[Federal Register Volume 75, Number 14 (Friday, January 22, 2010)]
[Proposed Rules]
[Pages 3642-3647]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-1213]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 75, No. 14 / Friday, January 22, 2010 / 
Proposed Rules  

[[Page 3642]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1774

RIN 0572-AC14


Special Evaluation Assistance for Rural Communities and 
Households Program

ACTION: Proposed rule.

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

SUMMARY: The Rural Utilities Service (RUS) is issuing a regulation to 
establish the Special Evaluation Assistance for Rural Communities and 
Households (SEARCH) Program as authorized by Section 6002 of The Food, 
Conservation and Energy Act of 2008, Public Law 110-246 (Farm Bill), 
which amended Section 306(a)(2) of the Consolidated Farm and Rural 
Development Act (CONACT) (7 U.S.C. 1926 (a)(2)). The amendment added 
the new SEARCH grant program under which the Secretary is authorized to 
make predevelopment planning grants for feasibility studies, design 
assistance, and technical assistance to financially distressed 
communities in rural areas with populations of 2,500 or fewer 
inhabitants for water and waste disposal projects.

DATES: You may submit comments according to the following deadlines:
     Paper copies must be postmarked and mailed, shipped, or 
sent overnight no later than February 22, 2010 to be eligible for 
consideration. Late comments will not be considered.
     Electronic copies must be received by February 22, 2010 to 
be eligible for consideration.

ADDRESSES: Submit comments by either of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and in the ``Search Documents'' box, enter RUS-09-
Water-0001, and select GO>>. To submit a comment, choose ``Send a 
comment or submission,'' under the Docket Title. In order to submit 
your comment, the information requested on the ``Public Comment and 
Submission Form,'' must be completed. Information on using 
Regulations.gov, including instructions for accessing documents, 
submitting comments, and viewing the docket after the close of the 
comment period, is available through the site's ``How To Use This 
Site'' link.
     Postal Mail/Commercial Delivery: Please send your comment 
addressed to Michele Brooks, Director, Program Development and 
Regulatory Analysis, USDA Rural Development, 1400 Independence Avenue, 
STOP 1522, Room 5162, Washington, DC 20250-1522. Please state that your 
comment refers to Docket No. RUS-09-Water-0001.
    Other Information: Additional information about Rural Development 
and its programs is available on the Internet at http://www.rurdev.usda.gov/index.html.

FOR FURTHER INFORMATION CONTACT: Anita O'Brien, Loan Specialist, Water 
and Environmental Programs, U.S. Department of Agriculture, Rural 
Utilities Service, Room 2230 South Building, Stop 1570, 1400 
Independence Ave., SW., Washington, DC 20250-1570. Telephone: (202)690-
3789, FAX: (202)690-0649, E-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Classification

Executive Order 12866

    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866 and, therefore, has not been reviewed 
by the Office of Management and Budget (OMB).

Executive Order 12988

    This proposed rule has been reviewed in accordance with Executive 
Order 12988, Civil Justice Reform. RUS has determined that this 
proposed rule meets the applicable standards provided in section 3 of 
the Executive Order. In addition, all State and local laws and 
regulations that are in conflict with this rule will be pre-empted; no 
retroactive effect will be given to the rule; and in accordance with 
section 212(e) of the Department of Agriculture Reorganization Act of 
1994 (7 U.S.C. sec. 6912(e)), appeal procedures must be exhausted 
before an action against the Department or its agencies may be 
initiated.

Regulatory Flexibility Act Certification

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this proposed rule since the Rural Utilities Service is 
not required by 5 U.S.C. 551 et seq. or any other provision of law to 
publish a notice of final rulemaking with respect to the subject matter 
of this rule.

