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The Administrator of the Farmers Home Administration (FmHA) asked whether a cost sharing or matching fund requirement exists under the FmHA Water and Waste Disposal (WWD) Development Grant Program. The WWD authorizing legislation limits a grant to a specific percentage of project development costs while mentioning nothing about where the remaining funds will originate. The Administrator also asked to what extent WWD grant funds may be used to satisfy local match requirements under the Environmental Protection Agency's (EPA) treatment works construction grant program. FmHA argued that no local match was required under the WWD Development Grant Program since neither 7 U.S.C. 1926(a)(2) nor its legislative history sets forth such legislation. GAO disagreed with this contention because, where a statutory provision specifies that the federal contribution to a local project will not exceed a particular percentage, GAO normally interprets it as providing that the remaining portion of the project costs will be funded through a local share made up of funds from non-federal sources. GAO also held that, in the absence of specific statutory authority, federal grant-in-aid funds from one program may not be used to satisfy the local share requirements of another federal grant-in-aid program. Since GAO was unaware of any authority under either the FmHA WWD Development Grant Program or the EPA treatment works construction grant program which would permit grant funds received under one program to be used to satisfy the local share of the other, it disagreed with the FmHA contention that a provision of the Consolidated Farm and Rural Development Act authorizes this use of grant funds. However, GAO conceded that two or more agencies may contribute to the same project provided that the total federal grant payment does not exceed the statutory limit. GAO concluded, in explaining several hypothetical funding arrangements, that FmHA may be able to make a separate grant to an overall project that includes an EPA grant so long as FmHA does not pay for costs that are eligible for assistance under the EPA grant.

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