[Federal Register Volume 78, Number 245 (Friday, December 20, 2013)]
[Proposed Rules]
[Pages 77009-77019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-30189]


 ========================================================================
 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. 78, No. 245 / Friday, December 20, 2013 / 
Proposed Rules  

[[Page 77009]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1784

RIN 0572-AC28


Section 306D Water Systems for Rural and Native Villages in 
Alaska

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Utilities Service (RUS), an Agency of the United 
States Department of Agriculture (USDA), proposes to modify its 
existing regulations and establish a separate regulation for making 
grants to rural or Native Alaskan Villages under the Rural Alaska 
Village Grant (RAVG) Program. The existing RAVG regulation (7 CFR 
1780.49) will be relocated to its own section and modified to conform 
with streamlined processes established through a Memorandum of 
Understanding among USDA, RUS; The United States Department of Health 
and Human Services, Indian Health Service (IHS); The State of Alaska, 
Department of Environmental Conservation (DEC); and the Alaska Native 
Tribal Health Consortium (ANTHC). The grants will be provided directly 
to a rural or Native Alaskan Village or jointly with either DEC or 
ANTHC for the development and construction of water and wastewater 
systems to improve the health and sanitation conditions in those 
Villages through removal of dire sanitation conditions.

DATES: Comments must be submitted by February 18, 2014.

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 
SW., 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/UWEP_HomePage.html.

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, Washington, DC 20250-
1590. Telephone number: (202) 690-2670, Facsimile: (202) 720-0718.

SUPPLEMENTARY INFORMATION: 

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.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. RUS 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

    Pursuant to 5 U.S.C. 553(a)(2), this proposed rule related to 
grants is exempt from the rulemaking requirements of the Administrative 
Procedure Act (5 U.S.C. 551 et seq.), including the requirement to 
provide prior notice and an opportunity for public comment. Because 
this rule is not subject to a requirement to provide prior notice and 
an opportunity for public comment pursuant to 5 U.S.C. 553, or any 
other law, the analytical requirements of the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.) are inapplicable.

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.
    Organizations applying for the RAVG program 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 RAVG program.
    The applicant will submit the following information:

SF-424, ``Application for Federal Assistance''

    Applicants use this form as a required cover sheet for applications 
submitted for RAVG grants. The application is an official form required 
for all Federal grants and requests basic information about the 
applicant and the proposed project.

Form--RD Instruction 1940-Q, Exhibit A-1, ``Certification for 
Contracts, Grants, and Loans''

    Applicants read and sign this certification. Submission of this 
certification is a prerequisite for making or entering into this 
transaction imposed by 31 U.S.C. 1352.

[[Page 77010]]

RD 400-1, ``Equal Opportunity Agreement''

    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.

RD 442-7, ``Operating Budget''

    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.

Written--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.

Form AD-1047, ``Certification Regarding Debarment, Suspension, and 
Other Responsibility Matters--Primary Covered Transactions''

    USDA regulations published at 2 CFR Parts 180 and 417 implement the 
government-wide debarment and suspension system for USDA's non-
procurement transactions. Applicants for RAVG grants are required to 
provide certification under these regulations. Form AD-1047 may also be 
used to obtain the required certification.

Form AD-1048, ``Certification Regarding Debarment, Suspension, and 
Other Responsibility Matters--Lower Tier Covered Transactions.''

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

Form AD-1049, ``Certification Regarding Drug-Free Workplace 
Requirements (Grants) Alternative I--for Grantees Other Than 
Individuals''

    USDA regulations published at 2 CFR Parts 180 and 417 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.

Written--Land Surveyors Certification and Opinion of Right of Way

    The document will include legal descriptions of lands created for 
parcels and shown in referenced documents are true and correct.

Written--Civil Rights Compliance Assurance Self Certification

    Applicant certifies that it will comply with Title VI of the Civil 
Rights Act of 1964. The certification can be a written self-
certification statement.

Written--Approved Business Plan

    The business plan will include the resolution adopting the plan and 
outline the proposed O&M costs, rate structures, short-lived asset rate 
schedule and associated materials.

Written--Preliminary Engineering Report

    Applicants must submit a preliminary engineering report (PER) 
prepared by a qualified engineer. The PER indicates areas to be served, 
scope and need of the project, cost estimate, annual operating 
expenses, etc. This report is necessary for RUS to determine project 
feasibility.

Written--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.

Written--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.

Written--Audits Based on Federal Assistance

    Grantees 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 grantee's fiscal year from all Federal sources. Grantees 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. 
Grantees 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 
grantees must submit.

Written--Management Reports

    All grantees 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.
    The following information/forms are collected and accounted for 
under other collection packages:

SF-424C, ``Budget Information--Construction Programs''

    Applicants estimate 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-424D, ``Assurances--Construction Programs''

    Applicants will 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.

SF-LLL, ``Disclosure of Lobbying Activities''

    Applicant will complete all items on the form that apply for both 
the initial filing and material change report.

RD 442-3, ``Balance Sheet''

    All applicants and borrowers use this form to present their assets, 
liabilities, and net worth. Borrowers whose gross annual income is less 
than $100,000 may use it at year-end. This form is necessary for all 
applicants, who prepare it once to present a comparative

[[Page 77011]]

balance sheet for the most current and prior years.

RD 442-2, ``Statement of Budget, Income and Equity''

    This form serves a dual purpose as a budget and an income and 
expense statement. RUS generally requires new borrowers to submit it 
each quarter for the first 3 years so RUS can monitor financial 
progress in the early years of operation. The report is then 
discontinued for those borrowers that are progressing satisfactorily. 
As a budget report, borrowers must submit their budget estimates before 
the beginning of each fiscal year. In these cases only, column three is 
to be completed. Borrowers, at their option, may also use this form as 
a year-end income and expense statement when audited financial 
statements are not prepared.

RD 442-22, ``Opinion of Counsel Regarding Right of Way''

    Applicants and their attorneys may use this form in obtaining 
continuous and adequate rights-of-way and interest in land needed for 
the construction, operation, and maintenance of a facility. This form 
is.

RD 1942-19, ``Agreement for Engineering 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.

RD 400-4, ``Assurance Agreement''

    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.

