§1926 1. Water and waste facility financing

(a) Authority

The Secretary of Agriculture shall make loans to individuals or entities who are borrowers under title III of the Rural Electrification Act of 1936 (7 U.S.C. 930 et seq.) (in this section referred to as the "borrower"), to the extent of qualifying applications therefor, to enable such borrowers to provide water and waste facility services in areas served by such borrowers.

(b) Limitation

Loans made under subsection (a) of this section shall not, unless otherwise specified by law, exceed an amount equal to 10 percent of the total amount of insured loans under the Rural Electrification Act of 1936 [7 U.S.C. 901 et seq.] authorized during the fiscal year in which such loan is made for rural electrification and telephone purposes, or $40,000,000, whichever is less. Such limitations shall be in addition to the total amount of insured loans authorized for electrification and telephone purposes.

(c) Priority

In reviewing applications for loans under this section, the Secretary shall consider-

(1) whether the loan is necessary to enable the communities to be served to comply with applicable Federal or State environmental laws;

(2) whether the individuals residing in the area for which service is proposed, and any local government entities, are in favor of the borrower providing such services in the area;

(3) the income, unemployment, and other characteristics of the area to be served;

(4) the degree of deprivation faced by residents of the area to be served as a result of the lack of safe drinking water, adequate water supplies, sewage treatment and other waste disposal facilities;

(5) the impact that the availability of safe water supplies, waste disposal and similar services would be likely to have on enhancing the prospects for economic growth within the area to be served;

(6) the degree to which a loan that may be provided under this subsection is necessary to ensure that water and waste disposal services are available in the area to be served by such loan at costs that do not exceed those charged in other nearby areas;

(7) the impact of the proposed loan on the retention of the property and service territory of the borrower, or in protecting the security given on outstanding loans provided to the borrower; and

(8) whether the water and waste facility projects described in the application will duplicate any existing facilities, and whether the borrower will coordinate its water and waste facility operations with similar operations in the area, including efforts to achieve economies of scale through joint billing, collection, or other operations with nearby systems in order to reduce the costs, improve the operations, or otherwise assist such systems.

(d) Coordination

(1) Other programs and requirements

(A) Other programs

The Secretary shall ensure that the program established under this section is coordinated with the programs authorized and established under section 1926 of this title, and will attempt to coordinate the lending activities under this section with similar activities conducted by other entities.

(B) Requirements

Loans made under this section shall be subject, in the same manner as loans made under section 1926 of this title, to the provisions of paragraphs (9) and (10) of section 1926(a) of this title (which require approvals by State water pollution control agencies), subparagraphs (A) and (B) of section 1926(a)(19) of this title (which include certain requirements in connection with the technical design and choice of materials for water and waste systems), and section 1926(b) of this title (which concerns the curtailment or limitation of service).

(2) Prohibition on limiting access

The Secretary shall establish rules and procedures that prohibit borrowers from conditioning or limiting access to, or the use of, any water and waste facility services that are financed under this section. Such rules and procedures shall be based on whether individuals or entities in the area for which such facility is proposed receive, or will accept, electric service from such borrower.

(e) Terms

(1) In general

Loans made under this section shall be for the same repayment period as insured loans made by the Administrator of the Rural Electrification Administration to such borrowers under title III of the Rural Electrification Act of 1936 (7 U.S.C. 930 et seq.) and interest rates on loans made under this section shall not exceed 5 percent.

(2) Interest rate

The Secretary shall determine the interest rate to be charged on loans made under this section on the basis of-

(A) ensuring that the cost to consumers for water and waste disposal services financed with loans provided under this section does not, to the extent possible, exceed rates charged in areas that are near the area served by the borrower;

(B) the income and other characteristics of the individuals to be served through the provision of such loans; and

(C) encouraging borrowers to obtain private sector capital, as provided for in subsection (f) of this section, to supplement loans made under this section.

(f) Private sector capital

(1) Matching funds required

The Secretary shall not provide assistance to a borrower under this section unless the borrower has made a commitment to the Secretary, and demonstrates to the Secretary that the borrower is able, to invest from its own funds an amount equal to the amount of assistance to be so provided.

(2) Interest rate reduction authorized

In order to facilitate the obtaining of private sector capital, the Secretary may, on a case-by-case basis, reduce the interest rate on loans provided under this section when such reduction is appropriate and will enable the borrower to obtain such private capital.

