
to this requirement may be granted by the Rural Development's State 
Director when the owner demonstrates that installation of metering 
devices would be a significant economic detriment and that environmental 
consideration would not be adversely affected by not installing such 
devices.
    (17) Seismic safety. (i) All new building construction shall be 
designed and constructed in accordance with the seismic provisions of 
one of the following model building codes or the latest edition of that 
code providing an equivalent level of safety to that contained in latest 
edition of the National Earthquake Hazard Reduction Program's (NEHRP) 
Recommended Provisions for the Development of Seismic Regulations for 
New Building (NEHRP Provisions):
    (A) 1991 International Conference of Building Officials (ICBO) 
Uniform Building Code;
    (B) 1993 Building Officials and Code Administrators International, 
Inc. (BOCA) National Building Code; or
    (C) 1992 Amendments to the Southern Building Code Congress 
International (SBCCI) Standard Building Code.
    (ii) The date, signature, and seal of a registered architect or 
engineer and the identification and date of the model building code on 
the plans and specifications will be evidence of compliance with the 
seismic requirements of the appropriate building code.
    (e) Construction contracts. Contract documents must be sufficiently 
descriptive and legally binding in order to accomplish the work as 
economically and expeditiously as possible.
    (1) Standard construction contract documents are available from 
Rural Development. When Rural Development's standard construction 
contract documents are used, it will normally not be necessary for the 
Office of the General Counsel (OGC) to perform a detailed legal review. 
If the construction contract documents utilized are not in the format of 
guide forms previously approved by Rural Development, OGC's review of 
the construction contract documents will be obtained prior to their use.
    (2) Contract review and approval. The owner's attorney will review 
the executed contract documents, including performance and payment 
bonds, and will certify that they are adequate, and that the persons 
executing these documents have been properly authorized to do so. The 
contract documents, bids bonds, and bid tabulation sheets will be 
forwarded to Rural Development for approval prior to awarding. All 
contracts will contain a provision that they are not in full force and 
effect until they have been approved by Rural Development. The Rural 
Development State Director or designee is responsible for approving 
construction contracts with the legal advice and guidance of the OGC 
when necessary.
    (3) Separate contracts. Arrangements which split responsibility of 
contractors (separate contracts for labor and material, extensive 
subcontracting and multiplicity of small contracts on the same job), 
should be avoided whenever it is practical to do so. Contracts may be 
awarded to suppliers or manufacturers for furnishing and installing 
certain items which have been designed by the manufacturer and delivered 
to the job site in a finished or semifinished state such as 
perfabricated buildings and lift stations. Contracts may also be awarded 
for material delivered to the job site and installed by a patented 
process or method.
    (f) Utility purchase contracts. Applicants proposing to purchase 
water or other utility service from private or public sources shall have 
written contracts for supply or service which are reviewed and approved 
by the Rural Development State Director or designee. To the extent 
practical, Rural Development review and approval of such contracts 
should take place prior to their execution by the owner. Form RD 442-30, 
``Water Purchase Contract,'' may be used when appropriate. If the Rural 
Development loan will be repaid from system revenues, the contract will 
be pledged to Rural Development

[[Page 159]]

as part of the security for the loan. Such contracts will:
    (1) Include a commitment by the supplier to furnish, at a specified 
point, an adequate quantity of water or other service and provide that, 
in case of shortages, all of the supplier's users will proportionately 
share shortages. If it is impossible to obtain a firm commitment for 
either an adequate quantity or sharing shortages proportionately, a 
contract may be executed and approved provided adequate evidence is 
furnished to enable Rural Development to make a determination that the 
supplier has adequate supply and/or treatment facilities to furnish its 
other users and the applicant for the foreseeable future; and
    (i) The supplier is subject to regulations of the Federal Energy 
Regulatory Commission or other Federal or State agency whose 
jurisdiction can be expected to prevent unwarranted curtailment of 
supply; or
    (ii) A suitable alternative supply could be arranged within the 
repayment ability of the borrower if it should become necessary; or
    (iii) Prior approval is obtained from the National Office. The 
following information should be submitted to the National Office:
    (A) Transmittal memorandum including:
    (1) Alternative supplies considered; and
    (2) Recommendations and comments; and
    (3) Any other necessary supporting information.
    (B) Copies of the following:
    (1) Proposed letter of conditions; and
    (2) Form RD 442-7, ``Operating Budget''; and
    (3) Form RD 442-3, ``Balance Sheet''; and
    (4) Preliminary Engineering Report; and
    (5) Proposed Contract.
    (C) Owner and Rural Development engineer's comments and 
recommendations.
    (D) Documentation and statement from the supplier that it has an 
adequate supply and treatment facilities available to meet the needs of 
its users and the owner for the foreseeable future.
    (2) Set out the ownership and maintenance responsibilities of the 
respective parties including the master meter if a meter is installed at 
the point of delivery.
    (3) Specify the initial rates and provide some kind of escalator 
clause which will permit rates for the association to be raised or 
lowered proportionately as certain specified rates for the supplier's 
regular customers are raised or lowered. Provisions may be made for 
altering rates in accordance with the decisions of the appropriate State 
agency which may have regulatory authority.
    (4) Run for a period of time which is at least equal to the 
repayment period of the loan. State Directors may approve contracts for 
shorter periods of time if the supplier cannot legally contract for such 
period, or if the owner and supplier find it impossible or impractical 
to negotiate a contract for the maximum period permissible under State 
law, provided:
    (i) The supplier is subject to regulations of the Federal Energy 
Regulatory Commission or other Federal or State agency whose 
jurisdiction can be expected to prevent unwarranted curtailment of 
supply; or
    (ii) The contract contains adequate provisions for renewal; or
    (iii) A determination is made that in the event the contract is 
terminated, there are or will be other adequate sources available to the 
owner that can feasibly be developed or purchased.
    (5) Set out in detail the amount of connection or demand charges, if 
any, to be made by the supplier as a condition to making the service 
available to the owner. However, the payment of such charges from loan 
funds shall not be approved unless Rural Development determines that it 
is more feasible and economical for the owner to pay such a connection 
charge than it is for the owner to provide the necessary supply by other 
means.
    (6) Provide for a pledge of the contract to Rural Development as 
part of the security for the loan.
    (7) Not contain provisions for:
    (i) Construction of facilities which will be owned by the supplier. 
This does not preclude the use of money

[[Page 160]]

paid as a connection charge for construction to be done by the supplier.
    (ii) Options for the future sale or transfer. This does not preclude 
an agreement recognizing that the supplier and owner may at some future 
date agree to a sale of all or a portion of the facility.
    (g) Sewage treatment and bulk water sales contracts. Owners entering 
into agreements with private or public parties to treat sewage or supply 
bulk water shall have written contracts for such service and all such 
contracts shall be subject to Rural Development concurrence. Paragraph 
(f) of this section should be used as a guide to prepare such contracts.
    (h) Performing construction. Owners are encouraged to accomplish 
construction through contracts with recognized contractors. Owners may 
accomplish construction by using their own personnel and equipment 
provided the owners possess the necessary skills, abilities and 
resources to perform the work and provided a licensed engineer or 
architect prepares design drawings and specifications and inspects 
construction and furnishes inspection reports as required by paragraph 
(o) of this section. For other than utility-type facilities, inspection 
services may be provided by individuals as approved by the Rural 
Development State Director. In either case, the requirements of 
paragraph (j) of this section apply. Payments for construction will be 
handled under Sec.  1942.17(p)(5) of this part.
    (i) Owner's contractual responsibility. This subpart does not 
relieve the owner of any contractual responsibilities under its 
contract. The owner is responsible for the settlement of all 
contractural and administrative issues arising out of procurements 
entered into in support of a loan or grant. These include, but are not 
limited to: source evaluation, protests, disputes, and claims. Matters 
concerning violation of laws are to be referred to the local, State, or 
Federal authority as may have jurisdiction.
    (j) Owner's procurement regulations. Owner's procurement regulations 
must comply with the following standards:
    (1) Code of conduct. Owners shall maintain a written code or 
standards of conduct which shall govern the performance of their 
officers, employees or agents engaged in the award and administration of 
contracts supported by Rural Development funds. No employee, officer or 
agent of the owner shall participate in the selection, award, or 
administration of a contract supported by Rural Development funds if a 
conflict of interest, real or apparent, would be involved. Examples of 
such conflicts would arise when: the employee, officer or agent; any 
member of their immediate family; their partner; or an organization 
which employs, or is about to employ, any of the above; has a financial 
or other interest in the firm selected for the award.
    (i) The owner's officers, employees or agents shall neither solicit 
nor accept gratuities, favors or anything of monetary value from 
contractors, potential contractors, or parties of subagreements.
    (ii) To the extent permitted by State or local law or regulations, 
the owner's standards of conduct shall provide for penalties, sanctions, 
or other disciplinary actions for violations of such standards by the 
owner's officers, employees, agents, or by contractors or their agents.
    (2) Maximum open and free competition. All procurement transactions, 
regardless of whether by sealed bids or by negotiation and without 
regard to dollar value, shall be conducted in a manner that provides 
maximum open and free competition. Procurement procedures shall not 
restrict or eliminate competition. Examples of what are considered to be 
restrictive of competition include, but are not limited to: Placing 
unreasonable requirements on firms in order for them to qualify to do 
business; noncompetitive practices between firms; organizational 
conflicts of interest; and unnecessary experience and bonding 
requirements. In specifying material(s), the owner and its consultant 
will consider all materials normally suitable for the project 
commensurate with sound engineering practices and project requirements. 
For a water or waste disposal facility, Rural Development shall consider 
fully any recommendation made by the loan applicant or borrower 
concerning the technical design and choice of materials to be used for 
such a facility. If

[[Page 161]]

Rural Development determines that a design or material, other than those 
that were recommended should be considered by including them in the 
procurement process as an acceptable design or material in the water or 
waste disposal facility, Rural Development shall provide such applicant 
or borrower with a comprehensive justification for such a determination. 
The justification will be documented in writing.
    (3) Owner's review. Proposed procurement actions shall be reviewed 
by the owner's officials to avoid the purchase of unnecessary or 
duplicate items. Consideration should be given to consolidation or 
separation of procurement items to obtain a more economical purchase. 
Where appropriate, an analysis shall be made of lease versus purchase 
alternatives, and any other appropriate analysis to determine which 
approach would be the most economical. To foster greater economy and 
efficiency, owners are encouraged to enter into State and local 
intergovernmental agreements for procurement or use of common goods and 
services.
    (4) Solicitation of offers, whether by competitive sealed bids or 
competitive negotiation, shall:
    (i) Incorporate a clear and accurate description of the technical 
requirements for the material, product, or service to be procured. The 
description shall not, in competitive procurements, contain features 
which unduly restrict competition. The description may include a 
statement of the qualitative nature of the material, product or service 
to be procured, and when necessary shall set forth those minimum 
essential characteristics and standards to which it must conform if it 
is to satisfy its intended use. Detailed product specifications should 
be avoided if at all possible. When it is impractical or uneconomical to 
make a clear and accurate description of the technical requirements, a 
``brand name or equal'' description may be used to define the 
performance or other salient requirements of a procurement. The specific 
features of the named brands which must be met by offerors shall be 
clearly stated.
    (ii) Clearly specify all requirements which offerors must fulfill 
and all other factors to be used in evaluating bids or proposals.
    (5) Small, minority, and women's businesses and labor surplus area 
firms. (i) affirmative steps should be taken to assure that small and 
minority businesses are utilized when possible as sources of supplies, 
equipment, construction and services. Affirmative steps shall include 
the following:
    (A) Include qualified small and minority businesses on solicitation 
lists.
    (B) Assure that small and minority businesses are solicited whenever 
they are potential sources.
    (C) When economically feasible, divide total requirements into 
smaller tasks or quantities so as to permit maximum small and minority 
business participation.
    (D) Where the requirement permits, establish delivery schedules 
which will encourage participation by small and minority businesses.
    (E) Use the services and assistance of the Small Business 
Administration and the Office of Minority Business Enterprise of the 
Department of Commerce.
    (F) If any subcontracts are to be let, require the prime contractor 
to take the affirmative steps in paragraphs (j)(5)(i) (A) through (E) of 
this section.
    (ii) Owners shall take similar appropriate affirmative action in 
support of women's businesses.
    (iii) Owners are encouraged to procure goods and services from labor 
surplus areas.
    (iv) Owners shall submit a written statement or other evidence to 
Rural Development of the steps taken to comply with paragraphs (j)(5)(i) 
(A) through (F), (j)(5)(ii), and (j)(5)(iii) of this section.
    (6) Contract pricing. Cost plus a percentage of cost method of 
contracting shall not be used.
    (7) Unacceptable bidders. The following will not be allowed to bid 
on, or negotiate for, a contract or subcontract related to the 
construction of the project:
    (i) An engineer or architect as an individual or firm who has 
prepared plans and specifications or who will be responsible for 
monitoring the construction;
    (ii) Any firm or corporation in which the owner's architect or 
engineer is an

[[Page 162]]

officer, employee, or holds or controls a substantial interest;
    (iii) The governing body's officers, employees, or agents;
    (iv) Any member of the immediate family or partners in paragraphs 
(j)(7)(i), (j)(7)(ii), or (j)(7)(iii) of this section; or
    (v) An organization which employs, or is about to employ, any person 
in paragraph (j)(7)(i), (j)(7)(ii), (j)(7)(iii) or (j)(7)(iv) of this 
section.
    (8) Contract award. Contracts shall be made only with responsible 
parties possessing the potential ability to perform successfully under 
the terms and conditions of a proposed procurement. Consideration shall 
include but not be limited to matters such as integrity, record of past 
performance, financial and technical resources, and accessibility to 
other necessary resources. Contracts shall not be made with parties who 
are suspended or debarred.
    (k) Procurement methods. Procurement shall be made by one of the 
following methods: small purchase procedures; competitive sealed bids 
(formal advertising); competitive negotiation; or noncompetitive 
negotiation. Competitive sealed bids (formal advertising) is the 
preferred procurement method for construction contracts.
    (1) Small purchase procedures. Small purchase procedures are those 
relatively simple and informal procurement methods for securing 
services, supplies or other property, costing in the aggregate not more 
than the Simplified Acquisition Threshold. If small purchase procedures 
are used for a procurement, written price or rate quotations shall be 
obtained from an adequate number of qualified sources.
    (2) Competitive sealed bids. In competitive sealed bids (formal 
advertising), sealed bids are publicly solicited and a firm-fixed-price 
contract (lump sum or unit price) is awarded to the responsible bidder 
whose bid, conforming with all the material terms and conditions of the 
invitation for bids, is lowest, price and other factors considered. When 
using this method the following shall apply:
    (i) At a sufficient time prior to the date set for opening of bids, 
bids shall be solicited from an adequate number of qualified sources. In 
addition, the invitation shall be publicly advertised.
    (ii) The invitation for bids, including specifications and perinent 
attachments, shall clearly define the items or services needed in order 
for the bidders to properly respond to the invitation under paragraph 
(j)(4) of this section.
    (iii) All bids shall be opened publicly at the time and place stated 
in the invitation for bids.
    (iv) A firm-fixed-price contract award shall be made by written 
notice to that responsible bidder whose bid, conforming to the 
invitation for bids, is lowest. When specified in the bidding documents, 
factors such as discounts and transportation costs shall be considered 
in determining which bid is lowest.
    (v) Any or all bids may be rejected by the owner when it is in their 
best interest.
    (3) Competitive negotiation. In competitive negotiations, proposals 
are requested from a number of sources and the Request for Proposal is 
publicized. Negotiations are normally conducted with more than one of 
the sources submitting offers. Competitive negotiation may be used if 
conditions are not appropriate for the use of formal advertising and 
where discussions and bargaining with a view to reaching agreement on 
the technical quality, price, other terms of the proposed contract and 
specifications may be necessary. If competitive negotiation is used for 
a procurement, the following requirements shall apply:
    (i) Proposals shall be solicited from an adequate number of 
qualified sources to permit reasonable competition consistent with the 
nature and requirements of the procurement. The Request for Proposal 
shall be publicized and reasonable requests by other sources to compete 
shall be honored to the maximum extent practicable.
    (ii) The Request for Proposal shall identify all significant 
evaluation factors, including price or cost where required, and their 
relative importance.
    (iii) The owner shall provide mechanisms for technical evaluation of 
the proposals received, determination of responsible offerors for the 
purpose of

[[Page 163]]

written or oral discussions, and selection for contract award.
    (iv) Award may be made to the responsible offeror whose proposal 
will be most advantageous to the owner, price and other factors 
considered. Unsuccessful offerors should be promptly notified.
    (v) Owners may utilize competitive negotiation procedures for 
procurement of architectural/engineering and other professional 
services, whereby competitors' qualifications are evaluated and the most 
qualified competitor is selected, subject to negotiations of fair and 
reasonable compensation.
    (4) Noncompetitive negotiation. Noncompetitive negotiation is 
procurement through solicitation of a proposal from only one source, or 
after solicitation of a number of sources competition is determined 
inadequate. Noncompetitive negotiation may be used when the award of a 
contract is not feasible under small purchase, competitive sealed bids 
(formal advertising) or competitive negotiation procedures. 
Circumstances under which a contract may be awarded by noncompetitive 
negotiations are limited to the following:
    (i) The item is available only from a single source; or
    (ii) There exists a public exigency or emergency and the urgency for 
the requirement will not permit a delay incident to competitive 
solicitation; or
    (iii) After solicitation of a number of sources, competition is 
determined inadequate; or
    (iv) No acceptable bids have been received after formal advertising; 
or
    (v) The procurement of architectural/engineering and other 
professional services.
    (vi) The aggregate amount does not exceed $50,000.
    (5) Additional procurement methods. Additional innovative 
procurement methods may be used by the owner with prior written approval 
of the Rural Development National Office.
    (l) Alternate contracting methods. The services of the consulting 
engineer or architect and the general construction contractor shall 
normally be procured from unrelated sources in accordance with paragraph 
(j)(7) of this section. Alternate contracting methods which combine or 
rearrange design, inspection or construction services (such as design/
build or construction management/constructor) may be used with Rural 
Development written approval.
    (1) The owner will request Rural Development approval by providing 
the following information to the State Office for review and approval by 
the State Architect:
    (i) The owner's written request to use an unconventional contracting 
method with a description of the proposed method.
    (ii) A proposed scope of work describing in clear, concise terms the 
technical requirements for the contract. This would include a 
nontechnical statement summarizing the work to be performed by the 
contractor, the expected results, the sequence in which the work is to 
be performed, and a proposed construction schedule.
    (iii) A proposed firm-fixed-price contract for the entire project 
which provides that the contractor shall be responsible for any extra 
cost which may result from errors or omissions in the services provided 
under the contract and compliance with all Federal, State, and local 
requirements effective on the contract execution date.
    (iv) An evaluation of the contractor's performance on previous 
similar projects in which the contractor acted in a similar capacity.
    (v) A detailed listing and cost estimate of equipment and supplies 
not included in the construction contract but which are necessary to 
properly operate the facility.
    (vi) Evidence that a qualified construction inspector who is 
independent of the contractor has or will be hired.
    (vii) Preliminary plans and outline specifications. However, final 
plans and specifications must be completed and reviewed by Rural 
Development prior to the start of construction.
    (viii) The owner's attorney's opinion and comments regarding the 
legal adequacy of the proposed contract documents and evidence that the 
owner has the legal authority to enter into and fulfill the contract.
    (2) The State Office may approve design/build or construction 
management/constructor projects if the contract amount is equal to or 
less than $250,000.

[[Page 164]]

    (3) If the contract amount exceeds $250,000, National Office prior 
concurrence must be obtained in accordance with Sec.  1942.9(b) of this 
subpart. Additional information, such as plans and specifications, may 
be requested by the National Office.
    (4) The Design/Build method of construction is one in which the 
architectural and engineering services, normally provided by an 
independent consultant to the owner, are combined with those of the 
General Contractor under a single source contract. These services are 
commonly provided by a Design/Build firm, a joint venture between an 
architectural firm and a construction firm, or a company providing pre-
engineered buildings and design services.
    (5) The Construction Management/constructor (CMc), acts in the 
capacity of a General Contractor and is actually responsible for the 
construction. This type of construction management is also referred to 
as Construction Manager ``At Risk.'' The construction contract is 
between the owner and the CMc. The CMc, in turn, may subcontract for 
some or all of the work.
    (6) The National Office may approve other alternative contact 
methods, such as Construction Management/advisor (CMa), with a 
recommendation from the State Office. The recommendation shall indicate 
the circumstances which prove this method advantageous to the applicant 
and the Government. A CMa acts in an advisory capacity to the owner, and 
the actual contract for construction is between the owner and a prime 
contractor or multiple prime contractors. When a contract for an 
architect and a CMa are being provided, it is important to make sure 
that separate professionals are not being paid to provide similar 
services. Further, paragraph (e)(3) of this section discourages separate 
contracts for construction.
    (7) All alternate contracting method projects must comply with the 
requirements for ``maximum open and free competition'' in paragraph 
(j)(2) of this section. Choosing an alternate contracting method is not 
a way to avoid competition. Further information on procurement methods, 
which must be followed, is provided in paragraph (k) of this section.
    (m) Contracts awarded prior to preapplications. Owners awarding 
construction or other procurement contracts prior to filing a pre-
application with Rural Development must comply with the following:
    (1) Evidence. Provide conclusive evidence that the contract was 
entered into without intent to circumvent the requirements of Rural 
Development regulations. The evidence will consist of at least the 
following:
    (i) The lapse of a reasonable period of time between the date of 
contract award and the date of filing the preapplication which clearly 
indicates an irreconcilable failure of previous financial arrangements; 
or
    (ii) A written statement explaining initial plans for financing the 
project and reasons for failure to obtain the planned credit.
    (2) Modifications. Modify the outstanding contract to conform with 
the provisions of this subpart. Where this is not possible, 
modifications will be made to the extent practicable and, as a minimum, 
the contract must comply with all State and local laws and regulations 
as well as statutory requirements and executive orders related to the 
Rural Development financing. When all construction is complete and it is 
impracticable to modify the contracts, the owner must provide the 
certification required by paragraph (m)(4) of this section.
    (3) Consultant's certification. Provide a certification by an 
engineer or architect that any construction performed complies fully 
with the plans and specifications.
    (4) Owner's certification. Provide a certification by the owner that 
the contractor has complied with all statutory and executive 
requirements related to Rural Development financing for construction 
already performed even though the requirements may not have been 
included in the contract documents.
    (n) Contract provisions. In addition to provisions defining a sound 
and complete contract, any recipient of Rural Development funds shall 
include the following contract provisions or conditions in all 
contracts:

[[Page 165]]

    (1) Remedies. Contracts other than small purchases shall contain 
provisions or conditions which will allow for administrative, 
contractual, or legal remedies in instances where contractors violate or 
breach contract terms, and provide for such sanctions and penalties as 
may be appropriate. A realistic liquidated damage provision should also 
be included.
    (2) Termination. All contracts exceeding $10,000, shall contain 
provisions for termination by the owner including the manner by which it 
will be affected and the basis for settlement. In addition, such 
contracts shall describe conditions under which the contract may be 
terminated for default as well as conditions when the contract may be 
terminated because of circumstances beyond the control of the 
contractor.
    (3) Surety. In all contracts for construction or facility 
improvements awarded exceeding $100,000, the owner shall require bonds, 
a bank letter of credit or cash deposit in escrow assuring performance 
and payment, each in the amount of 100 percent of the contract cost. The 
surety will normally be in the form of performance bonds and payment 
bonds; however, when other methods of surety may be necessary, bid 
documents must contain provisions for such alternative types of surety. 
The use of surety other than performance bonds and payment bonds 
requires concurrence by the National Office after submission of a 
justification by the State Director together with the proposed form of 
escrow agreement or letter of credit. For contracts of lesser amounts, 
the owner may require surety. When a surety is not provided, contractors 
will furnish evidence of payment in full for all materials, labor, and 
any other items procured under the contract. Form RD 1924-10, ``Release 
by Claimants,'' and Form RD 1924-9, ``Certificate of Contractor's 
Release,'' may be obtained at the local Rural Development office and 
used for this purpose. The United States, acting through Rural 
Development, will be named as co-obligee on all surety unless prohibited 
by State law. Companies providing performance bonds and payment bonds 
must hold a certificate of authority as an acceptable surety on Federal 
bonds as listed in Treasury Circular 570 as amended and be legally doing 
business in the State where the facility is located.
    (4) Equal Employment Opportunity. All contracts awarded in excess of 
$10,000 by owners shall contain a provision requiring compliance with 
Executive Order 11246, entitled, ``Equal Employment Opportunity,'' as 
amended by Executive Order 11375, and as supplemented by Department of 
Labor regulations 41 CFR part 60.
    (5) Anti-kickback. All contracts for construction shall include a 
provision for compliance with the Copeland ``Anti-Kickback'' Act (18 
U.S.C. 874). This Act provides that each contractor shall be prohibited 
from inducing, by any means, any person employed in the construction, 
completion, or repair of public work, to give up any part of the 
compensation to which they are otherwise entitled. The owner shall 
report all suspected or reported violations to Rural Development.
    (6) Records. All negotiated contracts (except those of $2,500 or 
less) awarded by owners shall include a provision to the effect that the 
owner, Rural Development, the Comptroller General of the United States, 
or any of their duly authorized representatives, shall have access to 
any books, documents, papers, and records of the contractor which are 
directly pertinent to a specific Federal loan program for the purpose of 
making audits, examinations, excerpts, and transcriptions. Owners shall 
require contractors to maintain all required records for three years 
after owners make final payments and all other pending matters are 
closed.
    (7) State Energy Conservation Plan. Contracts shall recognize 
mandatory standards and policies relating to energy efficiency which are 
contained in the State energy conservation plan issued in compliance 
with the Energy Policy and Conservation Act (Pub. L. 94-163).
    (8) Change orders. The construction contract shall require that all 
contract change orders be approved in writing by Rural Development.
    (9) Rural Development concurrence. All contracts must contain a 
provision that they shall not be effective unless and until the Rural 
Development State

[[Page 166]]

Director or designee concurs in writing.
    (10) Retainage. All construction contracts shall contain adequate 
provisions for retainage. No payments will be made that would deplete 
the retainage nor place in escrow any funds that are required for 
retainage nor invest the retainage for the benefit of the contractor. 
The retainage shall not be less than an amount equal to 10 percent of an 
approved partial payment estimate until 50 percent of the work has been 
completed. If the job is proceeding satisfactory at 50 percent 
completion, further partial payments may be made in full, however, 
previously retained amounts shall not be paid until construction is 
substantially complete. Additional amounts may be retained if the job is 
not proceeding satisfactorily, but in no event shall the total retainage 
be more than 10 percent of the value of the work completed.
    (11) Other compliance requirements. Contracts in excess of $100,000 
shall contain a provision which requires compliance with all applicable 
standards, orders, or requirements issued under section 306 of the Clean 
Air Act (42 U.S.C. 1857(h)), section 508 of the Clean Water Act (33 
U.S.C. 1368), Executive Order 11738, and Environmental Protection Agency 
(EPA) regulations 40 CFR part 15, which prohibit the use under non-
exempt Federal contracts, grants or loans of facilities included on the 
EPA List of Violating Facilities. The provision shall require reporting 
of violations to Rural Development and to the U.S. Environmental 
Protection Agency, Assistant Administrator for Enforcement. 
Solicitations and contract provisions shall include the requirements of 
40 CFR part 15.4(c) as set forth in guide 18 of this subpart which is 
available in all Rural Development offices.
    (o) Contract administration. Owners shall be responsible for 
maintaining a contract administration system to monitor the contractors' 
performance and compliance with the terms, conditions, and 
specifications of the contracts.
    (1) Preconstruction conference. Prior to beginning construction, the 
owner will schedule a preconstruction conference where Rural Development 
will review the planned development with the owner, its architect or 
engineer, resident inspector, attorney, contractor(s), and other 
interested parties. The conference will thoroughly cover applicable 
items included in Form RD 1924-16, ``Record of Preconstruction 
Conference,'' and the discussion and agreements will be documented. Form 
RD 1924-16 may be used for this purpose.
    (2) Monitoring reports. Each owner will be required to monitor and 
provide reports to Rural Development on actual performance during 
construction for each project financed, or to be financed, in whole or 
in part with Rural Development funds to include:
    (i) A comparison of actual accomplishments with the construction 
schedule established for the period. The partial payment estimate may be 
used for this purpose.
    (ii) A narrative statement giving full explanation of the following:
    (A) Reasons why established goals were not met.
    (B) Analysis and explanation of cost overruns or high unit costs and 
how payment is to be made for the same.
    (iii) If events occur between reports which have a significant 
impact upon the project, the owner will notify Rural Development as soon 
as any of the following conditions are met:
    (A) Problems, delays, or adverse conditions which will materially 
affect the ability to attain program objectives or prevent the meeting 
of project work units by established time periods. This disclosure shall 
be accompanied by a statement of the action taken, or contemplated, and 
any Federal assistance needed to resolve the situation.
    (B) Favorable developments or events which enable meeting time 
schedules and goals sooner than anticipated or producing more work units 
than originally projected or which will result in cost underruns or 
lower unit costs than originally planned and which may result in less 
Rural Development assistance.
    (3) Inspection. Full-time resident inspection is required for all 
construction unless a written exception is made by Rural Development 
upon written request of the owner. Unless otherwise agreed, the resident 
inspector will be provided by the consulting architect/

[[Page 167]]

engineer. Prior to the preconstruction conference, the architect/
engineer will submit a resume of qualifications of the resident 
inspector to the owner and to Rural Development for acceptance in 
writing. If the owner provides the resident inspector, it must submit a 
resume of the inspector's qualifications to the project architect/
engineer and Rural Development for acceptance in writing prior to the 
preconstruction conference. The resident inspector will work under the 
general supervision of the project architect/engineer. A guide format 
for preparing daily inspection reports (Guide 11 of this subpart) and 
Form RD 1924-18, ``Partial Payment Estimate,'' are available on request 
from Rural Development.
    (4) Inspector's daily diary. The resident inspector will maintain a 
record of the daily construction progress in the form of a daily diary 
and daily inspection reports as follows:
    (i) A complete set of all daily construction records will be 
maintained and the original set furnished to the owner upon completion 
of construction.
    (ii) All entries shall be legible and shall be made in ink.
    (iii) Daily entries shall include but not be limited to the date, 
weather conditions, number and classification of personnel working on 
the site, equipment being used to perform the work, persons visiting the 
site, accounts of substantive discussions, instructions given to the 
contractors, directions received, all significant or unusual happenings 
involving the work, any delays, and daily work accomplished.
    (iv) The daily entries shall be made available to Rural Development 
personnel and will be reviewed during project inspections.
    (5) Prefinal inspections. A prefinal inspection will be made by the 
owner, resident inspector, project architect or engineer, 
representatives of other agencies involved, the District Director and a 
Rural Development State Office staff representative, preferably the 
State Staff architect or engineer. Prefinal inspections may be made 
without Rural Development State Office staff participation if the State 
Director or a designee determines that the facility does not utilize 
complicated construction techniques, materials or equipment for 
facilities such as small fire stations, storage buildings or minor 
utility extensions, and that an experienced District Office staff 
representative will be present. The inspection results will be recorded 
on Form RD 1924-12, ``Inspection Report,'' and a copy provided to all 
appropriate parties.
    (6) Final inspection. A final inspection will be made by Rural 
Development before final payment is made.
    (7) Change is development plans. (i) Changes in development plans 
may be approved by Rural Development when requested by owners, provided:
    (A) Funds are available to cover any additional costs; and
    (B) The change is for an authorized loan purpose; and
    (C) It will not adversely affect the soundness of the facility 
operation or Rural Development's security; and
    (D) The change is within the scope of the contract.
    (ii) Changes will be recorded on Form RD 1924-7, ``Contract Change 
Order,'' or, other similar forms may be used with the prior approval of 
the State Director or designee. Regardless of the form, change orders 
must be approved by the Rural Development State Director or a designated 
representative.
    (iii) Changes should be accomplished only after Rural Development 
approval on all changes which affect the work and shall be authorized 
only by means of contract change order. The change order will include 
items such as:
    (A) Any changes in labor and material and their respective cost.
    (B) Changes in facility design.
    (C) Any decrease or increase in quantities based on final 
measurements that are different from those shown in the bidding 
schedule.
    (D) Any increase or decrease in the time to complete the project.
    (iv) All changes shall be recorded on chronologically numbered 
contract change orders as they occur. Change orders will not be included 
in payment estimates until approved by all parties.

[50 FR 7296, Feb. 22, 1985, as amended at 52 FR 8035, Mar. 13, 1987; 53 
FR 6791, Mar. 3, 1988; 54 FR 14334, Apr. 11, 1989; 54 FR 18883, May 3, 
1989; 61 FR 65156, Dec. 11, 1996; 77 FR 29539, May 18, 2012; 79 FR 
76008, Dec. 19, 2014]

[[Page 168]]



Sec.  1942.19  Information pertaining to preparation of notes or bonds
and bond transcript documents for public body applicants.

    (a) General. This section includes information for use by public 
body applicants in the preparation and issuance of evidence of debt 
(bonds, notes, or debt instruments, herein referred to as bonds). This 
section is made available to applicants as appropriate for application 
processing and loan docket preparation.
    (b) Policies related to use of bond counsel. Preparation of the 
bonds and the bond transcript documents will be the responsibility of 
the applicant. Public body applicants will obtain the services and 
opinion of recognized bond counsel with respect to the validity of a 
bond issue, except as provided in (b) (1) through (3) below. The 
applicant normally will be represented by a local attorney who will 
obtain the assistance of a recognized bond counsel firm which has 
experience in municipal financing with such investors as investment 
dealers, banks, and insurance companies.
    (1) Issues of $250,000 or less. At the option of the applicant for 
issues of $250,000 or less, bond counsel may be used for the issuance of 
a final opinion only and not for the preparation of the bond transcript 
and other documents when the applicant, Rural Development, and bond 
counsel have agreed in advance as to the method of preparation of the 
bond transcript documents. Under such circumstances the applicant will 
be responsible for the preparation of the bond transcript documents.
    (2) Issues of $50,000 or less. At the option of the applicant and 
with the prior approval of the Rural Development State Director, the 
applicant need not use bond counsel if:
    (i) The amount of the issue does not exceed $50,000 and the 
applicant recognizes and accepts the fact that processing the 
application may require additional legal and administrative time.
    (ii) There is a significant cost saving to the applicant 
particularly with reference to total legal fees after determining what 
bond counsel would charge as compared with what the local attorney will 
charge without bond counsel.
    (iii) The local attorney is able and experienced in handling this 
type of legal work.
    (iv) The applicant understands that, if it is required by Rural 
Development to refinance its loan pursuant to the statutory refinancing 
requirements, it will probably have to obtain at its expense a bond 
counsel's opinion at that time.
    (v) All bonds will be prepared in accordance with this regulation 
and will conform as nearly as possible to the preferred methods of 
preparation stated in paragraph (e) of this section but still be 
consistent with State law.
    (vi) Many matters necessary to comply with Rural Development 
requirements such as land rights, easements, and organizational 
documents will be handled by the applicant's local attorney. Specific 
closing instructions will be issued by the Office of the General Counsel 
of the U.S. Department of Agriculture for the guidance of Rural 
Development.
    (3) For loans of less than $500,000. The applicant shall not be 
required to use bond counsel in a straight mortgage-note situation where 
competitive bidding is not required for the sale of the debt instrument, 
unless a complicated financial situation exists with the applicant. In 
addition, if there is a known backlog in a particular OGC regional 
office the applicant will be advised of such backlog and it will be 
suggested to the applicant that the appointment of bond counsel may be 
more expeditious. However, it will be the decision of the applicant 
whether or not to appoint bond counsel. The applicant must comply with 
(b)(2) (iii) through (vi) of this section.
    (c) Bond transcript documents. Any questions with respect to Rural 
Development requirements should be discussed with the Rural Development 
representatives. The bond counsel (or local counsel where no bond 
counsel is involved) is required to furnish at least two complete sets 
of the following to the applicant, who will furnish one complete set to 
Rural Development:
    (1) Copies of all organizational documents.

[[Page 169]]

    (2) Copies of general incumbency certificate.
    (3) Certified copies of minutes or excerpts therefrom of all 
meetings of the applicant's governing body at which action was taken in 
connection with the authorization and issuance of the bonds.
    (4) Certified copies of documents evidencing that the applicant has 
complied fully with all statutory requirements incident to calling and 
holding of a favorable bond election, if such an election is necessary 
in connection with bond issuance.
    (5) Certified copies of the resolution or ordinances or other 
documents, such as the bond authorizing resolutions or ordinance and any 
resolution establishing rates and regulating the use of the improvement, 
if such documents are not included in the minutes furnished.
    (6) Copies of official Notice of Sale and affidavit of publication 
of Notice of Sale where a public sale is required by State statute.
    (7) Specimen bond, with any attached coupons.
    (8) Attorney's no-litigation certificate.
    (9) Certified copies of resolutions or other documents pertaining to 
the bond award.
    (10) Any additional or supporting documents required by bond 
counsel.
    (11) For loans involving multiple advances of Rural Development loan 
funds a preliminary approving opinion of bond counsel (or local counsel 
if no bond counsel is involved) if a final unqualified opinion cannot be 
obtained until all funds are advanced. The preliminary opinion for the 
entire issue shall be delivered on or before the first advance of loan 
funds and state that the applicant has the legal authority to issue the 
bonds, construct, operate and maintain the facility, and repay the loan 
subject only to changes during the advance of funds such as litigation 
resulting from the failure to advance loan funds, and receipt of closing 
certrificates.
    (12) Preliminary approving opinion, if any, and final unqualified 
approving opinion of recognized bond counsel (or local counsel if no 
bond counsel is involved) including opinion regarding interest on bonds 
being exempt from Federal and any State income taxes. On approval of the 
Administrator, a final opinion may be qualified to the extent that 
litigation is pending relating to Indian claims that may affect title to 
land or validity of the obligation. It is permissible for such opinions 
to contain language referring to the last sentence of section 306(a)(1) 
or to section 309A(h) of the Consolidated Farm and Rural Development Act 
[7 U.S.C. 1926(a)(1) or 1929a(h)], and providing that if the bonds 
evidencing the indebtedness in question are required by the Federal 
Government and sold on an insured basis from the Agriculture Credit 
Insurance Fund, or the Rural Development Insurance Fund, the interest on 
such bonds will be included in gross income for the purpose of the 
Federal income tax statutes.
    (d) Interim financing from commercial sources during construction 
period for loans of $50,000 or more. In all cases where it is possible 
for funds to be borrowed at current market interest rates on an interim 
basis from commercial sources, such interim financing will be obtained 
so as to preclude the necessity for multiple advances of Rural 
Development funds.
    (e) Permanent instruments for Rural Development loans to repay 
interim commercial financing. Rural Development loans will be evidenced 
by the following types of instruments chosen in accordance with the 
following order of preference:
    (1) First preference--Form RD 440-22, ``Promissory Note (Association 
or Organization)''. If legally permissible use Form RD 440-22 for 
insured loans.
    (2) Second preference--single instruments with amortized 
installments. If Form RD 440.22 is not legally permissible, use a single 
instrument providing for amortized installments. Show the full amount of 
the loan on the face of the document and provide for entering the date 
and amount of each Rural Development advance on the reverse thereof or 
on an attachment to the instrument. Form RD 440-22 should be followed to 
the extent possible. When principal payment is deferred, no attempt 
should be made to compute in dollar terms the amount of interest due on 
these installment dates. Rather

[[Page 170]]

the instrument should provide that ``interest only'' is due on these 
dates. The appropriate amortized installment computed as follows will be 
shown due on the installment date thereafter.
    (i) Annual payments--Subtract the due date of the last annual 
interest only installment from the due date of the final installment to 
determine the number of annual payments applicable. When there are no 
interest only installments, the number of annual payments will equal the 
number of years over which the loan is amortized. Then multiply the 
amount of the note by the applicable amortization factor shown in Rural 
Development Amortization Tables and round to the next higher dollar. 
Example of Computation of Annual Payment:

Date of Loan Closing: 7-5-1976
Amount of Loan: $100,000.00
Interest Rate: 5%
Amortization Period: 40 years
Interest Only Installments: 7-5-1977 and 7-5-1978
First Regular Installment: 7-5-1979
Final Installment: 7-5-2016
Computation:
2016 - 1978 = 38 annual payments
$100,000.00 x .05929 = $5,929.00 annual payment due

    (ii) Semiannual payments--Multiply by two the number of years 
between the due date of the last annual interest only installment and 
the due date of the final installment to determine the correct number of 
semiannual periods applicable. When there are no interest only 
installments, multiply by two the number of years over which the loan is 
amortized. Then multiply the amount of the note by the applicable 
amortization factor shown in Rural Development Amortization Tables and 
round to the next higher dollar. Example of Computation of Semiannual 
Payment:

Date of Loan Closing: 7-5-1976
Amount of Loan: $100,000.00
Interest Rate: 5%
Amortization Period: 40 years
Interest Only Installments: 7-5-1977 and 7-5-1978
First Regular Installment: 7-5-1979
Final Installment: 7-5-2016
Computation:
2016 - 1978 = 38 x 2 = 76 semiannual periods
$100,000.00 x .02952 = $2,952.00 semiannual payment due

    (iii) Monthly payments--Multiply by twelve the number of years 
between the due date of the last annual interest only installment and 
the final installment to determine the number of monthly payments 
applicable. When there are no interest only installments, multiply by 
twelve the number of years over which the loan is amortized. Then 
multiply the amount of the note by the applicable amortization factor 
shown in Rural Development Amortization Tables and round to the next 
higher dollar. Example of Computation of Monthly Payment:

Date of Loan Closing: 7-5-1976
Amount of Loan: $100,000.00
Interest Rate: 5%
Amortization Period: 40 years
Interest Only Installments: 7-5-1977 and 7-5-1978
First Regular Installment: 7-5-1979
Final Installment: 7-5-2016
Computation:
2016 - 1978 = 38 x 12 = 456 monthly payments
$100,000.00 x .00491 = $491.00 monthly payment due

    (3) Third preference--single instrument with installments of 
principal plus interest. If a single instrument with amortized 
installments is not legally permissible, use a single instrument 
providing for installments of principal plus interest accrued on the 
unmatured principal balance. The principal should be in an amount best 
adapted to making principal retirement and interest payments which 
closely approximate equal installments of combined interest and 
principal as required by the first two preferences.
    (i) The repayment terms concerning interest only installments 
described in paragraph (e)(2) of this section, ``Second perference'' 
applies.
    (ii) The instrument shall contain in substance the following 
provisions:
    (A) A statement of principal maturities and due dates.
    (B) Payments made on indebtedness evidenced by this instrument shall 
be applied to the interest due through the next installment due date and 
the balance to principal in accordance with the terms of the bond. 
Payments on delinquent accounts will be applied in the following 
sequence:
    (1) Billed delinquent interest,
    (2) Past due interest installments,

[[Page 171]]

    (3) Past due principal installments,
    (4) Interest installment due, and
    (5) Principal installment due.

Extra payments and payments made from security depleting sources shall 
be applied to the principal last to come due or as specified in the bond 
instrument.
    (4) Fourth preference--serial bonds with installments of principal 
plus interest. If instruments described under the first, second, and 
third preferences are not legally permissible, use serial bonds with a 
bond or bonds delivered in the amount of each advance. Bonds will be 
delivered in the order of their numbers. Such bonds will conform with 
the minimum requirements of paragraph (h) of this section. Rules for 
application of payments on serial bonds will be the same as those for 
principal installment single bonds as set out in the preceding paragraph 
(e)(3) of this section.
    (f) Multiple advances of Rural Development funds using permanent 
instruments. Where interim financing from commercial sources is not 
available, Rural Development loan proceeds will be disbursed on an ``as 
needed by borrower'' basis in amounts not to exceed the amount needed 
during 30-day periods.
    (g) Multiple advances of Rural Development funds using temporary 
debt instrument. When none of the instruments described in paragraph (e) 
of this section are legally permissible or practical, a bond 
anticipation note or similar temporary debt instrument may be used. The 
debt instrument will provide for multiple advance of Rural Development 
loan funds and will be for the full amount of the Rural Development 
loan. The instrument will be prepared by bond counsel (or local counsel 
if bond counsel is not involved) and approved by the State Director and 
OGC. At the same time Rural Development delivers the last advance, the 
borrower will deliver the permanent bond instrument and the canceled 
temporary instrument will be returned to the borrower. The approved debt 
instrument will show at least the following:
    (1) The date from which each advance will bear interest.
    (2) The interest rate.
    (3) A payment schedule providing for interest on outstanding 
principal at least annually.
    (4) A maturity date which shall be no earlier than the anticipated 
issuance date of the permanent instrument(s).
    (h) Minimum bond specifications. The provisions of this paragraph 
are minimum specifications only, and must be followed to the extent 
legally permissible.
    (1) Type and denominations. Bond resolutions or ordinances will 
provide that the instrument(s) be either a bond representing the total 
amount of the indebtedness or serial bonds in denominations customarily 
accepted in municipal financing (ordinarily in multiples of not less 
than $1000). Single bonds may provide for repayment of principal plus 
interest or amortized installments; amortized installments are 
preferable from the standpoint of Rural Development. Coupon bonds will 
not be used unless required by State statute.
    (i) To compute the value of each coupon when the bond denomination 
is consistent:
    (A) Multiply the amount of the loan or advance by the interest rate 
and divide the product by 365 days.
    (B) Multiply the daily accrual factor determined in (A) by the 
number of days from the date of advance or last installment date to the 
next installment date.
    (C) Divide the interest computed in (B) by the number of bonds 
securing the advance; this is the individual coupon amount.
    (ii) to compute the value of each coupon when the bond denomination 
varies:
    (A) Multiply the denomination of the bond by the interest rate and 
divide the product by 365 days.
    (B) Multiply the daily accrual factor determined in (A) by the 
number of days from the date of advance or last installment date to the 
next installment due date; this is the individual coupon amount.
    (2) Bond registration. Bonds will contain provisions permitting 
registration as to both principal and interest. Bonds purchased by Rural 
Development will be registered in the name of ``United States of 
America, Rural Development,'' and will remain so registered at all times 
while the bonds are held or

[[Page 172]]

insured by the United States. The address of Rural Development for 
registration purposes will be that of the appropriate Rural Development 
State Office.
    (3) Size and quality. Size of bonds and coupons should conform to 
standard practice. Paper must be of sufficient quality to prevent 
deterioration through ordinary handling over the life of the loan.
    (4) Date of bond. Bonds will preferably be dated as of the day of 
delivery, however, may be dated another date at the option of the 
borrower and subject to approval by Rural Development. If the date of 
delivery is other than the date of the bond, the date of delivery will 
be stated in the bond. In all cases, interest will accrue from the date 
of delivery of the funds.
    (5) Payment date. Loan payments will be scheduled to coincide with 
income availability and be in accordance with State law. If consistent 
with the foregoing, monthly payments will be required and will be 
enumerated in the bond, other evidence of indebtedness, or other 
supplemental agreement. However, if State law only permits principal 
plus interest (P&I) type bonds, annual or semiannual P&I bonds will be 
used. Insofar as practical monthly payments will be scheduled one full 
month following the date of loan closing; or semiannual or annual 
payments will be scheduled six or twelve full months, respectively, 
following the date of loan closing or any deferment period. Due dates 
falling on the 29th, 30th or 31st day of the month will be avoided.
    (6) [Reserved]
    (7) Redemptions. Bonds should contain customary redemption 
provisions, subject, however, to unlimited right of redemption without 
premium of any bonds held by Rural Development except to the extent 
limited by the provisions under the ``Third Preference'' and ``Fourth 
Preference'' in paragraph (e) of this section.
    (8) Additional revenue bonds. Parity bonds may be issued to complete 
the project. Otherwise, parity bonds may not be issued unless the net 
revenues (that is, unless otherwise defined by the State statute, gross 
revenues less essential operation and maintenance expense) for the 
fiscal year preceding the year in which such parity bonds are to be 
issued, were 120 percent of the average annual debt service requirements 
on all bonds then outstanding and those to be issued; provided, that 
this limitation may be waived or modified by the written consent of 
bondholders representing 75 percent of the then outstanding principal 
indebtedness. Junior and subordinate bonds may be issued in accordance 
with the loan agreement.
    (9) Scheduling of Rural Development payments when joint financing is 
involved. In all cases in which Rural Development is participating with 
another lender in the joint financing of the project to supply funds 
required by one applicant, the Rural Development payments of principal 
and interest should approximate amortized installments.
    (10) Precautions. The following types of provisions in debt 
instruments should be avoided.
    (i) Provisions for the holder to manually post each payment to the 
instrument.
    (ii) Provisions for returning the permanent or temporary debt 
instrument to the borrower in order that it, rather than Rural 
Development, may post the date and amount of each advance or repayment 
on the instrument.
    (iii) Defeasance provisions in loan or bond resolutions. When a bond 
issue is defeased, a new issue is sold which supersedes the contractual 
provisions of the prior issue, including the refinancing requirement and 
any lien on revenues. Since defeasance in effect precludes Rural 
Development from requiring graduation before the final maturity date, it 
represents a violation of the statutory refinancing requirement, 
therefore it is disallowed.
    (iv) Provisions that amend convenants contained in Forms RD 1942-47, 
``Loan Resolution (Public Bodies),'' or FmHA 1942-9, ``Loan Resolution 
Security Agreement.''
    (11) Multiple Loan Instruments. The following will be adhered to 
when preparing debt instruments:
    (i) When more than one loan type is used in financing a project, 
each type of loan will be evidenced by a separate debt instrument or 
series of debt instruments.

[[Page 173]]

    (ii) Loan funds obligated in different fiscal years and those 
obligated with different interest rates or terms in the same fiscal year 
will be evidenced by separate debt instruments.
    (iii) Loan funds obligated for the same loan type in the same fiscal 
year at the same interest rate and term may be combined in the same debt 
instrument; provided the borrower has been notified on Form RD 1940-1, 
``Request for Obligation of Funds'', of the action.
    (i) Bidding by Rural Development. Bonds offered for public sale 
shall be offered in accordance with State law, in such a manner to 
encourage public bidding. Rural Development will not submit a bid at the 
advertised sale unless required by State law, nor will reference to 
Rural Development's rates and terms be included. If no acceptable bid is 
received, Rural Development will negotiate the purchase of the bonds.

[50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6791, Mar. 3, 1988; 54 
FR 18883, May 3, 1989; 56 FR 29168, June 26, 1991; 68 FR 61331, Oct. 28, 
2003]



Sec.  1942.20  Community Facility Guides.

    (a) The following documents are attached and made part of this 
subpart and may be used by officials in administering this program.
    (1) Guide 1 and 1a--Guide Letter for Use in Informing Private Lender 
of Agency's Commitment.
    (2) Guide 2--Water Users Agreement.
    (3) Guide 3--Service Declination Statement.
    (4) Guide 4--Bylaws.
    (5) Guide 5--Financial Feasibility Report.
    (6) Guide 6--Preliminary Architectural Feasibility Report.
    (7) Guide 7--Preliminary Engineering Report Water Facility.
    (8) Guide 8--Preliminary Engineering Report Sewerage Systems.
    (9) Guide 9--Preliminary Engineering Report Solid Waste Disposal 
Systems.
    (10) Guide 10--Preliminary Engineering Report Storm Waste-Water 
Disposal.
    (11) Guide 11--Daily Inspection Report.
    (12) Guide 12--Memorandum of Understanding Between the Economic 
Development Administration--Department of Commerce and the Department of 
Agriculture Pertaining to EDA Public Works Projects Assisted by an 
Agency loan.
    (13) Guide 13--Memorandum of Understanding Between the Economic 
Development Administration--Department of Commerce and the Department of 
Agriculture Regarding Supplementary Grant Assistance for the 
Construction of Public Works and Development Facilities.
    (14) Guide 14--Legal Services Agreement.
    (15) Guide 15--Community Facility Borrower's Application.
    (16) Guide 16--Community Facility Loan Docket.
    (17) Guide 17--Construction Contract Documents--Short Form.
    (18) Guide 18--Agency Supplemental General Conditions.
    (19) Guide 19--Construction Contract Documents.
    (20) Guide 20--Agreement for Engineering Services (Agency/EPA 
Jointly Funded Projects).
    (21) Guide 21--Review of Audit Reports.
    (22) Guide 22--Delinquent Accounts Positive Action Plan.
    (23) Guide 23--Agreement for Joint Use of Electric System Poles.
    (24) Guide 24--Minimum Suggested Contents of Management Agreements.
    (25) Guide 25--Joint Policy Statement Between Environmental 
Protection Agency and the Agency.
    (26) Guide 26--Community Programs Project Selection Criteria.
    (27) Exhibit A--Circular No. A-128.
    (28) Exhibit B--Department of Agriculture Regional Inspector General 
(OIG).
    (b) These guides and exhibits are for use by Agency officials, 
applicants and applicant's officials and/or agents on certain matters 
related to the planning, development, and operation of essential 
community facilities which involve the use of loans and/or grants from 
Agency. This includes activities related to applying for and obtaining 
such financial assistance. These guides and exhibits are not published 
in the Federal Register, however, they are available in any Agency 
office.

[50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6787, Mar. 3, 1988]

[[Page 174]]



Sec.  1942.21  Statewide nonmetropolitan median household income.

    Statewide nonmetropolitan median household income means the median 
household income of the State's nonmetropolitan counties and portions of 
metropolitan counties outside of cities, towns or places, of 50,000 or 
more population.

[69 FR 65519, Nov. 15, 2004]



Sec. Sec.  1942.22-1942.49  [Reserved]



Sec.  1942.50  OMB control number.

    The reporting and recordkeeping requirements contained in this 
regulation have been approved by the Office of Management and Budget 
(OMB) and have been assigned OMB control number 0575-0015. Public 
reporting burden for this collection of information is estimated to vary 
from five minutes to 15 hours per response, with an average of 2.7 hours 
per response, including time for reviewing instructions, searching 
existing data sources, gathering and maintaining the data needed, and 
completing and reviewing the collection of information. Send comments 
regarding this burden estimate or any other aspect of this collection of 
information, including suggestions for reducing this burden to the 
Department of Agriculture, Clearance Officer, OIRM, Ag Box 7630, 
Washington, DC 20250; and to the Office of Management and Budget, 
Paperwork Reduction Project (OMB 0575-0015), Washington, DC 20503.

[60 FR 11019, Mar. 1, 1995]

Subpart B [Reserved]



 Subpart C_Fire and Rescue and Other Small Community Facilities Projects

    Source: 52 FR 43726, Nov. 16, 1987, unless otherwise noted.



Sec.  1942.101  General.

    This subpart provides the policies and procedures for making and 
processing insured Community Facilities (CF) loans for facilities that 
will primarily provide fire or rescue services and other small essential 
community facility projects and applies to fire and rescue and other 
Community Facilities loans for projects costing $300,000 and under. Any 
processing or servicing activity conducted pursuant to this subpart 
involving authorized assistance to Rural Development employees, members 
of their families, known close relatives, or business or close personal 
associates, is subject to the provisions of subpart D of part 1900 of 
this chapter. Applicants for this assistance are required to identify 
any known relationship or association with a Rural Development employee. 
Community Facilities loans for other types of facilities, and those 
costing in excess of $300,000, are defined in subpart A of this part.

[68 FR 65830, Nov. 24, 2003]



Sec.  1942.102  Nondiscrimination.

    (a) Federal statutes provide for extending Agency financial programs 
without regard to race, color, religion, sex, national origin, marital 
status, age, or physical/mental handicap. The participants must possess 
the capacity to enter into legal contracts under State and local 
statutes.
    (b) Indian tribes on Federal and State reservations and other 
Federally recognized Indian tribes are eligible to apply for and are 
encouraged to participate in this program. Such tribes might not be 
subject to State and local laws or jurisdiction. However, any 
requirements of this subpart that affect applicant eligibility, the 
adequacy of RD's security or the adequacy of service to users of the 
facility and all other requirements of this subpart must be met.



Sec.  1942.103  Definitions.

    Agency. The Rural Housing Service (RHS), an agency of the U.S. 
Department of Agriculture.
    Approval official. An official who has been delegated loan or grant 
approval authorities within applicable programs, subject to certain 
dollar limitations.
    Construction. The act of building or putting together a facility 
that is a part of, or physically attached to, real estate. This does not 
include procurement of major equipment even though the equipment may be 
custom built to meet the owner's requirements.
    Owner. An applicant or borrower.

[[Page 175]]

    Processing office. The office designated by the State program 
official to accept and process applications for Community Facilities 
projects.
    Regional Attorney or OGC. The head of a Regional Office of the 
General Counsel (OGC).
    Small Community Facilities projects. Community Facilities loans 
costing $300,000 and under.

[68 FR 65830, Nov. 24, 2003]



Sec.  1942.104  Application processing.

    (a) General. Prospective applicants should request assistance by 
filing SF 424.2, ``Application for Federal Assistance (For 
Construction),'' with the Local or Area Rural Development Office. When 
practical, approval officials should meet with prospective applicants 
before an application is filed to discuss eligibility and Rural 
Development requirements and processing procedures. Throughout loan 
processing, Rural Development should confer with applicant officials as 
needed to ensure that applicant officials understand the current status 
of the processing of their application, what steps and determinations 
are necessary, and what is required from them. Rural Development should 
assist the applicant as needed and generally try to develop and maintain 
a cooperative working relationship with the applicant.
    (b) Unfavorable decision. If, at any time prior to loan approval, it 
is decided that favorable action will not be taken on an application, 
the approval official will notify the applicant, in writing, of the 
reasons why the request was not favorably considered. The notification 
to the applicant will state that a review of this decision by Rural 
Development may be requested by the applicant in accordance with subpart 
B of part 1900 of this chapter. The following statement will also be 
made on all notifications of adverse action:

    The Federal Equal Credit Opportunity Act prohibits creditors from 
discriminating against credit applicants on the basis of race, color, 
religion, national origin, sex, marital status, age (provided that the 
applicant has the capacity to enter into a binding contract); because 
all or part of the applicant's income is derived from any public 
assistance program; or because the applicant has in good faith exercised 
any right under the Consumer Credit Protection Act. The Federal agency 
that administers compliance with this law is the Federal Trade 
Commission, Equal Credit Opportunity, Washington, DC 20580.

[52 FR 43726, Nov. 16, 1987, as amended at 54 FR 47197, Nov. 13, 1989; 
55 FR 13504, Apr. 11, 1990; 68 FR 65830, Nov. 24, 2003; 68 FR 69001, 
Dec. 11, 2003]



Sec.  1942.105  Environmental review

    RD must conduct and document an environmental review for each 
proposed project in accordance with subpart G of part 1940 of this 
chapter. The review should be completed as soon as possible after 
receipt of an application. The loan approving official must determine an 
adequate environmental review has been completed before requesting an 
obligation of funds.



Sec.  1942.106  Intergovernmental review.

    (a) Loans under this subpart are subject to intergovernmental review 
requirements set forth in U. S. Department of Agriculture regulations 7 
CFR 3015, subpart V and RD Instruction 1970-I, `Intergovernmental 
Review,' available in any Agency office or on the Agency's Web site.
    (b) State intergovernmental review agencies that have selected 
community facility loans as a program they want to review may not be 
interested in reviewing proposed loans for fire and rescue facilities. 
In such cases, the State Director should obtain a letter from the State 
single point of contact exempting fire and rescue loans from 
intergovernmental consultation review. A copy of the letter should be 
placed in the case file for each fire and rescue facility application in 
lieu of completing the intergovernmental review process.
    (c) When an application is filed and adverse comments are not 
expected, the District Director should proceed with application 
processing pending intergovernmental review. The loan should not be 
obligated until any required review process has been completed.
    (d) Funds allocated for use under this subpart are also for the use 
of eligible Indian tribes within the State, regardless of whether State 
development strategies include Indian reservations. Eligible Indian 
tribes must have equal

[[Page 176]]

opportunity to participate in the program as compared with other 
residents of the State.

[52 FR 43726, Nov. 16, 1987, as amended at 61 FR 6309, Feb. 20, 1996; 76 
FR 80730, Dec. 27, 2011]



Sec.  1942.107  Priorities.

    (a) Eligible applications must be selected for processing in 
accordance with Sec.  1942.17(c) of subpart A of this part 1942.
    (b) The District Director must score each eligible application in 
accordance with Sec.  1942.17(c)(2)(iii) of subpart A of this part 1942. 
The District Director must then notify the State Director of the score, 
proposed loan amount, and other pertinent data. The State Director 
should determine as soon as possible if the project has sufficient 
priority for further processing and notify the District Director. 
Normally, this consultation should be handled by telephone and 
documented in the running record.
    (c) Applicants who appear eligible but do not have the priority 
necessary for further consideration at this time should be notified that 
funds are not available, requested to advise whether they wish to have 
their application maintained for future consideration and given the 
following notice:

    You are advised against incurring obligations which would limit the 
range of alternatives to be considered, or which cannot be fulfilled 
without Agency funds until the funds are actually made available. 
Therefore, you should refrain from such actions as initiating 
engineering and legal work, taking actions which would have an adverse 
effect on the environment, taking options on land rights, developing 
detailed plans and specifications, or inviting construction bids until 
notified by RD to proceed.



Sec.  1942.108  Application docket preparation and review.

    (a) Guides. Application dockets should be developed in accordance 
with Sec.  1942.2(c) of subpart A of this part 1942.
    (b) [Reserved]
    (c) Budgets. All applicants must complete Form RD 442-7, ``Operating 
Budget,'' except as provided in this paragraph. Applicants with annual 
incomes not exceeding $100,000 may, with concurrence of the District 
Director, use Form RD 1942-52, ``Cash Flow Projection,'' instead of Form 
RD 442-7. Projections should be provided for the current year and each 
year thereafter until the facility is expected to have been in operation 
for a full year and a full annual installment paid on the loan.
    (d) Letter of conditions. The District Director should prepare and 
issue a letter of conditions in accordance with Sec.  1942.5 (a)(1) and 
(c) of subpart A of this part 1942.
    (e) Organizational review. As early in the application process as 
practical, the approval official should obtain copies of organization 
documents from each applicant and forward them through the State Office 
to the Regional Attorney for review and comments. The Regional 
Attorney's comments should be received and considered before obligation 
of funds.
    (f) National Office review. Applications that require National 
Office review will be submitted in accordance with Sec.  1942.5(b) of 
subpart A of this part 1942.
    (g) State Office review. The State Office must monitor fire and 
rescue and other small community facility project loanmaking and 
servicing and provide guidance, assistance, and training as necessary to 
ensure the activities are accomplished in an orderly manner consistent 
with the Agency's regulations. The processing office should request 
advice and assistance from the State Office as needed. The State 
Director may require all or part of a specific application docket to be 
submitted to the State Office for review at any time. The State Director 
may determine that one or more of the processing office staffs do not 
have adequate training and expertise to routinely complete application 
dockets without State Office review. In such cases, the State Director 
should establish guidelines by memorandum or by State supplement to the 
subpart for the necessary State Office reviews.
    (h) Loan approval and fund obligation. Loans must be approved and 
obligated in accordance with Sec.  1942.5(d) of subpart A of this part 
1942 and subpart A of part 1901 of this chapter.

[52 FR 43726, Nov. 16, 1987, as amended at 54 FR 47197, Nov. 13, 1989; 
67 FR 60854, Sept. 27, 2002; 68 FR 65830, Nov. 24, 2003]

[[Page 177]]



Sec. Sec.  1942.109-1942.110  [Reserved]



Sec.  1942.111  Applicant eligibility.

    (a) General. Loans under this subpart are subject to the provisions 
of Sec.  1942.17(b) of subpart A of this part 1942.
    (b) Credit elsewhere determinations. The approval official must 
determine whether financing from commercial sources at reasonable rates 
and terms is available. If credit elsewhere is indicated, the approval 
official should inform the applicant and recommend the applicant apply 
to commercial sources for financing. To provide a basis for referral of 
only those applicants who may be able to finance projects through 
commercial sources, approval officials should maintain liaison with 
representatives of lenders in the area. The State Director should keep 
approval officials informed regarding lenders outside the area who might 
make loans in the area. Approval officials should maintain criteria for 
determining applications that should be referred to commercial lenders 
and maintain a list of lender representatives interested in receiving 
such referrals.
    (c) Public use. Loans under this subpart are subject to the 
provisions of Sec.  1942.17(e) of subpart A of this part 1942.

[52 FR 43726, Nov. 16, 1987, as amended at 68 FR 65830, Nov. 24, 2003]



Sec.  1942.112  Eligible loan purposes.

    (a) Funds may be used:
    (1) To construct, enlarge, extend, or otherwise improve essential 
community facilities primarily providing fire or rescue services 
primarily to rural residents and rural business. Rural businesses would 
include facilities such as educational and other publicly owned 
facilities. ``Otherwise improve'' includes but is not limited to the 
following:
    (i) The purchase of major equipment, such as fire trucks and 
ambulances, which will, in themselves, provide an essential service to 
rural residents.
    (ii) The purchase of existing facilities when it is necessary either 
to improve or to prevent a loss of service.
    (iii) The construction or development of an essential community 
facility requisite to the beneficial and orderly development of a 
community operated on a nonprofit basis in accordance with Sec.  
1942.17(d) of this subpart. This subpart includes those projects meeting 
the definition of a small community facility project.
    (2) To pay the following expenses, but only when such expenses are a 
necessary part of a loan to finance facilities authorized in paragraph 
(a)(1) of this section:
    (i) Reasonable fees and costs such as legal, engineering, 
architectural, fiscal advisory, recording, environmental impact 
analyses, archaeological surveys and possible salvage or other 
mitigation measures, planning, establishing or acquiring rights.
    (ii) Interest on loans until the facility is self-supporting but not 
for more than 3 years unless a longer period is approved by the National 
Office; interest on loans secured by general obligation bonds until tax 
revenues are available for payment, but not for more than 2 years unless 
a longer period is approved by the National Office; and interest on 
interim financing, including interest charges on interim financing from 
sources other than RD.
    (iii) Costs of acquiring interest in land, rights such as water 
rights, leases, permits, rights-of-way, and other evidence of land or 
water control necessary for development of the facility.
    (iv) Purchasing or renting equipment necessary to install, maintain, 
extend, protect, operate, or utilize facilities.
    (v) Initial operating expenses for a period ordinarily not exceeding 
1 year when the borrower is unable to pay such expenses.
    (vi) Refinancing debts incurred by, or on behalf of, a community 
when all of the following conditions exist:
    (A) The debts being refinanced are a secondary part of the total 
loan;
    (B) The debts are incurred for the facility or service being 
financed or any part thereof; and
    (C) Arrangements cannot be made with the creditors to extend or 
modify the terms of the debts so that a sound basis will exist for 
making a loan.
    (3) To pay obligations for construction or procurement incurred 
before loan approval. Construction work or

[[Page 178]]

procurement actions should not be started and obligations for such work 
or materials should not be incurred before the loan is approved. 
However, if there are compelling reasons for proceeding with 
construction or procurement before loan approval, applicants may request 
Agency approval to pay such obligations. Such requests may be approved 
if RD determines that:
    (i) Compelling reasons exist for incurring obligations before loan 
approval; and
    (ii) The obligations will be incurred for authorized loan purposes; 
and
    (iii) Contract documents have been approved by RD; and
    (iv) All environmental requirements applicable to RD and the 
applicant have been met; and
    (v) The applicant has the legal authority to incur the obligations 
at the time proposed, and payment of the debts will remove any basis for 
any mechanic, material or other liens that may attach to the security 
property. RD may authorize payment of such obligations at the time of 
loan closing. RD's authorization to pay such obligations, however, is on 
the condition that it is not committed to make the loan; it assumes no 
responsibility for any obligations incurred by the applicant; and the 
applicant must subsequently meet all loan approval requirements. The 
applicant's request and Agency authorization for paying such obligations 
shall be in writing. If construction or procurement is started without 
Agency approval, post approval in accordance with this section may be 
considered.
    (b) Funds may not be used to finance:
    (1) Facilities which are not modest in size, design, and cost.
    (2) Loan finder's fees.
    (3) Projects located within the Coastal Barriers Resource system 
that do not qualify for an exception as defined in section 6 of the 
Coastal Barriers Resource Act, Pub. L. 97-348.

[52 FR 43726, Nov. 16, 1987, as amended at 57 FR 21195, May 19, 1992; 68 
FR 65831, Nov. 24, 2003]



Sec.  1942.113  Rates and terms.

    Rates and terms for loans under this subpart are as set out in Sec.  
1942.17(f) of subpart A of this part 1942.



Sec.  1942.114  Security.

    Specific requirements for security for each loan will be included in 
the letter of conditions. Loans must be secured by the best security 
position practicable, in a manner which will adequately protect the 
interest of RD during the repayment period of the loan, and in 
accordance with the following;
    (a) Security must include one of the following:
    (1) A pledge of revenue and a lien on all real estate and major 
equipment purchased or developed with the Agency loan; or
    (2) General obligation bonds or bonds pledging other taxes.
    (b) Additional security may be required as determined necessary by 
the loan approval official. In determining the need for additional 
security the loan approval official should carefully consider:
    (1) The estimated market value of real estate and equipment 
security.
    (2) The adequacy and dependability of the applicant's revenues, 
based on the applicant's financial records, the project financial 
feasibility report, and the project budgets.
    (3) The degree of community commitment to the project, as evidenced 
by items such as active broad based membership, aggressive leadership, 
broad based fund drives, or contributions by local public bodies.
    (c) Additional security may include, but is not limited to, the 
following:
    (1) Liens on additional real estate or equipment.
    (2) A pledge of revenues from additional sources.
    (3) An assignment of assured income in accordance with Sec.  
1942.17(g)(3)(iii)(A)(1) of subpart A of this part 1942.
    (d) Review and approval or concurrence in the State Office is 
required if the security will not include a pledge of taxes and the 
applicant cannot provide evidence of the financially successful 
operation of a similar facility for the 5 years immediately prior to 
loan application.
    (e) Review and concurrence in the National Office is required if the 
security will not include a pledge of taxes, the applicant cannot 
provide evidence of the financially successful operation

[[Page 179]]

of a similar facility for the 5 years immediately prior to loan 
application, and the amount of the loan will exceed $250,000.
    (f) Loans under this subpart are subject to the provisions of Sec.  
1942.17(g)(1) of subpart A of this part 1942, regarding security for 
projects utilizing joint financing.

[52 FR 43726, Nov. 16, 1987; 52 FR 47097, Dec. 11, 1987]



Sec.  1942.115  Reasonable project costs.

    Applicants are responsible for determining that prices paid for 
property rights, construction, equipment, and other project development 
are reasonable and fair. RD may require an appraisal by an independent 
appraiser or Agency employee.



Sec.  1942.116  Economic feasibility requirements.

    All projects financed under this section must be based on taxes, 
assessments, revenues, fees, or other satisfactory sources of revenues 
in an amount sufficient to provide for facility operation and 
maintenance, a reasonable reserve, and debt payment. An overall review 
of the applicant's financial status, including a review of all assets 
and liabilities, will be a part of the docket review process by the 
Agency staff and approval official. All applicants will be expected to 
provide a financial feasibility report. These financial feasibility 
reports will normally be:
    (a) Included as part of the preliminary engineer/architectural 
report using guide 6 to subpart A of this part 1942 (available in any RD 
Office), or
    (b) Prepared by the applicant using Form RD 1942-54, ``Applicant's 
Feasibility Report.''



