[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: 7CFR1780.7]

[Page 1033-1034]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1780--WATER AND WASTE LOANS AND GRANTS--Table of Contents
 
              Subpart A--General Policies and Requirements
 
Sec. 1780.7  Eligibility.

    Facilities financed by water and waste disposal loans or grants must 
serve rural areas.
    (a) Eligible applicant. An applicant must be:
    (1) A public body, such as a municipality, county, district, 
authority, or other political subdivision of a state, territory or 
commonwealth;
    (2) An organization operated on a not-for-profit basis, such as an 
association, cooperative, or private corporation. The organization must 
be an association controlled by a local public body or bodies, or have a 
broadly based ownership by or membership of people of the local 
community; or

[[Page 1034]]

    (3) Indian tribes on Federal and State reservations and other 
Federally recognized Indian tribes.
    (b) Eligible facilities. Facilities financed by RUS may be located 
in non-rural areas. However, loan and grant funds may be used to finance 
only that portion of the facility serving rural areas, regardless of 
facility location.
    (c) Eligible projects. (1) Projects must serve a rural area which, 
if such project is completed, is not likely to decline in population 
below that for which the project was designed.
    (2) Projects must be 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 to the extent practicable.
    (3) Projects must be necessary for orderly community development and 
consistent with a current comprehensive community water, waste disposal, 
or other current development plan for the rural area.
    (d) Credit elsewhere. Applicants must certify in writing and the 
Agency shall determine and document that the applicant is unable to 
finance the proposed project from their own resources or through 
commercial credit at reasonable rates and terms.
    (e) Legal authority and responsibility. Each applicant must have or 
will obtain the legal authority necessary for owning, constructing, 
operating, and maintaining the proposed facility or service and for 
obtaining, giving security for, and repaying the proposed loan. The 
applicant shall be responsible for operating, maintaining, and managing 
the facility, and providing for its continued availability and use at 
reasonable user rates and charges. This responsibility shall be 
exercised by the applicant even though the facility may be operated, 
maintained, or managed by a third party under contract or management 
agreement. Guidance for preparing a management agreement is available 
from the Agency. Such contracts, management agreements, or leases must 
not contain options or other provisions for transfer of ownership.
    (f) Economic feasibility. All projects financed under the provisions 
of this section must be based on taxes, assessments, income, fees, or 
other satisfactory sources of revenues in an amount sufficient to 
provide for facility operation and maintenance, reasonable reserves, and 
debt payment. If the primary use of the facility is by business and the 
success or failure of the facility is dependent on the business, then 
the economic viability of that business must be assessed.
    (g) Federal Debt Collection Act of 1990 (28 U.S.C. 3001 et seq.). An 
outstanding judgment obtained by the United States in a Federal Court 
(other than in the United States Tax Court), which has been recorded, 
shall cause the applicant to be ineligible to receive a loan or grant 
until the judgment is paid in full or otherwise satisfied.

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