RD 1942-6, ``Letter of Intent To Meet Conditions''

    Applicants complete this form to indicate the intent to meet the 
conditions of the loan established previously by RUS. This information 
is necessary to determine whether the Agency should continue further 
processing of the loan application.
    Comments on this information collection must be received by 
February 18, 2014.
    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: Rural Alaska Village Grant Program (RAVG).
    OMB Control Number: 0572-NEW.
    Type of Request: New.
    Abstract: The Rural Alaska Village Grant (RAVG) Program is 
authorized under Section 306D of the Consolidated Farm and Rural 
Development Act (CONACT), (7 U.S.C. 1926(d)), as amended. Governing 
regulations are currently codified in 7 CFR 1780.49. Under this 
program, the Secretary may make grants to the State of Alaska for the 
benefit of rural or Native Villages in Alaska to provide for the 
development and construction of water and wastewater systems to improve 
the health and sanitation conditions in those Villages.
    This is new collection associated with a proposed rule. RUS 
proposes to modify its existing regulations and establish a separate 
regulation for making grants to rural or Native Alaskan Villages under 
the Rural Alaska Village Grant (RAVG) Program. The existing RAVG 
regulation, 7 CFR 1780.49 will be relocated to its own section and 
modified to conform with the established streamlined processes. The 
collection of information from the public is necessary in order for RUS 
to identify projects eligible for RAVG grants.
    Estimate of Burden: Public reporting for this collection of 
information is estimated to average 2.05 hours per responses.
    Estimated Number of Respondents: 25.
    Estimated Number of Total Annual Responses per Respondents: 415.
    Estimated Total Annual Burden on Respondents: 851.
    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

    RUS 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 program described by this proposed rule is listed in the 
Catalog of Federal Domestic Assistance Programs under number 10.760. 
This catalog is available electronically through the free CFDA Web site 
on the Internet at http://www.cfda.gov. The print edition may be 
purchased by calling the Superintendent of Documents at 202-512-1800 or 
toll free at 866-512-1800, or ordering it online at http://bookstore.gpo.gov.

Executive Order 12372

    All projects funded under this part are subject to Executive Order 
12372 (3 CFR, 1983 Comp., p. 197), 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 1940 J. In the case of grants made to DEC 
and ANTHC, DEC and ANTHC will certify that the requirements listed in 
paragraphs a-e are included in their agreements with the rural or 
Native Villages.

Unfunded Mandates

    This proposed 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 proposed 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

    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.

Executive Order 13132, Federalism

    The policies contained in this proposed rule do not have any

[[Page 77012]]

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 the states is not 
required.

Executive Order 13175

    Executive Order 13175 imposes requirements on RUS in the 
development of regulatory policies that have tribal implications or 
preempt tribal laws. RUS has determined that this proposed rule has 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. Therefore, in 
anticipation of the publication of this proposed rule, RUS focused its 
quarterly Tribal Consultation webinar and teleconference process during 
the summer of 2013 on the Rural Alaska Village Grant program. A pre-
consultation briefing was held on June 20, 2013 to provide a thorough 
briefing of the Rural Alaska Village Grant program and the regulatory 
changes under consideration. This was followed by a Tribal Consultation 
webinar and teleconference on July 17, 2013. Input received by RUS 
through the Tribal Consultation process will be considered alongside 
comments to the proposed rule and utilized in drafting the next 
iteration of this rule. If a Tribe has questions about the Tribal 
Consultation process please contact Rural Development's Native American 
Coordinator at (720) 544-2911 or [email protected].

Background

    The Rural Utilities Service, a Rural Development agency of the 
United States Department of Agriculture (RUS), works to improve the 
quality of life in rural America by providing investment capital, in 
the form of loans, loan guarantees, grants and technical assistance for 
the deployment of rural telecommunications, broadband, electric, water 
and environmental infrastructure. RUS loans, loan guarantee and grant 
programs act as a catalyst for economic and community development. By 
financing improvements to rural electric, water and waste, and 
telecommunications and broadband infrastructure, RUS 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.

Statutory Authorization

    The Rural Alaska Village Grant (RAVG) Program is authorized under 
Section 306D of the Consolidated Farm and Rural Development Act 
(CONACT), (7 U.S.C. 1926(d)), as amended. Governing regulations are 
currently codified in 7 CFR 1780. Under this program, the Secretary may 
make grants to the State of Alaska for the benefit of rural or Native 
Villages in Alaska to provide for the development and construction of 
water and wastewater systems to improve the health and sanitation 
conditions in those Villages. To be eligible to receive a grant under 
the RAVG program, the project must provide 25 percent in matching funds 
from the State of Alaska. The matching funds must come from non-Federal 
sources. The Secretary shall consult with the State of Alaska on a 
method of prioritizing the allocation of grants according to the needs 
of, and relative health and sanitation conditions in, each village. Not 
more than 2 percent of the amount made available for a fiscal year may 
be used by the State of Alaska for training and technical assistance 
programs relating to the operation and management of water and waste 
disposal services in rural and Native Villages. Appropriated funds 
shall be available until expended.
    The U.S. Department of Health and Human Services, Indian Health 
Service (IHS) is authorized to construct sanitation and water supply 
facilities for native villages, and to enter into agreements and 
arrangements with public agencies, non-profit organizations and the 
native villages to be served in furtherance of such projects, pursuant 
to Public Law 86-121, 42 U.S.C. Sec. 2004a.
    ANTHC is authorized to provide statewide health services, including 
the construction of sanitation and water supply facilities, to Native 
beneficiaries in Alaska pursuant to Public Law 105-83, Sec. 325(a).
    The Village Safe Water program is authorized under the Village Safe 
Water Act, Alaska Statute Title 46, Chapter 7 (AS 46.07), as amended.

