USDA Rural Utilities Service — Administration, Delegations, and Appeals

Legal Authority

• 42 U.S.C. § 1480 — Rural housing statutory authority; one of the authorities under which RUS administers community programs
• 7 U.S.C. § 1989 — Emergency loan authority for rural areas; backstop authority for RUS program administration
• 7 U.S.C. § 6991 — Rural development statutory foundation; establishes the rural development mission of USDA's Rural Utilities Service
• 7 CFR Part 1900 — RUS general provisions; delegations of authority, adverse decision appeals, and conflict-of-interest rules
• 7 CFR Part 1962 — Personal property collateral rules; security documentation, default remedies, and auctioneer liability

Key Mechanics

7 CFR Part 1900 governs the internal administration of the Rural Utilities Service — who can make decisions, how borrowers appeal adverse decisions, and how conflicts of interest are handled. Delegation of authority (Subpart A): specific RUS officials hold defined authority to make, insure, service, collect, and enforce loans and grants; only State Directors may sign deeds conveying inventory real property and this authority cannot be sub-delegated (§ 1900.2). Adverse decisions and appeals (Subpart B): when RUS makes an unfavorable decision on a loan, guarantee, or grant for water/waste disposal, housing, community facilities, or rural business programs, the affected party receives written notice and may: (1) request an informal meeting with the agency before appealing; (2) request state-certified mediation (which pauses appeal deadlines); or (3) file a formal appeal with USDA's National Appeals Division (NAD) under 7 CFR Part 11. Existing assistance continues during appeal — RUS may not cut off aid pending review, though administrative offsets are not paused (§ 1900.54). Non-appealable decisions include interest rates set by regulation and denials due to insufficient program funds (§ 1900.56). Conflict-of-interest rules (Subpart D): RUS employees cannot process or approve assistance for themselves, close relatives (defined broadly to include step-relatives and first cousins), or persons with whom they have business/personal ties; applicants must disclose any known relationship with an RUS employee at application; the State Director assigns a neutral processing official at the same organizational level to handle the case (§ 1900.151–1900.156). Personal property collateral (Part 1962): borrowers pledging equipment, vehicles, or other chattel as RUS loan security must comply with documentation requirements; auctioneers who sell RUS-mortgaged property without agency permission are personally liable to the federal government even if state law provides otherwise (§ 1900.102) — a significant enforcement tool.

Current Rule (2026)

What This Rule Does

The Rural Utilities Service administers billions of dollars in loans, grants, and loan guarantees for rural water systems, electric cooperatives, telecommunications infrastructure, and community facilities. Three related Parts govern how RUS manages its own authority internally — who can make decisions, how borrowers can appeal adverse decisions, how personal property used as loan collateral is handled, and how conflicts of interest are managed when RUS employees are related to loan applicants.

• 7 CFR Part 1900 — General provisions: delegations of authority, adverse decisions and administrative appeals, applicable law, and conflict-of-interest rules for RUS employees processing loans to relatives or associates
• 7 CFR Part 1901 — Related instructions from predecessor agencies and cross-references to other program rules
• 7 CFR Part 1962 — Personal property: rules for securing, managing, and disposing of personal property that borrowers pledge as collateral for RUS loans

Delegations of Authority (Part 1900, Subpart A)

• § 1900.1 — These rules cover all property, debts, and programs that RUS manages, including assets inherited from predecessor agencies (Resettlement Administration, Farm Security Administration, emergency crop programs, state rural rehabilitation corporations, and others)
• § 1900.2 — Key RUS officials authorized to act for the agency and the United States in making, insuring, servicing, collecting, or enforcing loans and grants include: Deputy Administrator for Program Operations; State Directors; Assistant Administrators for housing, community, and business programs; Finance Office directors; division directors (water/waste, community facilities, business and industry, housing); acting officials when the named official is absent
  • These officials can place security in trust, foreclose, sell or dispose of real or personal property, accept insurance payments, accelerate debts, settle or write off debts, and sign releases and renewals
  • Only State Directors may sign deeds conveying inventory real property (quitclaim deeds, easements, rights-of-way); this authority cannot be sub-delegated
• § 1900.3 — State, district, and county office employees may carry out authorized program actions within their loan approval limits, including selling or disposing of real and personal property
• § 1900.4 — Ratifies past transfer documents signed by officials of predecessor agencies when signed in the course of administering those agencies' programs
• § 1900.5 — State Directors may reassign cases to different offices within the State RD organization when it will not adversely affect public benefits or rights