Sec.  1942.117  General requirements.

    (a) Reserve requirements. Loans under this subpart are subject to 
the provisions of Sec.  1942.17 (i) of subpart A of this part 1942.
    (b) Membership authorization. The membership of organizations other 
than public bodies must authorize the project and its financing except 
the District Director may, with the concurrence of the State Director 
(with advice of OGC as needed), accept the loan resolution without such 
membership authorization when State statutes and the organization 
charter and bylaws do not require such authorization.
    (c) Insurance and bonding. Loans under this subpart are subject to 
the provisions of Sec.  1942.17(j)(3) of subpart A of this part 1942.
    (d) Acquisition of land and rights. Loans under this subpart are 
subject to the provisions of Sec.  1942.17(j)(4) of subpart A of this 
part 1942.
    (e) Lease agreements. Loans under this subpart are subject to the 
provisions of Sec.  1942.17(j)(5) of subpart A of this part 1942.
    (f) Notes and bonds. Loans under this subpart are subject to the 
provisions of Sec. Sec.  1942.17(j)(6) and 1942.19 of subpart A of this 
part 1942.
    (g) Public information. Loans under this subpart are subject to the 
provisions of Sec.  1942.17 (j)(9) of subpart A of this part 1942.
    (h) Joint funding. Loans under this subpart are subject to the 
provisions of Sec. Sec.  1942.2 (e) and 1942.17 (j)(11) of subpart A of 
this part 1942.



Sec.  1942.118  Other Federal, State, and local requirements.

    (a) Loans under this subpart are subject to the provisions of Sec.  
1942.17 (k) of subpart A of this part 1942.
    (b) An initial compliance review should be completed under subpart E 
of part 1901 of this chapter.



Sec.  1942.119  Professional services and borrower contracts.

    (a) Loans under this subpart are subject to the provisions of Sec.  
1942.17 (l) of subpart A of this part 1942.
    (b) The District Director will, with assistance as necessary by the 
State Director and OGC, concur in agreements between borrowers and third 
parties such as contracts for professional and technical services. The 
State Director may require State Office review of such documents in 
accordance with Sec.  1942.108 (g) of this subpart. State Directors are 
expected to work closely with representatives of engineering and 
architectural societies, bar associations, commercial lenders, 
accountant associations, and others in developing standard forms of 
agreements, where needed, and other

[[Page 180]]

matters to expedite application processing, minimize referrals to OGC, 
and resolve problems which may arise. Standard forms should be reviewed 
by and approved by OGC.



Sec. Sec.  1942.120-1942.121  [Reserved]



Sec.  1942.122  Actions prior to loan closing and start of construction.

    (a) Excess Agency loan funds. Loans under this subpart are subject 
to the provisions of Sec.  1942.17 (n)(1) of subpart A of this part 
1942.
    (b) Loan resolutions. Loans under this subpart are subject to the 
provisions of Sec.  1942.17 (n)(2) of subpart A of this part 1942.
    (c) Interim financing. Loans under this subpart are subject to the 
provisions of Sec.  1942.17 (n)(3) of subpart A of this part 1942.
    (d) Applicant contribution. Loans under this subpart are subject to 
the provisions of Sec.  1942.17 (n)(5) of subpart A of this part 1942 
this chapter.
    (e) Evidence of and disbursement of other funds. Loans under this 
subpart are subject to the provisions of Sec.  1942.17 (n)(6) of subpart 
A of this part 1942.
    (f) Assurance agreement. All applicants must execute Form RD 400-4, 
``Assurance Agreement,'' at or before loan closing.



Sec.  1942.123  Loan closing.

    (a) Ordering loan checks. Checks will not be ordered until:
    (1) Form RD 440-57, ``Acknowledgement of Obligated Funds/Check 
Request,'' has been received from the Finance Office.
    (2) The applicant has complied with approval conditions and any 
closing instructions, except for those actions which are to be completed 
on the date of loan closing or subsequent thereto.
    (3) The applicant is ready to start construction or funds are needed 
to pay interim financing obligations.
    (b) Public bodies and Indian tribes. (1) After loan approval the 
completed docket will be reviewed by the State Director. The information 
required by OGC will be transmitted to OGC with a request for closing 
instructions. Upon receipt of the closing instructions from OGC, the 
State Director will forward them along with any appropriate instructions 
to the District Director. Upon receipt of closing instructions, the 
District Director will discuss with the applicant and its architect or 
engineer, attorney, and other appropriate representatives, the 
requirements contained therein and any actions necessary to proceed with 
closing.
    (2) Loans will be closed in accordance with the closing instructions 
issued by OGC and Sec.  1942.19 of subpart A of this part 1942.
    (c) Organizations other than public bodies and Indian tribes. 
District Directors are authorized to close loans to organizations other 
than public bodies and Indian tribes without closing instructions from 
OGC. State Directors, in consultation with OGC, should develop standard 
closing procedures and forms as needed. Assistance with loan closing and 
a certification regarding the validity of the note and mortgage or other 
debt instruments should be provided by the applicant's attorney. 
Appropriate title opinion or title insurance is required as provided in 
Sec.  1942.17 (j)(4)(i)(B) of subpart A of this part 1942.
    (d) Authority to execute, file, and record legal instruments. 
District Office employees are authorized to execute and file or record 
any legal instruments necessary to obtain or preserve security for 
loans. This includes, as appropriate, mortgages and other lien 
instruments, as well as affidavits, acknowledgements, and other 
certificates.
    (e) Mortgages. Unless otherwise required by State law or unless an 
exception is approved by the State Director with advice of the OGC, only 
one mortgage will be taken even though the indebtedness is to be 
evidenced by more than one instrument. The real estate or chattel 
mortgages or security instruments will be delivered to the recording 
office for recordation or filing, as appropriate. A copy of such 
instruments will be delivered to the borrower. The original instrument, 
if returnable after recording or filing, will be retained in the 
borrower's case folder.
    (f) Notes and bonds. When the debt instrument is a note or single 
instrument bond fully registered as to principal and interest a 
conformed copy will be

[[Page 181]]

sent to the Finance Office immediately after loan closing and the 
original instrument will be stored in the District Office. When other 
types of bonds are used, the original bond(s) will be forwarded to the 
Finance Office immediately after loan closing.
    (g) Disposition of title evidence. All title evidence other than the 
opinion of title and mortgage title insurance policy, will be returned 
to the borrower when the loan has been closed.
    (h) Multiple advances. When temporary paper, such as bond 
anticipation notes or interim receipts, is used to conform with the 
multiple advance requirement, the original temporary paper will be 
forwarded to the Finance Office after each advance is made to the 
borrower. The borrower's case number will be entered in the upper right-
hand corner of such paper by the Distict Office. The permanent debt 
instrument(s) should be forwarded to the Finance Office as soon as 
possible after the last advance is made, except that for notes and 
single instrument bonds fully registered as to principal and interest 
the original will be retained in the District Office and a copy will be 
forwarded to the Finance Office. The following actions will be taken 
prior to issuance of the permanent instruments:
    (1) The Finance Office will be notified of the anticipated date for 
the retirement of the interim instruments and the issuance of permanent 
instruments of debt.
    (2) The Office of the Deputy Chief Financial Officer will prepare a 
statement of account including accrued interest through the proposed 
date of retirement and also show the daily interest accrual. The 
statement of account and the interim financing instruments will be 
forwarded to the Rural Development Manager.
    (3) The Rural Development Manager will collect interest through the 
actual date of the retirement and obtain the permanent instrument(s) of 
debt in exchange for the interim financing instruments. The permanent 
instruments and the cash collection will be forwarded to the Office of 
the Deputy Chief Financial Officer immediately, except that for notes 
and single instrument bonds fully registered as to principal and 
interest the original will be retained in the Area Office and a copy 
will be forwarded to the Office of the Deputy Chief Financial Officer. 
In developing the permanent instruments, the sequence of preference set 
out Sec.  1942.19(e) of Subpart A of Part 1942 of this chapter will be 
followed.
    (i) Bond registration record. Form RD 442-28, ``Bond Registration 
Book,'' may be used as a guide to assist borrowers in the preparation of 
a bond registration book in those cases where a registration book is 
required and a book is not provided in connection with the printing of 
the bonds.
    (j) Loan disbursements. Whenever a loan disbursement is received, 
lost, or destroyed, the Rural Development Manager will take the 
appropriate actions outlined in Rural Development Instruction 2018-D.
    (k) Safeguarding bond shipments. Agency personnel will follow the 
procedures for safeguarding mailings and deliveries of bonds and coupons 
outlined in RD Instruction 2018-E (available in any RD office), whenever 
they mail or deliver these items.
    (l) Review of loan closing. When the loan has been closed, the Rural 
Development Manager will submit the completed loan closing documents and 
a statement showing what was done in closing the loan to the State 
Director. The State Director will review the documents and the Rural 
Development Manager's statement to determine whether the transaction was 
closed properly. For loans to public bodies or Indian tribes the State 
Director will forward all documents, along with a statement that all 
administrative requirements have been met, to the Regional Attorney. The 
Regional Attorney will review the submitted material to determine 
whether all legal requirements have been met. The Regional Attorney 
should review Rural Development standard forms only for proper 
execution, unless the State Director brings attention to specific 
questions. Facility development should not be held up pending receipt of 
the Regional Attorney opinion. When the review of the State Director has 
been completed, and for public bodies and Indian tribes the Regional 
Attorney's opinion has been received, the State Director must

[[Page 182]]

advise the Rural Development Manager of any deficiencies that must be 
corrected and return all material that was submitted for review.
    (m) Loan cancellation. Loans under this subpart are subject to the 
provisions of Sec.  1942.12 of subpart A of this part 1942.

[52 FR 43726, Nov. 16, 1987, as amended at 59 FR 54788, Nov. 2, 1994; 70 
FR 19254, Apr. 13, 2005]



Sec. Sec.  1942.124-1942.125  [Reserved]



Sec.  1942.126  Planning, bidding, contracting, constructing, procuring.

    (a) General. This section provides procedures and requirements for 
planning, bidding, contracting, constructing and procuring facilities 
financed under this subpart. These procedures do not relieve the owner 
of contractual obligations that arise from procurement of services.
    (b) Technical services. Owners are responsible for providing the 
engineering or architectural services necessary for planning, designing, 
bidding, contracting, inspecting and constructing their facilities. 
Services may be provided by the owner's ``in-house'' engineer or 
architect or through contract, subject to Agency concurrence. Architects 
and engineers must be licensed in the State where the facility is to be 
located.
    (1) Preliminary reports. A preliminary architectural or engineering 
report conforming with customary professional standards is required for 
all construction, except that RD may waive the requirement for a 
preliminary architectural/engineering report or accept a brief report if 
the cost of the construction does not exceed $100,000. Guide 6 to 
subpart A of this part 1942 (available in any RD office) may be used.
    (2) Final reports. Detailed final plans and specifications are 
required for all construction and must receive Agency concurrence. When 
negotiated procurement is used for construction costing not more than 
$100,000 the final plans and specifications may be provided by the 
contractor who submits the successful proposal. The plans and 
specifications must be prepared by or under the supervision of an 
architect or engineer who is licensed in the State where the facility is 
to be located and should include all materials and work to be provided 
under the contract. Some work and material may be omitted from the 
contract provided the owner furnishes detailed cost estimates for 
whatever is needed to fully complete the facility and will complete the 
facility in accordance with paragraph (e) of this section and the small 
purchase procedures set out in Sec.  1942.18(k)(1) of subpart A of this 
part 1942. In such cases, RD may determine that it is not necessary to 
require the applicant to hire a consulting architect/engineer; however, 
if a second contract that does not qualify for small purchase procedures 
is needed to complete the facility, the owner must provide for an 
architect/engineer to design the entire facility. When the contractor 
provides the plans and specifications, the contract will be considered a 
design/build procurement method under Sec.  1942.18(1) of subpart A of 
this part 1942.
    (3) Major equipment. An architect/engineer is not required for major 
equipment if RD determines the owner has the ability to develop an 
adequate request for proposal and evaluate the proposals received or can 
obtain adequate assistance from other sources, such as State or Federal 
agencies or trade associations.
    (c) Design policies. Facilities financed by RD must be designed and 
constructed in accordance with sound engineering and architectural 
practices, and must meet the requirements of Federal, State and local 
agencies. All facilities intended for or accessible to the public or in 
which physically handicapped persons may be employed or reside must be 
developed in compliance with the Architectural Barriers Act of 1968 
(Pub. L. 90-480) as implemented by the General Services Administration 
regulations 41 CFR 101-19.6 and section 504 of the Rehabilitation Act of 
1973 (Pub. L. 93-112) as implemented by 7 CFR parts 15 and 15b.
    (d) Construction contracts. Contract documents must be sufficiently 
descriptive and legally binding to accomplish the work as economically 
and expeditiously as possible.
    (1) Standard construction contract documents. When standard 
construction

[[Page 183]]

contract documents available from RD are used, or when the amount of the 
contract does not exceed $100,000, it will normally not be necessary for 
the Regional Attorney to perform a detailed legal review. If 
construction contract documents used are not in the format of guide 
forms approved by RD, and the contract amount exceeds $100,000, the 
Regonal Attorney must review the documents before their use.
    (2) Contract review and approval. The owner's attorney will review 
executed contract documents, including performance and payment bonds, 
and certify that they are adequate, legal and binding, and that the 
persons executing the documents have been authorized to do so. The 
contract documents, bid bonds, and bid tabulation sheets will be 
forwarded to RD for approval prior to awarding. All contracts will 
contain a provision that they are not in full force and effect until 
they have been approved by RD. The Agency District Director is 
responsible for approving construction contracts with advice and 
guidance of the State Director and Regional Attorney when necessary.
    (3) Separate contracts. Arrangements which split responsibility of 
contractors (separate contracts for labor and material, extensive 
subcontracting and multiplicity of small contracts on the same job) 
should be avoided whenever it is practical to do so. Contracts may be 
awarded to suppliers or manufacturers for furnishing and installing 
certain items which have been designed by the manufacturer and delivered 
to the job site in a finished or semifinished state such as 
prefabricated buildings. Contracts may also be awarded for material 
delivered to the job site and installed by a patented process or method.
    (e) Performing construction. Owners are encouraged to accomplish 
construction through contracts with recognized contractors. Owners may 
accomplish construction by using their own personnel and equipment 
provided the owners possess the necessary skills, abilities and 
resources to perform the work and provided a licensed engineer or 
architect prepares design drawings and specifications and inspection is 
provided in accordance with paragraph (l)(3) of this section.
    (f) Owner's contractual responsibility. Loans under this subpart are 
subject to the provisions of Sec.  1942.18(i) of subpart A of this part 
1942.
    (g) Owner's procurement regulations. Loans under this subpart are 
subject to the provisions of Sec.  1942.18(j) of subpart A of this part 
1942.
    (h) Procurement methods. Unless the Agency National Office gives 
prior written approval of another method, procurement must be made by 
one of the following methods:
    (1) Small purchase procedures as provided in Sec.  1942.18(k)(1) of 
subpart A of this part 1942.
    (2) Competitive sealed bids as provided in Sec.  1942.18(k)(2) of 
subpart A of this part 1942. Competitive sealed bids is the preferred 
procurement method of construction projects, except for buildings 
costing $100,000 or less when the owner desires to use a 
``preengineered'' or ``packaged'' building.
    (3) Competitive negotiation as provided in Sec.  1942.18(k)(3) of 
subpart A of this part 1942. Competitive negotiation is the preferred 
procurement method of buildings not exceeding $100,000 in cost when the 
owner desires to use a ``pre-engineered'' or ``packaged'' building and 
for major equipment.
    (4) Noncompetitive negotiation as provided in Sec.  1942.18(k)(4) of 
subpart A of this part 1942.
    (i) Contracting methods. Loans under this subpart are subject to the 
provisions of Sec.  1942.18(1) of subpart A of this part 1942.
    (j) Contracts awarded prior to preapplications. Loans under this 
subpart are subject to the provisions of Sec.  1942.18(m) of subpart A 
of this part 1942.
    (k) Construction contract provisions. Construction contracts for 
loans under this subpart are subject to the provisions of Sec.  
1942.18(n) of subpart A of this part 1942. Construction contracts for 
loans under this subpart are also subject to the provisions of Sec.  
1901.205 of subpart E of part 1901 of this chapter, regarding 
nondiscrimination in construction, except that guides 18 and 17 or 19 to 
subpart A of this part 1942 of this chapter will normally be used 
instead of Form RD 1924-5, ``Invitation for Bid (Construction 
Contract),'' and

[[Page 184]]

Form RD 1924-6, ``Construction Contract.'' When guide 18 is used with a 
design/build type contract, section 4, ``Conflict of Interest,'' may 
need revision.
    (l) Construction contract administration. Owners shall be 
responsible for maintaining a contract administration system to monitor 
the contractors' performance and compliance with the terms, conditions, 
and specifications of the contracts.
    (1) Preconstruction conference. Prior to beginning construction the 
owner will schedule a preconstruction conference where RD will review 
the planned development with the owner, its architect or engineer, 
project inspector, attorney, contractor(s), and other interested 
parties. The conference will thoroughly cover applicable items included 
in Form RD 1924-16, ``Record of Preconstruction Conference,'' and the 
discussions and agreements will be documented. Form RD 1924-16 may be 
used for this purpose.
    (2) Monitoring reports. Each owner will be required to monitor and 
provide reports to RD on actual performance during construction for each 
project financed, or to be financed, in whole or in part with Agency 
funds. The reports are to include:
    (i) A comparison of actual accomplishments with the construction 
schedule established for the period. The partial payment estimate may be 
used for this purpose.
    (ii) A narrative statement giving full explanation of the following:
    (A) Reasons why established goals were not met.
    (B) Analysis and explanation of cost overruns or high unit costs and 
how payment is to be made for the same.
    (iii) If events occur between reports which have a significant 
impact upon the project, the owner will notify RD as soon as any of the 
following conditions are known:
    (A) Problems, delays, or adverse conditions which will materially 
affect the ability to attain program objectives or prevent the meeting 
of project work units by established time periods. This disclosure shall 
be accompanied by a statement of the action taken, or contemplated, and 
any Federal assistance needed to resolve the situation.
    (B) Favorable developments or events which enable meeting time 
schedules and goals sooner than anticipated or producing more work units 
than originally projected or which will result in cost underruns or 
lower unit costs than originally planned and which may result in less 
Agency assistance.
    (3) Inspection. The borrower must provide for inspection of all 
construction. When the borrower enters into an agreement for technical 
services with an engineer/architect, the agreement should provide for 
general engineering/architectural inspection of the construction work. 
When no such agreement exists, or RD or the borrower determines the 
inspection services of the engineer/architect may not be sufficient, the 
owner must provide a project inspector. Prior to the preconstruction 
conference, the borrower must submit a r[eacute]sum[eacute] of 
qualifications of the project inspector to RD for acceptance in writing. 
The project inspector will be responsible for making inspections 
necessary to protect the borrower's interest and for providing written 
inspection reports to the borrower with copies to the Agency District 
Director. Guide 11 of subpart A of this part 1942 (available in any 
Rural Development office) may be used as a guide format for inspection 
reports. For new buildings, additions to existing buildings, and 
rehabilitation of existing buildings, the project inspector should make 
inspections at the following stages of construction and at other stages 
of construction as determined by the District Director and the borrower. 
Inspections by RD are solely for its benefit as lender.
    (i) An initial inspection should be made just prior to or during the 
placement of concrete footings or monolithic footings and floor slabs. 
At this point, foundation excavations are complete, forms or trenches 
and steel are ready for concrete placement and the subsurface 
installation is roughed in. If the building design does not include 
concrete footings the initial inspection should be made just after or 
during the placement of poles or other foundation materials.

[[Page 185]]

    (ii) An inspection should be made when the building is enclosed, 
structural members are still exposed, roughing in for heating, plumbing 
and electrical work is in place and visible, and wall insulation and 
vapor barriers are installed.
    (iii) A final inspection should be made when all development of the 
structure has been completed and the structrure is ready for its 
intended use.
    (4) Prefinal inspections. A prefinal inspection will be made by the 
owner, project inspector, owner's architect or engineer, representatives 
of other agencies involved, and the District Director. The inspection 
results will be recorded on Form RD 1924-12, ``Inspection Report,'' and 
a copy provided to all interested parties, including the Agency State 
Director.
    (5) Final inspection. A final inspection will be made by RD before 
final payment is made.
    (6) Changes in development plans. (i) Changes in development plans 
may be approved by RD when requested by owners, provided:
    (A) Funds are available to cover any additional costs; and
    (B) The change is for an authorized loan purpose; and
    (C) It will not adversely affect the soundness of the facility 
operation or RD's security; and
    (D) The change is within the scope of the contract; and
    (E) Any applicable requirements of subpart G of part 1940 of this 
chapter have been met.
    (ii) Changes will be recorded on Form RD 1924-7, ``Contract Change 
Order,'' or other similar forms may be used with the prior approval of 
the District Director. Regardless of the form, change orders must be 
approved by the Agency District Director.
    (iii) Changes should be accomplished only after Agency approval on 
all changes which affect the work and shall be authorized only by means 
of contract change order. The change order will include items such as:
    (A) Any changes in labor and material and their respective cost.
    (B) Changes in facility design.
    (C) Any decrease or increase in quantities based on final 
measurements that are different from those shown in the bidding 
schedule.
    (D) Any increase or decrease in the time to complete the project.
    (iv) All changes shall be recorded on chronologically numbered 
contract change orders as they occur. Change orders will not be included 
in payment estimates until approved by all parties.

[52 FR 43726, Nov. 16, 1987; 52 FR 47097, Dec. 11, 1987]



Sec.  1942.127  Project monitoring and fund delivery.

    (a) Coordination of funding sources. When a project is jointly 
financed, the District Director will reach any needed agreement or 
understanding with the representatives of the other source of funds on 
distribution of responsibilities for handling various aspects of the 
project. These responsibilities will include supervision of 
construction, inspections and determination of compliance with 
appropriate regulations concerning equal employment opportunities, wage 
rates, nondiscrimination in making services or benefits available, and 
environmental compliance. If any problems develop which cannot be 
resolved locally, complete information should be sent to the State 
Office for advice.
    (b) Multiple advances. Loans under this subpart are subject to the 
provisions of Sec.  1942.17 (p)(2) of subpart A of this part 1942.
    (c) Use and accountability of funds. Loans under this subpart are 
subject to the provisions of Sec.  1942.17 (p)(3) of subpart A of this 
part 1942.
    (d) Development inspections. Loans under this subpart are subject to 
the provisions of Sec.  1942.17(p)(4) of subpart A of this part 1942.
    (e) Payment for project costs. Each payment for project costs must 
be approved by the borrower's governing body.
    (1) Construction. Payment for construction must be for amounts shown 
on payment estimate forms. Form RD 1924-18, ``Partial Payment 
Estimate,'' may be used for this purpose or other similar forms may be 
used with the prior approval of the District Director. However, the 
District Director cannot require more reporting burden than is required 
by Form RD 1924-18. Advances

[[Page 186]]

for contract retainage will not be made until such retainage is due and 
payable under the terms of the contract. The review and acceptance of 
project cost, including construction partial payment estimates, by RD 
does not attest to the correctness of the amounts, the quantities shown, 
or that the work has been performed under the terms of agreements or 
contracts.
    (2) Major equipment. Payment for major equipment should generally 
coincide with delivery of the usable equipment, along with any necessary 
title or certifications, to the borrower. Borrowers may not use Agency 
loan funds to make deposits on equipment not ready for delivery. If a 
borrower purchases a truck chassis from one supplier and another 
supplier will complete the development of a fire or rescue vehicle, RD 
may release funds to pay for the chassis when title to the chassis is 
transferred to the borrower.
    (f) Use of remaining funds. Loans under this subpart are subject to 
the provisions of Sec.  1942.17 (p)(6) of subpart A of this part 1942.

[52 FR 43726, Nov. 16, 1987; 52 FR 47097, Dec. 11, 1987]



Sec.  1942.128  Borrower accounting methods, management reports and audits.

    (a) Loans under this subpart are subject to the provisions of Sec.  
1942.17(q) of subpart A of this part 1942 except as provided in this 
section.
    (b) Borrowers with annual incomes not exceeding $100,000 may, with 
concurrence of the District Director, use Form RD 1942-53, ``Cash Flow 
Report,'' instead of page one of schedule one and schedule two of Form 
RD 442-2, ``Statement of Budget, Income, and Equity.'' When used for 
budgeting, the cash statement should be projected for the upcoming 
fiscal year. When used for quarterly or annual reports, the cash flow 
report should include current year projections and actual data for the 
prior year, the quarter just ended, and the current year to date.



Sec.  1942.129  Borrower supervision and servicing.

    Loans under this subpart are subject to the provisions of Sec.  
1942.17(r) of subpart A of this part 1942 and subpart E of part 1951 of 
this chapter.



Sec. Sec.  1942.130-1942.131  [Reserved]



Sec.  1942.132  Subsequent loans.

    Subsequent loans will be processed under this subpart.



Sec.  1942.133  Delegation and redelegation of authority.

    Loan approval authority is in subpart A of part 1901 of this 
chapter. State Directors may delegate approval authority to District 
Directors to approve fire and rescue loans regardless of whether 
authority to approve other community facility loans is delegated. Except 
for loan approval authority, District Directors may redelegate their 
duties to qualified staff members.



Sec.  1942.134  State supplements and guides.

    State Directors will obtain National Office clearance for all State 
supplements and guides under RD Instruction 2006-B (available in any 
Rural Development office).
    (a) State supplements. State Directors may supplement this subpart 
to meet State and local laws and regulations and to provide for orderly 
application processing and efficient service to applicants. State 
supplements shall not contain any requirements pertaining to bids, 
contract awards, and materials more restrictive than those in this 
subpart.
    (b) State guides. State Directors may develop guides for use by 
applicants if the guides to this subpart and subpart A of part 1942 are 
not adequate. State Directors may prepare guides for items needed for 
the application; items necessary for the docket; and items required 
prior to loan closing or construction starts.



Sec. Sec.  1942.135-1942.149  [Reserved]



Sec.  1942.150  OMB control number.

    The collection of information requirements in this regulation have 
been approved by the Office of Management and Budget and have been 
assigned OMB control number 0575-0120.

Subparts D-H [Reserved]

[[Page 187]]



PART 1943 [RESERVED]--Table of Contents





PART 1944_HOUSING--Table of Contents



Subpart A [Reserved]

             Subpart B_Housing Application Packaging Grants

Sec.
1944.51 Objective.
1944.52 Definitions.
1944.53 Grantee eligibility.
1944.54-1944.61 [Reserved]
1944.62 Authorized representative of the applicant.
1944.63 Authorized use of grant funds.
1944.64-1944.65 [Reserved]
1944.66 Administrative requirements.
1944.67 Ineligible activities.
1944.68 [Reserved]
1944.69 Agency point of contact.
1944.70 Targeting of HAPG funds to States.
1944.71 Term of grant.
1944.72 Application packaging orientation and training.
1944.73 Package submission.
1944.74 Debarment or suspension.
1944.75 Exception authority.
1944.76-1944.99 [Reserved]
1944.100 OMB control number.

Exhibit A to Subpart B of Part 1944 [Reserved]
Exhibit B to Subpart B of Part 1944--Housing Application Packaging Grant 
          (HAPG) Fee Processing
Exhibit C to Subpart B of Part 1944--Requirements for Housing 
          Application Packages
Exhibit D to Subpart B of Part 1944--Designated Counties for Housing 
          Application Packaging Grants

Subparts C-E [Reserved]

              Subpart F_Congregate Housing Services Program

1944.251 Purpose.
1944.252 Definitions.
1944.253 Notice of funding availability, application process and 
          selection.
1944.254 Program costs.
1944.255 Eligible supportive services.
1944.256 Eligibility for services.
1944.257 Service coordinator.
1944.258 Professional assessment committee.
1944.259 Participatory agreement.
1944.260 Cost distribution.
1944.261 Program participant fees.
1944.262 Grant agreement and administration.
1944.263 Eligibility and priority for 1978 Act recipients.
1944.264 Evaluation of Congregate Housing Services Programs.
1944.265 Reserve for supplemental adjustment.
1944.266 Other Federal requirements.

Subparts G-H [Reserved]

             Subpart I_Self-Help Technical Assistance Grants

1944.401 Objective.
1944.402 Grant purposes.
1944.403 Definitions.
1944.404 Eligibility.
1944.405 Authorized use of grant funds.
1944.406 Prohibited use of grant funds.
1944.407 Limitations.
1944.408 [Reserved]
1944.409 Executive Order 12372.
1944.410 Processing preapplications, applications, and completing grant 
          dockets.
1944.411 Conditions for approving a grant.
1944.412 Docket preparation.
1944.413 Grant approval.
1944.414 [Reserved]
1944.415 Grant approval and other approving authorities.
1944.416 Grant closing.
1944.417 Servicing actions after grant closing.
1944.418 [Reserved]
1944.419 Final grantee evaluation.
1944.420 Extension or revision of the grant agreement.
1944.421 Refunding of an existing grantee.
1944.422 Audit and other report requirements.
1944.423 Loan packaging and 502 RH application submittal.
1944.424 Dwelling construction and standards.
1944.425 Handling and accounting for borrower loan funds.
1944.426 Grant closeout.
1944.427 Grantee self-evaluation.
1944.428-1944.449 [Reserved]
1944.450 OMB control number.

Exhibit A to Subpart I of Part 1944--Self-Help Technical Assistance 
          Grant Agreement
Exhibit B to Subpart I of Part 1944--Evaluation Report of Self-Help 
          Technical Assistance (TA) Grants
Exhibit B-1 to Subpart I of Part 1944--Instructions for Preparation of 
          Evaluation Report of Self-Help Technical Assistance Grants
Exhibit B-2 to Subpart I of Part 1944--Breakdown of Construction 
          Development for Determining Percentage Construction Completed
Exhibit B-3 to Subpart I of Part 1944--Pre-Construction and Construction 
          Phase Breakdown
Exhibit C to Subpart I of Part 1944--Amendment to Self-Help Technical 
          Assistance Grant Agreement

[[Page 188]]

Exhibit D to Subpart I of Part 1944--Self-Help Technical Assistance 
          Grant Predevelopment Agreement
Exhibit E to Subpart I of Part 1944--Guidance for Recipients of Self-
          Help Technical Assistance Grants (Section 523 of Housing Act 
          of 1949)
Exhibit F to Subpart I of Part 1944--Site Option Loan to Technical 
          Assistance Grantees

Subpart J [Reserved]

          Subpart K_Technical and Supervisory Assistance Grants

1944.501 General.
1944.502 Policy.
1944.503 Objectives.
1944.504-1944.505 [Reserved]
1944.506 Definitions.
1944.507-1944.509 [Reserved]
1944.510 Applicant eligibility.
1944.511 [Reserved]
1944.512 Authorized representative of the applicant.
1944.513 [Reserved]
1944.514 Comprehensive TSA grant projects.
1944.515 [Reserved]
1944.516 Grant purposes.
1944.517 [Reserved]
1944.518 Term of grant.
1944.519 [Reserved]
1944.520 Ineligible activities.
1944.521 [Reserved]
1944.522 Equal opportunity requirements.
1944.523 Other administrative requirements.
1944.524 [Reserved]
1944.525 Targeting of TSA funds to States.
1944.526 Preapplication procedure.
1944.527 [Reserved]
1944.528 Preapplication submission deadline.
1944.529 Project selection.
1944.530 [Reserved]
1944.531 Applications submission.
1944.532 [Reserved]
1944.533 Grant approval and announcement.
1944.534 [Reserved]
1944.535 Cancellation of an approved grant.
1944.536 Grant closing.
1944.537 [Reserved]
1944.538 Extending and revising grant agreements.
1944.539 [Reserved]
1944.540 Requesting TSA checks.
1944.541 Reporting requirements.
1944.542 [Reserved]
1944.543 Grant monitoring.
1944.544 [Reserved]
1944.545 Additional grants.
1944.546 [Reserved]
1944.547 Management assistance.
1944.548 Counseling consent by Rural Development single family housing 
          borrowers.
1944.549 Grant evaluation, closeout, suspension, and termination.
1944.550 [Reserved]

Exhibit A to Subpart K of Part 1944--Grant Agreement--Technical and 
          Supervisory Assistance
Exhibit B to Subpart K of Part 1944--Administrative Instructions for 
          State Offices Regarding Their Responsibilities in the 
          Administration of the Technical and Supervisory Assistance 
          Grant Program
Exhibit C to Subpart K of Part 1944--Instructions for District Offices 
          Regarding Their Responsibilities in the Administration of the 
          Technical and Supervisory Assistance Grant Program
Exhibit D to Subpart K of Part 1944--Amendment to Technical and 
          Supervisory Assistance Grant Agreement
Exhibit E to Subpart K of Part 1944--Guide Letter to Delinquent FmHA or 
          Its Successor Agency Under Public Law 103-354 Single Family 
          Housing Loan Borrowers

Subparts L-M [Reserved]

                  Subpart N_Housing Preservation Grants

1944.651 General.
1944.652 Policy.
1944.653 Objective.
1944.654 Debarment and suspension--drug-free workplace.
1944.655 [Reserved]
1944.656 Definitions.
1944.657 Restrictions on lobbying.
1944.658 Applicant eligibility.
1944.659 Replacement housing.
1944.660 Authorized representative of the HPG applicant and Rural 
          Development point of contact.
1944.661 Individual homeowners--eligibility for HPG assistance.
1944.662 Eligibility of HPG assistance on rental properties or co-ops.
1944.663 Ownership agreement between HPG grantee and rental property 
          owner or co-op.
1944.664 Housing preservation and replacement housing assistance.
1944.665 Supervision and inspection of work.
1944.666 Administrative activities and policies.
1944.667 Relocation and displacement.
1944.668 Term of grant.
1944.669 [Reserved]
1944.670 Project income.
1944.671 Equal opportunity requirements and outreach efforts.
1944.672 Environmental requirements.
1944.673 Historic preservation and replacement housing requirements and 
          procedures.
1944.674 Public participation and intergovernmental review.
1944.675 Allocation of HPG funds to States and unused HPG funds.

[[Page 189]]

1944.676 Preapplication procedures.
1944.677 [Reserved]
1944.678 Preapplication submission deadline.
1944.679 Project selection criteria.
1944.680 Limitation on grantee selection.
1944.681 Application submission.
1944.682 Preapplication/application review, grant approval, and 
          requesting HPG funds.
1944.683 Reporting requirements.
1944.684 Extending grant agreement and modifying the statement of 
          activities.
1944.685 [Reserved]
1944.686 Additional grants.
1944.687 [Reserved]
1944.688 Grant evaluation, closeout, suspension, and termination.
1944.689 Long-term monitoring by grantee.
1944.690 Exception authority.
1944.691-1944.699 [Reserved]
1944.700 OMB control number.

Exhibit A to Subpart N of Part 1944--Housing Preservation Grant 
          Agreement
Exhibit B to Subpart N of Part 1944--Amendment to Housing Preservation 
          Grant Agreement
Exhibit C to Subpart N of Part 1944 [Reserved]
Exhibit D to Subpart N of Part 1944--Project Selection Criteria-Outline 
          Rating Form
Exhibit E to Subpart N of Part 1944--Guide for Quarterly Performance 
          Report

    Authority: 5 U.S.C. 301; 42 U.S.C. 1480.

    Editorial Note: Nomenclature changes to part 1944 appear at 80 FR 
9885, Feb. 24, 2015.

Subpart A [Reserved]



             Subpart B_Housing Application Packaging Grants

    Source: 58 FR 58643, Nov. 3, 1993, unless otherwise noted.



Sec.  1944.51  Objective.

    This subpart states the policies and procedures for making grants 
under section 509 of the Housing Act of 1949, as amended (42 U.S.C. 
1479). Grants reimburse eligible organizations for part or all of the 
costs of conducting, administering, and coordinating an effective 
housing application packaging program in colonias and designated 
counties. Eligible organizations will aid very low- and low-income 
individuals and families in obtaining benefits from Federal, State, and 
local housing programs. The targeted groups are very low- and low-income 
families without adequate housing who will receive priority for 
recruitment and participation and nonprofit organizations able to 
propose rental or housing rehabilitation assistance benefitting such 
families. These funds are available only in the areas defined in exhibit 
D of this subpart. Participants will assist very low- and low-income 
families in solving their housing needs. One way of assisting is to 
package single family housing applications for families wishing to buy, 
build, or repair houses for their own use. Another way is to package 
applications for organizations wishing to develop rental units for lower 
income families. The intent is to make Rural Development housing 
assistance programs available to very low- and low-income rural 
residents in colonias and designated counties. Rural Development will 
reimburse eligible organizations packaging loan/grant applications 
without discrimination because of race, color, religion, sex, national 
origin, age, familial status, or handicap if such an organization has 
authority to contract.



Sec.  1944.52  Definitions.

    References in this subpart to County, District, State, National and 
Finance Offices, and to County Supervisor, District Director, State 
Director, and Administrator refer to Rural Development offices and 
officials and should be read as prefaced by Rural Development. Terms 
used in this subpart have the following meanings:
    Colonias. As defined in exhibit C of subpart L of part 1940 of this 
chapter.
    Complete application package (hereafter called package). The package 
submitted to the appropriate Rural Development office which is 
considered acceptable in accordance with exhibit C of this subpart.
    Cost reimbursement. Amount determined by the Administrator that 
equals the customary and reasonable costs incurred in preparing a 
package for a loan or grant. These amounts are included in exhibit B of 
this subpart.
    Designated counties. These counties are listed in exhibit D of this 
subpart. The counties meet the following criteria:
    (1) Twenty percent or more of the county population is at or below 
the poverty level based on the most recent

[[Page 190]]

5-year survey of the American Community Survey of the Census Bureau or 
other Census Bureau data if needed; and
    (2) Ten percent or more of the occupied housing units are 
substandard based on the most recent decennial Census of the United 
States.
    Organization. Any of the following entities which are legally 
authorized to work in designated counties and/or colonias and are:
    (1) A State, State agency, or unit of general local government or;
    (2) A private nonprofit organization or corporation that is owned 
and controlled by private persons or interests, is organized and 
operated for purposes other than making gains or profits for the 
corporation, and is legally precluded from distributing any gains or 
profits to its members.
    Packager. Any eligible organization which is reimbursed with Housing 
Application Packaging Grants (HAPG) funds.
    Technical assistance. Any assistance necessary to carry out housing 
efforts by or for very low- and low-income individuals/families to 
improve the quality and/or quantity of housing available to meet their 
needs. Such assistance must include, but is not limited to:
    (1) Contacting and assisting very low- and low-income families in 
need of adequate housing by:
    (i) Implementing an organized outreach program using available media 
and personal contacts;
    (ii) Explaining available housing programs and alternatives to 
increase the awareness of very low- and low-income families and to 
educate the community as to the benefits from improved housing;
    (iii) Assisting very low- and low-income families in locating 
adequate housing; and
    (iv) Developing and packaging loan/grant applications for new 
construction and/or rehabilitation, or repair of existing housing.
    (2) Contacting and assisting eligible applicants to develop multi-
family housing loan/grant applications for new construction, 
rehabilitation, or repair to serve very low- and low-income families.

[58 FR 58643, Nov. 3, 1993, as amended at 80 FR 9885, Feb. 24, 2015]



Sec.  1944.53  Grantee eligibility.

    An eligible grantee is an organization as defined in Sec.  1944.52 
of this subpart and has received a current ``Certificate of Training'' 
pertaining to the type of application being packaged. In addition, the 
grantee must:
    (a) Have the financial, legal, and administrative capacity to carry 
out the responsibilities of packaging housing applications for very low- 
and low-income applicants. To meet this requirement it must have the 
necessary background and experience with proven ability to perform 
responsibly in the field of housing application packaging, low-income 
housing development, or other business or administrative ventures which 
indicate an ability to perform responsibly in this field of housing 
application packaging.
    (b) Legally obligate itself to administer grant funds, provide 
adequate accounting of the expenditure of such funds, and comply with 
Rural Development regulations.
    (c) If the organization is a private nonprofit corporation, be a 
corporation that:
    (1) Is organized under State and local laws.
    (2) Is qualified under section 501(c)(3) of the Internal Revenue 
Code of 1986.
    (3) Has as one of its purposes assisting very low- and low-income 
families to obtain affordable housing.



Sec. Sec.  1944.54-1944.61  [Reserved]



Sec.  1944.62  Authorized representative of the applicant.

    RHS or its successor agency under Public Law 103-354 will deal only 
with authorized representatives designated by the applicant. The 
authorized representatives must have no pecuniary interest in the award 
of the architectural or construction contracts, the purchase of 
equipment, or the purchase of the land for the housing site.

[58 FR 58643, Nov. 3, 1993, as amended at 61 FR 39851, July 31, 1996]

[[Page 191]]



Sec.  1944.63  Authorized use of grant funds.

    Grant funds may only be used to reimburse a packager for delivered 
packages. Payment will be made for each complete package received and 
accepted in accordance with exhibit C of this subpart.



Sec. Sec.  1944.64-1944.65  [Reserved]



Sec.  1944.66  Administrative requirements.

    The following policies and regulations apply to grants made under 
this subpart:
    (a) Grantees must comply with all provisions of the Fair Housing Act 
of 1988 and subpart E of part 1901 of this chapter which states in part, 
that no person in the United States shall, on the grounds of race, 
color, national origin, sex, religion, familial status, handicap, or 
age, be excluded from participating in, be denied the benefits of, or be 
subject to discrimination in connection with the use of grant funds.
    (b) The policies and regulations contained in RD Instruction 1940-Q 
(available in any Agency office), Departmental Regulation 2400-5, 2 CFR 
part 200 as adopted by USDA through 2 CFR part 400 apply to grantees 
under this subpart.
    (c) Grantees should be aware of the policies and regulations 
contained in subpart G of part 1940 of this chapter. They will supply 
needed information requested by the local Agency Office in connection 
with the loan/grant application.
    (d) The grantee will retain records for 3 years from the date 
Standard Form (SF)-269A, ``Financial Status Report (Short Form),'' is 
submitted. These records will be accessible to RHS and other Federal 
officials in accordance with 2 CFR part 200 as adopted by USDA through 2 
CFR part 400.
    (e) Annual audits will be completed if the grantee has received more 
than $25,000 of Federal assistance in the year in which HAPG funds were 
received. These audits will be due 13 months after the end of the fiscal 
year in which funds were received.
    (1) States, State agencies, or units of general local government 
will complete an audit in accordance with 2 CFR part 200 as adopted by 
USDA through 2 CFR part 400 and OMB Circular A-128.
    (2) Nonprofit organizations will complete an audit in accordance 
with 2 CFR part 200 as adopted by USDA through 2 CFR part 400.
    (f) Performance reports, as required, will be submitted in 
accordance with 2 CFR part 200 as adopted by USDA through 2 CFR part 
400.

[58 FR 58643, Nov. 3, 1993, as amended at 61 FR 39851, July 31, 1996; 79 
FR 76008, Dec. 19, 2014]



Sec.  1944.67  Ineligible activities.

    The packager may not charge fees or accept compensation or 
gratuities directly or indirectly from the very low- and low-income 
families being assisted under this program. The packager may not 
represent or be associated with anyone else, other than the applicant, 
who may benefit in any way in the proposed transaction. If the packager 
is compensated for this service from other sources, then the packager is 
not eligible for compensation from this source except as permitted by 
Agency. Grantees who are funded to do Self-Help Housing, may not be 
reimbursed for packaging applications for participation in the Self-Help 
Housing effort.

[58 FR 58643, Nov. 3, 1993, as amended at 61 FR 39851, July 31, 1996]



Sec.  1944.68  [Reserved]



Sec.  1944.69  Agency point of contact.

    Grantees must submit packages to the appropriate Agency office 
serving the designated county and/or colonias. Packages for Single 
Family Housing loans/grants are submitted to the appropriate County 
Office. All other packages are submitted to the appropriate District 
Office. The applicable forms required to develop a package can be 
obtained in any District or County Office. Packagers should coordinate 
their packaging activity with the appropriate District and County 
Offices.

[58 FR 58643, Nov. 3, 1993, as amended at 61 FR 39851, July 31, 1996]

[[Page 192]]



Sec.  1944.70  Targeting of HAPG funds to States.

    (a) HAPG funds will be distributed administratively by the 
Administrator to achieve the success of the program. Allocations will be 
distributed to States as set forth in Attachment 2 of exhibit A of 
subpart L of part 1940 of this chapter.
    (b) The State Director will determine based on the housing funds 
available and the personnel available, how many applications can be 
processed for each program during the fiscal year in each Agency office 
serving a designated county and/or colonias. The number of applications 
will be published in the advertisement required under Sec.  1944.72 of 
this subpart.

[58 FR 58643, Nov. 3, 1993, as amended at 61 FR 39851, July 31, 1996]



Sec.  1944.71  Term of grant.

    (a) For Single Family Housing loans/grants, HAPG funds will be 
specifically available for designated counties. Packages may be 
submitted after the annual housing application packaging orientation and 
training is held. The grant period will end when sufficient packages are 
received for each designated county or colonia or on September 30, of 
the fiscal year, whichever is earlier. The State Director must send 
notification, in the form of a letter, to all packagers who attended the 
packaging orientation and training that the number of applications 
specified in the advertisement required under Sec.  1944.72 of this 
subpart have been received. Any packages submitted after this date will 
be paid for only if the grantee can demonstrate the package was prepared 
in good faith and prior to receipt of the above notification.
    (b) For Multi-Family Housing loans/grants, HAPG funds will be 
available for designated areas or colonias to the extent specified in 
Rural Development's advertisement. Preapplications approved in one 
fiscal year, for which grant funds were obligated, may have the balance 
disbursed in a later fiscal year when the application is submitted and 
approved.



Sec.  1944.72  Application packaging orientation and training.

    Agency approval officials will orient and train organizations on how 
to package. A newspaper advertisement will be published by Agency 
offices serving designated counties and/or colonias after October 1. The 
advertisement will announce that application packaging services are 
being requested and specify the date of the certification training. All 
eligible organizations may attend this training. This date will be no 
more than 30 days after the advertisement appears in the newspaper and 
no later than December 31 of any year. The advertisement will include 
the estimated number of packages needed by loan type, i.e., Single 
Family, Multi-Family, etc. Exhibit A of this subpart (available in any 
Agency office) is an example of an appropriate advertisement. 
``Certificates of Training'' as required under Sec.  1944.53 of this 
subpart will be signed by the State Director and given after completion 
of the training. Efforts will be made by the appropriate Agency office 
to complete this training process and certify packagers as quickly as 
possible. Grantees must attend this training each year in order to 
qualify for assistance.

[58 FR 58643, Nov. 3, 1993, as amended at 61 FR 39851, July 31, 1996]



Sec.  1944.73  Package submission.

    (a) When submitting its first package to a Rural Development office, 
in addition to the item in paragraph (b) of this section and the 
information set forth in exhibit C of this subpart, the organization 
must submit the following. A file of these documents will be established 
in the Rural Development office and retained in accordance with RD 
Instruction 2033-A (available in any Rural Development office).
    (1) Proof of their nonprofit status under section 501(c)(3) or 
section 501(c)(4) of the Internal Revenue Code of 1986 or of their 
existence as a state agency or unit of general local government legally 
authorized to work in the designated county and/or colonias. If the 
Rural Development approval official is in doubt about the legal status 
of the organization, the evidence will

[[Page 193]]

be sent to the State Director. The State Director may, if needed, submit 
the above documents with any comments or questions to the Office of 
General Counsel (OGC) for an opinion as to whether the applicant is a 
legal organization of the type required by these regulations.
    (2) An original and copy of Forms RD 400-1, ``Equal Opportunity 
Agreement,'' and RD 400-4, ``Assurance Agreement.''
    (3) A copy of a current ``Certificate of Training'' pertaining to 
the type of application package submitted.
    (b) All packages must contain a signed statement which states, 
``Neither the organization nor any of its employees have charged, 
received or accepted compensation from any source other than Rural 
Development for packaging this application and are not associated with 
or represent anyone other than the applicant in this transaction.''
    (c) Form SF-270, ``Request for Advance or Reimbursement'' will be 
submitted with each application package for the amount authorized for 
the specific loan type in exhibit B of this subpart.
    (d) The Rural Development approval official will review each package 
for completeness, accuracy, and conformance to program policy and 
regulations. Cost reimbursement will be made in accordance with exhibit 
B of this subpart. Packagers that submit ``incomplete'' packages for 
sections 502 and 504 loans/grants will be sent a letter within 5 working 
days after submission of the ``incomplete'' package advising of 
additional information needed. Payment will be held until all the 
information is received. Packagers for sections 502 loans and 504 loans/
grants will not be paid for packages submitted on applicants who are 
obviously ineligible for the programs. For example, a grantee would not 
be reimbursed for submitting a package for a section 502 loan applicant 
with an adjusted income exceeding the limits of Appendix 9 of HB-1-3550 
(available in any Rural Development office) or who already owns adequate 
housing. Likewise, a grantee would not be reimbursed for submitting a 
package for a section 504 loan/grant when the adjusted family income 
exceeds the very low-income limits of Appendix 9 of HB-1-3550 (available 
in any Rural Development office) or when the applicant does not own and 
occupy his/her property, or for a section 504 grant when the applicant 
is not 62 years of age or older.
    (e) Submissions for sections 514/516, 515, and 524 loans/grants will 
be reviewed and, if incomplete, a letter sent within 15 working days 
advising of additional information required.
    (f) Form SF-269A, will be submitted within 15 days of the end of the 
fiscal year.

[58 FR 58643, Nov. 3, 1993, as amended at 67 FR 78328, Dec. 24, 2002]



Sec.  1944.74  Debarment or suspension.

    Certified packagers whose actions or acts warrant they not be 
allowed to participate in the program are to be investigated in 
accordance with agency procedures (available in any Rural Development 
office).

[70 FR 7651, Feb. 15, 2005]



Sec.  1944.75  Exception authority.

    The Administrator may, in individual cases, make an exception to any 
requirement or provision of this subpart which is not inconsistent with 
the authorizing statute or other applicable law if the Administrator 
determines that the Government's interest would be adversely affected. 
The Administrator will exercise this authority only at the request of 
the State Director and recommendation of the Deputy Administrator, 
Single Family Housing. Requests for exceptions must be in writing by the 
State Director and supported with documentation to explain the adverse 
effect on the Government's interest and/or impact on the applicant, 
borrower, or community, proposed alternative courses of action, and show 
how the adverse effect will be eliminated or minimized if the exception 
is granted.

[58 FR 58643, Nov. 3, 1993, as amended at 67 FR 78328, Dec. 24, 2002]



Sec. Sec.  1944.76-1944.99  [Reserved]



Sec.  1944.100  OMB control number.

    The reporting and recordkeeping requirements contained in this 
regulation have been approved by the Office

[[Page 194]]

of Management and Budget and have been assigned OMB control number 0575-
0157. Public reporting burden for this collection of information is 
estimated to vary from 30 minutes to five hours per response, with an 
average of 3 hours per response including time for reviewing 
instruction, searching existing data sources, gathering and maintaining 
the data needed, and completing and reviewing the collection of 
information. Send comments regarding this burden estimate or any other 
aspect of this collection of information, including suggestions for 
reducing this burden, to Department of Agriculture, Clearance Officer, 
OIRM, Room 404-W, Washington, DC 20250; and to the Office of Management 
and Budget, Paperwork Reduction Project (OMB 0575-0157), Washington, DC 
20503.



           Sec. Exhibit A to Subpart B of Part 1944 [Reserved]



Sec. Exhibit B to Subpart B of Part 1944--Housing Application Packaging 
                       Grant (HAPG) Fee Processing

    The Farmers Home Administration (FmHA) or its successor agency under 
Public Law 103-354 approval official will execute and distribute Form 
FmHA or its successor agency under Public Law 103-354 1940-1, ``Request 
for Obligation of Funds,'' in accordance with the Forms Manual Insert 
(FMI). HAPG funds will be used for the fees except as otherwise noted in 
paragraphs II (A) and (B) of this exhibit. Funds for all loan and/or 
grant application packages will be paid as follows.
    I. For all Single Family Housing loans (Sections 502, 504, and 514 
(``on'' farm labor housing only) of the Housing Act of 1949, checks will 
be ordered when complete application packages as defined in Sec.  
1944.73 of this subpart and exhibit C of this subpart are received. The 
fees are as follows:
    (A) Section 502 Single Family Housing Loans--$500
    (B) Section 504 Rural Housing Loans and Grants--$500
    (C) Section 514 ``On'' Farm Labor Housing Loans--$500

    II. For all Multi-Family Housing loans and grants (sections 514/516, 
515, 524, and 533 of the Housing Act of 1949), the entire amount of the 
fee coming from HAPG funds will be obligated when the packager has met 
all the requirements of the preapplication stage, however, payments will 
be made in accordance with the following schedules:

    (A) Sections 514/516 Farm Labor Housing Loans and Grants

    ``Off'' farm labor housing loans/grants--fees paid in accordance 
with the schedule for section 515 Rural Rental Housing loans.

    (B) Section 515 Rural Rental Housing Loans.

    (1) The scale for packaging fees is based on the percentage of the 
total development cost as follows:

Up to $400,000--1.6 percent

    For additional amounts between:

$400,001 and $800,000--add 1.2 percent
$800,001 and $1,200,000--add 1.0 percent
$1,200,001 and $1,600,000--add .7 percent
$1,600,001 and $2,000,000--add .5 percent
Over $2,000,001--No additional amount

    (2) Twenty-five percent paid from HAPG funds when Form AD-622, 
``Notification of Preapplication Review Action,'' is sent inviting 
submission of a complete application.
    (3) Twenty percent paid from HAPG funds when a complete application 
is filed including plans and specifications.
    (4) The 55 percent balance paid when the loan is approved. Funds for 
this 55 percent will be drawn from loan funds in accordance with 7 CFR 
3560.53 (o).
    (C) Section 524 Rural Housing Site Loans--total fee is 1 percent of 
the loan amount payable in two installments.
    (1) Thirty percent paid after FmHA or its successor agency under 
Public Law 103-354's review of the preapplication under Sec.  
1822.271(a) of subpart G of part 1822 of this chapter (paragraph XI A of 
FmHA Instruction 444.8).
    (2) Seventy percent paid upon the completion of the docket in 
accordance with Sec.  1822.271(c) of subpart G of part 1822 of this 
chapter (paragraph XI C of FmHA Instruction 444.8).
    (D) Section 533 Housing Preservation Grants--total fee is 2 percent 
of the grant amount paid in two installments.
    (1) Forty percent will be paid when the Form AD-622, inviting 
submission of a complete application, is sent.
    (2) Sixty percent will be paid after grant closes.

[58 FR 58643, Nov. 3, 1993, as amended at 69 FR 69104, Nov. 26, 2004]



   Sec. Exhibit C to Subpart B of Part 1944--Requirements for Housing 
                          Application Packages

    A package will consist of the following requirements for the 
respective program.
    A. Section 502--Complete application packages will be submitted in 
accordance with the requirements of 7 CFR part 3550. The package must 
also include the following:


[[Page 195]]


Form RD 410-9--``Statement Required by the Privacy Act''
Form RD 1910-11--``Applicant Certification Federal Collection Policies 
for Consumer or Commercial Debts''
Form RD 1944-3--``Budget and/or Financial Statement''

    B. Section 504--Complete application packages will be submitted in 
accordance with 7 CFR part 3550. The package must include the forms 
listed in paragraph A. of this exhibit and the following:
    The appropriate Agency application form for Rural Housing assistance 
(non-farm tract) (available in any Rural Development office).
    The appropriate Agency form to request verification of employment 
(available in any Rural Development office).
    The appropriate Agency Rural Housing Loan application package 
(available in any Rural Development office).
    Evidence of ownership in accordance with 7 CFR part 3550.
    Cost estimates or bid prices for removal of health or safety hazards 
in accordance with 7 CFR part 3550.
    C. Section 514/516--Complete application packages will be submitted 
in accordance with the Notice of Funding Availability that will be 
published in the Federal Register each Fiscal Year.
    D. Section 515--Complete application packages will be submitted in 
accordance with the Notice of Funding Availability that will be 
published in the Federal Register each Fiscal Year.
    E. Section 524--Complete application packages will be submitted in 
accordance with Sec.  1822.271(a) of subpart G of part 1822 of this 
chapter (paragraph XI.A. of RD Instruction 444.8). After Rural 
Development's review and as instructed, the application should be 
completed in accordance with Sec.  1822.271(c) of subpart G of part 1822 
of this chapter (paragraph XI.C. of RD Instruction 444.8).
    F. Section 533--Complete application packages will be submitted in 
accordance with the requirements of subpart N of part 1944 of this 
chapter.

[69 FR 69104, Nov. 26, 2004]

[[Page 196]]



   Sec. Exhibit D to Subpart B of Part 1944--Designated Counties for 
                  Housing Application Packaging Grants
[GRAPHIC] [TIFF OMITTED] TR25MY05.036


[[Page 197]]


[GRAPHIC] [TIFF OMITTED] TR25MY05.037


[[Page 198]]


[GRAPHIC] [TIFF OMITTED] TR25MY05.038


[[Page 199]]


[GRAPHIC] [TIFF OMITTED] TR25MY05.039


[70 FR 29927, May 25, 2005]

Subparts C-E [Reserved]



              Subpart F_Congregate Housing Services Program

    Source: 61 FR 42943, 42949, Aug. 19, 1996, unless otherwise noted.



Sec.  1944.251  Purpose.

    The requirements of this subpart augment the requirements of section 
802 of the National Affordable Housing Act of 1990 (approved November 
28, 1990, Public Law 101-625) (42 U.S.C. 8011), (hereinafter, section 
802), as amended by the Housing and Community Development Act of 1992 
(Public Law 102-550, approved October 28, 1992), which authorizes the 
Congregate Housing Services Program (hereinafter, CHSP or Program).



Sec.  1944.252  Definitions.

    In addition to the definitions in section 802(k), the following 
definitions apply to CHSP:
    Activity of Daily Living (ADL) means an activity regularly necessary 
for personal care.
    (1) The minimum requirements of ADLs include:
    (i) Eating (may need assistance with cooking, preparing or serving 
food, but must be able to feed self);
    (ii) Dressing (must be able to dress self, but may need occasional 
assistance);
    (iii) Bathing (may need assistance in getting in and out of the 
shower or tub, but must be able to wash self);
    (iv) Grooming (may need assistance in washing hair, but must be able 
to take care of personal appearance);
    (v) Getting in and out of bed and chairs, walking, going outdoors, 
using the toilet; and

[[Page 200]]

    (vi) Household management activities (may need assistance in doing 
housework, grocery shopping or laundry, or getting to and from one 
location to another for activities such as going to the doctor and 
shopping, but must be mobile. The mobility requirement does not exclude 
persons in wheelchairs or those requiring mobility devices.)
    (2) Each of the Activities of Daily Living noted in paragraph (1) of 
this definition includes a requirement that a person must be able to 
perform at a specified minimal level (e.g., to satisfy the eating ADL, 
the person must be able to feed himself or herself). The determination 
of whether a person meets this minimal level of performance must include 
consideration of those services that will be performed by a person's 
spouse, relatives or other attendants to be provided by the individual. 
For example, if a person requires assistance with cooking, preparing or 
serving food plus assistance in feeding himself or herself, the 
individual would meet the minimal performance level and thus satisfy the 
eating ADL, if a spouse, relative or attendant provides assistance with 
feeding the person. Should such assistance become unavailable at any 
time, the owner is not obligated at any time to provide individualized 
services beyond those offered to the resident population in general. The 
Activities of Daily Living analysis is relevant only with regard to 
determination of a person's eligibility to receive supportive services 
paid for by CHSP and is not a determination of eligibility for 
occupancy;
    Adjusted income means adjusted income as defined in 24 CFR parts 813 
or 913.
    Applicant means a State, Indian tribe, unit of general local 
government, public housing authority (PHA), Indian housing authority 
(IHA) or local nonprofit housing sponsor. A State, Indian tribe, or unit 
of general local government may apply on behalf of a local nonprofit 
housing sponsor or a for-profit owner of eligible housing for the 
elderly.
    Area agency on aging means the single agency designated by the State 
Agency on Aging to administer the program described in Title III of the 
Older Americans Act of 1965 (45 CFR chapter 13).
    Assistant Secretary means the HUD Assistant Secretary for Housing-
Federal Housing Commissioner or the HUD Assistant Secretary for Public 
and Indian Housing.
    Case management means implementing the processes of: establishing 
linkages with appropriate agencies and service providers in the general 
community in order to tailor the needed services to the program 
participant; linking program participants to providers of services that 
the participant needs; making decisions about the way resources are 
allocated to an individual on the basis of needs; developing and 
monitoring of case plans in coordination with a formal assessment of 
services needed; and educating participants on issues, including, but 
not limited to, supportive service availability, application procedures 
and client rights.
    Eligible housing for the elderly means any eligible project 
including any building within a mixed-use project that was designated 
for occupancy by elderly persons, or persons with disabilities at its 
inception or, although not so designated, for which the eligible owner 
or grantee gives preference in tenant selection (with HUD approval) for 
all units in the eligible project (or for a building within an eligible 
mixed-use project) to eligible elderly persons, persons with 
disabilities, or temporarily disabled individuals. For purposes of this 
subpart, this term does not include projects assisted under the Low-Rent 
Housing Homeownership Opportunity program (Turnkey III (24 CFR part 905, 
subpart G)).
    Eligible owner means an owner of an eligible housing project.
    Excess residual receipts mean residual receipts of more than $500 
per unit in the project which are available and not committed to other 
uses at the time of application to HUD for CHSP. Such receipts may be 
used as matching funds and may be spent down to a minimum of $500/unit.
    For-profit owner of eligible housing for the elderly means an owner 
of an eligible housing project in which some part of the project's 
earnings lawfully inure to the benefit of any private shareholder or 
individual.

[[Page 201]]

    Grantee or Grant recipient means the recipient of funding under 
CHSP. Grantees under this Program may be states, units of general local 
government, Indian tribes, PHAs, IHAs, and local nonprofit housing 
sponsors.
    Local nonprofit housing sponsor means an owner or borrower of 
eligible housing for the elderly; no part of the net earnings of the 
owning organization shall lawfully inure to the benefit of any 
shareholder or individual.
    Nonprofit includes a public housing agency as that term is defined 
in section 3(b)(6) of the United States Housing Act of 1937.
    Person with disabilities means a household composed of one or more 
persons, at least one of whom is an adult who has a disability.
    (1) A person shall be considered to have a disability if such person 
is determined under regulations issued by the Secretary to have a 
physical, mental, or emotional impairment which:
    (i) Is expected to be of long-continued and indefinite duration;
    (ii) Substantially impedes his or her ability to live independently; 
and
    (iii) Is of such a nature that the person's ability could be 
improved by more suitable housing conditions.
    (2) A person shall also be considered to have a disability if the 
person has a developmental disability as defined in section 102(5) of 
the Developmental Disabilities Assistance and Bill of Rights Act (42 
U.S.C. 6001-7). Notwithstanding the preceding provisions of this 
paragraph, the terms person with disabilities or temporarily disabled 
include two or more persons with disabilities living together, one or 
more such persons living with another person who is determined (under 
regulations prescribed by the Secretary of HUD) to be essential to their 
care or well-being, and the surviving member or members of any household 
where at least one or more persons was an adult with a disability who 
was living, in a unit assisted under this section, with the deceased 
member of the household at the time of his or her death.
    Program participant (participant) means any project resident as 
defined in section 802(e)(1) who is formally accepted into CHSP, 
receives CHSP services, and resides in the eligible housing project 
served by CHSP grant.
    Qualifying supportive services means those services described in 
section 802(k)(16). Under this Program, health-related services mean 
non-medical supervision, wellness programs, preventive health screening, 
monitoring of medication consistent with state law, and non-medical 
components of adult day care. The Secretary concerned may also approve 
other requested supportive services essential for achieving and 
maintaining independent living.
    Rural Housing Service (RHS) means a credit agency for rural housing 
and rural development in the U.S. Department of Agriculture (USDA).
    Secretary concerned means (1) The Secretary of Housing and Urban 
Development, with respect to eligible federally assisted housing 
administered by HUD; and
    (2) The Secretary of Agriculture with reference to programs 
administered by the Administrator of the Rural Housing Service.
    Service coordinator means CHSP staff person responsible for 
coordinating Program services as described in section 1944.130.
    Service provider means a person or organization licensed or 
otherwise approved in writing by a State or local agency (e.g., 
Department of Health, Department of Human Services or Welfare) to 
provide supportive services.
    State agency means the State or an agency or instrumentality of the 
State.
    State agency on aging means the single agency designated by the 
Governor to administer the program described in Title III of the Older 
Americans Act of 1965 (See 45 CFR part 13).



Sec.  1944.253  Notice of funding availability, application process and selection.

    (a) Notice of funding availability. A Notice of Funding Availability 
(NOFA) will be published periodically in the Federal Register by the 
Secretary concerned containing the amounts of funds available, 
allocation or distribution of funds available among eligible applicant 
groups, where to obtain and submit applications, the deadline for 
submissions, and further explanation of

[[Page 202]]

the selection criteria, review and selection process. The Secretary 
concerned will designate the maximum allowable size for grants.
    (b) Selection criteria are set forth in section 802(h)(1) and shall 
include additional criteria specified by the Secretary concerned.



Sec.  1944.254  Program costs.

    (a) Allowable costs. (1) Allowable costs for direct provision of 
supportive services includes the provision of supportive services and 
others approved by the Secretary concerned for:
    (i) Direct hiring of staff, including a service coordinator;
    (ii) Supportive service contracts with third parties;
    (iii) Equipment and supplies (including food) necessary to provide 
services;
    (iv) Operational costs of a transportation service (e.g., mileage, 
insurance, gasoline and maintenance, driver wages, taxi or bus 
vouchers);
    (v) Purchase or leasing of vehicles;
    (vi) Direct and indirect administrative expenses for administrative 
costs such as annual fiscal review and audit, telephones, postage, 
travel, professional education, furniture and equipment, and costs 
associated with self evaluation or assessment (not to exceed one percent 
of the total budget for the activities approved); and
    (vii) States, Indian tribes and units of general local government 
with more than one project included in the grant may receive up to 1% of 
the total cost of the grant for monitoring the projects.
    (2) Allowable costs shall be reasonable, necessary and recognized as 
expenditures in compliance with OMB Cost Policies, i.e., OMB Circular A-
87, 24 CFR 85.36, and OMB Circular A-128.
    (b) Nonallowable costs. (1) CHSP funds may not be used to cover 
expenses related to any grantee program, service, or activity existing 
at the time of application to CHSP.
    (2) Examples of nonallowable costs under the program are:
    (i) Capital funding (such as purchase of buildings, related 
facilities or land and certain major kitchen items such as stoves, 
refrigerators, freezers, dishwashers, trash compactors or sinks);
    (ii) Administrative costs that represent a non-proportional share of 
costs charged to the Congregate Housing Services Program for rent or 
lease, utilities, staff time;
    (iii) Cost of supportive services other than those approved by the 
Secretary concerned;
    (iv) Modernization, renovation or new construction of a building or 
facility, including kitchens;
    (v) Any costs related to the development of the application and plan 
of operations before the effective date of CHSP grant award;
    (vi) Emergency medical services and ongoing and regular care from 
doctors and nurses, including but not limited to administering 
medication, purchase of medical supplies, equipment and medications, 
overnight nursing services, and other institutional forms of service, 
care or support;
    (vii) Occupational therapy and vocational rehabilitation services; 
or
    (viii) Other items defined as unallowable costs elsewhere in this 
subpart, in CHSP grant agreement, and OMB Circular A-87 or 122.
    (c) Administrative cost limitation. Grantees are subject to the 
limitation in section 802(j)(4).



Sec.  1944.255  Eligible supportive services.

    (a) Supportive services or funding for such services may be provided 
by state, local, public or private providers and CHSP funds. A CHSP 
under this section shall provide meal and other qualifying services for 
program participants (and other residents and nonresidents, as described 
in Sec.  1944.125(a)) that are coordinated on site.
    (b) Qualifying supportive services are those listed in section 
802(k)(16) and in section 1944.105.
    (c) Meal services shall meet the following guidelines:
    (1) Type of service. At least one meal a day must be served in a 
group setting for some or all of the participants; if more than one meal 
a day is provided, a combination of a group setting and carry-out meals 
may be utilized.
    (2) Hot meals. At least one meal a day must be hot. A hot meal for 
the purpose of this program is one in which the principal food item is 
hot at the time of serving.

[[Page 203]]

    (3) Special menus. Grantees shall provide special menus as necessary 
for meeting the dietary needs arising from the health requirements of 
conditions such as diabetes and hypertension. Grantees should attempt to 
meet the dietary needs of varying religious and ethnic backgrounds.
    (4) Meal service standards. Grantees shall plan for and provide 
meals which are wholesome, nutritious, and each of which meets a minimum 
of one-third of the minimum daily dietary allowances as established by 
the Food and Nutrition Board of the National Academy of Sciences-
National Research Council (or State or local standards, if these 
standards are higher). Grantees must have an annual certification, 
prepared and signed by a registered dietitian, which states that each 
meal provided under CHSP meets the minimum daily dietary allowances.
    (5) Food stamps and agricultural commodities. In providing meal 
services grantees must apply for and use food stamps and agricultural 
commodities as set forth in section 802(d)(2)(A).
    (6) Preference for nutrition providers: In contracting for or 
otherwise providing for meal services grantees must follow the 
requirements of section 802(d)(2)(B). These requirements do not preclude 
a grantee or owner from directly preparing and providing meals under its 
own auspices.



Sec.  1944.256  Eligibility for services.

    (a) Participants, other residents, and nonresidents. Such 
individuals are eligible either to participate in CHSP or to receive 
CHSP services, if they qualify under section 802(e)(1), (4) and (5). 
Under this paragraph, temporarily disabled persons are also eligible.
    (b) Economic need. In providing services under CHSP, grantees shall 
give priority to very low income individuals, and shall consider their 
service needs in selecting program participants.



Sec.  1944.257  Service coordinator.

