United States Department of Agriculture

                 Rural Utilities Service
           Water and Waste Disposal Programs

                     Fiscal Year 2003
                      Assistant Administrator
                  Water and Environmental Programs
                          USDA - RUS
                      Washington, D.C. 20250
                     Telephone:  (202) 720-9583

                  Internet Address: http://www.usda.gov/rus/water/
EPA
832
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                            JUL 1 2 2006

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           United States Department of Agriculture

                          Rural Utilities Service

                    Water and  Waste Disposal Programs
      The Rural Utilities Service (RUS), the Rural Business-Cooperative Service, and the Rural
Housing Service comprise USDA's Rural Development mission area. As the name suggests, the three
agencies' programs are designed to meet the needs of people who live in rural areas - including
infrastructure, housing, health and medical, education, and employment. The Rural Utilities Service's
Water Programs Division has four programs which provide financial and technical assistance for
development and operation of safe and affordable water supply systems and sewage and other forms of
waste disposal facilities:

     Water and Waste Disposal Loans and Grants

     Emergency Community Water Assistance Grants

     Technical Assistance and Training Grants

      Solid Waste Management Grants

These programs are administered by USDA Rural Development offices. There are 47 State Offices, as
well as Local or Area Offices. Brief descriptions of the programs are provided below.


                   WATER AND WASTE DISPOSAL LOANS AND GRANTS1

       RUS provides loans, guaranteed loans, and grants for water, sewer, storm water, and solid waste
disposal facilities in cities and towns up to 10,000 people and rural areas with no population limits.

Who May Receive Assistance?

       <      Recipients must be public entities. These can include municipalities, counties, special
              purpose districts, Indian tribes, and corporations not operated for profit, including
              cooperatives. A new entity may be formed to provide the needed service if an appropriate
              one does not already exist.


             Applicants must:
        1 Authorized by Section 306 of the Consolidated Farm and Rural Development
 Act, as amended (7 U.S.C. 1926).
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               (1)     Be unable to obtain needed funds from commercial sources at reasonable rates and
                      terms.

               (2)     Have the legal capacity to borrow and to repay loans, to pledge security for loans,
                      and to operate and maintain the facilities.

               (3)     Propose facilities that are consistent with any development plans of the State,
                      multijurisdictional area, counties, or municipalities where the project is to be located.
                      All facilities must comply with Federal, State, and local laws, including those
                      involving zoning regulations, health and sanitation standards, and water pollution
                      control.

       4>      Grants may be provided when necessary to reduce user costs to a reasonable level. They
               may cover a maximum of 75 percent of eligible facility development costs.

       *      Loan guarantees may be available for up to 90 percent of any eligible loss incurred by the
               lender. Lenders pay a 1 percent guarantee fee. which may be passed on to the loan
               recipient.

       <      Direct loans and/or grants have been set aside for:

                  Communities along the U.S.-Mexico border designated as "colonies."
                  Areas designated Empowerment Zones/Enterprise Communities and Rural Economic
                   Area Partnership Zones.
                  Certain projects where at least 50 percent of the users of the facility/project are Native
                   Americans.
                  Rural Alaskan villages.
               4   Water emergencies and disaster relief.

How May Funds be Used?

       *      Loan and grant funds may be used to:

               (1)      Construct, repair, modify, expand, or otherwise improve water supply and
                       distribution systems and waste collection and  treatment systems, including storm
                       drainage and solid waste disposal facilities. Certain other costs related to
                       development of the facility may also be covered.

               (2)      Acquire needed land, water sources, and water rights.

               (3)      Pay costs such as legal and engineering fees when necessary to develop the
                       facilities.

What are the Loan  Terms?

       <      The law authorizing the program allows a maximum repayment period of 40 years.
               However, the repayment period cannot exceed the useful life of the facilities financed or any
               statutory limitation on the applicant's borrowing authority.
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What is the Interest Rate?
              Three interest rates are used. They are set periodically based on an index of current market
              yields for municipal obligations.  The most current rates are available on the RUS Water and
              Environmental Programs Home Page on the Internet at http://www.usda.gov/rus/water/.

              (1)     Poverty Rate - The poverty interest rate is currently 4.5 percent  The poverty rate
                      applies when

                      (a) the primary purpose of the loan is to upgrade existing facilities or construct new
                          facilities required to meet applicable health or sanitary standards; and

                      (b) the median household income (MHl) of the service area is below the poverty
                          line for a family of four2 or below 80 percent of the Statewide Nonmetropditan
                          MHl (SNMHI).

               (2)     Market Rate - The market rate is set quarterly based on the average of the 'Bond
                      Buyer" 11-Bond Index over a four week period prior to the beginning of the quarter.
                      It applies to loans for projects where the MHl of the service area exceeds the
                      SNMHI.

