7 USC 1926 - Water and waste facility loans and grants

U.S Code last checked for updates: Apr 30, 2026

§ 1926.

Water and waste facility loans and grants

(a)

In general

(1)

The Secretary is also authorized to make or insure loans to associations, including corporations not operated for profit, Indian tribes on Federal and State reservations and other federally recognized Indian tribes, and public and quasi-public agencies to provide for the application or establishment of soil conservation practices, shifts in land use, the conservation, development, use, and control of water, and the installation or improvement of drainage or waste disposal facilities, recreational developments, and essential community facilities including necessary related equipment, all primarily serving farmers, ranchers, farm tenants, farm laborers, rural businesses, and other rural residents, and to furnish financial assistance or other aid in planning projects for such purposes. The Secretary may also make or insure loans to communities that have been designated as rural empowerment zones or rural enterprise communities pursuant to part I of subchapter U of chapter 1 of title 26, or as rural enterprise communities pursuant to section 766 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999 (Public Law 105–277; 112 Stat. 2681, 2681–37), to provide for the installation or improvement of essential community facilities including necessary related equipment, and to furnish financial assistance or other aid in planning projects for such purposes. The Secretary may also make loans to any borrower to whom a loan has been made under the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.), for the conservation, development, use, and control of water, and the installation of drainage or waste disposal facilities, primarily serving farmers, ranchers, farm tenants, farm laborers, rural businesses, and other rural residents. When any loan made for a purpose specified in this paragraph is sold out of the Agricultural Credit Insurance Fund as an insured loan, the interest or other income thereon paid to an insured holder shall be included in gross income for purposes of chapter 1 of title 26. With respect to loans of less than $500,000 made or insured under this paragraph that are evidenced by notes and mortgages, as distinguished from bond issues, borrowers shall not be required to appoint bond counsel to review the legal validity of the loan whenever the Secretary has available legal counsel to perform such review.

(2)

Water, waste disposal, and wastewater facility grants.—

(A)

Authority.—

(i)

In general.—

The Secretary is authorized to make grants to such associations to finance specific projects for works for the development, storage, treatment, purification, or distribution of water or the collection, treatment, or disposal of waste in rural areas.

(ii)

Amount.—

The amount of any grant made under the authority of this subparagraph shall not exceed 75 per centum of the development cost of the project to serve the area which the association determines can be feasibly served by the facility and to adequately serve the reasonably foreseeable growth needs of the area.

(iii)

Grant rate.—

The Secretary shall fix the grant rate for each project in conformity with regulations issued by the Secretary that shall provide for a graduated scale of grant rates establishing higher rates for projects in communities that have lower community population and income levels.

(B)

Revolving funds for financing water and wastewater projects.—

(i)

In general.—

The Secretary may make grants to qualified private, nonprofit entities to capitalize revolving funds for the purpose of providing financing to eligible entities for—

(I)

predevelopment costs associated with proposed water and wastewater projects or with existing water and wastewater systems; and

(II)

short-term costs incurred for replacement equipment, small-scale extension services, or other small capital projects that are not part of the regular operations and maintenance activities of existing water and wastewater systems.

(ii)

Eligible entities.—

To be eligible to obtain financing from a revolving fund under clause (i), an eligible entity must be eligible to obtain a loan, loan guarantee, or grant under paragraph (1) or this paragraph.

(iii)

Maximum amount of financing.—

The amount of financing made to an eligible entity under this subparagraph shall not exceed—

(I)

$200,000 for costs described in clause (i)(I); and

(II)

$200,000 for costs described in clause (i)(II).

(iv)

Term.—

The term of financing provided to an eligible entity under this subparagraph shall not exceed 10 years.

(v)

Administration.—

The Secretary shall limit the amount of grant funds that may be used by a grant recipient for administrative costs incurred under this subparagraph.

(vi)

Annual report.—

A nonprofit entity receiving a grant under this subparagraph shall submit to the Secretary an annual report that describes the number and size of communities served and the type of financing provided.

(vii)

Authorization of appropriations.—

There are authorized to be appropriated to carry out this subparagraph $15,000,000 for each of fiscal years 2019 through 2023.