    (a) Each grantee must have at least one service coordinator who 
shall perform the responsibilities listed in section 802(d)(4).
    (b) The service coordinator shall comply with the qualifications and 
standards required by the Secretary concerned. The service coordinator 
shall be trained in the subject areas set forth in section 802(d)(4), 
and in any other areas required by the Secretary concerned.
    (c) The service coordinator may be employed directly by the grantee, 
or employed under a contract with a case management agency on a fee-for-
service basis, and may serve less than full-time. The service 
coordinator or the case management agency providing service coordination 
shall not provide supportive services under a CHSP grant or have a 
financial interest in a service provider agency which intends to provide 
services to the grantee for CHSP.
    (d) The service coordinator shall:
    (1) Provide general case management and referral services to all 
potential participants in CHSP. This involves intake screening, upon 
referral from the grantee of potential program participants, and 
preliminary assessment of frailty or disability, using a commonly 
accepted assessment tool. The service coordinator then will refer to the 
professional assessment committee (PAC) those individuals who appear 
eligible for CHSP;
    (2) Establish professional relationships with all agencies and 
service providers in the community, and develop a directory of providers 
for use by program staff and program participants;
    (3) Refer proposed participants to service providers in the 
community, or those of the grantee;
    (4) Serve as staff to the PAC;
    (5) Complete, for the PAC, all paperwork necessary for the 
assessment, referral, case monitoring and reassessment processes;
    (6) Implement any case plan developed by the PAC and agreed to by 
the program participant;
    (7) Maintain necessary case files on each program participant, 
containing such information and kept in such form as HUD and RHS shall 
require;
    (8) Provide the necessary case files to PAC members upon request, in 
connection with PAC duties;
    (9) Monitor the ongoing provision of services from community 
agencies and keep the PAC and the agency providing

[[Page 204]]

the supportive service informed of the progress of the participant;
    (10) Educate grant recipient's program participants on such issues 
as benefits application procedures (e.g. SSI, food stamps, Medicaid), 
service availability, and program participant options and 
responsibilities;
    (11) Establish volunteer support programs with service organizations 
in the community;
    (12) Assist the grant recipient in building informal support 
networks with neighbors, friends and family; and
    (13) Educate other project management staff on issues related to 
``aging-in-place'' and services coordination, to help them to work with 
and assist other persons receiving housing assistance through the 
grantee.
    (e) The service coordinator shall tailor each participant's case 
plan to the individual's particular needs. The service coordinator shall 
work with community agencies, the grantee and third party service 
providers to ensure that the services are provided on a regular, 
ongoing, and satisfactory basis, in accordance with the case plan 
approved by the PAC and the participant.
    (f) Service coordinators shall not serve as members of the PAC.



Sec.  1944.258  Professional assessment committee.

    (a) General. (1) A professional assessment committee (PAC), as 
described in this section, shall recommend services appropriate to the 
functional abilities and needs of each eligible project resident. The 
PAC shall be either a voluntary committee appointed by the project 
management or an agency in the community which provides assessment 
services and conforms to section 802(e)(3)(A) and (B). PAC members are 
subject to the conflict of interest provisions in section 1944.175(b).
    (2) The PAC shall utilize procedures that ensure that the process of 
determining eligibility of individuals for congregate services affords 
individuals fair treatment, due process, and a right of appeal of the 
determination of eligibility, and shall ensure the confidentiality of 
personal and medical records.
    (3) The dollar value of PAC members' time spent on regular 
assessments after initial approval of program participants may be 
counted as match. If a community agency discharges the duties of the 
PAC, staff time is counted as its imputed value, and if the members are 
volunteers, their time is counted as volunteer time, according to 
sections 1944.145(c)(2) (ii) and (iv).
    (b) Duties of the PAC. The PAC is required to:
    (1) Perform a formal assessment of each potential elderly program 
participant to determine if the individual is frail. To qualify as 
frail, the PAC must determine if the elderly person is deficient in at 
least three ADLs, as defined in section 1944.105. This assessment shall 
be based upon the screening done by the service coordinator, and shall 
include a review of the adequacy of the informal support network (i.e., 
family and friends available to the potential participant to assist in 
meeting the ADL needs of that individual), and may include a more in-
depth medical evaluation, if necessary;
    (2) Determine if non-elderly disabled individuals qualify under the 
definition of person with disabilities under section 1944.105. If they 
do qualify, this is the acceptance criterion for them for CHSP. Persons 
with disabilities do not require an assessment by the PAC;
    (3) Perform a regular assessment and updating of the case plan of 
all participants;
    (4) Obtain and retain information in participant files, containing 
such information and maintained in such form, as HUD or RHS shall 
require;
    (5) Replace any members of the PAC within 30 days after a member 
resigns. A PAC shall not do formal assessments if its membership drops 
below three, or if the qualified medical professional leaves the PAC and 
has not been replaced.
    (6) Notify the grantee or eligible owner and the program 
participants of any proposed modifications to PAC procedures, and 
provide these parties with a process and reasonable time period in which 
to review and comment, before adoption of a modification;
    (7) Provide assurance of nondiscrimination in selection of CHSP 
participants, with respect to race, religion, color, sex, national 
origin, familial status or type of disability;

[[Page 205]]

    (8) Provide complete confidentiality of information related to any 
individual examined, in accordance with the Privacy Act of 1974;
    (9) Provide all formal information and reports in writing.
    (c) Prohibitions relating to the PAC. (1) At least one PAC member 
shall not have any direct or indirect relationship to the grantee.
    (2) No PAC member may be affiliated with organizations providing 
services under the grant.
    (3) Individuals or staff of third party organizations that act as 
PAC members may not be paid with CHSP grant funds.
    (d) Eligibility and admissions. (1) Before selecting potential 
program participants, each grantee (with PAC assistance) shall develop a 
CHSP application form. The information in the individual's application 
is crucial to the PAC's ability to determine the need for further 
physical or psychological evaluation.
    (2) The PAC, upon completion of a potential program participant's 
initial assessment, must make a recommendation to the service 
coordinator for that individual's acceptance or denial into CHSP.
    (3) Once a program participant is accepted into CHSP, the PAC must 
provide a supportive services case plan for each participant. In 
developing this plan, the PAC must take into consideration the 
participant's needs and wants. The case plan must provide the minimum 
supportive services necessary to maintain independence.
    (e) Transition-out procedures. The grantee or PAC must develop 
procedures for providing for an individual's transition out of CHSP to 
another setting. Transition out is based upon the degree of supportive 
services needed by an individual to continue to live independently. If a 
program participant leaves the program, but wishes to retain supportive 
services, he or she may do so, as long as he or she continues to live in 
an eligible project, pays the full cost of services provided, and 
management agrees (section 802(e)(4) and (5)). A participant can be 
moved out of CHSP if he or she:
    (1) Gains physical and mental health and is able to function without 
supportive services, even if only for a short time (in which case 
readmission, based upon reassessment to determine the degree of frailty 
or the disability, is acceptable);
    (2) Requires a higher level of care than that which can be provided 
under CHSP; or
    (3) Fails to pay services fees.
    (f) Procedural rights of participants. (1) The PAC must provide an 
informal process that recognizes the right to due process of individuals 
receiving assistance. This process, at a minimum, must consist of:
    (i) Serving the participant with a written notice containing a clear 
statement of the reasons for termination;
    (ii) A review of the decision, in which the participant is given the 
opportunity to present written or oral objections before a person other 
than the person (or a subordinate of that person) who made or approved 
the termination decision; and
    (iii) Prompt written notification of the final decision to the 
participant.
    (2) Procedures must ensure that any potential or current program 
participant, at the time of initial or regular assessment, has the 
option of refusing offered services and requesting other supportive 
services as part of the case planning process.
    (3) In situations where an individual requests additional services, 
not initially recommended by the PAC, the PAC must make a determination 
of whether the request is legitimately a needs-based service that can be 
covered under CHSP subsidy. Individuals can pay for services other than 
those recommended by the PAC as long as the additional services do not 
interfere with the efficient operation of the program.



Sec.  1944.259  Participatory agreement.

    (a) Before actual acceptance into CHSP, potential participants must 
work with the PAC and the service coordinator in developing supportive 
services case plans. A participant has the option of accepting any of 
the services under the case plan.
    (b) Once the plan is approved by the PAC and the program 
participant, the participant must sign a participatory agreement 
governing the utilization of

[[Page 206]]

the plan's supportive services and the payment of supportive services 
fees. The grantee annually must renegotiate the agreement with the 
participant.



Sec.  1944.260  Cost distribution.

    (a) General. (1) Grantees, the Secretary concerned, and participants 
shall all contribute to the cost of providing supportive services 
according to section 802(i)(A)(i). Grantees must contribute at least 50 
percent of program cost, participants must contribute fees that in total 
are at least 10 percent of program cost, and the Secretary concerned 
will provide funds in an amount not to exceed 40 percent.
    (2) Section 802(i)(1)(B)(ii) creates a cost-sharing provision 
between grantee and the Secretary concerned if total participant fees 
collected over a year are less than 10 percent of total program cost. 
This provision is subject to availability of appropriated grant funds. 
If funds are not available, the grantee must assume the funding 
shortfall.
    (b) Prohibition on substitution of funds and maintenance of existing 
supportive services. Grantees shall maintain existing funding for and 
provision of supportive services prior to the application date, as set 
forth in section 802(i)(1)(D). The grantee shall ensure that the 
activities provided to the project under a CHSP grant will be in 
addition to, and not in substitution for, these previously existing 
services. The value of these services do not qualify as matching funds. 
Such services must be maintained either for the time the participant 
remains in CHSP, or for the duration of CHSP grant. The grantee shall 
certify compliance with this paragraph to the Secretary concerned.
    (c) Eligible matching funds. (1) All sources of matching funds must 
be directly related to the types of supportive services prescribed by 
the PAC or used for administration of CHSP.
    (2) Matching funds may include:
    (i) Cash (which may include funds from Federal, State and local 
governments, third party contributions, available payments authorized 
under Medicaid for specific individuals in CHSP, Community Development 
Block Grants or Community Services Block Grants, Older American Act 
programs or excess residual funds with the approval of the Secretary 
concerned),
    (ii) The imputed dollar value of other agency or third party-
provided direct services or staff who will work with or provide services 
to program participants; these services must be justified in the 
application to assure that they are the new or expanded services of CHSP 
necessary to keep the program participants independent. If services are 
provided by the state, Indian tribe, unit of general local government, 
or local nonprofit housing sponsor, IHA, PHA, or for-profit or not-for-
profit owner, any salary paid to staff from governmental sources to 
carry out the program of the grantee and any funds paid to residents 
employed by the Program (other than from amounts under a contract under 
section 1944.155) is allowable match.
    (iii) In-kind items (these are limited to 10 percent of the 50 
percent matching amount), such as the current market value of donated 
common or office space, utility costs, furniture, material, supplies, 
equipment and food used in direct provision of services. The applicant 
must provide an explanation for the estimated donated value of any item 
listed.
    (iv) The value of services performed by volunteers to CHSP, at the 
rate of $5.00 an hour.
    (d) Limitation. (1) The following are not eligible for use as 
matching funds:
    (i) PHA operating funds;
    (ii) CHSP funds;
    (iii) Section 8 funds other than excess residual receipts;
    (iv) Funds under section 14 of the U.S. Housing Act of 1937, unless 
used for service coordination or case management; and
    (v) Comprehensive grant funds unless used for service coordination 
or case management;
    (2) Local government contributions are limited by section 
802(i)(1)(E).
    (e) Annual review of match. The Secretary concerned will review the 
infusion of matching funds annually, as part of the program or budget 
review. If there are insufficient matching funds available to meet 
program requirements at any point after grant start-up, or at any time 
during the term of the grant (i.e., if matching funds from

[[Page 207]]

sources other than program participant fees drop below 50 percent of 
total supportive services cost), the Secretary concerned may decrease 
the federal grant share of supportive services funds accordingly.



Sec.  1944.261  Program participant fees.

    (a) Eligible program participants. The grantee shall establish fees 
consistent with section 1944.145(a). Each program participant shall pay 
CHSP fees as stated in paragraphs (d) and (e) of this section, up to a 
maximum of 20 percent of the program participant's adjusted income. 
Consistent with section 802(d)(7)(A), the Secretary concerned shall 
provide for the waiver of fees for individuals who are without 
sufficient income to provide for any payment.
    (b) Fees shall include: (1) Cash contributions of the program 
participant;
    (2) Food Stamps; and
    (3) Contributions or donations to other eligible programs acceptable 
as matching funds under section 1944.145(c).
    (c) Older Americans Act programs. No fee may be charged for any 
meals or supportive services under CHSP if that service is funded under 
an Older Americans Act Program.
    (d) Meals fees: (1) For full meal services, the fees for residents 
receiving more than one meal per day, seven days per week, shall be 
reasonable and shall equal between 10 and 20 percent of the adjusted 
income of the project resident, or the cost of providing the services, 
whichever is less.
    (2) The fees for residents receiving meal services less frequently 
than as described in paragraph (d)(1) of this section shall be in an 
amount equal to 10 percent of the adjusted income of the project 
resident, or the cost of providing the services, whichever is less.
    (e) Other service fees. The grantee may also establish fees for 
other supportive services so that the total fees collected from all 
participants for meals and other services is at least 10 percent of the 
total cost of CHSP. However, no program participants may be required to 
pay more than 20 percent of their adjusted incomes for any combination 
of services.
    (f) Other residents and nonresidents. Fees shall be established for 
residents of eligible housing projects (other than eligible project 
residents) and for nonresidents who receive meals and other services 
from CHSP under section 1944.125(a). These fees shall be in an amount 
equal to the cost of providing the services.



Sec.  1944.262  Grant agreement and administration.

    (a) General. HUD will enter into grant agreements with grantees, to 
provide congregate services for program participants in eligible housing 
projects, in order to meet the purposes of CHSP.
    (b) Term of grant agreement and reservation of amount. A grant will 
be for a term of five years and the Secretary concerned shall reserve a 
sum equal to the total approved grant amount for each grantee. Grants 
will be renewable at the expiration of a term, subject to the 
availability of funds and conformance with the regulations in this 
subpart, except as otherwise provided in section 1944.160.
    (c) Monitoring of project sites by governmental units. States, 
Indian tribes, and units of general local government with a grant 
covering multiple projects shall monitor, review, and evaluate Program 
performance at each project site for compliance with CHSP regulations 
and procedures, in such manner as prescribed by HUD or RHS.
    (d) Reports. Each grantee shall submit program and fiscal reports 
and program budgets to the Secretary concerned in such form and at such 
times, as the Secretary concerned requires.
    (e) Enforcement. The Secretary concerned will enforce the 
obligations of the grantee under the agreement through such action as 
may be necessary, including terminating grants, recapturing grant funds, 
and imposing sanctions.
    (1) These actions may be taken for:
    (i) A grantee's non-compliance with the grant agreement or HUD or 
RHS regulations;
    (ii) Failure of the grantee to provide supportive services within 12 
months of execution of the grant agreement.
    (2) Sanctions include but are not limited to the following:
    (i) Temporary withholding of reimbursements or extensions or 
renewals under the grant agreement, pending

[[Page 208]]

correction of deficiencies by the grantee;
    (ii) Setting conditions in the contract;
    (iii) Termination of the grant;
    (iv) Substitution of grantee; and
    (v) Any other action deemed necessary by the Secretary concerned.
    (f) Renewal of grants. Subject to the availability of funding, 
satisfactory performance, and compliance with the regulations in this 
subpart:
    (1) Grantees funded initially under this subpart shall be eligible 
to receive continued, non-competitive renewals after the initial five-
year term of the grant.
    (2) Grantees will receive priority funding and grants will be 
renewed within time periods prescribed by the Secretary concerned.
    (g) Use of Grant Funds. If during any year, grantees use less than 
the annual amount of CHSP funds provided to them for that year, the 
excess amount can be carried forward for use in later years.



Sec.  1944.263  Eligibility and priority for 1978 Act recipients.

    Grantees funded initially under 42 U.S.C. 8001 shall be eligible to 
receive continued, non-competitive funding subject to its availability. 
These grantees will be eligible to receive priority funding under this 
subpart if they comply with the regulations in this part and with the 
requirements of any NOFA issued in a particular fiscal year.



Sec.  1944.264  Evaluation of Congregate Housing Services Programs.

    (a) Grantees shall submit annually to the Secretary concerned, a 
report evaluating the impact and effectiveness of CHSPs at the grant 
sites, in such form as the Secretary concerned shall require.
    (b) The Secretaries concerned shall further review and evaluate the 
performance of CHSPs at these sites and shall evaluate the Program as a 
whole.
    (c) Each grantee shall submit a certification with its application, 
agreeing to cooperate with and to provide requested data to the entity 
responsible for the Program's evaluation, if requested to do so by the 
Secretary concerned.



Sec.  1944.265  Reserve for supplemental adjustment.

    The Secretary concerned may reserve funds subject to section 802(o). 
Requests to utilize supplemental funds by the grantee shall be 
transmitted to the Secretary concerned in such form as may be required.



Sec.  1944.266  Other Federal requirements.

    In addition to the Federal Requirements set forth in 24 CFR part 5, 
the following requirements apply to grant recipient organizations in 
this program:
    (a) Office of Management and Budget (OMB) Circulars and 
Administrative Requirements. The policies, guidelines, and requirements 
of OMB Circular No. A-87 and 24 CFR part 85 apply to the acceptance and 
use of assistance under this program by public body grantees. The 
policies, guidelines, and requirements of OMB Circular No. A-122 apply 
to the acceptance and use of assistance under this program by non-profit 
grantees. Grantees are also subject to the audit requirements described 
in 24 CFR part 44 (OMB Circular A-128).
    (b) Conflict of interest. In addition to the conflict of interest 
requirements in OMB Circular A-87 and 24 CFR part 85, no person who is 
an employee, agent, consultant, officer, or elected or appointed 
official of the applicant, and who exercises or has exercised any 
function or responsibilities with respect to activities assisted with 
CHSP grant funds, or who is in a position to participate in a decision-
making process or gain inside information with regard to such 
activities, may obtain a personal or financial interest or benefit from 
the activity, or have an interest in any contract, subcontract, or 
agreement with respect thereto, or any proceeds thereunder, either for 
himself or herself or for those with whom he or she has family or 
business ties during his or her tenure, or for one year thereafter. CHSP 
employees may receive reasonable salary and benefits.
    (c) Disclosures required by Reform Act. Section 102(c) of the HUD 
Reform Act of 1989 (42 U.S.C. 3545(c)) requires disclosure concerning 
other government

[[Page 209]]

assistance to be made available with respect to the Program and parties 
with a pecuniary interest in CHSP and submission of a report on expected 
sources and uses of funds to be made available for CHSP. Each applicant 
shall include information required by 24 CFR part 12 on form HUD-2880 
``Applicant/Recipient Disclosure/Update Report,'' as required by the 
Federal Register Notice published on January 16, 1992, at 57 FR 1942.
    (d) Nondiscrimination and equal opportunity. (1) The fair housing 
poster regulations (24 CFR part 110) and advertising guidelines (24 CFR 
part 109);
    (2) The Affirmative Fair Housing Marketing Program requirements of 
24 CFR part 200, subpart M, and the implementing regulations at 24 CFR 
part 108; and
    (3) Racial and ethnic collection requirements--Recipients must 
maintain current data on the race, ethnicity and gender of program 
applicants and beneficiaries in accordance with section 562 of the 
Housing and Community Development Act of 1987 and section 808(e)(6) of 
the Fair Housing Act.
    (e) Environmental requirements. Support services, including the 
operating and administrative expenses described in section 1944.115(a), 
are categorically excluded from the requirements of the National 
Environmental Policy Act (NEPA) of 1969. These actions, however, are not 
excluded from individual compliance requirements of other environmental 
statutes, Executive Orders, and agency regulations where appropriate. 
When the responsible official determines that any action under this 
subpart may have an environmental effect because of extraordinary 
circumstances, the requirements of NEPA shall apply.

Subparts G-H [Reserved]



             Subpart I_Self-Help Technical Assistance Grants

    Source: 55 FR 41833, Oct. 16, 1990, unless otherwise noted.



Sec.  1944.401  Objective.

    This subpart sets forth the policies and procedures and delegates 
authority for providing Technical Assistance (TA) funds to eligible 
applicants to finance programs of technical and supervisory assistance 
for self-help housing, as authorized under section 523 of the Housing 
Act of 1949. Any processing or servicing activity conducted pursuant to 
this subpart involving authorized assistance to Rural Development 
employees, members of their families, known close relatives, or business 
or close personal associates, is subject to the provisions of subpart D 
of part 1900 of this chapter. Applicants for this assistance are 
required to identify any known relationship or association with a Rural 
Development employee. This financial assistance may pay part or all of 
the cost of developing, administering, or coordinating programs of 
technical and supervisory assistance to aid needy very low- and low-
income families in carrying out self-help housing efforts in rural 
areas. Very low-income families must receive a priority for recruitment 
and participation and may not comprise less than the percentage stated 
in subpart L of part 1940 of this chapter of those assisted in any 
grant. The primary purpose is to fund organizations that are willing to 
locate and work with families that otherwise do not qualify as 
homeowners. Generally, these are families below 50 percent of median 
incomes, living in substandard housing, and/or lacking the skills to be 
good homeowners. Grantees will comply with the nondiscrimination 
regulation subpart E of part 1901 of this chapter which states that no 
person in the United States shall, on the grounds of race, color, 
national origin, sex, religion, marital status, mental or physical 
handicap, or age, be excluded from participating in, be denied the 
benefits of, or be subject to discrimination in connection with the use 
of grant funds and all provisions of the Fair Housing Act of 1988.

[55 FR 41833, Oct. 16, 1990, as amended at 58 FR 227, Jan. 5, 1993]



Sec.  1944.402  Grant purposes.

    Rural Development may contract or make a grant to an organization 
to:
    (a) Give technical and supervisory assistance to eligible very low- 
and low-income families as defined in Appendix 9 of HB-1-3550 (available 
in any Rural

[[Page 210]]

Development office), in carrying out self-help housing efforts.
    (b) Assist other organizations to provide technical and supervisory 
assistance to eligible families.
    (c) Develop a final application, recruit families and related 
activities necessary to participate under paragraph (a) of this section.

[55 FR 41833, Oct. 16, 1990, as amended at 67 FR 78328, Dec. 24, 2002]



Sec.  1944.403  Definitions.

    (a) Agreement. The Self-Help Technical Assistance Agreement, which 
is a document signed by Rural Development and the grantee, sets forth 
the terms and conditions under which TA funds will be made available. 
(Exhibit A of this subpart).
    (b) Agreement period (or grant period). The period of time for which 
an agreement is in force. Generally, the period will not exceed 24 
months.
    (c) Date of completion. The date when all work under a grant is 
completed or the date in the TA grant agreement, or any supplement or 
amendment to it, when Federal assistance ends.
    (d) Direct costs. Those costs that are specifically identified with 
a particular project or activity. Grantees receiving funds from a single 
grant source would consider all costs as direct costs.
    (e) Disallowed costs. Those charges to a grant which Rural 
Development determines cannot be authorized.
    (f) Equivalent units. Equivalent units represent the ``theoretical 
number of units'' arrived at by adding the equivalent percentage of 
completion figure for each family in the self-help program (pre-
construction and actual construction) together at any given date during 
program operations. The sum of the percentage of completion figures for 
all participant families represent the total number of ``theoretical 
units'' completed at any point in time. Equivalent units are useful in 
measuring progress during the period of the grant and are not a 
measurement of actual accomplishments. The number of equivalent units 
for any group can never exceed the number of planned or completed houses 
for that group.
    (g) Equivalent value of a modest house. The equivalent value of a 
modest house is the typical cost of a recent contractor-built Rural 
Development financed home in the area plus the actual or projected costs 
of an acceptable site and site development. If Rural Development has not 
financed a contractor-built house during the last twelve months, the 
value will be established by use of the Marshall and Swift cost handbook 
or a similar type of handbook. Equivalent value of a modest house is 
established by Rural Development.
    (h) Indirect costs. Those costs that are incurred for common or 
joint objectives and therefore, cannot be readily and specifically 
identified with a particular project or activity, e.g., self-help.
    (i) Mutual self-help. The construction method by which participating 
families organized in groups generally of 4 to 10 families utilize their 
own labor to reduce the total construction cost of their homes. 
Participating families complete construction work on their homes by an 
exchange of labor with one another. The mutual self-help method must be 
used for new construction.
    (j) Organization. (1) A State, political subdivision, or public 
nonprofit corporation (including Indian tribes or Tribal corporations); 
or
    (2) A private nonprofit corporation that is owned and controlled by 
private persons or interests and is organized and operated for purposes 
other than making gains or profits for the corporation and is legally 
precluded from distributing any gains or profits to its members.
    (k) Participating family. Individuals and/or their families who 
agree to build homes by the mutual self-help method and rehabilitate 
homes by the self-help method. Participants are families with very low- 
or low-incomes who have the ability to furnish their share of the 
required labor input regardless of the handicap, age, race, color, 
national origin, religion, family status, or sex of the head of 
household. The participating family must be approved for a section 502 
RH loan or similar loans from other Federal, state, and private lenders 
that uses income guidelines substantially similar to the Department of 
Housing and Urban Development before the start of construction,

[[Page 211]]

have sufficient time available to assist in building their own homes, 
and show a desire to work with other families. Each family in the group 
must contribute labor on each other's homes to accomplish the 65 percent 
of the total 100 percent of tasks listed in exhibit B-2 of this subpart. 
A participating family may use a substitute to perform the labor with 
prior approval of the Grantee and the Rural Development State Director. 
A substitute is only permitted when the participating family is 
incapacitated.
    (l) Self-help. The construction method by which an individual family 
utilizes their labor to reduce the construction cost of their home 
without an exchange of labor between participating families. Unless 
otherwise authorized by the District Director, this method is only 
funded for repair and rehabilitation type construction.
    (m) Sponsor. An existing entity that is willing and able to assist 
an applicant, with or without charge, in applying for a grant and in 
carrying out responsibilities under the agreement. Examples of sponsors 
are local rural electric cooperatives, institutions of higher education, 
community action agencies and other self-help grantees. Also, when 
available, regional technical and management assistance contractors may 
qualify to serve as a sponsor at no charge.
    (n) Technical assistance. The organizing and supervising of groups 
of families in the construction of their own homes including:
    (1) Recruiting families who are interested in sharing labor in the 
construction of each other's homes and assisting such families in 
obtaining housing loans.
    (2) Conducting meetings of the families to explain the self-help 
program and subjects related to home ownership, such as loan payments, 
taxes, insurance, maintenance, and upkeep of the property.
    (3) Helping families in planning and developing activities that lead 
to the acquisition and development of suitable building sites.
    (4) Assisting families in selecting or developing house plans for 
homes which will meet their needs and which they can afford.
    (5) Assisting families in obtaining cost estimates for construction 
materials and any contracting that may be required.
    (6) Providing assistance in the preparation of loan applications.
    (7) Providing construction supervision and training for families 
while they construct their homes.
    (8) Providing financial supervision to individual families with 
section 502 Rural Housing (RH) loans which will minimize the time and 
effort required by Rural Development in processing borrower expenditures 
for materials and contract services.
    (9) Assisting families in solving other housing problems.
    (o) Termination of a grant. The cancellation of Federal assistance, 
in whole or in part, at any time before the date of completion.



Sec.  1944.404  Eligibility.

    To receive a grant, the applicant must:
    (a) Be an organization as defined in Sec.  1944.403(j) of this 
subpart.
    (b) Have the financial, legal, administrative, and actual capacity 
to assume and carry out the responsibilities imposed by the Agreement. 
To meet the requirement of actual capacity it must either:
    (1) Have necessary background and experience with proven ability to 
perform responsibly in the field of mutual self-help or other business 
management or administrative ventures which indicate an ability to 
perform responsibility in the field of mutual self-help; or
    (2) Be sponsored by an organization with background experience, and 
ability, which agrees in writing to help the applicant to carry out its 
responsibilities.
    (c) Legally obligate itself to administer TA funds, provide adequate 
accounting of the expenditure of such funds, and comply with the 
Agreement and Rural Development regulations.
    (d) If the organization is a private nonprofit corporation, be a 
corporation that:
    (1) Is organized under State and local laws.
    (2) Is qualified under section 501(c)(3) of the Internal Revenue 
Code of 1986.

[[Page 212]]

    (3) Has as one of its purposes the production of affordable housing.
    (4) Has a Board of Directors which consist of not less than five.



Sec.  1944.405  Authorized use of grant funds.

    (a) Payment of salaries of personnel as authorized in the Agreement.
    (b) Payment of necessary and reasonable office expenses such as 
office rental, office utilities, and office equipment rental. The 
purchase of office equipment is permissible when the grantee determines 
it to be more economical than renting. As a general rule, these types of 
expenses would be classified as indirect costs in multiple funded 
organizations.
    (c) Purchase of office supplies such as paper, pens, pencils, and 
trade magazines.
    (d) Payment of necessary employee benefit costs including but not 
limited to items such as Worker's Compensation, employer's share of 
social security, health benefits, and a reasonable tax deferred pension 
plan for permanent employees.
    (e) Purchase, lease, or maintenance of power or specialty tools such 
as a power saw, electric drill, sabre saw, ladders, and scaffolds, which 
are needed by the participating families. The participating families, 
however, are expected to provide their own hand tools such as hammers 
and handsaws.
    (f) Payment of liability insurance and special purpose audit costs 
associated with self-help activities. These would be considered direct 
costs, even though the grantee's general liability insurance cost and 
the cost of audits for the organization are generally indirect costs.
    (g) Payment of reasonable fees for training of grantee personnel 
including board members. This may include the cost of travel and per 
diem to attend in or out-of-State training as authorized by the board of 
directors and, when necessary, for the employee to do the current job. 
These costs are generally direct costs.
    (h) Payment of services rendered by a sponsor or other organization 
after the grant is closed and when it is determined the sponsor can 
provide the necessary services which will result in an overall reduction 
in the cost of assistance. Typically, this will be limited to new 
grantees and an existing grantee for the period of time that its size or 
activity does not justify a full staff. A full staff is a full or part-
time director, project worker, secretary-bookkeeper, and a construction 
supervisor. This type of cost is generally direct.
    (i) Payment of certain consulting and legal costs required in the 
administration of the grant if such service is not available without 
cost. This does not include legal expenses for claims against the 
Federal Government. (Legal costs that may be incurred by the 
organization for the benefit of the participating families may be paid 
with prior approval of the State Director).
    (j) Payments of the cost of an accountant to set up an accounting 
system and perform audits that may be required. Generally, these costs 
are indirect.
    (k) Payments of reasonable expenses of board members for attending 
regular or special board meetings. These costs are indirect.



Sec.  1944.406  Prohibited use of grant funds.

    (a) Hiring personnel specifically for the purpose of performing any 
of the construction work for participating families in the self-help 
projects.
    (b) Buying real estate or building materials or other property of 
any kind for participating families.
    (c) Paying any debts, expenses, or costs which should be the 
responsibility of the participating families in the self-help projects.
    (d) Paying for training of an employee as authorized by 2 CFR part 
200 as adopted by USDA through 2 CFR part 400.
    (e) Paying costs other than approved indirect (including salaries) 
that are not directly related to helping very low- and low-income 
families obtain housing consistent with the objectives of this program.

[55 FR 41833, Oct. 16, 1990, as amended at 79 FR 76009, Dec. 19, 2014]



Sec.  1944.407  Limitations.

    The amount of the TA grant depends on the experience and capability 
of the

[[Page 213]]

applicant and must be justified based on the number of families to be 
assisted. As a guide, the maximum grant amounts for any grant period 
will be limited to:
    (a) An average TA cost per equivalent unit of no more than 15 
percent of the cost of equivalent value of modest homes built in the 
area. (Upon request, the County Supervisor will provide the grantee the 
average cost of modest homes for the area); or
    (b) An average TA cost per equivalent unit that does not exceed the 
difference between the equivalent value of modest homes in the area and 
the average mortgage of the participating families minus $1,000; or
    (c) A TA per equivalent unit cost that does not exceed an amount 
established by the State Director. The State Director may authorize a 
greater TA cost than paragraph (a) or (b) of this section when needed to 
accomplish a particular objective, such as requiring the grantee to 
serve very low-income families, remote areas, or similar situations; or
    (d) A negotiated amount for repair and rehabilitation type 
proposals. At a minimum, applicants applying for repair and 
rehabilitation grants must include information on the proximity of the 
houses in a project, the typical needed repairs, and the cost savings 
between self-help and contractor rehabilitation and repair.

[55 FR 41833, Oct. 16, 1990; 56 FR 19253, Apr. 26, 1991]



Sec.  1944.408  [Reserved]



Sec.  1944.409  Executive Order 12372.

    The self-help program is subject to the provision of Executive Order 
12372 which requires intergovernmental consultation with State and local 
officials. These requirements are set forth in U. S. Department of 
Agriculture regulations 7 CFR 3015, subpart V and RD Instruction 1970-I, 
`Intergovernmental Review,' available in any Agency office or on the 
Agency's Web site, new applicants for the self-help program must submit 
their Statement of Activities to the State single point of contact prior 
to submitting their preapplication to Agency. The name of the point of 
contact is available from the State Office.

[55 FR 41833, Oct. 16, 1990, as amended at 61 FR 39851, July 31, 1996; 
76 FR 80730, Dec. 27, 2011]



Sec.  1944.410  Processing preapplications, applications, and completing
grant dockets.

    (a) Form SF-424, ``Application for Federal Assistance.'' Form SF-424 
in an original and one copy must be submitted by the applicant to the 
District Director. It will be used to establish communication between 
the applicant and RHS, determine the applicant's eligibility, determine 
how well the project can compete with similar applications from other 
organizations and eliminate any proposals which have little or no chance 
for Federal funding before applicants incur significant expenditures for 
preparing an application. In addition, the following information will be 
attached to and become a part of the preapplication:
    (1) Complete information about the applicant's previous experience 
and capacity to carry out the objective of the agreement.
    (2) If the applicant organization is already formed, a copy of or an 
accurate reference to the specific provisions of State law under which 
the applicant is organized; a certified copy of the applicant's Articles 
of Incorporation and Bylaws or other evidence of corporate existence; 
certificate of incorporation for other than public bodies; evidence of 
good standing from the State when the corporation has been in existence 
1 year or more; the names and addresses of the applicant's members, 
directors, and officers; and, if another organization is a member of the 
applicant-organization, its name, address, and principal business. If 
the applicant is not already formed, attach copies of the proposed 
organizational documents demonstrating compliance with Sec.  1944.404(d) 
of this subpart.
    (3) A current (no more than 12 months old) dated and signed 
financial statement showing the amounts and specific nature of assets 
and liabilities together with information on the repayment schedule and 
status of any debt owed by the applicant. If the applicant is being 
sponsored by another

[[Page 214]]

organization, the same type of financial statement also must be provided 
by the applicant's sponsor.
    (4) A narrative statement which includes information about the 
amount of the grant funds being requested, area(s) to be served, need 
for self-help housing in the area(s), the number of self-help units 
proposed to be built, rehabilitated or repaired during the agreement 
period, housing conditions of low-income families in the area and 
reasons why families need self-help assistance. Evidence should be 
provided that the communities support the activity and that there are 
low-income families willing to contribute their labor in order to obtain 
adequate housing. Evidence of community support may be letters of 
support from local officials, individuals and community organizations. 
The pre-application may contain information such as census materials, 
local planning studies, surveys, or other readily available information 
which indicates a need in the area for housing of the type and cost to 
be provided by the proposed self-help TA program.
    (5) A plan of how the organization proposes to reach very low-income 
families living in houses that are deteriorated, dilapidated, 
overcrowded, and/or lacking plumbing facilities.
    (6) A proposed budget which will be prepared on SF-424A, ``Budget 
Information (Non-Construction Programs)'' will be completed to address 
applicable assurances as outlined in 2 CFR part 200 as adopted by USDA 
through 2 CFR part 400. State and local Government will include an 
assurance that the grantee shall comply with all applicable Federal 
statutes and regulations in effect with respect to the periods for which 
it receives grant funding. The State and local governments shall also 
comply with 2 CFR part 200 as adopted by USDA through 2 CFR part 400.
    (7) A preliminary survey as to the availability of lots and 
projected cost of the sites.
    (8) A list of other activities the applicant is engaged in and 
expects to continue, and a statement as to other sources of funding and 
whether it will have sufficient funds to assure continued operation of 
the other activities for at least the period of the agreement. If multi-
funded, its cost allocation plan or indirect cost rate must be part of 
the pre-application.
    (9) Whether assistance under paragraph (d) of this section is 
requested and a brief narrative identifying the need, amount of funds 
needed, and projected time period.
    (10) If a project is planned for five or more housing lots or units, 
an Affirmative Fair Marketing Plan is required. The plan will be in 
effect until the completion of the project.
    (b) Preapplication review. (1) The District Director, within 30 days 
of receipt of the preapplication, Form SF-424, and all other required 
information and material will complete a thorough review for 
completeness, accuracy, and conformance to program policy and 
regulations. Incomplete preapplications will be returned to the 
applicant for completion. The applicant should be given the name of the 
regional technical assistance contractor. The County Supervisor in the 
prospective county will be contacted as to the need for the program in 
the proposed area and if the necessary resources are available to the 
grantee. This will include a discussion of the number of 502 and 504 
units that will need to be committed to the grantee and the potential 
work impact on the office during the grant period. If it is determined 
that the County Office lacks the resources (either personnel or funds) 
to process all loan requests in a timely manner, the District Director 
must communicate this need to the State Director along with a 
recommended solution. (Lack of resources at the county level are not 
grounds to deny a request). After the District Director has determined 
that the preapplication is complete and accurate, the District Director 
will assemble the material in an applicant case file and forward it to 
the State Director. The case file, as a minimum, must contain the 
following:
    (i) Form SF-424,
    (ii) Original and one copy of Form RD 1940-20, ``Request for 
Environmental Information,''
    (iii) Eligibility recommendations, and

[[Page 215]]

    (iv) HUD Form 935.2 ``Affirmative Fair Housing Marketing Plan'', if 
applicable.
    (2) The State Director may, if needed, submit the organizational 
documents with any comments or questions to the Office of General 
Counsel (OGC) for a preliminary opinion as to whether the applicant is 
or will be a legal organization of the type required by these 
regulations and for advice on any other aspects of the preapplication.
    (3) The State Director, if unable to determine eligibility or 
qualifications with the advice of the OGC, may submit the preapplication 
to the National Office for review. The preapplication will contain all 
memoranda from OGC giving the results of its review. The State Director 
will identify in the transmittal memorandum to the National Office the 
specific problem and will recommend possible solutions and any 
information about the applicant which would be helpful to the National 
Office in reaching a decision.
    (4) After an eligibility determination has been made, which should 
be completed within 30 days unless OGC is involved, the State Director 
will:
    (i) If the applicant is eligible, contact the National Office as to 
the availability of funds or submit the proposal to the National Office 
for authorization if the requested amount exceeds the State Director's 
approval authority. If funds are available, the final review officer, 
either the State Director or the Assistant Administrator, Housing will 
issue a letter of conditions that the applicant must meet and direct the 
District Director to issue Form AD-622, ``Notice of Preapplication 
Review Action.''
    (ii) If the applicant is determined not eligible, the State Director 
will direct the District Director to issue Form AD-622.
    (c) Form AD-622, ``Notice of Preapplication Review Action.'' (1) If 
the applicant is eligible and after the State Director has returned the 
preapplication information and the executed original Form RD 1940-20 to 
the District Office, the District Director will, within 10 days, prepare 
and issue Form AD-622. The original Form AD-622 will be signed and 
delivered to the applicant along with the letter of conditions, a copy 
to the applicant's case file, a copy to the County Supervisor, and a 
copy to the State Director.
    (2) If the applicant is not eligible and after the State Director 
has returned the preapplication information, the District Director will 
within 5 days notify the applicant on Form AD-622. The notification will 
inform the applicant that an appeal of the decision may be made to the 
National Appeals Staff under subpart B of part 1900 of this chapter.
    (3) If the applicant is eligible and no grant or loan funds are 
available, the State Director will return the preapplication information 
to the District Director who will, within 10 days, notify the applicant 
on Form AD-622. The notification will explain the facts concerning the 
lack of funding and that Rural Development will notify them when funding 
will be available. This is not an appealable decision.
    (d) Self-help technical assistance grant predevelopment agreement. 
If the grantee requested predevelopment assistance and the State 
Director determines that the applicant lacks the financial resources to 
meet the conditions of grant approval, a grant of up to $10,000 and for 
up to six months will be made in order for the applicant to provide what 
is required by paragraph (e) of this section. Exhibit D of this subpart 
will be used for this purpose. Existing grantees proposing to operate in 
an area different from the area that they are currently funded to 
operate are eligible for this grant. However, this grant is available 
only once for a defined area. This grant is available only after the 
letter of conditions has been issued. Denial of this assistance is an 
appealable decision under subpart B of part 1900 of this chapter.
    (e) Form SF-424, ``Application for Federal Assistance.'' The 
applicant will submit Form SF-424 in an original and one copy to the 
District Director. The application should provide a detailed proposal of 
its goals including:
    (1) Names, addresses, number in household, and total annual 
household income of families who have been contacted by the applicant 
and are interested in participating in a self-help housing project. 
Community organizations including minority organizations

[[Page 216]]

may be used as a source of names of people interested in self-help 
housing.
    (2) Proof that the first group of prospective participating self-
help families have qualified for financial assistance.
    (3) Evidence that lots are optioned by the prospective participating 
self-help families for the first group. Evidence that lots are available 
for the remaining groups.
    (4) Detailed cost estimates of houses to be built by the mutual 
self-help method. Plans and specifications should be submitted with the 
cost estimates.
    (5) Proposed staffing need, including qualifications, experience, 
proposed hiring schedule, and availability of any prospective employees.
    (6) Name, address, and official position of the applicant's 
representative or representatives authorized to act for the applicant 
and work with Rural Development.
    (7) Budget information including a detailed budget for the Agreement 
period based upon the needs outlined in the proposal. SF 424A will be 
completed to furnish the budget information.
    (8) Indirect or direct cost policy and proposed indirect cost rate 
developed in accordance with 2 CFR part 200 as adopted by USDA through 2 
CFR part 400.
    (9) Personnel procedures and practices that will be established or 
are in existence. Forms to be used should be submitted with the 
application.
    (10) A proposed monthly activities schedule showing the proposed 
dates for starting and completing the recruitment, loan processing and 
construction phases for each group of participant families.

[55 FR 41833, Oct. 16, 1990, as amended at 61 FR 39851, July 31, 1996; 
79 FR 76009, Dec. 19, 2014]



Sec.  1944.411  Conditions for approving a grant.

    A grant may be approved for an eligible applicant when the 
conditions in the letter of conditions are met and the following 
conditions are present:
    (a) The applicant has or can hire, or contract directly or 
indirectly with, qualified people to carry out its responsibilities in 
administering the grant.
    (b) The applicant has met all of the conditions listed in Sec.  
1944.410(e) of this subpart.
    (c) The grantee furnishes a signed statement that it complies with 
the requirements of the Departmental Regulations found in 2 CFR part 200 
as adopted by USDA through 2 CFR part 400.
    (d) A resolution has been adopted by the board of directors which 
authorizes the appropriate officer to execute exhibit A of this subpart 
and Form RD 400-4, ``Assurance Agreement.''
    (e) The grantee has fidelity bonding as covered in 2 CFR part 200 as 
adopted by USDA through 2 CFR part 400 if a nonprofit organization or, 
if a State or local government, to the extent required in 2 CFR part 200 
as adopted by USDA through 2 CFR part 400.
    (f) The grantee has agreed by completing SF-424B, ``Assurances-Non 
Construction Programs,'' that it will establish a recordkeeping system 
that is certifiable by a certified public accountant that it adequately 
meets the Agreement.
    (g) The grantee has established an interest bearing checking account 
on which at least two bonded officials will sign all checks issued and 
understands that interest earned in excess of $250.00 annually must be 
submitted to Rural Development quarterly. (The use of minority 
depository institutions is encouraged.)
    (h) The grantee has developed an agreement to be executed by the 
grantee and the self-help participants which clearly sets forth what is 
expected of each and has incorporated exhibit B-2 of this subpart which 
clearly shows what work is expected of the participating family.

[55 FR 41833, Oct. 16, 1990; 56 FR 19253, Apr. 26, 1991; 79 FR 76010, 
Dec. 19, 2014]



Sec.  1944.412  Docket preparation.

    When the application and all items required for the complete docket 
have been received, the District Director will thoroughly examine it to 
insure the application has been properly and accurately prepared and 
that it includes the required dates and signatures. The docket items 
will be assembled and distributed by the District Director in the 
following order:

[[Page 217]]



----------------------------------------------------------------------------------------------------------------
                                                  Total No.  Signed by    No. for agreement
       Form No.         Name of form or document  of copies  applicant         docket         Copy for applicant
----------------------------------------------------------------------------------------------------------------
SF-424................  Application for Federal       3          1      1-O and 1C            1-C
                         Assistance.
AD-622................  Notice of Preapplication      2      .........  1-C                   1-O
                         Review Action.
RD 1940-1.............  Request for Obligation        4          2      3-O and 2C            1-C
                         of Funds.
RD 400-4..............  Assurance Agreement.....      2          1      1-O                   1-C
                        HUD Form 935.2,               3          1      1-O and 1C            1-C
                         Affirmative Fair
                         Housing Marketing Plan.
                        Certified Copy                1          1      1-O                   -
                         Authorizing Resolution.
                        Self-Help Technical           2          1      1-O                   1-C
                         Assistance Grant
                         Agreement (Exhibit A).
                        Any Personnel Forms to        2      .........  1-O                   1-C
                         be used.
----------------------------------------------------------------------------------------------------------------
O = Original.
C = Copy.



Sec.  1944.413  Grant approval.

    (a) Approval of grant. Within 30 days of the grantee meeting the 
conditions of Sec.  1944.411 of this subpart or, if applicable, signing 
exhibit D, the approving official will:
    (1) Execute and distribute Form RD 1940-1 in accordance with the 
Forms Manual Insert (FMI).
    (2) After the Finance Office acknowledges that funds are obligated, 
request an initial advance of funds on Form RD 440-57, ``Acknowledgment 
of Obligated Funds/Check Request,'' in accordance with the FMI. The 
amount of this request should cover the applicant's needs for the 
remainder of the month in which the grant is closed plus the next month. 
Subsequent advances will cover only a one-month period.
    (b) Cancellation of an approved grant. An approved grant may be 
canceled before closing if the applicant is no longer eligible, the 
proposal is no longer feasible, or the applicant requests cancellation. 
Cancellation will be accomplished as follows:
    (1) The District Director will prepare Form RD 1940-10, 
``Cancellation of U.S. Treasury Check and/or Obligation,'' according to 
the FMI and send it to the State Director with the reasons for 
cancellation. If the State Director approves the request, Form RD 1940-
10 will be returned to the District Office for processing in accordance 
with the FMI.
    (2) The District Director will notify the applicant of the 
cancellation and the right to appeal under subpart B of part 1900 of 
this chapter. If the applicant requested the cancellation, no appeal 
rights are provided, but the applicant will still be notified of the 
cancellation.
    (c) Disapproval of grant. If a grant is disapproved after the docket 
has been developed, the approving official will state the reason on the 
original Form RD 1940-1, or in a memorandum to the District Director. 
The District Director will notify the applicant in writing of the 
disapproval and the reason for disapproval. Also, the notification will 
inform the applicant of its appeal rights under subpart B of part 1900 
of this chapter.



Sec.  1944.414  [Reserved]



Sec.  1944.415  Grant approval and other approving authorities.

    (a) The State Director is authorized to approve or disapprove TA 
grants under this subpart. For a grant in excess of $300,000, or in the 
case of a grant amendment when the amount of the grant plus any 
unexpended funds from a previous grant will exceed $400,000, prior 
written consent of the National Office is required. In such cases, the 
docket, along with the State Director's recommendations, must be 
submitted to the National Office for review.
    (b) The State Director may approve a grant not to exceed $10,000 to 
an eligible organization under Sec.  1944.410(d) of this subpart. The 
grant must be limited to 6 months and funds must be used for the 
development of the final application, family recruitment, and related 
activities as explained in Sec.  1944.410(e) of this subpart. The amount 
of this grant will not be included in figuring TA cost per units.
    (c) The authority to contract for services is limited to the 
Administrator of Rural Development.
    (d) Monthly expenditures of the grantee will normally be approved by 
the District Director unless:

[[Page 218]]

    (1) The grantee operates in only one county, in which case the 
authority may be delegated to the County Supervisor.
    (2) The grantee operates in more than one Rural Development 
District, in which case the State Director will designate the approving 
official.
    (3) The grantee operates in more than one State Director's 
jurisdiction, in which case the Administrator will designate the 
approving official.
    (4) The expenditure is under contract authority, in which case the 
Contracting Official Representative will approve the monthly 
expenditure.



Sec.  1944.416  Grant closing.

    The grant is closed on the date the Agreement is executed as defined 
in Sec.  1944.403(a) by the applicant and the Government. Funds may not 
be advanced prior to the signing of the Agreement. The District Director 
or Assistant District Director are authorized to execute the Agreement 
for Rural Development. Person(s) authorized by resolution may sign for 
the applicant.



Sec.  1944.417  Servicing actions after grant closing.

    Rural Development has a responsibility to help the grantee be 
successful and help the grantee avoid cases of fraud and abuse. 
Servicing actions also include correlating activities between the 
grantee and Rural Development to the benefit of the participating 
families. The amount of servicing actions needed will vary in accordance 
with the experience of the grantee, but as minimum the following actions 
are required:
    (a) Monthly, the grantee will provide the District Director with a 
request for additional funds on Form SF-270, ``Request for Advance or 
Reimbursement.'' This request need only show the amount of funds used 
during the previous month, amount of unspent funds, projected need for 
the next 30 days, and written justification if the request exceeds the 
projected need for the next 30 days. This request must be in the 
District Director's office fifteen days prior to the beginning of the 
month. Upon receipt of the grantee's request, the District Director 
will:
    (1) If the request appears to be in order, process Form RD 440-57 so 
that delivery of the check will be possible on the first of the next 
month.
    (2) If the request does not appear to be in order, immediately 
contact the grantee to resolve the problem. After the contact:
    (i) If the explanation is acceptable, process Form RD 440-57 so 
delivery may be possible by the first of the next month, or
    (ii) If the explanation is not acceptable, immediately notify the 
grantee and request the amount of funds that appear reasonable for the 
next 30 days on Form RD 440-57, so that delivery may be possible by the 
first of the next month. Unapproved funds that are later approved will 
be added to the next month's request.
    (b) Quarterly, the grantee will submit exhibit B of this subpart in 
an original and three copies to the County Supervisor on or before 
January 15, April 15, July 15, and October 15 which will verify its 
progress toward meeting the objectives stated in the Agreement and the 
application. The County Supervisor will immediately complete the County 
Office review part and forward the report to the District Office. After 
exhibit B is received in the District Office, a meeting should be 
scheduled between the grantee, District Director, and the County 
supervisor since this is an opportune time for both the grantee and 
Rural Development to review progress to date and make necessary 
adjustments for the future. This meeting is required if the grantee was 
previously identified as a problem grantee or will be identified as a 
problem grantee at this time. Regardless of whether a meeting will be 
held, the following will be done:
    (1) Exhibit B and other information will be evaluated to determine 
progress made to date. The District Director will comment on exhibit B 
as to whether the grantee is ahead or behind schedule in each of the 
following areas:
    (i) Assisting the projected number of families.
    (ii) Serving very low-income applicants. Is the grantee reaching a 
minimum of very low-income families as required in exhibit A, attachment 
2 to subpart L of

[[Page 219]]

part 1940 of this chapter (available in any Rural Development office).
    (iii) Equivalent units (EUs). Is the number of EUs completed 
representative of lapse in time of the grant? For example, if 25 percent 
of the grant period has elapsed, are 25 percent of the number of EUs 
completed?
    (iv) Labor contributions by the family. Are the families working 
together and are they completing the labor tasks as established on 
exhibit B-2?
    (2) The District Director will submit exhibit B to the State 
Director who will evaluate the quarterly report along with the District 
Director's comments. If the State Director determines the grantee is 
progressing satisfactorily, the State Director will sign and forward 
exhibit B to the National Office. However, if the State Director 
determines the grantee is not performing as expected, the State Director 
will notify the grantee that it has been classified a ``High Risk'' 
grantee. The notice will specify the deficiencies and inform the grantee 
of proposed remedies for noncompliance. The notice will advise the 
grantee that Rural Development is available to assist and provide the 
name and address of an organization that is under contract with Rural 
Development to assist them. The State Director will forward a copy of 
exhibit B, District Directors comments, and the reasons for classifying 
them as ``High Risk'' to the National Office, Single Family Housing, 
Special Programs Branch. When the period of time provided for corrective 
action has expired, an assessment will be made of the progress by the 
grantee toward correcting the situation. If the State Director 
determines:
    (i) The situation has been corrected or reasonable progress has been 
made toward correcting the situation, the ``High Risk'' status will be 
lifted and the grantee so notified.
    (ii) The situation has not been corrected but it is correctable if 
additional time is granted, an extension will be issued.
    (iii) The situation has not been corrected and it is unlikely to be 
corrected if given additional time, the grant will be terminated under 
Sec.  1944.426(b)(1) of this subpart.

[55 FR 41833, Oct. 16, 1990; 56 FR 19253, Apr. 26, 1991]



Sec.  1944.418  [Reserved]



Sec.  1944.419  Final grantee evaluation.

    Near the end of the grant period but prior to the last month, an 
evaluation of the grantee will be conducted by Rural Development. The 
State Director may use Rural Development employees or an organization 
under contract to Rural Development to provide the evaluation. The 
evaluation is to determine how successful the grantee was in meeting 
goals and objectives as defined in the agreement, application, this 
regulation, and any amendments.
    (a) This is a quantitative evaluation of the grantee to determine if 
it met its goals in:
    (1) Assisting the project number of families in obtaining adequate 
housing.
    (2) Meeting the goal of assisting very low-income families.
    (3) Meeting the family labor requirement in Sec.  1944.411(h) and 
exhibit B-2 of this subpart.
    (4) Keeping costs within the guides set in Sec.  1944.407.
    (5) Meeting order objectives in the Agreement.
    (b) The evaluation is a narrative addressed to the State Director 
with a copy of the National Office, Single Family Housing Processing 
Division. It will be in 3 parts, namely; findings, recommendations, and 
an overall rating. The rating will be either unacceptable, acceptable, 
or outstanding, as follows:
    (1) Outstanding if the grantee met or exceeded all of the goals in 
paragraph (a) of this section.
    (2) Acceptable if the grantee met or exceeded all of the goals as 
defined in paragraph (a) except two.
    (3) Unacceptable if the grantee failed to obtain an acceptable 
rating.
    (c) After the State Director has reviewed the evaluation, a copy 
will be mailed to the grantee. The grantee may request a review of the 
evaluation with the District Director. This review is for clarification 
of the material and to dispute the findings if they are known to be 
wrong. The rating is not

[[Page 220]]

open for discussion except to the extent it can be proven that the 
findings do not support the rating. If this is the case, the District 
Director will file an amendment to the State Director.



Sec.  1944.420  Extension or revision of the grant agreement.

    The State Director may authorize the District Director to execute on 
behalf of the Government, exhibit C of this subpart, at any time during 
the grant period provided:
    (a) The extension period is for no more than one year from the final 
date of the existing Agreement.
    (b) The need for the extension is clearly justified.
    (c) If additional funds are needed, a revised budget is submitted 
with complete justification, and
    (d) The grantee is within the guidelines in Sec.  1944.407 of this 
subpart or the State Director determines that the best interest of the 
Government will be served by the extension.



Sec.  1944.421  Refunding of an existing grantee.

    Grantees wishing to continue with self-help efforts after the end of 
the current grant plus any extensions should file Form SF-424, in 
accordance with Sec.  1944.410(e). It is recommended that it be filed at 
least 6 months before the end of the current grant period. Funds from 
the existing grant may be used to meet the conditions of a new grant to 
serve the same or redefined geographic area. If the grantee is targeting 
a different geographic area, a new preapplication must be submitted in 
accordance with Sec.  1944.410 and the grantee may apply for a 
predevelopment grant in accordance with Sec.  1944.410(d). In addition 
to meeting the conditions of an applicant as defined in Sec.  1944.411 
of this subpart, the grantee must also have received or will receive an 
acceptable rating on its current grant unless an exception is granted by 
the State Director. The State Director may grant an exception to the 
rating if it is determined that the reasons causing the previous 
unacceptable rating have been removed or will be removed with the 
approval of this grant.



Sec.  1944.422  Audit and other report requirements.

    The grantee must submit an audit to the appropriate Rural 
Development District Office annually (or biennially if a State or local 
government with authority to do a less frequent audit requests it) and 
within 90 days of the end of the grantee's fiscal year, grant period, or 
termination of the grant. The audit, conducted by the grantee's 
auditors, is to be performed in accordance with Generally Accepted 
Government Auditing Standards (GAGAS), using the publication ``Standards 
for Audit of Governmental Organizations, Programs, Activities and 
Functions'' developed by the Comptroller General of the United States in 
1981, and any subsequent revisions. In addition, the audits are also to 
be performed in accordance with 2 CFR part 200 as adopted by USDA 
through 2 CFR part 400 and Rural Development requirements as specified 
in this subpart. Audits of borrower loan funds will be required. The 
number of borrower accounts audited will be determined by the auditor. 
In incidences where it is difficult to determine the appropriate number 
of accounts to be audited, auditors should be authorized by the State 
Director to audit the lesser of 10 loans or 10 percent of total loans.
    (a) Nonprofit organizations and others. If determined necessary, 
these organizations are to be audited in accordance with Rural 
Development requirements in accordance with 2 CFR part 200 as adopted by 
USDA through 2 CFR part 400. These requirements also apply to public 
hospitals, public colleges, and universities if they are excluded from 
the audit requirements of paragraph (b) of this section.
    (1) An audit conducted by the grantee's auditor shall be supplied to 
the Rural Development District Director as soon as possible but in no 
case later than ninety (90) days following the period covered by the 
grant agreement.
    (2) Auditors shall promptly notify United States Department of 
Agriculture's Office of the Inspector General Regional Inspector General 
and the Rural Development District Office, in writing, of any indication 
of fraud, abuse, or illegal acts in grantees use of

[[Page 221]]

grant funds or in the handling of borrowers accounts.
    (3) Nonprofit organizations that receive less than $25,000 a year in 
Federal financial assistance need not be audited.
    (b) State and local governments and Indian tribes. These 
organizations are to be audited in accordance with this subpart and 2 
CFR part 200 as adopted by USDA through 2 CFR part 400. The grantee will 
forward completed audits to the appropriate Federal Cognizant agency and 
a copy to the Rural Development District Director. ``Cognizant agency'' 
for audits is defined at 2 CFR 200.18 as the Federal agency designated 
to carry out the responsibilities described in Sec.  200.513 
Responsibilities, paragraph (a). The cognizant agency for audit is not 
necessarily the same as the cognizant agency for indirect costs. A list 
of cognizant agencies for audit may be found at the FAC Web site. Within 
USDA, the OIG shall fulfill cognizant agency responsibilities. Smaller 
grantees not assigned a cognizant agency by OMB should contact the 
Federal agency that provided the most funds. When USDA is designated as 
the cognizant agency or when it has been determined by the borrower that 
Rural Development provided the major portion of Federal financial 
assistance, the State Director will contact the appropriate USDA OIG 
Regional Inspector General. Rural Development and the borrower shall 
coordinate all proposed audit plans with the appropriate USDA OIG.
    (1) State and local governments and Indian tribes that receive 
$25,000 or more a year in Federal financial assistance shall have an 
audit made in accordance with 2 CFR part 200 as adopted by USDA through 
2 CFR part 400.
    (2) State and local and Indian tribes that receive less than $25,000 
a year in Federal financial assistance shall be exempt from 2 CFR part 
200 as adopted by USDA through 2 CFR part 400.
    (3) Public hospitals and public colleges and universities may be 
excluded by the State Director from OMB Circular A-128 audit 
requirements. If such entities are excluded, audits shall be made in 
accordance with paragraph (a) of this section.

[55 FR 41833, Oct. 16, 1990; 56 FR 19253, Apr. 26, 1991; 79 FR 76010, 
Dec. 19, 2014]



Sec.  1944.423  Loan packaging and 502 RH application submittal.

    A grantee is required to assist 502 RH applicants in submitting 
their application for a RH loan. Loan packaging will be performed in 
accordance with 7 CFR part 3550; therefore, it is important that the 
grantee be trained at an early date in the packaging of RH loans. 
Typically, this training should take place before the first applications 
are submitted to the County Office and before the grant is closed. A 
grantee should become very knowledgeable of Rural Development's 
eligibility requirements but must understand that only Rural Development 
can approve or deny an applicant assistance. Grantee must work 
cooperatively with Rural Development in the 502 loan approval process 
and must work within the regulations for the 502 program and recognize 
Rural Development's ultimate decision making authority to approve or 
deny loans. However, the grantee may ask for clarification that may be 
helpful in working with future applicants. Grant funds may not be used 
to pay any expense in connection with an appeal that the applicant may 
file or pursue.

[55 FR 41833, Oct. 16, 1990, as amended at 67 FR 78328, Dec. 24, 2002]



Sec.  1944.424  Dwelling construction and standards.

    All construction will be performed in accordance with subpart A of 
part 1924 of this chapter. The planned work must meet the building 
requirements of 7 CFR part 3550 and meet the Development Standards as 
defined in subpart A of part 1924 of this chapter and in any local 
codes. Sites and site developments must conform to the requirements of 
subpart C of part 1924 of this chapter.

[55 FR 41833, Oct. 16, 1990, as amended at 67 FR 78328, Dec. 24, 2002]

[[Page 222]]



Sec.  1944.425  Handling and accounting for borrower loan funds.

    Grantees will be required to administer borrower loan funds during 
the construction phases. The extent of their involvement will depend on 
the experience of the grantee and the amount of authority delegated to 
them by the District Director in accordance with Sec.  1924.6(c) of 
subpart A of part 1924 of this chapter. Training should include Rural 
Development's non-discrimination policies in receiving applications.



Sec.  1944.426  Grant closeout.

    (a) Grant purposes completed. Promptly after the date of completion, 
grant closeout actions will be taken to allow the orderly discontinuance 
of grantee activity.
    (1) The grantee will immediately refund to Rural Development any 
balance of grant funds that are not committed for the payment of 
authorized expenses.
    (2) The grantee will furnish Form SF-269A, ``Financial Status Report 
(short form)'' to Rural Development within 90 days after the date of 
completion of the grant. All other financial, performance, and other 
reports required as a condition of the grant also will be completed.
    (3) After the grant closeout, Rural Development retains the right to 
recover any disallowed costs which are discovered as a result of the 
final audit. 7 CFR part 3550 will be used by Rural Development to 
recover any unauthorized expenditures.
    (4) The grantee will provide Rural Development an audit conforming 
to those requirements established in this part, including audits of 
self-help borrower accounts.
    (5) Upon request from the recipient, any allowable reimbursable cost 
not covered by previous payments shall be promptly paid by Rural 
Development.
    (b) Grant purposes not completed--(1) Notification of termination. 
The State Director will promptly notify the grantee and the National 
Office in writing of the termination action including the specific 
reasons for the decision and the effective date of the termination. The 
notification to the grantee will specify that if the grantee believes 
the reason for the proposed termination can be resolved, the grantee 
should, within 15 calendar days of the date of this notification, 
contact the State Director in writing requesting a meeting for further 
consideration. The meeting will be an informal proceeding at which the 
grantee will be given the opportunity to provide whatever additional 
information it believes should be considered in reaching a decision 
concerning the case. The grantee may have an attorney or any other 
person present at the meeting if desired. Within 7 calendar days of the 
meeting, the State Director will determine what action to take.
    (i) If the State Director determines that termination is not 
necessary, the grantee will be informed by letter along with the 
District Director.
    (ii) If the State Director determines that termination of the grant 
is appropriate, he/she will promptly inform the grantee by the use of 
exhibit B-3 of subpart B of part 1900 of this chapter.
    (2) National Office review. (i) Upon receipt of a request from a 
grantee that the decision of the State Director be reconsidered, the 
National Office will make a preliminary decision concerning the 
continued funding of the grantee during the appeal period. Written 
notification of the decision will be given to the State Director and 
grantee.
    (ii) The National Office will then obtain a comprehensive report on 
the matter from the State Office. This information will be considered 
together with any additional information that may be provided by the 
grantee.
    (c) Grant suspension. When the grantee has failed to comply with the 
terms of the agreement, the District Director will promptly report the 
facts to the State Director. The State Director will consider 
termination or suspension of the grant usually only after a Grantee has 
been classified as ``high risk'' in accordance with Sec.  
1944.417(b)(2). When the State Director determines that the grantee has 
a reasonable potential to correct deficiencies the grant may be 
suspended. The State Director will request written authorization from 
the National Office to suspend a grantee. The suspension will adhere to 
2 CFR part 200 as adopted by USDA through 2

[[Page 223]]

CFR part 400. The grantee will be notified of the grant suspension in 
writing by the State Director. The State Director will also promptly 
inform the grantee of its rights to appeal the decision by use of 
Exhibit B-3 of Subpart B of part 1900 of this chapter.
    (d) Grant termination. The State Director may terminate the grant 
agreement whenever Rural Development determines that the grantee has 
failed to comply with terms of the Agreement. The reasons for 
termination may include, but are not limited to, such problems as listed 
in paragraph (e)(3)(i) of exhibit A of this subpart. The State Director 
may also withhold further disbursement of grant funds and prohibit the 
grantee from incurring additional obligations of grant funds with 
written approval of the National Office. Rural Development will allow 
all necessary and proper costs which grantee could not reasonably avoid.
    (1) Termination for cause. The grant agreement may be terminated in 
whole, or in part, at any time before date of completion, whenever Rural 
Development determines that the grantee has failed to comply with terms 
of the Agreement. The State Director will notify the grantee in writing 
giving the reasons for the action and inform the grantee of its rights 
of appeal by use of exhibit B-3 of subpart B of part 1900 of this 
chapter.
    (2) Termination for convenience. FmHA or its successor agency under 
Public Law 103-354 or the grantee may terminate the grant in whole, or 
in part, when both parties agree that the continuation of the grant 
would not produce beneficial results. The two parties will agree in 
writing to the termination conditions including the effective date. No 
notice of rights of appeal will be issued by Rural Development.

[55 FR 41833, Oct. 16, 1990, as amended at 67 FR 78328, Dec. 24, 2002; 
68 FR 61331, Oct. 28, 2003; 79 FR 76010, Dec. 19, 2014]



Sec.  1944.427  Grantee self-evaluation.

    Annually or more often, the board of directors will evaluate their 
own self-help program. Exhibit E of this subpart is provided for that 
purpose. It is also recommended that they review their personnel policy, 
any audits that may have been conducted and other reports to determine 
if they need to make adjustments in order to prevent fraud and abuse, 
and meet the goals in the current grant agreement.



Sec. Sec.  1944.428-1944.449  [Reserved]



Sec.  1944.450  OMB control number.

    The reporting and recordkeeping requirements contained in this 
regulation have ben approved by the Office of Management and Budget and 
have been assigned OMB control number 0575-0043. Public reporting burden 
for this collection of information is estimated to vary from 10 minutes 
to 18 hours per response, with an average of 1.17 hours per response 
including time for reviewing instructions, searching existing data 
sources, gathering and maintaining the data needed, and completing and 
reviewing the collection of information. Send comments regarding this 
burden estimate or any other aspect of this collection of information, 
including suggestions for reducing this burden, to Department of 
Agriculture, Clearance Officer, OIRM, room 404-W, Washington, DC 20250; 
and to the Office of Management and Budget, Paperwork Reduction Project 
(OMB 0575-0043), Washington, DC 20503.



Sec. Exhibit A to Subpart I of Part 1944--Self-Help Technical Assistance 
                             Grant Agreement

    THIS GRANT AGREEMENT dated __________, 19__, is between ______

________________________________________________________________________
a nonprofit corporation (``Grantee''), organized and operating under
________________________________________________________________________
(authorizing State statute)

and the United States of America acting through the Farmers Home 
Administration, Department of Agriculture (``FmHA'') or its successor 
agency under Public Law 103-354.

    In consideration of financial assistance in the amount of $____ 
(called ``Grant Funds'') to be made available by FmHA or its successor 
agency under Public Law 103-354 to Grantee under section 523(b)(1)(A) of 
the Housing Act of 1949 to be used in (specify area to be served) ____ 
for the purpose of providing a program of technical and supervisory 
assistance which will aid low-income families in carrying out mutual 
self-help housing efforts. Grantee will provide such a program in 
accordance with the terms of this

[[Page 224]]

Agreement and FmHA or its successor agency under Public Law 103-354 
regulations.

                              Definitions:

    Date of Completion means the date when all work under a grant is 
completed or the date in the TA Grant Agreement, or any supplement or 
amendment thereto, on which Federal assistance ends.
    Disallowed costs are those charges to a grant which the FmHA or its 
successor agency under Public Law 103-354 determines cannot be 
authorized.
    Grant Closeout is the process by which the grant operation is 
concluded at the expiration of the grant period or following a decision 
to terminate the grant.
    Termination of a grant means the cancellation of Federal assistance, 
in whole of in part, under a grant at any time prior to the date of 
completion.

