[Federal Register Volume 77, Number 47 (Friday, March 9, 2012)]
[Proposed Rules]
[Pages 14307-14310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-5627]


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 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. 77 , No. 47 / Friday, March 9, 2012 / 
Proposed Rules  

[[Page 14307]]



 DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR 1777

RIN 0572-AC26


Water and Waste Disposal Loans and Grants

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Utilities Service (RUS) proposes to amend the 
regulations pertaining to the Section 306C Water and Waste Disposal 
(WWD) Loans and Grants program, which provides water and waste disposal 
facilities and services to low-income rural communities whose residents 
face significant health risks. Specifically, RUS is proposing to modify 
the priority points system within the regulation in order to give 
additional priority points to colonias areas that are un-served and 
that are facing significant health risks. The intent is to ensure that 
the neediest areas receive funding. RUS is also seeking comments on 
other potential modifications that could provide incentive for local 
entities to assist areas designated as colonias that lack access to 
water or waste disposal systems and/or which face significant health 
risk.

DATES: Comments must be submitted by May 8, 2012.

ADDRESSES: Submit comments by either of the following methods:
     Federal eRulemaking Portal at: http://www.regulations.gov. 
Follow instructions for submitting comments.
     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 5159, Washington, DC 20250-1522.
    Additional information about the Agency and its programs is 
available on the Internet at http://www.rurdev.usda.gov.

FOR FURTHER INFORMATION CONTACT: Jacqueline M. Ponti-Lazaruk, Assistant 
Administrator, Water and Environmental Programs, Rural Utilities 
Service, Rural Development, U.S. Department of Agriculture, 1400 
Independence Avenue SW., STOP 1548, Room 5147-S, Washington, DC 20250-
1590. Telephone number: (202) 720-2670, Facsimile: (202) 720-0718.

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

    This 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.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. The Agency has determined that this rule meets the 
applicable standards provided in section 3 of that Executive Order. In 
addition, all State and local laws and regulations that are in conflict 
with this rule will be preempted. 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. 6912(e)), 
administrative appeal procedures must be exhausted before an action 
against the Department or its agencies may be initiated.

Regulatory Flexibility Act Certification

    RUS has determined that this proposed rule will not have a 
significant economic impact on a substantial number of small entities, 
as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). 
RUS provides loans to borrowers at interest rates and on terms that are 
more favorable than those generally available from the private sector. 
RUS borrowers, as a result of obtaining federal financing, receive 
economic benefits that exceed any direct economic costs associated with 
complying with RUS regulations and requirements.

Information Collection and Recordkeeping Requirements

    This rule contains no new reporting or recordkeeping burdens under 
OMB control number 0572-0109 that would require approval under the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

E-Government Act Compliance

    The Agency 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.

Catalog of Federal Domestic Assistance

    The programs described by this rule are listed in the Catalog of 
Federal Domestic Assistance Programs under number 10.770 Water and 
Waste Disposal Loans and Grants (Section 306C). The Catalog is 
available on the Internet at http://www.cfda.gov.

Executive Order 12372

    This program is subject to the provisions of Executive Order 12372, 
Intergovernmental Consultation, which requires intergovernmental 
consultation with State and local officials.

Unfunded Mandates

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

National Environmental Policy Act Certification

    The Agency has determined that this 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.

Executive Order 13132, Federalism

    The policies contained in this 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 
rule impose substantial direct compliance costs on state and local 
governments. Therefore, consultation with the states is not required.

Executive Order 13175

    The policies contained in this rule do not impose substantial 
unreimbursed

[[Page 14308]]

direct compliance costs on Indian tribal, Alaska native, or native 
Hawaiian governments and sovereign institutions or have tribal 
implications that preempt tribal law.