Information Collection and Recordkeeping Requirements

    The information collection and recordkeeping requirements contained 
in this rule will not be effective until approved by the Office of 
Management and Budget (OMB), subject to the submission of a paperwork 
package for which the Agency intends to request approval from OMB 
pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35). 
RUS invites comments, on any aspect of this collection of information 
including suggestions for reducing the burden. Send questions or 
comments regarding this information collection to Michele Brooks, 
Director, Program Development and Regulatory Analysis, Rural Utilities 
Service, U.S. Department of Agriculture, STOP 1522, Washington, DC 
20250-152, Fax: (202) 720-8435.
    Nonprofit organizations applying for SEARCH grants must submit an 
application which includes an application form, various other forms, 
certifications, and supplemental information. RUS will use the 
information collected from applicants, borrowers, and consultants to 
determine applicant eligibility, project feasibility, and the 
applicant's ability to meet the grant and regulatory requirements. 
Failure to collect proper information could result in improper 
determinations of eligibility, improper use of funds, or hindrances in 
making grants authorized by the SEARCH program.
    The applicant will submit the following information:
    SF-424, ``Application for Federal Assistance.'' (cleared under 
4040-0004)
    Applicants use this form as a required cover sheet for applications 
submitted for SEARCH grants. The application is an official form 
required for all Federal grants and requests basic information about 
the applicant and the proposed project.
    SF-424A, ``Budget Information--Non-Construction Programs.'' 
(cleared under 4040-0006)

[[Page 3643]]

    Applicants project costs and expenses for the grant project. The 
form also provides information on matching funds. This form is 
submitted as part of the pre-application and if the project is 
selected, as part of the formal application.
    SF-424B, ``Assurances--Non-Construction Programs.'' (cleared under 
4040-0007)
    Applicants read and sign this form to indicate the organization's 
intent to comply with the laws, regulations, and policies to which a 
grant is subject.

Project Narrative

    Applicants will provide a project narrative detailing the project 
to be financed with the SEARCH grant funds. The narrative will also 
provide details on the activities or tasks to be accomplished, 
objectives, timetables for task completion, and anticipated results.
    RD 400-1, ``Equal Opportunity Agreement'' and RD 400-4, ``Assurance 
Agreement.'' (cleared under 0575-0018)
    Applicants read and sign these forms to assure RUS that they agree 
to and will comply with Title VI of the Civil Rights Act of 1964, and 
the Equal Opportunity Clause under Executive Order 11246 of September 
24, 1965.

Certification Regarding Debarment, Suspension, and Other Responsibility 
Matters--Primary Covered Transactions

    USDA regulations published at 7 CFR Part 3017 implement the 
government-wide debarment and suspension system for USDA's non-
procurement transactions. Applicants for SEARCH grants are required to 
provide certification under these regulations. Form AD-1047 may also be 
used to obtain the required certification.

Certification Regarding Debarment, Suspension, Ineligibility and 
Voluntary Exclusion--Lower Tier Transaction

    Form AD-1048 will be signed by applicant's suppliers, auditors, 
contractors, etc., and retained by applicant in their files.

Certification Regarding Drug-Free Workplace Requirements (Grants) 
Alternative I--for Grantees Other Than Individuals

    USDA regulations published at 7 CFR Part 3017 implement the Drug-
Free Workplace Act of 1988, which requires that grant recipients agree 
that they will maintain a drug-free workplace. Applicants are required 
to provide certification under these regulations. Form AD-1049 may also 
be used to obtain the required certification.

Relationship or Association With RUS Employees

    Applicants must identify and report any known relationship or 
association with a RUS employee such as close personal association, 
immediate family, close relatives, or business associates.

Supporting Documentation

    Applicants must provide documentation of legal organization and 
authority to borrow funds, construct, operate, manage the facility, 
etc. The documentation may include articles of incorporation, 
certificate of incorporation and good standing, bylaws, rules, and 
organizational minutes. Applicants also must provide financial 
information such as financial statements, audits, or existing debt 
instruments. This information is necessary for RUS to determine an 
organization's legal existence, authority to perform certain functions, 
and financial capacity to borrow funds.

Agreements for Professional Services

    Applicants must contract for the professional services rendered 
from an engineer, attorney, bond counsel, accountant, auditor, 
appraiser, or financial advisor. Contracts or other forms of agreement 
for services necessary for project planning and development are subject 
to RUS concurrence. Applicants must submit them to RUS for review and 
concurrence to ensure the needed services will be available at a 
reasonable cost.

Grant Agreement

    The Grant Agreement sets forth the terms and conditions under which 
the applicant receives a RUS grant. Applicants and RUS must execute the 
document before RUS disburses grant funds.