RAVG History

    The State of Alaska recognized the need for adequate water and 
sewer systems through the passage of the Village Safe Water Act in 
1970. The purpose of the Village Safe Water (VSW) program was to 
``establish a program designed to provide safe water and hygienic 
disposal facilities in the State of Alaska.'' There are several sources 
of grant funding that support water and waste projects in rural Alaska 
communities. The VSW program receives funding support from four primary 
sources: The USDA, the Environmental Protection Agency (EPA), the 
Department of Health and Human Services' Indian Health Services (IHS), 
and the State of Alaska. The RAVG program is administered by the Rural 
Development State Office. In recent years, Congressional set-asides 
have been provided to assist three groups of rural Americans who have 
great needs in improving their access to clean water. Alaska Natives 
through the RAVG program is one of those three groups. Through the RAVG 
set-aside, up to $25 million a year has been provided since fiscal year 
(FY) 2006 to help the Alaska VSW program fund projects designed to 
improve public health and provide clean, safe drinking water in rural 
areas. The RAVG program is currently administered under 7 CFR 1780.49 
and is designed to provide up to 75 percent grant funding to rural 
Alaskan Villages that are trying to address a dire sanitation problem. 
Applicants must: (1) Be a rural Alaska community that meets the 
definition of a village under Alaska law and whose population is 10,000 
inhabitants or less; (2) have a median household income not exceeding 
110 percent of the State nonmetropolitan median household income; and 
(3) obtain 25 percent of the project costs from State of Alaska or 
local contributions. When the State provides the 25 percent matching 
funds, it must come from nonfederal sources. If the State contributes 
to the project development costs, the project does not have to meet the 
construction requirements contained in 7 CFR part 1780.
    The RAVG program is coordinated with the Alaska Department of 
Environmental Conservation (DEC) that administers the VSW program, IHS, 
EPA, and Rural Utilities Service. Grants are awarded according to the 
needs of and relative health and sanitation conditions in each village.
    On June 15, 2011, Rural Development signed a Memorandum of 
Understanding (MOU) with federal and state partners in Alaska that 
streamlines policies and procedures for the RAVG Program. The MOU is 
the result of an initiative launched by USDA in April of 2010 to 
improve program delivery and ensure that critical water and waste 
services are provided to rural Alaskan Villages. The inter-agency 
collaboration has produced results throughout the streamlining 
initiative. Between Fiscal Year (FY) 2009 and FY 2012, 53 construction 
grants have been funded

[[Page 77013]]

providing service to 17,425 residents; 72 percent of the construction 
grants are complete or nearly complete and the remainders are underway. 
Also, between FY 2009 and FY 2012, 68 planning grants have been funded; 
76 percent of the planning grants are complete or nearly complete and 
the remainders are underway. In FY 2013, an additional 8 construction 
grants and 2 planning grants were awarded and will begin in the latter 
part of FY 2014. The total amount of cost overruns incurred since FY 
2009 is $4,132,391.
    The goals of the MOU are to streamline the grant process, better 
align the regulations to the statute, and improve accountability within 
the program; all of which would ultimately address the dire sanitary 
conditions in Rural Alaskan Villages more effectively. Major changes to 
the existing process included:
    (a) Revised application review. RAVG applications were processed 
pursuant to 7 CFR part 1780 which also covers the process for the 
direct loan and grant program. According to 7 U.S.C. 1926d, it is clear 
that this program is intended to be a grant program. Under the MOU, the 
twenty-five (25) percent match funding from the state of Alaska serves 
as applicant contribution and the Sanitary Deficiency System (SDS) 
categorization of the projects serves as the indicator of need for the 
project. Also, because this is a grant program, the credit elsewhere 
requirements in 7 CFR part 1780 and in Section 333(1)(A) of the 
Consolidated Farm and Rural Development Act (CONACT) do not apply.
    (b) An updated two-stage funding process. A two-stage funding 
process was implemented where applications for planning grants are 
submitted in the first stage to allow for development of preliminary 
engineering reports (PER) and environmental reports (ER) related to 
proposed construction projects. Once the planning activities are 
completed, construction applications are entertained for those 
projects. Due to the dire conditions and unique economic conditions in 
rural Alaskan Villages, there are limited, or no, funds available from 
the applicant to complete the application process. Under the MOU, 
applications for construction are filed after the planning grant is 
completed. As a result, the projects are well planned and RUS is able 
to fund projects with a high level of confidence. The result is the 
elimination of future cost overruns and incomplete projects that were 
experienced prior to the MOU.
    (c) Bundled applications. Under the MOU, DEC and ANTHC are 
permitted to bundle applications and seek funding for multiple 
construction projects in multiple villages within a single application. 
The single application is called the master application. DEC and ANTHC 
are responsible for managing the projects and accounting for funds 
associated with every project under the master application. Although 
RUS obligates funds for multiple projects in a single obligation, 
measures are included in the MOU process to avoid issues previously 
experienced with the RAVG program and to account for funding as 
identified in the 2010 Office of the Inspector General (OIG) report. To 
address concerns raised by OIG in their audit, the following measures 
were implemented:
    (a) Standardized construction information. A PER is required for 
each construction project proposed within a single application.
    (b) Funds are designated within the master obligation for specific 
projects. Funds cannot be transferred from one project to another.
    (c) Excess funds on projects are required to be returned to RUS. 
These funds are then returned to the RAVG funding account and used for 
other projects. This allows the RUS to extend the reach of the program 
and ensure that funds are used only for the purposes specified.
    (d) Specific reporting requirements for DEC and ANTHC were also 
established in the MOU. These allow RUS to effectively account for 
funds and track the progress on projects funded.
    (e) Streamlined environmental process. IHS has been designated as 
the lead agency for the environmental process because they have 
specialized expertise in this area and a local presence. For projects 
administered by ANTHC, IHS will be the lead agency for the 
environmental review process and required determinations applicable to 
various environmental laws and regulations. The ANTHC shall notify the 
funding agencies and the IHS if a change in the project or project's 
scope occurs which could change environmental determinations or could 
adversely impact the environment. The IHS shall bear no mitigation 
costs as it is not a funding agency for projects under the MOU. The 
environmental review process established in the MOU will result in a 
more streamlined review process minimizing duplication of efforts and 
provide clarity to roles and responsibilities of all concerned parties.
    (f) Appointment of a dedicated program coordinator. Finally, to 
ensure success of the new process, RUS appointed a RAVG Program 
Coordinator who is solely dedicated to RAVG program delivery.
    Ultimately the MOU has achieved the goal of streamlining the RAVG 
process. The program is working well under the MOU. Applications are 
being filed by ANTHC and DEC on behalf of villages. Those applications 
are being processed in a timely manner by RUS, and the State of Alaska 
continues to provide a 25 percent match of funds to projects. Most 
importantly, the construction of projects is occurring as proposed and 
the quality of life is improving in rural Alaskan Villages. The 
following are two examples of how the process adopted under the MOU is 
achieving program results:
    (1) Lower Kalskag, Alaska (Funding amount: $6,879,155). The thought 
of having to haul a honey bucket, in winter temperatures that drop to -
55 [deg]F, is an unpleasant scenario. For some residents in the 
community of Lower Kalskag, and other rural Alaskan communities, this 
is a reality. The community of Lower Kalskag, Alaska is remotely 
located 350 miles west of Anchorage in a persistent poverty area. This 
small community has a population of around 280, and roughly 50 percent 
of its homes still lack adequate sanitation systems. The lack of 
adequate sanitation services is a dire health and safety issue faced 
daily by residents of this small, remote community. In those 
households, the individual residents must haul their waste from their 
homes in honey buckets (five gallon buckets), regardless of the 
temperature outside. The community of Lower Kalskag provides a glimpse 
of the progress and success of the MOU that was executed by RUS and its 
partners on June 15, 2011. Those partners, including the ANTHC, State 
of Alaska's Village Safe Water Program, and IHS, are essential in 
helping to provide rural Alaskan communities with safe and healthy 
sanitation systems. Under the MOU, a phased approach is being utilized 
to successfully get projects moving through to the construction phase. 
It is through that phased approach the community of Lower Kalskag has 
received service from the RAVG program. In Fiscal Year (FY) 2010, the 
community of Lower Kalskag received a grant from the RAVG program in 
the amount of $869,193 to design proposed utility improvements. The 
design was finalized in early 2012 and allowed the ANTHC, on behalf of 
Lower Kalskag, to apply for a construction grant. In FY 2012, RUS 
awarded a construction grant in the amount of $6,879,155 to construct 
wastewater improvements that will serve 34 homes. Due to the phased 
approach, construction is anticipated to be underway by the spring of 
2014. The

