This bill revises 7 U.S.C. 1926e (Section 306E of the Consolidated Farm and Rural Development Act) to direct the Secretary of Agriculture to provide grants to private nonprofit organizations that will, in turn, make loans and subgrants to individual rural homeowners for the construction, refurbishing, and servicing of individually owned household water wells and household decentralized wastewater systems.
Key programmatic changes: the bill separates aid into subgrants for households with incomes below 60% of the area median nonmetropolitan household income and loans for households with incomes from 60% to 100% of that median (using the most recent decennial census to set the median); it raises an existing statutory dollar amount in subsection (b)(2)(B) from $15,000 to $20,000; it permits subgrants to include funding to cover a performance warranty of at least five years for decentralized wastewater systems; and it extends the program’s statutory term in subsection (d) through 2031. These changes alter who gets free assistance vs loans, add warranty funding that affects contracting and procurement, and shift distribution responsibility to nonprofit intermediaries.
At a Glance
What It Does
The bill authorizes the USDA Secretary to award grants to private nonprofit organizations, which must use those funds to provide subgrants to households under 60% of the median nonmetropolitan income and loans to households between 60% and 100%. It also raises a statutory dollar figure from $15,000 to $20,000, allows subgrants to cover at least 5‑year performance warranties for decentralized wastewater systems, and extends the statutory authorization to 2031.
Who It Affects
Rural homeowners who rely on private wells or on-site decentralized wastewater systems, private nonprofit organizations that will act as intermediaries, rural contractors and system manufacturers who install and service systems, and USDA Rural Development which administers the grant program.
Why It Matters
The bill shifts delivery to nonprofit intermediaries (changing how projects are selected and managed), tightens targeting by income bands based on the decennial census (which affects eligibility over a decade), increases per‑project funding limits, and builds warranty costs into grants — all of which change project economics, contracting, and administrative burdens for implementers.
More articles like this one.
A weekly email with all the latest developments on this topic.
What This Bill Actually Does
The bill rewrites Section 306E so that the Department of Agriculture provides funds to private nonprofit organizations rather than directly to individuals or local governments. Those nonprofits must use the grant money to make either direct subgrants or loans to individual homeowners to build, refurbish, or service their privately owned household water wells and decentralized household wastewater systems.
The shift makes nonprofits the front line: they will decide who receives grants or loans within their service areas and will handle distribution, oversight, and recordkeeping.
Eligibility is split by household income using a simple two‑band rule tied to the most recent decennial census median nonmetropolitan household income for the area: households below 60% of that median can receive subgrants, and households between 60% and 100% can receive loans. That census linkage fixes eligibility to a decennial snapshot rather than a rolling or annually updated metric, so eligibility will remain static until the next census data update.The bill changes a specific dollar figure in the statute from $15,000 to $20,000, affecting the maximum amount referenced in subsection (b)(2)(B).
It also adds an explicit allowance that subgrants for decentralized wastewater systems may include extra funding to purchase a performance warranty that lasts at least five years. Finally, the bill pushes the statutory timeframe in subsection (d) out to 2031.
Practically, implementation will require USDA guidance on what constitutes a nonprofit’s service area, how to document incomes under the census metric, how to structure warranties and warranty claims, and how grants and loans coordinate with state and local funding sources.
The Five Things You Need to Know
The bill makes private nonprofit organizations the recipients of USDA grants and requires those nonprofits to provide loans and subgrants to individual rural homeowners for privately owned household water wells and decentralized wastewater systems.
Subgrants are limited to households whose combined income is under 60% of the median nonmetropolitan household income for the area, as measured by the most recent decennial census.
Loans are available to households with combined incomes between 60% and 100% of the median nonmetropolitan household income for the area, per the most recent decennial census.
The statute’s existing dollar amount in subsection (b)(2)(B) is increased from $15,000 to $20,000.
A subgrant for an individually owned decentralized wastewater system may include funding to cover the cost of a performance warranty lasting at least five years, and the program’s statutory authority is extended through 2031.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Program purpose and grants to private nonprofits
The bill replaces the prior section heading and subsection (a) to make clear that the Secretary may award grants to private nonprofit organizations for the specific purpose of enabling those organizations to make loans and subgrants to individuals. That change recasts the federal role from one of direct assistance to one of funding intermediaries, which concentrates selection, oversight, and distribution responsibilities with nonprofits that have a stated service area.