Audits Based on Federal Assistance

    Borrowers must submit audited financial statements annually in 
accordance with Generally Accepted Government Auditing Standards 
(GAGAS). The audit must comply with the requirements of OMB Circular A-
133, ``Audits of State, Local Governments, and Non-Profit 
Organizations'' or Water and Waste Disposal audit requirements.
    The requirements for submitting an audit report under OMB Circular 
A-133 are based on the total amount of Federal financial assistance 
expended during a borrower's fiscal year from all Federal sources. 
Borrowers that expend $500,000 or more in a year in Federal awards must 
have a single audit conducted for that year under OMB Circular A-133. 
Those that expend less than $500,000 in Federal awards and have an 
outstanding RUS loan balance equal to or greater than $1,000,000 must 
submit an audit in accordance with Water and Waste Disposal audit 
requirements. Borrowers expending less than $500,000 in Federal 
assistance and having a RUS loan balance less than $1,000,000 may 
submit a management report instead of an audit report. RUS will 
designate the type of audit borrowers must submit.

Management Reports

    All borrowers must furnish management reports that will provide 
management a means of evaluating prior decisions and serve as a basis 
for planning future operations and financial strategies. This 
requirement is necessary to help assure that the facility will be 
properly managed and to protect the financial interest of the 
Government.
    Form RD 1942-8, ``Resolution of Members or Stockholders'' (cleared 
under 0575-0015)
    Nonprofit applicants prepare this form to indicate that the 
governing body has the authority to enter into a grant of a particular 
amount with RUS.
    Form RD 442-7, ``Operating Budget'' (cleared under 0575-0015)
    All applicants use the form to project income and expense items and 
a complete cash flow through the first full year of operations after 
they use the loan proceeds. These projections are necessary in 
determining the source and reliability of the projected income and the 
adequacy of resources to repay the loan in a timely manner, operate and 
maintain the facility, and maintain adequate reserves.
    Comments on this information collection must be received by March 
23, 2010.
    Comments are invited on (a) whether the collection of information 
is necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility; (b) the 
accuracy of the agency's estimate of burden including the validity of 
the methodology and assumption used; (c) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (d) ways 
to minimize the burden of the collection of information on those who 
are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques on 
other forms and information technology.
    Title: Special Evaluation Assistance for Rural Communities and 
Household Program (SEARCH).
    OMB Control Number: 0572-NEW.

[[Page 3644]]

    Type of Request: New.
    Abstract: The Food, Conservation and Energy Act of 2008, Public Law 
110-246 (Farm Bill) amended Section 306(a)(2) of the Consolidated Farm 
and Rural Development Act (CONACT) (7 U.S.C. 1926 (a)(2)). The 
amendment created a grant program to make Special Evaluation Assistance 
for Rural Communities and Households (SEARCH) Program grants.
    Under the SEARCH program, the Secretary may make predevelopment and 
planning grants to public or quasi-public agencies, organizations 
operated on a not-for-profit basis or Indian tribes on Federal and 
State reservations and other federally recognized Indian tribes. The 
grant recipients shall use the grant funds for feasibility studies, 
design assistance, and development of an application for financial 
assistance to financially distressed communities in rural areas with 
populations of 2,500 or fewer inhabitants for water and waste disposal 
projects as authorized in Sections 306(a)(1), 306(a)(2) and 306(a)(24) 
of the CONACT.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 32.15 hours per responses.
    Estimated Number of Respondents: 50.
    Estimated Number of Total Annual Reponses per Respondents: 820.
    Estimated Total Annual Burden on Respondents: 1,050.
    Copies of this information collection can be obtained from MaryPat 
Daskal, Program Development and Regulatory Analysis at (202) 720-7853.
    All responses to this information collection and recordkeeping 
notice will be summarized and included in the request for OMB approval. 
All comments will also become a matter of public record.

E-Government Act Compliance

    Rural Development is committed to the E-Government Act, which 
requires Government agencies in general to provide the public the 
option of submitting information or transacting business electronically 
to the maximum extent possible.