[[Page 77014]]

effort to retire the use of honey buckets in this community, and other 
rural Alaskan communities, is no small feat. The result of those 
efforts and the grants provided by the RUS's RAVG program will help 
improve the health and safety of community members for generations to 
come.
    (2) Pitkas Point, Alaska (Funded as both a design planning grant 
and two construction grants). Most Americans take their supply of 
sanitary water and effective wastewater disposal for granted. Water as 
close as the nearest faucet and easy access to restrooms is often taken 
for granted. Residents of Pitkas Point had to deal with unhealthy water 
and wastewater conditions that were staggering. They were in dire need 
of a water supply, water treatment facilities and wastewater treatment 
and collection facilities. Drinking water was hauled from local 
watering points, which did not meet safe drinking water standards. 
Wastewater was hauled in honey buckets along the same route children 
played on and where they traveled to and from school. RAVG assistance 
included a preplanning and development grant in FY 2009 in the amount 
of $378,966 to design water distribution mains and sewer collection 
mains; and two construction grants were awarded in FY 2010 in the 
amount of $6,891,750 and $2,214,769 to construct core sanitation 
facilities and a piped water and wastewater system. The project became 
fully operational on September 8, 2011. Funding for this critical 
infrastructure project made it possible for the Pitkas Point community 
to construct a variety of basic water and waste needs for this rural 
community.

Purpose of This Proposed Rule

    The purpose of this proposed rule is to solicit comments on 
proposed modifications to the current RAVG regulation. Specifically, 
the modifications include:
    (1) Move regulation requirements from inclusion in 7 CFR part 1780, 
to new part 7 CFR part 1784;
    (2) Elimination of the RAVG regulatory language currently located 
in 7 CFR part 1780; and
    (3) Key streamlining measures which include:
    (a) Revised application review so the evaluation process is based 
on need for grant only;
    (b) A new application process that allows the state of Alaska to 
bundle applications from multiple villages into a single master 
application;
    (c) Improved reporting and tracking measures to ensure 
accountability of funds and completion of projects in a timely fashion; 
and
    (d) Establishing a single lead responsible for facilitating each 
applicable agencies' environmental and historic preservation review 
requirements for all projects.

Request for Comments

    RUS invites interested parties including, but not limited to, 
Tribes, Rural or Native Villages in Alaska, Alaska Native Regional and 
Village Corporations, financial and lending institutions, trade 
associations, consumer groups and individuals to provide any 
information or analyses they believe to be relevant to the issues 
discussed in this proposed rule and to the implementation of the grant 
program. RUS is proposing to codify the process developed under the MOU 
and establish rules for the RAVG program under the new part 7 CFR part 
1784. The proposed regulation includes all of the streamlined 
approaches and accountability measures from the MOU. RUS seeks comment 
on these changes.

List of Subjects

    Agriculture, Community development, Community facilities, Reporting 
and recordkeeping requirements, Rural areas, Sewage disposal, Waste 
treatment and disposal, Water pollution control, Water supply, 
Watersheds.
    For the reasons set forth in the preamble, RUS proposes to amend 7 
CFR chapter XVII of Title 7 of the Code of Federal Regulations by 
adding a new part 1784 to read as follows:

PART 1784--RURAL ALASKAN VILLAGE GRANTS

Subpart A--General Provisions
Sec.
1784.1 Purpose.
1784.2 Definitions.
1784.3 Objective.
1784.4-1784.7 [Reserved]
Subpart B--Grant Requirements
1784.8 Eligibility.
1784.9 Grant Amount.
1784.10 Eligible Grant Purposes.
1784.11 Restrictions.
1784.12-1784.15 [Reserved]
Subpart C--Application Processing
1784.16 Application for Master Plan grant.
1784.17 Application for Pre-development grants.
1784.18 Application for Construction grants.
1784.19 Applications accepted from DEC or ANTHC.
1784.20 Other forms and certifications.
1784.21 Other requirements.
1784.22 Lead Agency Environmental Review.
1784.23-1784.25 [Reserved]
Subpart D--Grant Processing
1784.26 Planning, Development and Procurement.
1784.27 Grant closing and Disbursement of funds.
1784.28 Grantee Accounting Methods, Management Reporting and Audits.
1784.29 Grant Servicing and Accountability.
1784.30 Subsequent grants.
1784.31 Exception Authority.
1784.32-1784.34 [Reserved]
Subpart E--Design, Bidding, Contracting, Constructing, and Inspections
1784.35 General.
1784.36 Procurement by Applicants Eligible Under 1784.8(a)(2) and 
(3).
1784.37 Procurement by Applicants Eligible Under 1784.8(a)(1).
1784.38-1784.99 [Reserved]

    Authority:  7 U.S.C. 1926d.

Subpart A.--General Provisions


Sec.  1784.1  Purpose.

    This part sets forth the policies and procedures that will apply 
when the Rural Utilities Service (RUS) makes grants under the Rural 
Alaska Village Grant (RAVG) program to rural or Native Villages in 
Alaska. The grants will be provided directly to a rural or native 
village or jointly with either The State of Alaska, Department of 
Environmental Conservation (DEC) or The Alaska Native Tribal Health 
Consortium (ANTHC) for the benefit of rural or native villages in 
Alaska.


Sec.  1784.2  Definitions.