                           Terms of agreement:

    (a) This Agreement shall terminate ____ years from this date unless 
extended or sooner terminated under paragraphs (e) and (f) of this 
Agreement.
    (b) Grantee shall carry out the self-help housing activity described 
in the application docket which is attached to and made a part of this 
Agreement. Grantee will be bound by the conditions set forth in the 
docket, 7 CFR part 1944, subpart I, and the further conditions set forth 
in this Agreement. If any of the conditions in the docket are 
inconsistent with those in the Agreement or subpart I of part 1944, the 
latter will govern. A waiver of any condition must be in writing and 
must be signed by an authorized representative of FmHA or its successor 
agency under Public Law 103-354.
    (c) Grantee shall use grant funds only for the purposes and 
activities specified in FmHA or its successor agency under Public Law 
103-354 regulations and in the application docket approved by FmHA or 
its successor agency under Public Law 103-354 including the approved 
budget. Any uses not provided for in the approved budget must be 
approved in writing by FmHA or its successor agency under Public Law 
103-354 in advance.
    (d) If Grantee is a private nonprofit corporation, expenses charged 
for travel or per diem will not exceed the rates paid FmHA or its 
successor agency under Public Law 103-354 employees for similar 
expenses. If Grantee is a public body, the rates will be those that are 
allowable under the customary practice in the government of which 
Grantee is a part; if none are customary, the FmHA or its successor 
agency under Public Law 103-354 rates will be the maximum allowed.
    (e) Grant closeout and termination procedures will be as follows:
    (1) Promptly after the date of completion or a decision to terminate 
a grant, grant closeout actions are to be taken to allow the orderly 
discontinuation of Grantee activity.
    (i) Grantee shall immediately refund to FmHA or its successor agency 
under Public Law 103-354 any uncommitted balance of grant funds.
    (ii) Grantee will furnish to FmHA or its successor agency under 
Public Law 103-354 within 90 days after the date of completion of the 
grant a ``Financial Status Report'', Form SF-269A. All financial, 
performance, and other reports required as a condition of the grant will 
also be completed.
    (iii) Grantee shall account for any property acquired with technical 
assistance (TA) grant funds, or otherwise received from FmHA or its 
successor agency under Public Law 103-354.
    (iv) After the grant closeout, FmHA or its successor agency under 
Public Law 103-354 retains the right to recover any disallowed costs 
which may be discovered as a result of any audit.
    (2) When there is reasonable evidence that Grantee has failed to 
comply with the terms of this Agreement, the State Director may 
determine Grantee as ``high risk''. A ``high risk'' Grantee will be 
supervised to the extent necessary to protect the Government's interest 
and to help Grantee overcome the deficiencies.
    (3) Grant termination will be based on the following:
    (i) Termination for cause. This grant may be terminated in whole, or 
in part, 90 days after a Grantee has been classified as ``high risk'' if 
the State Director determines that Grantee has failed to correct 
previous deficiencies and is unlikely to correct such items if 
additional time is allowed. The reasons for termination may include, but 
are not limited to, such problems as:
    (A) Actual TA costs significantly exceeding the amount stipulated in 
the proposal.
    (B) The number of homes being built is significantly less than 
proposed construction or is not on schedule.
    (C) The cost of housing not being appropriate for the self-help 
program.
    (D) Failure of Grantee to only use grant funds for authorized 
purposes.
    (E) Failure of Grantee to submit adequate and timely reports of its 
operation.
    (F) Failure of Grantee to require families to work together in 
groups by the mutual self-help method in the case of new construction.
    (G) Serious or repetitive violation of any of the provisions of any 
laws administered by FmHA or its successor agency under Public Law 103-
354 or any regulation issued under those laws.
    (H) Violation of any nondiscrimination or equal opportunity 
requirement administered

[[Page 225]]

by FmHA or its successor agency under Public Law 103-354 in connection 
with any FmHA or its successor agency under Public Law 103-354 programs.
    (I) Failure to establish an accounting system acceptable to FmHA or 
its successor agency under Public Law 103-354.
    (J) Failure to serve very low-income families.
    (K) Failure to recruit families from substandard housing.
    (ii) Termination for convenience. FmHA or its successor agency under 
Public Law 103-354 or Grantee may terminate the grant in whole, or in 
part, when both parties agree that the continuation of the project would 
not produce beneficial results commensurate with the further expenditure 
of funds. The two parties shall agree upon the termination conditions, 
including the effective date and, in case of partial termination, the 
portion to be terminated.
    (4) To terminate a grant for cause, FmHA or its successor agency 
under Public Law 103-354 shall promptly notify Grantee in writing of the 
determination and the reasons for and the effective date of the whole or 
partial termination. Grantee will be advised of its appeal rights under 
7 CFR part 1900, subpart B.
    (f) An extension of this grant agreement may be approved by FmHA or 
its successor agency under Public Law 103-354 provided, in its opinion, 
the extension is justified and there is a likelihood that the Grantee 
can accomplish the goals set out and approved in the application docket 
during the period of the extension.
    (g) Grant funds may not be used to pay obligations incurred before 
the date of this Agreement. Grantee will not obligate grant funds after 
the grant termination or completion date.
    (h) As requested and in the manner specified by FmHA or its 
successor agency under Public Law 103-354, the Grantee must make 
quarterly reports, exhibit C of this subpart (on \1/15\, \4/15\, \7/15\ 
and \10/15\ of each year), and a financial status report at the end of 
the grant period, and permit on-site inspections of program progress by 
FmHA or its successor agency under Public Law 103-354 representatives. 
FmHA or its successor agency under Public Law 103-354 may require 
progress reports more frequently if it deems necessary. Grantee must 
also comply with the audit requirements found in Sec.  1944.422 of 
subpart I of 7 CFR part 1944, if applicable. Grantee will maintain 
records and accounts, including property, personnel and financial 
records, to assure a proper accounting of all grant funds. These records 
will be made available to FmHA or its successor agency under Public Law 
103-354 for auditing purposes and will be retained by Grantee for three 
years after the termination or completion of this grant.
    (i) Acquisition and disposal of personal, equipment and supplies 
should comply with Subpart R of 2 CFR part 200 as adopted by USDA 
through 2 CFR part 400.
    (j) Results of the program assisted by grant funds may be published 
by Grantee without prior review by FmHA or its successor agency under 
Public Law 103-354, provided that such publications acknowledge the 
support provided by funds pursuant to the provisions of Title V of the 
Housing Act of 1949, 42 U.S.C. 1471, et seq., and that five copies of 
each such publication are furnished to the local representative of FmHA 
or its successor agency under Public Law 103-354.
    (k) Grantee certifies that no person or organization has been 
employed or retained to solicit or secure this grant for a commission, 
percentage, brokerage, or contingent fee.
    (l) Grantee shall comply with all civil rights laws and the FmHA or 
its successor agency under Public Law 103-354 regulations implementing 
these laws.
    (m) In all hiring or employment made possible by or resulting from 
this grant, Grantee: (1) Will not discriminate against any employee or 
applicant for employment because of race, religion, color, sex, marital 
status, national origin, age, or mental or physical handicap, and (2) 
will take affirmative action to insure that applicants are employed, and 
that employees are treated during employment without regard to their 
race, religion, color, sex, marital status, national origin, or mental 
or physical handicap. This requirement shall apply to, but not be 
limited to, the following: Employment, upgrading, demotion, or transfer; 
recruitment or recruitment advertising; layoff or termination; rates of 
pay or other forms of compensation; and selection for training, 
including apprenticeship. In the event Grantee signs a contract which 
would be covered by any Executive Order, law, or regulation prohibiting 
discrimination, Grantee shall include in the contract the ``Equal 
Employment Clause'' as specified by FmHA or its successor agency under 
Public Law 103-354.
    (n) It is understood and agreed by Grantee that any assistance 
granted under this Agreement will be administered subject to the 
limitations of Title V of the Housing Act of 1949 as amended, 42 U.S.C. 
1471 et seq., and related regulations, and that rights granted to FmHA 
or its successor agency under Public Law 103-354 in this Agreement or 
elsewhere may be exercised by it in its sole discretion to carry out the 
purposes of the assistance, and protect FmHA or its successor agency 
under Public Law 103-354's financial interest.
    (o) Grantee will maintain a code or standards of conduct which will 
govern the performance of its officers, employees, or agents. Grantee's 
officers, employees, or agents will neither solicit nor accept 
gratuities, favors, or anything of monetary value

[[Page 226]]

from suppliers, contractors, or others doing business with the grantee. 
To the extent permissible by State or local law, rules, or regulations 
such standards will provide for penalties, sanctions, or other 
disciplinary actions to be taken for violations of such standards.
    (p) Grantee shall not hire or permit to be hired any person in a 
staff position or as a participant if that person or a member of that 
person's immediate household is employed in an administrative capacity 
by the organization, unless waived by the State Director. (For the 
purpose of this section, the term household means all persons sharing 
the same dwelling, whether related or not).
    (q) Grantee's board members or employees shall not directly pr 
indirectly participate, for financial gain, in any transactions 
involving the organization or the participating families. This includes 
activities such as selling real estate, building material, supplies, and 
services.
    (r) Grantee will retain all financial records, supporting documents, 
statistical records, and other records pertinent to this agreement for 3 
years, and affirms that it is fully aware of the provisions of the 
Administrative Remedies for False Claims and Statements Act, 31 U.S.C. 
3801, et seq.

By______________________________________________________________________
(Signature)

________________________________________________________________________
(Title)
GRANTEE

By______________________________________________________________________
(Signature)

________________________________________________________________________
(Title)
FARMERS HOME ADMINISTRATION or its successor agency under Public Law 
103-354



Sec. Exhibit B to Subpart I of Part 1944--Evaluation Report of Self-Help 
                    Technical Assistance (TA) Grants

Evaluation for Quarter Ending: (1) ________, 19__
1. a. Name of Grantee: (2) ___
    b. Address: (3) ___
    c. Area the grant serves: (4) ___
2. Date of Agreement: (5) ___ Time Extended (6) ___
3. a. Equivalent unit increase during quarter:
(7)_____________________________________________________________________
First Month
(8)_____________________________________________________________________
Second Month
(9)_____________________________________________________________________
Third Month
b. Cumulative total number of Equivalent Units since beginning of grant:
(10)____________________________________________________________________
Total to Date
4. a. Method of Construction:
    Stick built ___%, Panelized ___%, Combined ___%
    b. Number of bedrooms per house built this grant period:
2BR,____________________________________________________________________
3BR,____________________________________________________________________
________________________________________________________________________
    c. Household size this Quarter:

1 person ___,
2 persons ___,
3 persons ___,
4 persons ___,
5 persons ___.

    d. Number of houses under construction this grant period, but 
started during previous grant period: ___
5. a. Number of houses proposed under this grant:
(11)____________________________________________________________________
    b. Number of houses completed under this grant:
(12)____________________________________________________________________
    c. Number of houses currently under construction:
(13)____________________________________________________________________
    d. Number of families in pre construction:
(14)____________________________________________________________________
    e. Number of Construction Supervisors:
(15)____________________________________________________________________
    f. Number of TA employees:
(16)____________________________________________________________________
6. a. Average time needed to construct a single house:
(17)____________________________________________________________________
    b. Number of months between submission of self-help borrower's 
docket and approval/rejection:
(18)____________________________________________________________________
    c. Number and percentage of loan docket rejections during reporting 
period: ___
(19)____________________________________________________________________
7. a. Did any of the following adversely affect the Grantee's ability to 
          accomplish program objectives?

 
                                                       YES         NO
 
TA Staff Turnover.................................       ____       ____
FmHA Staff Turnover...............................       ____       ____
Bad Weather.......................................       ____       ____
Loan Processing Delays............................       ____       ____
Site Acquisition and Development..................       ____       ____
Unavailable Loan/Grant Funds......................       ____       ____
Lack of Participants..............................       ____       ____
Communication between FmHA/Grantee................       ____       ____
 

8. Attach information concerning number of families contacted, number 
          who have indicated a willingness to be a participating family, 
          number of mutual self-help groups organized, progress on any 
          construction started, and any problems relating to the 
          operation of this grant.

[[Page 227]]

I certify that the statements made above are true to the best of my 
          knowledge and belief.

(20)____________________________________________________________________
(Date)

(21)____________________________________________________________________
(Title)

GRANTEE
(22)____________________________________________________________________
(Signature)

                          County Office Review

I have reviewed the above information which I have found to be 
          substantially correct. Must be completed by County Office.
Comment: Must be completed (23)
Average appraisal value of units financed this Quarter:

________________________________________________________________________
Average amount loan per unit financed this Quarter:
________________________________________________________________________
(24)____________________________________________________________________
(Date)

(25)____________________________________________________________________
County Supervisor

                         District Office Review

Comment: Must be completed (26)
(27)____________________________________________________________________
Date

(28)____________________________________________________________________
District Director

                           State Office Review

Comments: Must be completed (29)
(30)____________________________________________________________________
Date

(31)____________________________________________________________________
State Office Representative



Sec. Exhibit B-1 to Subpart I of Part 1944--Instructions for Preparation 
      of Evaluation Report of Self-Help Technical Assistance Grants

    Exhibit B will be used by all Technical Assistance (TA) Grantees 
obtaining self-help TA grants. This attachment provides the grantee and 
FmHA or its successor agency under Public Law 103-354 a uniform method 
of reporting the performance progress of self-help projects. The TA 
Grantee will prepare an original and 4 copies of the attachment. The TA 
Grantee will sign the original and 3 copies and forward it to the local 
FmHA or its successor agency under Public Law 103-354 County Office. The 
TA Grantee will keep the unsigned copy for its records.
    The evaluation report will be completed in accordance with the 
following:
    1. Enter the date the quarter ends either March 31, June 30, 
September 30, or December 31 and the year.
    2. Enter the full name of the TA Grantee organization.
    3. Enter the complete mailing address of the TA Grantee 
organization.
    4. Enter the area served by the grant.
    5. Enter the date of the initial self-help TA grant agreement.
    6. Enter the time of any extension self-help TA grant agreement(s).
    7. Insert the number of equivalent units (EU) completed the first/
second/third month of the quarter using steps 1, 2, and 3 of exhibit B-
3.
    8. Insert the number of EU's completed the second month of the 
quarter by using steps 1, 2, and 3 of exhibit B-3.
    9. Insert the number of EU's completed the third month of the 
quarter by using steps 1, 2, and 3 of exhibit B-3.
    10. Add items (7), (8), and (9) to the total from the previous 
quarterly report to obtain the cumulative total number of EU's. This 
total is the cumulative total number of EU's for the project.
    11. Enter the number of houses planned in the TA Grantee 
proposal(s).
    12. Enter the number of houses completed and occupied since the 
beginning of the grant.
    13. Enter the number of houses that are under construction at the 
end of this quarter.
    14. Enter the number of families in the pre-construction phase.
    15. Enter the total number of construction supervisor(s) paid with 
TA grant funds.
    16. Enter the number of employees paid with TA grant funds including 
those listed in item 15.
    17. Insert the average elapsed time needed per house from excavation 
to final inspection by FmHA or its successor agency under Public Law 
103-354 to complete construction of a house. If no self-help homes have 
been completed by this grantee, use other projects or your best estimate 
as a guide.
    18. Enter the number of months it takes on average to approve or 
reject a borrower's docket once it's submitted.
    19. Enter number and percent of dockets submitted and rejected this 
quarter.
    20. Enter date of exhibit submittal.
    21. Insert title of the Grantee or authorized representative.
    22. Signature of Grantee or authorized representative.
    23. County Supervisor must answer questions concerning market value 
and loan amount and also should insert comments concerning progress of 
construction, success of the project and any problems that the 
organization may have.
    24. Insert date of County Supervisor's review.

[[Page 228]]

    25. Signature of County Supervisor.
    26. District Director representative should insert his/her comments 
concerning items listed in Sec.  1944.417(b)(1) of 1944-I.
    27. Insert date of District Director review.
    28. Signature of District Director or representative.
    29. Insert State Office comments.
    30. Insert date of State Office review.
    31. Signature of State Office representative.



 Sec. Exhibit B-2 to Subpart I of Part 1944--Breakdown of Construction 
      Development for Determining Percentage Construction Completed

------------------------------------------------------------------------
                                                In percent--
                                  --------------------------------------
                                    With slab    With crawl      With
                                     on grade      space       basement
------------------------------------------------------------------------
1. Excavation....................           3            5            6
    The removal of earth to allow the construction of a foundation or
     basement.
2. Footing, Foundations, columns.           8            8           11
    Footing: Construction of the spreading course or courses at the base
     or bottom of a foundation wall, pier, or column.
    Foundation: Construction of the supporting portion of a structure
     below the first floor construction, or below grade, including
     footing.
3. Floor slab or framing.........           6            4            4
    The floor slab consist of concrete, usually reinforced, poured over
     gravel and a vapor barrier with perimeter insulation to prevent
     heat loss.
4. Subflooring...................           0            1            1
    The installation of materials used for flooring that is laid
     directly on the joist and serving the purpose of a floor during
     construction prior installation of the finish floor.
5. Wall framing sheathing........           7            7            6
    The construction process of putting together and erecting the
     skeleton parts of a building's walls (the rough lumber work) and,
     for the exterior walls, covering with sheathing (plywood,
     waferboard, oriented strand board or lumber) and insulating board
     to close up the side walls prior to the installation of finish
     materials on the surface.
6. Roof and ceiling framing,                6            6            5
 sheathing.......................
    The process, or method, of putting the parts of a roof, such as
     truss, rafters, ridge and plates in position. Ceiling joist support
     the overhead interior lining of a room. Roof sheathing is any sheet
     material, such as plywood or particleboard, connected to the roof
     rafters or truss to act as a base for sheathing felt, shingles or
     other roof covers.
7. Roofing.......................           5            5            4
    The installation of a material that acts as a roof covering, making
     it impervious to the weather, such as shingles over sheathing felt,
     tile, or slate.
8. Siding, exterior trim, porches           7            7            6
    The installation of lumber, panel products or other materials
     intended for use as the exterior wall covering including all trim.
9. Windows and exterior doors....           9            9            8
    The installation of all exterior windows and doors. This includes
     securely fastening windows and doors plumb and level, square and
     true and adjusting sash, screens and hardware for smooth and proper
     operation.
10. Plumbing--roughed in.........           3            2            3
    Subject to local codes and regulations the installation of all parts
     of the plumbing system which must be completed prior to the
     installation of plumbing fixtures or appliances. This includes
     drain, waste, and vent piping, water supply, and the necessary
     built-in fixture supports.
11. Sewage disposal..............           1            1            1

[[Page 229]]

 
    Subject to local codes and regulations the construction and
     installation of a wastewater disposal system consisting of a house
     sewer, a pretreatment unit (e.g., septic tank, individual package
     treatment plant), an acceptable absorption system (subsurface
     absorption field, seepage pit, or subsurface absorption bed). The
     system shall be designed to receive all sanitary sewage (bathroom,
     kitchen and laundry) from the dwelling, but not footing or roof
     drainage. It shall be designed so that gases generated anywhere in
     the system can easily flow back to the building sewer stack.
12. Heating--roughed in..........           1            1            1
    Subject to local codes and regulations the installation of ducts and/
     or piping and the necessary supports to minimize the cutting of
     walls and joist. This rough in is done before finish wall and floor
     installed.
13. Electrical--roughed in.......           2            2            2
    Subject to local codes and regulations the installation of conduit
     or cable and the location of switch, light, and outlet boxes with
     wires ready to connect. This roughing-in work is done before the
     dry wall finish is applied, and before the insulation is placed in
     the walls and ceiling.
14. Insulation...................           2            2            2
    The installation of any material used in walls, floors, and ceilings
     to prevent heat transmission as required by FmHA Instruction 1924-
     A, exhibit D of 7 CFR of part 1924, subpart A.
15. Dry wall.....................           8            8            7
    Dry walling is covering the interior walls using sheets of gypsum
     board and taped joints.
16. Basement or porch floor,                1            1            6
 steps...........................
    The construction of basement or porch floors and steps whether wood
     or concrete.
17. Heating--finished............           3            3            3
    Subject to local codes and regulations the installation of
     registers, grilles and thermostats.
18. Flooring covering............           6            6            5
    The installation of the ``finish flooring'' (the material used as
     the final wearing surface that is applied to a floor). Floor
     covering include numerous flooring materials such as wood
     materials, vinyl, linoleum, cork, plastic, carpet and other
     materials in tile or sheet form.
19. Interior carpentry, trim,               6            6            5
 doors...........................
    Installing visible interior finish work (molding and/or trim),
     including covering joints around window and door openings. The
     installation of an interior door including frames and trim.
20. Cabinets and counter tops....           1            1            1
    Securing cabinets and counter tops (usually requiring only fastening
     to the wall or floor) that are plumb and level, square and true.
21. Interior painting............           4            4            3
    Cleaning and preparation of all interior surfaces and applying paint
     in strict accordance with the paint manufacturer's instructions.
22. Exterior painting............           1            1            1
    Cleaning and preparation of all exterior surfaces and applying paint
     in strict accordance with the paint manufacturer's instructions.
23. Plumbing--complete fixtures..           4            4            3
    Subject to local codes and regulations the installation of a
     receptor or device which requires both a water supply connection
     and a discharge to the drainage system, such as water closets,
     lavatories, bathtubs or sinks. Also, the installation of an
     energized household appliance with plumbing connections, such as a
     clothes washer, water heater, dishwasher or garbage grinder.
24. Electrical--complete fixtures           1            1            1
    Subject to local codes and regulations the installation of the
     fixtures, the switches, and switch plates. This is usually done
     after the dry wall finish is applied.
25. Finish hardware..............           1            1            1
    The installation of all the visible, functional hardware in a house
     that has a finish appearance, including such features as hinges,
     locks, catches, pulls, knobs, and clothes hooks.
26. Gutters and downspouts.......           1            1            1

[[Page 230]]

 
    The installation of a shallow channel of wood, metal, or PVC
     (gutters) positioned just below and following along the eaves of
     the house for the purpose of collecting and diverting water from a
     roof to a vertical pipe (downspouts) used to carry rainwater from
     the roof to the ground by way of a splash block or into a drainage
     system.
27. Grading, paving, landscaping.           3            3            3
    Landscaping includes final grading, planting of shrubs and trees,
     and seeding or sodding of lawn areas. Final grading includes the
     best available routing of runoff water to assure that house and
     adjacent homes will not be endangered by the path of water runoff.
     The minimum slope should be 6 in 10[foot] or 5% from the
     foundation of the home. Paving includes both driveways and walks.
                                  --------------------------------------
        Total....................         100          100          100
------------------------------------------------------------------------



    Sec. Exhibit B-3 to Subpart I of Part 1944--Pre-Construction and 
                      Construction Phase Breakdown

I. General. This exhibit will be used by Farmers Home Administration 
          (FmHA) or its successor agency under Public Law 103-354 and 
          the Grantee in determining Grantee performance as required in 
          Sec.  1944.417(b) of this subpart.
II. Determining technical assistance (TA) cost per unit.
    A. Equivalent units are used to measure progress at any time during 
the period of the grant. It is necessary because self-help grantees have 
several groups of families in various stages of progress during the 
period of the grant. The following formula has been developed to provide 
a more accurate method of determining progress.

                                 Formula
------------------------------------------------------------------------
                                                      In percent--
                                               -------------------------
                Phase breakdown                   Value of
                                                 each phase   Cumulative
------------------------------------------------------------------------
Pre-construction:
  Phase I.....................................           10           10
  Phase II....................................           10           10
Construction:
  Phase III...................................           80       21-100
------------------------------------------------------------------------

    B. Using the Description of Phase Breakdown as a guide, the project 
staff selects the total percentage pertinent to the stage the self-help 
group is in and multiplies that percentage by the number of families 
(units) in the group. The result is the equivalent number of units 
completed. No credit may be given for Phase I, if the application is 
rejected. When this computation has been completed for each group that 
falls within Phases I-III, the total number of equivalent units is 
divided into the total grant funds expended to that date. The result is 
the TA cost per unit at that stage of the program's progress.
    C. The definition of pre-construction and construction phases 
described are follows:

                            Pre-Construction

    Phase I: Hold community meetings; conduct interviews; obtain house 
plans; prepare cost estimates; begin search for land; submit family 
applications to the lender; lender runs credit check; applications. 
Lender either approves or rejects.
    Phase II: Organize an association of section 502 Rural Housing 
eligible families; association conducts weekly meetings at which 
required lender forms are discussed and completed; house plans and land 
sites are selected; outside speakers explain and discuss taxes, 
insurance, how to keep a checking account, how interest is computed, 
home maintenance, decorating, and landscaping; etc.; completed loan 
dockets for each family are submitted to the lender. Family loan dockets 
are reviewed and recommendations made as to the loan amounts requested; 
the lender reviews family loan dockets; preliminary title search of each 
proposed building site is begun; requests loan check from Finance 
Office; when check arrives, final title search is made, loan closed, 
checking accounts opened, and construction begun.
    Construction: The grantee will utilize exhibit B-2 which outlines 27 
construction tasks to determine the percentage of completed construction 
activities.
    D. The computation of equivalent units and TA costs will be computed 
as follows:
    Exhibit C will be used for recording the following information and 
construction in this example which starts January 1.

                                 Step 1

    Both the grantee and FmHA or its successor agency under Public Law 
103-354 review the FmHA or its successor agency

[[Page 231]]

under Public Law 103-354 loan application records to determine the 
percentage of completion for each family in the pre-construction phase 
of the program. These are Phases I-III. Total these percentages to find 
the number of ``equivalent units'' (EUs) completed at that date during 
pre-construction. For example, if there are eight families in Group 2 
and all have completed the 20 percent phase of pre-construction, then 
there would be 1.6 EUs in the pre-construction phase of the program as 
of that date. Each phase must be completed before it is considered in 
the calculation.

                                 Step 2

    Refer to the records of construction progress for families in the 
construction Phase III. As of that date, the director totals the 
percentage of completion figures for each family as follows:

Askew...........................................................    0.45
Whited..........................................................    0.40
Martinez........................................................    0.40
Gonzalez........................................................    0.38
Sherry..........................................................    0.34
Duran...........................................................    0.33
Johnson.........................................................    0.13
Harvey..........................................................    0.31
                                                                 -------
  EUs...........................................................    2.92
 

    Total production in the construction phase is therefore 2.92 EUs as 
of that date.

                                 Step 3

    Add the pre-construction and construction subtotals together:

Pre-construction................................................    1.60
Construction....................................................    2.92
                                                                 -------
  Total EUs.....................................................    4.52
 

    This provides the total EUs of production during the first three 
months of operation. Steps 1, 2, and 3 will be used to complete items 7, 
8 and 9 of exhibit B of this subpart.

III. Preparation:
    Compile exhibit B of this subpart in an original and four copies. 
The exhibit will be signed by the TA Grantee. Submit the original and 
three copies of the exhibit quarterly to FmHA or its successor agency 
under Public Law 103-354 County Office on or before January 15, April 
15, July 15, and October 15, of each year for the quarters ending March 
31, June 30, September 30, and December 31 of each year. The District 
Director will keep the original and forward two copies to the State 
Office. The State Office will forward one copy to the National Office. 
The State Office will prepare information concerning TA grants closed 
within 30 days of the end of a quarter on the next quarterly report.



    Sec. Exhibit C to Subpart I of Part 1944--Amendment to Self-Help 
                  Technical Assistance Grant Agreement

    This Agreement dated, ____________ 19__
between_________________________________________________________________
a nonprofit corporation (``Grantee''), organized and operating under

________________________________________________________________________
(authorizing State Statute)

and the United States of America acting through the Farmers Home 
Administration, Department of Agriculture (``FmHA'') or its successor 
agency under Public Law 103-354, amends the ``Self-Help Technical 
Assistance Grant Agreement'' between the parties dated _________ 19__, 
(``Agreement'').
    The Agreement is amended by providing additional financial 
assistance in the amount of ____ to be made available by FmHA or its 
successor agency under Public Law 103-354 to Grantee pursuant to section 
523 of Title V of the Housing Act of 1949 for the purpose of assisting 
in providing a program of technical and supervisory assistance which 
will aid low-income families in carrying out mutual self-help housing 
efforts; or
    The Agreement is amended by changing the completion date specified 
in convenant 1 from ____ to ____ and by making the following attachments 
to this amendment: (List and identify proposal and any other documents 
pertinent to the grant.)
    Agreed to this _____ day of ______ 19__.

________________________________________________________________________
(Name of Grantee)

By______________________________________________________________________
(Signature)

________________________________________________________________________
(Title)

United States of America

By______________________________________________________________________
(Signature)

________________________________________________________________________
(Title)
Farmers Home Administration or its successor agency under Public Law 
103-354



Sec. Exhibit D to Subpart I of Part 1944--Self-Help Technical Assistance 
                     Grant Predevelopment Agreement

    This grant predevelopment agreement dated, _________ 19__, is 
between ____________
a nonprofit corporation (``Grantee''), organized and operating under 
____________
(authorizing State statute)


[[Page 232]]


and the United States of America acting through the Farmers Home 
Administration, Department of Agriculture (``FmHA'') or its successor 
agency under Public Law 103-354.
    In consideration of financial assistance in the amount of $___ 
(``Grant Funds'') to be made available by FmHA or its successor agency 
under Public Law 103-354 to Grantee under section 523 (b)(1)(A) of the 
Housing Act of 1949 to be used in (specify area to be served) ________ 
for the purpose of developing a program of technical and supervisory 
assistance which will aid low-income families in carrying out mutual 
self-help housing efforts, Grantee will provide such a program in 
accordance with the terms of this Agreement and FmHA or its successor 
agency under Public Law 103-354 regulations.
    Grant funds will be used for authorized purposes as contained in 
Sec.  1944.410(d) of 7 CFR part 1944, subpart I, as necessary, to 
develop a complete program for a self-help TA grant. This will include 
recruitment, screening, loan packaging and related activities for 
prospective self-help participants.
    Agreed to this _____ day of ______ 19__.

________________________________________________________________________

(Name of Grantee)

By______________________________________________________________________
(Signature)

________________________________________________________________________
(Title)

United States of America

By______________________________________________________________________
(Signature)

________________________________________________________________________
(Title)
Farmers Home Administration or its successor agency under Public Law 
103-354



  Sec. Exhibit E to Subpart I of Part 1944--Guidance for Recipients of 
  Self-Help Technical Assistance Grants (Section 523 of Housing Act of 
                                  1949)

    7 CFR part 1944, subpart I provides the specific details of this 
grant program. The following is a list of some functions of the grant 
recipients taken from this subpart. With the list are questions we 
request to be answered by the recipients to reduce the potential for 
fraud, waste, unauthorized use or mismanagement of these grant funds. We 
suggest the Board of Directors answer these questions every six months 
by conducting their own review. Paid staff should not be permitted to 
complete this evaluation.

               A. Family Labor Contribution
 
1. Does your organization maintain a list of each family      Yes     No
 and a running total of hours worked (when and on what
 activity)?...............................................
2. Are there records of discussions with participating        Yes     No
 families counselling them when the family contribution is
 falling behind?..........................................
3. Are there obstacles which prevent the family from          Yes     No
 performing the required tasks?...........................
 
                   B. Use of Grant Funds
 
1. Were grant funds used to pay salaries or other expenses    Yes     No
 of personnel not directly associated with this grant?....
2. Were grant funds used to pay for construction work for     Yes     No
 participating families?..................................
3. Were all purchases or rentals (item and cost) of office    Yes     No
 equipment authorized?....................................
4. Are all office expenses authorized by 7 CFR part 1944,     Yes     No
 subpart I?...............................................
5. Was a record of long distance telephone calls              Yes     No
 maintained and was that log and telephone checked?.......
6. Was all travel and mileage incurred for official           Yes     No
 business and properly authorized in advance?.............
7. Were mileage and per diem rates within authorized          Yes     No
 levels?..................................................
8. Were participating families charged for use of tools?..    Yes     No
9. Were grant funds expended to train grant personnel?....    Yes     No
10. Was training appropriate for the individual trainee?..    Yes     No
11. Were any technical or consultant services obtained for    Yes     No
 participating families?..................................
12. Were the provided technical or consultant services        Yes     No
 appropriate in type and cost?............................
 
               C. Financial Responsibilities
 
1. Does each invoice paid by the grant recipient match the    Yes     No
 purchase order?..........................................
2. Does each invoice paid by the borrower and FmHA or its     Yes     No
 successor agency under Public Law 103-354 match the
 purchase order?..........................................
3. Were purchases made from the appropriate vendors?......    Yes     No
4. Are the invoices and itemized statements totalled for      Yes     No
 materials purchased for individual families?.............
5. Is there a record of deposits and withdrawals to           Yes     No
 account for all loan funds?..............................
6. Are checks from grant funds signed by the Board            Yes     No
 Treasurer and Executive Director?........................

[[Page 233]]

 
7. Are grant funds deposited in an interest bearing           Yes     No
 account?.................................................
8. Are checks from loan funds prepared by the grant           Yes     No
 recipient for the borrower's and lender's signature?.....
9. Are checks from loan funds accompanied by accurate         Yes     No
 invoices?................................................
10. Are any borrower loan funds including interests,          Yes     No
 deposited in grantee accounts?...........................
11. Are checks from loan funds submitted to FmHA or its       Yes     No
 successor agency under Public Law 103-354 more often than
 once every 30 days?......................................
12. Is the reconciliation of bank statements for both         Yes     No
 grant and loan funds completed on a monthly basis?.......
13. If the person who issues the checks also reconciles       Yes     No
 them, does the Executive Director review this activity?..
14. Are materials purchased in bulk approved by the           Yes     No
 Executive Director?......................................
15. Was the amount of materials determined by both the        Yes     No
 Executive Director and construction staff?...............
16. Were any participating families consulted about the       Yes     No
 purchase of materials?...................................
17. Were savings accomplished by the bulk purchase method?    Yes     No
18. Did the Executive Director review the purchase order      Yes     No
 and the ultimate use of the materials?...................
19. Are materials covered by insurance when stored by         Yes     No
 grantee?.................................................
 
                       D. Reporting
 
1. Are ``Requests for Advance or Reimbursement'' made once    Yes     No
 monthly to the FmHA or its successor agency under Public
 Law 103-354 District Office?.............................
2. Has the grant recipient engaged a certified public         Yes     No
 Accountant (CPA) or CPA firm to review their operations
 on a regular basis: (Annually is preferable but every two
 years and at the end or the grant period are
 requirements)?...........................................
3. Are the quarterly evaluation reports submitted on time     Yes     No
 to the County Supervisor?................................
 

    What, if any, problems exist that need to be corrected for effective 
management of the grant project?

________________________________________________________________________
Date

________________________________________________________________________
President, Board of Directors

(Period covered by report ___)

                               Answer Key

    The following answers should help your organization in assessing its 
vulnerability to fraud, waste, and abuse. You should take actions to 
correct practices that now generate an answer different from the key.

 
                  Question                              Answer
 
A. 1.......................................  Yes
A. 2.......................................  Yes
A. 3.......................................  Yes
B. 1.......................................  No
B. 2.......................................  No
B. 3.......................................  Yes
B. 4.......................................  Yes
B. 5.......................................  Yes
B. 6.......................................  Yes
B. 7.......................................  Yes
B. 8.......................................  No
B. 9.......................................  Yes
B. 10......................................  Yes
B. 11......................................  Yes
B. 12......................................  Yes
C. 1.......................................  Yes
C. 2.......................................  Yes
C. 3.......................................  Yes
C. 4.......................................  Yes
C. 5.......................................  Yes
C. 6.......................................  Yes
C. 7.......................................  No
C. 8.......................................  Yes
C. 9.......................................  Yes
C. 10......................................  No
C. 11......................................  No
C. 12......................................  Yes
C. 13......................................  Yes
C. 14......................................  Yes
C. 15......................................  Yes
C. 16......................................  Yes
C. 17......................................  Yes
C. 18......................................  Yes
C. 19......................................  Yes
D. 1.......................................  Yes
D. 2.......................................  Yes
D. 3.......................................  Yes
 



Sec. Exhibit F to Subpart I of Part 1944--Site Option Loan to Technical 
                           Assistance Grantees

                              I. Objectives

    The objective of a Site Option (SO) loan under Section 523(b)(1)(B) 
of Title V of the Housing Act of 1949 is to enable technical assistance 
(TA) grantees to establish revolving fund accounts to obtain options on 
land needed to make sites available to families that will build their 
own homes by the self-help method. An SO loan will be considered only 
when sites cannot be made available by

[[Page 234]]

other means including a regular Rural Housing Site (RHS) loan.

                      II. Eligibility Requirements

    To be eligible for an SO loan, the applicant must be a TA grantee 
that is currently operating in a satisfactory manner under a TA grant 
agreement. If the SO loan applicant has applied for TA funds but is not 
already a TA grantee and it appears that the TA grant will be made, the 
SO loan may be approved but not closed until the TA grant is closed.

                           III. Loan Purposes

    Loans may be made only as necessary to enable eligible applicants to 
establish revolving accounts with which to obtain options on land that 
will be needed as building sites by self-help families participating in 
the TA self-help housing program. Loans will not be made to pay the full 
purchase price of land but only for the minimum amounts necessary to 
obtain an option from the seller. The option should be for as long as 
necessary but in no case should the option be for less than 90 days.

                             IV. Limitations

    (A) If the amount of an SO loan will exceed $10,000, the prior 
consent of the National Office shall be obtained before approval.
    (B) The amount of the SO loan should not exceed 15 percent of the 
purchase price of the land expected to be under option at any one time, 
unless a higher percent is authorized by the State Director when other 
land in not available or the particular area requires more down payment 
than elsewhere or similar circumstances exist.
    (C) Form FmHA or its successor agency under Public Law 103-354 440-
34, ``Option to Purchase Real Property,'' will be used without 
modification in all cases for obtaining options under this subpart.
    (D) The limitations of Sec.  1822.266(b) (1) and (2) of subpart F of 
part 1822 of this chapter (FmHA Instruction 444.8, paragraphs VI B (1) 
and (2)) concerning land purchase will apply to options purchased under 
this subpart.

                           V. Rates and Terms

    (A) Interest. Loans will be made at an interest rate of 3 percent.
    (B) Repayment period. Each SO loan will be repaid in one installment 
which will include the entire principal balance and accrued interest. 
The maximum repayment period for each SO loan will be the applicant's 
remaining TA grant funding period.
    (1) A shorter repayment period will be established if SO funds will 
not be needed for the entire TA grant funding period.
    (2) If a regular RHS loan is to be processed, the SO loan should be 
scheduled for repayment when RHS loan funds will be available to 
purchase the land and repay the amount of SO funds advanced on the 
option, unless SO loan funds will still be needed to purchase other 
options. Under no circumstances, however, will the repayment period 
exceed the applicant's remaining TA grant funding period.

                       VI. Processing Application

    (A) Form of application: The application for assistance will be in 
the form of a letter to the FmHA or its successor agency under Public 
Law 103-354 County Supervisor having jurisdiction over the area of the 
proposed site to be optioned. The letter will be signed by the applicant 
or its authorized representative and contain, as a minimum, the 
following information:
    (1) A copy of the proposed option that shows a legal description of 
the land, option price, purchase price, and terms of the option. If more 
than one site is to be purchased, a schedule of the proposed options 
should be included.
    (2) Information to verify that a regular RHS loan cannot be 
processed in time to secure the option.
    (3) Proposed method repayment of the SO loan.
    (4) Resolution from the applicant's governing body authorizing the 
application for an SO loan from FmHA or its successor agency under 
Public Law 103-354.
    (B) Responsibility of the County Supervisor. Upon receipt of an SO 
loan application, the County Supervisor will:
    (1) Determine whether the applicant is eligible. If the applicant is 
not eligible, or the loan cannot be made for other reasons, the 
application may be rejected by the County Supervisor with the 
concurrence of the District Director. The reasons for the rejection 
should be clearly stated and provided, in writing to the applicant. The 
applicant will have the right to have the decision reviewed following 
the procedure established in subpart B of part 1900 of this chapter.
    (2) Review and verify the accuracy of the information provided.
    (3) Make an inspection and a memorandum appraisal of each proposed 
site ``as is.'' The appraisal will include a narrative statement as to 
whether the site has been recently sold, verify that the seller is the 
owner of the property, and indicate whether the purchase price is 
acceptable based on the selling price of similar properties in the area.
    (4) Indicate whether or not it appears that, considering the 
location and cost of development, adequate building sites can be 
provided at reasonable costs.
    (5) If the option is for a tract of land on which 5 or more sites 
are proposed, the County Supervisor will forward to the District 
Director with recommendations as defined in Sec.  1924.119 of subpart C 
of part 1924 of this chapter.

[[Page 235]]

    (6) If approval is recommended, prepare and have the applicant 
execute Form FmHA or its successor agency under Public Law 103-354 1940-
1, ``Request for Obligation of Funds,'' for the amount needed. Copies of 
the form will be distributed as provided in the Forms Manual Insert 
(FMI).
    (7) Forward the SO loan application and the applicant's TA 
application or TA docket to the State Director. The submission will 
include the appraisal report and the County Supervisor's comments and 
recommendations.

          VII. Loan Approval Authority and State Office Actions

    The State Director is authorized to approve SO loans developed in 
accordance with this exhibit. The approval or disapproval of the loan 
will be handled in the same manner as provided in Sec.  1822.272 of 
subpart F of part 1822 of this chapter (FmHA Instruction 444.8, 
paragraph XII). SO loans will be established in Automated Multiple 
Housing Accounting System (AMAS) using Form RD 3560-51, ``Multiple 
Family Housing Obligation Fund Analysis''. The Issue loan/Grant checks 
transaction will be used to request a check for SO loans.

                           VIII. Loan Closing

    (A) General. Loan closing instructions will be provided by the 
Office of the General Counsel (OGC) to assure that the Promissory Note 
is properly completed and executed. The County Supervisor may then close 
the loan.
    (B) Security for the loan. The loan will be secured by a Promissory 
Note properly executed by the grantee using Form FmHA or its successor 
agency under Public Law 103-354 1940-16, ``Promissory Note.'' A lien on 
the optioned real estate will not be taken.
    (1) The ``kind of loan'' block on the note will read ``SO loan.''
    (2) The note will be modified to show that the only installment on 
the loan will be the final installment.
    (C) Loan is closed. The loan will be considered closed when the note 
is executed and the loan check delivered to the grantee.

             IX. Establishment of SO Loan Revolving Account

    (A) Supervised bank accounts will not be used for SO loans.
    (B) Grantee will deposit SO loan funds in a depository institution 
of its choice. The use of minority institutions is encouraged. Such 
funds will remain separate from any other account of the grantee and 
shall be established as an SO revolving account.
    (C) Checks drawn on the revolving account will be for the sole 
purpose of purchasing land options and must be signed by at least two 
authorized officials of the grantee who have been properly bonded in 
accordance with Sec.  1944.411 (e) and (g) of this subpart.
    (D) Grantees will not expend funds for any options until the site 
and the option form have been reviewed and approved by the County 
Supervisor.
    (1) SO funds will not be left unused in the revolving account in 
excess of 60 days.
    (2) If the funds are not used for the intended purpose within the 60 
days specified above, the unused portion will be refunded on the 
account.
    (E) When funds become available for repayment of the SO loan, such 
funds will be deposited in the revolving account for the purchase of 
additional site options if needed. If such funds are not needed to 
purchase more options, they will be applied on the SO loan.

                           X. Source of Funds

    SO loans will be funded from the self-help housing land development 
fund.

[55 FR 41833, Oct. 16, 1990, as amended at 69 FR 69105, Nov. 26, 2004; 
79 FR 76010, Dec. 19, 2014]

Subpart J [Reserved]



          Subpart K_Technical and Supervisory Assistance Grants

    Source: 44 FR 36891, June 22, 1979, unless otherwise noted.



Sec.  1944.501  General.

    (a) This subpart sets forth the policies and procedures for making 
grants under section 525(a) of the Housing Act of 1949, 42 U.S.C. 
1490e(a), to provide funds to eligible applicants to conduct programs of 
technical and supervisory assistance (TSA) for low-income rural 
residents to obtain and/or maintain occupancy of adequate housing. Any 
processing or servicing activity conducted pursuant to this subpart 
involving authorized assistance to Rural Development employees, members 
of their families, known close relatives, or business or close personal 
associates, is subject to the provisions of subpart D of part 1900 of 
this chapter. Applicants for this assistance are required to identify 
any known relationship or association with a Rural Development employee. 
This financial assistance may pay part or all of the cost of developing, 
conducting, administering, or coordinating effective and comprehensive 
programs of technical and supervisory assistance which will aid needy

[[Page 236]]

low-income individuals and families in benefiting from federal, state, 
and local programs in rural areas.
    (b) Rural Development will provide technical and supervisory grant 
assistance to applicants without discrimination because of race, color, 
religion, sex, national origin, age, marital status, or physical or 
mental handicap.

[44 FR 36891, June 22, 1979, as amended at 58 FR 228, Jan. 5, 1993]



Sec.  1944.502  Policy.

    (a) The policy of the Rural Development is to provide Technical and 
Supervisory Assistance to eligible applicants to do the following:
    (1) Provide homeownership and financial counseling to reduce both 
the potential for delinquency by loan applicants and the level of 
payment delinquency by present Rural Development housing loan borrowers; 
and
    (2) Facilitate the delivery of housing programs to serve the most 
needy low-income families in rural areas of greatest need for housing.
    (b) Rural Development intends to fund projects which include 
counseling and delivery of housing programs.
    (c) State Directors are given a strong role in the selection of 
grantees so this program can complement Rural Development's policies of 
targeting Rural Development resources to areas of greatest need within 
their States.
    (d) Rural Development expects grant recipients to implement a TSA 
program and not to use TSA funds to prepare housing plans and strategies 
except as necessary to accomplish the specific objectives of the TSA 
project.



Sec.  1944.503  Objectives.

    The objectives of the TSA Grant Program are to assist low-income 
rural families in obtaining adequate housing to meet their family's 
needs and/or to provide the necessary guidance to promote their 
continued occupancy of already adequate housing. These objectives will 
be accomplished through the establishment or support of housing delivery 
and counseling projects run by eligible applicants. This program is 
intended to make use of any available housing program which provides the 
low-income rural resident access to adequate rental properties or 
homeownership.



Sec. Sec.  1944.504-1944.505  [Reserved]



Sec.  1944.506  Definitions.

    References in this subpart to County, District, State, National and 
Finance Offices and to County Supervisor, District Director, State 
Director, and Administrator refer to Rural Development offices and 
officials and should be read as prefaced by Rural Development. Terms 
used in this subpart have the following meanings:
    (a) Adequate housing. A housing unit of adequate size and design to 
meet the specific needs of low-income families and the requirements 
governing the particular housing program providing the services or 
financial assistance.
    (b) Applicant or grantee. Any eligible organization which applies 
for or receives TSA funds under a grant agreement.
    (c) Grant agreement. The contract between Rural Development and the 
applicant which sets forth the terms and conditions under which TSA 
funds will be made available.
    (d) Low-income family. Any household, including those with one 
member, whose adjusted annual income, computed in accordance with 7 CFR 
part 3550, subpart B, does not exceed the maximum low-income limits 
specified in Appendix 9 of HB-1-3550 (available in any Rural Development 
office).
    (e) Organization. (1) Public or private nonprofit corporations, 
agencies, institutions, Indian tribes, and other associations.
    (2) A private nonprofit corporation with local representation from 
the area being served that is owned and controlled by private persons or 
interests and is organized and operated by private persons or interests 
for purposes other than making gains or profits for the corporation and 
is legally precluded from distributing any gains or profits to its 
members.
    (f) Rural area. The definition in 7 CFR part 3550 applies.
    (g) Sponsored applicant. An eligible applicant which has a 
commitment of financial and/or technical assistance to apply for the TSA 
program and to implement such a program from a state,

[[Page 237]]

county, municipality, or other governmental entity or public body.
    (h) Supervisory assistance. Any type of assistance to low-income 
families which will assist those families in meeting the eligibility 
requirements for, or the financial and managerial responsibilities of, 
homeownership or tenancy in an adequate housing unit. Such assistance 
must include, but is not limited to, the following activities:
    (1) Assisting individual Rural Development borrowers with financial 
problems to overcome delinquency and/or prevent foreclosure and 
assisting new low-income applicants to avoid financial problems through:
    (i) Financial and budget counseling including advice on debt levels, 
credit purchases, consumer and cost awareness, debt adjustment 
procedures, and availablity of other financial counseling services;
    (ii) Monitoring payment of taxes and insurance;
    (iii) Home maintenance and management; and
    (iv) Other counseling based on the needs of the low-income families.
    (2) Contracting and assisting low-income families in need of 
adequate housing by:
    (i) Implementing an organized outreach program using available media 
and personal contacts;
    (ii) Explaining available housing programs and alternatives to 
increase the awareness of low-income families and to educate the 
community as to the benefits which can accrue from improved housing;
    (iii) Assisting low-income families locate adequate housing;
    (iv) Providing construction supervision, training, and guidance to 
low-income families not involved in mutual self-help projects who are 
otherwise being assisted by the TSA project;
    (v) Organizing local public or private nonprofit groups willing to 
provide adequate housing for low-income families; and
    (vi) Providing assistance to families and organizations in 
processing housing loan and/or grant applications generated by the TSA 
program, including developing and packaging such applications for new 
construction, rehabilitation, or repair to serve low-income families.
    (i) Technical assistance. Any specific expertise necessary to carry 
out housing efforts by or for low-income families to improve the 
quantity and/or quality of housing available to meet their needs. Such 
assistance should be specifically related to the supervisory assistance 
provided by the project, and may include, as appropriate, the following 
activities:
    (1) Develop, or assist eligible applicants to develop, multi-housing 
loan and/or grant applications for new construction, rehabilitation, or 
repair to serve low-income families.
    (2) Market surveys, engineering studies, cost estimates, and 
feasibility studies related to applications for housing assistance to 
meet the specific needs of the low-income families assisted under the 
TSA program.

[44 FR 36891, June 22, 1979, as amended at 46 FR 61990, Dec. 21, 1981; 
50 FR 39967, Oct. 1, 1985; 51 FR 6393, Feb. 26, 1986; 59 FR 7193, Feb. 
15, 1994; 67 FR 78328, Dec. 24, 2002]



Sec. Sec.  1944.507-1944.509  [Reserved]



Sec.  1944.510  Applicant eligibility.

    To be eligible to receive a grant, the applicant must:
    (a) Be an organization as defined in Sec.  1944.506(e).
    (b) Have the financial, legal, administrative, and operational 
capacity to assume and carry out the responsibilities imposed by the 
grant agreement. To meet this requirement of actual capacity, it must 
either:
    (1) Have necessary background and experience with proven ability to 
perform responsibly in the field of low-income rural housing development 
and counseling, or other business management or administrative 
experience which indicates an ability to provide responsible technical 
and supervisory assistance; or
    (2) Be assisted by an organization which has such background 
experience and ability and which agrees in writing that it will provide, 
without charge, the assistance the applicant will need to carry out its 
responsibilities.
    (c) Legally obligate itself to administer TSA funds, provide an 
adequate accounting of the expenditure of such

[[Page 238]]

funds, and comply with the grant agreement and Rural Development 
regulations;
    (d) Demonstrate an understanding of the needs of low-income rural 
families;
    (e) Have the ability and willingness to work within established 
guidelines; and
    (f) If the applicant is engaged in or plans to become engaged in any 
other activities, it must be able to provide sufficient evidence and 
documentation that it has adequate resources, including financial 
resources, to carry on any other programs or activities to which it is 
committed without jeopardizing the success and effectiveness of its TSA 
project.



Sec.  1944.511  [Reserved]



Sec.  1944.512  Authorized representative of the applicant.

    Rural Development will deal only with authorized representatives 
designed by the applicant. The authorized representatives must have no 
pecuniary interest in any of the following as they would relate in any 
way to the TSA grant: the award of any engineering, architectural, 
management, administration, or construction contracts; purchase of the 
furnishings, fixtures or equipment; or purchase and/or development of 
land.

    Note: Rural Development has designated the District Office as the 
primary point of contact for all matters relating to the TSA program and 
as the office responsible for the administration of approved TSA 
projects.



Sec.  1944.513  [Reserved]



Sec.  1944.514  Comprehensive TSA grant projects.

    (a) The rural area to be covered by the TSA project must be 
realistically serviceable by the applicant in terms of funding 
resources, manpower, and distances and generally should be limited to 
one to four counties within the service area of one District Office.
    (b) Consideration of the following items may assist applicants 
develop TSA projects which meet the needs of low-income families in the 
proposed TSA service area: present population distribution, projected 
population growth or decline, the amount of inadequate housing, economic 
conditions, and trends of the rural areas concerned, and any other 
factors affecting the quantity and quality of housing currently 
available or planned for the area. Consideration must also be given to 
the needs and desires of the community; the financial and social 
condition of the individuals within the community; the needs of areas 
with a concentration of low-income minority families and the needs of 
Rural Development borrowers who are delinquent in their housing loan 
payments; the availability of supporting services such as water, 
sewerage, health and educational facilities, transportation, 
recreational and community facilities, and the types of housing 
facilities and services presently available or planned to which the low-
income families have or will have ready access.
    (c) Each TSA applicant should consider the alternatives available to 
provide needed housing facilities and services for the area. 
Consideration should also be given to the recommendations and services 
available from local, state, federal governmental entities, and from 
private agencies and individuals.
    (1) In no case should the TSA project deliberately conflict with or 
duplicate housing studies, plans, projects, or any other housing related 
activities in a rural area unless documentation shows these activities 
do not meet the needs of low-income families.
    (2) Each TSA project should be coordinated to the extent possible 
with any comprehensive or special purpose plans and projects affecting 
low-income housing in the area.
    (3) To the fullest extent possible, TSA projects should be 
coordinated with any housing-related activities currently being carried 
out in the area.
    (d) TSA applicants must coordinate their proposals with the 
appropriate County and District Offices to be fully familiar with the 
needs of those offices and of the low-income families currently served 
by the County Offices.



Sec.  1944.515  [Reserved]



Sec.  1944.516  Grant purposes.

    Grant funds are to be used for a housing delivery system and 
counseling program to include a comprehensive

[[Page 239]]

program of technical and supervisory assistance as set forth in the 
grant agreement and any other special conditions as required by Rural 
Development. Uses of grant funds may include, but are not limited to:
    (a) The development and implementation of a program of technical and 
supervisory assistance as defined in Sec.  1944.506 (h) and (i).
    (b) Payment of reasonable salaries of professional, technical, and 
clerical staff actively assisting in the delivery of the TSA project.
    (c) Payment of necessary and reasonable office expenses such as 
office supplies and office rental, office utilities, telephone services, 
and office equipment rental.
    (d) Payment of necessary and reasonable administrative costs such as 
workers' compensation, liability insurance, audit reports, travel to and 
attendance at Rural Development approved training sessions, and the 
employer's share of Social Security and health benefits. Payments to 
private retirement funds are prohibited unless prior written 
authorization is obtained from the Administrator.
    (e) Payment of reasonable fees for necessary training of grantee 
personnel. This may include the cost of travel and per diem to attend 
regional training sessions when authorized by the State Director.
    (f) Other reasonable travel and miscellaneous expenses necessary to 
accomplish the objectives of the specific TSA grant which were 
anticipated in the individual TSA grant proposal and which have been 
included as eligible expenses at the time of grant approval.



Sec.  1944.517  [Reserved]



Sec.  1944.518  Term of grant.

    TSA projects will be funded under one Grant Agreement for two years 
commencing on the date of execution of the Agreement by the State 
Director.



Sec.  1944.519  [Reserved]



Sec.  1944.520  Ineligible activities.

    (a) Grant funds may not be used for:
    (1) Acquisition, construction, repair, or rehabilitation of 
structures or acquisition of land, vehicles, or equipment.
    (2) Replacement of or substitution for any financial support which 
would be available from any other source.
    (3) Duplication of current services in conflict with the 
requirements of Sec.  1944.514(c).
    (4) Hiring personnel to perform construction.
    (5) Buying property of any kind from families receiving technical or 
supervisory assistance from the grantee under the terms of the TSA 
grant.
    (6) Paying for or reimbursing the grantee for any expenses or debts 
incurred before Rural Development executes the grant agreement.
    (7) Paying any debts, expenses, or costs which should be the 
responsibility of the individual families receiving technical and 
supervisory assistance.
    (8) Any type of political activities.
    (9) Other costs including contributions and donations, 
entertainment, fines and penalties, interest and other financial costs, 
legislative expenses and any excess of cost from other grant agreements.
    (b) Advice and assistance may be obtained from the National Office 
where ineligible costs are proposed as part of the TSA project or where 
a proposed cost appears ineligible.
    (c) The grantee may not charge fees or accept compensation or 
gratuities from TSA recipients for the grantee's assistance under this 
program.



Sec.  1944.521  [Reserved]



Sec.  1944.522  Equal opportunity requirements.

    The policies and regulations contained in subpart E of part 1901 of 
this chapter apply to grants made under this subpart.



Sec.  1944.523  Other administrative requirements.

    The following policies and regulations apply to grants made under 
this subpart:
    (a) The policies and regulations contained in subpart F of part 1901 
of this chapter regarding historical and archaeological properties.
    (b) The policies and regulations contained in subpart G of part 1940 
of this

[[Page 240]]

chapter regarding Environmental Assessments.

[44 FR 36891, June 22, 1979, as amended at 48 FR 29121, June 24, 1983; 
49 FR 3763, Jan. 30, 1984]



Sec.  1944.524  [Reserved]



Sec.  1944.525  Targeting of TSA funds to States.

    (a) The Administrator will determine, based on the most current 
available information (generally that information used to determine the 
allocation to States of Rural Development housing loan funds), those 
States with the highest degree of substandard housing and persons in 
poverty in rural areas eligible to receive Rural Development housing 
assistance. The Administrator will distribute a portion of the available 
funds for TSA to these States, leaving the balance available for 
national competition.
    (b) The Administrator will provide annual notice through a published 
Notice on the distribution of appropriated TSA funds, the number of 
preapplications to be submitted to the National Office from the State 
Offices, and the maximum grant amount per project.



Sec.  1944.526  Preapplication procedure.

    (a) Preapplication submission. (1) All applicants will file an 
original and two copies of SF 424.1, ``Application for Federal 
Assistance (For Non-construction),'' and supporting information detailed 
below with the appropriate District Office serving the proposed TSA 
area. A preapplication packet including SF 424.1 is available in all 
District and State Offices.
    (i) The applicant will provide informational copies of the 
preapplication to the County Supervisor(s) of the area to be served by 
the TSA project at the time of submittal to the appropriate District 
Office.
    (ii) If the TSA area encompasses more than one District Office, the 
preapplication will be filed at the District Office which serves the 
area in which the grantee will provide the greatest amount of TSA 
efforts. Additional informational copies of the preapplication will be 
sent by the applicant to the other affected District Office(s).
    (2) All preapplications shall be accompanied by the following 
information which will be used to determine the applicant's eligibility 
to undertake a TSA program and to determine whether the applicant might 
be funded.
    (i) A narrative presentation of the applicant's proposed TSA 
program, including:
    (A) The technical and supervisory assistance to be provided;
    (B) The time schedule for implementing the program;
    (C) The staffing pattern to execute the program and salary range for 
each position, existing and proposed;
    (D) The estimated number of low-income and low-income minority 
families the applicant will assist in obtaining affordable adequate 
housing;
    (E) The estimated number of Rural Development borrowers who are 
delinquent or being foreclosed that the applicant will assist in 
resolving their financial problems relating to their delinquency;
    (F) The estimated number of households which will be assisted in 
obtaining adequate housing in the TSA area through new construction and/
or rehabilitation;
    (G) Annual estimated budget for each of the two years based on the 
financial needs to accomplish the objectives outlined in the proposal. 
The budget should include proposed direct and indirect costs for 
personnel, fringe benefits, travel, equipment, supplies, contracts, and 
other costs categories, detailing those costs for which the grantee 
proposes to use the TSA grant separately from non-TSA resources, if any;
    (H) The accounting system to be used;
    (I) The method of evaluation proposed to be used by the applicant to 
determine the effectiveness of its program;
    (J) The sources and estimated amounts of other financial resources 
to be obtained and used by the applicant for both TSA activities and 
housing development and/or supporting facilities; and
    (K) Any other information necessary to explain the manner of 
delivering the TSA assistance proposed.

[[Page 241]]

    (ii) Complete information about the applicant's previous experience 
and capacity to carry out the objectives of the proposed TSA program;
    (iii) Evidence of the applicant's legal existence, including, in the 
case of a private nonprofit organization, a copy of, or an accurate 
reference to, the specific provisions of State law under which the 
applicant is organized; a certified copy of the applicant's Articles of 
Incorporation and Bylaws or other evidence of corporate existence; 
certificate of incorporation for other than public bodies; evidence of 
good standing from the State when the corporation has been in existence 
one year or more; the names and addresses of the applicant's members, 
directors, and officers; and, if another organization is a member of the 
applicant-organization, its name, address, and principal business.
    (iv) For a private nonprofit entity, a current financial statement 
dated and signed by an authorized officer of the entity showing the 
amounts and specific nature of assets and liabilities together with 
information on the repayment schedule and status of any debt(s) owed by 
the applicant. If the applicant is an organization being assisted by 
another private nonprofit organization, the same type of financial 
statement should also be provided by that organization.
    (v) A brief narrative statement which includes information about the 
area to be served and the need for improved housing (including both 
percentage and actual number of both low-income and low-income minority 
families and substandard housing), the need for the type of technical 
and supervisory assistance being proposed, the method of evaluation to 
be use by the applicant in determining the effectiveness of its efforts 
(as related to paragraph (a)(2)(i) of this section), and any other 
information necessary to specifically address the selection criteria in 
Sec.  1944.529.
    (vi) A list of other activities the applicant is engaged in and 
expects to continue and a statement as to any other funding and whether 
it will have sufficient funds to assure continued operation of the other 
activities for at least the period of the TSA grant agreement.
    (3) An applicant should submit written statements from the county, 
parish, or township governments of the area affected that the project is 
beneficial and does not duplicate current activities. If the local 
governmental units will not provide such statements, the applicant will 
prepare and include with its preapplication a summary of its analysis of 
alternatives considered under Sec.  1944.514(c). However, Indian 
nonprofit organization applicants should obtain the written concurrence 
of the Tribal governing body in lieu of the concurrence of the county 
governments.
    (4) Sponsored applicants should submit a written commitment for 
financial and/or technical assistance from their sponsoring entity.
    (5) An original and one copy of Form RD 1940-20, ``Request for 
Environmental Information.''
    (b) District Office processing of preapplications. (1) The District 
Director with whom the preapplication is filed will review the 
preapplication, SF 424.1, and any other supporting information from the 
applicant. The District Director will also:
    (i) Complete any required environmental review procedures as 
specified in subpart G of part 1940 of this chapter and attach to the 
application.
    (ii) Prepare a review of the project in accordance with subpart F of 
part 1901 of this chapter and attach it to the preapplication.
    (2) All District Directors and County Supervisors receiving 
informational copies of the preapplication should submit their comments 
within five working days to the District Director with whom the 
preapplication if filed.
    (3) The original and one copy of the preapplication, together with 
the District Director's written comments and recommendations, reflecting 
the criteria used in Sec.  1944.529 and exhibit C of this subpart, will 
be forwarded to the State Director within ten working days of receipt of 
the preapplication.
    (c) State Office processing of preapplications. (1) Upon receipt of 
a preapplication, the State Office will review and evaluate the 
preapplication

[[Page 242]]

and accompanying documents in accordance with the project selection 
criteria of Sec.  1944.529 and exhibit B of this subpart. The State 
Office will also:
    (i) Make a determination on Form RD 1940-21, Form RD 1940-22 or 
Class II Environmental Assessment in accordance with subpart G of part 
1940 of this chapter.
    (ii) Prepare an historical and archaeological assessment in 
accordance with Sec.  1901.255 (b) and (c) of subpart F of part 1901 of 
this chapter.
    (2) Within 30 days of the closing date for receipt of 
preapplications as published in the Federal Register, the State Director 
will forward to the National Office the original preapplication(s) and 
supporting documents of the selected applicant(s), including any 
comments received in accordance with 2 CFR part 200 as adopted by USDA 
through 2 CFR part 400. See RD Instruction 1970-I available in any Rural 
Development Office and the comments and recommendations of the County 
Office(s), District Office(s), and the State Office. The State Office 
will submit the preapplication(s) in accordance with the annual notice 
provided for by Sec.  1944.525 (b).
    (3) Concurrently the State Office will send a copy of the selected 
applicant's(s') SF 424.1 and relevant documents to the Regional Office 
of the General Counsel (OGC) requesting a legal determination be made of 
the applicant's legal existence and authority to conduct the proposed 
program of technical and supervisory assistance.
    (4) The State Office will notify other applicants that their 
preapplications will not selected and advise them of their appeal rights 
under subpart B of part 1900 of this chapter.
    (d) National Office processing of preapplications. (1) 
Preapplications for this program from those States targeted under Sec.  
1944.525 will be reviewed by the National Office for completeness and 
compliance with this subpart. If a grant is recommended, the National 
Office will return the preapplication(s) with any comments and 
recommendations to the State Office and advise that office to proceed 
with the issuance of Form AD-622, ``Notice of Preapplication Review 
Action,'' and to request the applicant to prepare SF 424.1 for 
submission to the District Office. If a grant is not recommended, the 
National Office will advise the State Office of action to take.
    (2) Preapplications from States which are not targeted in accordance 
with Sec.  1944.525 will be reviewed for completeness and compliance 
with this subpart and then evaluated in accordance with the project 
selection criteria of Sec.  1944.529. Those preapplications which are 
selected, and for which funds are available, will be returned to the 
appropriate State Office with any National Office comments and 
recommendations. The State Office will be advised to proceed with the 
issuance of SF 424.1 and to request the applicant to prepare Form AD-623 
for submission to the District Office as detailed in Sec.  1944.531.
    (3) Those preapplications for which funds are not available will be 
returned to the appropriate State Office which will notify each 
applicant and advise the applicant of its appeal rights under subpart B 
of part 1900 of this chapter.
    (4) State Directors will be advised of the National Office's action 
on their selected preapplication within 30 days of receipt of all 
preapplications.

[47 FR 40400, Sept. 14, 1982, as amended at 48 FR 29121, June 24, 1983; 
49 FR 3763, Jan. 30, 1984; 55 FR 13503, 13504, Apr. 11, 1990; 55 FR 
50081, Dec. 4, 1990; 76 FR 80730, Dec. 27, 2011; 79 FR 76010, Dec. 19, 
2014]



Sec.  1944.527  [Reserved]



Sec.  1944.528  Preapplication submission deadline.

    Dates governing the review and selection of TSA grant 
preapplications will be published annually in the Federal Register. 
Preapplications received after that time will not be considered for 
funding. For use of fiscal year 1979 funds, the deadline for submission 
of preapplications will be 45 calendar days from date of publication of 
final regulations.



Sec.  1944.529  Project selection.

    (a) Projects must meet the following criteria:
    (1) Provide a program of supervisory assistance as defined in Sec.  
1944.506(h), and

[[Page 243]]

    (2) Serve areas with a concentration of substandard housing and low-
income and low-income minority households.
    (b) In addition to the items listed in paragraph (a) of this 
section, the following criteria will be considered in the selection of 
grant recipients:
    (1) The extent to which the project serves areas with concentrations 
of Rural Development single family housing loan borrowers who are 
delinquent in their housing loan payments and/or threatened with 
foreclosure.
    (2) The capability and past performance demonstrated by the 
applicant in administering its programs.
    (3) The effectiveness of the current efforts by the applicant to 
assist low-income families in obtaining adequate housing.
    (4) The extent to which the project will provide or increase the 
delivery of housing resources to low-income and low-income minority 
families in the area who are not currently occupying adequate housing.
    (5) The services the applicant will provide that are not presently 
available to assist low-income families in obtaining or maintaining 
occupancy of adequate housing and the extent of duplication of technical 
and supervisory assistance activities currently provided for low-income 
families.
    (6) The extent of citizen and local government participation and 
involvement in the development of the preapplication and project.
    (7) The extent of planned coordination with other Federal, State, or 
local technical and/or supervisory assistance programs.
    (8) The extent to which the project will make use of other financial 
and contributions-in-kind resources for both technical and supervisory 
assistance and housing development and supporting facilities.
    (9) Any comments received in accordance with 2 CFR part 200 as 
adopted by USDA through 2 CFR part 400. See RD Instruction 1970-I, 
available in any Rural Development Office.
    (10) The extent to which the project will be cost effective, 
including but not limited to the ratio of personnel to be hired by the 
applicant to the cost of the project, the cost, both direct and 
indirect, per person benefiting from the project, and the expected 
benefits to low-income families from the project.
    (11) The extent to which the proposed staff and salary ranges, 
including qualifications, experience, proposed hiring schedule and 
availability of any prospective employees, will meet the objectives of 
the proposed TSA program.
    (12) The anticipated capacity of the applicant to implement the 
proposed time schedule for starting and completing the TSA program and 
each phase thereof.
    (13) The adequacy of the records and practices, including personnel 
procedures and practices, that will be established and maintained by the 
applicant during the term of the agreement.
    (c) Among the projects proposed by private nonprofit entities, 
preference will be given to sponsored applicants.

[47 FR 40400, Sept. 14, 1982, as amended at 48 FR 29121, June 24, 1983; 
76 FR 80731, Dec. 27, 2011; 79 FR 76011, Dec. 19, 2014]



Sec.  1944.530  [Reserved]



Sec.  1944.531  Applications submission.

    (a) Upon notification that the applicant has been tentatively 
selected for funding, the State Office will forward to the applicant a 
signed Form AD-622 and provide SF 424.1 with instructions to the 
applicant for preparation of an application.
    (b) Upon receipt of Form AD-622, the applicant will submit an 
application in an original and 2 copies on Form SF 424.1, and provide 
whatever additional information is requested to the District Office 
within 30 days.
    (c) Upon receipt of an application on SF 424.1 by the District 
Office, a docket shall be assembled which will include the following:
    (1) Form SF 424.1 and the information submitted in accordance with 
Sec.  1944.526(a)(2).
    (2) Form AD-622.
    (3) Any comments received in accordance with 2 CFR part 200 as 
adopted by USDA through 2 CFR part 400. See RD Instruction 1970-I, 
available in any Rural Development Office.
    (4) SF 424.1.
    (5) OGC legal determination made pursuant to Sec.  1944.526(c)(3).
    (6) Grant Agreement.

[[Page 244]]

    (7) Form RD 1940-1, ``Request for Obligation of Funds.''
    (8) Form RD 400-1, ``Equal Opportunity Agreement.''
    (9) Form RD 400-4, ``Assurance Agreement.''
    (10) Form RD 1940-20, ``Request for Environmental Information.''
    (11) Form RD 1940-22, ``Environmental Checklist for Categorical 
Exclusions,'' Form RD 1940-21, ``Environmental Assessment for Class I 
Actions'' or exhibit H, subpart G of part 1940 entitled, Environmental 
Assessment for Class II Actions.
    (12) The historical and archaeological assessment.
    (13) The detailed budget for the agreement period based upon the 
needs outlined in the proposal and the comments and recommendations by 
Rural Development.

[47 FR 40400, Sept. 14, 1982, as amended at 48 FR 29121, June 24, 1983; 
49 FR 3763, Jan. 30, 1984; 55 FR 13503, 13504, Apr. 11, 1990; 76 FR 
80731, Dec. 27, 2011; 79 FR 76011, Dec. 19, 2014]



Sec.  1944.532  [Reserved]



Sec.  1944.533  Grant approval and announcement.