Background

    USDA Rural Development (RD) is a mission area within the U.S. 
Department of Agriculture comprised of the Rural Housing Service, Rural 
Business/Cooperative Service and Rural Utilities Service. Rural 
Development's mission is to increase economic opportunity and improve 
the quality of life for all rural Americans. Rural Development meets 
its mission by providing loans, loan guarantees, grants and technical 
assistance through more than forty programs aimed at creating and 
improving housing, businesses and infrastructure throughout rural 
America.
    The RUS loan, loan guarantee and grant programs act as a catalyst 
for economic and community development. By financing improvements to 
rural electric, water and waste, and telecom and broadband 
infrastructure, RUS also plays a significant role in improving other 
measures of quality of life in rural America, including public health 
and safety, environmental protection, conservation, and cultural and 
historic preservation.
    The Consolidated Farm and Rural Development Act (CONACT) authorizes 
USDA to provide loans and grants for the development, storage, 
treatment, purification, or distribution of water; and for the 
collection, treatment, or disposal of waste in rural areas. Section 
306C of the CONACT directs USDA to provide loans and grants to Indian 
Tribes and other targeted areas, such as colonias, for the construction 
of new water and waste systems, or for the extension or improvement of 
such systems, in rural areas. The loans and grants are to be available 
to provide these facilities only to communities whose residents face 
significant health risks, as determined by the Secretary, due to the 
fact that a significant proportion of the community's residents do not 
have access to, or are not served by, adequate affordable water supply 
systems or waste disposal facilities. The Agency provides such loans 
and grants through its regulation, 7 CFR 1777, providing assistance to 
colonias along the U.S. Mexican border.
    Currently, the Rural Utilities Service prioritizes potential 
projects filed pursuant to 7 CFR 1777, based upon a point system, 
wherein the greatest possible number of points (50) is given to 
proposed projects that seek to provide water and/or waste disposal 
services to a colonia. Colonias are communities along the U.S.-Mexico 
border that are defined in 7 CFR 1777.4 as ``Any identifiable community 
designated in writing by the State or county in which it is located; 
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, inadequate roads and drainage; 
and existed and was generally recognized as a colonia before October 1, 
1989.''
    RUS remains committed to improving the quality of, and access to, 
water and waste services in colonias areas, and often collaborates and 
coordinates with other federal and state funders to do so. Since the 
inception of the 7 CFR 1777 grant program for colonias in 1993, RUS has 
provided $425.5 million in grants for 519 projects serving colonias 
areas. RUS has also provided funding to Rural Development's Rural 
Housing Service customers, resulting in $22,137,827 worth of assistance 
to 6,693 households in colonias areas. This has allowed affected 
colonias to connect to community water and waste systems. In addition, 
USDA continues to work with state and local partners to seek new ways 
to improve program delivery in these areas.
    In December 2009, the Government Accountability Office (GAO) 
released a report describing a number of perceived inadequacies in 
Federal Government programs across various agencies focused on 
assisting colonias. In the report, GAO recommended that the Secretary 
of Agriculture direct Rural Development to revise its process to ensure 
that the agency only provide Section 306C colonia funds to projects 
that benefit colonias, as defined by Federal statute. While USDA 
disagrees with GAO's assertion that 306C funds are currently allocated 
contrary to statutory intent, the agency understands that more should 
be done to ensure that those colonias most in need, especially those 
that remain unserved, are better targeted for funding.
    In an effort to better serve colonias areas, and to address 
concerns raised by GAO, RUS reviewed 7 CFR 1777 as it pertains to 
projects serving colonias.

Purpose of This Document

    The purpose of this document is to make a minor clarification 
change to 7 CFR 1777.12 and to revise 7 CFR 1777.13. 7 CFR 1777.12 is 
revised to include specific information on documentation to support a 
determination of a significant health risk. The revision to 7 CFR 
1777.13 focuses specifically on the priority point system used in 
selecting projects for 306C funding, in order to ensure that colonias 
that lack access to water and/or waste disposal systems, and that are 
facing significant health problems, are given priority consideration 
for 306C funding.
    This document also seeks comment on potential incentives to 
encourage established regional or other rural water systems, in good 
financial standing and with sufficient operating capacity, to extend 
service to colonias that have no access to water and/or waste disposal 
services.
    Additionally, this document is a request for comments regarding the 
communities on the U.S.-Mexico border designated as colonias. In 
particular, RUS seeks comment regarding how its programs and other 
federal, state and local government programs might be leveraged to 
better serve these areas and create sustainable communities. Any 
individual or entity with comments concerning the Water and Waste 
Disposal (WWD) Loans and Grants program or other comments regarding 
colonias-related issues is asked to provide comments to RUS as 
specified above.