    The following definitions apply to subparts A through E of this 
part.
    ANTHC means the Alaska Native Tribal Health Consortium.
    CONACT means the Consolidated Farm and Rural Development Act.
    DEC means the State of Alaska, Department of Environmental 
Conservation.
    Dire sanitation conditions means:
    (1) Recurring instances of a waterborne communicable disease have 
been documented; or
    (2) No community-wide water and sewer system exists and individual 
residents must haul water to or human waste from their homes and/or use 
pit privies; or (3) An appropriate regulatory Agency of the State of 
Alaska determines that an imminent threat of a waterborne communicable 
disease is present.
    Grant recipient means an applicant that has been awarded a Rural 
Alaskan Village Grant under this part.
    IHS means the United States Department of Health and Human 
Services, Indian Health Service.
    RAVG means Rural Alaskan Village Grant, a grant awarded by RUS, 
DEC,

[[Page 77015]]

and/or ANTHC to a grant recipient under this part.
    Rural or Native Villages in Alaska means a rural community or 
Native village in Alaska which meets the definition of a village under 
State statutes and does not have a population in excess of 10,000 
inhabitants, according to the U.S. Census American Community Survey.
    RD means Rural Development, a federal agency mission area 
delivering the United States Department of Agriculture's programs to 
rural communities.
    Recipient community means a community that has been awarded a grant 
under this part.
    RUS means the Rural Utilities Service, a federal agency delivering 
the United States Department of Agriculture's rural utilities programs.
    Short-lived assets means repair and replacement items expended each 
year that are not included in the annual Operational and Maintenance 
expenses as annual repair and maintenance.
    Statewide nonmetropolitan median household income (SNMHI) 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.
    USDA means the United States Department of Agriculture.
    VSW means Village Safe Water Program authorized under the Village 
Safe Water Act, Alaska Statute Title 46, Chapter 7 (AS 46.07).


Sec.  1784.3  Objective.

    The objective of the RAVG Program is to assist the residents of 
rural or Native Villages in Alaska to provide for the development and 
construction of water and wastewater systems to improve the health and 
sanitation conditions in those Villages through removal of dire 
sanitation conditions.


Sec.  1784.4-1784.7  [Reserved]

Subpart B--Grant Requirements


Sec.  1784.8  Eligibility.

    (a) Grants may be made to the following eligible applicants:
    (1) A rural or native village in Alaska; and/or
    (2) DEC on behalf of one or more rural or native villages in 
Alaska; or
    (3) ANTHC on behalf of one or more rural or native villages in 
Alaska.
    (b) Grants made to DEC or ANTHC may be obligated through a master 
letter of conditions for more than one rural or native village in 
Alaska; however, DEC or ANTHC together with each individual rural or 
native village beneficiary shall execute a grant agreement on a project 
by project basis. Expenditures for projects will be based on specific 
scope and be requested on a project by project basis.
    (c) For grants proposed to be administered directly by a community, 
the responsibility to meet the requirements outlined in this part will 
be met by the community. RUS will be the lead agency on direct 
administration projects.
    (d) The median household income of the rural or native village 
cannot exceed 110 percent of the statewide nonmetropolitan household 
income, according to US Census American Community Survey. Alaska census 
communities considered to be high cost isolated areas or ``off the road 
systems'' (i.e. communities that cannot be accessed by roads) may 
utilize up to 150 percent of SNMHI.
    (e) A dire sanitation condition as defined in Sec.  1784.2 must 
exist in the village served by the proposed project. For those projects 
identified under (1) and (3) of the dire sanitation definition, a 
notice of violation, consent order or other enforcement action from the 
appropriate regulatory agency must be provided to document the dire 
sanitation condition.
    (f) In order for an eligible applicant to receive a grant under the 
Rural Alaska Village Grant program, the State of Alaska shall provide 
25 percent in matching funds from non-Federal sources.
    (g) In processing grants through DEC and ANTHC, a public meeting 
must be held to inform the general public regarding the development of 
any proposed project. Documentation of the public meeting must be 
received with construction applications.
    (1) A notice of intent must be published in a newspaper of general 
circulation in the proposed area to be served.
    (2) For projects where there are no newspapers of general 
circulation, a posting of the notice in a community building (post 
office, washeteria, clinic, etc.) frequented by village residents may 
be used to meet the requirement. This alternative form of notice has 
been authorized by the RUS Administrator.


Sec.  1784.9  Grant Amount.

    Grants will be made for up to 75 percent of the project development 
and/or construction costs. Pursuant to Section 306 D of the CONACT, the 
State of Alaska shall provide 25 percent in matching funds from non-
Federal sources.


Sec.  1784.10  Eligible Grant Purposes.

    Grant funds may be used for the following purposes:
    (a) To pay reasonable costs associated with providing potable water 
or waste disposal services to residents of rural or native villages in 
Alaska.
    (b) To pay reasonable costs associated with the use of a recipient 
community's equipment during construction. (i.e. maintenance, minor 
repairs, and operational costs). A cost accounting system that is 
accurate to track expenses must be in place. Use of ANTHC or State of 
Alaska equipment fleet rental costs will also be eligible. RUS 
concurrence in the allocation method is required.
    (1) Reasonable costs include construction, master planning, 
predevelopment costs (including engineering, design, and rights-of-way 
establishment), and technical assistance as further defined below:
    (i) Master planning. Grants can be made specifically for Master 
planning costs associated with the prioritization process.
    (ii) Pre-Development. Grants can be made for pre-development costs 
such as preliminary engineering, environmental, application 
development, review and establishment of rights-of-way and easement, 
and full construction design for up to $1,000,000 for each eligible 
village. Prior to approving additional pre-development costs, a 
preliminary engineering report (PER) and/or approved PER like document, 
such as the Cooperative Project Agreement and supplemental documents 
from ANTHC and an environmental report shall be reviewed and concurred 
by RUS, DEC, ANTHC, and IHS.
    (iii) Training and Technical Assistance. Not more than 2 percent of 
the funding made available each fiscal year may be used by the State of 
Alaska for training and technical assistance programs relating to the 
operation and management of water and waste disposal services in rural 
and native villages. Grants for this purpose will be processed in 
accordance with 7 CFR Part 1775.
    (c) Individual Installations:
    (1) Individual service installation relates to residential homes 
only and does not include public facilities and/or commercial 
facilities. The only exception to serving a public facility is when the 
facility is necessary for the successful operation and maintenance of 
the water or sanitation system (i.e. the facility utilized for 
accepting utility payments and/or holding public meetings on the 
utility system).
    (2) Individual home installations, including wells, septic system, 
flush

[[Page 77016]]

tank & haul, in-house plumbing, etc., may be provided. The following 
guidelines must be followed for individual installations. A 
certification will be required with the application that provides 
documentation of the following:
    (i) The residents are unable to afford to make the improvements on 
their own.
    (ii) An agreement outlining the installation, operation, and 
maintenance of facilities must be in place.
    (iii) An adequate method for denying service in the event of non-
payment of user fees.
    (iv) All residents of the community are treated equally.
    (v) The improvements provided are reasonable and modest.
    (vi) Legal authority (i.e. easements) is obtained to construct 
these improvements.
    (vii) Documentation must be provided to RUS indicating the quantity 
and quality of the individual installations that may be developed; cost 
effectiveness of the individual facility compared with initial and long 
term user costs on a central system; health and pollution problems 
attributable to individual facilities; operational or management 
problems peculiar to individual installations; and permit of regulatory 
agency requirements.