               (3)     Intermediate Rate - The intermediate interest rate is the poverty rate plus half of
                      the difference between the poverty rate and the market rate, but not to exceed 7
                      percent. It applies to loans that do not meet the criteria for either the poverty rate or
                      the market rate.

               Borrowers may choose the interest rate in effect on the date of loan approval or on the date
               of loan closing.
 Is Collateral Required?
                Loans are secured so as to adequately protect the Government's interest.  Bonds or notes
                pledging taxes, assessments, or revenues may be accepted if they meet statutory
                requirements. A mortgage or other lien may also be taken on the applicant's property when
                State laws permit
 Where Should Applications be Filed?

         <      Applications may be filed with the USDA Rural Development office serving the applicant's
                area. Detailed information and applications are available through USDA Rural Development
                State, Local, and Area Offices.   State Office locations and telephone  numbers may be
                obtained from the office of the Assistant Administrator, Water and Waste, at (202) 720-9583.
                They are also available on the Internet.

 What Should Be Included in an Application?

         *      Primary Documents:


    2 As defined in Section 673 (2) of the Community Services  Block Grant Act (42 U.S.C.
  9902(2)).
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              (1)     Form SF 424, "Application for Federal Assistance (For Construction).'

              (2)     State intergovernmental review comments and recommendations (Clearinghouse
                     Comments).  For States without a Clearinghouse, the USDA Rural Development
                     office will instruct the applicant on the appropriate process.

              (3)     Supporting  documentation  needed  to  determine eligibility, such  as  financial
                     statements, audits, organizational  documents, existing debt instruments,  and
                     engineering reports. Applicants will be advised what documentation is necessary.

Funds Available.
                                                             FY2003

    *            Direct Loans                            $797,667,000
    *            Guaranteed Loans                        $75,000,000
    *            Grants                                 $425,000,000
                        Emergency Community Water Assistance Grants

       Emergency Community Water Assistance Grants may be available to rural communities when
disaster strikes.  Congress may appropriate funds for the program after a flood, earthquake, or other disaster
if Federal assistance is warranted.

Who May Receive Assistance?

       *      Applicants must demonstrate that a significant decline in quantity or quality of water occurred
               within two years of the date the application was filed with RUS.

       <      Public bodies and nonprofit corporations serving rural areas, including cities or towns whose
               population does not exceed 10,000 people may be eligible. Public bodies include Indian
               Tribes on Federal and State reservations and other Federally recognized Indian Tribal
               groups.

How May Grant Funds  be Used?

       4      Funds may be used to:

               (1)     Extend, repair, or perform significant maintenance on existing water systems;
                      construct new water lines, wells or other sources of water, reservoirs, and treatment
                      plants; replace equipment; and pay costs  associated with connection or tap fees.
               (2)    Pay related expenses such as legal and engineering fees and environmental impact
                      analyses, or acquire-rights associated with developing sources of, treating, storing,
                      or distributing water.

               (3)     Achieve compliance with the requirements of the Federal Water Pollution Control
                      Act (33 U.S.C. I et seq.) or with the Safe Drinking Water Act when noncompliance is
                      directly related to a recent decline in quality of potable water.
    3 Authorized by Section 306A of the Consolidated Farm and Rural Development Act,
 as amended (7 U.S.C. 1926a)


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What is the Maximum Grant?

       <     Grants made to alleviate a significant decline in quantity or quality of water available from
              the water supplies in rural areas that occurred within two years of filing an application
              with the Agency cannot exceed $500,000.

       <     Grants made for repairs, partial replacement, or significant maintenance on an
     ,         established system to remedy an acute shortage or significant decline in the quality or
              quantity of potable water cannot exceed $75,000.

       *     Subject to the above limitations, grants may be made for 100 percent of eligible project
              costs.

Where Should Applications be Filed?

       *     Applications are filed with any USDA Rural Development State or District office.

What Should be Included in an Application?

       *     Primary Documents:

              (1)     Form SF 424, "Application for Federal Assistance (For Construction}."

               (2)     State Intergovernmental Review.

               (3)     Supporting  documentation  which  includes a  preliminary  engineering report,
                      population and median household  income of the service area,  nature of the
                      emergency that caused the problems associated with the project, and evidence that
                      the significant decline in quantity or quality  of water occurred within two years of
                      filing the application.

        *      Funds Available.  FY 2003 - $21.700,000
                            Technical Assistance and Training Grants
        Technical Assistance and Training Grants are made available from at least one percent and not
 more than three percent of the funds appropriated for Water and Waste Disposal Grants.

 Who May Receive Assistance?

