[Federal Register Volume 77, Number 142 (Tuesday, July 24, 2012)]
[Rules and Regulations]
[Pages 43149-43151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-18017]

Rules and Regulations
                                                Federal Register

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Federal Register / Vol. 77, No. 142 / Tuesday, July 24, 2012 / Rules 
and Regulations

[[Page 43149]]


Rural Utilities Service

7 CFR Part 1777

RIN 0572-AC26

Water and Waste Disposal Loans and Grants

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule.


SUMMARY: The Rural Utilities Service (RUS) is amending its regulations 
related 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 modifying the priority 
points system in order to give additional priority points to the 
colonias that lack access to water or waste disposal systems and face 
significant health problems. The intent is to ensure that the neediest 
areas receive funding.

DATES: This rule is effective August 23, 2012.

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.


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 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 

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

    Executive Order 13175 imposes requirements on Rural Development in 
the development of regulatory policies that have tribal implications or 
preempt tribal laws. Rural Development has determined that this final 
rule does not have a substantial direct effect on one or more Indian 
tribe(s) or on either the relationship or the distribution of powers 
and responsibilities between the Federal Government and Indian tribes. 
Additionally, during the Proposed Rule comment period no comments were 
filed by elected leaders or staff of Federally Recognized Indian 
Tribes. Thus, this final rule is not subject to the requirements of 
Executive Order 13175. If a tribe determines that this rule has 
implications of which Rural

[[Page 43150]]

Development is not aware and would like to engage in consultation with 
Rural Development on this rule, please contact Rural Development's 
Native American Coordinator at (720) 544-2911 or AIAN@wdc.usda.gov.


    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 
    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. It should be noted that the changes to 7 
CFR 1777 are meant to only affect those projects in colonias and do not 
change the agency's rules for administering assistance that is 
legislatively mandated to benefit Federally Recognized Indian Tribes. 
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.
    This rule will change the Rural Utilities Service's current 
prioritization of potential projects pursuant to 7 CFR part 1777, which 
is 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 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 colonia households, which provided access 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 areas. 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 colonias areas 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 amends 7 CFR 1777 as it pertains to 
projects serving colonias.

Purpose of This Final Rule

    This final rule clarifies 7 CFR 1777.12 by including specific 
information on documentation to support a determination of a 
significant health risk. The rule also revises 7 CFR 1777.13 to 
specifically focus on the priority point system used in selecting 
projects for 306C funding. This will ensure that the colonias that lack 
access to water or waste disposal systems, and face significant health 
problems, are given priority consideration for 306C funding.


    RUS published a proposed rulemaking in the Federal Register on 
March 9, 2012 at 77 FR 14307 and invited interested parties to comment. 
One public submission was received with regard to the need for funding 
and education in colonias area. No other comments were received from 
any other source. A summary of the submission and the Agency's response 
is summarized as follows:

    Issue 1: Commenter agreed that the efforts of the Department of 
Agriculture to provide further funding in the form of grants for 
potable water and proper waste management is a good course of action.
    Response: Agency concurs.
    Issue 2: Commenter suggested that education and training must be a 
key component in granting aid.
    Response: Agency concurs. RUS has technical assistance providers 
that work with colonias areas in terms of education and training.

    Issue 3: Commenter would like USDA RD to focus on employment 
projects, as this will begin to lessen dependency on federal aid.
    Response: Agency concurs. RUS believes that modern, reliable water 
and waste infrastructure can provide the foundation for economic growth 
and future employment opportunities in colonias areas.

List of Subjects in 7 CFR Part 1777

    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, the Agency amends 7 CFR 
part 1777 as follows:


1. The authority citation continues to read as follows:

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

2. Amend Sec.  1777.12 add a sentence to the end of paragraph (b) 

[[Page 43151]]

text and add paragraphs (b)(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 Sec.  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 
which 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:
    (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 RUS' and other 
agencies' selection systems, to assist those projects that are the most 
cost effective, high unemployment rate, severity of health risks, etc.

    Dated: July 18, 2012.
Jonathan Adelstein,
Administrator, Rural Utilities Service.
[FR Doc. 2012-18017 Filed 7-23-12; 8:45 am]