Sec.  1784.11  Restrictions.

    Grant funds may not be used to:
    (a) Pay any annual recurring costs that are considered to be 
operational expenses of a facility.
    (b) Pay basic/rental fee or depreciation for the use of the 
recipient community's equipment.
    (c) Purchase existing systems.
    (d) Pay for items not associated with Rural Utilities Service's 
approved scope of work. This includes projects developed from other 
funding sources.


Sec.  1784.12-1784.15  [Reserved]

Subpart C--Application Processing


Sec.  1784.16  Application for master plan grant.

    (a) DEC and ANTHC utilize the National Indian Health Service, 
Sanitation Deficiency System (SDS) database as a comprehensive source 
of rural sanitation needs in Alaska. The database provides an inventory 
of the sanitation deficiencies including water, sewer, and solid waste 
facilities for existing homes. The sanitation deficiencies data is 
updated annually by DEC and ANTHC in consultation with the respective 
rural or native villages. The SDS database is utilized under the RAVG 
program to help prioritize applications under the Village Safe Water 
Program.
    (b) In order to be considered for funding, projects must be 
included in a sanitation facility Master Plan for the community which 
has been approved by DEC or ANTHC and RUS.
    (c) Entities identified in Sec.  1784.8 of this part may submit a 
completed Standard Form 424 to apply for funding to establish a Master 
Plan for a rural or Native village.


Sec.  1784.17  Application for pre-development grants.

    (a) A prioritized list of projects will be developed each year by 
RUS, DEC, and ANTHC applying prioritization criteria to the sanitation 
needs database. Prioritization criteria established by the RUS, DEC, 
ANTHC, and IHS will be based, at a minimum, on relative health impacts, 
drinking water and wastewater regulatory requirements, the sanitation 
conditions in each community and project readiness. The Village Safe 
Water Program process and associated prioritization criteria will be 
used to prioritize projects and place them on a priority list. The 
process will be reviewed and approved by RUS, DEC, ANTHC, and IHS. 
Projects will be funded from the priority list as they meet established 
planning, design, and construction requirements, subject to available 
funding.
    (b) Funding for pre-development grants will be allocated by USDA, 
DEC, and ANTHC according to the prioritized list.
    (c) Entities identified in Sec.  1784.8 of this part may submit a 
completed Standard Form 424 to apply for funding for pre-development 
costs. Pre-development costs are described in Sec.  1784.10 (b)(2)(ii) 
of this part.
    (d) Projects submitted for design only under the pre-development 
grants, must have RUS approval of the master plan prior to 
consideration for funding.


Sec.  1784.18  Application for construction grants.

    (a) Funding for construction grants will be allocated annually by 
USDA, DEC, and ANTHC according to the prioritization list described in 
Sec.  1784.17(a) of this part.
    (b) An application for a construction grant shall include:
    (1) Completed Standard Form 424, Standard Form 424C and Standard 
Form 424D. Current versions of these forms may be found at Grants.gov.
    (2) Preliminary Engineering Report, Environmental Report, or 
approved PER like document, including ANTHC's Cooperative Project 
Agreement and associated supplemental attachments;
    (3) Population and median household income of the area to be 
served;
    (4) Description of the project; and
    (5) Approved business plan, including resolution adopting the plan, 
for the recipient community. The business plan will outline the 
proposed operation and management costs, rate structures, short-lived 
asset schedule and associated materials.


Sec.  1784.19  Applications from DEC or ANTHC.

    (a) In cases where applications are accepted from DEC or ANTHC, one 
master application may be submitted covering all rural or native 
villages to be funded, however, each individual project will be broken 
out and (for construction grants) each will require its own PER, or PER 
like document and Environmental Report.
    (b) They will be processed as separate projects with individual 
grant agreements, as appropriate.
    (c) Expenditures for projects will be based on specific scope and 
be requested on a project by project basis.
    (d) Funding amounts, as indicated in each grant agreement and 
letter of conditions, will be for the approved scope of work.


Sec.  1784.20  Other forms and certifications.

    (a) Referenced bulletins, instructions and forms are for use in 
administering grants made under this part and are available from any 
USDA/Rural Development office or the Rural Utilities Service, United 
States Department of Agriculture, Washington, DC 20250-1500.
    (b) Applicants will be required to submit the following items to 
the processing office, upon notification from the processing office to 
proceed with further development of the full application:
    (1) Form RD 400-1, Equal Opportunity Agreement;
    (2) Form RD 400-4, Assurance Agreement;
    (3) Form AD 1047, Certification Regarding Debarment, Suspension and 
other Responsibility Matters;
    (4) Form AD 1048, Certification Regarding Debarment, Suspension, 
Ineligibility and Voluntary Exclusion--Lower Tier Covered Transactions;
    (5) Form AD 1049, Certification regarding Drug-Free Workplace 
Requirements (Grants) Alternative I for Grantees Other Than 
Individuals;
    (6) RUS Form 266, Compliance Assurance form--Civil Rights 
Compliance;
    (7) Standard Form LLL, Disclosure of Lobbying Activities;

[[Page 77017]]

    (8) RD Instruction 1940-Q, Exhibit A-1, Certifications for 
Contracts, Grants, and Loans (Regarding Lobbying); and
    (9) 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.
    (c) In the case of grants made to DEC and ANTHC, DEC and ANTHC will 
certify that the above requirements are included in their agreements 
with the Villages. The certification and forms listed above must be 
provided from DEC and ANTHC on an annual basis for utilization in 
proposed applications.
    (d) When favorable action is not taken on an application, the 
applicant will be notified in writing by the Rural Development State 
Program Official of the reasons why the request was not favorably 
considered. Notification to the applicant will state that a review of 
this decision by the Agency may be requested by the applicant in 
accordance with 7 CFR Part 11.
    (e) When favorable action is taken on an application, the applicant 
will be notified by a letter which establishes conditions that must be 
understood and agreed to before further consideration may be given to 
the application. In cases where a master application is submitted by 
DEC or ANTHC, the letter of conditions will include all projects, and 
their funding amounts, included in the master application on which 
favorable action will be taken. The letter of conditions does not 
constitute loan and/or grant approval, nor does it ensure that funds 
are or will be available for the project. The grant will be considered 
approved on the date a signed copy of Form RD 1940-1, Request for 
Obligation of Funds, is mailed to the applicant.