    Grant approval and announcement will be accomplished under the 
following procedure. The Administrator may modify this section if 
necessary to obligate funds in a timely and efficient manner.
    (a) The District Office will review the docket to determine whether 
the application complies with these regulations and is consistent with 
the information and supporting documents submitted with the 
preapplication and any comments and recommendations of the State and 
National Offices.
    (b) If major problems occur during the development of the docket, 
the District Office will call upon the State Office for assistance.
    (c) If a grant is recommended, Form RD 1940-1 and the Grant 
Agreement will be prepared by the District Office and forwarded to the 
applicant for signature as authorized in its authorizing resolution. 
Exhibit A, Grant Agreement, is a part of these regulations.
    (d) When Form RD 1940-1 and the Grant Agreement are received from 
the applicant and signed by the applicant, the docket will be forwarded 
to the State Director.
    (e) Exhibit A to RD Instruction 2015-C (available in any FmHA or its 
successor agency under Public Law 103-354 office) will be prepared and 
sent to the Director, Legislative and Public Affairs Staff (LAPAS), in 
the Rural Development National Office.
    (f) If the State Director approves the project, the following 
actions will be taken in the order listed:
    (1) The State Director, or the State Director's designee, will 
telephone the Finance Office Check Request Station requesting that grant 
funds for a particular project be obligated. Immediately after 
contacting the Finance Office, the requesting official will furnish the 
requesting office's security identification code. Failure to furnish the 
security code will result in the rejection of the request for 
obligation. After the security code is furnished, the required 
information from Form RD 1940-1 will be furnished to the Finance Office. 
Upon receipt of the telephone request for obligation of funds, the 
Finance Office will record all information necessary to process the 
request for obligation in addition to the date and time of the request.
    (2) The individual making the request will record the date and time 
of the request and sign section 37 of Form RD 1940-1.
    (i) The Finance Office will notify the State Office by telephone 
when funds are reserved and of the date of obligation. If funds cannot 
be reserved for a project, the Finance Office will notify the State 
Office that funds are not available. The obligation date will be the 
date the request for obligation is processed.
    (ii) The Finance Office will terminally process telephone obligation 
requests. Those requests received prior to 2:30 p.m. Central Time will 
be processed on the date of the request. Those requests received after 
2:30 p.m., to the extent possible, will be processed on the day 
received; however, there may be instances where the obligation will be 
processed on the next working day.
    (iii) The Finance Office will mail Form RD 440-57, ``Acknowledgement 
of Obligated Funds/Check Request,'' to

[[Page 245]]

the State Director, confirming the reservation of funds with the 
obligation date inserted as required by Item 9 on the Forms Manual 
Insert (FMI) for Form RD 440-57.
    (iv) Form RD 1940-1 will not be mailed to the Finance Office.
    (3) The State Director will notify the Director of Information in 
the National Office with a recommendation that the project announcement 
be released.
    (4) An executed form RD 1940-1 will be sent to the applicant along 
with an executed copy of the Grant Agreement and scope of work 6 working 
days from the date funds are obligated.
    (i) The actual date of applicant notification will be entered on the 
original of Form RD 1940-1 and the original of the form will be included 
as a permanent part of the file.
    (ii) Standard Form 270, ``Request for Advance or Reimbursement,'' 
will be sent to the applicant for completion and returned to Rural 
Development.
    (5) If it is determined that a project will not be funded or if 
major changes in the scope of the project are made after release of the 
approval announcement, the State Director will notify the Administrator 
and the Director, Legislative Affairs and Public Information Staff 
(LAPAS) by telephone or electronic mail, giving the reasons for such 
action. The Director, LAPAS, will inform all parties who were notified 
by the project announcement if the project will not be funded or of 
major changes in the project using the procedure similar to the 
announcement process. Form RD 1940-10, ``Cancellation of U.S. Treasury 
Check and/or Obligation,'' will not be submitted to the Finance Office 
until five working days after notifying the Administrator and the 
Director, LAPAS.
    (6) Upon receipt from the grantee of a properly completed SF-270, 
Form RD 440-57 will be completed and the check request will be called to 
the Finance Office Check Request Station in accordance with the FMI for 
Form RD 440-57.

[44 FR 36891, June 22, 1979, as amended at 47 FR 36415, Aug. 20, 1982; 
48 FR 30946, July 6, 1983; 55 FR 13504, Apr. 11, 1990; 79 FR 55967, 
Sept. 18, 2014]



Sec.  1944.534  [Reserved]



Sec.  1944.535  Cancellation of an approved grant.

    (a) The District Director will prepare Form RD 1940-10, 
``Cancellation of U.S. Treasury Check and/or Obligation,'' in an 
original and two copies (three copies if the technical and supervisory 
assistance (TSA) check has been received in the District Office from the 
Disbursing Office). Form RD 1940-10 will be sent to the State Director 
(original and two copies with the check if the Treasury check is being 
canceled) with the reasons for requesting cancellation.
    (b) If the State Director approves the request for cancellation, he/
she will forward the original request for cancellation (original and one 
copy of Form RD 1940-10 with the check if the Treasury check is being 
canceled) to the Finance Office. If the TSA check is received in the 
District Office, the District Director will return it to the Finance 
Office with an original and one copy of Form RD 1940-10.
    (c) The District Director will notify the applicant of the 
cancellation and, unless the applicant requested the cancellation, its 
right to appeal in accordance with the Rural Development Appeal 
Procedure contained in subpart B of part 1900 of this chapter.

[44 FR 36891, June 22, 1979, as amended at 47 FR 36415, Aug. 20, 1982]



Sec.  1944.536  Grant closing.

    Closing is the process by which Rural Development determines that 
applicable administrative actions have been completed and the Grant 
Agreement is signed. The Grant Agreement (Exhibit A) will be executed by 
the State Director at the time the Form RD 1940-1 and Grant Agreement is 
sent to the Grantee in accordance with Sec.  1944.533 (f)(4). An 
executed original of the Grant Agreement shall be sent to the District 
Director and one copy to the grantee.

[44 FR 36891, June 22, 1979, as amended at 55 FR 13504, Apr. 11, 1990]



Sec.  1944.537  [Reserved]



Sec.  1944.538  Extending and revising grant agreements.

    (a) All requests extending the original grant agreement or revising 
the

[[Page 246]]

TSA program must be in writing. Such requests will be processed through 
the District Director. Any such requests will be processed in accordance 
with the processing procedure specified in Sec.  1944.526 (b) and (c) of 
this subpart. The State Office will respond to the applicant within 30 
days of receipt of the request in the State Office.
    (b) An extension of a grant beyond the two year term may be granted 
by the State Director when:
    (1) There are grant funds remaining and the grantee requests an 
extension at the end of the grant period,
    (2) The grantee has demonstrated its ability to conduct a 
comprehensive program of technical and supervisory assistance in 
accordance with the terms of its grant agreement and in a manner 
satisfactory to Rural Development,
    (3) The grantee is likely to complete the goals outlined in the 
initial proposal,
    (4) There is an unmet need to continue the delivery of the technical 
and supervisory assistance being provided by the grantee, and
    (5) The District Director recommends continuation of the grant until 
the grantee has expended all of the remaining grant funds.
    (c) Upon approval of the extension, the State Director will 
authorize the District Director to amend the ending date of the grant 
agreement and revise the budgets, if necessary, on behalf of the 
Government.
    (d) If the grant agreement must be revised and amended other than by 
extension, including any changes in the scope and objectives of the TSA 
program, the grantee will submit a revised budget and TSA program 
together with any information necessary to justify its requests. Such 
requests will be submitted to the State Director through the District 
Director.
    (e) The State Office will advise the National Office of all requests 
to extend or modify the original grant agreement. Prior concurrence of 
the National Office is not required unless the State Director so 
desires, in which case the State Director will advise the applicant that 
the request has been forwarded to the National Office for concurrence. 
The State Director's recommendation will accompany such requests.
    (f) Exhibit D to this subpart shall be executed upon approval of an 
extension of the grant period, or significant change in either the 
project budget or the objectives of the approved technical and 
supervisory activities.
    (g) If extension or modification is not approved, the State Office 
will notify the applicant in writing of the decision and advise the 
applicant of the appeal procedures under subpart B of part 1900 of this 
chapter.



Sec.  1944.539  [Reserved]



Sec.  1944.540  Requesting TSA checks.

    (a) The initial TSA check may cover the applicant's needs for the 
first calendar month. If the first calendar month is a partial month, 
the check will cover the needs for the partial month and the next whole 
month.
    (b) The initial advance of TSA grant funds may not be requested 
simultaneously with the request for obligation of TSA grant funds. The 
initial advance must be requested on Form RD 440-57 in accordance with 
the FMI after it has been received from the Finance Office indicating 
that funds have been obligated.
    (c) All advances will be requested only after receipt of Standard 
Form 270 from the grantee. The amount requested must be in accordance 
with the detailed budget, including amendments, as approved by Rural 
Development. Standard Form 270 will not be submitted more frequently 
than once every 30 days. In no case will additional funds be advanced if 
the grantee fails to submit required reports or is in violation of the 
grant agreement.



Sec.  1944.541  Reporting requirements.

    (a) Standard Form 269, ``Financial Status Report,'' and a project 
performance report will be required of all grantees on a quarterly 
basis. All grantees shall submit an original and two copies of these 
reports to the District Director. The project performance reports will 
be submitted not later than January 15, April 15, July 15, and October 
15 of each year.
    (b) As part of the grantee's preapplication submission required by

[[Page 247]]

Sec.  1944.526(a)(2)(i), the grantee established the objectives of its 
TSA program including the estimated number of low-income families to be 
assisted by the TSA program and established its method of evaluation to 
determine the effectiveness of its program. The project performance 
report should relate the activities during the report period to the 
project's objectives and analyze the effectiveness of the program. 
Accordingly, the report should include, but need not be limited to the 
following:
    (1) A comparison of actual accomplishments to the objectives 
established for that period, including:
    (i) The number of low-income families assisted in improving their 
housing conditions or in obtaining affordable adequate housing.
    (ii) The number of Rural Development borrowers who were delinquent 
or being foreclosed who were assisted in resolving their financial 
problems.
    (iii) The number of households assisted in obtaining adequate 
housing by the TSA program through new construction and/or 
rehabilitation.
    (2) Reasons why, if established objectives are not met.
    (3) Problems, delays, or adverse conditions which will materially 
affect attainment of the TSA grant objectives, prevent the meeting of 
time schedules or objectives, or preclude the attainment of project work 
elements during established time periods. This disclosure shall be 
accompanied by a statement of the action taken or contemplated and any 
Federal assistance needed to resolve the situation.
    (4) Objectives established for the next reporting period, 
sufficiently detailed to identify the type of assistance to be provided, 
the number and type of families to be assisted, etc.
    (c) These reports will be reviewed by the District Director to 
determine satisfactory progress. The District Director will work with 
the grantee to resolve any problems. The District Director will forward 
the original and one copy of the reports with any comments and 
recommendations to the State Director within ten working days of 
receipt.
    (d) The State Director will review the reports, comments, and 
recommendations forwarded by the District Director within five working 
days of receipt.
    (1) If the reports indicate satisfactory progress, the State 
Director will forward the original to the National Office with any 
comments or suggestions and return the remaining copy to the grantee 
through the District Director with a copy of the comments or 
recommendations.
    (2) If the reports indicate unsatisfactory progress, the State 
Director will recommend appropriate action to resolve the indicated 
problem(s). The State Director has the discretion to not authorize 
further advances where the progress of the project is unsatisfactory. 
The State Director will notify the grantee through the District Director 
of a decision not to authorize further advances and advise the grantee 
of its appeal rights under subpart B of part 1900 of this chapter.
    (3) A copy of the memorandum returning the unsatisfactory reports 
will be forwarded to the National Office together with the State 
Director's decision, comments and recommendations, if appropriate.
    (e) The grantee will complete a final Standard Form 269 and a final 
performance report upon termination or expiration of the grant 
agreement.



Sec.  1944.542  [Reserved]



Sec.  1944.543  Grant monitoring.

    Each grant will be monitored by Rural Development to ensure that the 
grantee is complying with the terms of the grant and that the TSA 
project activity is completed as approved. Ordinarily, this will involve 
a review of quarterly and final reports by Rural Development and review 
by the appropriate District Director.



Sec.  1944.544  [Reserved]



Sec.  1944.545  Additional grants.

    An additional grant may be made to an applicant that has previously 
received a TSA grant and has achieved or nearly achieved the goals 
established for the previous grant by submitting a

[[Page 248]]

new proposal for TSA funds. The additional grant application will be 
processed as if it were an initial application. Upon approval, a new 
grant agreement will be required and the grant will be coded as an 
initial grant on Form RD 1940-1.



Sec.  1944.546  [Reserved]



Sec.  1944.547  Management assistance.

    The District Director will see that each TSA grantee receives 
management assistance to help achieve a successful program.
    (a) TSA employees who will be contacting and assisting families will 
receive training in packaging single family housing and Rural Rental 
Housing loans when, or very shortly after, they are hired so that they 
can work effectively.
    (b) TSA employees who will provide counseling, outreach, and other 
technical and supervisory assistance will receive training on Rural 
Development policies, procedures, and requirements appropriate to their 
positions and the type of assistance the grantee will provide at the 
outset of the grant.
    (c) Training will be provided by FmHA or its successor agency under 
Public Law 103-354 employees and/or outside sources approved by Rural 
Development when the technical and supervisory assistance involves rural 
housing programs other than Rural Development programs. Appropriate 
training of TSA employees should be anticipated during the planning 
stages of the grant and the reasonable cost of such training included in 
the budget.
    (d) The District Director, in cooperation with the appropriate 
County Supervisor(s), should coordinate the management assistance given 
to the TSA grantee in a manner which is timely and effective. This will 
require periodic meetings with the grantee to discuss problems being 
encountered and offer assistance in solving these problems; to discuss 
the budget, the effectiveness of the grant, and any other unusual 
circumstances affecting delivery of the proposed TSA services; to keep 
the grantee aware of procedural and policy changes, availability of 
funds, etc.; and to discuss any other matters affecting the availability 
of housing opportunities for low-income families.
    (e) The District Director will advise the grantee of the options 
available to bring the delinquent borrowers' accounts current and advise 
the grantee that the appropriate County Supervisor retains all approval 
authority for any resolution of the delinquent accounts and all other 
authority currently available to remedy delinquent accounts.



Sec.  1944.548  Counseling consent by Rural Development single family
housing borrowers.

    (a) Subsequent to execution of the TSA grant agreement, the County 
Supervisor(s) serving the TSA project area will contact the delinquent 
Rural Development single family housing borrowers who appear to be in 
need of supervisory assistance as defined in Sec.  1944.506(h)(1). Such 
contact will indicate the availability of the counseling services of the 
grantee and solicit the borrower's participation in the program. Exhibit 
E should be used in contacting and/or discussing counseling with the 
borrowers.
    (b) Upon indication of the borrower's willingness to participate in 
the program by his or her signature on exhibit E or similar letter or 
statement, the County Supervisor will make available to the grantee (at 
no cost) the borrower's Rural Development loan history including the 
following information:
    (1) Name, address, and telephone number;
    (2) Status of the account including the amount of the loan, the 
repayment schedule, and the amount of the delinquency; and
    (3) Other information needed for counseling purposes which may be 
provided in accordance with RD Instruction 2018-F.



Sec.  1944.549  Grant evaluation, closeout, suspension, and termination.

    (a) Grant evaluation will be an ongoing activity performed by both 
the grantee and Rural Development. The grantee will perform self-
evaluations by preparing periodic project performance reports in 
accordance with Sec.  1944.541. Rural Development will also

[[Page 249]]

review all reports prepared and submitted by the grantee in accordance 
with the grant agreement and this part.
    (b) Within forty-five (45) days after the grant ending date, the 
grantee will complete closeout procedures as specified in the grant 
agreement.
    (c) The grant can also be terminated before the grant ending date 
for the causes specified in the grant agreement. No further grant funds 
will be disbursed when grant suspension or termination procedures have 
been initiated in accordance with the grant agreement.



Sec.  1944.550  [Reserved]



Sec. Exhibit A to Subpart K of Part 1944--Grant Agreement--Technical and 
                         Supervisory Assistance

    This Agreement dated _____ is between ____________ (name), 
____________ (address), (Grantee) and the United States of America 
acting through the Farmers Home Administration (Grantor or FmHA) or its 
successor agency under Public Law 103-354. The Grantor agrees to grant 
to Grantee a sum not to exceed $____ subject to the terms and conditions 
established by the Grantor: Provided, however, That the proportionate 
share of any grant funds actually advanced and not needed for grant 
purposes shall be returned immediately to the Grantor. The Grantor may 
terminate the grant in whole, or in part, at any time before the date of 
completion, whenever it is determined that the Grantee has failed to 
comply with the conditions of the grant. The grantee may appeal this 
decision in accordance with the FmHA or its successor agency under 
Public Law 103-354 Appeal Procedure contained in subpart B of part 1900 
of this chapter. In consideration of said grant by Grantor to Grantee, 
to be made pursuant to Section 525(a) of the Housing Act of 1949 for the 
purpose of providing funds to eligible nonprofit applicants (grantees) 
to pay part or all of the cost of developing, conducting, administering, 
or coordinating comprehensive programs of technical and supervisory 
assistance (TSA) which will aid needy low-income individuals and 
families in benefiting from Federal, State and local housing programs in 
rural areas, the Grantee will provide such a program in accordance with 
the terms of this agreement and applicable Farmers Home Administration 
(FmHA) or its successor agency under Public Law 103-354 regulations.

                          Part A--Definitions:

    1. Beginning date means the date when work under this grant will 
commence. Such date is set forth in paragraph 2 of part B of this 
Agreement.
    2. Ending date means the date when all work under this agreement is 
scheduled to be completed. It is also the latest date grant funds will 
be provided under this agreement, without an approved extension. Such 
date is set forth in paragraph 2 of part B of this Agreement.
    3. Disallowed costs are those charges to a grant which the FmHA or 
its successor agency under Public Law 103-354 determines cannot be 
authorized in accordance with applicable Federal costs principles or 
other conditions contained in this Agreement.
    4. Grant closeout is the process by which the grant operation is 
concluded at the expiration of the grant period or following a decision 
to terminate the grant.
    5. Termination of a grant means the cancellation of Federal 
assistance, in whole or in part, under a grant at any time before the 
date of completion.

                       Part B--Terms of agreement:

    Grantor and grantee agree:
    1. This agreement shall be effective when executed by both parties.
    2. The TSA activities approved by FmHA or its successor agency under 
Public Law 103-354 shall commence not later than ______, and shall be 
completed by ______, unless earlier terminated under paragraph B 18 
below, or extended.
    3. Grantee shall carry out the TSA activities described in the 
application docket which is made a part of this Agreement. Grantee will 
be bound by the conditions set forth in the docket and the further 
conditions set forth in this Agreement. If any of the conditions in the 
docket are inconsistent with those in the Agreement, the latter will 
govern. A change of any conditions must be in writing and must be signed 
by an authorized representative of FmHA or its successor agency under 
Public Law 103-354.
    4. Grantee shall use grant funds only for the purpose and activities 
specified in FmHA or its successor agency under Public Law 103-354 
regulations and in the application docket approved by FmHA or its 
successor agency under Public Law 103-354 including the approved budget. 
Any uses not provided for in the approved budget must be approved in 
writing by FmHA or its successor agency under Public Law 103-354 in 
advance.
    5. If the Grantee is a private nonprofit corporation, expenses 
charged for travel or per diem will not exceed the rates paid FmHA or 
its successor agency under Public Law 103-354 employees for similar 
expenses. If the Grantee is a public body, the rates will be

[[Page 250]]

those that are allowable under the customary practice in the government 
of which the grantee is a part; if none are customary, the FmHA or its 
successor agency under Public Law 103-354 rates will be the maximum 
allowed.
    6. Grant funds will not be used for any of the following:
    (a) To pay obligations incurred before the effective date of this 
Agreement.
    (b) To pay obligations incurred after the grant termination or 
ending date.
    (c) Entertainment purposes.
    (d) To pay for capital assets, the purchase of real estate or 
vehicles, improvement or renovation of space, or repair or maintenance 
of privately owned vehicles.
    (e) Any other purpose specified in 7 CFR 1944.520.
    7. Grant funds shall not be used to replace any financial support 
previously provided or assured from any other source.
    8. Disbursal of grants will be governed as follows:
    (a) In accordance with Treasury Circular 1075 (fourth revision) Part 
205, Chapter II of title 31 of the Code of Federal Regulations, grant 
funds will be provided by Rural Development as cash advances on an as 
needed basis not to exceed one advance every 30 days. The advance will 
be made by direct Treasury check to the Grantee. The financial 
management system of the recipient organization shall provide for 
effective control over and accountability for all Federal funds as 
stated in 2 CFR part 200 as adopted by USDA through 2 CFR part 400 for 
State and local governments and 2 CFR part 200 as adopted by USDA 
through 2 CFR part 400 for nonprofit organizations.
    (b) Cash advances to the Grantee shall be limited to the minimum 
amounts needed and shall be timed to be in accord only with the actual, 
immediate cash requirements of the Grantee in carrying out the purpose 
of the planned project.
    (c) Grant funds should be promptly refunded to the FmHA or its 
successor agency under Public Law 103-354 and redrawn when needed if the 
funds are erroneously drawn in excess of immediate disbursement needs. 
The only exceptions to the requirement for prompt refunding are when the 
funds involved:
    (i) Will be disbursed by the recipient organization within seven 
calendar days from the date of the Treasury check, or
    (ii) Are less than $10,000 and will be disbursed within 30 calendar 
days from the date of the Treasury check.
    (d) Grantee shall provide satisfactory evidence to FmHA or its 
successor agency under Public Law 103-354 that all officers of the 
Grantee organization authorized to receive and/or disburse Federal funds 
are covered by satisfactory fidelity bonds sufficient to protect the 
Grantor's interests.
    (e) Grant funds will be placed in the Grantee's bank account(s) 
until disbursed.
    9. the Grantee will submit Performance and Financial reports as 
indicated below to the appropriate FmHA or its successor agency under 
Public Law 103-354 District Office:
    (a) As needed, but not more frequently than once every 30 days, an 
original and 2 copies of Standard Form 270, ``Request for Advance or 
Reimbursement.''
    (b) Quarterly, (not later than January 15, April 15, July 15, and 
October 15 of each year) an original and 2 copies of Standard Form 269, 
``Financial Status Report,'' and a Project Performance report in 
accordance with Sec.  1944.541 of this subpart.
    (c) Within forty-five (45) days after the termination or expiration 
of the grant agreement, an original and 2 copies of Standard Form 269, 
and a final Project Performance report which will include a summary of 
the project's accomplishments, problems, and planned future activities 
of the Grantee for TSA. Final reports may serve as the last quarterly 
report.
    (d) FmHA or its successor agency under Public Law 103-354 may 
require performance reports more frequently if it deems necessary.
    10. In accordance with FMC 74-4, Attachment B, compensation for 
employees will be considered reasonable to the extent that such 
compensation is consistent with that paid for similar work in other 
activities of the State or local government.
    11. If the grant exceeds $100,000, transfers among direct cost 
budget categories totaling more than 5 percent of the total budget must 
have prior written approval by the appropriate District Director.
    12. Results of the program assisted by grant funds may be published 
by the grantee without prior review by FmHA or its successor agency 
under Public Law 103-354, provided that such publications acknowledge 
the support provided by funds pursuant to the provisions of Title V of 
the Housing Act of 1949 and that five copies of each such publication 
are furnished to the District Director.
    13. Grantee certifies that no person or organization has been 
employed or retained to solicit or secure this grant for a commission, 
percentage, brokerage, or contingent fee.
    14. No person in the United States shall, on the grounds of race, 
creed, color, sex, marital status, age, national origin, or mental or 
physical handicap, be excluded from participating in, be denied the 
proceeds of, or be subject to discrimination in connection with the use 
of grant funds. Grantee will comply with pertinent nondiscrimination 
regulations of FmHA or its successor agency under Public Law 103-354.

[[Page 251]]

    15. In all hiring or employment made possible by or resulting from 
this grant, Grantee: (a) Will not discriminate against any employee or 
applicant for employment because of race, creed, color, sex, marital 
status, national origin, age, or mental or physical handicap, and (b) 
will take affirmative action to insure that employees are treated during 
employment without regard to their race, creed, color, sex, marital 
status, national origin, age, or mental or physical handicap. This 
requirement shall apply to, but not be limited to, the following: 
Employment, upgrading, demotion, or transfer; recruitment or recruitment 
advertising; layoff or termination; rates of pay or other forms of 
compensation; and selection for training, including apprenticeship. In 
the event Grantee signs a contract related to this grant which would be 
covered by any Executive Order, law, or regulation prohibiting 
discrimination, Grantee shall include in the contract the ``Equal 
Employment Clause'' as specified by FmHA or its successor agency under 
Public Law 103-354.
    16. The grantee accepts responsibility for accomplishing the TSA 
program as submitted and included in the application docket. The Grantee 
shall also:
    (a) Endeavor to coordinate and provide liaison with State and local 
housing organizations, where they exist.
    (b) Provide continuing information to FmHA or its successor agency 
under Public Law 103-354 on the status of Grantee programs, projects, 
related activities, and problems.
    (c) The Grantee shall inform the Grantor as soon as the following 
types of conditions become known:
    (i) Problems, delays, or adverse conditions which materially affect 
the ability to attain program objectives, prevent the meeting of time 
schedules or goals, or preclude the attainment of project work units by 
established time periods. This disclosure shall be accompanied by a 
statement of the action taken or contemplated, and any Grantor 
assistance needed to resolve the situation.
    (ii) Favorable developments or events which enable meeting time 
schedules and goals sooner than anticipated or producing more work units 
than originally projected.
    17. Grant closeout and termination procedures will be as follows:
    (a) Promptly after the date of completion or a decision to terminate 
a grant, grant closeout actions are to be taken to allow the orderly 
discontinuation of Grantee activity.
    (i) The grantee shall immediately refund to FmHA or its successor 
agency under Public Law 103-354 any uncommitted balance of grant funds.
    (ii) The Grantee will furnish to FmHA or its successor agency under 
Public Law 103-354 within 45 days after the date of completion of the 
grant a Standard Form 269 and all financial, performance, and other 
reports required as a condition of the grant.
    (iii) The Grantee shall account for any property acquired with TSA 
grant funds, or otherwise received from FmHA or its successor agency 
under Public Law 103-354.
    (iv) After the grant closeout, FmHA or its successor agency under 
Public Law 103-354 retains the right to recover any disallowed costs 
which may be discovered as a result of an audit.
    (b) When there is reasonable evidence that the Grantee has failed to 
comply with the terms of this Agreement, the State Director can, on 
reasonable notice, terminate the grant pursuant to paragraph (c) below 
and withhold further payments or prohibit the Grantee from further 
obligating grant funds. FmHA or its successor agency under Public Law 
103-354 may allow all necessary and proper costs which the Grantee could 
not reasonably avoid.
    (c) Grant termination will be based on the following:
    (i) Termination for cause. This grant may be terminated in whole, or 
in part, at any time before the date of completion, whenever FmHA or its 
successor agency under Public Law 103-354 determines that the Grantee 
has failed to comply with the terms of the Agreement. The reasons for 
termination may include, but are not limited to, such problems as:
    (A) Failure to make satisfactory progress in attaining grant 
objectives.
    (B) Failure of Grantee to use grant funds only for authorized 
purposes.
    (C) Failure of Grantee to submit adequate and timely reports of its 
operation.
    (D) Violation of any of the provisions of any laws administered by 
FmHA or its successor agency under Public Law 103-354 or any regulation 
issued thereunder.
    (E) Violation of any nondiscrimination or equal opportunity 
requirement administered by FmHA or its successor agency under Public 
Law 103-354 in connection with any FmHA or its successor agency under 
Public Law 103-354 programs.
    (F) Failure to maintain an accounting system acceptable to FmHA or 
its successor agency under Public Law 103-354.
    (ii) Termination for convenience. FmHA or its successor agency under 
Public Law 103-354 or the Grantee may terminate the grant in whole, or 
in part, when both parties agree that the continuation of the project 
would not produce beneficial results commensurate with the further 
expenditure of funds. The two parties shall agree upon the termination 
conditions, including the effective date and, in case of partial 
termination, the portion to be terminated.
    (d) Procedure for termination of grant for cause. FmHA or its 
successor agency under Public Law 103-354 shall notify the Grantee

[[Page 252]]

in writing of the determination and the reasons for and the effective 
date of the whole or partial termination in accordance with 7 CFR 
1900.53.
    18. Extension and/or revision of this grant agreement may be 
approved by FmHA or its successor agency under Public Law 103-354 
provided, in its opinion, the extention and/or revision is justified and 
there is a likelihood that the Grantee can accomplish the goals set out 
and approved in the application docket during the period of the 
extension and/or revision as specified in 7 CFR 1944.538.

                         Part C--Grantee agrees:

    (1) To comply with property management standards for expendable and 
nonexpendable personal property established by Attachment N of OMB 
Circular A-102 or Attachment N of 2 CFR part 200 as adopted by USDA 
through 2 CFR part 400 for State and local governments or nonprofit 
organizations respectively. ``Personal property'' means property of any 
kind except real property. It may be tangible--having physical 
existence--or intangible-having no physical existence, such as patents, 
inventions, and copyrights. ``Nonexpendable personal property'' means 
tangible personal property having a useful life of more than one year 
and an acquisition cost of $300 or more per unit. A Grantee may use its 
own definition of nonexpendable personal property provided that such 
definition would at least include all tangible personal property as 
defined above. ``Expendable personal property'' refers to all tangible 
personal property other than nonexpendable personal property. When 
nonexpendable tangible personal property is acquired by a Grantee with 
project funds, title shall not be taken by the Federal Government but 
shall vest in the Grantee subject to the following conditions:
    (a) Right to transfer title. For items of nonexpendable personal 
property having a unit acquisition cost of $1,000 or more, FmHA or its 
successor agency under Public Law 103-354 may reserve the right to 
transfer title to the Federal Government or to a third party named by 
the Federal Government when such third party is otherwise eligible under 
existing statutes. Such reservation shall be subject to the following 
standards:
    (i) The property shall be appropriately identified in the grant or 
otherwise made known to the Grantee in writing.
    (ii) FmHA or its successor agency under Public Law 103-354 shall 
issue disposition instructions within 120 calendar days after the end of 
the Federal support of the project for which it was acquired. If FmHA or 
its successor agency under Public Law 103-354 fails to issue disposition 
instructions within the 120 calendar day period, the Grantee shall apply 
the standards of paragraph 1(c) below.
    (iii) When FmHA or its successor agency under Public Law 103-354 
exercises its right to take title, the personal property shall be 
subject to the provisions for federally owned nonexpendable property 
discussed in paragraph 1(a)(iv) below.
    (iv) When title is transferred either to the Federal Government or 
to a third party and the Grantee is instructed to ship the property 
elsewhere, the Grantee shall be reimbursed by the benefitting Federal 
agency with an amount which is computed by applying the percentage of 
the Grantee participation in the cost of the original grant project or 
program to the current fair market value of the property, plus any 
reasonable shipping or interim storage costs incurred.
    (b) Use of other tangible nonexpendable property for which the 
Grantee has title.
    (i) The Grantee shall use the property in the project or program for 
which it was acquired as long as needed, whether or not the project or 
program continues to be supported by Federal funds. When it is no longer 
needed for the original project or program, the Grantee shall use the 
property in connection with its other federally sponsored activities, in 
the following order of priority:
    (A) Activities sponsored by FmHA or its successor agency under 
Public Law 103-354.
    (B) Activities sponsored by other Federal agencies.
    (ii) Shared use. During the time that nonexpendable personal 
property is held for use on the project or program for which it was 
acquired, the Grantee shall make it available for use on other projects 
or programs if such other use will not interfere with the work on the 
project or program for which the property was originally acquired. First 
preference for such other use shall be given to other projects or 
programs sponsored by FmHA or its successor agency under Public Law 103-
354; second preference shall be given to projects or programs sponsored 
by other Federal agencies. If the property is owned by the Federal 
Government, use on other activities not sponsored by the Federal 
Government shall be permissible if authorized by FmHA or its successor 
agency under Public Law 103-354. User charges should be considered if 
appropriate.
    (c) Disposition of other nonexpendable property. When the Grantee no 
longer needs the property, the property may be used for other activities 
in accordance with the following standards:
    (i) Nonexpendable property with a unit acquisition cost of less than 
$1,000. The Grantee may use the property for other activities without 
reimbursement to the Federal Government or sell the property and retain 
the proceeds.
    (ii) Nonexpendable personal property with a unit acquisition cost of 
$1,000 or more. The Grantee may retain the property for other use 
provided that compensation is made to FmHA or its successor agency under 
Public Law 103-354 or its successor. The amount of

[[Page 253]]

compensation shall be computed by applying the percentage of Federal 
participation in the cost of the original project or program to the 
current fair market value of the property. If the Grantee has no need 
for the property and the property has further use value, the Grantee 
shall request disposition instructions from the original Grantor agency. 
FmHA or its successor agency under Public Law 103-354 shall determine 
whether the property can be used to meet the agency's requirements. If 
no requirement exists within that agency, the availability of the 
property shall be reported, in accordance with the guidelines of the 
Federal Property Management Regulations (FPMR) to the General Services 
Administration by FmHA or its successor agency under Public Law 103-354 
to determine whether a requirement for the property exists in other 
Federal agencies. FmHA or its successor agency under Public Law 103-354 
shall issue instructions to the Grantee no later than 120 days after the 
Grantee request and the following procedures shall govern:
    (A) If so instructed or if disposition instructions are not issued 
within 120 calendar days after the Grantee's request, the Grantee shall 
sell the property and reimburse FmHA or its successor agency under 
Public Law 103-354 an amount computed by applying to the sales proceeds 
the percentage of Federal participation in the cost of the original 
project or program. However, the Grantee shall be permitted to deduct 
and retain from the Federal shares $100 or ten percent of the proceeds, 
whichever is greater, for the Grantee's selling and handling expenses.
    (B) If the Grantee is instructed to dispose of the property other 
than as described in paragraph 1(a)(iv) above, the Grantee shall be 
reimbursed by FmHA or its successor agency under Public Law 103-354 for 
such costs incurred in its disposition.
    (C) The Grantee's property management standards for nonexpendable 
personal property shall include the following procedural requirements:
    (1) Property records shall be maintained accurately and shall 
include:
    (a) A description of the property.
    (b) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (c) Sources of the property including grant or other agreement 
number.
    (d) Whether title vests in the Grantee or the Federal Government.
    (e) Acquisition date (or date received, if the property was 
furnished by the Federal Government) and cost.
    (f) Percentage (at the end of the budget year) of Federal 
participation in the cost of the project or program for which the 
property was acquired. (Not applicable to property furnished by the 
Federal Government).
    (g) Location, use, and condition of the property and the date the 
information was reported.
    (h) Unit acquisition cost.
    (i) Ultimate disposition data, including date of disposal and sales 
price or the method used to determine current fair market value when a 
Grantee compensates the Federal agency for its share.
    (2) Property owned by the Federal Government must be marked to 
indicate Federal ownership.
    (3) A physical inventory of property shall be taken and the results 
reconciled with the property records at least once every two years. Any 
difference between quantities determined by the physical inspection and 
those shown in the accounting records shall be investigated to determine 
the causes of the difference. The Grantee shall, in connection with the 
inventory, verify the existence, current utilization, and continued need 
for the property.
    (4) A control system shall be in effect to ensure adequate 
safeguards to prevent loss, damage, or theft of the property. Any loss, 
damage, or theft of nonexpendable property shall be investigated and 
fully documented; if the property was owned by the Federal Government, 
the Grantee shall promptly notify FmHA or its successor agency under 
Public Law 103-354.
    (5) Adequate maintenance procedures shall be implemented to keep the 
property in good condition.
    (6) When the Grantee is authorized or required to sell the property, 
proper sales procedures shall be established which will provide for 
competition to the extent practicable and result in the highest possible 
return.
    (7) Expendable personal property shall vest in the Grantee upon 
acquisition. If there is a residual inventory of such property exceeding 
$1,000 in total aggregate fair market value, upon termination or 
completion of the grant and if the property is not needed for any other 
federally sponsored project or program, the Grantee shall retain the 
property for use on nonfederally sponsored activities, or sell it, but 
must in either case compensate the Federal Government for its share. The 
amount of compensation shall be computed in the same manner as 
nonexpendable personal property.
    2. To provide a financial management system which will include:
    (a) Accurate, current, and complete disclosure of the financial 
results of each grant. Financial reporting will be on an accrual basis.
    (b) Records which identify adequately the source and application of 
funds for grant-supported activities. Those records shall contain 
information pertaining to grant awards and authorizations, obligations, 
unobligated

[[Page 254]]

balances, assets, liabilities, outlays, and income.
    (c) Effective control over and accountability for all funds, 
property, and other assets. Grantee shall adequately safeguard all such 
assets and shall assure that they are solely for authorized purposes.
    (d) Accounting records supported by source documentation.
    3. To retain financial records, supporting documents, statistical 
records, and all other records pertinent to the grant for a period of at 
least three years after the submission of the final Project Performance 
report pursuant to paragraph B(9)(c) of this agreement except in the 
following situations:
    (a) If any litigation, claim, or audit is commenced before the 
expiration of the three year period, the records shall be retained until 
all litigations, claims, or audit findings involving the records have 
been resolved.
    (b) Records for nonexpandable property acquired with Federal funds 
shall be retained for three years after final disposition.
    (c) When records are transferred to or maintained by FmHA or its 
successor agency under Public Law 103-354, the three year retention 
requirement is not applicable.
    Microfilm copies may be substituted in lieu of original records. The 
Grantor and the Comptroller General of the United States, or any of 
their duly auhthorized representatives, shall have access to any books, 
documents, papers, and records of the Grantee which are pertinent to the 
specific grant program for the purpose of making audits, examinations, 
excerpts, and transcripts.
    4. To provide information as requested by the Grantor concerning the 
Grantee's actions in soliciting citizen participation in the application 
process, including published notice of public meetings, actual public 
meetings held, and content of written comments received.
    5. Not encumber, transfer, or dispose of the property or any part 
thereof, furnished by the Grantor or acquired wholly or in part with 
Grantor funds without the written consent of the Grantor except as 
provided in part C 1.
    6. To provide Grantor with such periodic reports of Grantee 
operations as may be required by authorized representatives of the 
Grantor.
    7. To execute Form FmHA or its successor agency under Public Law 
103-354 400-1, ``Equal Opportunity Agreement,'' and to execute any other 
agreements required by Grantor to implement the civil rights 
requirements.
    8. To include in all contracts in excess of $100,000 a provision for 
compliance with all applicable standards, orders, or regulations issued 
purusant to the Federal Clean Air Act as amended. Violations shall be 
reported to the Grantor and the Regional Office of the Environmental 
Protection Agency.
    9. That, upon any default under its representations or agreements 
set forth in this instrument, Grantee, at the option and demand of 
Grantor, will, to the extent legally permissible, repay to the Grantor 
forthwith the grant funds received with interest at the rate of five 
percentum per annum from the date of the default. The provisions of this 
Grant Agreement may be enforced by Grantor, at its option and without 
regard to prior waivers by it of previous defaults of Grantee, by 
judicial proceedings to require specific performance of the terms of 
this Grant Agreement or by such other proceedings in law or equity, in 
either Federal or State Courts, as may be deemed necessary by Grantor to 
assure compliance with the provisions of this Grant Agreement and the 
laws and regulations under which this grant is made.
    10. That no member of Congress shall be admitted to any share or 
part of this Grant or any benefit that may arise therefrom; but this 
provision shall not be construed to bar as a contractor under the Grant 
a publicly held corporation whose ownership might include a member of 
Congress.
    11. That all nonconfidential information resulting from its 
activities shall be made available to the general public on an equal 
basis.
    12. That the purpose for which this grant is made may complement, 
but shall not duplicate programs for which monies have been received, 
are committed, or are applied for from other sources, public and 
private.
    13. That the Grantee shall relinquish any and all copyrights and/or 
privileges to the materials developed under this grant, such material 
being the sole property of the Federal Government. In the event anything 
developed under this grant is published in whole or in part, the 
material shall contain notice and be identified by language to the 
following effect: ``The material is the result of tax-supported research 
and as such is not copyrightable. It may be freely reprinted with the 
customary crediting of the source.''
    (14) That the Grantee shall abide by the policies promulgated in 2 
CFR part 200 as adopted by USDA through 2 CFR part 400 which provides 
standards for use by Grantees in establishing procedures for the 
procurement of supplies, equipment and other services with Federal grant 
funds.
    15. That it is understood and agreed that any assistance granted 
under this Agreement will be administered subject to the limitations of 
Title V of the Housing Act of 1949 as amended, 42 U.S.C. 1471 et. seq., 
and related regulations, and that rights granted to FmHA or its 
successor agency under Public Law 103-354 herein or elsewhere may be 
exercised by it in its sole discretion to carry out the purposes of the 
assistance, and protect FmHA or its successor agency under Public Law 
103-354's financial interest.

[[Page 255]]

    16. Standard of Conduct. No employee, officer or agent of Grantee 
shall participate in the selection, award or administration of a 
contract in which Federal funds are used where, to the knowledge of such 
employee, officer or agent, the employee, officer or agent or such 
person's immediate family members, partners or any organization in which 
such person or such person's immediate family award or administration of 
the contract, or (2) when such person is negotiating or has any 
arrangement concerning future employment. The recipient's officers, 
employees or agents shall neither solicit nor accept gratuities, favors 
or anything of monetary value from landlords or developers of rental or 
ownership housing projects in which the persons receiving TSA assistance 
may be placed as a result of such assistance.

                         Part D--Grantor agrees:

    1. That it may assist Grantee, within available appropriations, with 
such technical and management assistance as needed in planning the 
project and coordinating the plan with local officials, comprehensive 
plans, and any State or area plans for improving housing for low-income 
families in the area in which the project is located.
    2. That at its sole discretion, Grantor may at any time give any 
consent, deferment, subordination, release, satisfaction, or termination 
of any or all of Grantee's grant obligations, with or without valuable 
consideration, upon such terms and conditions as Grantor may determine 
to be (a) advisable to further the purposes of the grant or to protect 
Grantor's financial interests therein, and (b) consistent with the 
statutory purposes of the grant and the limitations of the statutory 
authority under which it is made and Grantor's regulations.
    This Agreement is subject to current Grantor regulations and any 
future regulations not inconsistent with the express terms hereof. 
Grantee on __________, 19__, has caused this Agreement to be executed by 
its duly authorized _________ and attested and its corporate seal 
affixed by its duly authorized ________.

Attest:

________________________________________________________________________

Grantee

________________________________________________________________________
By______________________________________________________________________

(Title)
By______________________________________________________________________

(Title)

Grantor

United States of America
Farmers Home Administration or its successor agency under Public Law 
103-354

By______________________________________________________________________

________________________________________________________________________
(Title)



 Sec. Exhibit B to Subpart K of Part 1944--Administrative Instructions 
for State Offices Regarding Their Responsibilities in the Administration 
        of the Technical and Supervisory Assistance Grant Program

    A. The State Office will maintain for distribution to potential 
applicants, upon request, a supply of preapplication packets consisting 
of:
    1. SF 424.1.
    2. Form FmHA or its successor agency under Public Law 103-354 400-1, 
``Equal Opportunity Agreement.''
    3. Form FmHA or its successor agency under Public Law 103-354 400-4, 
``Assurance Agreement.''
    4. Form FmHA or its successor agency under Public Law 103-354 1940-
20, ``Request for Environmental Information.''
    5. Subpart K of part 1944 of this chapter.
    B. The State Office should inform all potential applicants, at the 
time they pick up forms, that:
    1. The preapplication must be submitted to the District Office 
serving the area in which the applicant proposes to operate the 
Technical and Supervisory Assistance (TSA) program.
    2. The State Office will refer all requests for assistance in 
completing the preapplication to the appropriate District Office.
    C. Beyond the responsibilities of the State Office in the selection 
of grantees and the administration of the program, and as stated in 
Sec.  1944.502 of this subpart, the TSA program provides an opportunity 
for the State Director to give priority to applicants serving the rural 
areas of greatest need as well as use the program cooperatively with 
other Federal and State agencies in addressing the housing needs of the 
residents of a proposed TSA service area. Therefore, the State Office 
should be prepared, before receipt of preapplications, to advise the 
District Directors, potential applicants and other Federal and State 
agencies which part(s) of the State has the greatest need for the TSA 
program. The State Director should identify target areas in a similar 
manner to the process used by the Administrator pursuant to Sec.  
1944.525 of this subpart. Proposals which are clearly inappropriate and 
do not meet the basic priorities of Sec.  1944.529 (a) of this subpart 
should not be encouraged due to the complexity of the preapplication 
submission.
    D. In addition to the instructions of Sec.  1944.526 of this 
subpart, the State Office should follow the procedures outlined below:

[[Page 256]]

    1. Review preapplications for completeness and adequacy and make 
assessments required by Sec.  1944.526(c)(1) of this subpart.
    2. Request clarifications from the District Office if necessary.
    3. Evaluate the proposals in light of Sec.  1944.529 of this subpart 
and select the proposal(s) which best meets the priorities established 
under the project selection criteria in Sec.  1944.529 (a), (b) and (c) 
of this subpart.
    4. The State Office must provide written comments to be attached to 
the preapplication(s) justifying the selection(s) and addressing the 
items in Sec.  1944.529 of this subpart.
    5. The State Office will forward the original SF 424.1 and 
accompanying documents of the selected preapplication(s) as quickly as 
possible to the National Office, Attention: Special Authorities 
Division, Multi-Family Housing. In no case should the State Office 
forward their selected TSA preapplication(s) later than thirty (30) days 
after the closing date for receipt of preapplications.
    6. Preapplications not selected by the State Office will be returned 
to the applicants through the appropriate District Offices with notice 
of appeal rights.
    7. In accordance with Sec.  1944.525 of this subpart, State Offices 
will be advised of the number of preapplications to be submitted from 
each state to the National Office.
    E. Sections 1944.531 and 1944.533 of this subpart detail the 
responsibilities of the State Office after tentative selection or 
concurrence of the TSA grantees by the National Office. Those 
preapplicants not selected will be promptly notified and their 
preapplication returned with notice of appeal rights. Form AD-622, 
``Notice of Preapplication Review Action,'' will be mailed from the 
State Office to the applicants. District Offices will receive a copy 
from the State Office.
    F. After execution of the grant agreement, the State Office will 
work closely with the District Office and the grantee to obtain 
additional resources from other Federal and State agencies to meet the 
needs of the TSA service area. The State Office should closely review 
the quarterly project performance reports and assist the District 
Director, as appropriate, in resolving any problems or taking advantage 
of favorable funding or program opportunities.

[44 FR 36891, June 22, 1979, as amended at 48 FR 29121, June 24, 1983; 
49 FR 3763, Jan. 30, 1984; 55 FR 13503, 13504, Apr. 11, 1990; 79 FR 
76011, Dec. 19, 2014]



  Sec. Exhibit C to Subpart K of Part 1944--Instructions for District 
 Offices Regarding Their Responsibilities in the Administration of the 
           Technical and Supervisory Assistance Grant Program

    A. The District Office will maintain for distribution to potential 
applicants, upon request, a supply of preapplication packets consisting 
of:
    1. SF 424.1.
    2. Form FmHA or its successor agency under Public Law 103-354 400-1, 
``Equal Opportunity Agreement.''
    3. Form FmHA or its successor agency under Public Law 103-354 400-4, 
``Assurance Agreement.''
    4. Form FmHA or its successor agency under Public Law 103-354 1940-
20, ``Request for Environmental Information.''
    5. Subpart K of part 1944 of this chapter.
    B. District Directors will provide any necessary assistance in 
completing preapplication forms.
    C. All applicants will submit preapplications to District Offices. 
Upon receipt of the preapplication the District Director will review it 
to ensure that the preapplication is complete and make assessments 
required by Sec.  1944.526(b)(1) of this subpart.
    D. The District Director will provide written comments to be 
attached to the preapplication. These comments will, at a minimum, 
address the following items:
    1. Whether the area to be covered by the project is a ``rural area'' 
as defined by FmHA or its successor agency under Public Law 103-354 
regulations.
    2. The District Director's knowledge of the applicant's past 
history.
    3. The need for the proposed activity, and its relationship to the 
targeting strategies for the District.
    4. Appropriateness and applicability of this proposal for FmHA or 
its successor agency under Public Law 103-354 implementation funds.
    5. Extent of citizen involvement in development of preapplication, 
particularly the involvement of minority and/or low-income groups.
    6. All other criteria specified in Sec.  1944.529 of this subpart.
    7. The comments and recommendations of the County Supervisors for 
the proposed TSA service area.
    E. The District Director will forward the original and one copy of 
the preapplication and accompanying documents along with the comments 
and a summary recommendation to the State Director within ten (10) 
working days of receipt of the preapplication.
    F. Those applicants invited to submit applications will submit their 
applications to

[[Page 257]]

the District Office with two copies. The District Office will retain the 
original for the docket and forward one copy to the appropriate State 
Office after making sufficient copies to forward one copy to each of the 
appropriate County Offices.
    G. The District Director, upon receipt of the application, will 
prepare a docket in accordance with Sec.  1944.531 of this subpart. The 
procedures for approval and project servicing are detailed in this 
subpart.

[44 FR 36891, June 22, 1979, as amended at 48 FR 29121, June 24, 1983; 
49 FR 3763, Jan. 30, 1984; 55 FR 13504, Apr. 11, 1990]



  Sec. Exhibit D to Subpart K of Part 1944--Amendment to Technical and 
                 Supervisory Assistance Grant Agreement

    This Amendment to Agreement dated __________ 19__ between
herein called ``Grantee,'' organized and operating under________________
________________________________________________________________________
(authorizing State Statute)

and the United States of America acting through the Farmers Home 
Administration, Department of Agriculture, herein called ``FmHA,'' or 
its successor agency under Public Law 103-354 amends the Technical and 
Supervisory Assistance Grant Agreement'' between the parties hereto 
dated __________ 19__, hereinafter called the ``Agreement.''
    Said Agreement is amended by changing the ending date specified in 
paragraph 2 of part B of the Agreement from _________ to _________ and/
or by making the following changes noted in the attachments hereto: 
(List and identify proposal and any other documents pertinent to the 
grant which are attached to the Amendment.)
    Agreed to this _____ day of _______ 19__.

________________________________________________________________________
(Name of Grantee)

By______________________________________________________________________
 (Signature)

________________________________________________________________________

 (Title)

United States of America

By______________________________________________________________________

 (Signature)

________________________________________________________________________

 (Title)

Farmers Home Administration or its successor agency under Public Law 
103-354

________________________________________________________________________

 (Date)



  Sec. Exhibit E to Subpart K of Part 1944--Guide Letter to Delinquent 
  FmHA or Its Successor Agency Under Public Law 103-354 Single Family 
                         Housing Loan Borrowers

Dear____________________________________________________________________
(name of borrower):

    This is to advise you that (name of TSA grantee) is available to 
provide independent counseling services to Farmers Home Administration 
(FmHA) or its successor agency under Public Law 103-354 borrowers in 
need of financial management assistance. These services may assist you 
in resolving your present delinquency in your housing loan.
    This organization is prepared to provide financial and budget 
counseling at no charge to you. Their counseling services include advice 
on debt levels and credit purchases, consumer and cost awareness, debt 
adjustment procedures, and other financial information and services.
    You are urged to take advantage of this program. However, your 
participation is voluntary and does not relieve you of any of your loan 
obligations to FmHA or its successor agency under Public Law 103-354 or 
limit the remedies FmHA or its successor agency under Public Law 103-354 
has to bring your loan current or recover the loan in full. Any plan 
altering your repayment schedule in any way must be approved by this 
office. However, it is our intention to work with you and the counseling 
organization in every way we can to resolve your delinquency.
    If you want to participate in this program, please sign the attached 
copy of this letter and return it to this office. At that time we will 
advise (name of TSA grantee) that you are interested in their services 
and provide them with the information they need to contact you. Only 
information available to the general public will be released.
    We are sure you agree that it is in your interest to make every 
effort to bring your account current. We look forward to your return of 
the attached copy of this letter.

Sincerely,

County Supervisor
Farmers Home Administration or its successor agency under Public Law 
103-354

Enclosure

(On attached copy only:)
    I desire to participate in the counseling program with (name of TSA 
grantee).

________________________________________________________________________
 Borrower

________________________________________________________________________
 Date

Subparts L-M [Reserved]

[[Page 258]]



                  Subpart N_Housing Preservation Grants

    Source: 58 FR 21894, Apr. 26, 1993, unless otherwise noted.



Sec.  1944.651  General.

    (a) This subpart sets forth the policies and procedures for making 
grants under section 533 of the Housing Act of 1949, 42 U.S.C. 1490(m), 
to provide funds to eligible applicants (hereafter also referred to as 
grantee(s)) to conduct housing preservation programs benefiting very 
low- and low-income rural residents. Program funds cover part or all of 
the grantee's cost of providing loans, grants, interest reduction 
payments or other assistance to eligible homeowners, owners of single or 
multiple unit rental properties or for the benefit of owners (as 
occupants) of consumer cooperative housing projects (hereafter also 
referred to as co-ops). Such assistance will be used to reduce the cost 
of repair and rehabilitation, to remove or correct health or safety 
hazards, to comply with applicable development standards or codes, or to 
make needed repairs to improve the general living conditions of the 
resident(s), including improved accessibility by handicapped persons. 
Such assistance will be used to reduce the cost of repair and 
rehabilitation, to remove or correct health or safety hazards, to comply 
with applicable development standards or codes, or to make needed 
repairs to improve the general living conditions of the residents, 
including improved accessibility by persons with a disability. 
Individual housing that is owner occupied may qualify for replacement 
housing when it is determined by the grantee that the housing is not 
economically feasible for repair or rehabilitation.
    (b) The Rural Housing Service (RHS) will provide Housing 
Preservation Grant (HPG) assistance to grantees who are responsible for 
providing assistance to eligible persons without discrimination because 
of race, color, religion, sex, national origin, age, familial status, or 
disability.
    (c) The preapplication must only address a proposal to finance 
repairs and rehabilitation activities to individual housing or rental 
properties or co-ops. Any combination proposal will not be accepted.
    (d) Any processing or servicing activity conducted pursuant to this 
subpart involving authorized assistance to RHS employees, members of 
their families, known close relatives, or business or close personal 
associates, is subject to the provisions of subpart D of part 1900 of 
this chapter. Applicants for this assistance are required to identify 
any known relationship or association with an RHS employee.

[58 FR 21894, Apr. 26, 1993, as amended at 62 FR 26208, May 13, 1997]



Sec.  1944.652  Policy.

    (a) The policy of RHS is to provide HPG's to grantees to operate a 
program which finances repair and rehabilitation activities to 
individual housing, rental properties, or co-ops for very low- and low-
income persons. Individual housing that is owner occupied may qualify 
for replacement housing when it is determined by the grantee that the 
housing is not economically feasible for repair or rehabilitation. 
Grantees are expected to:
    (1) Coordinate and leverage funding for repair and rehabilitation 
activities, as well as replacement housing, with housing and community 
development organizations or activities operating in the same geographic 
area; and
    (2) Focus the program on rural areas and smaller communities so that 
it serves very low and low-income persons.
    (b) RHS intends to permit grantees considerable latitude in program 
design and administration. The forms or types of assistance must provide 
the greatest long-term benefit to the greatest number of persons 
residing in individual housing, rental properties, or co-ops needing 
repair and rehabilitation or replacement of individual housing.
    (c) Repairs and rehabilitation or replacement activities affecting 
properties on or eligible for listing on the National Register of 
Historic Places will be accomplished in a manner that supports national 
historic preservation objectives as specified in Sec.  1944.673.

[62 FR 26208, May 13, 1997]

[[Page 259]]



Sec.  1944.653  Objective.

    The objective of the HPG program is to repair or rehabilitate 
individual housing, rental properties, or co-ops owned and/or occupied 
by very low- and low-income rural persons. Grantees will provide 
eligible homeowners, owners of rental properties, and owners of co-ops 
with financial assistance through loans, grants, interest reduction 
payments or other comparable financial assistance for necessary repairs 
and rehabilitation. Further, individual housing that is owner occupied 
may qualify for replacement housing when it is determined by the grantee 
that the housing is not economically feasible for repair or 
rehabilitation, except as specified in Sec.  1944.659.

[58 FR 21894, Apr. 26, 1993, as amended at 62 FR 26209, May 13, 1997]



Sec.  1944.654  Debarment and suspension--drug-free workplace.

    (a) For purposes of this subpart, exhibit A of RD Instruction 1940-M 
(available in any Agency office) requires all Rural Development 
applicants; for an HPG to sign and submit with their preapplication, 
Form AD-1047, ``Certification Regarding Debarment, Suspension, and Other 
Responsibility Matters--Primary Covered Transactions,'' which basically 
states that the applicant has not been debarred or suspended from 
Government assistance. Further, all grantees after receiving a HPG must 
obtain a signed certification (Form AD-1048, ``Certification Regarding 
Debarment, Suspension, Ineligibility and Voluntary Exclusion--Lower Tier 
Covered Transactions'') from all persons or entities (excluding 
homeowner recipients) that the grantee does business with as a result of 
the HPG. Grantees are responsible for informing these persons or 
entities of the provisions of exhibit A of RD Instruction 1940-M 
(available in any Agency office) and of maintaining Form AD-1048 in the 
grantee's office.
    (b) Grantees must also be made aware of the Drug-free Workplace Act 
of 1988 requirements found in exhibit A of RD Instruction 1940-M 
(available in any Rural Development office). For this subpart, a grantee 
is defined as any organization who applies for or receives a direct 
grant from Rural Development. All preapplications must include a signed 
Form AD-1049, ``Certification Regarding Drug-free Workplace Requirements 
(Grants) Alternative I--Grants Other Than Individuals.''

[58 FR 21894, Apr. 26, 1993, as amended at 61 FR 39851, July 31, 1996]



Sec.  1944.655  [Reserved]



Sec.  1944.656  Definitions.

    References in this subpart to District, State, National and Finance 
Offices, and to District Director, State Director, and Administrator 
refer to Rural Development offices and officials and should be read as 
prefaced by Rural Development. Terms used in this subpart have the 
following meanings:
    Adjusted income. As defined in 7 CFR 3550.54(c).
    Applicant or grantee. Any eligible organization which applies for or 
receives HPG funds under a grant agreement.
    Cooperative (co-op). For the purposes of the HPG program, a 
cooperative (co-op) is one which:
    (1) Is a corporation organized as a consumer cooperative;
    (2) Will operate the housing on a nonprofit basis solely for the 
benefit of the occupants; and
    (3) Is legally precluded from distributing, for a minimum period of 
5 years from the date of HPG assistance from the grantee, any gains or 
profits from operation of the co-op. For this purpose, any patronage 
refunds to occupants of the co-op would not be considered gains or 
profits. A co-op may accept non-members as well as members for occupancy 
in the project.
    Grant agreement. The contract between Agency and the grantee which 
sets forth the terms and conditions under which HPG funds will be made 
available. (See exhibit A of this subpart which is available in any 
Agency office.)
    Homeowner. For the purposes of the HPG program, a homeowner is one 
who can meet the conditions of income and ownership under Sec.  1944.661 
of this subpart.
    Household. For the purposes of the HPG program, a household is 
defined as all persons living all or part of the next

[[Page 260]]

12 months in a unit or dwelling assisted with HPG funds.
    Housing preservation. The repair and rehabilitation activities that 
contribute to the health, safety, and well-being of the occupant, and 
contribute to the structural integrity or long-term preservation of the 
unit. As a result of these activities, the overall condition of the unit 
or dwelling must be raised to meet Thermal Standards for existing 
structures adopted by the locality/jurisdiction and applicable 
development standards for existing housing recognized by RHS in subpart 
A of part 1924 or standards contained in any of the voluntary national 
model codes acceptable upon review by RHS. Properties included on or 
eligible for inclusion on the National Register of Historic Places are 
subject to the standards and conditions of Sec.  1944.673. The term 
``housing preservation'' does not apply to replacement housing.
    HPG. Housing Preservation Grant.
    Low income. An adjusted annual income that does not exceed the 
``lower'' income limit according to size of household as established by 
the United States Department of Housing and Urban Development (HUD) for 
the county or Metropolitan Statistical Area (MSA) where the property is 
located. Maximum low-income limits are set forth in Appendix 9 of HB-1-
3550 (available in any Rural Development office).
    Organization. An organization is defined as one of the following:
    (1) A State, commonwealth, trust territory, other political 
subdivision, or public nonprofit corporation authorized to receive and 
administer HPG funds;
    (2) An American Indian tribe, band, group, nation, including Alaskan 
Indians, Aleuts, Eskimos and any Alaskan Native Village, of the United 
States which is considered an eligible recipient under the Indian Self-
Determination and Education Assistance Act (Pub. L. 93-638) or under the 
State and Local Fiscal Assistance Act of 1972 (Pub. L. 92-512);
    (3) A private nonprofit organization, including faith-based and 
community organizations, that is owned and controlled by private persons 
or interests for purposes other than making gains or profits for the 
corporation, is legally precluded from distributing any gains or profits 
to its members, and is authorized to undertake housing development 
activities; or
    (4) A consortium of units of government and/or private nonprofit 
organizations, including faith-based and community organizations, which 
is otherwise eligible to receive and administer HPG funds and which 
meets the following conditions:
    (i) Be comprised of units of government and/or private nonprofit 
corporations that are close together, located in the same state, and 
serve areas eligible for USDA Rural Development assistance; and
    (ii) Have executed an agreement among its members designating one 
participating unit of government or private nonprofit corporation as the 
applicant or designating a legal entity (such as a Council of 
Governments) to be the applicant.
    Overcrowding. Guidance is provided at 7 CFR 3560.155(e). These 
guidelines should result in an ideal range of persons per housing unit.
    Rental properties. Rental properties are defined as single-unit or 
multi-unit dwellings used for occupancy by tenants, owners, or members 
of an owner's immediate family.
    Replacement housing. The replacement of existing, individual owner 
occupied housing where repair and rehabilitation assistance is not 
economically feasible or practical. The term replacement housing does 
not apply to housing preservation. The overall condition of the unit or 
dwelling must meet Thermal Standards adopted by the locality/
jurisdiction for new or existing structures and applicable development 
standards for new or existing housing recognized by RHS in subpart A of 
part 1924 or standards contained in any of the voluntary national model 
codes acceptable upon review by RHS. Properties included on or eligible 
for inclusion on the National Register of Historic Places are subject to 
the standards and conditions of Sec.  1944.673 prior to replacement.
    RHS. RHS means the Rural Housing Service, or a successor agency.
    Rural area. The definition in 7 CFR part 3550 applies.

[[Page 261]]

    Tenant. Any person who resides in a single- or multi-unit rental 
property.
    Very low-income. An adjusted annual income that does not exceed the 
very low-income limit according to size of household as established by 
HUD for the county of MSA where the property is located. Maximum very 
low-income limits are set forth in 7 CFR part 3550.

[58 FR 21894, Apr. 26, 1996, as amended at 61 FR 39851, July 31, 1996; 
62 FR 26209, May 13, 1997; 67 FR 78329, Dec. 24, 2002; 69 FR 69105, Nov. 
26, 2004; 72 FR 70221, Dec. 11, 2007; 73 FR 36268, June 26, 2008]



Sec.  1944.657  Restrictions on lobbying.

    All applicants must comply with RD Instruction 1940-Q (available in 
any Rural Development office) which prohibits applicants of Federal 
grants from using appropriated funds for lobbying the Federal Government 
in connection with a specific grant.



Sec.  1944.658  Applicant eligibility.

    (a) To be eligible to receive a grant, the applicant must:
    (1) Be an organization as defined in Sec.  1944.656 of this subpart;
    (2) Have the necessary background and experience on the part of its 
staff or governing body with proven ability to perform responsibility in 
the field of low-income rural housing development, repair and 
rehabilitation, or have other business management or administrative 
experience which indicates an ability to operate a program providing 
repair and rehabilitation financial assistance as well as for 
replacement housing;
    (3) Legally obligate itself to administer HPG funds, provide an 
adequate accounting of the expenditure of such funds in compliance with 
the terms of this regulation, the grant agreement, and 2 CFR part 200 as 
adopted by USDA through 2 CFR part 400 (available in any Rural 
Development office), as appropriate, and comply with the grant agreement 
and Rural Development regulations; and
    (4) If the applicant is engaged in or plans to become engaged in any 
other activities, provide sufficient evidence and documentation that 
they have adequate resources, including financial resources, to carry on 
any other programs or activities to which they are committed without 
jeopardizing the success and effectiveness of the HPG project.
    (b) An applicant will not be considered eligible if it is a 
nonprofit entity and its proposal is based solely on an identity of 
interest, as defined in Sec.  1924.4(i) of subpart A of part 1924 of 
this chapter, between the applicant and the owner(s) of the proposed 
dwelling or co-op to be rehabilitated or repaired.

[58 FR 21894, Apr. 26, 1993, as amended at 62 FR 26209, May 13, 1997; 79 
FR 76011, Dec. 19, 2014]



Sec.  1944.659  Replacement housing.

    Replacement housing applies only to existing, individual owner 
occupied housing. Replacement housing does not apply to rental 
properties (single-unit or multiple-unit) or to cooperative housing 
projects. The grantee is responsible for determining the extent of the 
repairs and rehabilitation prior to any assistance given to an 
individual homeowner. If the cost of such repairs and rehabilitation is 
not economically feasible, then the grantee may consider replacing the 
existing housing with replacement housing, subject to the following:
    (a) The HPG grantee:
    (1) Shall document the total costs for all repairs and 
rehabilitation of the existing housing; and
    (2) Shall document the basis for the determination that the costs 
for all repairs and rehabilitation for the existing housing are not 
economically feasible.
    (b) The individual homeowner:
    (1) Must meet all requirements of Sec.  1944.661;
    (2) Must lack the income and repayment ability to replace their 
existing home without the assistance of the HPG grantee;
    (3) Must have been determined by the HPG grantee and RHS to be 
unable to afford a loan under section 502 for replacement housing; and
    (4) Must be able to afford the replacement housing on terms set 
forth by the HPG grantee.
    (c) The existing home:

[[Page 262]]

    (1) Must be demolished as part of the process of providing 
replacement housing. It will be determined by the grantee and individual 
homeowner when is the best time for demolition; and
    (2) May not be sold to make way for the replacement housing.
    (d) The replacement housing:
    (1) May be either new housing or a dwelling brought onto the site of 
the existing housing;
    (2) May use no more than $15,000 in HPG funds;
    (3) Must meet all applicable requirements of 7 CFR 3550.57; and
    (4) May not be sold within 5 years of completion of the project.
    (e) Any moneys received by the homeowner from selling salvaged 
material after demolishing the existing home must be used towards the 
replacement housing.

[62 FR 26209, May 13, 1997]



Sec.  1944.660  Authorized representative of the HPG applicant and
Rural Development point of contact.

    (a) Rural Development will deal only with authorized representatives 
designated by the HPG applicant.
    (b) The State Director will designate either the State Office and/or 
the District Office as the processing office and/or the servicing office 
for the HPG program. The State Director's selection may be based on 
staffing, total program size, number of preapplications anticipated, 
type of applicants, or similar criteria. The State Director must publish 
this designation each year at the time the Federal Register is published 
informing the public of the open period for acceptance of 
preapplications as outlined in Sec.  1944.678 of this subpart.



Sec.  1944.661  Individual homeowners--eligibility for HPG assistance.

    The individual homeowners assisted must have income that meets the 
very low- or low-income definitions, be the owner of an individual 
dwelling at least 1 year prior to the time of assistance, and be the 
intended occupant of the dwelling subsequent to the time of assistance. 
The dwelling must be located in a rural area and be in need of housing 
preservation assistance. Each homeowner is required to submit evidence 
of income and ownership for retention in the grantee's files.
    (a) Income. Determination of income will be made in accordance with 
7 CFR 3550.54(c). All members of the household, as defined in Sec.  
1944.656 of this subpart, must be included when determining income. 
Grantees must use certifications, may require additional information 
from the homeowner, and should seek advice from their attorney.
    (b) Ownership. Evidence of ownership may be a photostatic copy of 
the instrument evidencing ownership. Methods for assuring the intention 
of the homeowner to continue to occupy the unit after assistance will be 
established by the grantee. Any of the following will satisfy or fulfill 
this requirement of ownership:
    (1) Full marketable title.
    (2) An undivided or divided interest in the property to be repaired, 
rehabilitated, or replaced when not all of the owners are occupying the 
property. HPG assistance may be made in such cases when:
    (i) The occupant has been living in the house for at least 1 year 
prior to the date of requesting assistance;
    (ii) The grantee has no reason to believe the occupant's position of 
owner/occupant will be jeopardized as a result of the improvements to be 
made with HPG funds; and
    (iii) In the case of a loan, and to the extent possible, the co-
owner(s) should also sign the security instrument.
    (3) A leasehold interest in the property to be repaired, 
rehabilitated, or replaced. When the potential HPG recipient's 
``ownership'' interest in the property is based on a leasehold interest, 
the lease must be in writing and a copy must be included in the 
grantee's file. The unexpired portion of the lease must not be less than 
5 years and must permit the recipient to make modifications to the 
structure without increasing the recipient's lease cost.
    (4) A life estate, with the right of present possession, control, 
and beneficial use of the property.
    (5) Land assignments may be accepted as evidence of ownership only 
for American Indians living on a reservation, when historically the 
permits have been used by the tribe and have

[[Page 263]]

had the comparable effect of a life estate.
    (c) Other evidence of ownership. The following items may be accepted 
as evidence of ownership if a recorded deed cannot be provided:
    (1) Any legal instrument, whether or not recorded, which is commonly 
considered evidence of ownership.
    (2) Evidence that the person(s) receiving assistance from the HPG 
grantee is listed as the owner of the property by the local taxing 
authority and is responsible for any real estate taxes.
    (3) Affidavits by others in the community that the person(s) 
receiving assistance from the HPG grantee has occupied the property as 
the apparent owner for a period of not less than 10 years, and is 
generally believed to be the owner.

[58 FR 21894, Apr. 26, 1993, as amended at 62 FR 26209, May 13, 1997]



Sec.  1944.662  Eligibility of HPG assistance on rental properties
or co-ops.

    (a) Ownership. The owner(s) of rental properties or co-ops must own 
the dwelling at the time of receiving assistance from the HPG grantee. 
The dwelling must be located in a rural area and be in need of housing 
preservation assistance. Evidence of ownership may be a photostatic copy 
of the instrument evidencing ownership. Owners of rental properties and 
co-ops are required to submit evidence of ownership for retention in the 
grantee's files. Any of the following will satisfy or fulfill this 
requirement of ownership:
    (1) Full marketable title.
    (2) An undivided or divided interest in the property to be repaired 
or rehabilitated.
    (3) A leasehold interest in the property to be repaired or 
rehabilitated. Ownership interest in the property is based on a 
leasehold interest. The lease must be in writing and a copy must be 
included in the grantee's file. The unexpired portion of the lease must 
not be less than 5 years and must permit the recipient to make 
modifications to the structure without increasing the recipient's lease 
cost.
    (4) Land assignments may be accepted as evidence of ownership only 
for American Indians living on a reservation, when historically the 
permits have been used by the tribe and have had the comparable effect 
of a life estate.
    (b) Tenant eligibility. The following requirements must be met in 
order for a unit within a rental property or co-op to be assisted with 
HPG funds:
    (1) The tenant must have income that meets the very low- or low-
income definition.
    (2) The tenant must be the intended occupant of the unit, but is not 
required to have resided previously in the dwelling.
    (3) Any owner(s) who receives assistance from an HPG grantee or a 
member of the immediate family of the owner(s), who also resides in the 
unit within the dwelling to be repaired or rehabilitated is eligible to 
have their unit repaired or rehabilitated, if they are income eligible 
and meet all other requirements.
    (c) Identity of interest. When an identity of interest, as defined 
in Sec.  1924.4(i) of subpart A of part 1924 of this chapter, exists 
between a nonprofit entity and the owner(s) of a dwelling, the property 
is not eligible for assistance.



Sec.  1944.663  Ownership agreement between HPG grantee and rental
property owner or co-op.