(C)

Special evaluation assistance for rural communities and households program.—

(i)

In general.—

The Secretary may establish the Special Evaluation Assistance for Rural Communities and Households (SEARCH) program, to make predevelopment planning grants for feasibility studies, design assistance, and technical assistance, to financially distressed communities in rural areas with populations of 2,500 or fewer inhabitants for water and waste disposal projects described in paragraph (1), this paragraph, and paragraph (24).

(ii)

Terms.—

(I)

Documentation.—

With respect to grants made under this subparagraph, the Secretary shall require the lowest amount of documentation practicable.

(II)

Matching.—

Notwithstanding any other provisions in this subsection, the Secretary may fund up to 100 percent of the eligible costs of grants provided under this subparagraph, as determined by the Secretary.

(iii)

Funding.—

The Secretary may use not more than 4 percent of the total amount of funds made available for a fiscal year for water, waste disposal, and essential community facility activities under this chapter to carry out this subparagraph.

(iv)

Relationship to other authority.—

The funds and authorities provided under this subparagraph are in addition to any other funds or authorities the Secretary may have to carry out activities described in clause (i).

(3)

No grant shall be made under paragraph (2) of this subsection in connection with any project unless the Secretary determines that the project (i) will serve a rural area which, if such project is carried out, is not likely to decline in population below that for which the project was designed, (ii) is designed and constructed so that adequate capacity will or can be made available to serve the present population of the area to the extent feasible and to serve the reasonably foreseeable growth needs of the area, and (iii) is necessary for an orderly community development consistent with a comprehensive community water, waste disposal, or other development plan of the rural area.

(4)

(A)

The term “development cost” means the cost of construction of a facility and the land, easements, and rights-of-way, and water rights necessary to the construction and operation of the facility.

(B)

The term “project” shall include facilities providing central service or facilities serving individual properties, or both.

(5)

Application requirements.—

Not earlier than 60 days before a preliminary application is filed for a loan under paragraph (1) or a grant under paragraph (2) for a water or waste disposal purpose, a notice of the intent of the applicant to apply for the loan or grant shall be published in a general circulation newspaper. The selection of engineers for a project design shall be done by a request for proposals by the applicant.

(6)

The Secretary may make grants aggregating not to exceed $30,000,000 in any fiscal year to public bodies or such other agencies as the Secretary may determine having authority to prepare comprehensive plans for the development of water or waste disposal systems in rural areas which do not have funds available for immediate undertaking of the preparation of such plan.

(7)

Repealed. Pub. L. 107–171, title VI, § 6020(b)(1), May 13, 2002, 116 Stat. 363.

(8)

In each instance where the Secretary receives two or more applications for financial assistance for projects that would serve substantially the same group of residents within a single rural area, and one such application is submitted by a city, town, county or other unit of general local government, he shall, in the absence of substantial reasons to the contrary, provide such assistance to such city, town, county or other unit of general local government.

(9)

Conformity with state drinking water standards.—

No Federal funds shall be made available under this section for a water system unless the Secretary determines that the water system will make significant progress toward meeting the standards established under title XIV of the Public Health Service Act (commonly known as the “Safe Drinking Water Act”) (42 U.S.C. 300f et seq.).

(10)

Conformity with federal and state water pollution control standards.—

No Federal funds shall be made available under this section for a water treatment discharge or waste disposal system unless the Secretary determines that the effluent from the system conforms with applicable Federal and State water pollution control standards.

(11)

Repealed. Pub. L. 113–79, title VI, § 6012(b), Feb. 7, 2014, 128 Stat. 845.

(12)

(A)

The Secretary shall, in cooperation with institutions eligible to receive funds under the Act of July 2, 1862 (12 Stat. 503–505, as amended; 7 U.S.C. 301–305, 307 and 308), or the Act of August 30, 1890 (26 Stat. 417–419, as amended; 7 U.S.C. 321–326 and 328), including the Tuskegee Institute and State, substate, and regional planning bodies, establish a system for the dissemination of information and technical assistance on federally sponsored or funded programs. The system shall be for the use of institutions eligible to receive funds under the Act of July 2, 1862 (12 Stat. 503–505, as amended; 7 U.S.C. 301–305, 307, and 308), or the Act of August 30, 1890 (26 Stat. 417–419, as amended; 7 U.S.C. 321–326 and 328), including the Tuskegee Institute and State, substate, and regional planning bodies, and other persons concerned with rural development.