Sec.  1784.21  Other requirements.

    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.
    (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.
    (m) Floodplains. The agencies follow the eight-step decision-making 
process referenced in Section 2(a) of Executive Order 11988, Floodplain 
Management, when undertaking actions located in floodplains. Pursuant 
to E.O. 11988, the IHS uses a Class Review process to exclude certain 
actions from further review under the eight-step process. For all 
actions that do not qualify for IHS Class Review, the eight-step 
process shall be completed. All practicable measures to minimize 
development in floodplains and reduce the risk of human safety, health, 
and welfare shall be followed, including elevating a new water or 
wastewater facility at least one foot above the base flood elevation as 
determined by the Army Corp of Engineers or other qualified survey. If 
an area has been designated by the Federal Emergency Management Agency 
mapping, flood insurance shall be required for facilities located in 
flood plains. If a community is not participating in the National Flood 
Insurance Program, this requirement does not apply.
    (n) Project planning, including engineering and environmental 
reports, to the maximum extent feasible, must address all water and/or 
waste disposal needs for a community in a coordinated manner with other 
community development projects and take into consideration information 
presented in available community strategic and comprehensive plans. Any 
reports or designs completed with funds must be completed in accordance 
with sound engineering practices and USDA regulations, including 
environmental instruction 7 CFR Part 1794.


Sec.  1784.22  Lead Agency Environmental Review.

    (a) The Agency designated as the lead agency for the purposes of 
this grant program, will fulfill and agree to be responsible for 
complying with lead agency requirements for:
    (1) National Environmental Policy Act (NEPA) as outlined in 40 CFR 
1501.5, Lead agencies;
    (2) Section 106 review process as outlined in 36 CFR Part 
800.2(a)(2) Lead Federal agency; and
    (3) Section 7 of the Endangered Species Act as outlined in 50 CFR 
402.07, Designation of lead agency.
    (b) All environmental findings and determinations made by the lead 
agency represent those of the cooperating agencies and will be 
completed in accordance with the procedures outlined in this section.
    (c) RUS will, to the extent possible and in accordance with 40 CFR 
1506.2 and 7 CFR 1794.14, actively participate with DEC, IHS, and ANTHC 
to cooperatively or jointly prepare environmental documents so that one 
document will comply with all applicable laws.
    (d) For projects administered by DEC and ANTHC, RUS agrees to 
participate as a cooperating agency in accordance with 40 CFR 1501.6 
and 7 CFR 1794.14 and relies upon those agencies' procedures for 
implementing NEPA procedures as further described below.
    (e) The lead agency will indicate that RUS is a cooperating agency 
in all NEPA-related notices published for the proposed action.
    (f) A construction grant may not be approved until all 
environmental findings and determinations have been made according to 
the following:
    (1) Rural Development Lead Agency. If RUS is the lead agency the 
environmental review process, including all findings and 
determinations, will be completed in accordance with 7 CFR 1794.

[[Page 77018]]

    (2) DEC Lead Agency. In the event DEC is the lead agency, the 
environmental review process, including all findings and determinations 
will be completed in accordance with the procedures outlined in the 
RAVG Environmental Review Process in this section 1784.22.
    (3) IHS Lead Agency. For projects administered by ANTHC, IHS will 
be the lead agency for the environmental review process, including all 
findings and determinations. The environmental review process, 
including all findings and determinations will be completed in 
accordance with the Department of Health and Human Services policies 
and procedures in General Administration Manual, Part 30, the Council 
on Environmental Quality regulations at 40 CFR 1500-1508 and with 
procedures published by IHS in the Federal Register on March 22, 1993 
at 58 FR15284. The ANTHC shall notify the funding agencies and the IHS 
if a change in the project or project scope occurs which could change 
any previously prepared environmental findings or determinations or 
could adversely impact the environment. In the event of an 
unanticipated discovery of a historic property or other environmental 
resource, the ANTHC shall stop construction activity in the area of the 
discovery and notify the appropriate authority and the IHS. Mitigation 
options resulting from unanticipated discoveries, including but not 
limited to changes in project scope or cancellation of the project will 
be evaluated by the funding agencies in collaboration with the ANTHC 
and IHS. If appropriate and necessary, mitigation plans will be 
negotiated and approved by all parties. When the funding agencies have 
approved a mitigation plan and IHS has reaffirmed its environmental 
review process, including all findings review and determinations, the 
ANTHC will be authorized to initiate the agreed to mitigation plan. The 
IHS shall bear no mitigation costs as it is not a funding agency for 
projects under 7 CFR part 1784.
    (g) RUS will have an opportunity to review the IHS or DEC 
environmental review documents, including all findings and 
determinations to ensure consistency with this part and agency 
procedures. Where an Environmental Assessment (EA) or Environmental 
Impact Statement (EIS) is required by the lead agency's environmental 
policies and procedures, the lead agency will ensure that the scope and 
content of the EA or EIS satisfies the statutory and regulatory 
requirements applicable to RUS. Where an EA and EIS is not required 
under the applicable lead agencies' procedures for implementing NEPA, 
the review by RUS will be limited to ensure that the applicable lead 
agencies' procedures were followed.
    (h) The Section 106, National Historic Preservation Act review 
requirements completed for ANTHC administered projects will be carried 
out in accordance with RAVG Section 106 Process.


Sec.  1784.23-25  [Reserved]

Subpart D--Grant Processing


Sec.  1784.26  Planning Development and Procurement.