Income-based split between subgrants and loans
Subsection (b)(1) now requires nonprofits to target subgrants to households under 60% of the median nonmetropolitan household income and loans to households at 60%–100% of that median, using the most recent decennial census for the income metric. This creates a clearly defined binary eligibility framework that will be administrable but tied to decennial data rather than annual updates, which has implications for how many households qualify over time and how nonprofits verify eligibility.
Higher per‑project dollar figure and warranty funding
The bill changes a numeric cap in subsection (b)(2)(B) from $15,000 to $20,000 — a straightforward statutory increase that raises the ceiling for the referenced award or cost item. It also adds paragraph (5), which permits a subgrant for a decentralized wastewater system to include additional funds specifically to cover the cost of a performance warranty of at least five years. Administratively, USDA and nonprofits will need to define acceptable warranty terms, who backs the warranty, and how warranty claims are processed and enforced.
Program authorization extended
The bill amends subsection (d) to change the year '2023' to '2031,' effectively extending the statute’s operative or authorization period. This is a textual update that preserves the program in law through 2031, but it does not itself appropriate funds — implementation still depends on appropriations and USDA program guidance.
This bill is one of many.
Codify tracks hundreds of bills on Infrastructure across all five countries.
Explore Infrastructure in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Low‑income rural homeowners (income <60% of area median): They become eligible for subgrants to build, refurbish, or service private wells and decentralized wastewater systems without taking on loan obligations.
- Moderate‑income rural homeowners (60%–100% of area median): They gain access to loans designed for households above the subgrant threshold, potentially reducing upfront costs for system repair or replacement.
- Private nonprofit organizations with rural service capacity: They receive new grant funding and play the central role in identifying beneficiaries, disbursing funds, and managing projects, which can expand their program portfolios and local influence.
- Rural contractors and system suppliers: Increased funding and active grant programs should increase demand for well drilling, septic installation, and system refurbishment, and may create more predictable work through warranty-backed projects.
- Public and environmental health stakeholders: Broader repair and replacement of failing wells and septic systems reduces contamination risks to drinking water and surface/groundwater, improving public health outcomes in targeted communities.
Who Bears the Cost
- USDA / Rural Development: The agency must administer grants to nonprofits, issue guidance, monitor compliance, and oversee warranty standards — work that requires staffing and possibly additional appropriations.
- Nonprofit intermediaries: They will absorb administrative burdens for application processing, income verification, project oversight, reporting, and warranty administration; smaller nonprofits may need capacity-building.
- Contractors and manufacturers: Warranty requirements and the potential for extended liability may raise costs, require insurance or bonding, or change contract terms to account for five‑year performance obligations.
- Federal taxpayers / appropriations: Extending and expanding the program increases potential federal outlays; actual spending depends on annual appropriations decided by Congress.
- Loan recipients (60%–100% income band): Households receiving loans shoulder repayment obligations and associated interest or fees, changing the affordability calculus compared with subgrant recipients.
Key Issues
The Core Tension
The bill balances targeting scarce federal dollars to the poorest rural households and adding protections (warranties, nonprofit oversight) against the need to move funding at scale to address widespread aging well and septic infrastructure; making the program more protective and administratively robust improves quality control but risks slowing deployment and leaving many systems unfunded.
Several implementation and policy tensions arise from the bill’s design choices. First, tying eligibility to the 'most recent decennial census' median nonmetropolitan household income fixes eligibility thresholds for up to ten years; this simplifies administration but risks mis-targeting as local incomes shift between censuses.
Areas that experience rapid income changes or demographic shifts could see many households wrongly categorized as eligible or ineligible for several years.
Second, moving distribution through private nonprofit intermediaries concentrates decisionmaking and can speed local tailoring where capable organizations exist, but it risks leaving service gaps in counties or regions without qualifying nonprofits. Nonprofits will also face new compliance burdens — income verification, project oversight, warranty management — that may require federal capacity building.
The inclusion of warranty funding improves long‑term performance incentives but raises procurement and liability questions: who underwrites the warranty, what triggers a claim, and how are contractors compensated for extended obligations? Finally, the $20,000 statutory figure may still fall short of the full cost of replacing or upgrading complex well or advanced decentralized wastewater systems in some rural geographies, meaning projects may need additional state, local, or private financing to be workable.
Try it yourself.
Ask a question in plain English, or pick a topic below. Results in seconds.