(B)

The informational system developed under this paragraph shall contain all pertinent information, including, but not limited to, information contained in the Federal Procurement Data System, Federal Assistance Program Retrieval System, Catalogue of Federal Domestic Assistance, Geographic Distribution of Federal Funds, United States Census, and Code of Federal Regulations.

(C)

The Secretary shall obtain from all other Federal departments and agencies comprehensive, relevant, and applicable information on programs under their jurisdiction that are operated in rural areas.

(D)

Of the sums authorized to be appropriated to carry out the provisions of this chapter, not more than $1,000,000 per year may be expended to carry out the provisions of this paragraph.

(13)

In the making of loans and grants for community waste disposal and water facilities under paragraphs (1) and (2) of this subsection the Secretary shall accord highest priority to the application of any municipality or other public agency (including an Indian tribe on a Federal or State reservation or other federally recognized Indian tribal group) in a rural community having a population not in excess of five thousand five hundred and which, in the case of water facility loans, has a community water supply system, where the Secretary determines that due to unanticipated diminution or deterioration of its water supply, immediate action is needed, or in the case of waste disposal, has a community waste disposal system, where the Secretary determines that due to unanticipated occurrences the system is not adequate to the needs of the community. The Secretary shall utilize the Soil Conservation Service in rendering technical assistance to applicants under this paragraph to the extent he deems appropriate.

(14)

Rural water and wastewater technical assistance and training programs.—

(A)

In general.—

(i)

identify, and evaluate alternative solutions to, problems relating to the obtaining, storage, treatment, purification, or distribution of water or the collection, treatment, or disposal of waste in rural areas;

(ii)

prepare applications to receive financial assistance for any purpose specified in paragraph (2) of this subsection from any public or private source;

(iii)

improve the operation and maintenance practices at any existing works for the storage, treatment, purification, or distribution of water or the collection, treatment, or disposal of waste in rural areas;

(iv)

identify options to enhance the long-term sustainability of rural water and waste systems, including operational practices, revenue enhancements, partnerships, consolidation, regionalization, or contract services; and

(v)

address the contamination of drinking water and surface water supplies by emerging contaminants, including per- and polyfluoroalkyl substances.

(B)

Selection priority.—

In selecting recipients of grants to be made under subparagraph (A), the Secretary shall give priority to private nonprofit organizations that have experience in providing the technical assistance and training described in subparagraph (A) to associations serving rural areas in which residents have low income and in which water supply systems or waste facilities are unhealthful.

(C)

Funding.—

Not less than 3 percent and not more than 5 percent of any funds appropriated to carry out paragraph (2) of this subsection for any fiscal year shall be reserved for grants under subparagraph (A) unless the applications, qualifying for grants, received by the Secretary from eligible nonprofit organizations for the fiscal year total less than 3 percent of those funds.

(15)

In the case of water and waste disposal facility projects serving more than one separate rural community, the Secretary shall use the median population level and the community income level of all the separate communities to be served in applying the standards specified in paragraph (2) of this subsection and section 1927(a)(3)(A) of this title.

(16)

Grants under paragraph (2) of this subsection may be used to pay the local share requirements of another Federal grant-in-aid program to the extent permitted under the law providing for such grant-in-aid program.

(17)

(A)

In the approval and administration of a loan made under paragraph (1) for a water or waste disposal facility, the Secretary shall consider fully any recommendation made by the loan applicant or borrower concerning the technical design and choice of materials to be used for such facility.

(B)

If the Secretary determines that a design or materials, other than those that were recommended, should be used in the water or waste disposal facility, the Secretary shall provide such applicant or borrower with a comprehensive justification for such determination.

(18)

In making or insuring loans or making grants under this subsection, the Secretary may not condition approval of such loans or grants upon any requirement, condition or certification other than those specified under this chapter.

(19)

Community facilities grant program.—

(A)

In general.—

The Secretary may make grants, in a total amount not to exceed $10,000,000 for any fiscal year, to associations, units of general local government, nonprofit corporations, Indian Tribes (as defined in section 5304(e) of title 25), and federally recognized Indian tribes to provide the Federal share of the cost of developing specific essential community facilities in rural areas.

(B)

Federal share.—

(i)

In general.—

Except as provided in clauses (ii) and (iii), the Secretary shall, by regulation, establish the amount of the Federal share of the cost of the facility under this paragraph.