    (a) If RUS is the lead agency and will provide oversight for the 
project, a certification should be obtained from the State agency, or 
the Environmental Protection Agency if the State does not have primacy, 
stating that the proposed improvements will be in compliance with 
requirements of the Safe Drinking Water Act and/or Clean Water Act and 
the applicable requirements of 7 CFR parts 3015, 3016 and 3019.
    (b) Applicants that will bid and construct a project in phases, 
must provide assurance that the full scope of each specific phase of 
the project will be functional. In the event that the actual cost is 
anticipated to exceed the funding originally allocated for the project, 
all potential options will be reviewed and considered, including but 
not limited to acquiring additional funds or a reduction in project 
scope. RUS, ANTHC, and VSW will ensure that funded scope items are 
functional when all funds have been disbursed.


Sec.  1784.27  Grant Closing and Disbursement of Funds.

    (a) The Water and Waste Grant Agreements for rural and native 
villages in Alaska, or other approved form(s) will be executed by all 
applicants. To view all forms and agreements, refer to the USDA RUS 
Water and Environmental Programs Web site.
    (b) Grant funds will be distributed from the Treasury at the time 
they are actually needed by the applicant using multiple advances. 
Instructions regarding disbursement of funds can be found in the Letter 
of Conditions.
    (c) If there is a significant reduction in project costs, the 
applicant's funding needs will be reassessed. Decreases in RUS funds 
will be based on revised project costs and current number of users, 
however, other factors including RUS regulations used at the time of 
grant approval will remain the same. Obligated grant funds not needed 
to complete the proposed project will be deobligated. In such cases 
applicable forms, the letter of conditions, and other items will be 
revised.


Sec.  1784.28  Grantee Accounting Methods, Management Reporting and 
Audits.

    (a) All Agency grantees will follow the reporting requirements as 
outlined in 7 CFR 1780.47.
    (b) Other reporting requirements are as follows:
    (1) During the construction period, for the reporting of expenses 
incurred for projects under this part, the party responsible for the 
administration of the project (DEC, ANTHC, or community) will provide 
an audit report in accordance with Sec.  1784.28 (which includes GAGAS 
and OMB Circular A-133 requirements).
    (2) For DEC and ANTHC projects, a supplemental report will be 
provided to the external independent CPA auditing the organization. The 
report will support the official figure indicated for CFDA 10.760 in 
the Schedule of Expenditure of Federal Awards. The report must provide 
details on the amount of expenses and specific communities for which 
expenses were incurred. This report must also be provided to RUS.
    (3) After the construction period and for the life of the facility, 
the recipient community will be responsible to meet the requirements 
outlined in 7 CFR parts 3015, 3016, and 3019 and 7 CFR 1784.28, 
paragraphs a through d, herein. These requirements include 
administration and record keeping requirements along with CPA audit 
report and report requirements. These requirements must be outlined in 
funding documents from RUS, ANTHC, and VSW and in agreements with the 
recipient communities.
    (4) The requirements found in 7 CFR parts 3015, 3016 and 3019 shall 
apply to all grants made under the RAVG program and shall be set forth 
in the respective grant agreement where required.


Sec.  1784.29  Grant servicing and accountability.

    a. Grants will be serviced in accordance with 7 CFR Part 1782.
    b. RUS reserves the right to request and review project files from 
grantees at any time.


Sec.  1784.30  Subsequent grants.

    Subsequent grants will be processed in accordance with the 
requirements set forth in this part. The initial and subsequent grants 
made to complete a previously approved project must comply with the 
maximum grant requirements set forth in Subpart B of this section.

[[Page 77019]]

Sec.  1784.31  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 best interest. Additionally, in individual 
cases where a proposed project does not meet the definition of ``Dire 
sanitation condition'' in Section 1784.2, but an applicant is able to 
satisfactorily demonstrate to the Administrator of RUS that a water or 
sewer system is deficient and negatively impacts the health or safety 
of the community, the Administrator of RUS may consider funding under 
this Rule.


Sec.  1784.32-34  [Reserved]

Subpart E--Design Bidding, Contracting, Constructing, and 
Inspections


Sec.  1784.35  General.

    This subpart is specifically designed for use by owners including 
the professional or technical consultants or agents who provide 
assistance and services such as engineering, environmental, inspection, 
financial, legal or other services related to planning, designing, 
bidding, contracting, and constructing water and waste disposal 
facilities. These procedures do not relieve the owner of the 
contractual obligations that arise from the procurement of these 
services. For this subpart, an owner is defined as an applicant, or 
grantee. For projects administered by eligible applicants identified in 
1784.8(a)(2) or (3), 1784.36 of this subpart will be followed. For 
eligible applicants identified in 1784.8(a)(1), the requirements 
outlined in 1784.37 will be followed.


Sec.  1784.36  Procurement by Applicants Eligible Under 1784.8(a)(2) 
and (3).

    (a) For applicants eligible under 1784.8(a)(2) and (3), contracting 
and procurement activities will follow DEC or ANTHC policies, 
procedures and methods. DEC and ANTHC's practices will be based on 
Uniform Administrative Requirements for federal grants and OMB 
requirements as defined by applicable OMB Circulars. Procurement 
procedures shall not restrict or eliminate open and free competition. 
In specifying materials, DEC and ANTHC will consider all materials 
normally suitable for the project based on sound engineering practices 
and project requirements.
    (b) Contracts for construction or repairs must contain the 
following provisions:
    (1) To 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).
    (2) To include in all contracts in excess of $100,000 a provision 
that the contractor agrees to comply with all the requirements of the 
Clean Air Act (42 U.S.C. 7414) and Section 308 of the Water Pollution 
Control Act (33 U.S.C. 1318) relating to inspection, monitoring, entry, 
reports, and information, as well as all other requirements specified 
in Section 114 of the Clean Air Act and Section 308 of the Water 
Pollution Control Act and all regulations and guidelines issued there 
under after the award of the contract.


Sec.  1784.37  Procurement by Applicants Eligible Under 1784.8(a)(1).

    For grants proposed to be administered directly by applicants 
eligible under 1784.8(a)(1), the requirements outlined in Sec.  1780 
subpart C will be met by those eligible applicants with the exception 
of the following requirements:
    (a) Preliminary engineering reports and Environmental Reports 
(Sec.  1780.55). Refer to the requirements of this subpart and subpart 
C 1784.21(e)).
    (b) Metering devices in Sec.  1780.57(m).
    (c) Utility Purchase Contracts in Sec.  1780.62.
    (d) Sewage treatment and bulk water sales contracts in Sec.  
1780.63.


Sec.  1784.3 1784.99  [Reserved].

    Dated: November 8, 2013.
John Charles Padalino,
Administrator,
    Rural Utilities Service.

[FR Doc. 2013-30189 Filed 12-19-13; 8:45 am]
BILLING CODE P