Discussion of Proposed Changes

    1. RUS proposes to amend 7 CFR 1777.12(b) to add specific 
requirements regarding the type of documentation that will support a 
determination of a significant health risk.
    2. Currently, 7 CFR 1777.13 allocates 50 points to projects that 
serve colonias. RUS proposes to amend 7 CFR 1777.13 by including 
language that allows for additional priority points to be given to 
colonias that lack any access to water and/or waste disposal systems, 
and to those that are facing significant health risk. This is intended 
to ensure that RUS is reaching those colonias with the most need. 
Specifically, projects proposing to serve colonias that either lack 
access to community systems that supply water meeting Safe Drinking 
Water Act standards or that lack waste disposal services (unserved), 
resulting in a documented significant health or sanitary risk, would 
receive 40 points. Projects proposing to serve colonias that lack 
access to community systems that supply water meeting Safe Drinking 
Water Act standards and that lack waste disposal services (unserved), 
resulting in a documented health or sanitary risk, would receive 50 
points. Projects proposing to serve colonias that have access to 
community systems that supply water meeting Safe Drinking Water Act and 
waste disposal services, but are facing documented health or sanitary 
risks, would receive 15 points. These changes allow for the

[[Page 14309]]

differentiation between those colonias that are seeking funding for 
additional improvements or expansion, and those that lack basic water 
and waste disposal systems and/or that face significant health risks.
    3. RUS proposes to amend 7 CFR 1777.13 by removing all occurrences 
of the word ``preapplication'' and replacing it with the word 
``application''. This will reflect a change in RUS procedure 
implemented several years ago which eliminated the use of 
preapplications.
    4. RUS proposes to remove text in 1777.13(b) and (d) that are 
internal instructions.

Request for Comments

    USDA is also seeking input on potential amendments to 7 CFR 1777.11 
that would provide incentives for county, regional and other 
established and successful eligible water and waste systems to provide 
service to colonias areas that have no in-home access to community 
water and/or waste disposal infrastructure. In some areas without 
access, there is a lack of managerial, technical and financial capacity 
to operate and maintain rural water and waste facilities. One way to 
bring reliable, affordable service to such an area would involve the 
expansion of a neighboring established county, regional or other rural 
water or waste disposal system.
    1. The Agency seeks comment on the possibility of incentivizing the 
expansion of existing systems into colonias areas by providing loan and 
grant funds to eligible, qualified existing entities who are seeking to 
serve an existing colonia. This determination would be based on the 
ability of the proposed service area to repay debt rather than on the 
repayment ability of the entire system. The Agency seeks comment on 
whether this approach would be effective in encouraging these entities 
to provide service to unserved colonias areas.
    2. The Agency seeks comment regarding what safeguards might be 
needed to ensure that the limited grant funding available to service 
colonias is applied only where it is critically needed. Should proposed 
service areas considered under such a proposal be at or below per 
capita poverty income level for the state? Should this approach only be 
available to those areas with no access? Should it exclude expansion 
within an existing colonia to unserved houses? Should fully improved 
Colonias lose the ``colonias'' designation?
    3. The Agency seeks additional suggestions on how to encourage the 
provision of sustainable service in the colonias. Suggestions may range 
from additional modifications of regulations to specific technical 
assistance and training programs for colonias areas. To facilitate the 
discussion, RUS has developed the following questions. What are the 
primary challenges to establishing and sustaining rural water and waste 
disposal services in colonias areas? Should alternative technology for 
services be considered in the colonias? Are appropriate governance 
structures in place to support local services? What type of technical 
assistance is needed in colonias without access to water and waste 
services? What local and/or regional partners can help facilitate or 
promote sustainable water and waste systems in colonia areas?

List of Subjects

    Community development, Community facilities, Grant programs--
housing and community development, Loan programs--housing and community 
development, Reporting and recordkeeping requirements, Rural areas, 
Waste treatment and disposal, Water supply, Watersheds.

    For the reasons discussed in the preamble, RUS proposes to amend 7 
CFR 1777 as follows:

PART 1777--SECTION 306C WWD LOANS AND GRANTS

    1. The authority citation for part 1777 continues to read as 
follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.

    2. Amend section 1777.12 by revising paragraph (b) to add a 
sentence to the end and subparagraphs (1) through (4) to read as 
follows:


Sec.  1777.12  Eligibility.