National Environmental Policy Act Certification

    The Administrator of RUS has determined that this proposed rule 
will not significantly affect the quality of the human environment as 
defined by the National Environmental Policy Act of 1969 (42 U.S.C. 
4321 et seq.). Therefore, this action does not require an environmental 
impact statement or assessment.

Catalog of Federal Domestic Assistance

    The program described by this proposed rule is listed in the 
Catalog of Federal Domestic Assistance Programs under number 10.759--
Special Evaluation Assistance for Rural Communities and Households 
Program (SEARCH). This catalog is available on a subscription basis 
from the Superintendent of Documents, the United States Government 
Printing Office, Washington, DC 20402-9325, telephone number (202) 512-
1800 and at https://www.cfda.gov.

Executive Order 12372

    This program is not subject to the requirements of Executive Order 
12372, ``Intergovernmental Review of Federal Programs,'' as implemented 
under USDA's regulations at 7 CFR part 3015.

Unfunded Mandates

    This proposed rule contains no Federal mandates (under the 
regulatory provision of title II of the Unfunded Mandates Reform Act of 
1995) for State, local, and tribal governments or the private sector. 
Therefore, this proposed rule is not subject to the requirements of 
section 202 and 205 of the Unfunded Mandates Reform Act.

Executive Order 13132, Federalism

    The policies contained in this proposed rule do not have any 
substantial direct effect on states, on the relationship between the 
national government and the states, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
proposed rule impose substantial direct compliance costs on state and 
local governments. Therefore, consultation with states is not required.

Background

    The Food, Conservation and Energy Act of 2008, Public Law 110-246 
(Farm Bill) amended Section 306(a)(2) of the Consolidated Farm and 
Rural Development Act (CONACT) (7 U.S.C. 1926(a)(2)). The amendment 
added a grant program to make Special Evaluation Assistance for Rural 
Communities and Households (SEARCH) Program grants. SEARCH grants are 
intended to assist the neediest, eligible communities that lack 
financial resources to pay for feasibility studies, design assistance 
and technical assistance associated with water and waste infrastructure 
needs.
    Under the SEARCH program, the Secretary may make predevelopment and 
planning grants to public or quasi-public agencies, organizations 
operated on a not-for-profit basis or Indian tribes on Federal and 
State reservations and other federally recognized Indian tribes. Up to 
100 percent of the eligible cost of the grant may be funded and may not 
exceed $30,000. The grant recipients shall use the grant funds for 
feasibility studies, design assistance, and development of an 
application for financial assistance to financially distressed 
communities in rural areas with populations of 2,500 or fewer 
inhabitants for water and waste disposal projects as authorized in 
Sections 306(a)(1), 306(a)(2) and 306(a)(24) of the Consolidated Farm 
and Rural Development Act (CONACT).
    Eligible entities for the SEARCH grants will be the same entities 
eligible to obtain a loan, grant, or loan guarantee from the Rural 
Utilities Service Water and Waste Disposal and Wastewater loan and 
grant programs. However, as applied to the SEARCH program, rural area 
has been defined as one with a population of 2,500 or less. The Agency 
will define financially distressed areas as those where the median 
household income of the areas to be served is either below the poverty 
line or below 80 percent of the statewide non-metropolitan median 
household income.
    The Secretary may use not more than four percent of the total 
amount of funds made available for a fiscal year for water and waste 
disposal to carry out the SEARCH program.
    The Administrator of the RUS is required to prescribe regulations 
to implement the provisions of Section 6002 of the Farm Bill and does 
so through the proposed regulations herein. In developing the proposed 
SEARCH program regulations, the Agency relied heavily on existing Rural 
Development regulations relative to water and waste disposal loans and 
grants.

List of Subjects in 7 CFR Part 1774

    Community development, Grant programs, Reporting and recordkeeping 
requirements, Rural areas, Waste treatment and disposal, Water supply.

    Therefore for the reasons discussed in the preamble, RUS proposes 
to amend chapter XVII of title 7 of the Code of Federal Regulations by 
adding a new part 1774 to read as follows:

PART 1774--SPECIAL EVALUATION ASSISTANCE FOR RURAL COMMUNITIES AND 
HOUSEHOLDS PROGRAM (SEARCH)

Subpart A--General Provisions
Sec.
1774.1 General.
1774.2 Definitions.

