June 29, 2010

SCHUMER URGES USDA SECRETARY TO REVERSE RULE-CHANGE PREVENTING NY COMMUNITIES FROM ACCESSING FEDERAL RURAL GRANT PROGRAM

At Least 15 Communities Across New York Received Preliminary Eligibility Determination Letters from USDA Only To Have Rules Changed in The Middle of the Game

USDA Started Enforcing Rule Saying Only Communities Under 10,000 People Can Apply for Funding from USDA's Water and Waste Disposal Grant Program - USDA Had Previously Told Communities that Were Slightly Over the Cap that

Today, U.S. Senator Charles E. Schumer announced that he has written a personal letter to the Secretary of the United States Department of Agriculture (USDA), Tom Vilsack, urging him to address a new rule that makes at least 15 communities across New York ineligible for a vital rural development grant program, the Water and Waste Disposal Grant Program, that works to reduce costs for New Yorkers and local governments in rural communities. Schumer's office has been contacted by several communities and knows at least 15 communities that have been affected by the rule change and said that there may be others that have yet to make contact. At issue is a decision by USDA to strictly enforce a rule allowing only communities under 10,000 people to apply for the grant program, as well as a decision by USDA to change the definition of the geographical limits that the 10,000 people have to live in.

For example, in Lysander, NY, the community was told it was eligible to apply for funding because the water district that would receive the funding would be serving fewer than 10,000 people. However, after they had already applied and received a letter telling them they were eligible and would likely receive funding, USDA changed the rules and said that the entire town had to be under 10,000 people, a number that Lysander greatly exceeds. Schumer today asked Vilsack to grandfather in those communities over the population threshold that have already applied to the program this year and have received preliminary eligibility determination letters from the USDA.

"Everyone knows it's unfair to change the rules in the middle of game, but that's exactly what happen did in this situation and it's hurting our rural communities," Schumer said. "It's not right, but can easily be corrected by allowing the communities that have been ruled ineligible to apply under the original rules."

In December, the USDA reversed a long standing tradition that allowed communities just above statutory population levels to apply for the program, making communities that had received funding for the program in previous years allofasudden ineligible. Most stunning is that the USDA did not change the rules of the program until after many towns had applied and received preliminary eligibility determination letters from USDA, which normally all but assures funding. In response to those letters, and in accord with prior experience, communities committed significant resources towards the projects in anticipation of the funding. Today's letter by Schumer is an effort to make sure these communities that received preliminary eligibility determination letters are grandfathered into the program, so they can still be considered for funding from the USDA.

USDA's Water and Waste Disposal Grant Program has helped rural communities all over New York to develop critical water and waste disposal systems. This support has helped reduce water and waste disposal costs down to a reasonable level for rural users, a constituency that is very important to the vitality and success of New York and to the entire country. Prior to 2002, USDA agency regulations defined a rural community as one comprised of a population of less than 50,000 people. When it came to water and waste disposal loans and grants agency regulations were even more specific, limiting applicant eligibility to municipalities with less than 10,000 people.

For years, State USDA offices did not always adhere to the water and waste disposal program population thresholds, allowing communities that exceeded 10,000 people to apply. With this precedent in mind, many New York communities applied for water and waste disposal grant funding. In several cases, communities were given both informal commitments and formal preliminary eligibility determination letters that itemized award dollar amounts and gave communities the impression that they were all but assured to receive financial assistance.

USDA decided in December 2009 to issue a clarification memo requiring all states to follow the program's population statutory requirements and that all those over the population limit are disqualified. More than fifteen communities across New York were told they were eligible to apply, received precommitment letters, and then were later told they were ineligible. Some communities have spent thousands of dollars in preparation for receiving this funding. While a precommitment is not a formal funding commitment, it is inherently unfair to disqualify communities that were at one point told they were eligible, and have been given an indication that they would receive funding.

At least the following communities in New York have been ruled ineligible in the grant program after receiving preliminary eligibility letters:

· Kirkland and Utica in Oneida County

· Cortlandville in Cortland County

· Herkimer in Herkimer County

· Waddington and Massena in St. Lawrence County

· Alden in Erie County

· Sullivan in Madison County

· Arcadia in Wayne County

· Wawarsing in Ulster County

· Kingsbury in Washington County

· Plattsburgh in Clinton County

· Lansing in Oswego County

· Lysander in Onondaga County

· Moreau Flatsville in Saratoga County

Below is a copy of Schumer's letter to Secretary Vilsack

Dear Secretary Vilsack,

I write today to bring to your attention an issue that is adversely affecting at least fifteen communities across the State of New York.

Prior to 2002, USDA agency regulations defined a rural community as one comprised of a population of less than 50,000 people. When it came to water and waste disposal loans and grants agency regulations were even more specific, limiting applicant eligibility to municipalities with less than 10,000 people. In order to ensure that communities that were in fact rural or rural in character, these population restrictions were codified in the 2002 and 2008 farm bills.

For years, state USDA offices did not always adhere to the water and waste disposal program population thresholds, allowing communities that exceeded people 10,000 to apply. With this precedent in mind, many New York communities applied for water and waste disposal grant funding. In several cases, communities were given both informal commitments and formal preliminary eligibility determination letters, letters that itemized award terms and gave communities the impression that they were all but assured to receive financial assistance.

USDA decided in December 2009 to issue a clarification memo requiring all states to follow the program's population statutory requirements and that all those over the population limit are disqualified. More than fifteen communities across New York were told they were eligible to apply, received precommitment letters, and then were later told they were ineligible. These communities in many cases have spent hundreds of thousands of dollars in preparation for receiving this funding. While I recognize that a precommitment is not a formal funding commitment, it is inherently unfair to allow communities to apply if it is known beforehand that they do not meet statutory requirements.

At this time, I respectfully urge that all New York communities that applied to the Water and Waste Disposal Program and received preliminary eligibility determination letters be considered for review.

Thank you for your consideration of this important request. For additional information, please do not hesitate to contact me.

Sincerely,

Charles E. Schumer

United States Senator