* * * * *
    (b) * * * The following requirements regarding the documentation 
must be followed:
    (1) The originating documentation must come from an independent 
third party source that has the experience in specifying the health or 
sanitary problem that currently exists.
    (2) The documentation must state specifically the health or 
sanitary problems that exist. General statements of problems or support 
for the project are not acceptable.
    (3) Current users of the facility must be experiencing the current 
health or sanitary problem and not future or possible users.
    (4) If no facility exists, documentation must include specific 
health and sanitary problems associated with individual facilities that 
currently exist to warrant the health and sanitary determination.
    3. Revise section 1777.13 to read as follows:


Sec.  1777.13  Project priority.

    Paragraphs (a) through (d) of this section indicate items and 
conditions which must be considered in selecting applications for 
further development. When ranking eligible applications for 
consideration for limited funds, Agency officials must consider the 
priority items met by each application and the degree to which those 
priorities are met.
    (a) Applications. The application and supporting information 
submitted with it will be used to determine applicant eligibility and 
the proposed project's priority for available funds. Applicants 
determined ineligible will be advised of their appeal rights in 
accordance with 7 CFR part 11.
    (b) State Office review. All applications will be processed and 
scored in the area office and then reviewed for funding priority at the 
State Office using RUS Bulletin 1777-2. Eligible applicants that cannot 
be funded will be advised that funds are not available and advised of 
their appeal rights as set forth in 7 CFR part 11.
    (c) National Office. The National Office will allocate funds on a 
project-by-project basis as requests are received from the State 
Office. If the amount of funds requested exceeds the amount of funds 
available, the total project score will be used to select projects for 
funding. The RUS Administrator may assign up to 35 additional points 
that will be considered in the total points for items such as 
geographic distribution of funds, severity of health risks, etc. 
Unobligated funds will be pooled by mid-August of each year and made 
available to all States with eligible colonias applicants on a case-by-
case basis.
    (d) Selection priorities. The priorities described below will be 
used to rate applications and in selecting projects for funding. Points 
will be distributed as indicated in paragraphs (d)(1) through (d)(6) of 
this section and will be used in selecting projects for funding.
    (1) Population. The proposed project will serve an area with a 
rural population:
    (i) Not in excess of 1,500--30 points.
    (ii) More than 1,500 and not in excess of 3,000--20 points.
    (iii) More than 3,000 and not in excess of 5,500--10 points.
    (2) Income. The median household income of population to be served 
by the proposed project is:

[[Page 14310]]

    (i) Not in excess of 50 percent of the statewide nonmetropolitan 
median household income--40 points.
    (ii) More than 50 percent and not in excess of 60 percent of the 
statewide nonmetropolitan median household income--20 points.
    (iii) More than 60 percent and not in excess of 70 percent of the 
statewide nonmetropolitan median household income--10 points.
    (3) Joint financing. The amount of joint financing committed to the 
proposed project is:
    (i) Twenty percent or more private, local, or State funds except 
Federal funds channeled through a State agency--10 points.
    (ii) Five to 19 percent private, local, or State funds except 
Federal funds channeled through a State agency--5 points.
    (4) Colonia. (See definition in Sec.  1777.4). The proposed project 
will provide water and/or waste disposal services to the residents of a 
colonia:--50 points. Additional points will be assigned as follows:
    (5) Access and health risks for colonias. (i) A colonia that lacks 
access to both water and waste disposal facilities, resulting in a 
significant health risk--50 points.
    (ii) A colonia that lacks access to either water or waste disposal 
facilities, resulting in a significant health risk--40 points.
    (iii) A colonia that has access to water and waste disposal 
facilities, but is facing a significant health risk--15 points.
    (6) Discretionary. In certain cases, and when a written 
justification is prepared, the State Program Official with loan/grant 
approval authority may assign up to 15 points for items such as natural 
disaster, to improve compatibility/coordination between the Agency's 
and other agencies' selection systems, to assist those projects that 
are the most cost effective, high unemployment rate, severity of health 
risks, etc.

    Dated: February 29, 2012.
Jonathan Adelstein,
Administrator, Rural Utilities Service.
[FR Doc. 2012-5627 Filed 3-8-12; 8:45 am]
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