(ii)

Maximum amount.—

The amount of a grant provided under this paragraph for a facility shall not exceed 75 percent of the cost of developing the facility.

(iii)

Graduated scale.—

The Secretary shall provide for a graduated scale for the amount of the Federal share provided under this paragraph, with higher Federal shares for facilities in communities that have lower community population and income levels, as determined by the Secretary.

(20)

Community facilities grant program for rural communities with extreme unemployment and severe economic depression.—

(A)

Definition of not employed rate.—

In this paragraph, the term “not employed rate”, with respect to a community, means the percentage of individuals over the age of 18 who reside within the community and who are ready, willing, and able to be employed but are unable to find employment, as determined by the department of labor of the State in which the community is located.

(B)

Grant authority.—

The Secretary may make grants to associations, units of general local government, nonprofit corporations, and Indian tribes (as defined in section 5304 of title 25) in a State to provide the Federal share of the cost of developing specific essential community facilities in rural communities with respect to which the not employed rate is greater than the lesser of—

(i)

500 percent of the average national unemployment rate on November 9, 2000, as determined by the Bureau of Labor Statistics; or

(ii)

200 percent of the average national unemployment rate during the Great Depression, as determined by the Bureau of Labor Statistics.

(C)

Federal share.—

Paragraph (19)(B) shall apply to a grant made under this paragraph.

(D)

Authorization of appropriations.—

There are authorized to be appropriated to carry out this paragraph $50,000,000 for fiscal year 2001 and such sums as are necessary for each subsequent fiscal year, of which not more than 5 percent of the amount made available for a fiscal year shall be available for community planning and implementation.

(E)

Rural broadband.—

Notwithstanding subparagraph (C), the Secretary may make grants to State agencies for use by regulatory commissions in states 1

 So in original. Probably should be capitalized.

with rural communities without local broadband service to establish a competitively, technologically neutral grant program to telecommunications carriers or cable operators that establish common carrier facilities and services which, in the commission’s determination, will result in the long-term availability to such communities of affordable broadband services which are used for the provision of high speed Internet access.

(21)

Community facilities grant program for rural communities with high levels of out-migration or loss of population.—

(A)

Grant authority.—

(i)

that is represented by—

(I)

any political subdivision of a State;

(II)

an Indian tribe on a Federal or State reservation; or

(III)

other federally recognized Indian tribal group;

(ii)

that is located in a rural area (as defined in section 2009 2

 See References in Text note below.

of this title);

(iii)

with respect to which, during the most recent 5-year period, the net out-migration of inhabitants, or other population loss, from the area equals or exceeds 5 percent of the population of the area; and

(iv)

that has a median household income that is less than the nonmetropolitan median household income of the United States.

(B)

Federal share.—

Paragraph (19)(B) shall apply to a grant made under this paragraph.

(C)

Authorization of appropriations.—

(22)

Rural water and wastewater circuit rider program.—

(A)

In general.—

The Secretary shall continue a national rural water and wastewater circuit rider program that—

(i)

is consistent with the activities and results of the program conducted before February 7, 2014, as determined by the Secretary; and

(ii)

receives funding from the Secretary, acting through the Rural Utilities Service.

(B)

Authorization of appropriations.—

There is authorized to be appropriated to carry out this paragraph $25,000,000 for each of fiscal years 2019 through 2023.

(23)

Repealed. Pub. L. 115–334, title VI, § 6601(a)(1)(A), Dec. 20, 2018, 132 Stat. 4775.

(24)

Loan guarantees for water, wastewater, and essential community facilities loans.—

(A)

In general.—

The Secretary may guarantee a loan made to finance a community facility or water or waste facility project in a rural area, including a loan financed by the net proceeds of a bond described in section 142(a) of title 26.

(B)

Requirements.—

To be eligible for a loan guarantee under subparagraph (A), an individual or entity offering to purchase the loan shall demonstrate to the Secretary that the person has—

(i)

the capabilities and resources necessary to service the loan in a manner that ensures the continued performance of the loan, as determined by the Secretary; and

(ii)

the ability to generate capital to provide borrowers of the loan with the additional credit necessary to properly service the loan.

(C)

Use of loan guarantees for community facilities.—

The Secretary shall consider the benefits to communities that result from using loan guarantees in carrying out the community facilities program and, to the maximum extent practicable, use guarantees to enhance community involvement.