[[Page 3645]]

1774.3 Availability of forms and regulations.
1774.4 Allocation of funds.
1774.5-1774.6 [Reserved]
1774.7 Environmental requirements.
1774.8 Other Federal statutes.
1774.9 [Reserved]
Subpart B--Grant Application Processing
1774.10 Applications.
1774.11 [Reserved]
1774.12 Eligibility.
1774.13 Limitations.
1774.14 Eligible grant purposes.
1774.15 Selection criteria.
1774.16 Grant application processing and approval.
1774.17 Grant closing and disbursement.
1774.18 Reporting requirements, accounting methods and audits.
1774.19 Applications determined ineligible.
1774.20 Conflict of interest.
1774.21-1774.23 [Reserved]
1774.25-1774.99 [Reserved]
1774.100 OMB Control Number.

    Authority: 7 U.S.C. 1926(a)(2)(C).

Subpart A--General Provisions


Sec.  1774.1  General.

    The purpose of the Special Evaluation Assistance for Rural 
Communities and Household (SEARCH) Grant program is to provide 
financial assistance to the neediest, eligible communities, who lack 
financial resources to pay for feasibility studies, design assistance 
and technical assistance. This subpart sets forth the general policies 
and procedures for making and processing predevelopment planning SEARCH 
grants for water and waste projects.


Sec.  1774.2  Definitions.

    The following definitions apply to subparts A and B of this part.
    Agency. The Rural Utilities Service of the United States Department 
of Agriculture (USDA) within the Rural Development mission area of the 
Under Secretary for Rural Development. The Processing Official will 
administer this water and waste program on behalf of the Rural 
Utilities Service.
    Approval official. The Agency official at the State level who has 
been delegated the authority to approve grants.
    ConAct. Consolidated Farm and Rural Development Act (7 U.S.C. 
1926(a)(2)).
    Design assistance. Preliminary design and engineering analysis 
necessary for an application for funding. Design assistance does not 
include financial assistance for development of plans, specifications, 
or bidding documents.
    DUNS Number. Data Universal Numbering System number obtained from 
Dun and Bradstreet and used when applying for Federal grants or 
cooperative agreements. A DUNS number may be obtained at no cost, by 
calling 1-866-705-5711.
    Eligible entity. Entity that meets eligibility requirements to 
obtain a loan, loan guarantee or grant under Paragraphs 1, 2 or 24 of 
Section 306(a) of the ConAct (codified at 7 U.S.C. Section 
1926(a)(1)(2) and (24)).
    Feasibility study. Documentation associated with an objective 
analysis of project-related technical engineering or environmental 
impact analyses required to support applications for funding water or 
waste disposal projects through USDA, Rural Utilities Service or other 
agencies.
    Financially distressed area. An area is considered financially 
distressed if the median household income of the area to be served is 
either below the poverty line or below 80 percent of the statewide non-
metropolitan median household income based on available historic 
statistical information from the latest decennial census.
    Grantee. The applicant receiving financial assistance directly from 
the RUS to carry out the project or program under this program.
    Poverty line. The level of income for a family of four, as defined 
in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 
9902(2)).
    Processing official. The Agency official designated by the approval 
official as having the authority to accept and process applications for 
water and waste disposal assistance.
    Rural area. For the purposes of this SEARCH program, any area not 
in a city or town with a population of 2,500 or fewer, according to the 
latest decennial census of the United States.
    State. Any of the 50 States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Territory of Guam, the Commonwealth of 
the Northern Mariana Islands, the Republic of the Marshall Islands, the 
Federated States of Micronesia, the Republic of Palau, and the U.S. 
Virgin Islands.
    Technical assistance. Supervision, oversight, or training by an 
organization for the development of an application for financial 
assistance.


Sec.  1774.3  Availability of forms and regulations.

    Information about the forms, instructions, regulations, bulletins, 
OMB Circulars, Treasury Circulars, standards, documents and 
publications cited in this part is available from any UDSA/Rural 
Development Office or the United States Department of Agriculture, 
Washington, DC 20250-1500 and at http://www.grants.gov.