(g) Appropriations

The Secretary may make loans under this section to the extent provided for in appropriations Acts, except that during any fiscal year the amount of such loans, unless otherwise provided by law, shall not exceed 10 percent of the amount authorized for all insured loans under title III of the Rural Electrification Act of 1936 (7 U.S.C. 930 et seq.), or $40,000,000, whichever amount is less. Funds appropriated under this subsection shall remain available until expended.

(h) Repayment

Appropriations made for purposes of this section shall be placed in a separate account. Advances on loans made under this section shall be made from such account, and payments on such loans shall be returned to the account for use by the account in making advances on future loans.

(i) Full use

(1) In general

Subject to paragraph (2) and any other limitations that may be imposed by law, during each fiscal year the Secretary shall undertake all reasonable efforts to make full use of any funds held by the account established under subsection (h) of this section.

(2) Ceiling on loans

During any particular fiscal year the aggregate amount of the loans the Secretary may make under this section, from amounts in the account established under subsection (h) of this section that are not attributable to repayments, shall be the lesser of-

(A) 10 percent of the amount of loans made under title III of the Rural Electrification Act of 1936 (7 U.S.C. 930 et seq.) during the fiscal year; or

(B) $40,000,000.

(j) Replenishment of water and waste facility fund

(1) Calculation of total amount of loans

At the end of each fiscal year the Secretary shall calculate-

(A) the total amount of loans made under this section during such fiscal year; and

(B) the amount of water or waste facility loans made under section 1926 of this title to borrowers described in subsection (a) of this section.

(2) Transfer of amounts

Notwithstanding subsections (g) and (i) of this section, if any amount appropriated under subsection (g) of this section remains available at the end of any fiscal year-

(A) the Secretary shall transfer such available amount to the fund used to make water or waste facility loans under section 1926 of this title, to the extent not exceeding the amount of any loans made under such section 1926 of this title to borrowers under the Rural Electrification Act of 1936 [7 U.S.C. 901 et seq.]; and

(B) any such loan to such borrower made under such section 1926 of this title shall be-

(i) subject to the terms, conditions and other requirements of section 1926a of this title; and

(ii) repaid to the account established by subsection (h) of this section.

(Pub. L. 101 624, title XXIII, §2322, Nov. 28, 1990, 104 Stat. 4010; Pub. L. 102 237, title VII, §702(f), Dec. 13, 1991, 105 Stat. 1880; Pub. L. 103 354, title II, §235(b)(6), Oct. 13, 1994, 108 Stat. 3222.)

References in Text

The Rural Electrification Act of 1936, referred to in subsecs. (a), (b), (e)(1), (g), (i)(2)(A), and (j)(2)(A), is act May 20, 1936, ch. 432, 49 Stat. 1363 , as amended, which is classified generally to chapter 31 (§901 et seq.) of this title. Title III of the Act is classified generally to subchapter III (§930 et seq.) of chapter 31 of this title. For complete classification of this Act to the Code, see section 901 of this title and Tables.

Codification

Section was enacted as part of the Rural Economic Development Act of 1990, and also as part of the Food, Agriculture, Conservation, and Trade Act of 1990, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.

Amendments

1994-Subsec. (d)(2), (3). Pub. L. 103 354 redesignated par. (3) as (2) and struck out heading and text of former par. (2). Text read as follows: "The Secretary shall determine whether the Rural Electrification Administration possesses greater expertise, as compared with the Farmers Home Administration, in the areas of utility accounting, utility management and financial analysis, advice and assistance, and other aspects of utility operations and engineering. If the Secretary determines that the Rural Electrification Administration possesses greater expertise in such areas, the Secretary shall require the Rural Electrification Administration to provide technical assistance, and assist in the processing of applications under this section."

1991-Subsec. (d)(1)(B). Pub. L. 102 237, §702(f)(1), substituted "paragraphs (9) and (10) of section 1926(a) of this title" for "section 1926(a)(9) and 1926(a)(10) of this title" and "subparagraphs (A) and (B) of section 1926(a)(19) of this title" for "sections 1926(a)(19)(A) and (B) of this title".

Subsec. (i)(1). Pub. L. 102 237, §702(f)(2), struck out "and (3)" after "(2)".

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(7) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Section Referred to in Other Sections

This section is referred to in section 6942 of this title.