Water and Waste Disposal Systems for Rural Communities

To provide basic human amenities, alleviate health hazards and promote the orderly growth of the rural areas of the nation by meeting the need for new and improved rural water and waste disposal facilities.

Related Programs

Examples of Funded Projects

The following areas received funds for specified projects: Construct new water system consisting of water lines, pumping stations, wells, storage tanks and treatment plants; water system improvements consisting of additional water lines, new water treatment facility and booster pump; renovation of existing water system which includes new distribution lines, wells and pressure tanks; construct new waste water collection and treatment systems; replace waste water treatment plant and improve waste water collection lines; rehabilitate waste water collection lines and construct lift station; purchase site for landfill; and purchase trucks and equipment for solid waste disposal.

Agency - Department of Agriculture

Established in 1862, the Department of Agriculture serves all Americans through anti-hunger efforts, stewardship of nearly 200 million acres of national forest and rangelands, and through product safety and conservation efforts. The USDA opens markets for American farmers and ranchers and provides food for needy people around the world.

Office - Consult your local telephone directory for Rural Development local number.

If no listing, get in touch with the appropriate Rural Development State Office listed in Appendix IV of the Catalog.

Program Accomplishments

It is estimated that 800 direct, 2 guaranteed loans, and 700 grants will be made in fiscal year 2007. It is estimated that 900 direct, 2 guaranteed loans, and 800 grants will be made in fiscal year 2008.

Uses and Use Restrictions

Funds may be used for the installation, repair, improvement, or expansion of a rural water facility including distribution lines, well pumping facilities and costs related thereto, and the installation, repair, improvement, or expansion of a rural waste disposal facility including the collection, and treatment of sanitary, storm, and solid wastes.

Grant funds may not be used to pay: interest on loans, operation and maintenance costs, or acqusition or refinancing of an existing system.

No maximum loan amount is established by statute.

The maximum term on all loans is 40 years.

However, no repayment period will exceed any statutory limitation or the organization's borrowing authority or the useful life of the improvement or facility to be financed.

There are currently three interest rates for direct loans: a 4.5 percent rate when the loan is required to meet health or sanitary standards and the median household income of the service area is below the higher of the poverty line or 80 percent of the statewide nonmetropolitan median household income; an intermediate rate halfway between 4.5 percent and market rate if the median household income of the service area is not more than 100 percent of the nonmetropolitan median household income of the State; and a market rate for those applicants that do not qualify for 4.5 percent or the intermediate rate.

The interest rate on guaranteed loans is negotiable between the applicant and the lender.

Eligibility Requirements

Applicant Eligibility

Municipalities, counties, other political subdivisions of a State such as districts and authorities, associations, cooperatives, corporations operated on a not-for-profit basis, Indian tribes on Federal and State reservations and other Federally recognized Indian tribes.

The applicant must: (1) be unable to finance the proposed project from its own resources or through commercial credit at reasonable rates and terms; and (2) have the legal authority necessary for constructing, operating, and maintaining the proposed facility or service, and for obtaining, giving security for, and repaying the proposed loan.

Facilities shall primarily serve rural residents and rural businesses.

The service area shall not include any area in any city or town having a population in excess of 10,000 inhabitants according to the latest decennial census of the United States.

Plans and specifications must be developed to comply with State and local health and pollution regulations and other requirements.

Grants are made only when necessary to reduce the average annual benefited user charges to a reasonable level.

Normally, grants are considered only when the debt service portion of the cost to grant eligible users exceeds the following percentages of median household incomes (MHI) for the applicant service area: 0.5 percent when the MHI of the service area is below the poverty line or below 80 percent (whichever is higher) of the State's non-metropolitan household income (NMHI); 1.0 percent when the NMHI of the service area exceeds the 0.5 percent requirement but is not more than 100 percent of the State's NMHI; no RUS grant funds will be used in any project when the MHI of the service area is above the poverty line and more than 100 percent of the State's NMHI.

The RUS grant may not exceed 75 percent of the eligible project development cost when the MHI of the service area is below the poverty line or below 80 percent (whichever is higher) of the State's NMHI and the project is necessary to alleviate a health or sanitary problem; 45 percent when the MHI of the service area exceeds the 75 percent requirements, but is not more than 100 percent of the State's NMHI.

Assistance is authorized for eligible applicants in rural areas of the United States, Puerto Rico, the Virgin Islands, Guam, Commonwealth of Northern Mariana Islands, American Samoa, and to the extent the Secretary determines feasible and appropriate, the Trust Territory of the Pacific Islands.