Sec.  1774.4  Allocation of funds.

    The Secretary may use not more than four percent of the total 
amount of funds made available for a fiscal year for water and waste 
disposal activities for SEARCH grants.


Sec. Sec.  1774.5-1774.6  [Reserved]


Sec.  1774.7  Environmental requirements.

    The policies and regulations contained in Part 1794 of this chapter 
apply to grants made in accordance with this part.


Sec.  1774.8  Other Federal Statutes.

    Other Federal statutes and regulations are applicable to grants 
awarded under this part. These include but are not limited to:
    (a) 7 CFR part 1, subpart A--USDA implementation of Freedom of 
Information Act.
    (b) 7 CFR part 3--USDA implementation of OMB Circular No. A-129 
regarding debt collection.
    (c) 7 CFR part 15, subpart A--USDA implementation of Title VI of 
the Civil Rights Act of 1964, as amended.
    (d) 7 CFR part 1794, RUS Implementation of the National 
Environmental Policy Act.
    (e) 7 CFR part 1901, subpart E--Civil Rights Compliance 
Requirements.
    (f) 7 CFR part 3015--Uniform Federal Assistance Regulations.
    (g) 7 CFR part 3016--USDA Implementation of OMB Circular Nos. A-102 
and A-97, Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and Local Governments.
    (h) 7 CFR part 3018-- Restrictions on Lobbying, prohibiting the use 
of appropriated funds to influence Congress or a Federal agency in 
connection with the making of any Federal grant and other Federal 
contracting and financial transactions.
    (i) 7 CFR part 3019--USDA implementation of OMB Circular A-110, 
Uniform Administrative Requirements for Grants and Agreements With 
Institutions of Higher Education, Hospitals, and Other Nonprofit 
Organizations.
    (j) 7 CFR part 3021, as amended--Government-wide Debarment and 
Suspension (Non-procurement); Government-wide Requirements for Drug-
Free Workplace (Grants), implementing Executive Order 12549 on 
debarment and suspension and the Drug-Free Workplace Act of 1988 (41 
U.S.C. 701).
    (k) 7 CFR part 3052--USDA implementation of OMB Circular No. A-133 
regarding audits of institutions of higher education and other 
nonprofit institutions.

[[Page 3646]]

    (l) 29 U.S.C. 794, section 504--Rehabilitation Act of 1973, and 7 
CFR part 15B (USDA implementation of statute), prohibiting 
discrimination based upon physical or mental handicap in federally 
assisted programs.


Sec.  1774.9  [Reserved]

Subpart B--Grant Application Processing


Sec.  1774.10  Applications.

    (a) To file an application, an organization must provide their DUNS 
number. An organization may obtain a DUNS number from Dun and 
Bradstreet by calling (1-866-705-5711). To file a complete application, 
the following information should be submitted:
    (1) Standard Form 424, ``Application for Federal Assistance (For 
Non-Construction).''
    (2) Standard Form 424A & B, ``Budget Information--Non-Construction 
Programs.''
    (3) Supporting documentation necessary to make an eligibility 
determination such as financial statements, audits, organizational 
documents, or existing debt instruments. The Processing Official will 
advise applicants regarding the required documents. Applicants that are 
indebted to RUS will not need to submit documents already on file with 
the Processing Official as long as such documents are current and 
valid.
    (4) Project narrative detailing the project to be financed with the 
SEARCH grant funds. The narrative will also provide details on the 
activities or tasks to be accomplished, objectives, timetables for task 
completion, and anticipated results.
    (5) The applicant's Internal Revenue Service Taxpayer 
Identification Number (TIN).
    (6) Other Forms and certifications. Applicants will be required to 
submit the following items to the Processing Official, upon 
notification from the Processing Official to proceed with further 
development of the full application:
    (i) Form RD 442-7, ``Operating Budget'';
    (ii) Form RD 400-1, ``Equal Opportunity Agreement'';
    (iii) Form RD 400-4, ``Assurance Agreement'';
    (iv) Form AD-1047, ``Certification Regarding Debarment, Suspension 
and other Responsibility Matters'';
    (v) Form AD-1049, Certification regarding Drug-Free Workplace 
Requirements (Grants) Alternative I For Grantees Other Than 
Individuals;
    (vi) Certifications for Contracts, Grants, and Loans (Regarding 
Lobbying); and
    (vii) Certification regarding prohibited tying arrangements. 
Applicants that provide electric service must provide the Agency a 
certification that they will not require users of a water or waste 
facility financed under this part to accept electric service as a 
condition of receiving assistance.
    (b) Applicants are encouraged to contact the State Office or the 
Processing Official to find out how to file electronically. The 
application and supporting documentation must be sent or delivered to 
the Processing Official, unless it is filed electronically.


