[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: 7CFR1781.9]

[Page 1079]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1781--RESOURCE CONSERVATION AND DEVELOPMENT (RCD) LOANS AND WATERSHED (WS) LOANS AND ADVANCES--Table of Contents
 
Sec. 1781.9  Security, feasibility, evidence of debt, title, insurance and other requirements.

    (a) Security. WS loans, WS advances, and RCD loans will be secured 
in accordance with applicable provisions of Sec. 1780.14 of this 
chapter.
    (b) Feasibility. All projects financed under the provisions of this 
part must be based on taxes, assessments, revenues, fees, or other 
satisfactory sources in an amount that will provide for facility 
operation and maintenance, a reasonable reserve, and payment of the 
debt. The Rural Development State Director may obtain needed assistance 
in determining economic feasibility from officials of NRCS and other 
appropriate USDA agencies. See Sec. 1780.7(f) of this chapter for 
applicable economic feasibility requirements and feasibility reports.
    (c) Notes, bonds, and bond transcript documents. See subpart D of 
Part 1780 of this chapter for applicable requirements and provisions.
    (d) Insurance. See Sec. 1780.39(g) of this chapter for requirements.
    (e) National flood insurance. The requirements of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4001 et seq.) as amended by the Flood 
Disaster Protection Act of 1973 (42 U.S.C. 4003 et seq.) will be 
complied with in accordance with applicable provisions of RD Instruction 
1901-L. Also see Sec. 1780.39(g) of this chapter.
    (f) Borrower contracts and bonds. See subpart C of Part 1780 of this 
chapter for applicable provisions.
    (g) Title requirements. (1) Title evidence for land, easements, and 
rights-of-way to be acquired with proceeds of loans or advances will be 
furnished by the sponsoring local organization in accordance with NRCS 
policies and procedures.
    (2) RUS will specify and approve the form and content of instruments 
for conveying title to or interest in real estate on which a lien will 
be taken to secure a WS loan, WS advance, or RCD loan. These should be 
consistent with the applicable provisions of Sec. 1780.14 of this 
chapter. The Rural Development State Director will make his decision 
after consultation with the Regional Attorney and the State 
Conservationist. He will notify NRCS in writing of his decision. 
Thereafter, title clearance will be completed under NRCS regulations 
except that a marketable title must be obtained on any tract of land, a 
part of which will be sold as excess land in accordance with 
Sec. 1781.6(a)(9). In addition to the title evidence required by NRCS, 
applicants will furnish an opinion of legal counsel on all land and 
interest in land acquired with loan or advance funds.
    (h) Purchasing lands, rights and facilities. The amounts paid for 
lands, rights, and facilities with loan funds will be not more than that 
determined to be reasonable and fair by the loan approval official based 
upon an appraisal of the current market value made by an Rural 
Development employee or an independent appraiser.
    (i) Water rights. Applicants will be required to comply with 
applicable State and local laws and regulations governing appropriating, 
diverting, storing and using water, changing the place and manner of use 
of water, and in disposing of water. All of the rights of any landowner, 
appropriator, or user of water from any source will be fully honored in 
all respects as they may be affected by facilities installed with WS 
loans and advances and RCD loans. If, under the provisions of State law, 
notice of the proposed diversion or storage of water by the applicant 
may be filed, the applicant will be required to file such a notice. An 
applicant must furnish evidence to provide reasonable assurance that its 
water rights will be or have been properly established, will not 
interfere with prior vested rights, will likely not be contested or 
enjoined by other water users or riparian owners, and will be within the 
provisions of any applicable interstate compact.