Beneficiary Eligibility

Farmers, ranchers, rural residents, rural businesses and other users in eligible applicant areas.


Evidence of legal capacity, economic feasibility and financial responsibility relative to the activity for which assistance is requested. Costs will be determined in accordance with OMB Circular No. A-87 for State and local governments and OMB Circular No. A-122 for nonprofit organizations.

Aplication and Award Process

Preapplication Coordination

The standard application forms furnished by the Federal agency and required by OMB Circular No.

A-102 must be used for this program.

An environmental assessment is required for this program.

This program is eligible for coverage under E.O.

12372, "Intergovernmental Review of Federal Programs." An applicant should consult the office or official designated as the single point of contact in his or her State for more information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review.

Application Procedures

USDA Rural Development (RD) offices administer the program on the local level. Application Form SF-424 is filed at the local RD Office from which assistance may be obtained. This program is subject to the provisions of OMB Circular No. A-110.

Award Procedures

After the application has been reviewed at the local level, it is forwarded to the RD State Director for review and processing instructions. Following completion of application processing requirements and loan/grant approval, funds are made available to the applicant.




Consolidated Farm and Rural Development Act, as amended, Section 306, Public Law 92-419, 7 U.S.C. 1926.

Range of Approval/Disapproval Time

From 30 to 90 days.


If an application is rejected, the reasons for rejection are fully stated. The applicant may request a review of this decision at the RD or RUS National level.


Not applicable.

Assistance Considerations

Formula and Matching Requirements

This program has no statutory formula. Funds are allocated to States based upon rural population, number of households in poverty, and unemployment. This program has no matching requirements.

Length and Time Phasing of Assistance

A time limitation is not specified for the use of RUS loan or grant funds. Funds will be awarded when all RUS requirements are met and the project can be completed on a timely basis. Funds may be advanced on an as needed basis by the RUS to cover expenses for a 30-day period.

Post Assistance Requirements


Periodic reports are to be made to the RD servicing official.


In accordance with the provisions of OMB Circular No. A- 133 (Revised, June 27, 2003), "Audits of States, Local Governments, and Non-Profit Organizations," non federal entities that expend financial assistance of $500,000 or more in Federal awards will have a single or a program-specific audit conducted for that year. Nonfederal entities that expend less than $500,000 a year in Federal awards are exempt from Federal audit requirements for that year, except as noted in Circular No. A-133.


Records and accounts are required to reflect the operations of the facility.

Financial Information

Account Identification

(Loans) 12-4155-0-3-452; (Grants and
Loans) 12-0400-0-1-452.


Direct Loans) FY 07 est $990,000,000; FY 08 est $1,080,236,000; and FY 09 est not reported. (Guaranteed Loans) FY 07 est $75,000,000; FY 08 est $75,000,000; and FY 09 est not reported. (Grants) FY 07 est $349,385,000; FY 08 est. $349,385,000; and FY 09 est not reported. Note: Technical Assistance and Training (TAT) and grants earmarked under Section 306C of the Consolidated Farm and Rural Development Act to Note: Colonias are included in these estimates.

Range and Average of Financial Assistance

(FY 2005) (Direct Loans) $3,400 to $9,999,900; $1,064,000; (Grants) $600 to $8,090,000; $619,000.

Regulations, Guidelines, and Literature

7 CFR 1780, Water and Waste Loans and Grants, 7 CFR 1779, Water and Waste Disposal Program Guaranteed Loans.

Information Contacts

Regional or Local Office

Consult your local telephone directory for Rural Development local number. If no listing, get in touch with the appropriate Rural Development State Office listed in Appendix IV of the Catalog.

Headquarters Office

Assistant Administrator, Water and Environmental Programs, Rural Utilities Service, Department of Agriculture, Washington, DC 20250. Telephone: (202) 690-2670.

Criteria for Selecting Proposals

In selecting applications for funding, the agency cooperates with appropriate State agencies. RUS assistance for water and waste disposal projects will be directed toward truly rural areas and rural communities. Considerations for available funds emphasize such criteria as: Population; low income unemployment; and health and sanitary problems. RUS financed facilities will not be inconsistent with any development plans of the State, multi-jurisdictional area, county, or municipality in which the proposed project is located.

The Social Incubator North, a £2 million incubator fund spearheaded by Sheffield-based Key Fund in collaboration with the four Northern Social Enterprise Partnerships and Locality, is providing 0% interest loans to North of England’s social entrepreneurs.

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Edited by: Michael Saunders

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