        <     Private nonprofit organizations may receive grants. They must have tax exempt status
               granted by the Internal Revenue Service (IRS).

        <     Applicants must have the proven ability, background, experience, legal authority, and actual
               capacity to provide technical assistance and/or training to associations.5
    4 Authorized by Section 306 (a)(14) of the Consolidated Farm and Rural
 Development Act, as amended (7 U.S.C. 1926 (a)(14)).

    5 An association is an entity, including a small city or town, that is potentially eligible
 for water and waste disposal assistance under 7 CFR 1942.17 or 1942.356.
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How May Grant Funds be Used?
       *     Funds may be used to:
              (1)     identify and evaluate solutions to water and/or waste related problems of
                      associations in rural areas.
    i
              (2)     Assist entities with preparation of applications for Water and Waste Disposal loans
                      and grants.
              (3)     Provide training to association personnel in order to improve the management,
                      operation and maintenance of water and/or waste disposal facilities.
              (4)     Pay expenses related to providing the technical assistance and/or training.
What is the Maximum Grant?
        <      Grants may be made for up to 100 percent of eligible project costs.
When Should Applications be Filed?
        *      Preapplications must be filed between October 1 and December 31 of each fiscal year.
Where Should Applications be Filed?
        <      Applicants proposing to provide technical assistance  and/or training in only one State will
               apply through the appropriate USDA Rural Development State Office.
              Applicants proposing to provide technical assistance and/or training in more than one State
               will apply through the Administrator, RUS, Washington, D.C. 20250.
What Should Be Included in an Application?
        <      Primary documents include:
               (1)     SF 424, "Application for Federal Assistance (For Non-construction)."
               (2)     Evidence of applicant's legal existence and authority.
               (3)     Evidence of tax exempt status from the Internal Revenue Service.
               (4)     Narrative of the proposed  technical assistance  and/or training  services to  be
                       provided, method for  selecting association(s) to receive the service, applicant's
                       experience, service area, related costs, applicant's financial information, etc.
 Funds Available.       *      FY2003 - 518,213,835
                                                -.-L Headquarters Library
                                                 y'ail code 3404T
                                                -^nsylvania Avenue NW
                                                ^hinqton, DC 20460
                                                   'fi?-566-0556
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                               Solid Waste Management Grants
       Solid Waste Management Grants are made available from an amount which is usually stipulated by
Congress when it appropriates funds for Water Programs Grants.

Who May Receive Assistance?

       *     Private nonprofit organizations that have been granted tax exempt status by the IRS and
              public bodies, including local government-based multJ-jurisdictional organizations, may be
              eligible for assistance.

       4>     Applicants must have proven ability, background, experience, legal authority, and actual
              capacity to provide the proposed services.

How May Grant Funds be Used?

       *     Funds may be used to:

              (1)    Evaluate landfill conditions to determine threats to water resources.

              (2)    Provide technical assistance and/or training to help communities reduce the solid
                     waste stream; enhance operator skills in operation and maintenance of active
                     landfills, or assist operators of landfills which are closed, or will be closed soon, with
                     the development and implementation of the plans for closing and future land use.

What is the Maximum Grant?

        >      Grants may be made for up to 100 percent of eligible project costs.

Where Should Applications be Filed?

        *      Applicants proposing to provide technical assistance and/or training in only one State will
               apply through the appropriate USDA Rural Development State office.

              Applicants proposing to provide technical assistance and/or training in more than one State
               will apply through the Administrator, RUS, Washington, D.C. 20250.

What Should be Included in an Application?

        *      Primary documents include:

               (1)     SF 424, "Application for Federal Assistance (For Non-Construction)."

               (2)     Evidence of applicant's legal existence and authority.

               (3)     Evidence of tax exempt status from the IRS.
    6 Authorized by Section 310B(b) of the Consolidated Farm and Rural Development
 Act, as amended (7 U.S.C.  1932).
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              (4)     Narrative of the proposed  technical -assistance and/or  training  services to be
                     provided, method for selecting association(s) to receive  the services, applicant's
                     experience, service area, related costs, applicant's financial information, etc.
Funds Available.

       *     FY2003 -  $3,500,000
                   Where Can Additional Information or Material Be Obtained?
       <      Forms, documents, and information may be obtained from any of the 47 USDA Rural
               Development State, Local, or Area Offices, USDA Service Centers, or the Administrative
               Services Division, RUS, Washington, D.C. 20250.

       *      Any questions can be answered by the State Director, USDA Rural Development, or by the
               Water Programs Division, Washington, D.C. at (202) 720-9583.

       *      A considerable amount of information is available on the Water Programs Internet home
               page. The address is:

                              http://www.usda.gov/rus/water/
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