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The Agency plans to consolidate and update three regulations governing Community Facilities Loans and Grants programs, 7 CFR part 1942, subparts A and C, and 7 CFR part 3570, subpart B, into a new regulation, 7 CFR part 3570, subpart A. This new regulation will be used to administer the Community Facilities Direct Loan and Grant programs as well as incorporate the Tribal College and Economic Impact Initiative Grant programs. The existing regulations in 7 CFR part 1942, subparts A and C, and 7 CFR part 3570, subpart B, will be removed as obsolete. The final rule includes the following: remove references to the RUS water and waste disposal program, which was moved to 7 CFR part 1780 in 1997, and update scoring priorities to reflect current needs in rural America; incorporate information from staff instructions and guidance that have been renewed and republished for many years; make preapplications optional for small projects ($500,000 or less); clarify and coordinate applicant and project eligibility requirements among the Community Facilities Guarantee, Direct, and Grant regulations; update the regulation to reflect recent legal opinions/determinations; update audit requirements in accordance with the latest OMB directives; and add "Exception Authority” to allow for the granting of exceptions by the RHS Administrator to portions of regulations that are not statutory. The granting of exceptions is allowed in other rural development regulations under well-defined and very controlled circumstances. We will also add language implementing the 2018 Farm Bill to include priority for projects that provide substance abuse prevention, treatment, and recovery services; and to allow as an eligible loan purpose the refinancing of certain rural hospital debt.

Statement of Need:

The Rural Housing Service will consolidate and update three regulations governing Community Facilities Loans and Grants programs, into a new regulation, 7 CFR 3570, subpart A. This new regulation will be used to administer the Community Facilities Direct Loan and Grant programs as well as incorporate the Tribal College and Economic Impact Initiative Grant programs. The new regulation will incorporate current lending practices, priorities, and statutes and will provide the public and the Agency with one concise regulation for processing Community Facilities Loans and Grants. This is expected to result in a more consistent, effective, and efficient application process and customer experience. For more information on this rule, see RIN 0575-AC91.

Summary of the Legal Basis:

This regulatory action is not required by statute or court order; however, the underlying statutes authorizing these policies are the Consolidated Farm and Rural Development Act, 7 USC 1926 et seq and sections 6101 and 6103 of the Agriculture Improvement Act of 2018.

Alternatives:

The alternative is to continue operating under the current existing regulations for these programs. This option would not allow us the opportunity to implement those items included in the Agriculture Improvement Act of 2018. The regulation will meet all the statutory and other requirements necessary to have an effective application process.

Anticipated Costs and Benefits:

The consolidation of the three regulations, incorporating the Tribal College and Economic Impact Initiative programs, and updates to current lending practices, priorities, and statutes will provide the public and the Agency with one concise regulation for processing Community Facilities Loans and Grants. This is expected to result in a more consistent, effective, and efficient application process. It will also allow the borrower and staff to find information more quickly.  

There are no expected long-term costs associated with this proposed action as it will incorporate staff guidance that has been issued and re-issued for many years. Implementation provisions of the Agriculture Improvement Act of 2018 are in line with current program regulations assigning priority points, determining the rural population, and evaluating project feasibility and security no cost impact identified. There is some potential savings expected from eliminating the preapplication process and providing an optional preliminary eligibility review. The annual effect on the economy is estimated at less than $100 million per year and there is no adverse impact on the economy.