(D)

Priority.—

(i)

Water or waste facility.—

The Secretary shall prioritize water and waste facility projects under this paragraph in rural areas with a population of not more than 10,000 people.

(ii)

Community facility.—

Of the funds made available to carry out this paragraph for community facility loan guarantees for a fiscal year the following amounts shall be reserved for projects in rural areas with a population of not more than 20,000 inhabitants:

(I)

100 percent of the first $200,000,000 so made available;

(II)

50 percent of the next $200,000,000 so made available; and

(III)

25 percent of all amounts exceeding $400,000,000 so made available,

except that, to the extent that the Secretary demonstrates that the funds so reserved are not needed to finance a community facility project in such a rural area, the Secretary may use the funds for other community facility projects in accordance with this paragraph.

(25)

Tribal college and university essential community facilities.—

(A)

In general.—

The Secretary may make grants to an entity that is a Tribal College or University (as defined in section 1059c of title 20) to provide the Federal share of the cost of developing specific Tribal College or University essential community facilities in rural areas.

(B)

Federal share.—

The Secretary shall establish the maximum percentage of the cost of the facility that may be covered by a grant under this paragraph, except that the Secretary may not require non-Federal financial support in an amount that is greater than 5 percent of the total cost of the facility.

(C)

Authorization of appropriations.—

There is authorized to be appropriated to carry out this paragraph $10,000,000 for each of fiscal years 2008 through 2023.

(26)

Essential community facilities technical assistance and training.—

(A)

In general.—

The Secretary may make grants to public bodies and private nonprofit corporations (such as States, counties, cities, townships, and incorporated towns and villages, boroughs, authorities, districts, and Indian tribes on Federal and State reservations) that will serve rural areas for the purpose of enabling the public bodies and private nonprofit corporations to provide to associations described in paragraph (1) technical assistance and training, with respect to essential community facilities programs authorized under this subsection—

(i)

to assist communities in identifying and planning for community facility needs;

(ii)

to identify public and private resources to finance community facility needs;

(iii)

to prepare reports and surveys necessary to request financial assistance to develop community facilities;

(iv)

to prepare applications for financial assistance;

(v)

to improve the management, including financial management, related to the operation of community facilities; or

(vi)

to assist with other areas of need identified by the Secretary.

(B)

Selection priority.—

In selecting recipients of grants under this paragraph, the Secretary shall give priority to private, nonprofit, or public organizations that have experience in providing technical assistance and training to rural entities.

(C)

Funding.—

Not less than 3 nor more than 5 percent of any funds appropriated to carry out each of the essential community facilities grant, loan and loan guarantee programs as authorized under this subsection for a fiscal year shall be reserved for grants under this paragraph.

(b)

Curtailment or limitation of service prohibited

(c)

Repealed. Pub. L. 91–606, title III, § 302(2), Dec. 31, 1970, 84 Stat. 1759

(d)

Carryover of unused authorizations for appropriations

(Pub. L. 87–128, title III, § 306, Aug. 8, 1961, 75 Stat. 308; Pub. L. 87–703, title IV, § 401(2), Sept. 27, 1962, 76 Stat. 632; Pub. L. 89–240, § 1, Oct. 7, 1965, 79 Stat. 931; Pub. L. 89–769, § 6(b), Nov. 6, 1966, 80 Stat. 1318; Pub. L. 90–488, §§ 3–5, Aug. 15, 1968, 82 Stat. 770; Pub. L. 91–524, title VIII, § 806(a), Nov. 30, 1970, 84 Stat. 1383; Pub. L. 91–606, title III, § 302(2), Dec. 31, 1970, 84 Stat. 1759; Pub. L. 91–617, § 1(a), Dec. 31, 1970, 84 Stat. 1855; Pub. L. 92–419, title I, §§ 104–112, Aug. 30, 1972, 86 Stat. 658, 659; Pub. L. 91–524, title VIII, § 816(c), as added Pub. L. 93–86, § 1(27)(B), Aug. 10, 1973, 87 Stat. 240; Pub. L. 95–334, title I, §§ 104–107(a), Aug. 4, 1978, 92 Stat. 421, 422; Pub. L. 96–355, § 7, Sept. 24, 1980, 94 Stat. 1174;

cite as: 7 USC 1926