Adverse Decisions and Appeals (Part 1900, Subpart B)

• § 1900.51 — Definitions: "Agency" covers RUS, Rural Housing Service (RHS), and Rural Business-Cooperative Development Service (RBS) collectively
• § 1900.52 — USDA staff must follow formal adverse-decision procedures to ensure everyone affected by an unfavorable ruling gets full and complete consideration
• § 1900.53 — Appeals cover: direct loans, loan guarantees, and grants for water and waste disposal, housing, community facilities, and rural business programs; decisions made by outside parties (Davis-Bacon rates, building codes, endangered species determinations) are not appealable through this process
• § 1900.54 — Existing assistance continues during an appeal; RUS may not cut off aid pending appeal, but administrative offsets (recovering money owed) are not paused
• § 1900.55 — When RUS makes an adverse decision, it must notify the affected party and indicate whether the decision is appealable; the party may request an informal meeting with the agency before filing a formal appeal to the National Appeals Division (NAD) under 7 CFR Part 11; state-certified mediation is available for appealable decisions and pauses appeal deadlines
• § 1900.56 — Non-appealable decisions include: interest rates set by regulation, refusals to request administrative waivers, and denials due to insufficient funds or lack of authority to guarantee

Conflict-of-Interest Rules (Part 1900, Subpart D)

• § 1900.151 — RUS employees must not process or approve assistance for: themselves; family members or close relatives; people with whom they have an immediate working relationship; or people with whom they have business or close personal ties
• § 1900.152 — "Close relatives" includes spouse, children, siblings, parents, grandparents, aunts/uncles, nieces/nephews, grandchildren, first cousins, and step-relatives; "members of family" are blood and in-law relatives in the employee's household
• § 1900.153 — Loan applicants must disclose any known relationship with an RUS employee when applying; employees who discover a relationship must notify the relevant official in writing immediately; the State Director then assigns a neutral processing official
• § 1900.154 — State Directors determine whether a reported relationship creates a conflict requiring special handling
• § 1900.155 — Neutral processing officials must be at the same organizational level as the original processor; if a County Committee would normally decide and the recipient is a committee member, a different County Committee must be used
• § 1900.156 — Special handling: the designated neutral official makes the initial determination, the recipient picks the closing location and agent (absent a clear conflict), and construction inspections are done by the nearest non-conflicted employee

Personal Property Collateral (Part 1962)

When borrowers pledge personal property (equipment, vehicles, livestock, crops) as collateral for RUS loans, Part 1962 governs:

• Proper security documentation and recording requirements for chattel mortgages and security agreements
• RUS's rights when collateral is sold, transferred, or damaged without permission
• Procedures for the agency to take possession of, manage, and dispose of collateral when a borrower defaults
• Rights of auctioneers: under § 1900.102, any auctioneer who sells personal property mortgaged to RUS without permission is personally liable to the government under federal law, even if state law says otherwise — this applies to commission merchants, market agencies, factors, and agents

How It Affects You

Borrowers with RUS loans — water and wastewater systems, electric cooperatives, telecom providers, community facilities — have a right to appeal adverse decisions before they become final. You can request an informal meeting with the agency first, and you can use state-certified mediation. Your existing assistance continues during an appeal. Understanding what decisions are and are not appealable (§ 1900.56) matters before you invest in an appeal process.

Loan applicants must disclose any relationship with an RUS employee when applying. Failure to disclose can create problems later. If you are related to an RUS employee, special handling will be assigned — this is not a denial and cannot itself be appealed.

Borrowers using personal property as loan collateral cannot sell or transfer that property without RUS approval. Selling mortgaged property without permission violates federal law (not just state law), and auctioneers who facilitate unauthorized sales bear personal liability.

RUS employees have strict conflict-of-interest obligations. Even the appearance of a conflict requires disclosure and reassignment. Employees can ask for special handling on their own initiative without negative consequences.

Statutory Authority

This rule implements:

• 42 U.S.C. § 1480 — Authority for rural housing loans and grants under the Housing Act of 1949
• 7 U.S.C. § 1989 — General emergency loan authority for rural programs; source of broad administrative authority
• 7 U.S.C. § 6991 — Rural Development authority under the 1994 USDA reorganization act, consolidating RUS, RHS, and RBS
• 5 U.S.C. § 301 — General agency housekeeping authority

Recent Rulemakings

• 80 FR 9867 (February 2015) — Major update to Parts 1900 and related rules, consolidating administrative procedures and clarifying appeal rights

Pending Action