[Code of Federal Regulations]
[Title 7, Volume 11]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1780.35]

[Page 1045-1046]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1780--WATER AND WASTE LOANS AND GRANTS--Table of Contents
 
            Subpart B--Loan and Grant Application Processing
 
Sec. 1780.35  Processing office review.

    Review of the application will usually include the following:
    (a) Nondiscrimination. Boundaries for the proposed service area must 
not be chosen in such a way that any user or area will be excluded 
because of race, color, religion, sex, marital status, age, handicap, or 
national origin. This does not preclude construction of the project in 
phases as noted in Sec. 1780.11 as long as it is not done in a 
discriminatory manner.
    (b) Grant determination. Grants will be determined by the processing 
office in accordance with the following provisions and will not result 
in EDU costs below similar system user cost.
    (1) Maximum grant. Grants may not exceed the percentages in 
Sec. 1780.10(c) of the eligible RUS project development costs listed in 
Sec. 1780.9.

[[Page 1046]]

    (2) Debt service. Applicants will be considered for grant assistance 
when the debt service portion of the average annual EDU cost, for users 
in the applicant's service area, exceeds the following percentages of 
median household income:
    (i) 0.5 percent when the median household income of the service area 
is equal to or below 80% of the statewide nonmetropolitan median income.
    (ii) 1.0 percent when the median household income of the service 
area exceeds the 0.5 percent requirement but is not more than 100 
percent the statewide nonmetropolitan household income.
    (3) Similar system cost. If the grant determined in paragraph (b)(2) 
of this section results in an annual EDU cost that is not comparable 
with similar systems, the Agency will determine a grant amount based on 
achieving EDU costs that are not below similar system user costs.
    (4) Wholesale service. When an applicant provides wholesale sales or 
services on a contract basis to another system or entity, similar 
wholesale system cost will be used in determining the amount of grant 
needed to achieve a reasonable wholesale user cost.
    (5) Subsidized cost. When annual cost to the applicant for delivery 
of service is subsidized by either the state, commonwealth, or 
territory, and uniform flat user charges regardless of usage are imposed 
for similar classes of service throughout the service area, the Agency 
may proceed with a grant in an amount necessary to reduce such delivery 
cost to a reasonable level.
    (c) User charges. The user charges should be reasonable and produce 
enough revenue to provide for all costs of the facility after the 
project is complete. The planned revenue should be sufficient to provide 
for all debt service, debt reserve, operation and maintenance, and, if 
appropriate, additional revenue for facility replacement of short-lived 
assets without building a substantial surplus. Ordinarily, the total 
debt service reserve will be equal to one average annual loan 
installment which will accumulate at the rate of one-tenth of the total 
each year.

[62 FR 33478, June 19, 1997, as amended at 64 FR 29946, June 4, 1999]