Sec.  1774.11  [Reserved]


Sec.  1774.12  Eligibility.

    The following eligibility requirements must be met:
    (a) The applicant must be:
    (1) A public body, such as a municipality, county, district, 
authority, or other political subdivision or a state, territory or 
commonwealth, or
    (2) An organization operated on a not-for-profit basis, such as an 
association, cooperative, or private corporation. The organization must 
be an association controlled by a local public body or bodies, or have 
a broadly based ownership by or membership of people of the local 
community, or
    (3) Indian tribes on Federal and State reservations and other 
federally recognized Indian tribes.
    (b) The area to be served must be financially distressed and rural 
as defined in Sec.  1774.2 of this part.


Sec.  1774.13  Limitations.

    Grant funds may not be used to:
    (a) Fund political or lobbying activities.
    (b) Pay for work already completed.
    (c) Purchase real estate or vehicles, improve or renovate office 
space, or repair and maintain privately owned property.
    (d) Construct or furnish a building.
    (e) Intervene in the Federal regulatory or adjudicatory 
proceedings.
    (f) Sue the Federal Government or any other government entities.
    (g) Pay for any other costs that are not allowable under OMB 
Circular A-87, OMB Circular A-110, OMB Circular A-102 or OMB Circular 
A-122.
    (h) Make contributions or donations to others.
    (i) Fund projects that duplicate technical assistance given to 
implement action plans under the National Forest-Dependent Rural 
Communities Economic Diversification Act of 1990 (7 U.S.C. 6613). 
Applicants cannot receive both grants made under this part and grants 
that the Forest Service makes to implement the action plans for five 
continuous years from the date of grant approval by the Forest Service.
    (j) To pay an outstanding judgment obtained by the United States in 
a Federal Court (other than in the United States Tax Court), which has 
been recorded. An applicant will be ineligible to receive a loan or 
grant until the judgment is paid in full or otherwise satisfied.


Sec.  1774.14  Eligible grant purposes.

    (a) Eligible predevelopment planning costs are feasibility studies, 
preliminary design assistance, and technical assistance as each is 
defined in Sec.  1774.2. The eligible predevelopment activities funded 
with these grant funds must be agreed to and accepted by the Agency 
prior to the disbursement of the SEARCH grant. The predevelopment 
planning costs must be related to a proposed project that meets the 
following requirements:
    (1) To construct, enlarge, extend, or otherwise improve rural 
water, sanitary sewage, solid waste disposal, and storm wastewater 
disposal facilities.
    (2) To construct or relocate public buildings, roads, bridges, 
fences, or utilities, and to make other public improvements necessary 
for the successful operation or protection of facilities authorized in 
paragraph (a)(1) of this section.
    (3) To relocate private buildings, roads, bridges, fences, or 
utilities, and other private improvements necessary for the successful 
operation or protection of facilities authorized in paragraph (a)(1) of 
this section.
    (b) The Secretary, subject to the limitation in Sec.  1774.4 of 
this part, may fund up to 100 percent of the eligible grant costs, not 
to exceed $30,000.


Sec.  1774.15  Selection criteria.

    Projects will be selected based primarily on the funding priorities 
in 7 CFR 1780.17. The Program Official discretionary points stated in 7 
CFR 1780.17(e) can also include consideration of the following 
criteria:
    (a) Systems with limited resources.
    (b) Smallest systems with lowest incomes.
    (c) Funds availability.


Sec.  1774.16  Grant application processing and approval.

    (a) Before starting to assemble the full application, the applicant 
should arrange through the Processing Official an application 
conference to provide a basis for orderly application assembly.