    HPG assistance may be provided by a grantee with respect to rental 
properties or co-ops only if the following conditions are met by the 
rental property owner(s) or by the co-op during a minimum 5 year 
restrictive period beginning on the date agreed upon in the agreement 
between the grantee and the rental property owner (or co-op). The HPG 
grantee is responsible for preparing, executing, and monitoring for 
compliance, the ownership agreement with the owner(s) of the rental 
property or the co-op. The rental property owner(s) or the co-ops are 
required to enter into an ownership agreement with the grantee to assure 
compliance with the requirements of this section.
    (a) Ownership agreement. At a minimum, the ownership agreement must 
include the following clauses:
    (1) The owner(s) agrees to make the units repaired or rehabilitated 
available for occupancy to very low- or low-income persons for a period 
of not less

[[Page 264]]

than 5 years, such restrictive period beginning on the date agreed upon 
in the agreement between the grantee and the rental property owner(s) or 
co-op.
    (2) The owner(s) agrees to pass on to the tenants any reduction in 
the debt service payments resulting from the HPG assistance provided by 
the HPG grantee to the owner(s).
    (3) The owner(s) of rental properties agrees not to convert the 
units to condominium ownership. In the case of co-ops, the owner(s) 
agrees not to convert the dwelling(s) to condominium ownership or any 
form of cooperative ownership not eligible under this section. This 
paragraph (a)(3) is subject to the restrictive period noted in paragraph 
(a)(1) of this section.
    (4) The owner(s) agrees not to refuse to rent a unit to any person 
solely because the person is receiving or is eligible to receive 
assistance under any Federal, State, or local housing assistance 
program.
    (5) The owner(s) agrees that the units repaired or rehabilitated 
will be occupied or available for occupancy by persons of very low- or 
low-income.
    (6) The owner(s) agrees to enter into and abide by written leases 
with the tenants and that such leases shall provide that the tenants may 
be evicted only for good cause.
    (7) The owner(s) agrees that, in the event the owner(s) or the 
owner's successors in interest fail to carry out the requirements of 
this section during the applicable period, they shall make a payment to 
Rural Development in an amount that equals the total amount of 
assistance provided by the grantee plus interest thereon (without 
compounding) for each year and any fraction thereof that the assistance 
was outstanding. The interest rate shall be that as determined by Rural 
Development at the time of infraction taking into account the average 
yield on outstanding marketable long-term obligations of the United 
States during the month preceding the date on which the assistance was 
initially made available.
    (8) The owner(s) agrees that, notwithstanding any other provisions 
of law, the HPG assistance provided to the owner(s) shall constitute a 
debt which is payable in the case of any failure of this section and 
shall be secured by a security instrument provided by the owner(s) or 
co-op to the grantee, that provides for Rural Development to take such 
action upon incapacity or dissolution of the grantee.
    (9) The owner(s) agrees and certifies that the assistance is being 
made available in conformity with Public Law 88-352, the ``Civil Rights 
Act of 1964,'' and Public Law 90-284, the ``Civil Rights Act of 1968.''
    (b) Responsibilities of the grantee. The grantee is responsible for 
insuring through verification and monitoring that the areas listed below 
are in compliance:
    (1) That HPG funds used for loans, grants, or interest reduction 
payments providing repair or rehabilitation assistance to owners of 
rental properties or co-ops are not in excess of 75 percent of the total 
cost of all repairs and rehabilitation activities eligible for HPG 
assistance.
    (2) That the owner(s) is not repairing and/or rehabilitating any 
unit unless it meets the requirements of Sec.  1944.662 (b)(3) of this 
subpart.
    (3) That rental property units being repaired and/or rehabilitated 
and occupied by owners or members of the owner's immediate family meet 
all other requirements of this subpart.
    (4) That, for multi-units not considered eligible as a result of 
paragraph (b)(2) or (b)(3) of this section, the grantee and owner(s) 
shall agree on a method, if any is needed, of determining the prorata 
share of repairs and rehabilitation activities to the dwelling, based on 
a percentage of the ineligible units to the total dwelling.



Sec.  1944.664  Housing preservation and replacement housing assistance.

    (a) Grantees are responsible for providing loans, grants, or other 
comparable assistance to homeowners, owners of rental properties or co-
ops for housing preservation or for replacement housing as described in 
Sec.  1944.656.
    (b) HPG funds used for loans, grants, or interest reduction payments 
to provide rental repair and/or rehabilitation assistance to owners of 
rental properties or co-ops shall not exceed the requirement noted in 
Sec.  1944.663(b)(1) of this subpart.

[[Page 265]]

    (c) Authorized housing preservation assistance includes, but is not 
limited to, cost of labor and materials for:
    (1) Installation and/or repair of sanitary water and waste disposal 
systems, together with related plumbing and fixtures, which will meet 
local health department requirements;
    (2) Energy conservation measures such as:
    (i) Insulation; and
    (ii) Combination screen-storm windows and doors;
    (3) Repair or replacement of the heating system including the 
installation of alternative systems such as woodburning stoves or space 
heaters, when appropriate and if local codes permit;
    (4) Electrical wiring;
    (5) Repair of, or provision for, structural supports and 
foundations;
    (6) Repair or replacement of the roof;
    (7) Replacement of severely deteriorated siding, porches or stoops;
    (8) Alterations of the unit's interior or exterior to provide 
greater accessibility for any handicapped person;
    (9) For properties listed on or eligible for the National Register 
of Historic Places, activities associated with conforming repair and 
rehabilitation activities to the standards and/or design comments 
resulting from the consultation process contained in Sec.  1944.673 of 
this subpart;
    (10) Necessary repairs to manufactured housing provided:
    (i) For homeowners only, the recipient owns the home and the site on 
which the home is situated and the homeowner has occupied that home on 
that site for at least 1 year prior to receiving HPG assistance; and
    (ii) For homeowners, owners of single- or multiple-unit rental 
properties, and co-ops, the manufactured housing is on a permanent 
foundation or will be put on a permanent foundation with HPG funds. 
Advice on the requirements for a permanent foundation is available from 
Rural Development. Guidance may be found in Sec.  1944.223(e) of subpart 
E of this part and in exhibit J of subpart A of part 1924 of this 
chapter;
    (11) Additions to any dwelling (conventional or manufactured) only 
when it is clearly necessary to alleviate overcrowding or to remove 
health hazards to the occupants; or
    (12) Relocation costs either permanent or temporary for assistance 
to rental properties or co-ops, as noted in Sec.  1944.667 of this 
subpart.
    (d) Authorized replacement housing assistance includes, but is not 
limited to:
    (1) Building a dwelling and providing related facilities for use by 
the individual homeowner as a permanent resident;
    (2) Providing a safe and sanitary water and waste disposal system, 
together with related plumbing and fixtures, which will meet local 
health department requirements;
    (3) Providing minimum site preparation and other on-site improvement 
including grading, foundation plantings, and minimal landscaping, and 
other on-site improvements required by local jurisdictions;
    (4) Providing special design features or equipment when necessary 
because of physical handicap or disability of the HPG recipient or 
member of the household;
    (5) Purchasing and installing approved energy saving measures and 
approved furnaces and space heaters which use a type of fuel that is 
commonly used, and is economical and dependably available;
    (6) Providing storm cellars and similar protective structures, if 
typical for the area;
    (7) Paying real estate taxes which are due and payable on the 
existing dwelling or site at the time of closing, if this amount is not 
a substantial part of the HPG assistance. (HPG assistance may not be 
made available if the real estate taxes which are due and payable are 
not paid at the time assistance is granted.);
    (8) Providing living area for the HPG recipient and all members of 
the household as required in 7 CFR 3550.54(c);
    (9) Moving a dwelling onto the site of the demolished, previously 
existing housing and meeting all HPG housing preservation requirements 
for repair and rehabilitation;
    (10) Providing funds for demolishing the existing housing; and

[[Page 266]]

    (11) Any other cost that is reasonable and justifiable directly 
related to replacement activities.
    (e) HPG funds may be used for payment of incidental expenses 
directly related to accomplishing authorized activities such as fees for 
connection of utilities (water, sewer, gas, electric), credit reports, 
surveys, title clearance, loan closing, inspections, and architectural 
or other technical services. All fees will be in accordance with local 
prevailing rates and so documented.
    (f) HPG funds may be used where they do not contribute to the 
health, safety and well being of the occupant or do not materially 
contribute to the structural integrity or long-term preservation of the 
unit. The percentage of the funds to be used for such purposes must not 
exceed 20 percent of the total funding for the unit(s) and/or dwelling, 
and such work must be combined with improvements listed as eligible 
under paragraph (c) of this section. These improvements may include, but 
are not limited to the following:
    (1) Painting;
    (2) Paneling;
    (3) Floor covering, including carpeting;
    (4) Improving clothes closets or shelving;
    (5) Improving kitchen cabinets;
    (6) Air conditioning; or
    (7) Landscape plantings.
    (g) Under the following conditions, HPG funds may be used to 
reimburse the grantee for authorized housing preservation or replacement 
housing activities performed by employees of the grantee where the 
grantee acts as a construction contractor and furnishes construction 
services:
    (1) The grantee must demonstrate that such work performed by the 
grantee results in cost savings in terms of time and labor over cost for 
such work prevailing in the area;
    (2) The grantee has established a process for third party review of 
all performance by a local government, building inspector or other 
independent party;
    (3) The grantee has established or makes available a process that 
provides for consumer protection to the individual homeowner, owner of a 
rental property, or co-op assisted; and
    (4) The grantee's accounting system provides a clear delineation 
between administrative costs and construction contractor (non-
administrative) costs.
    (h) HPG funds may not be used to:
    (1) Assist in the construction or completion of an addition 
(excluding paragraph (c)(11) of this section) or a new dwelling. This 
paragraph does not apply to replacement housing.
    (2) Refinance any debt or obligation of the grantee, the individual 
homeowner, owners of a rental property, or co-ops other than obligations 
incurred for eligible items covered by this section entered into after 
the date of agreement with the HPG grantee.
    (3) Repair or rehabilitate as well as replace any property located 
in the Coastal Barrier Resources System.

[58 FR 21894, Apr. 26, 1993, as amended at 62 FR 26210, May 13, 1997]



Sec.  1944.665  Supervision and inspection of work.

    Grantees are responsible for supervising all rehabilitation and 
repair work, as well as replacement housing financed with HPG 
assistance. After all HPG work has been completed, a final inspection 
must be done by a disinterested third party, such as local building and 
code enforcement officials. If there are no such officials serving the 
area where HPG activities will be undertaken, or if the grantee would 
also normally make such inspections, the grantee must use qualified 
contract or fee inspectors.

[58 FR 21894, Apr. 26, 1993, as amended at 62 FR 26210, May 13, 1997]



Sec.  1944.666  Administrative activities and policies.

    Grant funds are to be used primarily for housing repair and 
rehabilitation activities. Use of grant funds for direct and indirect 
administrative costs is a secondary purpose and must not exceed 20 
percent of the HPG funds awarded to the grantee.
    (a) Administrative expenses may include:
    (1) payment of reasonable salaries or contracts for professional, 
technical, and clerical staff actively assisting in the delivery of the 
HPG project.

[[Page 267]]

    (2) Payment of necessary and reasonable office expenses such as 
office rental, supplies, utilities, telephone services, and equipment. 
(Any item of nonexpendable personal property having a unit value of 
$1,000 or more, acquired with HPG funds, will be specifically identified 
to Rural Development in writing.)
    (3) Payment of necessary and reasonable administrative costs such as 
workers' compensation, liability insurance, and the employer's share of 
Social Security and health benefits. Payments to private retirement 
funds are permitted if the grantee already has such a fund established 
and ongoing.
    (4) Payment of reasonable fees for necessary training of grantee 
personnel.
    (5) Payment of necessary and reasonable costs for an audit upon 
expiration of the grant agreement.
    (6) Other reasonable travel and miscellaneous expenses necessary to 
accomplish the objectives of the specific HPG grant which were 
anticipated in the individual HPG grant proposal and which have been 
approved as eligible expenses at the time of grant approval.
    (b) HPG administrative funds may not be used for:
    (1) Preparing housing development plans and strategies except as 
necessary to accomplish the specific objectives of the HPG project.
    (2) Substitution of any financial support previously provided or 
currently available from any other source.
    (3) Reimbursing personnel to perform construction related to housing 
preservation assistance. (Non-administrative funds may be used if 
construction is for housing preservation assistance under the provisions 
of Sec.  1944.664(g) of this subpart.
    (4) Buying property of any kind from persons receiving assistance 
from the grantee under the terms of the HPG agreement.
    (5) Paying for or reimbursing the grantee for any expense or debts 
incurred before Rural Development executes the grant agreement.
    (6) Paying any debts, expenses, or costs which should be the 
responsibility of the individual homeowner, owner, tenant or household 
member of a rental property, or owner (member) or non-member of a co-op 
receiving HPG assistance outside the costs of repair and rehabilitation 
as well as for replacement housing (individual homeowners only).
    (7) Any type of political activities prohibited by the Office of 
Management and Budget (OMB) Circular A-122.
    (8) Other costs including contributions and donations, 
entertainment, fines and penalties, interest and other financial costs 
unrelated to the HPG assistance to be provided, legislative expenses, 
and any excess of cost from other grant agreements.
    (9) Paying added salaries for employees paid by other sources, i.e., 
public agencies who pay employees to handle grants.
    (c) Advice concerning ineligible costs may be obtained from Rural 
Development as part of the HPG preapplication review or when a proposed 
cost appears ineligible.
    (d) The grantee may not charge fees or accept any compensation or 
gratuities from HPG recipients for the grantee's technical or 
administrative services under this program. Where the grantee performs 
as a construction contractor, the grantee may be paid such compensation 
directly related to construction services provided and limited to 
authorized housing preservation activities.
    (e) The policies, guidelines and requirements of 2 CFR part 200, as 
adopted by USDA through 2 CFR part 400, apply to the acceptance and use 
of HPG funds.

[58 FR 21894, Apr. 26, 1993, as amended at 62 FR 26210, May 13, 1997; 79 
FR 76011, Dec. 19, 2014]



Sec.  1944.667  Relocation and displacement.

    (a) Relocation. Public bodies and agencies must comply with the 
requirements of the Uniform Relocation Assistance and Real Property 
Acquisition Act of 1970. The grantee must provide assistance for 
permanent or temporary relocation of displaced persons for units 
repaired or rehabilitated or for individual homes replaced with HPG 
assistance. HPG funds may be used to cover costs incurred in the 
relocation of displaced persons. The applicant

[[Page 268]]

shall include in its statement of activities, a statement concerning the 
temporary relocation of homeowners and/or tenants during the period of 
repairs and/or rehabilitation to the units or dwellings. Any contract or 
agreement between the homeowner and the grantee, as well as between the 
grantee and the owner(s) of rental properties and co-ops shall include a 
statement covering at a minimum;
    (1) The period of relocation (if any);
    (2) The name(s) of the party (or parties) who shall bear the cost of 
temporarily relocating; and
    (3) The name(s) of the party (or parties) who shall bear the cost of 
permanent relocation; and
    (4) If paragraphs (a) (2) or (3) of this section is the grantee, the 
maximum amount of temporary or permanent relocation costs proposed to be 
allowed.
    (b) Displacement. The applicant shall include in its statement of 
activities, a statement as to how its proposed HPG financial assistance 
program shall keep to a minimum the displacement of homeowners and/or 
tenants.

[58 FR 21894, Apr. 26, 1993, as amended at 62 FR 26210, May 13, 1997]



Sec.  1944.668  Term of grant.

    HPG projects may be funded under the terms of a grant agreement for 
a period of up to 2 years commencing on the date of execution of the 
grant agreement by the Rural Development approval official. Term of the 
project will be based upon HPG resources available for the proposed 
project and the accomplishability of the applicant's proposal within 1 
or 2 years. Applicants requesting a 2 year term may be asked to develop 
a feasible 1 year program if sufficient funds are not available for a 2 
year program.



Sec.  1944.669  [Reserved]



Sec.  1944.670  Project income.

    (a) Project income during the grant period from loans made to 
homeowners, owners of rental properties, and co-ops is governed by 2 CFR 
part 200 as adopted by USDA through 2 CFR part 400. All income during 
the grant period, including amounts recovered by the grantee due to 
breach of agreements between the grantee and the HPG recipient, must be 
used under (and in accordance with) the requirements of the HPG program.
    (b) Grantees are encouraged to establish a program which reuses 
income from loans after the grant period for continuing repair and 
rehabilitation activities, as well as for individual housing replaced.

[58 FR 21894, Apr. 26, 1993, as amended at 62 FR 26210, May 13, 1997; 79 
FR 76011, Dec. 19, 2014]



Sec.  1944.671  Equal opportunity requirements and outreach efforts.

    The policies and regulations contained in subpart E of part 1901 of 
this chapter apply to grantees under this subpart.
    (a) Fair housing. The Fair Housing Act prohibits any person or 
entity whose business includes engaging in residential real estate-
related transactions to discriminate against any person in making loans, 
grants, or other financial assistance for a unit or dwelling, or which 
will be secured by a unit or dwelling, because of race, color, religion, 
sex, national origin, age, familial status, or handicap/disability. 
Prohibited practices under this section include:
    (1) Failing to provide any person in connection with a residential 
real estate-related transaction, information regarding the availability 
of loans, grants, or other financial assistance, or providing 
information that is inaccurate or different from that provided others; 
and
    (2) The term residential and real estate-related transaction 
includes the making or purchasing of loans, grants, or other financial 
assistance for purchasing, constructing, improving, repairing, or 
rehabilitating a unit or dwelling, as well as for replacement housing 
for individual homeowners.
    (b) Outreach. In addition, the HPG grantee is required to address an 
outreach effort in their program. The amount of outreach should 
sufficiently reach the entire service area. As a measure of compliance, 
the percentages of the individuals served by the HPG grantee should be 
in proportion to the percentages of the population of

[[Page 269]]

the service area by race/national origin. If the percentages are not 
proportional, then adequate justification is to be made. Exhibit E-1 of 
this subpart (available in any Rural Development office) will be used to 
monitor these requirements. (Further explanation and guidance of exhibit 
E-1 can be found in exhibit E-2 of this subpart which is available in 
any Rural Development office). A separate file will be maintained by the 
grantee that will include the following outreach activities:
    (1) Community contacts to community organizations, community 
leaders, including minority leaders, by name, race, and date contacted;
    (2) Copies of all advertising in local newspapers, and through other 
media. Any advertising must reach the entire service area. Rural 
Development encourages the use of minority-owned radio stations and 
other types of media, if available, in the service area. The grantee's 
file shall also include the name of the media used, and the percentage 
of its patronage by race/national origin; and
    (3) Copies of any other advertising or other printed material, 
including the application form used. The application form shall include 
the nondiscrimination slogan: ``This is an equal opportunity program. 
Discrimination is prohibited by Federal Law.''
    (c) Additional requirements. In order to meet the Fair Housing 
requirements and the nondiscrimination requirements of Title VI of the 
Civil rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, 
and the Age Discrimination Act of 1975, the HPG grantee will need to 
adhere to the recommendations of exhibit H of this subpart (available in 
any Rural Development office).

[58 FR 21894, Apr. 26, 1993, as amended at 62 FR 26210, May 13, 1997]



Sec.  1944.672  Environmental requirements.

    Subpart G of part 1940 of this chapter will be followed regarding 
environmental requirements. The following is additional information on 
how to approach HPG projects under those requirements:
    (a) The approval of an HPG grant for the repair, rehabilitation, or 
replacement of dwellings shall be a Class I action. As part of their 
preapplication materials, applicants shall submit Form RD 1940-20, 
``Request for Environmental Information,'' for the geographical areas 
proposed to be served by the program. The applicant shall refer to 
exhibit F-1 of this subpart (available in any Rural Development State or 
District Office) when completing Form RD 1940-20. Further guidance on 
completing this form is available from the Agency office servicing the 
program.
    (b) The use of HPG funds by the grantee to repair, rehabilitate, or 
replace on the same site, specific dwellings is generally exempt from an 
RHS environmental review. However, if such dwellings are located in a 
floodplain, wetland, or the proposed work is not concurred in by the 
Advisory Council on Historic Preservation under the requirements of 
Sec.  1944.673, an RHS environmental review is required. Dwellings 
within the Coastal Barrier Resources System are not eligible for HPG 
assistance. Applicants must include in their preapplication a process 
for identifying dwellings that may receive housing preservation or 
replacement housing assistance that will require an environmental 
assessment. This may be accomplished through use of exhibit F-2 of this 
subpart (available in any Rural Development State or District Office) or 
another process supplying similar information acceptable to RHS.
    (c) If a specific dwelling is not located in a floodplain, wetland, 
or the proposed work is concurred in by the Advisory Council on Historic 
Preservation under the requirements of Sec.  1944.673 of this subpart, 
no environmental review is required by Rural Development. The grantee 
only needs to indicate its review and compliance with this subpart, 
indicating such in each recipient's file in accordance with paragraph 
(e) of this section.
    (d) When a dwelling requiring an environmental assessment is 
proposed for HPG assistance, the grantee will immediately contact the 
RHS office designated to service the HPG grant. Prior to approval of HPG 
assistance to the recipient by the grantee, RHS will prepare the 
environmental assessment in

[[Page 270]]

accordance with part 1940, subpart G, of this chapter with the 
assistance of the grantee, as necessary. Paragraph VIII of exhibit C of 
this subpart (available in any Rural Development State or District 
Office) provides further guidance in this area.
    (e) If Rural Development is required to make an environmental 
assessment, the grantee will be provided with a copy of the assessment 
which will be made part of the recipient's file. The grantee must also 
include in each recipient's file:
    (1) Documentation on how the process for historic preservation 
review under Sec.  1944.673 of this subpart has been complied with, 
including all relevant reviews and correspondence; and
    (2) Determination as to whether the unit is located in a 100-year 
floodplain or a wetland.
    (3) Documentation of this review. Suggested language is: ``We have 
considered this dwelling under Rural Development's environmental and 
historic preservation requirements for a HPG (Sec. Sec.  1944.672 and 
1944.673 of this subpart) and an environmental assessment is not 
required. The review was completed in accordance with the process to 
identify properties requiring a Rural Development environmental 
assessment approved with our statement of activities.''
    (f) Proposed use of funds by an applicant to use monies for 
additions under Sec.  1944.664 (c)(11) of this subpart must be addressed 
in the statement of activities.
    (g) Grantees must contact Rural Development prior to actual usage of 
funds by the grantees under Sec.  1944.664 (c)(11) of this subpart. 
Rural Development must complete the appropriate level of environmental 
review in accordance with subpart G of part 1940 of this chapter.

[58 FR 21894, Apr. 26, 1993, as amended at 62 FR 26210, May 13, 1997]



Sec.  1944.673  Historic preservation and replacement housing requirements
and procedures.

    (a) Rural Development has entered into a Programmatic Memorandum of 
Agreement (PMOA) with the National Conference of State Historic 
Preservation Officers (SHPO) and the Advisory Council on Historic 
Preservation in order to implement the specific requirements regarding 
historic preservation contained in section 533 of the Housing Act of 
1949, 42 U.S.C. 1490(m) of the enabling legislation. The PMOA, with 
attachments, can be found in RD Instruction 2000-FF (available in any 
Rural Development office). A copy of the PMOA will be provided to each 
applicant for a HPG as part of the preapplication package specified in 
paragraph II of exhibit C of this subpart (available in any Rural 
Development office).
    (b) Each applicant for an HPG grant will provide, as part of its 
preapplication documentation submitted to RHS, a description of its 
proposed process for assisting very low-and low-income persons owning 
historic properties needing rehabilitation, repair, or replacement. 
``Historic properties'' are defined as properties that are listed or 
eligible for listing on the National Register of Historic Places. Each 
HPG proposal shall comply with the provisions of Stipulation I, A-G of 
the PMOA (RD Instruction 2000-FF), available in any Rural Development 
State or District Office. Should RHS be required to assume 
responsibility for compliance with 36 CFR part 800 in accordance with 
Stipulation III of the PMOA, the grantee will assist RHS in preparing an 
environmental assessment. RHS will work with the grantee to develop 
alternative actions or mitigation measures, as appropriate.
    (c) Such assumption of responsibility by Rural Development on a 
particular property shall not preclude the grantee from carrying out the 
requirements of 36 CFR part 800 on other properties as though it were a 
Federal agency, but no work may be commenced on any unit or dwelling in 
controversy until and unless so advised by Rural Development.

[58 FR 21894, Apr. 26, 1993, as amended at 62 FR 26211, May 13, 1997]



Sec.  1944.674  Public participation and intergovernmental review.

    (a) In preparing its statement of activities, the applicant is 
responsible for consulting with leaders from the county, parish and/or 
township governments of the area where HPG activities

[[Page 271]]

will take place for the purpose of assuring that the proposed HPO 
program is beneficial and does not duplicate current activities. 
American Indian nonprofit organization applicants should obtain the 
written concurrence of the tribal governing body in lieu of consulting 
with the county governments when the program is operated only on tribal 
land.
    (b) The applicant must also make its statement of activities 
available to the public for comment. The applicant must announce the 
availability of its statement of activities for review in a newspaper of 
general circulation in the project area and allow at least 15 days for 
public comment. The start of this 15-day period must occur no later than 
16 days prior to the last day for acceptance of preapplications by Rural 
Development.
    (c) The HPG program is subject to the provisions of Executive Order 
12372, which requires intergovernmental consultation with State and 
local officials. These requirements are set forth in U.S. Department of 
Agriculture regulations 7 CFR part 3015, subpart V, and RD Instruction 
1970-I, `Intergovernmental Review,' available in any Agency office or on 
the Agency's Web site. Prospective applicants for HPG grants must submit 
its statement of activities to the State single point of contact prior 
to submitting their preapplication to Rural Development. Evidence of 
submittal of the statement of activities to the State single point of 
contact is to be submitted with a preapplication. Comments and 
recommendations made through the intergovernmental review process are 
for the purpose of assuring consideration of State and local government 
views. The name of the State single point of contact is available from 
any Rural Development office. This section does not apply to American 
Indian tribes, bands, groups, etc., as noted in Sec.  1944.656 of this 
subpart.

[58 FR 21894, Apr. 26, 1993, as amended at 76 FR 80731, Dec. 27, 2011]



Sec.  1944.675  Allocation of HPG funds to States and unused HPG funds.

    The allocation and distribution of HPG funds is found in Sec.  
1940.578 of subpart L of part 1940 of this chapter.



Sec.  1944.676  Preapplication procedures.

    (a) All applicants will file an original and two copies of Standard 
Form (SF) 424.1, ``Application For Federal Assistance (For 
Nonconstruction),'' and supporting information with the appropriate 
Rural Development office. A preapplication package, including SF-424.1, 
is available in any Rural Development office.
    (b) All preapplications shall be accompanied by the following 
information which Rural Development will use to determine the 
applicant's eligibility to undertake the HPG program and to evaluate the 
preapplication under the project selection criteria of Sec.  1944.679 of 
this subpart.
    (1) A statement of activities proposed by the applicant for its HPG 
program as appropriate to the type of assistance the applicant is 
proposing, including:
    (i) A complete discussion of the type of and conditions for 
financial assistance for housing preservation, including whether the 
request for assistance is for a homeowner assistance program, a rental 
property assistance program, or a co-op assistance program;
    (ii) The process for selecting recipients for HPG assistance, 
determining housing preservation needs of the dwelling, performing the 
necessary work, and monitoring/inspecting work performed;
    (iii) A description of the process for identifying potential 
environmental impacts in accordance with Sec.  1944.672 of this subpart, 
and the provisions for compliance with Stipulation I, A-G of the PMOA 
(RD Instruction 2000-FF available in any Rural Development office) in 
accordance with Sec.  1944.673 (b) of this subpart. With the exception 
of Stipulation I, D of the PMOA, this may be accomplished by adoption of 
exhibit F-2 of this subpart (available in any Rural Development office), 
or another process supplying similar information acceptable to Rural 
Development;
    (iv) The development standard(s) the applicant will use for the 
housing preservation work; and, if not the Rural Development development 
standards for existing dwellings, the evidence of its acceptance by the 
jurisdiction where the grant will be implemented;
    (v) The time schedule for completing the program;

[[Page 272]]

    (vi) The staffing required to complete the program;
    (vii) The estimated number of very low- and low-income minority and 
nonminority persons the grantee will assist with HPG funds; and, if a 
rental property or co-op assistance program, the number of units and the 
term of restrictive covenants on their use for very low- and low-income;
    (viii) The geographical area(s) to be served by the HPG program;
    (ix) The annual estimated budget for the program period based on the 
financial needs to accomplish the objectives outlined in the proposal. 
The budget should include proposed direct and indirect administrative 
costs, such as personnel, fringe benefits, travel, equipment, supplies, 
contracts, and other cost categories, detailing those costs for which 
the grantee proposes to use the HPG grant separately from non-HPG 
resources, if any. The applicant budget should also include a schedule 
(with amounts) of how the applicant proposes to draw HPG grant funds, 
i.e., monthly, quarterly, lump sum for program activities, etc.;
    (x) A copy of an indirect cost proposal as required in 2 CFR part 
200 as adopted by USDA through 2 CFR part 400, when the applicant has 
another source of federal funding in addition to the HPG program;
    (xi) A brief description of the accounting system to be used;
    (xii) The method of evaluation to be used by the applicant to 
determine the effectiveness of its program which encompasses the 
requirements for quarterly reports to Rural Development in accordance 
with Sec.  1944.683(b) of this subpart and the monitoring plan for 
rental properties and co-ops (when applicable) according to Sec.  
1944.689 of this subpart;
    (xiii) The source and estimated amount of other financial resources 
to be obtained and used by the applicant for both HPG activities and 
housing development and/or supporting activities;
    (xiv) The use of program income, if any, and the tracking system 
used for monitoring same;
    (xv) The applicant's plan for disposition of any security 
instruments held by them as a result of its HPG activities in the event 
of its loss of legal status;
    (xvi) Any other information necessary to explain the proposed HPG 
program; and
    (xvii) The outreach efforts outlined in Sec.  1944.671(b) of this 
subpart.
    (2) Complete information about the applicant's experience and 
capacity to carry out the objectives of the proposed HPG program.
    (3) Evidence of the applicant's legal existence, including, in the 
case of a private nonprofit organization, a copy of, or an accurate 
reference to, the specific provisions of State law under which the 
applicant is organized; a certified copy of the applicant's Articles of 
Incorporation and Bylaws or other evidence of corporate existence; 
certificate of incorporation for other than public bodies; evidence of 
good standing from the State when the corporation has been in existence 
1 year or more; and, the names and addresses of the applicant's members, 
directors and officers. If other organizations are members of the 
applicant-organization, or the applicant is a consortium, 
preapplications should be accompanied by the names, addresses, and 
principal purpose of the other organizations. If the applicant is a 
consortium, documentation showing compliance with Sec.  1944.656 of this 
subpart will also be included.
    (4) For a private nonprofit entity, the most recent audited 
statement and a current financial statement dated and signed by an 
authorized officer of the entity showing the amounts and specific nature 
of assets and liabilities together with information on the repayment 
schedule and status of any debt(s) owed by the applicant. If the 
applicant is an organization being assisted by another private nonprofit 
organization, the same type of financial statement should also be 
provided by that organization.
    (5) A brief narrative statement which includes information about the 
area to be served and the need for improved housing (including both 
percentage and actual number of both low-income and low-income minority 
households and substandard housing), the need for the type of housing 
preservation assistance being proposed, the anticipated use of

[[Page 273]]

HPG resources for historic properties, the method of evaluation to be 
used by the applicant in determining the effectiveness of its efforts 
(according to paragraph (b)(1)(xii) of this section).
    (6) A statement containing the component for alleviating 
overcrowding as defined by Sec.  1944.656 of this subpart.
    (7) A list of other activities the applicant is engaged in and 
expects to continue, a statement as to any other funding, and whether it 
will have sufficient funds to assure continued operation of the other 
activities for at least the period of the HPG grant agreement.
    (8) Any other information necessary that specifically addresses the 
selection criteria in Sec.  1944.679 of this subpart.
    (c) The applicant must submit an original and one copy of Form RD 
1940-20 prepared in accordance with exhibit F-1 of this subpart 
(available in any Rural Development office).
    (d) The applicant must submit a description of its process for:
    (1) Identifying and rehabilitating properties that are listed on or 
eligible for listing on the National Register of Historic Places.
    (2) Identifying properties that are located in a floodplain or 
wetland.
    (3) Identifying properties located within the Coastal Barrier 
Resources System.
    (4) Coordinating with other public and private organizations and 
programs that provide assistance in the rehabilitation of historic 
properties (Stipulation I, D, of the PMOA, RD Instruction 2000-FF, 
available in any Rural Development office).
    (5) Paragraphs (d) (1), (2), and (3) of this section may be 
accomplished by adoption of exhibit F-2 of this subpart (available in 
any Rural Development office), or another process supplying similar 
information acceptable to Rural Development.
    (e) The applicant must submit evidence of SHPO concurrence in the 
proposal, or in the event of nonconcurrence, a copy of SHPO's comments 
together with evidence that the applicant has sought the Advisory 
Council on Historic Preservation's advice as to how the disagreement 
might be resolved, and a copy of any advice provided by the Council.
    (f) The applicant must submit written statements and related 
correspondence reflecting compliance with Sec.  1944.674 (a) and (c) of 
this subpart regarding consultation with local government leaders in the 
preparation of its program and the consultation with local and state 
government pursuant to the provisions of Executive Order 12372.
    (g) The applicant is to make its statement of activities available 
to the public for comment prior to submission to Rural Development 
pursuant to Sec.  1944.674(b) of this subpart. The application must 
contain a description of how the comments (if any were received) were 
addressed.
    (h) The applicant must submit an original and one copy of Form RD 
400-1, ``Equal Opportunity Agreement,'' and Form RD 400-4, ``Assurance 
Agreement,'' in accordance with Sec.  1944.674(c) of this subpart.

[58 FR 21894, Apr. 26, 1993, as amended at 79 FR 76011, Dec. 19, 2014]



Sec.  1944.677  [Reserved]



Sec.  1944.678  Preapplication submission deadline.

    Dates governing the invitation and review of HPG preapplications 
will be published annually in the Federal Register and may be obtained 
from Rural Development offices processing HPG preapplications. 
Preapplications received after the date specified in the Federal 
Register will not be considered for funding in that fiscal year and will 
be returned.



Sec.  1944.679  Project selection criteria.

    (a) Applicants must meet all of the following threshold criteria:
    (1) Provide a financially feasible program of housing preservation 
assistance. Financially feasible is defined as proposed assistance which 
will be affordable to the intended recipient or result in affordable 
housing for very low- and low-income persons;
    (2) Serve eligible rural areas with a concentration of substandard 
housing for households with very low- and low-income;
    (3) Be an eligible applicant entity as defined in Sec.  1944.658 of 
this subpart;

[[Page 274]]

    (4) Meet the requirements of consultation and public comment in 
accordance with Sec.  1944.674 of this subpart; and
    (5) Submit a complete preapplication as outlined in Sec.  1944.676 
of this subpart.
    (b) For applicants meeting all of the requirements listed in 
paragraph (a) of this section, Rural Development will use the weighted 
criteria in this paragraph (b) in the selection of grant recipients. 
Each preapplication and its accompanying statement of activities will be 
evaluated and, based solely on the information contained in the 
preapplication, the applicant's proposal will be numerically rated on 
each criteria within the range provided. The highest ranking 
applicant(s) will be selected based on allocation of funds available to 
the State. Exhibit D of this subpart (available in any Rural Development 
office) will be used to document the rating.
    (1) Points are awarded based on the percentage of very low-income 
persons that the applicant proposes to assist, using the following 
scale:
    (i) More than 80%: 20 points.
    (ii) 61% to 80%: 15 points.
    (iii) 41% to 60%: 10 points.
    (iv) 20% to 40%: 5 points.
    (v) Less than 20%: 0 points.
    (2) The applicant's proposal may be expected to result in the 
following percentage of HPG fund use (excluding administrative costs) to 
total cost of unit preservation. This percentage reflects maximum repair 
or rehabilitation with the least possible HPG funds due to leveraging, 
innovative financial assistance, owner's contribution or other specified 
approaches. Points are awarded based on the following percentage of HPG 
funds (excluding administrative costs) to total funds:
    (i) 50% or less: 20 points.
    (ii) 51% to 65%: 15 points.
    (iii) 66% to 80%: 10 points.
    (iv) 81% to 95%: 5 points.
    (v) 96% to 100%: 0 points.
    (3) The applicant has demonstrated its administrative capacity in 
assisting very low- and low-income persons to obtain adequate housing 
based on the following:
    (i) The organization or a member of its staff has at least one or 
more years experience successfully managing and operating a 
rehabilitation or weatherization type program: 10 points.
    (ii) The organization or a member of its staff has at least one or 
more years experience successfully managing and operating a program 
assisting very low- and low-income persons obtain housing assistance: 10 
points.
    (iii) If the organization has administered grant programs, there are 
no outstanding or unresolved audit or investigative findings which might 
impair carrying out the proposal: 10 points.
    (4) The proposed program will be undertaken entirely in rural areas 
outside MSAs identified by Rural Development as having populations below 
10,000 or in remote parts of other rural areas (i.e., rural areas 
contained in MSAs with less than 5,000 population) as defined in Sec.  
1944.656 of this subpart: 10 points.
    (5) The program will use less than 20 percent of HPG funds for 
administration purposes:
    (i) More than 20%: Not Eligible.
    (ii) 20%: 0 points.
    (iii) 19%: 1 point.
    (iv) 18%: 2 points.
    (v) 17%: 3 points.
    (vi) 16%: 4 points.
    (vii) 15% or less: 5 points.
    (6) The proposed program contains a component for alleviating 
overcrowding as defined in Sec.  1944.656 of this subpart: 5 points.
    (c) In the event more than one preapplication receives the same 
amount of points, those preapplications will then be ranked based on the 
actual percentage figure used for determining the points under paragraph 
(b)(1) of this section. Further, in the event that preapplications are 
still tied, then those preapplications still tied will be ranked based 
on the percentage figures used (low to high) in paragraph (b)(2) of this 
section. Further, for applications where assistance to rental properties 
or co-ops is proposed, those still tied will be further ranked based on 
the number of years the units are available for occupancy under the 
program (a minimum of 5 years is required). For this part, ranking will 
be based from most to least number of years. Finally,

[[Page 275]]

if there is still a tie, then a ``lottery'' System will be used.

[58 FR 21894, Apr. 26, 1993, as amended at 73 FR 36269, June 26, 2008]



Sec.  1944.680  Limitation on grantee selection.

    After all preapplications have been reviewed under the selection 
criteria and if more than one preapplication has met the criteria of 
Sec.  1944.679(a) of this subpart, the State Director or approval 
official may not approve more than 50 percent of the State's allocation 
to a single entity.



Sec.  1944.681  Application submission.

    Applicants selected by Rural Development will be advised to submit a 
full application in an original and two copies of SF 424.1, and are to 
include any condition or amendments that must be incorporated into the 
statement of activities prior to submitting a full application. 
Instructions on submission and timing will be provided by FmHA or its 
successor agency under Public Law 103-354.



Sec.  1944.682  Preapplication/application review, grant approval, 
and requesting HPG funds.

    The Rural Development offices processing HPG preapplications/
applications will review the preapplications and applications submitted. 
Further review and actions will be taken by Rural Development personnel 
in accordance with exhibit C of this subpart (available in any Rural 
Development office). Exhibit G of this subpart (available in any Rural 
Development office) will be used by the State Office to notify the 
National Office of preapplications received, eligibility, ranking, 
number of proposed units, amount requested by applicants, and amount 
recommended by State Office. Preapplications determined not eligible 
and/or not meeting the selection criteria will be notified in the manner 
prescribed in exhibit C of this subpart (available in any Rural 
Development office). In addition, Rural Development will document its 
findings and advise the applicant of its review rights or appeal rights 
(if applicable) under subpart B of part 1900 of this chapter. 
Applications determined not eligible will be handled in the same manner. 
The preapplications or applications determined incomplete will be 
notified in the manner prescribed in exhibit C of this subpart 
(available in any Rural Development office) and will not be given appeal 
rights. The State Director is authorized to approve an HPG in accordance 
with this subpart and subpart A of part 1901 of this chapter. The State 
Director may delegate this authority in writing to designated State 
Office personnel and District Directors. Further:
    (a) Grant approval is the process by which Rural Development 
determines that all applicable administrative and legal conditions for 
making a grant have been met, the grant agreement is signed, and funds 
have been obligated for the HPG project. If acceptable, the approval 
official will inform the applicant of approval, having the applicant 
sign Form RD 1940-1, ``Request for Obligation of Funds,'' and exhibit A 
of this subpart (available in any Rural Development office). The 
applicant will be sent a copy of the executed grant agreement and Form 
RD 1940-1. Should any conditions be attached to the grant agreement that 
must be satisfied prior to the applicant receiving any HPG funds, the 
grant agreement and the conditions will be returned to the applicant for 
acceptance and acknowledgement on the grant agreement prior to execution 
by the approval official.
    (b) The application may be disapproved before execution of the grant 
agreement if the applicant is no longer eligible, the proposal is no 
longer feasible, or the applicant requests cancellation of its project. 
Except when the applicant requests cancellation, Rural Development will 
document its findings and advise the applicant of its appeal rights 
under subpart B of part 1900 of this chapter.
    (c) With the executed grant agreement and Form RD 1940-1, Rural 
Development will send the approved applicant (now the ``grantee'') 
copies of SF-270, ``Request for Advance or Reimbursement''. The grantee 
must submit an original and two copies of SF-270 to the Rural 
Development office servicing the project. In addition, the grantee must 
submit SF-272, ``Federal Cash

[[Page 276]]

Transactions Report,'' each time an advance of funds is made. This 
report shall be used by Rural Development to monitor cash advances made 
to the grantee. Advances or reimbursements must be in accordance with 
the grantee's budget and statement of activities, including any 
amendments, prior approved by Rural Development. Requests for 
reimbursement or advances must be at least 30 calendar days apart.
    (d) If the grantee fails to submit required reports pursuant to 
Sec.  1944.683 of this subpart or is in violation of the grant 
agreement, Rural Development may suspend HPG reimbursements and advances 
or terminate the grant in accordance with Sec.  1944.688 of this subpart 
and the grant agreement.



Sec.  1944.683  Reporting requirements.

    (a) SF-269, ``Financial Status Report,'' is required of all grantees 
on a quarterly basis. Grantees shall submit an original and two copies 
of the report to the designated Rural Development servicing office. When 
preparing the Financial Status Report, the total program outlays (Item 
10, g, of SF-269) should be less any rebates, refunds, or other 
discounts. Reports must be submitted no later than 15 days after the end 
of each calendar quarter.
    (b) Quarterly performance reports shall be submitted by grantees 
with SF-269, in an original and two copies (see exhibit E-1 or this 
subpart which is available in any Rural Development office.) The 
quarterly report should relate the activities during the report period 
to the project's objectives and analyze the effectiveness of the 
program. As part of the grantee's preapplication submission, as required 
by Sec.  1944.676(b) of this subpart, the grantee establishes its 
objectives for the HPG program, including its method of evaluation to 
determine its effectiveness. Accordingly, the report must include, but 
need not be limited to, the following:
    (1) Use of HPG funds for administration and housing preservation 
activities.
    (2) The following specific information for each unit or dwelling 
assisted:
    (i) Name(s), address, and income(s) of each homeowner assisted or 
the name and address of the owner(s) or co-op for each rental property 
(single or multi-unit) or co-op assisted;
    (ii) Total cost of repair/rehabilitation, a list of major repairs 
made, amount financed by HPG, and amount financed from which other 
sources;
    (iii) Type of assistance provided (interest subsidy, loan, grant, 
etc.); and
    (iv) Results of implementing the environmental process contained in 
Sec.  1944.672 of this subpart and the historic preservation process 
contained in Sec.  1944.673 of this subpart.
    (3) The use of HPG and any other funds for replacement housing.
    (4) A comparison of actual accomplishments to the objectives set for 
that period, including:
    (i) The number of very low- and low-income, minority and nonminority 
persons assisted in obtaining adequate housing by the HPG program 
through repair and rehabilitation as well as for replacement housing; 
and
    (ii) The average cost of assistance provided to each household.
    (5) Reasons why, if established objectives are not met.
    (6) Problems, delays, or adverse conditions which will materially 
affect attainment of the HPG grant objectives, prevent the meeting of 
time schedules or objectives, or preclude the attainment of program work 
elements during established time periods. This disclosure shall be 
accompanied by a statement of the action taken or contemplated and any 
Federal or other assistance needed to relieve the situation.
    (7) Objectives established for the next reporting period, 
sufficiently detailed to identify the type of assistance to be provided, 
the number and type of households to be assisted, etc.
    (8) A certification that the final building inspection reports for 
each rehabilitation or repair work financed as well as for replacement 
housing with HPG funds for that quarter is on file.
    (c) The grantee should be prepared to meet with the Rural 
Development office servicing the project to discuss its quarterly report 
shortly after submission.
    (d) If the reports are not submitted in a timely manner or if the 
reports indicate that the grantee has made unsatisfactory progress or 
the grantee is not

[[Page 277]]

meeting its established objectives, the Rural Development official 
servicing the grant will recommend to the State Director appropriate 
action to resolve the indicated problem(s). If appropriate corrective 
action is not taken by the grantee, the State Director has the 
discretion to not authorize further advances by suspending the project 
in accordance with Sec.  1944.688 of this subpart and the grant 
agreement.

[58 FR 21894, Apr. 26, 1993, as amended at 62 FR 26211, May 13, 1997]



Sec.  1944.684  Extending grant agreement and modifying the statement 
of activities.

    (a) All requests extending the original grant agreement or modifying 
the HPG program's statement of activities must be in writing. Such 
requests will be processed through the designated Rural Development 
office servicing the project. The approval official will respond to the 
applicant within 30 days of receipt of the request.
    (b) A grantee may request an extension of the grant agreement prior 
to the end of the project term specified in the grant agreement if the 
grantee anticipates that there will be grant funds remaining and the 
grantee has demonstrated its ability to conduct its program in a manner 
satisfactory to Rural Development. The approval official may approve an 
extension when:
    (1) The grantee is likely to complete or exceed the goals outlined 
in the approved statement of activities; and
    (2) The Rural Development office responsible for servicing the grant 
recommends continuation of the grant until the grantee has expended all 
of the remaining grant funds.
    (c) Modifications to the statement of activities, such as revising 
the processes the grantee follows in operating the HPG program, may be 
approved by the approval official when the modifications are for 
eligible purposes in accordance with Sec. Sec.  1944.664 and 1944.666 of 
this subpart, meet any applicable review and process requirements of 
this subpart, and the program will continue to serve the geographic area 
originally approved. The grantee will submit its proposed revisions 
together with the necessary supporting information to Rural Development 
prior to modifying its operation from the approved statement of 
activities.
    (d) Exhibit B of this subpart (available in any Rural Development 
office) will be used for all extensions on and modifications to the 
grant agreement.



Sec.  1944.685  [Reserved]



Sec.  1944.686  Additional grants.

    An additional HPG grant may be made when the grantee has achieved or 
nearly achieved the goals established for the previous or existing 
grant. The grantee must file a preapplication for the current fiscal 
year which will be processed and compared under the project selection 
criteria to others submitted at that time.



Sec.  1944.687  [Reserved]



Sec.  1944.688  Grant evaluation, closeout, suspension, and termination.

    (a) Grant evaluation will be an on-going activity performed by both 
the grantee and Rural Development. The grantee will perform self-
evaluations by preparing quarterly performance reports in accordance 
with Sec.  1944.683 of this subpart. Rural Development will also review 
all reports prepared and submitted by the grantee in accordance with the 
grant agreement and this subpart.
    (b) The grant can be suspended or terminated before the grant ending 
date for the causes specified in the grant agreement. No further grant 
funds will be advanced when grant suspension or termination procedures 
have been initiated in accordance with the grant agreement. Grantees may 
be reimbursed for eligible costs incurred prior to the effective date of 
the suspension or termination. Grantees are prohibited from incurring 
additional obligations of funds after notification, pending corrective 
action by the grantee. Rural Development may allow necessary and proper 
costs that the grantee could not reasonably avoid during the period of 
suspension provided they are for eligible HPG purposes. In the event of 
termination, Rural Development may allow necessary and reasonable costs 
for an audit.

[[Page 278]]

    (c) Grantees will have the opportunity to appeal a suspension or 
termination under Rural Development's appeal procedures under subpart B 
of part 1900 of this chapter.
    (d) The grantee will complete the closeout procedures as specified 
in the grant agreement.
    (e) The grantee will have an audit performed upon termination or 
completion of the project in accordance with 2 CFR part 200 as adopted 
by USDA through 2 CFR part 400, as applicable. As part of its final 
report, the grantee will address and resolve all audit findings.

[58 FR 21894, Apr. 26, 1993, as amended at 79 FR 76011, Dec. 19, 2014]



Sec.  1944.689  Long-term monitoring by grantee.

    (a) The grantee is required to perform long-term monitoring on any 
housing preservation program involving rental properties and co-ops. 
This monitoring shall be at least on an annual basis and shall consist 
of, at a minimum, the following:
    (1) All requirements noted in Sec.  1944.663 of this subpart;
    (2) All requirements of the ``ownership agreement'' executed between 
the grantee and the rental property owner or co-op; and
    (3) All requirements noted in 2 CFR part 200 as adopted by USDA 
through 2 CFR part 400 during the effective period of the grant 
agreement.
    (b) The grantee is required to make available to Rural Development 
any such information as requested by Rural Development concerning the 
above. The grantee shall submit to the Rural Development servicing 
office an annual report every year while the ownership agreement is in 
effect. This report shall be submitted within 15 days after the 
anniversary date or end of the grant agreement. At a minimum, the report 
will consist of a statement that the grantee is in compliance with this 
subpart.
    (c) All files pertaining to such rental property owner or co-op 
shall be kept separate and shall be maintained for a period of 3 years 
after the termination date of the ownership agreement.

[58 FR 21894, Apr. 26, 1993, as amended at 79 FR 76011, Dec. 19, 2014]



Sec.  1944.690  Exception authority.

    The Under Secretary for Rural Development (or designee) may, in 
individual cases, make an exception to any requirements of this subpart 
not required by the authorizing statute if the Administrator finds that 
application of such requirement would adversely affect the interest of 
the Government, or adversely affect the accomplishment of the purposes 
of the HPG program, or result in undue hardship by applying the 
requirement. The Administrator or the Assistant Administrator for 
Housing may exercise this exception authority at the request of the 
State Director. The request must be supported by information 
demonstrating the adverse impact, citing the particular requirement 
involved, recommending proper alternative course(s) of action, and 
outlining how the adverse impact could be mitigated. Exception to any 
requirement may also be initiated by the Assistant Administrator for 
Housing.



Sec. Sec.  1944.691-1944.699  [Reserved]



Sec.  1944.700  OMB control number.

    According to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 
35), no persons are required to respond to a collection of information 
unless it displays a valid OMB control number. The valid OMB control 
number for the information collection in this subpart is 0575-0115.

[62 FR 26211, May 13, 1997]



  Sec. Exhibit A to Subpart N of Part 1944--Housing Preservation Grant 
                                Agreement

    This Agreement dated ___ is between ___ (name), ___ (address), 
(grantee), organized and operating under ___ (authorizing State 
statute), and the United States of America acting through the Farmers 
Home Administration (FmHA) or its successor agency under Public Law 103-
354. FmHA or its successor agency under Public Law 103-354 agrees to 
grant a sum not to exceed $___ subject to the terms and conditions of 
this Agreement; provided, however, that the grant funds actually 
advanced and not needed for grant purposes shall be returned immediately 
to FmHA or its successor agency under Public Law 103-354. The Housing 
Preservation Grant (HPG) Statement of Activities approved by FmHA or its 
successor

[[Page 279]]

agency under Public Law 103-354, is attached, and shall commence within 
10 days of the date of execution of this agreement by FmHA or its 
successor agency under Public Law 103-354 and be completed by ___ 
(date). FmHA or its successor agency under Public Law 103-354 may 
terminate the grant in whole, or in part, at any time before the date of 
completion, whenever it is determined that the grantee has failed to 
comply with the conditions of this Grant Agreement or FmHA or its 
successor agency under Public Law 103-354 regulation related hereto. The 
grantee may appeal adverse decisions in accordance with the FmHA or its 
successor agency under Public Law 103-354 Appeal Procedures contained in 
subpart B of part 1900 of this chapter.
    In consideration of said grant by FmHA or its successor agency under 
Public Law 103-354 to the Grantee, to be made pursuant to section 533 of 
the Housing Act of 1949, Housing Preservation Grant (HPG) program, the 
grantee will provide such a program in accordance with the terms of this 
Agreement and applicable FmHA or its successor agency under Public Law 
103-354 regulations.

                           Part A--Definitions

    1. Beginning date means the date this agreement is executed by FmHA 
or its successor agency under Public Law 103-354 and costs can be 
incurred.
    2. Ending date means the date when all work under this agreement is 
scheduled to be completed. It is also the latest date grant funds will 
be provided under this agreement, without an approved extension.
    3. Disallowed costs are those charges to a grant which Rural 
Development or its successor agency under Public Law 103-354 determines 
cannot be authorized in accordance with applicable Federal cost 
principles contained in Treasury Circular 74-4, ``Cost Principles 
Applicable to Grants and Contracts with State and Local Governments,'' 
OMB Circular A-87, ``Cost Principles for State and Local Governments,'' 
OMB Circular A-122, ``Cost Principles for Nonprofit Organizations,'' and 
other conditions contained in this Agreement and OMB Circular A-102 
``Uniform Requirements for Grants to State and Local Governments,'' and 
OMB Circular A-110, ``Grants and Agreements with Institutions of Higher 
Education, Hospitals and Other Nonprofit Organizations, Uniform 
Administrative Requirements,'' as appropriate, and 2 CFR part 200, as 
adopted by USDA through 2 CFR part 400.
    4. ``Grant closeout'' is the process by which the grant operation is 
concluded at the expiration of the grant period or following a decision 
to terminate the grant.
    5. ``Termination'' of the grant means the cancellation of Federal 
assistance, in whole or in part, at any time before the date of 
completion.

                       Part B--Terms of agreement

    FmHA or its successor agency under Public Law 103-354 and grantee 
agree:
    1. All grant activities shall be limited to those authorized in 
subpart N of 7 CFR part 1944.
    2. This Agreement shall be effective when executed by both parties.
    3. The HPG activities approved by FmHA or its successor agency under 
Public Law 103-354 shall commence and be completed by the date indicated 
above, unless earlier terminated under paragraph B 18 below or extended.
    4. Grantee shall carry out the HPG activities and processes as 
described in the approved Statement of Activities which is made a part 
of this Agreement. Grantee will be bound by the activities and processes 
set forth in the Statement of Activities and the further conditions set 
forth in this Agreement. If the Statement of Activities is inconsistent 
with the Agreement, the latter will govern. A change of any activities 
and processes must be in writing and must be signed by the FmHA or its 
successor agency under Public Law 103-354 State Director or his or her 
delegated representative.
    5. Grantee shall use grant funds only for the purpose and activities 
approved by FmHA or its successor agency under Public Law 103-354 in the 
HPG budget. Any uses not provided for in the approved budget must be 
approved in writing by FmHA or its successor agency under Public Law 
103-354 in advance.
    6. If the Grantee is a private nonprofit corporation, expenses 
charged for travel or per diem will not exceed the rates paid FmHA or 
its successor agency under Public Law 103-354 employees for similar 
purposes. If the grantee is a public body, the rates will be those that 
are allowable under the customary practice in the government of which 
the grantee is a part; if none are customary, the FmHA or its successor 
agency under Public Law 103-354 rates will be the maximum allowed.
    7. Grant funds will not be used for any of the following:
    (a) To pay obligations incurred before the effective date of this 
Agreement.
    (b) To pay obligations incurred after the grant termination or 
ending date.
    (c) Entertainment purposes.
    (d) To pay for capital assets, the purchase of real estate or 
vehicles, improvement or renovation of grantee's office space, or repair 
or maintenance of privately owned vehicles.
    (e) Any other purpose specified in Sec. Sec.  1944.664(f) and 
1944.666(b) of this subpart.
    (f) Administrative expenses exceeding 20% HPG grant funds.
    8. Grant funds shall not be used to substitute for any financial 
support previously

[[Page 280]]

provided and currently available or assured from any other source.
    9. Disbursal of grants will be governed as follows:
    (a) In accordance with Treasury Circular 1075 (fourth revision) part 
205, chapter II of title 31 of the Code of Federal Regulations, grant 
funds will be provided by FmHA or its successor agency under Public Law 
103-354 as cash advances on an as needed basis not to exceed one advance 
every 30 days. The advance will be made by direct Treasury check to the 
grantee. The financial management system of the recipient organization 
shall provide for effective control over and accountability for all 
Federal funds as stated to OMB Circular A-102 (42 FR 45828, September 
12, 1977) for State and local governments and OMB Circular A-110 (41 FR 
32016, July 30, 1976) for nonprofit organizations.
    (b) Cash advances to the grantee shall be limited to the minimum 
amounts needed and shall be timed to be in accord only with the actual, 
immediate cash requirements of the Grantee in carrying out the purpose 
of the planned project. The timing and amount of cash advances shall be 
as close as administratively feasible to the actual disbursements by the 
grantee for direct program costs (as identified in the grantee's 
Statement of Activity and budget and fund use plan) and proportionate 
share of any allowable indirect costs.
    (c) Grant funds should be promptly refunded to the FmHA or its 
successor agency under Public Law 103-354 and redrawn when needed if the 
funds are erroneously drawn in excess of immediate disbursement needs. 
The only exceptions to the requirement for prompt refunding are when the 
funds involved:
    (i) Will be disbursed by the recipient organization within seven 
calendar days from the date of the Treasury check, or
    (ii) Are less than $10,000 and will be disbursed within 30 calendar 
days from the date of the Treasury check.
    (d) Grantee shall provide satisfactory evidence to FmHA or its 
successor agency under Public Law 103-354 that all officers of the 
Grantee organization authorized to receive and/or disburse Federal funds 
are covered by satisfactory fidelity bonds sufficient to protect FmHA or 
its successor agency under Public Law 103-354's interests.
    10. The grantee will submit performance and financial reports as 
indicated below to the appropriate FmHA or its successor agency under 
Public Law 103-354 office.
    (a) As needed, but not more frequently than once every 30 calendar 
days, an original and 2 copies of SF-270, ``Request for Advance or 
Reimbursement.''
    (b) Quarterly (not later than February 15, May 15, August 15, and 
November 15 of each year), an original and 2 copies of SF-269, 
``Financial Status Report,'' and a quarterly performance report in 
accordance with Sec.  1944.683 of this subpart.
    (c) Within ninety (90) days after the termination or expiration of 
the Grant Agreement, an original and 2 copies of SF-269, and a final 
performance report which will include a summary of the project's 
accomplishments, problems, and planned future activities of the grantee 
for HPG. Final reports may serve as the last quarterly report.
    (d) FmHA or its successor agency under Public Law 103-354 may 
require performance reports more frequently if deemed necessary.
    11. In accordance with FMC Circular 74-4, Attachment B, compensation 
for employees will be considered reasonable to the extent that such 
compensation is consistent with that paid for similar work in other 
activities of the State or local government.
    12. If the grant exceeds $100,000, cumulative transfers among direct 
cost budget categories totaling more than 5 percent of the total budget 
must have prior written approval by FmHA or its successor agency under 
Public Law 103-354.
    13. Results of the program assisted by grant funds may be published 
by the grantee without prior review by FmHA or its successor agency 
under Public Law 103-354, provided that such publications acknowledge 
the support provided by funds pursuant to the provisions of Title V of 
the Housing Act of 1949, as amended, and that five copies of each such 
publications are furnished to FmHA or its successor agency under Public 
Law 103-354.
    14. Grantee certifies that no person or organization has been 
employed or retained to solicit or secure this grant for a commission, 
percentage, brokerage, or contingent fee.
    15. No person in the United States shall, on the grounds of race, 
creed, color, sex, marital status, age, national origin, or mental or 
physical handicap, be excluded from participating in, be denied the 
proceeds of, or be subject to discrimination in connection with the use 
of grant funds. Grantee will comply with the nondiscrimination 
regulations of FmHA or its successor agency under Public Law 103-354 
contained in subpart E of part 1901 of this chapter.
    16. In all hiring or employment made possible by or resulting from 
this grant, the grantee: (a) Will not discriminate against any employee 
or applicant for employment because of race, creed, color, sex, marital 
status, national origin, age, or mental or physical handicap, and (b) 
will take affirmative action to insure that employees are treated during 
employment without regard to their race, creed, color, sex, marital 
status, national origin, age, or mental or physical handicap. This 
requirement shall apply to, but not be limited to, the following: 
Employment, upgrading, demotion, or transfer; recruitment or recruitment 
advertising, layoff or termination, rates of pay or other

[[Page 281]]

forms of compensation; and selection for training, including 
apprenticeship. In the event grantee signs a contract related to this 
grant which would be covered by any Executive Order, law, or regulation 
prohibiting discrimination, grantee shall include in the contract the 
``Equal Employment Clause'' as specified by Form FmHA or its successor 
agency under Public Law 103-354 400-1, ``Equal Employment Agreement.''
    17. The grantee accepts responsibility for accomplishing the HPG 
program as submitted and included in the Statement of Activities. The 
grantee shall also:
    (a) Endeavor to coordinate and provide liaison with State and local 
housing organizations, where they exist.
    (b) Provide continuing information to FmHA or its successor agency 
under Public Law 103-354 on the status of grantee HPG programs, 
projects, related activities, and problems.
    (c) The grantee shall inform FmHA or its successor agency under 
Public Law 103-354 as soon as the following types of conditions become 
known:
    (i) Problems, delays, or adverse conditions which materially affect 
the ability to attain program objectives, prevent the meeting of time 
schedules or goals, or preclude the attainment of project work units by 
established time periods. This disclosure shall be accompanied by a 
statement of the action taken or contemplated, new time schedules 
required and any FmHA or its successor agency under Public Law 103-354 
assistance needed to resolve the situation.
    (ii) Favorable developments or events which enable meeting time 
schedules and goals sooner than anticipated or producing more work units 
than originally projected.
    18. Grant closeout and termination procedures will be as follows:
    (a) Promptly after the date of completion or a decision to terminate 
a grant, grant closeout actions are to be taken to allow the orderly 
discontinuation of grantee activity.
    (i) The grantee shall immediately refund to FmHA or its successor 
agency under Public Law 103-354 any uncommitted balance of grant funds.
    (ii) The grantee will furnish to Rural Development or its successor 
agency under Public Law 103- 354 within 90 calendar days after the date 
of completion of the grant an SF-269 and all financial, performance, and 
other reports required as a condition of the grant, including an audit 
report.
    (iii) The grantee shall account for any property acquired with HPG 
grant funds, or otherwise received from FmHA or its successor agency 
under Public Law 103-354.
    (iv) After the grant closeout, FmHA or its successor agency under 
Public Law 103-354 retains the right to recover any disallowed costs 
which may be discovered as a result of an audit.
    (b) When there is reasonable evidence that the grantee has failed to 
comply with the terms of this Agreement, the State Director can, on 
reasonable notice, suspend the grant pending corrective action or 
terminate the grant pursuant to paragraph (c) below. In such instances, 
FmHA or its successor agency under Public Law 103-354 may reimburse the 
grantee for eligible costs incurred prior to the effective date of the 
suspension or termination and may allow all necessary and proper costs 
which the grantee could not reasonably avoid. FmHA or its successor 
agency under Public Law 103-354 will withhold further advances and 
grantees are prohibited from further obligating grant funds, pending 
corrective action.
    (c) Grant termination will be based on the following:
    (i) Termination for cause. This grant may be terminated in whole or 
in part at any time before the date of completion, whenever FmHA or its 
successor agency under Public Law 103-354 determines that the grantee 
has failed to comply with the terms of this Agreement. The reasons for 
termination may include, but are not limited to, such problems as:
    (A) Failure to make reasonable and satisfactory progress in 
attaining grant objectives.
    (B) Failure of grantee to use grant funds only for authorized 
purposes.
    (C) Failure of grantee to submit adequate and timely reports of its 
operation.
    (D) Violation of any of the provisions of any laws administered by 
FmHA or its successor agency under Public Law 103-354 or any regulation 
issued thereunder.
    (E) Violation of any nondiscrimination or equal opportunity 
requirement administered by FmHA or its successor agency under Public 
Law 103-354 in connection with any FmHA or its successor agency under 
Public Law 103-354 programs.
    (F) Failure to maintain an accounting system acceptable to FmHA or 
its successor agency under Public Law 103-354.
    (ii) Termination for convenience. FmHA or its successor agency under 
Public Law 103-354 or the grantee may terminate the grant in whole, or 
in part, when both parties agree that the continuation of the project 
would not produce beneficial results commensurate with the further 
expenditure of funds. The two parties shall agree upon the termination 
conditions, including the effective date and, in case of partial 
termination, the portion to be terminated.
    (d) FmHA or its successor agency under Public Law 103-354 shall 
notify the grantee in writing of the determination and the reasons for 
and the effective date of the suspension or termination. Except for 
termination convenience, grantees have the opportunity to appeal a 
suspension or termination under FmHA or its successor agency under 
Public

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Law 103-354's appeal procedure, subpart B of part 1900 of this chapter.
    19. Upon any default under its representatives or agreements set 
forth in this instrument, the grantee, at the option and demand of FmHA 
or its successor agency under Public Law 103-354, will, to the extent 
legally permissible, repay to FmHA or its successor agency under Public 
Law 103-354 forthwith the grant funds received with interest at the rate 
of five per centum per annum from the date of the default. The 
provisions of this Grant Agreement may be enforced by FmHA or its 
successor agency under Public Law 103-354, at its option and without 
regard to prior waivers by it or previous defaults of the grantee, by 
judicial proceedings to require specific performance of the terms of 
this Grant Agreement or by such other proceedings in law or equity, in 
either Federal or State Courts, as may be deemed necessary by FmHA or 
its successor agency under Public Law 103-354 to assure compliance with 
the provisions of this Grant Agreement and the laws and regulations 
under which this grant is made.
    20. Extension of this Grant Agreement and/or modifications of the 
Statement of Activities may be approved by FmHA or its successor agency 
under Public Law 103-354 provided, in its opinion, the extension and/or 
modification is justified and there is a likelihood that the grantee can 
accomplish the goals set out and approved in the Statement of Activities 
during the period of the extension and/or modifications as specified in 
Sec.  1944.684 of this subpart.

