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USDA's Rural Utility Service (RUS) finances rural water and
waste disposal facilities through loans and grants. These
and other water-related programs are included in the Rural
Community Advancement Program.
Key Changes
The $590 million limit on annual authorizations for water
and waste facility grants would be eliminated. This change
allows appropriation levels to rise over current levels for
existing programs.
Funding of $360 million is authorized from Commodity
Credit Corporation for a one-time reduction in the backlog
of qualified, pending applications for grants and loans for
water and waste disposal and emergency community water assistance.
This funding would help RUS programs administer to the growing
list of communities seeking assistance.
A new program of Search Grants is authorized at $51 million
per year to assist very small communities (under 3,000 population)
in preparing feasibility and environmental studies required
to meet water and waste environmental standards.
Summary of Provisions
The authorization for Search Grants covers fiscal years (FY)
2002-07. Before awarding Search Grants to communities, the
State's rural development director would establish and consult
with an Independent Citizens Council, and the State rural
development director would also consult with the State's environmental
protection director. Eligibility requires that the communities
demonstrate inability to obtain sufficient funding from traditional
sources to complete legally mandated feasibility or environmental
studies.
Other newly authorized programs include the following:
- Grants to nonprofits to capitalize revolving loans for
water and waste disposal facilities are authorized at $30
million per year for FY 2002-07. The purpose is to provide
financing for predevelopment costs and short-term costs
for replacement of equipment, small-scale extension services,
or other small capital projects not part of regular operations
and maintenance activities.
- Grants to nonprofit organizations to finance homeowners'
water well systems are authorized at $10 million per year
for FY 2003-07. To be eligible for assistance, individuals
cannot have household incomes above the State nonmetropolitan
median.
Programs reauthorized include the following:
- Grants for water systems of rural and native villages
in Alaska are authorized at $10 million per year for FY
2002-07.
- Grants for Native American tribes are authorized for each
fiscal year. This among includes $30 million for grants,
plus $20 million in grants for Indian tribes as defined
in section 4 of the Indian Self-Determination and Education
Assistance Act, plus $30 million for loans.
- A Rural Water Circuit Rider Program will provide technical
assistance to rural communities and is authorized at $15
million per year, beginning in FY 2003 and continuing each
fiscal year thereafter. RUS already funds a circuit rider
program operated by the National Rural Water Association.
The Emergency and Imminent Community Water Assistance Program
(formerly the Emergency Community Water Assistance Program)
now allows grants to forestall imminent decline in water quality
and quantity, as well as to meet emergency needs of water
systems. Between 3 and 5 percent of the funds appropriated
under section 306(a)(2) of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1926a) will be reserved for this
program until July 1 of each year. In addition, the program
is authorized to receive $35 million per year for FY 2003-07.
Another provision allows for the guarantee of bond-financed
loans for water and waste disposal facilities in the event
the Internal Revenue Service code is modified.
Economic Implications
Water and waste disposal systems play an important role in
rural communities, not only in maintaining a healthy community
and a clean environment but also in providing basic infrastructure
required to develop economically. As more is known about water's
relationship to health, greater investments are required to
ensure a healthy community. However, the per-person cost of
these public investments in water system improvements is relatively
high in rural areas because these areas tend to have small
systems that do not achieve economies of scale. In addition,
rural communities tend to have lower incomes than urban communities,
so they are less able to afford the investments required.
Increased Federal funding of rural water systems should help
to meet the growing public and private demands for safe and
clean water in rural communities.
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