[[Page 3647]]

The processing office will explain program requirements, public 
information requirements and provide guidance on preparation of items 
necessary for final determination.
    (b) The Processing Official will determine if the application is 
properly assembled. If not, the applicant will be notified within 
fifteen federal working days as to what additional submittal items are 
needed.
    (c) The Processing Official and Approval Official will coordinate 
their reviews to ensure that the applicant is advised about eligibility 
and anticipated fund availability within 45 days of the receipt of a 
completed application.
    (d) The Processing Official will submit the following to the 
Approval Official:
    (1) ``Water and Waste Project Information Summary'';
    (2) Form RD 442-3, ``Balance Sheet'' or a financial statement or 
audit that includes a balance sheet;
    (3) Letter of Conditions;
    (4) Form RD 1942-46, ``Letter of Intent to Meet Conditions'';
    (5) Form RD 1940-1, ``Request for Obligation of Funds'';


Sec.  1774.17   Grant closing and disbursement.

    (a) Grant closing. RUS Bulletin 1780-12 ``Water or Waste System 
Grant Agreement'' will be completed and executed in accordance with the 
requirements of grant approval. The grant will be considered closed 
when RUS Bulletin 1780-12 has been properly executed. Processing 
officials or Approval officials are authorized to sign the grant 
agreement on behalf of RUS.
    (b) Grant disbursements. Agency policy is not to disburse grant 
funds from the Treasury until they are actually needed by the 
applicant. If an approved grant includes applicant or other 
contributions, then these funds will be disbursed before the disbursal 
of any Agency grant funds.
    (c) Payment for project costs. Project costs will be monitored by 
the RUS processing office. Invoices will be approved by the borrower 
and submitted to the Processing Official for concurrence. The review 
and acceptance of project costs by 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 the agreements or contracts.
    (d) 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 if SEARCH grants funds are financing 
less than 100 percent of the project. Funds remaining may be considered 
in direct proportion to the amounts obtained from each source. 
Remaining funds will be handled as follows:
    (1) Remaining funds may be used for eligible grant purposes as 
described in 1774.14 of this subpart, or
    (2) Grant funds not expended will be canceled. Prior to the actual 
cancellation, the borrower, its attorney and its engineer will be 
notified of RUS' intent to cancel the remaining funds.


Sec.  1774.18  Reporting requirements, accounting methods and audits.

    All Agency grantees will follow the reporting requirements as 
outlined in 7 CFR 1780.47.


Sec.  1774.19  Applications determined ineligible.

    If at any time an application is determined ineligible, the 
processing office will notify the applicant in writing of the reasons. 
The notification to the applicant will state that an appeal of this 
decision may be made by the applicant under 7 CFR Part 11.


Sec.  1774.20  Conflict of interest.

    Any processing or servicing activity conducted pursuant to this 
part involving authorized assistance to Rural Development employees 
with Water and Environmental Programs responsibility, 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 title. Applicants of this assistance are required to identify any 
known relationship or association with an RUS employee.


Sec. Sec.  1774.21-1774.23  [Reserved]


Sec.  1774.24  Exception authority.

    The Administrator may, in individual cases, make an exception to 
any requirement or provision of this part which is not inconsistent 
with the authorizing statute or other applicable law and is determined 
to be in the Government's interest. Requests for exceptions must be 
made in writing by the State Director and supported with documentation 
to explain the adverse effect on the Government's interest, propose 
alternative course(s) of action, and show how the adverse effect will 
be eliminated or minimized if the exception is granted. The exception 
decision will be documented in writing, signed by the Administrator, 
and retained in the files.


Sec. Sec.  1774.25-1774.99   [Reserved]


Sec.  1774.100  OMB Control Number.

    The information collection requirements in this part will not be 
effective until approved by the Office of Management and Budget (OMB), 
subject to the submission of a paperwork package to OMB and assigned an 
OMB Control Number.

    Dated: January 15, 2010.
Jonathan Adelstein,
Administrator, Rural Utilities Service.
[FR Doc. 2010-1213 Filed 1-21-10; 8:45 am]
BILLING CODE 3410-15-P