                         Part C--Grantee agrees

    1. To comply with property management standards for expendable and 
nonexpendable personal property established by Attachment N of OMB 
Circular A-102 or Attachment N of OMB Circular A-110 for State and local 
governments or nonprofit organizations respectively. Personal property 
means property of any kind except real property. It may be tangible--
having physical existence--or intangible--having no physical existence, 
such as patents, inventions, and copyrights. Nonexpendable personal 
property means tangible personal property having a useful life of more 
than one year and an acquisition cost of $300 or more per unit. A 
grantee may use its own definitions of nonexpendable personal property 
provided that such definition would at least include all tangible 
personal property as defined above. Expendable personal property refers 
to all tangible personal property other than nonexpendable personal 
property. When nonexpendable tangible personal property is acquired by a 
grantee with project funds, title shall not be taken by the Federal 
Government but shall vest in the grantee subject to the following 
conditions:
    (a) Right to transfer title. For items of nonexpendable personal 
property having a unit acquisition cost of $1,000 or more, FmHA or its 
successor agency under Public Law 103-354 may reserve the right to 
transfer title to the Federal Government or to a third party named by 
the Federal Government when such third party is otherwise eligible under 
existing statutes. Such reservation shall be subject to the following 
standards:
    (i) The property shall be appropriately identified in the grant or 
otherwise made known to the grantee in writing.
    (ii) FmHA or its successor agency under Public Law 103-354 shall 
issue disposition instructions within 120 calendar days after the end of 
the Federal support of the project for which it was acquired. If FmHA or 
its successor agency under Public Law 103-354 fails to issue disposition 
instructions within the 120 calendar day period, the grantee shall apply 
the standards of paragraph 1(c) below.
    (iii) When FmHA or its successor agency under Public Law 103-354 
exercises its right to take title, the personal property shall be 
subject to the provisions for federally owned nonexpendable property 
discussed in paragraph 1(a)(iv) below.
    (iv) When title is transferred either to the Federal Government or 
to a third party and the grantee is instructed to ship the property 
elsewhere, the grantee shall be reimbursed by the benefitting Federal 
agency with an amount which is computed by applying the percentage of 
the grantee participation in the cost of the original grant project or 
program to the current fair market value of the property, plus any 
reasonable shipping or interim storage costs incurred.
    (b) Use of other tangible nonexpendable property for which the 
grantee has title.
    (i) The grantee shall use the property in the project or program for 
which it was acquired as long as needed, whether or not the project or 
program continues to be supported by Federal funds. When it is no longer 
needed for the original project or program, the grantee shall use the 
property in connection with its other federally sponsored activities, in 
the following order of priority:
    (A) Activities sponsored by FmHA or its successor agency under 
Public Law 103-354.
    (B) Activities sponsored by other Federal agencies.
    (ii) Shared use. During the time that nonexpendable personal 
property is held for use on the project or program for which it was 
acquired, the grantee shall make it available for use on other projects 
or programs if such other use will not interfere with the work on the 
project or program for which the property was originally acquired. First 
preference for such other use shall be given to other projects or 
programs sponsored by FmHA or its successor agency under Public Law 103-
354; second preference shall be given to projects or programs sponsored 
by other Federal agencies. If the property is owned by

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the Federal Government, use on other activities not sponsored by the 
Federal Government shall be permissible if authorized by FmHA or its 
successor agency under Public Law 103-354. User charges should be 
considered if appropriate.
    (c) Disposition of other nonexpendable property. When the grantee no 
longer needs the property, the property may be used for other activities 
in accordance with the following standards:
    (i) Nonexpendable property with a unit acquisition cost of less than 
$1,000. The grantee may use the property for other activities without 
reimbursement to the Federal Government or sell the property and retain 
the proceeds.
    (ii) Nonexpendable personal property with a unit acquisition cost of 
$1,000 or more. The grantee may retain the property for other use 
provided that compensation is made to FmHA or its successor agency under 
Public Law 103-354 or its successor. The amount of compensation shall be 
computed by applying the percentage of Federal participation in the cost 
of the original project or program to the current fair market value of 
the property. If the grantee has no need for the property and the 
property has further use value, the grantee shall request disposition 
instructions from the original Grantor agency. FmHA or its successor 
agency under Public Law 103-354 shall determine whether the property can 
be used to meet the agency's requirements. If no requirement exists 
within that agency, the availability of the property shall be reported, 
in accordance with the guidelines of the Federal Property Management 
Regulations (FPMR) to the General Services Administration by FmHA or its 
successor agency under Public Law 103-354 to determine whether a 
requirement for the property exists in other Federal agencies. FmHA or 
its successor agency under Public Law 103-354 shall issue instructions 
to the grantee no later than 120 calendar days after the grantee request 
and the following procedures shall govern:
    (A) If so instructed or if disposition instructions are not issued 
within 120 calendar days after the grantee's request, the grantee shall 
sell the property and reimburse FmHA or its successor agency under 
Public Law 103-354 an amount computed by applying to the sales proceeds 
the percentage of Federal participation in the cost of the original 
project or program. However, the grantee shall be permitted to deduct 
and retain from the Federal shares $100 or ten percent of the proceeds, 
whichever is greater, for the grantee's selling and handling expenses.
    (B) If the grantee is instructed to dispose of the property other 
than as described in paragraph 1(a)(iv) above, the grantee shall be 
reimbursed by FmHA or its successor agency under Public Law 103-354 for 
such costs incurred in its disposition.
    (C) The grantee's property management standards for nonexpendable 
personal property shall include the following procedural requirements:
    (1) Property records shall be maintained accurately and shall 
include:
    (a) A description of the property.
    (b) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (c) Sources of the property including grant or other agreement 
number.
    (d) Whether title vests in the grantee or the Federal Government.
    (e) Acquisition date (or date received, if the property was 
furnished by the Federal Government) and cost.
    (f) Percentage (at the end of the budget year) of Federal 
participation in the cost of the project or program for which the 
property was acquired. (Not applicable to property furnished by the 
Federal Government).
    (g) Location, use, and condition of the property and the date the 
information was reported.
    (h) Unit acquisition cost.
    (i) Ultimate disposition data, including date of disposal and sales 
price or the method used to determine current fair market value when a 
grantee compensates the Federal agency for its share.
    (2) Property owned by the Federal Government must be marked to 
indicate Federal ownership.
    (3) A physical inventory of property shall be taken and the results 
reconciled with the property records at least once every two years. Any 
differences between quantities determined by the physical inspection and 
those shown in the accounting records shall be investigated to determine 
the causes of the difference. The grantee shall, in connection with the 
inventory, verify the existence, current utilization, and continued need 
for the property.
    (4) A control system shall be in effect to ensure adequate 
safeguards to prevent loss, damage, or theft of the property. Any loss, 
damage, or theft of nonexpendable property shall be investigated and 
fully documented; if the property was owned by the Federal Government, 
the grantee shall promptly notify FmHA or its successor agency under 
Public Law 103-354.
    (5) Adequate maintenance procedures shall be implemented to keep the 
property in good condition.
    (6) When the grantee is authorized or required to sell the property, 
proper sales procedures shall be established which will provide for 
competition to the extent practicable and result in the highest possible 
return.
    (7) Expendable personal property shall vest in the grantee upon 
acquisition. If there is a

[[Page 284]]

residual inventory of such property exceeding $1,000 in total aggregate 
fair market value, upon termination or completion of the grant and if 
the property is not needed for any other federally sponsored project or 
program, the grantee shall retain the property for use on nonfederally 
sponsored activities, or sell it, but must in either case compensate the 
Federal Government for its share. The amount of compensation shall be 
computed in the same manner as nonexpendable personal property.
    2. To provide a financial management system which will include:
    (a) Accurate, current, and complete disclosure of the financial 
results of each grant. Financial reporting will be on an accrual basis.
    (b) Records which identify adequately the source and application of 
funds for grant-supported activities. Those records shall contain 
information pertaining to grant awards and authorizations, obligations, 
unobligated balances, assets, liabilities, outlays, and income.
    (c) Effecting control over and accountability for all funds, 
property, and other assets. Grantee shall adequately safeguard all such 
assets and shall assure that they are solely for authorized purposes.
    (d) Accounting records supported by source documentation.
    3. To retain financial records, supporting documents, statistical 
records, and all other records pertinent to the grant for a period of at 
least three years after the submission of the final Project Performance 
report pursuant to part B (10)(c) of this Agreement except in the 
following situations:
    (a) If any litigation, claim, audit, or investigation is commenced 
before the expiration of the three year period, the records shall be 
retained until all litigations, claims, audit or investigation findings 
involving the records have been resolved.
    (b) Records for nonexpendable property acquired by FmHA or its 
successor agency under Public Law 103-354, the three year retention 
requirement is not applicable.
    (c) When records are transferred to or maintained by FmHA or its 
successor agency under Public Law 103-354, the three year retention 
requirement is not applicable.
    Microfilm copies may be substituted in lieu of original records. 
FmHA or its successor agency under Public Law 103-354 and the 
Comptroller General of the United States, or any of their duly 
authorized representatives, shall have access to any books, documents, 
papers, and records of the grantee which are pertinent to the specific 
grant program for the purpose of making audits, examinations, excerpts, 
and transcripts.
    4. To provide information as requested by FmHA or its successor 
agency under Public Law 103-354 concerning the grantee's actions in 
soliciting citizen participation in the application process, including 
published notice of public meetings, actual public meetings held, and 
content of written comments received.
    5. Not to encumber, transfer, or dispose of the property or any part 
thereof, furnished by FmHA or its successor agency under Public Law 103-
354 or acquired wholly or in part with HPG funds without the written 
consent of FmHA or its successor agency under Public Law 103-354 except 
as provided in part C 1 of this Agreement.
    6. To provide FmHA or its successor agency under Public Law 103-354 
with such periodic reports of grantee operations as may be required by 
authorized representatives of FmHA or its successor agency under Public 
Law 103-354.
    7. To execute Form FmHA or its successor agency under Public Law 
103-354 400-1, and to execute any other agreements required by FmHA or 
its successor agency under Public Law 103-354 to implement the civil 
rights requirements.
    8. To include in all contracts in excess of $100,000 a provision for 
compliance with all applicable standards, orders, or regulations issued 
pursuant to the Clean Air Act, 42 U.S.C. 1875C-9 as amended. Violations 
shall be reported to FmHA or its successor agency under Public Law 103-
354 and the Regional Office of the Environmental Protection Agency.
    9. That no member of Congress shall be admitted to any share or part 
of this grant or any benefit that may arise therefrom, but this 
provision shall not be construed to bar as a contractor under the grant 
a publicly held corporation whose ownership might include a member of 
Congress.
    10. That all nonconfidential information resulting from its 
activities shall be made available to the general public on an equal 
basis.
    11. That the purpose for which this grant is made may complement, 
but shall not duplicate programs for which monies have been received, 
are committed, or are applied for from other sources, public and 
private.
    12. That the grantee shall relinquish any and all copyrights and/or 
privileges to the materials developed under this grant, such material 
being the sole property of the Federal Government. In the event anything 
developed under this grant is published in whole or in part, the 
material shall contain notice and be identified by language to the 
following effect: ``The material is the result of tax-supported research 
and as such is not copyrightable. It may be freely reprinted with the 
customary crediting of the source.''
    (13) That the grantee shall abide by the policies promulgated in OMB 
Circular A-102, Attachment O, or OMB Circular A-110, Attachment O, as 
applicable, which provides standards for use by Grantees in establishing 
procedures for the procurement of supplies,

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equipment, and other services with Federal grant funds.
    14. That it is understood and agreed that any assistance granted 
under this Agreement will be administered subject to the limitations of 
Title V of the Housing Act of 1949 as amended, 42 U.S.C. 1471 et seq., 
and related regulations, and that all rights granted to FmHA or its 
successor agency under Public Law 103-354 herein or elsewhere may be 
exercised by it in its sole discretion to carry out the purposes of the 
assistance, and project FmHA or its successor agency under Public Law 
103-354's financial interest.
    15. That it will adopt a Standard of Conduct that provides that, if 
an employee, officer, or agent of the grantee, or such person's 
immediate family members conducts business with the grantee, the grantee 
must not:
    (a) Participate in the selection, award, or administration of a 
contract to such persons for which Federal funds are used;
    (b) Knowingly permit the award or administration of the contract to 
be delivered to such persons or other immediate family members or to any 
entity (i.e., partnerships, corporation, etc.) in which such persons or 
their immediate family members have an ownership interest; or
    (c) Permit such person to solicit or accept gratuities, favors or 
anything of monetary value from landlords or developers of rental or 
ownership housing projects or any other person receiving HPG assistance.

  Part D--FmHA or its successor agency under Public Law 103-354 agrees

    1. That it may assist grantee, within available appropriations, with 
such technical and management assistance as needed in coordinating the 
Statement of Activities with local officials, comprehensive plans, and 
any State or area plans for improving housing for very low- and low-
income households in the area in which the project is located.
    2. That at its sole discretion, FmHA or its successor agency under 
Public Law 103-354 may at any time give any consent, deferment, 
subordination, release, satisfaction, or termination of any or all of 
grantee's grant obligations, with or without valuable consideration, 
upon such terms and conditions as Grantor may determine to be (a) 
advisable to further the purposes of the grant or to protect FmHA or its 
successor agency under Public Law 103-354's financial interests therein, 
and (b) consistent with the statutory purposes of the grant and the 
limitations of the statutory authority under which it is made and FmHA 
or its successor agency under Public Law 103-354 regulations.
    This Agreement is subject to current FmHA or its successor agency 
under Public Law 103-354 regulations and any future regulations not 
inconsistent with the express terms hereof. Grantee has caused this 
Agreement to be executed by its duly authorized ___, properly attested 
to and its corporate seal affixed by its duly authorized ___.

    Attest:
    Grantee:
By______________________________________________________________________
(Title)_________________________________________________________________

    United States Of America Farmers Home Administration or its 
successor agency under Public Law 103-354:
By______________________________________________________________________
(Title)_________________________________________________________________

    Date of Execution of Grant Agreement by FmHA or its successor agency 
under Public Law 103-354:
________________________________________________________________________
    Attached Statement of Activities Is Made Part of This Agreement.



     Sec. Exhibit B to Subpart N of Part 1944--Amendment to Housing 
                      Preservation Grant Agreement

    This Amendment between ___ herein called ``Grantee,'' and the United 
States of America acting through the Farmers Home Administration, 
Department of Agriculture, herein called ``FmHA,'' or its successor 
agency under Public Law 103-354 hereby amends the Housing Preservation 
Grant Agreement executed by said parties on ___________, 19__, 
hereinafter called the ``Agreement.''
    Said Agreement is amended by extending the Agreement to __________, 
19__, and/or by making the following changes noted in the attachments 
hereto: (List and identify proposal and any other documents pertinent to 
the grant which are attached to the Amendment.)
    Grantee has caused this Agreement to be executed by its duly 
authorized _________, properly attested to and its corporate seal 
affixed by its duly authorized ________.

    Attest:
    Grantee:
By______________________________________________________________________
(Title)_________________________________________________________________

    United States Of America Farmers Home Administration or its 
successor agency under Public Law 103-354.
By______________________________________________________________________
(Title)_________________________________________________________________

    Date of Execution of Amendment to Grant Agreement by FmHA or its 
successor agency under Public Law 103-354: ___.

________________________________________________________________________

[[Page 286]]



           Sec. Exhibit C to Subpart N of Part 1944 [Reserved]



 Sec. Exhibit D to Subpart N of Part 1944--Project Selection Criteria--
                           Outline Rating Form

Applicant Name _________________________________________________________
Applicant Address ______________________________________________________
    Application received on ___.
    State ___ District Office ___.

                           Threshold Criteria
 
Applicant must meet the following:
  1. Proposes a financially feasible HPG program.......     yes_     no_
  2. Serves an eligible rural area.....................     yes_     no_
  3. Is an eligible HPG grantee........................     yes_     no_
  4. Has met consultation and public comment rules.....     yes_     no_
 

    If answer to any of the above is ``no'', application is rejected and 
applicant so notified.
    Selection Criteria:
    Select the appropriate rating:
    1. Points awarded based on the percentage of very-low income 
homeowners or families the applicant proposes to assist, using the 
following scale ___:
    (a) More than 80%: 20 points.
    (b) 61% to 80%: 15 points.
    (c) 41% to 60%: 10 points.
    (d) 20% to 40%: 5 points.
    (e) Less than 20%: 0 points.
    2. Points awarded based on the applicant's percentage of use of HPG 
funds to total cost of unit preservation. This percentage reflects 
maximum rehabilitation with the least possible HPG funds due to 
leveraging, innovative financial assistance, or other specified 
approaches. Points are based on the following percentage of HPG funds to 
total funds ___:
    (a) 50% or less: 20 points.
    (b) 51% to 65%: 15 points.
    (c) 66% to 80%: 10 points.
    (d) 81% to 95%: 5 points.
    (e) 96% to 100%: 0 points.
    3. The applicant has demonstrated its administrative capacity in 
assisting very low- and low-income families obtain adequate housing 
based on the following:
    (a) The organization or a member of its staff has at least one or 
more years experience successfully managing and operating a 
rehabilitation or weatherization type program ___:
    Yes--10 points.
    No--0 points.
    (b) The organization or a member of its staff has at least one or 
more years experience successfully managing and operating a program 
assisting very low- and low-income families obtain housing assistance 
___:
    Yes--10 points.
    No--0 points.
    (c) If the organization has administered grant programs, there are 
no outstanding or unresolved audit or investigative findings which might 
impair carrying out the proposal ___:
    No findings: 10 points.
    Outstanding findings: 0 points.
    4. The proposed program will be undertaken entirely in rural areas 
outside Metropolitan Statistical Areas (MSAs) identified by FmHA or its 
successor agency under Public Law 103-354 as having populations below 
10,000 or in remote parts of other rural areas (i.e., rural areas 
contained in MSAs with less than 5,000 population) ___:
    Non-MSA area below 10,000 pop.: 10 points.
    MSA area below 5,000 pop.: 10 points.
    Neither: 0 points.
    5. The program will use less than 20 percent of HPG funds for 
administration___:
    Less than 20%: 5 points.
    20%: 0 points.
    6. The proposed program contains a component for alleviating 
overcrowding ___:
    Has component: 5 points.
    No component: 0 points.
    7. The applicant is an existing grantee and meets the conditions of 
Sec.  1944.686 of this subpart for additional points ___:
    Meets conditions: 10 points.
    Doesn't meet conditions: 0 points.
    Total Points ___:
    Ranking of This Applicant ____

[58 FR 21894, Apr. 26, 1993, as amended at 73 FR 36269, June 26, 2008; 
79 FR 76011, Dec. 19, 2014]



     Sec. Exhibit E to Subpart N of Part 1944--Guide For Quarterly 
                           Performance Report

Grantee name:___________________________________________________________
Grantee address:________________________________________________________
Grant quarter:__________________________________________________________

    Report Period: From: ___ To: ___

    I. General Information on Use of HPG Funds During Period:

    A. Use of Administrative Funds:
Budgeted Amount..................................................$___...
Expended Thru Last Quarter........................................___...
Direct Cost:
Personnel........................................................$___...
Supplies & Equip..................................................___...
Travel............................................................___...
Indirect Costs:
(___% Rate).......................................................___...
 This Quarter Total...............................................___...
    B. Use of Program Funds:
Budgeted Amount...................................................___...
Expended Thru Last Quarter........................................___...

[[Page 287]]

Loans.................................................No. ___ $___......
Grants.................................................No. ___ ___......
Other subsidies
 (describe briefly)....................................No. ___ ___......
 This Quarter Total...............................................___...

    II. Description of recipients provided assistance during report 
period: (Attach breakdown for each HPG recipient on separate page 
including name, address, income, size, race, housing preservation 
activities, and type of assistance received):

Number of low-income homeowners assisted..........................___...
Number of very low-income homeowners assisted.....................___...
 Total number of homeowners assisted..............................___...

Racial composition:

 White............................................................___...
 Black............................................................___...
 Hispanic.........................................................___...
 Am. Indian.......................................................___...
 Other............................................................___...

    III. Description of types of housing preservation provided:

----------------------------------------------------------------------------------------------------------------
                             Housing preservation activity                                Financial assistance
----------------------------------------------------------------------------------------------------------------
                             Item                              Cost of materials/labor    HPG    Other    Total
----------------------------------------------------------------------------------------------------------------
 
 
----------------------------------------------------------------------------------------------------------------

    IV. Objectives for next period:

Loans.................................................No. ___ $___......
Grants................................................No. ___ $___......
Other subsidy.........................................No. ___ $___......
 Totals...............................................No. ___ $___......

    V. Project summary:

------------------------------------------------------------------------
                                       No.
                                    homeowners   HPG funds      Other
------------------------------------------------------------------------
Assistance objectives of project.  ...........         $___         $___
Assistance to date...............  ...........          ___          ___
Assistance during next period....  ...........          ___          ___
Average amount of HPG assistance.
Per unit provided (program to             $___
 date) (per unit)................
------------------------------------------------------------------------

    VI. Narrative:
    A. Significant accomplishments.
    B. Problem areas.
    C. Proposed changes/assistance needed, etc.
    D. Status of implementing environmental and historic preservation 
requirements. Include number of historic properties assisted.

                          PART 1946 [RESERVED]



PART 1948_RURAL DEVELOPMENT--Table of Contents



Subpart A [Reserved]

   Subpart B_Section 601 Energy Impacted Area Development Assistance 
                                 Program

Sec.
1948.51 General.
1948.52 Objectives.
1948.53 Definitions.
1948.54 Eligible applicants.
1948.55 Source of funds.
1948.56 Program purposes.
1948.57 Eligible activities.
1948.58 [Reserved]
1948.59 Ineligible activities.
1948.60 Delegation and redelegation of authority.
1948.61 State supplements and guides.
1948.62 Environmental impact requirements.
1948.63 Historic preservation requirements.
1948.64 Equal opportunity requirements.
1948.65 Relocation Act requirements.
1948.66 [Reserved]
1948.67 Procedure for designation.
1948.68 Criteria for designation.
1948.69 [Reserved]
1948.70 Designation approval.
1948.71 [Reserved]
1948.72 Industry reports.
1948.73-1948.77 [Reserved]
1948.78 Growth management and housing planning projects.
1948.79 Application procedure for planning grants.
1948.80 Planning grant selection criteria.
1948.81 State Investment Strategy for Energy Impacted Areas.
1948.82 Plan and State Investment Strategy approval procedure.
1948.83 Performance of site development work.
1948.84 Application procedure for site development and acquisition 
          grants.
1948.85 [Reserved]
1948.86 Site development and acquisition grant selection criteria.
1948.87 [Reserved]
1948.88 Direct land acquisition by Rural Development.
1948.89 Land condemnation by Rural Development.
1948.90 Land transfers.
1948.91 Inspections of development.
1948.92 Grant approval and fund obligation.
1948.93 Appeal procedure.
1948.94 Reporting requirements.
1948.95 Grant monitoring.
1948.96 Audit requirements.
1948.97 Grant closing and fund disbursement.
1948.98 Grant agreements.
1948.99-1948.100 [Reserved]

[[Page 288]]


Exhibit A to Subpart B of Part 1948--Grant Agreement--Growth Management 
          and Housing Planning for Approved Designated Energy Impacted 
          Areas
Exhibit B to Subpart B of Part 1948--Grant Agreement (Public Bodies) for 
          Site Development and/or Site Acquisition for Housing and/or 
          Public Facilities and/or Services

Subpart C [Reserved]

    Authority: 5 U.S.C. 301, 7 U.S.C. 1932 note.

    Editorial Note: Nomenclature changes to part 1948 appear at 80 FR 
9888, Feb. 24, 2015.

Subpart A [Reserved]



   Subpart B_Section 601 Energy Impacted Area Development Assistance 
                                 Program

    Authority: Sec. 601, Pub. L. 95-620, delegation of authority by the 
Sec. of Agri., 7 CFR 2.23; delegation of authority by the Asst. Sec. for 
Rural Development, 7 CFR 2.70.

    Source: 44 FR 35984, June 19, 1979, unless otherwise noted.



Sec.  1948.51  General.

    This subpart sets forth policies and procedures for designation, 
approval of designation, and making grants for assistance to areas 
impacted by increased coal and uranium production, processing, or 
transportation. The Rural Development will fully consider all A-95 
clearing-house review comments and recommendations in selecting 
applications for funding. Any processing or servicing activity conducted 
pursuant to this subpart involving authorized assistance to Rural 
Development employees, members of their families, known close relatives, 
or business or close personal associates, is subject to the provisions 
of subpart D of part 1900 of this chapter. Applicants for this 
assistance are required to identify any known relationship or 
association with a Rural Development employee.

[44 FR 35984, June 19, 1979, as amended at 58 FR 228, Jan. 5, 1993]



Sec.  1948.52  Objectives.

    The objective of the program is to help areas impacted by coal or 
uranium development activities by providing assistance for the 
development of growth management and housing plans and in developing and 
acquiring sites for housing and public facilities and services.



Sec.  1948.53  Definitions.

    (a) Approved designated area. A group of counties, a county, or a 
part of a county designated as an energy impacted area by the Governor 
of a State and approved by the Secretary of Energy.
    (b) Available financial resources. All existing financial resources 
which could be used for impact assistance including Federal, State, and 
local financial resources and financial resources accruing to States and 
local governments as a result of coal or uranium development activity 
and not already committed to other programs by low or historical 
precedent.
    (c) Coal. Coal means anthracite and bituminous coal, lignite, and 
any fuel derivative thereof.
    (d) Coal or uranium development activities. The production, 
processing, or transportation of coal or uranium.
    (1) Production includes the mining of coal or uranium and all mine 
site operations connected with such mining operations and processing 
activities. This includes construction activities on mine sites relating 
to mining, production, and processing.
    (2) Processing includes all operations performed on coal or uranium 
including construction of processing plants. However, processing does 
not include conversion into electrical energy.
    (3) Transportation which directly relates to the production and 
processing of coal or uranium including transportation networks in the 
county of origin of the coal or uranium and counties of processing of 
coal and uranium. This includes transportation depots along 
transportation networks that are used primarily for the transfer of coal 
or uranium for domestic consumption. This also includes unit train 
rolling stock construction and repair facilities.
    (e) Condemnation by U.S. Department of Agriculture (USDA). The use 
of Federal authority by the Secretary of Agriculture to condemn real 
property.

[[Page 289]]

    (f) Council of local governments. An areawide development 
organization which includes one or more local governments servicing at 
least a portion of an approved designated area. Such organization must 
either have a policymaking body made up of a majority of local elected 
officials.
    (g) Eligible employment. Full time work related to coal or uranium 
development activities.
    (h) Eligible employment facility. A coal or uranium mine, processing 
plant, or transportation depot.
    (i) Energy impacted areas. An area where coal and uranium 
development activities have a significant impact on the socio-economic 
structure of the area and which meet the criteria set out at Sec.  
1948.68 of this subpart.
    (j) Fair market value. The price at which a property will sell in 
the open market allowing a reasonable period of time for typical, fully-
informed buyers and sellers to react, assuming that the purchaser and 
seller are both willing participants in the transaction.
    (k) Grantee. An entity with whom FmHA or its successor agency under 
Public Law 103-354 has entered into a grant agreement under this 
program.
    (l) Growth management planning. Planning for the orderly development 
of an approved designated area. This planning includes, but is not 
limited to: Planning for provision of resources to support housing, 
public facility needs, sewer and water needs; planning for the provision 
of additional public services needed; overall plans for the coordinated 
development of all approved designated areas within a State; the 
development of State Investment Strategies for Energy Impacted Areas; 
and coordination of development of approved designated areas at the 
interstate level where impact is interstate in nature.
    (m) Housing planning. Identification of present and future housing 
needs within an approved designated area and providing methods for 
developing needed housing. This planning includes, but is not limited to 
the identification of: housing sites; housing site development needs; 
data and resource needs; funding needs; acquisition methods; and 
agencies of government responsible for delivery of housing services.
    (n) Industry reports. Those reports concerning production, expected 
production, and employment within an approved designated area which are 
requested by the Governor and submitted by a person to the Secretary of 
Energy.
    (o) Local government. Any county, parish, city, town, township, 
village, or other general purpose political subdivision of a State with 
the power to levy taxes and expend Federal, State, and local funds and 
exercise governmental powers and which is located in, or has authority 
over, the energy impact area. With the concurrence of the Governor, the 
term may also include such school, water, sewer, highway, or other 
public special purpose districts or authorities, or public or private 
nonprofit corporations as may be appropriate to carry out the purpose 
for which a grant is being made. These corporations or special purpose 
districts or authorities may apply (including applications previously 
received) for grants from fiscal year 1981 and earlier fiscal year funds 
only.
    (p) Person. Any corporation, individual, partnership, company, 
association, firm, institution, society, trust, joint venture, or joint 
stock company, any State or any agency or instrumentality thereof.
    (q) Public facilities. Installations open to the public and used for 
the public welfare. This includes but is not limited to: hospitals, 
clinics, firehouses, parks, recreation areas, sewer plants, water 
plants, community centers, libraries, city or town halls, jailhouses, 
courthouses, and schoolhouses.
    (r) Public services. The provision to the public of services such 
as: health care, fire and police protection, recreation, etc.
    (s) Site. A site is a plot of land which is suitable or can be made 
suitable for providing housing, public facilities, or services.
    (t) Site acquisition. Obtaining legal title to a site (or sites) or 
obtaining leaseholds or other interests in land, by an instrumentality 
of a state or local Government, or by Rural Development, for housing, 
public facilities, or services.
    (u) Site development. Site restoration, necessary off-site 
improvements and

[[Page 290]]

such on-site improvements as the construction of sewerage collection and 
water distribution lines (does not include individual taps) and 
construction of access roads; but does not include the construction of 
houses or public facilities.
    (v) Site restoration. On-site improvements to the real property 
(such as backfilling, compacting, grading and leveling) necessary for 
the construction of houses and public facilities.
    (w) State. Any of the fifty States, Puerto Rico, and any territory 
or possession of the United States.
    (x) State Investment Strategy for Energy Impacted Areas. The 
investment strategy for the development of approved designated areas 
within a State as proposed by the Governor and approved by Rural 
Development.
    (y) Substandard housing. All housing units which do not have 
complete plumbing fixtures, lack adequate heating systems, are not 
structurally sound, or contain any other conditions that would cause a 
safety, sanitary, or health hazard to the family or community.

[44 FR 35984, June 19, 1979, as amended at 45 FR 26943, Apr. 22, 1980; 
46 FR 33021, June 26, 1981]



Sec.  1948.54  Eligible applicants.

    Organizations eligible for grants include local governments, 
councils of local government, and State governments that have the leval 
authority necessary to undertake the proposed project.

[46 FR 33022, June 26, 1981]



Sec.  1948.55  Source of funds.

    (a) Grants will be awarded from appropriate funds specifically 
allocated for this program.
    (b) Grants made for growth management and housing planning may equal 
but will not exceed 10 percent of the total amount of funds appropriated 
for and allocated to this program.



Sec.  1948.56  Program purposes.

    (a) Rural Development will make grants for assistance to approved 
designated areas in accordance with criteria contained in this subpart 
by providing assistance to fill gaps in growth management and housing 
planning, and to provide supplementary support for acquisition and 
development of sites for housing and public facilities and services by 
States, local governments, and councils of local government.
    (b) Efforts will be made to provide comprehensive assistance to 
approved designated areas through the coordination power of the 
Secretary of Agriculture by utilizing existing plans, State and local 
programs, and other Federal programs to the maximum extent possible. 
Particular attention will be given to the utilization of existing Rural 
Development authorities under other Rural Development programs in 
conjunction with this subpart for providing assistance to approved 
designated areas in accordance with the Governor's approved State 
Investment Strategy for Energy Impacted Areas.
    (c) Where existing plans are unsuitable or nonexistent, and other 
assistance programs are inadequate or unavailable on a timely basis, 
Rural Development will provide assistance under this subpart to States, 
councils of local governments, and local governments for the 
modification, updating, and/or development of growth management and/or 
housing plans to deal with problems resulting from coal or uranium 
development within approved designated areas according to the criteria 
contained in this subpart.
    (d) Where needed, Rural Development will provide assistance for the 
development of sites and/or the acquisition of sites for housing and 
public facilities and services within approved designated areas 
according to the criteria contained in this subpart. Such assistance for 
site development and acquisition will be made in accordance with Rural 
Development approved plans and State Investment Strategies for Energy 
Impacted Areas in accordance with the criteria contained in the subpart.
    (e) At the request of the Governor of the appropriate State, Rural 
Development will take action to acquire real property directly for sites 
for housing and/or public facilities and services in accordance with 
procedures set forth in this subpart.

[[Page 291]]

    (f) At the request of the Governor of the appropriate State, where 
neither the State nor local government has power to do so for this 
purpose, Rural Development may take action through condemnation to 
acquire real property for sites necessary for housing, public 
facilities, or services.



Sec.  1948.57  Eligible activities.

    Grant Funds may be used for:
    (a) The preparation of growth management and/or housing plans (or 
aspects thereof) for which financial resources are not available for 
approved designated areas as set forth in the grant agreement, including 
but limited to:
    (1) One hundred percent of the total cost of developing growth 
management and/or housing plans.
    (2) One hundred percent of the cost of developing aspects of growth 
management plans and/or housing plans including but not limited to:
    (i) Sewer plans;
    (ii) Water plans;
    (iii) Recreation plans;
    (iv) Transportation plans;
    (v) Education plans; and
    (vi) Subdivision plans.
    (3) Payment of salaries of professional, technical, and clerical 
staff to carry out growth management and housing planning and 
evaluation;
    (4) Payment of necessary reasonable office expenses such as office 
rental, office utilities, and office equipment rental;
    (5) Purchase of office supplies;
    (6) Payment of necessary reasonable administrative posts, such as 
workmen's compensation, liability insurance, and employer's share of 
social security and travel; and
    (7) Payment of costs to undertake tests, make appraisals, and 
arrange for engineering/architectural services necessary for the 
planning activity.
    (b) Up to 75 percent of the actual cost of developing or acquiring 
sites for housing, public facilities, or services for which financial 
resources are otherwise not available as set forth in the grant 
agreement, including but not limited to:
    (1) Necessary grading and leveling;
    (2) Sewer and water connections;
    (3) Necessary water and sewer lines to housing and public facilities 
sites;
    (4) Access roads to housing and public facilities sites;
    (5) Restoring previously mined sites;
    (6) Necessary engineering reports in connection with site 
development;
    (7) Payment of costs to undertake tests, make appraisals, and 
engineering/architectural services necessary for the site development 
and/or site acquisition;
    (8) Necessary legal fees involved in the transfer of the real 
property.



Sec.  1948.58  [Reserved]



Sec.  1948.59  Ineligible activities.

    (a) Growth management and housing planning grant funds may not be 
used for:
    (1) Acquisition, construction, repair, or rehabilitation of existing 
housing and public facilities;
    (2) Replacement of, or substitution for, any financial support 
previously provided or assured from any other source which would result 
in a reduction of current efforts on the part of the applicant;
    (3) Duplication of current services;
    (4) Routine administrative activities not allowed under Federal 
Management Circular FMC 74-4, ``Cost Principles Applicable to Grants and 
Contracts with State and Local Governments;''
    (5) Planning for areas other than approved designated areas;
    (6) Planning other than growth management and housing planning; or
    (7) Political activities.
    (b) Grant funds for site development may not be used for:
    (1) Construction, repair, or rehabilitation of housing and public 
facilities;
    (2) Replacement of, or substitution for, any financial support 
previously provided or assured from any other source which would result 
in a reduction of effort on the part of the applicant;
    (3) Administrative expenses not allowed under FMC 74-4;
    (4) Purposes for which funding exists under other State or Federal 
programs that may reasonably be obtained on a timely basis by the 
applicants;
    (5) Duplication of current services; or
    (6) Political activities.

[[Page 292]]



Sec.  1948.60  Delegation and redelegation of authority.

    The Rural Development State Director is responsible for implementing 
the authorities contained in this subpart and may issue State 
supplements redelegating these authorities to appropriate Rural 
Development employees.



Sec.  1948.61  State supplements and guides.

    Rural Development State Directors will obtain National Office 
clearance for all State supplements and guides in accordance with 
paragraph VIII of RD Instruction 2006-B, (available in any Rural 
Development office).
    (a) State supplements. State Directors may supplement this subpart 
as appropriate to meet State and local laws and regulations and to 
provide for orderly application processing and efficient service to 
applicants. State supplements shall not contain any requirements 
pertaining to designations, designation approval, or plan approvals more 
restrictive than those in this subpart.
    (b) State guides. State Directors may develop guides for use by 
applicants if the guides to this subpart are not adequate. State 
Directors may prepare guides for: items needed for the application; 
items necessary for the docket; and items required prior to grant 
closing or construction starts.

[44 FR 35984, June 19, 1979, as amended at 80 FR 9888, Feb. 24, 2015]



Sec.  1948.62  Environmental impact requirements.

    (a) The policies and regulations contained in subpart G of part 1940 
of this chapter apply to grants made and other actions under this 
program.
    (b) Subsequent to an energy impact area designation by the Governor 
and establishment of priorities, the Rural Development State Director, 
in consultation with the Governor, shall define the geographic 
boundaries or otherwise delineate the areas which will be studied for 
environmental impacts.
    (c) Boundaries shall define the area within which the environmental 
impacts of the proposed action can be reasonably studied. Proper 
delineation of impact areas will avoid duplication of effort by using 
one assessment or impact statement to study a broad area rather than 
numerous overlapping documents prepared for smaller projects.

[44 FR 35984, June 19, 1979, as amended at 49 FR 3764, Jan. 30, 1984]



Sec.  1948.63  Historic preservation requirements.

    The policies and regulations contained in part 1901, subpart F, of 
this chapter apply to this program.



Sec.  1948.64  Equal opportunity requirements.

    The policies and regulations contained in part 1901, subpart E, of 
this chapter apply to grants made under this program.



Sec.  1948.65  Relocation Act requirements.

    The policies and regulations contained in title 7, subtitle A, part 
21 of the Code of Federal Regulations (Uniform Relocation Assistance and 
Real Property Acquisition Policies Act of 1970) will apply to site 
development and acquisition grants and other actions under this program.



Sec.  1948.66  [Reserved]



Sec.  1948.67  Procedure for designation.

    (a) Local governments may request the Governor of the State in which 
they are located to designate an area served by them as an energy 
impacted area.
    (b) The Governor will define the geographic area of a designated 
area consistent with the nature of the impact and the socio-economic 
integration of the area.
    (c) The Governor may designate an area as an energy impacted area 
based on the criteria contained in this subpart.



Sec.  1948.68  Criteria for designation.

    (a) An area designated by the Governor must have the following 
characteristics:
    (1) During the most recent calendar year, the eligible employment in 
coal or uranium development activities within the area has increased by 
eight percent or more from the preceding year, or such employment (as 
projected by generally acceptable estimates) will

[[Page 293]]

increase by eight percent (of the eligible employment in the year of the 
designation) or more per year during each of the next three calendar 
years.
    (2) Because of increased employment in coal or uranium development 
activities, a shortage of housing, inadequate public facilities, or 
services exists or will exist in the area. Such shortages or 
inadequacies may be demonstrated by: Housing shortage statistics; higher 
occupancy rates of substandard houses than has historically occurred 
within the area; an increase (for which data or projected data is 
available) in eligible employment from the year of the designation of at 
least 100 workers and one-half of one percent of the designated area's 
population; or data showing that available public facilities and 
services in the area are below generally accepted standards due to the 
increased demand resulting from coal and uranium development activities.
    (3) Available State and local financial resources are inadequate to 
meet the public need for housing or public facilities and services at 
present or in the next three years. In making this determination the 
Governor should consider the following:
    (i) State revenue increases resulting from coal and uranium 
development activity based on existing tax laws;
    (ii) Federal funds transferred to the State for impact assistance;
    (iii) Local revenue increases resulting from coal or uranium 
development activities based on existing tax laws;
    (iv) Other federal financial assistance to which the area may have 
access;
    (v) All other available State and local sources of funding;
    (vi) The time during which the resources will be available;
    (vii) Existing laws committing increases in State and local revenues 
and Federal transfers to purposes other than impact assistance; and
    (viii) The estimated cost of development based on the best available 
informed judgment.
    (b) Designations submitted to the Secretary of Energy for approval 
must have the following attached:
    (1) A list of all counties and parts of counties covered by the 
designation;
    (2) If the area is smaller than a county, a map showing the boundary 
of the area and the approximate location of all eligible employment 
facilities in the area and nearby;
    (3) A written justification for the inclusion of an area if the area 
is smaller than a county;
    (4) The level of eligible employment within the designated area for 
each of the two most recent calendar years. This data should be obtained 
from a single source for the entire State, if possible; special surveys 
may be used when the Governor determines that these more accurately 
reflect employment conditions within the designated area, or in cases 
where data from other sources for the most recent calendar year is 
unavailable at the time of designation. Reference should be made to the 
data sources used if it is a Federal source; if a non-Federal sources is 
used, a copy of the source and a brief description of the procedures 
used for justification should be included. If projections of eligible 
employment are to be considered, projections of such employment for the 
next three years must be attached; identification of data sources and 
methodology used in developing those projections and a copy of any 
survey data used should be included.
    (c) In areas where the impacted area covers counties or parts of 
counties located in more than one State, the Governors of the affected 
States may jointly designate such area and submit the designation to the 
Secretary of Energy for approval.
    (d) After examining these factors and determining that the area 
meets the criteria of (a) above, the Governor may so certify in a letter 
bearing his or her signature and submit the letter of certification with 
all data and estimates upon which the designation is based to the 
Secretary of Energy for approval.
    (e) Each designation submitted should have the name and phone number 
of a contact person in the Governor's designating office.
    (f) An original and one copy of the designation should be submitted 
to the Secretary of Energy, Department of Energy, Mail Stop 8G-031, 
Forrestal Building, Washington, DC 20585.

[[Page 294]]

    (g) Two copies of all designations submitted for approval shall be 
submitted to the appropriate Rural Development State Director. The Rural 
Development State Director shall forward one copy to the Office of Area 
Development Assistance in the Rural Development National Office.
    (h) The Governor should designate all areas expected to be 
considered in fiscal year 1979 allocations of funds before July 1, 1979.

[44 FR 35984, June 19, 1979, as amended at 46 FR 33022, June 26, 1981]



Sec.  1948.69  [Reserved]



Sec.  1948.70  Designation approval.

    Upon receipt of a request for approval of a designation made under 
this section, the Secretary of Energy shall:
    (a) Determine to the best of his ability the consistency of the 
supporting data submitted along with the designation by the Governor;
    (b) Confer with Rural Development on approval;
    (c) Notify the Governor and the Under Secretary for Rural 
Development of action taken on each designation within 30 calendar days 
of the receipt of a request for approval;
    (d) Consult with the Governor before the disapproval of any 
designation; and
    (e) Publish a description in the Federal Register of all designated 
areas approved within 30 days of their approval.



Sec.  1948.71  [Reserved]



Sec.  1948.72  Industry reports.

    Any person regularly engaged in any coal or uranium development 
activity within an area designated and approved in accordance with this 
subpart, shall prepare and transmit a report to the Secretary of Energy, 
Department of Energy, Mail Stop 8G-031, Forrestal Building, Washington, 
DC 20585 within 90 days after a written request to such person by the 
Governor of the State in which such area is located.
    (a) The report shall contain:
    (1) Projected levels of employment in coal or uranium development 
activities within the approved designated area for the next three 
calendar years;
    (2) The projected number of new jobs to be created in coal or 
uranium development activities by the person within the approved 
designated area in each of the following three calendar years;
    (3) Current or planned actions of the person in relation to the 
provision of housing or public facilities for such person's employees in 
the next three calendar years;
    (4) Contracts in force whereby the person intends to provide funds 
to State government, local governments, and public or private nonprofit 
organizations for the provision of housing or public facilities for such 
person's employees; and
    (5) The projected quantity of coal or uranium to be produced, 
processed, or transported by the person in each of the next three years.
    (b) The Governor requesting the report will notify the Secretary of 
Energy of persons from whom reports have been requested.
    (c) The Secretary of Energy shall provide a copy of these reports to 
the Secretary of Agriculture, the appropriate Governor, and the 
appropriate county or local officials, and make it available for public 
inspection and copying in the public reading room of the Department of 
Energy, Room GA152, Forrestal Building, Washington, DC 20585.



Sec. Sec.  1948.73-1948.77  [Reserved]



Sec.  1948.78  Growth management and housing planning projects.

    (a) Existing plans for growth management and housing may be used to 
meet the planning requirements of this subpart.
    (b) A reasonable effort should be made to modify existing plans for 
use in meeting the planning requirements of this section.
    (c) The Governor shall be responsible for the coordination of 
planning within a State.
    (d) The planning process developed with assistance under this 
section should begin at the local level and flow upward to the State.
    (e) Planning processes developed with assistance under this section 
should have the maximum possible citizen involvement in the development 
of plans.

[[Page 295]]

    (f) Governors should give full consideration to local and substate 
priorities in the development of the State Investment Strategy for 
Energy Impacted Areas.
    (g) Plans developed with assistance under this section should be 
fully coordinated with other Federal, State, substate, and local 
planning activities affected by the project.
    (h) Planning conducted by the State include effective management 
activities for coordinated development of approved designated areas 
through the plan implementation stage.

[44 FR 35984, June 19, 1979, as amended at 48 FR 29121, June 24, 1983]



Sec.  1948.79  Application procedure for planning grants.

    (a) Applicants may submit a preapplication for a planning grant upon 
designation of the area as an energy impacted area by the Governor. 
Rural Development will not take final action on the preapplication until 
the designation has been approved by the Secretary of Energy.
    (b) Intergovernmental consultation should be carried out in 
accordance with 7 CFR part 3015 subpart V, ``Intergovernmental Review of 
Department of Agriculture office.''
    (c) Applicants shall file an original and one copy of SF 424.1, 
``Application for Federal Assistance (For Non-construction),'' with the 
appropriate Rural Development office. A copy should also be filed with 
the Governor's office of the appropriate State. This form is available 
in all Rural Development offices. Local governments and councils of 
local governments shall submit preapplications to the appropriate Rural 
Development District Office. State governments shall apply to the 
appropriate Rural Development State Office. The Rural Development 
District Office will forward the preapplication with written comments 
within 10 working days to the appropriate State Office.
    (d) All preapplications shall be accompanied by:
    (1) Evidence of applicant's legal existence;
    (2) Evidence of applicant's authority to prepare growth management 
and/or housing plans;
    (3) A statement declaring that the planning neither duplicates nor 
conflicts with current activities;
    (4) An original and one copy of Form RD 400-1, ``Equal Opportunity 
Agreement,'' and Form RD 400-4, ``Assurance Agreement;'' and
    (5) A statement regarding other financial resources available to the 
area for this planning.
    (e) District and State Rural Development Offices receiving 
preapplications will:
    (1) Determine if the area to be covered by this project is an 
``approved designated area'' as defined in this subpart;
    (2) Comply with the environmental requirements set forth in this 
subpart; and
    (3) Prepare a Historic Preservation Assessment in accordance with 
part 1901, subpart F, of this chapter.
    (f) District Rural Development Offices receiving preapplications 
will also provide written comments reflecting planning grant selection 
criteria listed in this subpart.
    (g) The Rural Development District Office will forward the original 
of the preapplication and accompanying documents including those 
described in paragraphs (e)(1) through (e)(3) and (f) of this section to 
the appropriate Rural Development State Director within 10 working days 
of receipt of the preapplication.
    (h) Upon receipt of a preapplication, the Rural Development State 
Office will:
    (1) Review and evaluate the preapplication and accompanying 
documents;
    (2) Consult with the Governor of the appropriate State concerning 
the Governor's priorities and recommended funding level for the project; 
and
    (3) Respond to the applicant within 30 days of the date of receipt 
of the preapplication using Form AD-622, ``Notice of Preapplication 
Review Action,'' indicating the action taken on the preapplication.
    (i) Upon notification that the applicant is eligible to compete with 
other applicants for funding, a SF 424.1 may be submitted to the Rural 
Development State Office by all applicants.

[[Page 296]]

    (j) The Rural Development State Office will send evidence of the 
applicant's legal existence and authority to the USDA Regional Office of 
General Counsel (OGC) and request that a legal determination be made of 
the applicant's legal existence and authority to prepare growth 
management and/or housing plans in those cases where an application (SF 
424.1) is requested.
    (k) Upon receipt of an application on SF 424.1 by the Rural 
Development State Office, a docket will be prepared which will include 
the following:
    (1) Form SF 424.1;
    (2) Form AD-622;
    (3) Any comments received in accordance with 7 CFR part 3015 subpart 
V, ``Intergovernmental Review of Department of Agriculture Programs and 
Activities''. See RD Instruction 1970-I, `Intergovernmental Review,' 
available in any Agency office or on the Agency's Web site.
    (4) SF 424.1;
    (5) Evidence of the applicant's legal existence and authority to 
prepare growth management and/or housing plans;
    (6) OGC legal determinations;
    (7) Grant agreement and scope of work;
    (8) Form RD 1940-1, ``Request for Obligation of Funds;''
    (9) Form RD 400-1;
    (10) Form RD 400-4;
    (11) Historic Preservation Assessment;
    (12) District, where appropriate, and State Rural Development 
written comments, assessments, and analysis of the proposed projects in 
accordance with the grant selection criteria; and
    (13) All certificates and statements accompanying the pre-
application and/or application.

[44 FR 35984, June 19, 1979, as amended at 48 FR 29121, June 24, 1983; 
49 FR 3764, Jan. 30, 1984; 55 FR 13503, 13504, Apr. 11, 1990; 76 FR 
80731, Dec. 27, 2011]



Sec.  1948.80  Planning grant selection criteria.

    The following criteria will be used in the selection of planning 
grant recipients:
    (a) Planning assistance which could be used for the purpose of the 
proposed planning process is not available from other sources on a 
timely basis (Mandatory);
    (b) The increase in the number of new employees and the percentage 
of increase in employment in coal and/or uranium development activities 
in the year of designation within the approved designated area (years 
projected will be averaged and treated equally);
    (c) The need for planning in relation to the financial resources 
available for such planning;
    (d) The planning priorities and recommended funding level of the 
Governor(s) of the appropriate State(s);
    (e) The appropriateness of the proposed planning activity for 
meeting the planning needs of the area, including but not limited to the 
building of planning capacity and the local priority for the project;
    (f) The inadequacy of existing plans for mitigating the effects of 
coal and/or uranium development activities; and
    (g) The nature of comments and recommendation received in accordance 
with 7 CFR part 3015 subpart V, ``Intergovernmental Review of Department 
of Agriculture Programs and Activities''. (See RD Instruction 1970-I, 
`Intergovernmental Review,' available in any Agency office or on the 
Agency's Web site.)

[44 FR 35984, June 19, 1979, as amended at 48 FR 29121, June 24, 1983; 
76 FR 80731, Dec. 27, 2011]



Sec.  1948.81  State Investment Strategy for Energy Impacted Areas.

    (a) The State Investment Strategy for Energy Impacted Areas should 
be a dynamic document updated as each plan or group of plans is 
submitted to Rural Development for approval.
    (b) The Governor shall consult with the Rural Development State 
Director when developing or updating a State Investment Strategy for 
Energy Impacted Areas.
    (c) The State Investment Strategy for Energy Impacted Areas will 
include but is not limited to:
    (1) A list of projects in order of priority;
    (2) The Governor's recommended level of and method of funding for 
each project through completion of the project identified in the plans 
submitted and incorporated into the State

[[Page 297]]

Investment Strategy for Energy Impacted Areas;
    (3) Methods of coordinating assistance with other State and Federal 
development programs;
    (4) The differential between available financial resources and the 
cost of needed site development and acquisition for housing and public 
facilities and services within the area covered by the State Investment 
Strategy for Energy Impacted Areas;
    (5) References to plan and page number of plan on which each 
priority project is described.
    (d) The State Investment Strategy for Energy Impacted Areas having 
projects expected to be funded in FY 1979 should be submitted to the 
Rural Development State Director of the appropriate State before July 
15, 1979. A copy should also be forwarded to the Under Secretary for 
Rural Development.



Sec.  1948.82  Plan and State Investment Strategy approval procedure.

    (a) Any plan submitted for Rural Development approval, whether it is 
a plan developed with assistance under this section, an existing plan, 
or a modified plan, should contain:
    (1) The present level of coal or uranium production, processing, or 
transportation within the approved designated area covered by the plan;
    (2) The anticipated level of coal or uranium production, processing, 
or transportation in each of the next three calendar years within the 
area covered by the plan;
    (3) A brief description of the socio-economic impacts that have 
occurred during the two most recent calendar years in the approved 
designated area covered by the plan;
    (4) A brief description of the socio-economic impacts that are 
expected to occur in the approved designated area covered by the plan 
within each of the next three calendar years;
    (5) The anticipated number of new employees expected to be hired in 
coal or uranium development activities in each of the next three years 
within the approved designated area covered by the plan;
    (6) Available financial resources and federal programs that may be 
applied to meeting the needs of the approved designated area including 
but not limited to the following:
    (i) The expected amount of State assistance and State expenditures 
in the approved designated area covered by the plan which will be used 
for impact assistance in the next three years;
    (ii) The amount of tax revenues expected to accrue to local 
governments serving the approved designated area covered by the plan in 
each of the next three years due to increased economic activities which 
have occurred since the year prior to designation or are expected to 
occur as a result of coal and uranium development activity;
    (iii) Sources and amount of assistance State and local governments 
are now receiving or are expected to receive from persons for the 
provision of housing and public facility and services; and
    (iv) Existing budget surplus at the State and local level.
    (7) The specific needs of the area covered by the plan as to the 
number of housing units now needed and the number that are expected to 
be needed in each of the next three years, and/or the number and type of 
public facilities and services now needed or expected to be needed in 
the next three years;
    (8) The type and quantity of real property now needed or expected to 
be needed in the next three years for the construction of public 
facilities and/or housing and/or in the provisions of public services;
    (9) Proposed method of acquisition for each site to be acquired by 
the State or local governments; and
    (10) An estimate of assistance that will be necessary under this 
section and/or other Rural Development or Federal programs for the 
development of the site.
    (b) All plans meeting the criteria in paragraph (a) of this section 
should be forwarded to the Governor of the appropriate State or States 
for possible incorporation into the State Investment Strategy for Energy 
Impacted Areas.
    (c) Appropriate growth management and/or housing plans received by 
the Governor under this section may be

[[Page 298]]

submitted to the appropriate Rural Development State Office by the 
Governor.
    (d) The Governor shall submit a copy of the State Investment 
Strategy for Energy Impacted Areas along with all plans the Governor is 
submitting to Rural Development for approval.
    (e) During fiscal year 1979 the Governor may submit existing plans 
to Rural Development for qualified approval in which some sections under 
paragraph (a) above are incomplete, provided that planning is presently 
being done to fill these gaps, or application for a planning grant has 
been submitted or is to be submitted to cover the cost of the needed 
planning. These plans must be resubmitted for final approval on or 
before December 31, 1980. No requested grant will be approved for land 
acquisition or site development unless the request is cited in the Rural 
Development -approved comprehensive growth management plan for the 
designated area in which the project is located.
    (f) The Rural Development State Director shall review all plans and 
the State Investment Strategy for Energy Impacted Areas and provide 
comments on the following:
    (1) Appropriateness of Rural Development assistance under this 
section as called for in the plans;
    (2) Appropriateness of Rural Development assistance under other 
programs as called for in the plans;
    (3) Appropriateness of the State Investment Strategy for Energy 
Impacted Areas;
    (4) Other Federal programs which could be used instead of, or in 
addition to, assistance under this section; and
    (5) Recommended action.
    (g) The Rural Development State Director shall submit all plans 
received from the Governor, the State Investment Strategy Energy 
Impacted Areas, and any comments to the Rural Development National 
Office for approval within 10 days of the submission of plans and the 
State Investment Strategies for Energy Impacted Areas to the State 
Director.
    (h) The Rural Development National Office shall review all plans and 
State Investment Strategy for Energy Impacted Areas received and approve 
or return them for modification within 30 days of their receipt in the 
Rural Development National Office.
    (i) The Rural Development State Office shall notify the appropriate 
State Director of all plans that have been approved by the Under 
Secretary for Rural Development.
    (j) Upon approval of the plans and State Investment Strategies for 
Energy Impacted Areas by the Under Secretary for Rural Development, the 
Rural Development State Director may exercise the authority of the 
Secretary of Agriculture under Section 603 of the Rural Development Act 
of 1972 to convene a meeting of the appropriate representatives of all 
Federal and State agencies which are requested to supply development 
funds by the State Investment Strategy for Energy Impacted Areas for the 
purpose of obtaining tentative funding commitments consistent with their 
authorities.
    (k) The Rural Development State Office shall notify the Governor and 
the appropriate District Directors of all plans approved by the Under 
Secretary for Rural Development.
    (l) Modifications to approved plans shall be approved by the Under 
Secretary for Rural Development following the above procedure.
    (m) The Governor's modification to the State Investment Strategy for 
Energy Impacted Areas may be approved by the Rural Development State 
Director provided the modification is consistent with Rural Development 
approved plans.



Sec.  1948.83  Performance of site development work.

    Site development work will be done in accordance with Sec.  1942.18 
of RD Instruction 1942-A.



Sec.  1948.84  Application procedure for site development and
acquisition grants.

    (a) For those projects for which Federal funding is sought in excess 
of $100,000 the applicant shall file SF 424.2, ``Application for Federal 
Assistance (For Construction)'' with the appropriate Rural Development 
office. For those projects for which Federal funding is sought for less 
than $100,000, the applicant shall file SF 424.2 with

[[Page 299]]

the appropriate Rural Development office. A copy should also be filed 
with the Governor's office of the appropriate State.
    (b) The Rural Development office receiving a SF 424.2 shall reply to 
the applicant with-in 45 calendar days regarding the applicant's 
eligibility to compete for funding under this program using Form AD-622. 
(Rural Development District offices will send each preapplication to the 
Rural Development State Offices for review before replying to the 
applicant. Rural Development District offices will send a copy of Form 
AD-622 to the Rural Development State Office at the time the Form AD-622 
is sent to the applicant.)
    (c) Intergovernmental consultation should be carried out in 
accordance with 7 CFR part 3015 subpart V, ``Intergovernmental Review of 
Department of Agriculture Programs and Activities''. (See RD Instruction 
1970-I, `Intergovernmental Review,' available in any Agency office or on 
the Agency's Web site.)
    (d) Applicants shall file an original and one copy of SF 424.2, with 
the appropriate Rural Development office. Local governments and councils 
of local government shall submit applications to the Rural Development 
District Office and State governments to the Rural Development State 
Office. Applications shall include:
    (1) Evidence of applicant's legal existence and authority to 
undertake the proposed project;
    (2) Evidence of ownership of or lease on a site to be developed or 
``Options to Purchase Real Property,'' Form RD 440-34, (Lease on a site 
for a public facility will be in accordance with FmHA Instruction 1942-A 
and lease on a site for housing will be in accordance with 7 CFR part 
3550);
    (3) Description of project and relationship to approved growth 
management and housing plan. Applicant must cite pages and section of 
the approved plan;
    (4) A plat of the area including elevations;
    (5) Preliminary plans and specifications on proposed development 
which will contain an estimate of the projected cost of site development 
prepared by independent qualified appraisers or architects/engineers;
    (6) The amount of Federal grant needed;
    (7) The amount and source of applicant's financial contribution to 
the project;
    (8) An original and one copy of Form RD 1940-20;
    (9) An original and one copy of Form RD 400-1 and Form RD 400-4;
    (10) Evidence that the land is stable if the land has been 
previously mined (include relevant data on soil and analysis);
    (11) Assurance that the requirements set forth in title 7, subtitle 
A, part 21 of the Code of Federal Regulations (Uniform Relocation 
Assistance and Real Property Acquisition Policies Act of 1970) have been 
met.
    (12) Specific concurrence of the Governor if the proposed applicant 
is neither a council of local governments nor a general purpose 
political subdivision of a State;
    (e) District and State Rural Development Offices receiving 
applications shall:
    (1) Determine if the project is in accordance with a Rural 
Development approved growth management and/or housing plan covering the 
approved designated area;
    (2) Comply with environmental requirements set forth in subpart G of 
part 1940 of this chapter;
    (3) Prepare a Historic Preservation Assessment in accordance with 
part 1901, subpart F, of this chapter;
    (4) Determine site stability if the land has been previously mined; 
and
    (f) District Rural Development Offices receiving applications shall 
also provide written comments reflecting site development and 
acquisition grant selection criteria (Sec.  1948.86) listed in this 
subpart.
    (g) The Rural Development District Office shall forward the original 
of the application and accompanying documents including those required 
in paragraph (e) of this section to the Rural Development State Director 
within 10 working days of receipt of the application.
    (h) Upon receipt of an application, the Rural Development State 
Office shall:

[[Page 300]]

    (1) Review and evaluate the application and accompanying documents;
    (2) Determine that the project is a part of and consistent with the 
State Investment Strategy for Energy Impacted Areas;
    (3) Send a copy of the applicant's evidence of legal existence and 
authority to the USDA Regional OGC for review;
    (4) If applicant is local government(s), consult with the Governor 
on funding recommendation of the project; and
    (5) Respond to the applicant within 30 days of the date of receipt 
of the application.
    (i) Upon receipt of an application by the Rural Development State 
Office, a docket shall be prepared which shall include the following:
    (1) Application SF 424.2 and enclosures;
    (2) Any comments received in accordance with 7 CFR part 3015 subpart 
V, ``Intergovernmental Review of Department of Agriculture Programs and 
Activities''. (See RD Instruction 1970-I, `Intergovernmental Review,' 
available in any Agency office or on the Agency's Web site.)
    (3) Evidence of ownership or lease of site to be developed;
    (4) Evidence of applicant's legal existence and authority;
    (5) OGC legal determination;
    (6) Preliminary plans and specifications concerning the proposed 
development;
    (7) Grant agreement and scope of work;
    (8) An estimate of projected cost of site development prepared by 
independent qualified appraisers or engineers/architects;
    (9) A topographical map of the area;
    (10) Form RD 1940-1;
    (11) Form RD 400-1;
    (12) Form RD 400-4;
    (13) Form RD 1940-20, if required by subpart G of part 1940 of this 
chapter;
    (14) A copy of the appropriate Rural Development environmental 
review required by subpart G of part 1940 of this chapter;
    (15) Historic Preservation Assessment;
    (16) A copy of the State Investment for Energy Areas; and
    (17) District, where appropriate, and State Rural Development 
written comments, assessments and analysis of the proposed project in 
accordance with the grant selection criteria.

[44 FR 35984, June 19, 1979, as amended at 46 FR 61991, Dec. 21, 1981; 
48 FR 29121, June 24, 1983; 49 FR 3764, Jan. 30, 1984; 55 FR 13503, 
13504, Apr. 11, 1990; 67 FR 78329, Dec. 24, 2002; 76 FR 80731, Dec. 27, 
2011]



Sec.  1948.85  [Reserved]



Sec.  1948.86  Site development and acquisition grant selection criteria.

    The following criteria will be considered in the selection of site 
development and/or acquisition grant recipients:
    (a) Required criteria. Each project must meet the following 
criteria:
    (1) The area is covered by a Rural Development approved plan;
    (2) The Rural Development approved plan specifically calls for the 
site development and/or acquisition;
    (3) Other Federal funds that the community could receive for the 
project are inadequate or not available, and no State or local funds for 
site development are available to permit development on a timely basis;
    (4) The site is to be developed and/or acquired and is to be used 
for housing, public facilities, or services;
    (5) The applicant has title to the site, lease on site, or an option 
on the site and funds to purchase the site, or is applying for site 
acquisition funds;
    (6) The site will comply with Executive Orders 11988, ``Flood Plain 
Management'' and 11990, ``Protection of Wetlands;''
    (7) An appraisal of the fair market value of the site must have been 
completed;
    (8) Priority has been given in the selection of site to unoccupied 
or previously mined land;
    (9) Class I or Class II farm land was included in the site only if 
other suitable land was not available;
    (10) The land is stable if previously mined; and
    (11) Assurance that the requirements set forth in title 7, subtitle 
A, part 21 of the Code of Federal Regulations (Uniform Relocation 
Assistance and Real Property Acquisition Policies Act of 1970) have been 
met.

[[Page 301]]

    (b) Competitive criteria. The following criteria will be considered 
in the selection of grantees:
    (1) Priority assigned and recommended funding level by the Governor 
in the State Investment Strategy for Energy Impacted Areas;
    (2) The increase in the number of new employees and the percentage 
of increase in employment in coal and/or uranium development activities 
in the year of designation within the approved designated area (years 
projected will be averaged and treated equally);
    (3) The severity of need for housing, public facilities, services 
that has resulted from coal or uranium development activities in 
relation to available financial resources within the approved designated 
area covered by the plan calling for the project;
    (4) Local priority for the project;
    (5) The amount of effort by State and local government to meet the 
needs of the area covered by the application as called for in the State 
Investment Strategy for Energy Impacted Areas in relation to available 
financial resources;
    (6) An assessment of the environmental impacts of the project; and
    (7) The nature of comments and recommendations of A-95 clearing- 
house(s).



Sec.  1948.87  [Reserved]



Sec.  1948.88  Direct land acquisition by Rural Development.

    (a) Rural Development may take action to acquire real property 
directly upon the written request of the Governor of the State in which 
the real property is located. Rural Development will not acquire real 
property directly under this section without such a request.
    (b) All requests for direct land acquisition should be submitted to 
the Rural Development State Director. The following conditions must be 
met prior to the submission of a request for direct acquisition by Rural 
Development:
    (1) The State or local government serving the area must lack power 
to condemn land of this type for this purpose and must supply an opinion 
by the State Attorney General that this authority is lacking;
    (2) The real property is to be used as a site for needed housing, 
public facilities, or services;
    (3) The site acquisition is called for in a Rural Development 
approved plan;
    (4) The site is specifically identified by a Rural Development 
approved plan;
    (5) State and local governments have been unable to obtain the real 
property for a price which does not substantially exceed its fair market 
value; and suitable alternate sites are not available;
    (6) The land is not Indian Trust land;
    (7) The land is not U.S. Forest Service land; and
    (8) There is legal authority to undertake the proposed project.
    (c) Rural Development may acquire Federal real property not 
prohibited in paragraphs (b) (6) and (7) of this section for purposes 
contained in this subpart. Farm land (Class I and II) will not be 
considered unless there is no other suitable land available.
    (d) If the State Director determines that no other suitable real 
property exists that can be obtained at a price which does not 
substantially exceed its fair market value, and if the appropriate State 
or local government lacks condemnation authority as evidenced by opinion 
from the Attorney General, and there is authority to undertake the 
proposed project, then the State Director shall follow the procedures 
set out in title 7, subtitle A, part 21 of the Code of Federal 
Regulations (Uniform Relocation Assistance and Real Property Acquisition 
Policies Act of 1970) and immediately open negotiations to directly 
acquire the real property through purchase or trade.
    (e) The Rural Development State Director may acquire real property 
by purchase to trade for other real property when Rural Development has 
been requested to acquire real property by the Governor of the State in 
which the real property is located.
    (f) The Governor shall submit, with this request, a commitment from 
the State to acquire real property, together with a plan of compensation 
to Rural Development and evidence of the State's legal authority to 
enter into this agreement with Rural Development to accept the real 
property and repay Rural Development for the fair

[[Page 302]]

market value of the real property for the intended purpose.
    (g) Real property acquired by Rural Development shall be transferred 
to the State requesting by a quitclaim deed for a price equal to the 
fair market value in accordance with the terms of a transfer agreement.
    (h) After obtaining title to the real property and prior to transfer 
to the State, the property shall be managed by Rural Development in 
accordance with part 1955, subpart B of this chapter.
    (i) The State Director shall inform the Governor that Rural 
Development real property acquisition is not likely to occur by purchase 
or trade if negotiations have failed to produce acceptable results 
within 90 days of the request for Rural Development acquisition of real 
property.



Sec.  1948.89  Land condemnation by Rural Development.

    (a) If Rural Development attempts to acquire real property at the 
request of a Governor through purchase or trade and is unable to do so, 
Rural Development may take action to condemn the real property by the 
following procedures:
    (1) A request for condemnation shall be submitted by the Rural 
Development State Director to the Under Secretary for Rural Development, 
Washington, DC 20250 at the request of the Governor of the appropriate 
State. A copy of the Governor's request for Rural Development real 
property condemnation and the State Attorney General's opinion that 
State and local government condemnation authority is lacking shall be 
attached to the Rural Development State Director's request.
    (2) The Under Secretary for Rural Development shall forward all 
requests for Federal condemnation to the OGC, USDA with a recommendation 
for action.
    (3) The Under Secretary for Rural Development shall inform the 
Governor of any action on the request for condemnation.
    (4) Real property condemned by Rural Development shall be 
transferred to the requesting State by a quitclaim Deed for a price 
equal to the fair market value of the real property in accordance with 
terms of a negotiated real property transfer agreement.
    (5) After obtaining title to real property and prior to transfer to 
the State, the property shall be managed by Rural Development in 
accordance with part 1955, subpart B of this chapter.
    (b) Rural Development may not condemn Indian Trust Land or U.S. 
Forest Service Land.



Sec.  1948.90  Land transfers.

    (a) Transfers of real property acquired by Rural Development.
    (1) A request for Rural Development acquisition of real property by 
a Governor of a State constitutes an agreement by that State to receive 
said real property and to reimburse Rural Development for the fair 
market value of said real property for the intended use.
    (2) Terms and conditions, including reimbursement terms, for real 
property transfers shall be set forth in a Real Property Transfer 
Agreement between the Under Secretary for Rural Development and the 
appropriate Governor. These terms and conditions will be agreed upon by 
Rural Development and the State prior to Rural Development attempting to 
acquire the property. These agreements shall be prepared after 
consulting with OGC, and forwarded for prior approval by the Rural 
Development National Office.
    (3) All funds from real property transfers received by Rural 
Development shall be deposited in the U.S. Treasury.
    (b) Transfer of real property acquired and/or developed with grant 
funds from a grant made under this subpart to a person.
    (1) Real property acquired and/or developed under this subpart may 
be transferred to a person for the purposes of construction of 
privately-owned housing.
    (2) All transfers of real property to a person must be approved by 
the Rural Development State Director of the appropriate State.
    (3) Transfer of real property by a recipient of assistance under 
this subpart to a person must be by contract which: acknowledges the use 
of funds provided under this subpart to acquire or develop the site; 
specifies the date of performance prior to delivery of the deed;

[[Page 303]]

provides for Rural Development concurrence before changes or 
modifications; and assures Rural Development that the real property will 
be used for the purposes under which the grant was made.
    (4) Proceeds derived from the sale of land acquired or developed 
through the use of a grant provided under this subpart must be divided 
between the grantee and Rural Development on a pro rata basis. A grantee 
may not recover its cost from sale proceeds to the exclusion of Rural 
Development. The amount to be returned to Rural Development is to be 
computed by applying the percentage of the Rural Development grant 
participation in the total cost of the project to the proceeds from the 
sale.
    (5) All funds received by Rural Development from real property 
transfers shall be deposited in the U.S. Treasury.

(42 U.S.C. 8401; delegation of authority by the Secretary of 
Agriculture, 7 CFR 2.23; delegation of authority by the Assistant 
Secretary for Rural Development, 7 CFR 2.70)

[44 FR 35984, June 19, 1979, as amended at 46 FR 33022, June 26, 1981; 
56 FR 28038, June 19, 1991; 68 FR 61331, Oct. 28, 2003]



Sec.  1948.91  Inspections of development.

    Inspections will be made by the Rural Development State Engineer or 
other employee designated by the Rural Development State Director to 
ascertain whether site development is proceeding in accordance with 
plans and specifications. Such inspections are solely for the benefit of 
the Government and not for the benefit of the Grantee or any other 
person.



Sec.  1948.92  Grant approval and fund obligation.

    (a) The Rural Development State Office shall review the docket to 
determine whether the proposed grant complies with this subpart and that 
funds are available.
    (b) The Rural Development State Director shall be the approving 
officer on all grants made under this subpart.
    (c) If at any time prior to grant approval it is decided that 
favorable action will not be taken on a preapplication or application, 
the Rural Development State Director will notify the applicant in 
writing of the reasons why the request was not favorably considered. The 
notification to the applicant will state that a review of this decision 
by Rural Development may be requested by the applicant in accordance 
with RD Instruction 1900-B.
    (d) If a grant is recommended, Form RD 1940-1 and the proposed grant 
agreement and scope of work will be prepared and forwarded to the 
applicant for signature.
    (e) When Form RD 1940-1 and the grant agreement and scope of work 
are received by the applicant, the applicant will sign these documents 
and forward them to the State Director.
    (f) Exhibit A to RD Instruction 2015-C (available in any Rural 
Development office) will be prepared by the State Director and sent to 
the Director, Legislative and Public Affairs Staff (LAPAS), in the Rural 
Development National Office.
    (g) If the State Director approves the project, the following 
actions will be taken in the order listed:
    (1) The State Director, or a designee, will telephone the Finance 
Office requesting that grant funds for a particular project be 
obligated. Immediately after contacting the Finance Office, the 
requesting official shall furnish the requesting office's security 
identification code. Failure to furnish the security code will result in 
the rejection of the request of obligation. After the security code is 
furnished, the required information from Form FmHA or its successor 
agency under Public Law 103-354 440-1 shall be furnished to the Finance 
Office. Upon receipt of the telephone request for obligation of funds, 
the Finance Office shall record all information necessary to process the 
request for obligation in addition to the date and time of request.
    (2) The individual making the request shall record the date and time 
of the request.
    (3) The Finance Office will notify the Rural Development State 
Office by telephone when funds are reserved and the date the funds will 
be obligated. If funds cannot be reserved for a project, the Finance 
Office will notify the Rural Development State Office that funds are not 
available. The obligation

[[Page 304]]

date will be the date the request for obligation is processed.
    (4) The Finance Office will send Form RD 440-57, ``Acknowledgement 
of Obligated Funds/Check Request,'' to the Rural Development State 
Director, informing the State Director of the reservation of funds with 
the obligation date inserted as required by Item 9 on the Forms Manual 
Insert (FMI) for Form RD 440-57.
    (5) Form FmHA or its successor agency under Public Law 103-354 440-1 
will not be mailed to the Finance Office.
    (6) A copy of Form RD 1940-1 will be sent the Rural Development 
National Office.
    (7) The State Director shall notify the Director, LAPAS, in the 
Rural Development National Office with a recommendation that the project 
announcement be released.
    (8) An executed copy of Form FmHA or its successor agency under 
Public Law 103-354 440-1 shall be sent to the applicant along with an 
executed copy of the grant agreement and scope of work 6 working days 
from the date funds are obligated.
    (9) The actual date of applicant notification will be entered on the 
original of Form FmHA or its successor agency under Public Law 103-354 
440-1 and the original of the form will be included as a permanent part 
of the file.
    (10) For planning grants, Standard Form 270, ``Request for Advance 
or Reimbursement,'' will be sent to the applicant for completion and 
return to Rural Development. For site acquisition and site development 
grants, Standard Form 271, ``Outlay Report and Request for Reimbursement 
for Construction Programs,'' will be sent to the applicant for 
completion and returned to Rural Development.
    (11) If it is determined that a project will not be funded or if 
major changes in the scope of the project are made after release of the 
approval announcement, the Rural Development State Director will notify 
the Director, LAPAS by telephone or electronic mail giving the reasons 
for such action. The Director, LAPAS, will inform all parties who were 
notified by the project announcement that the project will not be funded 
or of major changes in the project using a procedure similar to the 
announcement process. Form RD 1940-10, ``Cancellation of U.S. Treasury 
Check and/or Obligation,'' will not be submitted to the Finance Office 
until five working days after notifying the Director, LAPAS.

(7 U.S.C. 1989; 42 U.S.C. 1480; 5 U.S.C. 301; sec. 10 Pub. L. 93-357; 
delegation of authority by the Sec. of Agri., 7 CFR 2.23; delegation of 
authority by the Under Secretary for Small Community and Rural 
Development, 7 CFR 2.70)

[44 FR 35984, June 19, 1979, as amended at 47 FR 36416, Aug. 20, 1982; 
48 FR 30946, July 6, 1983; 79 FR 55967, Sept. 18, 2014]



Sec.  1948.93  Appeal procedure.

    Any grantee or applicant for Rural Development assistance under this 
subpart who has been directly and adversely affected by an 
administrative decision by Rural Development may appeal such decision in 
accordance with RD Instruction 1900-B.



Sec.  1948.94  Reporting requirements.

    (a) For planning grants, SF-270 shall be submitted by grantees on an 
as-needed basis but not more frequently that once every 30 days. SF-269, 
``Financial Status Report,'' and a project performance activity report 
will be required of all grantees on a quarterly basis. SF-269 and a 
final project performance report will also be required. These final 
reports may serve as the last quarterly reports. Grantees shall 
constantly monitor performance to ensure that time schedules are being 
met, projected work by time periods is being accomplished, and other 
performance objectives are being achieved. All grantees except States 
should submit an original of each report and one copy to the appropriate 
Rural Development District Office. When the grantee is a State, an 
original should be submitted to the appropriate Rural Development State 
Office. The project performance reports shall include, but need not be 
limited to the following:
    (1) A comparison of actual accomplishments to the objectives 
established for that period;
    (2) Reasons why established objectives were not met;
    (3) Problems, delays, or adverse conditions which will materially 
affect attainment of planned project objectives,

[[Page 305]]

prevent the meeting of time schedules or objectives, or preclude the 
attainment of project work elements during established time periods. 
This disclosure shall be accompanied by a statement of the action taken 
or contemplated and any Federal assistance needed to resolve the 
situation; and
    (4) Objectives established for the next reporting period.
    (b) For site development and land acquisition grants, grantees shall 
submit Form SF-271 for payment of site development costs. Multiple 
advances will be made in accordance with RD Instruction 1902-A 
(available in any Rural Development office) and will be made as needed 
to cover required disbursements for not less than 30 day periods. 
Advances will be requested for the next 30 day period by the grantee on 
Form SF-272, ``Report of Federal Cash Transactions.'' Each payment 
estimate must be approved by the grantee. A final Form SF-272 will be 
submitted to Rural Development to include the final advance not later 
than 90 days after the final advance.



Sec.  1948.95  Grant monitoring.

    Each grant will be monitored by Rural Development to ensure that the 
Grantee is complying with the terms of the grant and that the project 
activities are completed as approved. This will involve on-site visits 
to the project area and review of quarterly and final reports by Rural 
Development.



Sec.  1948.96  Audit requirements.

    (a) Audit requirements for Site Development and Acquisition Grants 
will be made in accordance with RD Instruction 1942-G.
    (b) Audits for planning grants made in accordance with State 
statutes or regulatory agencies will be acceptable provided they are 
prepared in sufficient detail to permit Rural Development to determine 
that grant funds have been used in compliance with the proposal, any 
applicable laws and regulations, and the grant agreement. A copy of the 
audit shall be submitted to the State Director as soon as possible but 
in no case later than 90 days following the period covered by the grant.



Sec.  1948.97  Grant closing and fund disbursement.

    Grant closing and fund disbursement will be accomplished in 
accordance with RD Instruction 1942-G.



Sec.  1948.98  Grant agreements.

    The following Grant Agreements are a part of this regulation.
    (a) Exhibit A of this subpart is a Grant Agreement for Growth 
Management and Housing Planning Grants for approved Designated Energy 
Impacted Areas.
    (b) Exhibit B of this subpart is a Grant Agreement for Site 
Development and/or Site Acquisition for Housing and/or Public Facilities 
and/or Services.



Sec. Sec.  1948.99-1948.100  [Reserved]



   Sec. Exhibit A to Subpart B of Part 1948--Grant Agreement--Growth 
Management and Housing Planning for Approved Designated Energy Impacted 
                                  Areas

    This Agreement is between

(Name),_________________________________________________________________
(Address),(Grantee) and the United States of America acting through the 
Farmers Home Administration (Grantor or FmHA) or its successor agency 
under Public Law 103-354. Grantee has determined to undertake certain 
growth management and housing planning for energy impacted areas at an 
estimated cost of $_____ and has duly authorized such planning. The 
Grantor agrees to grant to Grantee a sum not to exceed $_____ subject to 
the terms and conditions established by the Grantor; provided, however, 
that any grant funds actually advanced and not needed for grant purposes 
shall be returned immediately to the Grantor. The Grantor may terminate 
the grant in whole, or in part, at any time before the date of 
completion, whenever it is determined that the Grantee has failed to 
comply with the conditions of the grant. In consideration of said grant 
by Grantor to Grantee, to be made pursuant to Section 601 of the 
Powerplant and Industrial Fuel Use Act of 1978 (Pub. L. 95-620) for the 
purpose only of defraying the planning costs as permitted by applicable 
Farmers Home Administration or its successor agency under Public Law 
103-354 regulations:

                                 Part A

Grantor and Grantee agree:

    1. This agreement shall be effective when executed by both parties.

[[Page 306]]

    2. The scope of work set out below shall be completed prior 
to_______.
    3. (a) Use of grant funds for travel which is determined as being 
necessary to the program for which the grant is established may be 
subject to the travel policies of the Grantee institution if they are 
uniformly applied regardless of the source of funds in determining the 
amounts and types of reimbursable travel expenses of Grantee staff and 
consultants. Where the Grantee institution does not have such specific 
policies uniformly applied, the Federal Travel Regulations shall apply 
in determining the amount charged to the grant. Grantee may purchase 
furniture and office equipment only if specifically approved in the 
scope of work. Approval will be given only when Grantee demonstrates 
that purchase is necessary and would result in less cost to the 
Government in providing Federal-share funds or to the Grantee in 
providing its contributions. Commercial purchase under these 
circumstances will be approved only after consideration of Federal 
supply sources.
    (b) Expenses and Purchases Excluded:
    (i) In no event shall the Grantee expend or request reimbursement 
from Federal-share funds for obligations entered into or for costs 
incurred or accrued prior to the effective date of this grant.
    (ii) Funds budgeted under this grant may not be used for 
entertainment expenses.
    (iii) Funds budgeted under this grant may not be used to pay for 
capital assets, the purchase of real estate or vehicles, improvement and 
renovation of space, and repair and maintenance of privately-owned 
vehicles.
    (c) Grant funds shall not be used to replace any financial support 
previously provided or assured from any other source. The Grantee agrees 
that the general level of expenditure by the Grantee for the benefit of 
program area and/or program covered by this agreement shall be 
maintained and not reduced as a result of the Federal share funds 
received under this grant.
    4. (a) In accordance with Treasury Circular 1075, grant funds will 
be disbursed by the FmHA or its successor agency under Public Law 103-
354 as cash advances on an as-needed basis not to exceed one advance 
every 30 days. The financial management system of the recipient 
organization shall provide for effective control over and accountability 
for all Federal funds as stated in OMB Circular A-102 revised for State 
and local governments.
    (b) Cash advances to the Grantee shall be limited to the minimum 
amounts needed and shall be timed to be in accord only with the actual, 
immediate cash requirements of the Grantee in carrying out the purpose 
of the planning project.
    (c) The timing and amount of cash advances shall be as close as is 
administratively feasible to the actual disbursements by the recipient 
organization for direct program costs.
    (d) Federal funds should be promptly refunded to the FmHA or its 
successor agency under Public Law 103-354 and redrawn when needed if the 
funds are erroneously drawn in excess of immediate disbursement needs. 
The only exceptions to the requirement for prompt refunding are when the 
funds involved:
    (i) Will be disbursed by the recipient organization within seven 
calendar days, or
    (ii) Are less than $10,000 and will be disbursed within 30 calendar 
days.
    (e) Grantee shall provide satisfactory evidence to FmHA or its 
successor agency under Public Law 103-354 that all officers of Grantee 
organization authorized to receive and/or disburse Federal funds are 
covered by such bonding and/or insurance requirements as are normally 
required by the Grantee.
    (f) Grant funds will be placed in a bank account(s). If for any 
reason grant funds are invested, income earned on such investment shall 
be identified as interest income on grant funds and forwarded to the 
Finance Office, FmHA or its successor agency under Public Law 103-354, 
St. Louis, Missouri, unless the Grantee is a State. ``State'' includes 
instrumentalities of a State but not political subdivisions of a State. 
A State Grantee is not accountable for interest earned on grant funds.
    5. The Grantee will submit Performance and Financial reports as 
indicated below:
    (a) As needed, but not more frequently than once every 30 days, an 
original and 2 copies of Standard Form 270, ``Request for Advance or 
Reimbursement;''
    (b) Quarterly, an original and 2 copies of Standard Form 269, 
``Financial Status Report,'' and a Project Performance report according 
to the schedule below:

     Period Date due

    (c) Final, an original and 2 copies of Standard Form 269, 
``Financial Status Report,'' and a Project Performance report according 
to the schedule below:

     Period Date due

    Note: Final reports may serve as the last quarterly reports.

    (d) The Project Performance reports shall include but need not be 
limited to the following:
    (i) A comparison of actual accomplishment to the objectives 
established for that period;
    (ii) Reasons why established objectives were not met;
    (iii) Problems, delays, or adverse conditions which will materially 
affect attainment of planned project objectives, prevent the meeting of 
time schedules or objectives, or preclude the attainment of project work 
elements during established time periods. This disclosure shall be 
accompanied by a

[[Page 307]]

Statement of the action taken or comtemplated and any Federal assistance 
needed to resolve the situation; and
    (iv) Objectives established for the next reporting period.
    (e) All Grantees except States shall submit an original of each 
report and one copy to the appropriate FmHA or its successor agency 
under Public Law 103-354 District Office. A State Grantee shall submit 
original reports to the appropriate FmHA or its successor agency under 
Public Law 103-354 State Office.
    (f) The plan(s) developed under this grant shall be submitted to the 
appropriate Governor for incorporation into the State Investment 
Strategy for Energy Impacted Areas. The Governor will submit the plan 
and the State Investment Strategy to the appropriate FmHA or its 
successor agency under Public Law 103-354 State Office(s). The FmHA or 
its successor agency under Public Law 103-354 State Office will forward 
the plan and State Investment Strategy to the FmHA or its successor 
agency under Public Law 103-354 National Office for approval of the 
plan.
    6. The Budget covered by this agreement is:

----------------------------------------------------------------------------------------------------------------
                                                                                 Non-Federal share
                        Budget categories                           Federal  ------------------------    Total
                                                                     funds       Cash       In-kind
----------------------------------------------------------------------------------------------------------------
Direct charges:
  1. Personnel..................................................           $  ..........  ..........  ..........
  2. Fringe benefits............................................  ..........  ..........  ..........  ..........
  3. Travel.....................................................  ..........  ..........  ..........  ..........
  4. Equipment..................................................  ..........  ..........  ..........  ..........
  5. Supplies...................................................  ..........  ..........  ..........  ..........
  6. Contractual................................................  ..........  ..........  ..........  ..........
  7. Others.....................................................  ..........  ..........  ..........  ..........
                                                                 -----------------------------------------------
    Total Direct Charges........................................  ..........  ..........  ..........  ..........
  8. Indirect charges...........................................  ..........  ..........  ..........  ..........
                                                                 -----------------------------------------------
    Total.......................................................  ..........  ..........  ..........  ..........
----------------------------------------------------------------------------------------------------------------

    (a) In accordance with FMC 74-4, Attachment B, compensation for 
employees will be considered reasonable to the extent that such 
compensation is consistent with that paid for similar work in other 
activities of the State or local government.
    (b) In accordance with OMB Circular A-102, Attachment K, transfers 
among direct cost budget categories of more than 5 percent of the total 
budget must have prior written approval by the State Director, Farmers 
Home Administration or its successor agency under Public Law 103-354.
    7. (a) The scope of work is described in the attached exhibit 1. The 
Grantee accepts responsibility for establishing a development process 
which will improve local conditions and alleviate problems associated 
with increased coal or uranium production in the Grantee areas. The 
Grantee shall:
    (i) Develop a growth management and housing plan for assistance to 
approved designated area(s) impacted by increased coal or uranium 
production.
    (ii) Contribute to development of a State Investment Strategy for 
Energy Impacted Areas.
    (iii) Endeavor to coordinate and provide liaison with State 
development organizations, where they exist.
    (iv) Provide continuing information to FmHA or its successor agency 
under Public Law 103-354 on the status of Grantee programs, projects, 
related activities, and problems.
    (b) The Grantee shall inform the Grantor as soon as the following 
types of conditions become known:
    (i) Problems, delays, or adverse conditions which materially affect 
the ability to attain program objectives, prevent the meeting of time 
schedules or goals, or preclude the attainment of project work units by 
established time periods. This disclosure shall be accompanied by a 
statement of the action taken or contemplated, and any Grantor 
assistance needed to resolve the situation.
    (ii) Favorable developments or events which enable meeting time 
schedules and goals sooner than anticipated or producing more work units 
than originally projected.

                                 Part B

Grantee agrees:

    1. To comply with property management standards established by 
Attachment N of OMB Circular A-102 for expendable and nonexpendable 
personal property Personal property means property of any kind except 
real property. It may be tangible--having physical existence--or 
intangible--having no physical existence, such as patents, inventions, 
and copyrights. Nonexpendable personal property means tangible personal 
property having a useful life of more than one year and an acquisition 
cost of $300 or more per

[[Page 308]]

unit. A Grantee may use its own definition of nonexpendable personal 
property provided that such definition would at least include all 
tangible personal property as defined above. ``Expendable personal 
property'' refers to all tangible personal property other than 
nonexpendable property. When nonexpendable tangible property is acquired 
by a Grantee with project funds, title shall not be taken by the Federal 
Government but shall vest in the Grantee subject to the following 
conditions:
    (a) Right to transfer title. For items of nonexpendable personal 
property having a unit acquisition cost of $1,000 or more, FmHA or its 
successor agency under Public Law 103-354 may reserve the right to 
transfer the title to the Federal Government or to a third party named 
by the Federal Government when such third party is otherwise eligible 
under existing statutes. Such reservation shall be subject to the 
following standards:
    (1) The property shall be appropriately identified in the grant or 
otherwise made known to the Grantee in writing.
    (2) FmHA or its successor agency under Public Law 103-354 shall 
issue disposition instructions within 120 calendar days after the end of 
the Federal support of the project for which it was acquired. If FmHA or 
its successor agency under Public Law 103-354 fails to issue disposition 
instructions within the 120 calendar day period, the Grantee shall apply 
the standards of paragraph (4) below.
    (3) When FmHA or its successor agency under Public Law 103-354 
exercises its right to take title, the personal property shall be 
subject to the provisions for federally owned nonexpendable property 
discussed in paragraph (4), below.
    (4) When title is transferred either to the Federal Government or to 
a third party and the Grantee is instructed to ship the property 
elsewhere, the Grantee shall be reimbursed by the benefiting Federal 
agency with an amount which is computed by applying the percentage of 
the Grantee participation in the cost of the original grant project or 
program to the current fair market value of the property, plus any 
reasonable shipping or interim storage costs incurred.
    (b) Use of other nontangible expendable property for which the 
Grantee has title.
    (1) The Grantee shall use the property in the project or program for 
which it was acquired as long as needed, whether or not the project or 
program continues to be supported by Federal funds. When it is no longer 
needed for the original project or program, the Grantee shall use the 
property in connection with its other Federally sponsored activities, in 
the following order of priority:
    (a) Activities sponsored by FmHA or its successor agency under 
Public Law 103-354.
    (b) Activities sponsored by other Federal agencies.
    (2) Shared use. During the time that nonexpendable personal property 
is held for use on the project or program for which it was acquired, the 
Grantee shall make it available for use on other projects or programs if 
such other use will not interfere with the work on the project or 
program for which the property was originally acquired. First preference 
for such other use shall be given to other projects or programs 
sponsored by FmHA or its successor agency under Public Law 103-354; 
second preference shall be given to projects or programs sponsored by 
other Federal agencies. If the property is owned by the Federal 
Government, use on other activities not sponsored by the Federal 
Government shall be permissable if authorized by FmHA or its successor 
agency under Public Law 103-354. User charges should be considered if 
appropriate.
    (c) Disposition of other nonexpendable property. When the Grantee no 
longer needs the property as provided in 1(a)(4) above, the property may 
be used for other activities in accordance with the following standards:
    (1) Nonexpendable property with a unit acquisition cost of less than 
$1,000. The Grantee may use the property for other activities without 
reimbursement to the Federal Government or sell the property and retain 
the proceeds.
    (2) Nonexpendable personal property with a unit acquisition cost of 
$1,000 or more. The Grantee may retain the property for other use 
provided that compensation is made to FmHA or its successor agency under 
Public Law 103-354 or its successor. The amount of compensation shall be 
computed by applying the percentage of Federal participation in the cost 
of the original project or program to the current fair market value of 
the property. If the Grantee has no need for the property and the 
property has further use value, the Grantee shall request disposition 
instructions from the original Grantor agency.
    FmHA or its successor agency under Public Law 103-354 shall 
determine whether the property can be used to meet the agency's 
requirements. If no requirement exists within that agency, the 
availability of the property shall be reported, in accordance with the 
guidelines of the Federal Property Management Regulations (FPMR), to the 
General Services Administration by FmHA or its successor agency under 
Public Law 103-354 to determine whether a requirement for the property 
exists in other Federal agencies. FmHA or its successor agency under 
Public Law 103-354 shall issue instructions to the Grantee no later than 
120 days after the Grantee request and the following procedures shall 
govern:
    (a) If so instructed or if disposition instructions are not issued 
within 120 calendar days after the Grantee's request, the Grantee shall 
sell the property and reimburse FmHA or its successor agency under 
Public Law

[[Page 309]]

103-354 an amount computed by applying to the sales proceeds the 
percentage of Federal participation in the cost of the original project 
or program. However, the Grantee shall be permitted to deduct and retain 
from the Federal share $100 or ten percent of the proceeds, whichever is 
greater, for the Grantee's selling and handling expenses.
    (b) If the Grantee is instructed to dispose of the property other 
than as described in (1)(a)(4) above, the Grantee shall be reimbursed by 
FmHA or its successor agency under Public Law 103-354 for such costs 
incurred in its disposition.
    (c) Property management standards for nonexpendable property. The 
Grantee's property management standards for nonexpendable personal 
property shall include the following procedural requirements:
    (1) Property records shall be maintained accurately and shall 
include:
    (a) A description of the property.
    (b) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (c) Sources of the property including grant or other agreement 
number.
    (d) Whether title vests in the Grantee or the Federal Government.
    (e) Acquisition date (or date received, if the property was 
furnished by the Federal Government) and cost.
    (f) Percentage (at the end of the budget year) of Federal 
participation in the cost of the project or program for which the 
property was acquired. (Not applicable to property furnished by the 
Federal Government.)
    (g) Location, use and condition of the property and the date the 
information was reported.
    (h) Unit acquisition cost.
    (i) Ultimate disposition data, including date of disposal and sales 
price or the method used to determine current fair market value where a 
Grantee compensates the Federal agency for its share.
    (2) Property owned by the Federal Government must be marked to 
indicate Federal ownership.
    (3) A physical inventory of property shall be taken and the results 
reconciled with the property records at least once every two years. Any 
differences between quantities determined by the physical inspection and 
those shown in the accounting records shall be investigated to determine 
the causes of the difference. The Grantee shall, in connection with the 
inventory, verify the existence, current utilization, and continued need 
for the property.
    (4) A control system shall be in effect to insure adequate 
safeguards to prevent loss, damage, or theft of the property. Any loss, 
damage, or theft of nonexpendable property shall be investigated and 
fully documented; if the property was owned by the Federal Government, 
the Grantee shall promptly notify FmHA or its successor agency under 
Public Law 103-354.
    (5) Adequate maintenance procedures shall be implemented to keep the 
property in good condition.
    (6) Where the Grantee is authorized or required to sell the 
property, proper sales procedures shall be established which would 
provide for competition to the extent practicable and result in the 
highest possible return.
    (7) Expendable personal property shall vest in the Grantee upon 
acquisition. If there is a residual inventory of such property exceeding 
$1,000 in total aggregate fair market value, upon termination or 
completion of the grant and if the property is not needed for any other 
Federally sponsored project or program, the Grantee shall retain the 
property for use on nonfederally sponsored activities, or sell it, but 
must in either case compensate the Federal Government for its share. The 
amount of compensation shall be computed in the same manner as 
nonexpendable personal property.
    2. To provide Financial Management Systems which will include:
    (a) Accurate, current, and complete disclosure of the financial 
results of each grant. Financial Reporting will be on an accrual basis.
    (b) Records which identify adequately the source and application of 
funds for grant-supported activities. Those records shall contain 
information pertaining to grant awards and authorizations, obligations, 
unobligated balances, assets, liabilities, outlays, and income.
    (c) Effective control over and accountability for all funds, 
property, and other assets. Grantee shall adequately safeguard all such 
assets and shall assure that they are used solely for authorized 
purposes.
    (d) Accounting records supported by source documentation.
    (e) Provide an audit report prepared in sufficient detail to allow 
Grantor to determine that funds have been used in compliance with the 
proposal any applicable laws and regulations and this agreement.
    3. To retain financial records, supporting documents, statistical 
records, and all other records pertinent to the grant for a period of at 
least three years after closing except that the records shall be 
retained beyond the three-year period if audit findings have not been 
resolved. Microfilm copies may be substituted in lieu of original 
records. The Grantor and the Comptroller General of the United States, 
or any of their duly authorized representatives, shall have access to 
any books, documents, papers, and records of the Grantee which are 
pertinent to the specific grant program for the purpose of making audit, 
examination, excerpts, and transcripts.

[[Page 310]]

    4. To provide information as requested by the Grantor to determine 
the need for and complete any necessary Environmental Impact Statements.
    5. To provide information as requested by the Grantor concerning the 
Grantee's actions in soliciting citizen participation in the application 
process, including published notice of public meetings, actual public 
meetings held, and content of written comments received.
    6. To account for and to return to Grantor interest earned on grant 
funds pending their disbursement for program purposes unless the Grantee 
is a State. See part A 4(f) above.
    7. Not to encumber, transfer, or dispose of the property or any part 
thereof, furnished by the Grantor or acquired wholly or in part with 
Grantor funds without the written consent of the Grantor except as 
provided in part B 1.
    8. To provide Grantor such periodic reports as it may require of 
Grantee operations by designated representative of the Grantor.
    9. To execute Form FmHA or its successor agency under Public Law 
103-354 400-1, ``Equal Opportunity Agreement,'' and to execute any other 
agreements required by Grantor to implement the civil rights 
requirements.
    10. To include in all contracts in excess of $100,000 a provision 
for compliance with all applicable standards, orders, or regulations 
issued pursuant to the Clean Air Act of 1970. Violations shall be 
reported to the Grantor and the Regional Office of the Environmental 
Protection Agency.
    11. That, upon any default under its representations or agreements 
set forth in this instrument, Grantee, at the option and demand of 
Grantor, will, to the extent legally permissible, repay to the Grantor 
forthwith the original principal amount of the grant stated herein 
above, with interest at the rate of five per centum per annum from the 
date of the default. The provisions of this Grant Agreement may be 
enforced by Grantor, at its option and without regard to prior waivers 
by it of previous defaults of Grantee, by judicial proceedings to 
require specific performance of the terms of this Grant Agreement or by 
such other proceedings in law or equity, in either Federal or State 
courts, as may be deemed necessary by Grantor to assure compliance with 
the provisions of this Grant Agreement and the laws and regulations 
under which this grant is made.
    12. That no member of Congress shall be admitted to any share or 
part of this grant or any benefit that may arise therefrom; but this 
provision shall not be construed to bar as a contractor under the grant 
a publicly held corporation whose ownership might include a member of 
Congress.
    13. That all non-confidential information resulting from its 
activities shall be made available to the general public on an equal 
basis.
    14. That the purpose and scope of work for which this grant is made 
shall not duplicate programs for which monies have been received, are 
committed, or are applied for from other sources, public and private.
    15. That the Grantee shall relinquish any and all copyrights and/or 
privileges to the materials developed under this grant, such material 
being the sole property of the Federal Government. In the event anything 
developed under this grant is published in whole or in part, the 
material shall contain notice and be identified by language to the 
following effect: ``The material is the result of tax-supported research 
and as such is not copyrightable. It may be freely reprinted with the 
customary crediting of the source.''
    16. That the Grantee shall abide by the policies promulgated in OMB 
Circular A-102, Attachment O, which provides standards for use by 
Grantees in establishing procedures for the procurement of supplies, 
equipment, and other services with Federal grant funds.
    17. To the following termination provisions:
    (a) Termination for cause: The Grantor agency may terminate any 
grant in whole, or in part, at any time before the date of completion, 
whenever it is determined that the Grantee has failed to comply with the 
conditions of the grant. The Grantor agency shall promptly notify the 
Grantee in writing of the determination and the reasons for the 
termination, together with the effective date.
    (b) Termination for convenience. The Grantor agency or Grantee may 
terminate grants in whole, or in part, when both parties agree that the 
continuation of the project would not produce beneficial results 
commensurate with the further expenditure of funds. The two parties 
shall agree upon the termination conditions, including the effective 
date and, in the case of partial terminations, the portion to be 
terminated. The Grantee shall not incur new obligations for the 
terminated portion after the effective date, and shall cancel as many 
outstanding obligations as possible. The Grantor agency shall allow full 
credit to the Grantee for the Federal share of the noncancelable 
obligations, properly incurred by the Grantee prior to termination.

                                 Part C

Grantor agrees:

    1. That it will assist Grantee, within available appropriations, 
with such technical assistance as Grantor deems appropriate in planning 
the project and coordinating the plan with local official comprehensive 
plans and with any State or area plans for the area in which the project 
is located.

[[Page 311]]

    2. That at its sole discretion, Grantor may at any time give any 
consent, deferment, subordination, release, satisfaction, or termination 
of any or all of Grantee's grant obligations, with or without valuable 
consideration, upon such terms and conditions as Grantor may determine 
to be (a) advisable to further the purposes of the grant or to protect 
Grantor's financial interest therein, and (b) consistent with both the 
statutory purposes of the grant and the limitations of the statutory 
authority under which it is made.
    This agreement is subject to current Grantor regulations and any 
future regulations not inconsistent with the express terms hereof.
    Grantee on ___________, 19__, has caused this agreement to be 
executed by its duly authorized ___________ and attested and its 
corporate seal affixed by its duly authorized ___________.
Attest:

Grantee:

By______________________________________________________________________
________________________
(Title)
By______________________________________________________________________

________________________
(Title)
Grantor:
United States of America Farmers Home Administration or its successor 
agency under Public Law 103-354.

By______________________________________________________________________

________________________
(Title)

(Approved by the Office of Management and Budget under control number 
0575-0040)

[44 FR 35984, June 19, 1979, as amended at 47 FR 745, Jan. 7, 1982]



   Sec. Exhibit B to Subpart B of Part 1948--Grant Agreement (Public 
Bodies) for Site Development and/or Site Acquisition for Housing and/or 
                    Public Facilities and/or Services

    This agreement dated __________, 19_, between __________________ a 
public body corporate organized and operating under ____________ 
(Authorizing State Statute)
    Herein called ``Grantee,'' and the United States of America acting 
through the Farmers Home Administration or its successor agency under 
Public Law 103-354, Department of Agriculture, herein called 
``Grantor,'' Witnesseth:
    Grantee has determined to undertake a project for site acquisition 
and/or site development as follows: _______________ (herein called 
project) to serve the approved designated energy impacted area under its 
jurisdiction at an estimated cost of $_____, and has duly authorized the 
undertaking of such project;
    Grantee is able to finance not more than $_____ of the site 
acquisition and/or site development costs through revenues, charges, 
taxes or assessments, or funds otherwise available to Grantee. Said sum 
has been committed to and by Grantee for such project acquisition and/or 
site development costs.
    The Grantor agrees to grant to Grantee a sum not to exceed $_____ 
subject to the terms and conditions established by the Grantor. 
Provided, however, that the proportionate share of any grant funds 
actually advanced and not needed for grant purposes shall be returned 
immediately to the Grantor. The Grantor may terminate the grant in 
whole, or in part, at any time before the date of completion, whenever 
it is determined that the Grantee has failed to comply with the 
conditions of the grant.
    In consideration of said grant by Grantor to Grantee, to be made 
pursuant to Section 601 of the Powerplant and Industrial Fuel Use Act of 
1978 (Pub. L. 95-620) for the purpose only of defraying a part of the 
acquisition and/or site development costs, as defined by applicable 
Farmers Home Administration or its successor agency under Public Law 
103-354 regulations:

Grantee agrees that Grantee will:

    1. Cause said project to be completed within the total sums 
available to it, including said grant, in accordance with the project 
plans and specifications and any necessary modifications thereof 
prepared by Grantee and approved by Grantor.
    2. Permit periodic inspection of the project by a representative of 
Grantor.
    3. Make the housing or public facility or services available to all 
persons in Grantee's servce area without regard to race, color, national 
origin, religion, sex, marital status, age, physical or mental handicap.
    4. Use the real property including land and land improvements for 
authorized purposes of the grant as long as needed.
    a. The Grantee shall obtain approval of the Grantor before using the 
real property for other purposes when the Grantee determines that the 
property is no longer for the original purposes.
    b. When the real property is no longer needed as provided above, 
return all real property furnished or purchased wholly with Federal 
grant funds to the Grantor. In the case of property purchased in part 
with Federal grant funds, the Grantee may be permitted to take title to 
the Federal interest therein upon compensating the Federal Government 
for its fair share of the property. The Federal share of the property 
shall be

[[Page 312]]

the amount computed by applying the percentage of the Federal 
Participation in the total cost of the grant program for which the 
property was acquired to the current fair market value of the property.
    5. Not use grant funds to replace any financial support previously 
provided or assured from any other source. The Grantee agrees that the 
general level of expenditure by the Grantee for the benefit of program 
area and/or program covered by this agreement shall be maintained and 
not reduced as a result of the Federal share funds received under this 
grant.
    6. Not use grant funds to pay for construction costs of housing or 
public facilities.
    This Grant Agreement covers the following described real property 
(use continuation sheets as necessary).
    7. Abide by the following conditions pertaining to nonexpendable 
personal property which is furnished by the Grantor or acquired wholly 
or in part with Grant Funds.
    a. The Grantee shall retain such property as long as there is a need 
for the property to accomplish the purpose of the grant. When there is 
no longer a need for the property to accomplish the purpose of the 
grant, the Grantee shall use the property in connection with other 
Federal grants it has received in the following order of priority.
    (1) Other grant of the Grantor needing the property.
    (2) Grants of other Federal agencies needing the property.
    b. When the Grantee no longer has need for the property in any of 
its Federal grant programs, the property may be used for its own 
official activities in accordance with the following standards:
    (1) Nonexpendable property with an acquisition cost of less than 
$500 and used four years or more. The Grantee may use the property for 
its own official activities without reimbursement to the Federal 
Government or sell the property and retain the proceeds.
    (2) All other nonexpendable property. The Grantee may retain the 
property for its own use provided that a fair compensation is made to 
the Grantor. The amount of compensation shall be computed by applying 
the percentage of the Grantor participation in the grant program to the 
current fair market value of the property as determined by the Grantor.
    c. If the Grantee has no need for the property, disposition shall be 
made as follows:
    (1) Nonexpendable property with an acquisition cost of $1,000 or 
less. Except for that property which meets the criteria of b(1) above, 
the Grantee shall sell the property and reimburse the Grantor an amount 
which is computed in accordance with (3) below.
    (2) Nonexpendable property with an acquisition cost of over $1,000. 
The Grantee shall request disposition instructions from Grantor.
    (3) If disposition instructions are not issued within 120 days after 
reporting, the Grantee shall sell the property and reimburse the Grantor 
an amount which is computed by applying the percentage of the Grantor 
participation in the grant program to the sales proceeds. Further, the 
Grantee shall be permitted to retain $100 or ten percent of the 
proceeds, whichever is greater, for the Grantee's selling and handling 
expenses.
    d. The Grantee's property management standards for nonexpendable 
personal property shall also include:
    (1) Property records which accurately provide for: a description of 
the property; manufacturer's serial number or other identification 
number; acquisition date and cost; sources of the property; and ultimate 
disposition data including sales price or the method used to determine 
current fair market value if the Grantee reimburses the Grantor for its 
share.
    (2) A physical inventory of property shall be taken and the result 
reconciled with the property records at least once every two years to 
verify the existence, current utilization, and continued need for the 
property.
    (3) A control system shall be in effect to insure adequate 
safeguards to prevent loss, damage, or theft to the property shall be 
investigated and fully documented.
    (4) Adequate maintenance procedures shall be implemented to keep the 
property in good condition.
    (5) Proper sales procedures shall be established for unneeded 
property which would provide for competition to the extent practicable 
and result in the highest possible return.

This Grant Agreement covers the following described nonexpendable 
property (use continuation sheets as necessary).

    8. Provide Financial Management Systems which will include:
    (a) Accurate, current, and complete disclosure of the financial 
results of each grant. Financial Reporting will be on an accrual basis.
    (b) Records which identify adequately the source and application of 
funds for grant-supporting activities. Those records shall contain 
information pertaining to grant awards and authorizations, obligations, 
unobligated balances, assets, liabilities, outlays, and income.
    (c) Effective control over and accountability for all funds, 
property and other assets. Grantees shall adequately safeguard all such 
assets and shall assure that they are used solely for authorized 
purposes.
    (d) Accounting records supported by source documentation.

[[Page 313]]

    9. Retain financial records, supporting documents, statistical 
records, and all other records pertinent to the grant for a period of at 
least three years after grant closing except that the records shall be 
retained beyond the three-year period if audit findings have not been 
resolved. Microfilm copies may be substituted in lieu of original 
records. The Grantor and the Comptroller General of the United States, 
or any of their duly authorized representatives, shall have access to 
any books, documents, papers, and records of the Grantee governments 
which are pertinent to the specific grant program for the purpose of 
making audit, examination, excerpts and transcripts.
    10. Provide information as requested by the Grantor to determine the 
need for and complete any necessary Environmental Impact Statements.
    11. Provide an audit report prepared in sufficient detail to allow 
the Grantor to determine that funds have been used in compliance with 
the proposal, any applicable laws and regulations and this agreement.
    12. Agree to account for and to return to Grantor interest earned on 
grant funds pending their disbursement for program purposes when the 
Grantee is a unit of local government. States and agencies of 
instrumentalities of states shall not be held accountable for interest 
earned on grant funds pending their disbursement.
    13. Not encumber, transfer, or dispose of the property or any part 
thereof, furnished by the Grantor or acquired wholly or in part with 
Grantor funds without the written consent of the Grantor except as 
provided in item 5 above.
    14. Provide Grantor with such periodic reports as it may require and 
permit periodic inspection of its operations by a designated 
representative of the Grantor.
    15. Execute Form FHA 400-1, ``Equal Opportunity Agreement,'' Form 
FHA 400-4, ``Nondiscrimination Agreement,'' and any other agreements 
required by Grantor to implement the civil rights requirements. If any 
such form has been executed by Grantee as a result of a loan being made 
to Grantee by Grantor contemporaneously with the making of this grant, 
another form of the same type need not be executed in connection with 
this grant.
    16. Include in all contracts for construction or repair a provision 
for compliance with the Copeland ``Anti-Kick Back'' Act (18 U.S.C. 874) 
as supplemented in Department of Labor regulations (29 CFR, part 3). The 
Grantee shall report all suspected or reported violations to the 
Grantor.
    17. In Contracts in excess of $2,000 and in other contracts in 
excess of $2,500 which involve the employment of mechanics or laborers, 
to include a provision for compliance with sections 103 and 107 of the 
Contract Work Hours and Safety Standards Act (40 U.S.C. 327-330) as 
supplemented by Department of Labor regulations (29 CFR, part 5).
    18. Include in all contracts in excess of $2,500 a provision for 
compliance with applicable regulations and standards of the Cost of 
Living Council in establishing wages and prices. Grantee shall report 
any violations of such regulation and standards to the Grantor and the 
local Internal Revenue Service field office.
    19. Include in all contracts in excess of $100,000 a provision for 
compliance with all applicable standards, orders, or regulations issued 
pursuant to the Clear Air Act of 1970. Violations shall be reported to 
the Grantor and the Regional Office of the Environmental Protection 
Agency.
    20. Upon any default under its representations or agreements set 
forth in this instrument, Grantee, at the option and the demand of 
Grantor, will, to the extent legally permissible, repay to Grantor 
forthwith the original principal amount of the grant stated hereinabove, 
with interest at the rate of five per centum per annum from the date of 
the default. The provisions of this Grant Agreement may be enforced by 
Grantor at its option and without regard to prior waivers by it of 
previous defaults of Grantee, by judicial proceedings to require 
specific performance of the terms of this Grant Agreement or by such 
other proceedings in law or equity, in either Federal or State courts, 
as may be deemed necessary by Grantor to assure compliance with the 
provisions of this Grant Agreement and the laws and regulations under 
which this grant is made.
    21. That no member of Congress shall be admitted to any share or 
part of this grant or any benefit that may arise therefrom; but this 
provision shall not be construed to bar as a contractor under the grant 
a publicly held corporation whose ownership might include a member of 
Congress.
    22. That all non-confidential information resulting from its 
activities shall be made available to the general public on an equal 
basis.
    23. That the purpose and scope of work for which this grant is made 
shall not duplicate programs for which monies have been received are 
committed, or are applied for from other sources, public and private.
    24. That Grantee shall relinquish any and all copyrights and/or 
privileges to the materials developed under this grant, such material 
being the sole property of the Federal Government. In the event anything 
developed under this grant is published in whole or in part, the 
material shall contain notice and be identified by language to the 
following effect: ``The material is the result of tax-supported research 
and as such is not copyrightable. It may be freely reprinted with the 
customary crediting of the source.''
    25. That the Grantee shall abide by the policies promulgated in OMB 
Circular A-95,

[[Page 314]]

Attachment O, which provides standards for use by Grantees in 
establishing procedures for the procurement of supplies, equipment, and 
other services with Federal grant funds.
    26. To the following termination provisions:
    (a) Termination for cause: The Grantor agency may terminate any 
grant in whole, or in part, at any time before the date of completion, 
whenever it is determined that the Grantee has failed to comply with the 
conditions of the grant. The Grantor agency shall promptly notify the 
Grantee in writing of the determination and the reasons for the 
termination, together with the effective date.
    (b) Termination for convenience. The Grantor agency or Grantee may 
terminate grants in whole, or in part, when both parties agree that the 
continuation of the project would not produce beneficial results 
commensurate with the further expenditure of funds. The two parties 
shall agree upon the termination conditions, including the effective 
date and, in the case of partial terminations, the portion to be 
terminated. The Grantee shall not incur new obligations for the 
terminated portion after the effective date, and shall cancel as many 
outstanding obligations as possible. The Grantor agency shall allow full 
credit to the Grantee for the Federal share of the noncancelable 
obligations, properly incurred by the Grantee prior to termination.

Grantor agrees that it will:

    1. Assist Grantee, within available appropriations, with such 
technical assistance as Grantor deems appropriate in planning the 
project and coordinating the plan with local official comprehensive 
plans and with any State or area plans for the area in which the project 
is located.
    2. In its sole discretion, Grantor may at any time give any consent, 
deferment, subordination, release, satisfaction, or termination of any 
or all of Grantee's grant obligations, with or without valuable 
consideration, upon such terms and conditions as Grantor may determine 
to be (a) advisable to further the purposes of the grant or to protect 
Grantor's financial interest therein, and (b) consistent with both the 
statutory purposes of the grant and the limitations of the statutory 
authority under which it is made.

Grantee on the date first above written has caused this agreement to be 
executed by its duly authorized____________
and attested and its corporate seal affixed by its duly 
authorized____________
Attest:
(Seal)
By______________________________________________________________________

(Title)

Grantee

________________________________________________________________________

By______________________________________________________________________
________________________________________________________________________
(Title)

Grantor
United States of America
Farmers Home Administration or its successor agency under Public Law 
103-354

By______________________________________________________________________
________________________________________________________________________
(Title)

(Approved by the Office of Management and Budget under control number 
0575-0040)

[44 FR 35984, June 19, 1979, as amended at 47 FR 745, Jan. 7, 1982]

Subpart C [Reserved]

                          PART 1949 [RESERVED]

[[Page 315]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 317]]



                    Table of CFR Titles and Chapters




                     (Revised as of January 1, 2016)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
       III  Administrative Conference of the United States (Parts 
                300--399)
        IV  Miscellaneous Agencies (Parts 400--500)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 2--199)
        II  Office of Management and Budget Guidance (Parts 200--
                299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements
       III  Department of Health and Human Services (Parts 300--
                399)
        IV  Department of Agriculture (Parts 400--499)
        VI  Department of State (Parts 600--699)
       VII  Agency for International Development (Parts 700--799)
      VIII  Department of Veterans Affairs (Parts 800--899)
        IX  Department of Energy (Parts 900--999)
         X  Department of the Treasury (Parts 1000--1099)
        XI  Department of Defense (Parts 1100--1199)
       XII  Department of Transportation (Parts 1200--1299)
      XIII  Department of Commerce (Parts 1300--1399)
       XIV  Department of the Interior (Parts 1400--1499)
        XV  Environmental Protection Agency (Parts 1500--1599)
     XVIII  National Aeronautics and Space Administration (Parts 
                1800--1899)
        XX  United States Nuclear Regulatory Commission (Parts 
                2000--2099)
      XXII  Corporation for National and Community Service (Parts 
                2200--2299)
     XXIII  Social Security Administration (Parts 2300--2399)
      XXIV  Housing and Urban Development (Parts 2400--2499)
       XXV  National Science Foundation (Parts 2500--2599)
      XXVI  National Archives and Records Administration (Parts 
                2600--2699)
     XXVII  Small Business Administration (Parts 2700--2799)

[[Page 318]]

    XXVIII  Department of Justice (Parts 2800--2899)
      XXIX  Department of Labor (Parts 2900--2999)
       XXX  Department of Homeland Security (Parts 3000--3099)
      XXXI  Institute of Museum and Library Services (Parts 3100--
                3199)
     XXXII  National Endowment for the Arts (Parts 3200--3299)
    XXXIII  National Endowment for the Humanities (Parts 3300--
                3399)
     XXXIV  Department of Education (Parts 3400--3499)
      XXXV  Export-Import Bank of the United States (Parts 3500--
                3599)
     XXXVI  Office of National Drug Control Policy, Executive 
                Office of the President (Parts 3600--3699)
    XXXVII  Peace Corps (Parts 3700--3799)
     LVIII  Election Assistance Commission (Parts 5800--5899)
       LIX  Gulf Coast Ecosystem Restoration Council (Parts 5900--
                5999)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--199)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
        IV  Office of Personnel Management and Office of the 
                Director of National Intelligence (Parts 1400--
                1499)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Parts 2100--2199)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Parts 3200--
                3299)
     XXIII  Department of Energy (Parts 3300--3399)
      XXIV  Federal Energy Regulatory Commission (Parts 3400--
                3499)
       XXV  Department of the Interior (Parts 3500--3599)
      XXVI  Department of Defense (Parts 3600--3699)
    XXVIII  Department of Justice (Parts 3800--3899)

[[Page 319]]

      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Parts 4300--
                4399)
     XXXIV  Securities and Exchange Commission (Parts 4400--4499)
      XXXV  Office of Personnel Management (Parts 4500--4599)
    XXXVII  Federal Election Commission (Parts 4700--4799)
        XL  Interstate Commerce Commission (Parts 5000--5099)
       XLI  Commodity Futures Trading Commission (Parts 5100--
                5199)
      XLII  Department of Labor (Parts 5200--5299)
     XLIII  National Science Foundation (Parts 5300--5399)
       XLV  Department of Health and Human Services (Parts 5500--
                5599)
      XLVI  Postal Rate Commission (Parts 5600--5699)
     XLVII  Federal Trade Commission (Parts 5700--5799)
    XLVIII  Nuclear Regulatory Commission (Parts 5800--5899)
      XLIX  Federal Labor Relations Authority (Parts 5900--5999)
         L  Department of Transportation (Parts 6000--6099)
       LII  Export-Import Bank of the United States (Parts 6200--
                6299)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Parts 6400--6499)
        LV  National Endowment for the Arts (Parts 6500--6599)
       LVI  National Endowment for the Humanities (Parts 6600--
                6699)
      LVII  General Services Administration (Parts 6700--6799)
     LVIII  Board of Governors of the Federal Reserve System 
                (Parts 6800--6899)
       LIX  National Aeronautics and Space Administration (Parts 
                6900--6999)
        LX  United States Postal Service (Parts 7000--7099)
       LXI  National Labor Relations Board (Parts 7100--7199)
      LXII  Equal Employment Opportunity Commission (Parts 7200--
                7299)
     LXIII  Inter-American Foundation (Parts 7300--7399)
      LXIV  Merit Systems Protection Board (Parts 7400--7499)
       LXV  Department of Housing and Urban Development (Parts 
                7500--7599)
      LXVI  National Archives and Records Administration (Parts 
                7600--7699)
     LXVII  Institute of Museum and Library Services (Parts 7700--
                7799)
    LXVIII  Commission on Civil Rights (Parts 7800--7899)
      LXIX  Tennessee Valley Authority (Parts 7900--7999)
       LXX  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 8000--8099)
      LXXI  Consumer Product Safety Commission (Parts 8100--8199)
    LXXIII  Department of Agriculture (Parts 8300--8399)
     LXXIV  Federal Mine Safety and Health Review Commission 
                (Parts 8400--8499)
     LXXVI  Federal Retirement Thrift Investment Board (Parts 
                8600--8699)

[[Page 320]]

    LXXVII  Office of Management and Budget (Parts 8700--8799)
      LXXX  Federal Housing Finance Agency (Parts 9000--9099)
   LXXXIII  Special Inspector General for Afghanistan 
                Reconstruction (Parts 9300--9399)
    LXXXIV  Bureau of Consumer Financial Protection (Parts 9400--
                9499)
    LXXXVI  National Credit Union Administration (Parts 9600--
                9699)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Parts 
                9700--9799)
     XCVII  Council of the Inspectors General on Integrity and 
                Efficiency (Parts 9800--9899)
      XCIX  Military Compensation and Retirement Modernization 
                Commission (Parts 9900--9999)
         C  National Council on Disability (Partys 10000--10049)

                      Title 6--Domestic Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 1--199)
         X  Privacy and Civil Liberties Oversight Board (Parts 
                1000--1099)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)

[[Page 321]]

        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
       XXV  Office of Advocacy and Outreach, Department of 
                Agriculture (Parts 2500--2599)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy Policy and New Uses, Department of 
                Agriculture (Parts 2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  National Institute of Food and Agriculture (Parts 
                3400--3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--499)

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         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XIII  Nuclear Waste Technical Review Board (Parts 1300--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Parts 1800--1899)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)
        II  Election Assistance Commission (Parts 9400--9499)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
         X  Bureau of Consumer Financial Protection (Parts 1000--
                1099)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XII  Federal Housing Finance Agency (Parts 1200--1299)
      XIII  Financial Stability Oversight Council (Parts 1300--
                1399)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)

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        XV  Department of the Treasury (Parts 1500--1599)
       XVI  Office of Financial Research (Parts 1600--1699)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--1199)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)

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       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  U.S. Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  U.S. Immigration and Customs Enforcement, Department 
                of Homeland Security (Parts 400--599)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)

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         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board (Parts 900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Millennium Challenge Corporation (Parts 1300--1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)

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       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XV  Emergency Mortgage Insurance and Loan Programs, 
                Department of Housing and Urban Development (Parts 
                2700--2799) [Reserved]
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
      XXIV  Board of Directors of the HOPE for Homeowners Program 
                (Parts 4000--4099) [Reserved]
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

[[Page 327]]

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Parts 1200--1299)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--End)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)

[[Page 328]]

        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Bureau of Safety and Environmental Enforcement, 
                Department of the Interior (Parts 200--299)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
         V  Bureau of Ocean Energy Management, Department of the 
                Interior (Parts 500--599)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)
       XII  Office of Natural Resources Revenue, Department of the 
                Interior (Parts 1200--1299)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)

[[Page 329]]

      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)
         X  Financial Crimes Enforcement Network, Department of 
                the Treasury (Parts 1000--1099)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
      XVII  Office of the Director of National Intelligence (Parts 
                1700--1799)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)

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        IV  Office of Career, Technical and Adult Education, 
                Department of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599) 
                [Reserved]
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799) 
                [Reserved]
            Subtitle C--Regulations Relating to Education
        XI  [Reserved]
       XII  National Council on Disability (Parts 1200--1299)

                          Title 35 [Reserved]

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
        VI  [Reserved]
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Parts 1500--
                1599)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  U.S. Copyright Office, Library of Congress (Parts 
                200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                300--399)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--199)
        II  Armed Forces Retirement Home (Parts 200--299)

[[Page 331]]

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Regulatory Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)
      VIII  Gulf Coast Ecosystem Restoration Council (Parts 1800--
                1899)

          Title 41--Public Contracts and Property Management

            Subtitle A--Federal Procurement Regulations System 
                [Note]
            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
   62--100  [Reserved]
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
  103--104  [Reserved]
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
  129--200  [Reserved]
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)

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       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--599)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 400--999)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10099)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)

[[Page 333]]

        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)
        IV  National Telecommunications and Information 
                Administration, Department of Commerce, and 
                National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 400--499)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)

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         3  Health and Human Services (Parts 300--399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  Agency for International Development (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management, Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399) 
                [Reserved]
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  Civilian Board of Contract Appeals, General Services 
                Administration (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

[[Page 335]]

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                Administration, Department of Transportation 
                (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Homeland Security (Parts 
                400--499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation (Parts 1400--1499) 
                [Reserved]
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

[[Page 337]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 2016)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Administrative Conference of the United States    1, III
Advisory Council on Historic Preservation         36, VIII
Advocacy and Outreach, Office of                  7, XXV
Afghanistan Reconstruction, Special Inspector     5, LXXXIII
     General for
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development              2, VII; 22, II
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            2, IV; 5, LXXIII
  Advocacy and Outreach, Office of                7, XXV
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Economic Research Service                       7, XXXVII
  Energy Policy and New Uses, Office of           2, IX; 7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  National Institute of Food and Agriculture      7, XXXIV
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII

[[Page 338]]

Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase from People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Career, Technical and Adult Education, Office of  34, IV
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chemical Safety and Hazardous Investigation       40, VI
     Board
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       5, LXVIII; 45, VII
Civil Rights, Office for                          34, I
Council of the Inspectors General on Integrity    5, XCVIII
     and Efficiency
Court Services and Offender Supervision Agency    5, LXX
     for the District of Columbia
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               2, XIII; 44, IV; 50, VI
  Census Bureau                                   15, I
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III, IV
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Financial Protection Bureau              5, LXXXIV; 12, X
Consumer Product Safety Commission                5, LXXI; 16, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    2, XXII; 45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    5, LXX; 28, VIII
     for the District of Columbia
Customs and Border Protection                     19, I
Defense Contract Audit Agency                     32, I

[[Page 339]]

Defense Department                                2, XI; 5, XXVI; 32, 
                                                  Subtitle A; 40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III; 
                                                  48, 51
  Defense Acquisition Regulations System          48, 2
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 2, XI; 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          5, LXX; 28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          2, XXXIV; 5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Career, Technical and Adult Education, Office   34, IV
       of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Career, Technical, and Adult Education, Office  34, IV
       of
Educational Research and Improvement, Office of   34, VII
Election Assistance Commission                    2, LVIII; 11, II
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             2, IX; 5, XXIII; 10, II, 
                                                  III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   2, XV; 5, LIV; 40, I, IV, 
                                                  VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                2, Subtitle A; 5, III, 
                                                  LXXVII; 14, VI; 48, 99

[[Page 340]]

  National Drug Control Policy, Office of         2, XXXVI; 21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           2, XXXV; 5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       5, XXXVII; 11, I
Federal Emergency Management Agency               44, I
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Agency                    5, LXXX; 12, XII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority                 5, XIV, XLIX; 22, XIV
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Financial Crimes Enforcement Network              31, X
Financial Research Office                         12, XVI
Financial Stability Oversight Council             12, XIII
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV

[[Page 341]]

Forest Service                                    36, II
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Gulf Coast Ecosystem Restoration Council          2, LIX; 40, VIII
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          2, III; 5, XLV; 45, 
                                                  Subtitle A,
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  2, XXX; 6, I; 8, I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection                   19, I
  Federal Emergency Management Agency             44, I
  Human Resources Management and Labor Relations  5, XCVII
       Systems
  Immigration and Customs Enforcement Bureau      19, IV
  Transportation Security Administration          49, XII
HOPE for Homeowners Program, Board of Directors   24, XXIV
     of
Housing and Urban Development, Department of      2, XXIV; 5, LXV; 24, 
                                                  Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Human Development Services, Office of             45, XIII
Immigration and Customs Enforcement Bureau        19, IV
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII

[[Page 342]]

Independent Counsel, Offices of                   28, VI
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII, XV
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department                               2, XIV
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Natural Resource Revenue, Office of             30, XII
  Ocean Energy Management, Bureau of              30, V
  Reclamation, Bureau of                          43, I
  Safety and Enforcement Bureau, Bureau of        30, II
  Secretary of the Interior, Office of            2, XIV; 43, Subtitle A
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
Investment Security, Office of                    31, VIII
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                2, XXVIII; 5, XXVIII; 28, 
                                                  I, XI; 40, IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Independent Counsel, Offices of                 28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  2, XXIX; 5, XLII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V

[[Page 343]]

  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I, VII
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Royalty Board                         37, III
  U.S. Copyright Office                           37, II
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II, LXIV
Micronesian Status Negotiations, Office for       32, XXVII
Military Compensation and Retirement              5, XCIX
     Modernization Commission
Millennium Challenge Corporation                  22, XIII
Mine Safety and Health Administration             30, I
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
Museum and Library Services, Institute of         2, XXXI
National Aeronautics and Space 
     AdministrationI722, XVIII; 5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   2, XXII; 45, XII, XXV
National Archives and Records Administration      2, XXVI; 5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    5, C; 34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              5, LXXXVI; 12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           2, XXXVI; 21, III
National Endowment for the Arts                   2, XXXII
National Endowment for the Humanities             2, XXXIII
National Foundation on the Arts and the           45, XI
     Humanities
National Geospatial-Intelligence Agency           32, I
National Highway Traffic Safety Administration    23, II, III; 47, VI; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute of Food and Agriculture        7, XXXIV
National Institute of Standards and Technology    15, II
National Intelligence, Office of Director of      5, IV; 32, XVII
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI

[[Page 344]]

National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       2, XXV; 5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III, IV
     Administration
National Transportation Safety Board              49, VIII
Natural Resources Conservation Service            7, VI
Natural Resource Revenue, Office of               30, XII
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     2, XX; 5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Ocean Energy Management, Bureau of                30, V
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       2, XXXVII; 22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 5, IV; 45, 
                                                  VIII
  Human Resources Management and Labor Relations  5, XCVII
       Systems, Department of Homeland Security
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Regulatory Commission                      5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Privacy and Civil Liberties Oversight Board       6, X
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII

[[Page 345]]

Safety and Environmental Enforcement, Bureau of   30, II
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                5, XXXIV; 17, II
Selective Service System                          32, XVI
Small Business Administration                     2, XXVII; 13, I
Smithsonian Institution                           36, V
Social Security Administration                    2, XXIII; 20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  2, VI; 22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     2, XII; 5, L
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 47, IV; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               2, X;5, XXI; 12, XV; 17, 
                                                  IV; 31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection                   19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Claims Collection Standards             31, IX
  Federal Law Enforcement Training Center         31, VII
  Financial Crimes Enforcement Network            31, X
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  Investment Security, Office of                  31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
   and Water Commission, United States Section
[[Page 346]]

U.S. Copyright Office                             37, II
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       2, VIII; 38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I, VII
World Agricultural Outlook Board                  7, XXXVIII

[[Page 347]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations (CFR) that 
were made by documents published in the Federal Register since January 
1, 2011 are enumerated in the following list. Entries indicate the 
nature of the changes effected. Page numbers refer to Federal Register 
pages. The user should consult the entries for chapters, parts and 
subparts as well as sections for revisions.
For changes to this volume of the CFR prior to this listing, consult the 
annual edition of the monthly List of CFR Sections Affected (LSA). The 
LSA is available at www.fdsys.gov. For changes to this volume of the CFR 
prior to 2001, see the ``List of CFR Sections Affected, 1949-1963, 1964-
1972, 1973-1985, and 1986-2000'' published in 11 separate volumes. The 
``List of CFR Sections Affected 1986-2000'' is available at 
www.fdsys.gov.

                                  2011

7 CFR
                                                                   76 FR
                                                                    Page
Chapter XVIII
1940.310 (c)(7) added; interim; eff. 1-23-12.......................80220
1942.5 (b)(1)(ii)(B) amended.......................................80730
1942.106 (a) amended...............................................80730
1944.409 Amended...................................................80730
1944.526 (c)(2) amended............................................80730
1944.529 (b)(9) amended............................................80731
1944.531 (c)(3) amended............................................80731
1944.674 (c) amended...............................................80731
1948.79 (k)(3) amended.............................................80731
1948.80 (g) amended................................................80731
1948.84 (c) and (i)(2) amended.....................................80731

                                  2012

7 CFR
                                                                   77 FR
                                                                    Page
Chapter XVIII
1942.9 Heading, (b) introductory text and (1) revised..............29539
1942.18 (l) revised................................................29539
1945 Removed.......................................................41256

                                  2013

                       (No regulations published)

                                  2014

7 CFR
                                                                   79 FR
                                                                    Page
Chapter XVIII
1940.588 (i) revised; eff. 1-16-15.................................55967
    Revised........................................................56218
1940.589 Revised...................................................56219
1940.593 Revised...................................................56220
1942.1 (e) added; interim..........................................76007
1942.2 (a)(1)(iii) revised; interim................................76007
1942.5 (d)(4) revised; (d)(6) amended; eff. 1-16-15................55967
    (b)(1)(ii)(B) revised; interim.................................76007
1942.17 (j)(3)(ii)(C) added; (j)(3)(iii), (n)(2)(xi) and (q) 
        revised; interim...........................................76007
1942.18 (k)(1) revised; interim....................................76008
1944.66 (b), (d), (e)(1), (2) and (f) revised; interim.............76008
1942.304 Amended; interim..........................................76008
1942.310 (d), (f) and (i) revised; (j) and (k) added; interim......76009
1942.311 (a)(1) revised; interim...................................76009
1942.314 (f)(4) and (5) added; interim.............................76009
1942.315 (b) revised; interim......................................76009
1942.316 Heading revised; (d) added; interim.......................76009
1944.406 (d) revised; interim......................................76009
1944.410 (a)(6) and (e)(8) revised; interim........................76009

[[Page 348]]

1944.411 (c) and (e) revised; interim..............................76010
1944.422 Introductory text, (a), (b) introductory text, (1) and 
        (2) revised; interim.......................................76010
1944.426 (c) revised; interim......................................76010
1944.401--1944.450 (Subpart I) Exhibit A amended; interim..........76010
1944.526 (c)(2) revised; interim...................................76010
1944.529 (b)(9) revised; interim...................................76011
1944.531 (c)(3) revised; interim...................................76011
1944.533 (f)(2)(i) amended; (f)(4) introductory text revised; eff. 
        1-16-15....................................................55967
1944.501--1944.550 (Subpart K) Exhibit A amended; interim..........76011
1944.658 (a)(3) revised; interim...................................76011
1944.666 (e) revised; interim......................................76011
1944.670 (a) revised; interim......................................76011
1944.676 (b)(1)(x) revised; interim................................76011
1944.688 (e) revised; interim......................................76011
1944.689 (a)(3) revised; interim...................................76011
1944.651--1944.700 (Subpart N) Exhibit A amended; interim..........76011
1948.92 (g)(3) amended; (g)(8) revised; eff. 1-16-15...............55967

                                  2015

7 CFR
                                                                   80 FR
                                                                    Page
Chapter XVIII
1940.401 Amended; (d)(4)(iii) amended...............................9876
1940.406 Amended....................................................9876
1940.551 (a) and (c) amended........................................9876
1940.552 (e) amended................................................9876
1940.577 (b)(2) amended.............................................9876
1940.578 (k) amended................................................9876
1940.585 (g) amended................................................9876
1940.560 (b)(3) revised.............................................9876
1940.563 (b)(4) revised; (b)(5) added...............................9876
1940.564 (b)(4) revised; (b)(5) added...............................9877
1940.566 (b)(2) revised.............................................9877
1940.567 (b)(3) revised.............................................9877
1940.575 (b)(3) revised.............................................9877
1940.585 (b)(2) revised.............................................9877
1940.591 (b)(2) revised; (g) amended................................9877
1940.592 (b)(2) revised.............................................9877
1940.951 Introductory text and (d) amended..........................9877
1940.953 Amended....................................................9878
1940.956 Amended....................................................9878
1940.957 (d) amended................................................9878
1940.960 (a) amended................................................9878
1940.961 (a)(1), (2) and (d)(1) amended.............................9878
1940.965 Amended....................................................9878
1940.968 (a), (c), (d), (h)(4), (i)(2)(vii), (3)(i) through (iv), 
        (j)(2), (4), (6), (7) and (l) amended.......................9878
1940.969 Amended....................................................9878
1942.1 (b), (c) and (d) amended.....................................9878
1942.2 (a)(1), (2)(iv), (3), (4), (c)(3), (d) and (e) amended.......9878
1942.3 Amended......................................................9878
1942.5 (a) introductory text, (1)(i), (ii), (b)(1)(ii)(E), (c)(2), 
        (d) introductory text, (1), (2), (3), (5), (6), (7) 
        introductory text and (iii) amended.........................9878
1942.6 Amended......................................................9879
1942.8 (d), (g) and (h) amended.....................................9879
1942.16 Introductory text amended...................................9879
1942.17 (a), (b)(2)(i), (3), (4), (5), (c)(1), (2) introductory 
        text, (iii)(E), (iv) introductory text, (d)(1)(iv)(B), (G) 
        introductory text, (2)(ii), (v) introductory text, (C), 
        (D), (E), (e)(1) introductory text, (ii), (4), (f)(5), 
        (6), (7) introductory text, (i)(D), (g) introductory text, 
        (1) introductory text, (i), (ii) introductory text, (iv), 
        (2)(iii)(A)(7), (3)(i) introductory text, (B), (D), 
        (iii)(A)(3), (h) introductory text, (1)(ii)(B), 
        (2)(i)(B)(2), (ii)(A)(2), (B), (iii) introductory text, 
        (C), (3) introductory text, (j)(3) introductory text, 
        (i)(A) through (D), (ii)(A), (B), (4) introductory text, 
        (i) introductory text, (A), (B) introductory text, (1), 
        (iii)(C), (5), (6)(i), (7), (9), (10)(ii), (iv), (11), (k) 
        introductory text, (1)(iv), (4), (5), (7), (8), (l)(1), 
        (3), (4), (m)(1), (2), (3) through (6), (n)(1), (2) 
        introductory text, (vii), (x), (xiii), (3) introductory 
        text, (ii), (6), (o)(3), (p)(2) introductory text, (ii), 
        (iii), (3)(i), (ii), (iii), (4), (5), (6)(i)(A) and (B) 
        amended; (b)(1)(i)(A), (B), (2)(iii), (iv) and (j)(3)(iii) 
        revised.....................................................9879

[[Page 349]]

1942.18 (b), (c), (d) introductory text, (1) introductory text, 
        (i), (4), (11), (16), (e)(1), (2), (f) introductory text, 
        (1) introductory text, (iii)(B)(2), (3), (C), (5), (6), 
        (g), (h), (j)(1) introductory text, (2), (5)(iv), (k)(5), 
        (m) introductory text, (1) introductory text, (2), (4), 
        (n) introductory text, (3), (5), (6), (8), (9), (11), 
        (o)(1), (2) introductory text, (iii) introductory text, 
        (B), (3), (4)(iv), (5), (6), (7)(i) introductory text, 
        (C), (ii) and (iii) introductory text amended...............9881
1942.19 (b)(1), (2) introductory text, (iv), (vi), (c) 
        introductory text, (11), (d), (e) introductory text, (1), 
        (2), (i), (ii), (iii), (f), (g) introductory text, (h)(1), 
        (2), (4), (7), (9), (10)(ii), (iii), (iv), (11)(iii) and 
        (i) amended.................................................9882
1942.20 (a) introductory text, (1), (12), (13), (18), (20), (25) 
        and (b) amended.............................................9883
1942.102 (a) and (b) amended........................................9883
1942.105 Amended....................................................9883
1942.107 (c) amended................................................9883
1942.108 (c) amended................................................9883
1942.112 (a)(2)(ii), (3) introductory text, (iii), (iv) and (v) 
        amended.....................................................9883
1942.114 Introductory text and (a)(1) amended.......................9883
1942.115 Amended....................................................9883
1942.116 Introductory text, (a) and (b) amended.....................9883
1942.122 (a) heading and (f) amended................................9883
1942.123 (a)(1), (i) and (k) amended................................9883
1942.126 (b) introductory text, (1), (2), (3), (c), (d)(1), (2), 
        (h) introductory text, (k), (l)(1), (2), (iii) 
        introductory text, (B), (3) introductory text, (4), (5), 
        (6)(i) introductory text, (C), (ii) and (iii) introductory 
        text amended................................................9883
1942.127 (e)(1) and (2) amended.....................................9884
1942.128 (b) amended................................................9884
1942.134 Introductory text amended..................................9884
1942.301--1942.350 (Subpart G) Removed; interim....................15667
1942.301 Amended....................................................9884
1942.302 Amended....................................................9884
1942.303 Amended....................................................9884
1942.304 Amended....................................................9884
1942.305 (b) introductory text, (3)(iv)(A), (C), (E) and (v) 
        amended.....................................................9884
1942.306 (c) amended................................................9884
1942.308 (a), (b) and (d) amended...................................9884
1942.310 (a), (b)(1), (2), (4), (c)(1) introductory text, (ii), 
        (3) and (4) amended.........................................9885
1942.311 (b) amended................................................9885
1942.313 (b) amended................................................9885
1942.315 (b) amended................................................9885
1942.316 (a) amended................................................9885
1944.51 Amended.....................................................9885
1944.52 Amended.....................................................9885
1944.53 Amended.....................................................9885
1944.71 (b) amended.................................................9885
1944.73 (a) introductory text, (1), (2), (b) and (d) amended........9885
1944.401 Amended....................................................9885
1944.402 Introductory text amended..................................9886
1944.403 Amended....................................................9886
1944.404 Amended....................................................9886
1944.410 (b)(1)(ii), (c)(1), (3) and (e)(6) amended.................9886
1944.411 (d) and (g) amended........................................9886
1944.412 Amended....................................................9886
1944.413 Amended....................................................9886
1944.415 Amended....................................................9886
1944.416 Amended....................................................9886
1944.417 Introductory text, (a)(1), (2)(i), (ii), (b) introductory 
        text, (1)(ii) and (2) amended...............................9886
1944.419 Amended....................................................9886
1944.422 Amended....................................................9886
1944.423 Amended....................................................9886
1944.425 Amended....................................................9886
1944.426 Amended....................................................9886
1944.501 (a) and (b) amended........................................9886
1944.502 (a) introductory text, (1), (b), (c) and (d) amended.......9886
1944.506 Amended....................................................9886
1944.510 Amended....................................................9886
1944.512 Amended....................................................9886
1944.514 Amended....................................................9886
1944.516 Amended....................................................9886
1944.520 Amended....................................................9886
1944.525 Amended....................................................9886
1944.526 (a)(2)(i)(E), (5) and (c)(1)(i) amended....................9886
1944.529 Amended....................................................9886
1944.531 Amended....................................................9886

[[Page 350]]

1944.533 (c), (d), (e) introductory text, (f)(1), (2) introductory 
        text, (iii), (iv), (4) introductory text, (i), (ii), (5) 
        and (6) amended.............................................9886
1944.535 (a), (b) and (c) amended...................................9887
1944.536 Amended....................................................9887
1944.538 Amended....................................................9886
1944.540 (b) and (c) amended........................................9887
1944.541 Amended....................................................9886
1944.543 Amended....................................................9886
1944.545 Amended....................................................9887
1944.547 Amended....................................................9886
1944.548 Heading, (a), (b) introductory text and (3) amended........9887
1944.549 Amended....................................................9886
1944.654 (a) and (b) amended........................................9887
1944.657 Amended....................................................9887
1944.658 (a)(3) amended.............................................9887
1944.660 Heading and (a) amended....................................9887
1944.663 (a)(7) and (8) amended.....................................9887
1944.664 (c)(10)(ii) amended........................................9887
1944.666 (a)(2), (b)(5) and (c) amended.............................9887
1944.668 Amended....................................................9887
1944.671 (b) introductory text, (2) and (c) amended.................9887
1944.672 (c), (e) introductory text, (3) and (g) amended............9887
1944.673 (a) and (c) amended........................................9887
1944.674 (b) and (c) amended........................................9887
1944.676 (a), (b) introductory text, (1)(iii), (iv), (xii), (x), 
        (c), (d)(4), (5), (g) and (h) amended.......................9887
1944.678 Amended....................................................9887
1944.679 (b) introductory text and (4) amended......................9887
1944.681 Amended....................................................9887
1944.682 introductory text and (a) through (d) amended..............9888
1944.683 (a), (b) introductory text, (c) and (d) amended............9887
1944.684 (a), (b) introductory text, (2), (c) and (d) amended.......9887
1944.688 (a), (b) and (c) amended...................................9888
1944.689 (b) amended................................................9887
1944.690 Amended....................................................9888
1948.51 Amended.....................................................9888
1948.53 Amended.....................................................9888
1948.56 Amended.....................................................9888
1948.60 Amended.....................................................9888
1948.61 Introductory text revised...................................9888
1948.62 (b) amended.................................................9888
1948.68 (g) amended.................................................9888
1948.70 (b) and (c) amended.........................................9888
1948.79 (a), (c) introductory text, (4), (e) introductory text, 
        (f), (g), (h) introductory text, (i), (j), (k) 
        introductory text, (8), (9), (10) and (12) amended..........9888
1948.81 (a), (b) and (d) amended....................................9888
1948.82 (a) introductory text, (10), (c), (d), (e), (f) 
        introductory text, (1), (2) and (g) through (m) amended.....9888
1948.83 Amended.....................................................9889
1948.84 (a), (b), (d) introductory text, (2), (8), (9), (e) 
        introductory text, (1), (f), (g), (h) introductory text, 
        (i) introductory text, (10) through (14) and (17) amended 
                                                                    9889
1948.86 (a)(1) and (2) amended......................................9888
1948.88 Amended.....................................................9888
1948.89 Heading, (a) introductory text, (1) through (5) and (b) 
        amended.....................................................9889
1948.90 (a) introductory text, (1), (2), (3), (b)(2), (3) and (5) 
        amended.....................................................9889
1948.91 Amended.....................................................9888
1948.92 (a) through (f), (g)(3), (4), (6), (7), (10) and (11) 
        amended.....................................................9889
1948.93 Amended.....................................................9890
1948.94 (a) introductory text and (b) amended.................9888, 9890
1948.95 Amended.....................................................9888
1948.96 (a) and (b) amended.........................................9890
1948.97 Amended.....................................................9889


                                  [all]