Rural Definitions Used for Eligibility Requirements in USDA Rural Development Programs

Rural Definitions Used for Eligibility Requirements in USDA Rural Development Programs

Rural Definitions Used for Eligibility
April 19, 2023
Requirements in USDA Rural Development
Lisa S. Benson,
Programs
Coordinator
Analyst in Agricultural
The U.S. Department of Agriculture (USDA) Office of Rural Development (RD) administers
Policy
more than 40 programs that support economic and community development in rural

communities. For many of the programs, the definition of rural determines, in part, who is
Maggie McCarty
eligible to apply for the program. Congress has set in statute seven rural definitions to be used to
Specialist in Housing Policy
determine eligible rural areas for different RD programs. Congress established the rural

definitions used in RD programs through the Rural Electrification Act of 1936 (49 Stat. 1367),
Housing Act of 1949 (P.L. 81-171), and Consolidated Farm and Rural Development Act of 1961
Katie Jones
Analyst in Housing Policy
(P.L. 87-128). The Rural Electrification Act of 1936, as amended, includes rural definitions that

are used in RD broadband, electric, and telecommunications programs. The Housing Act of 1949,
as amended, includes the rural definition used in RD housing programs. The Consolidated Farm
Kelsi Bracmort
and Rural Development Act, as amended, includes rural definitions that are used in RD business,
Specialist in Natural
energy, water and waste disposal, and community facilities programs.
Resources and Energy
Policy
Total population is the primary factor used in rural definitions to determine eligible rural areas

for USDA RD programs. The rural definitions provide population thresholds. Areas with
populations at or below the population threshold are considered eligible rural areas, whereas

areas with populations above the threshold are considered non-rural and therefore ineligible
areas. The population thresholds used to determine eligibility vary across programs. In some rural definitions, additional
factors, such as proximity to urban areas, also are used to determine eligible rural areas. In addition, Congress has provided
flexibility within some of the rural definitions to allow communities with certain characteristics to be considered eligible
rural areas even if they do not otherwise meet the rural definitions. Congress has included flexibility for communities through
grandfathering; implementing “rural in character” exceptions; making exceptions for development along highways; and
creating alternative processes for areas in Hawaii, Puerto Rico, and the U.S. territories.
Some issues raised by the rural definitions used in RD programs are (1) changes in population, (2) non-rural projects that
may benefit rural communities, and (3) obstacles to regional planning. Area populations do not necessarily remain consistent
over time. Areas may experience population growth or decline that affects their eligibility for RD programs. In addition,
some projects located in urban or suburban areas may benefit rural communities but are ineligible for RD program funding.
These include projects providing rural businesses access to new markets and funding health clinics that serve rural
communities but are located in non-rural areas. Another issue involving the rural definitions is their impact on regional
planning. The population thresholds for eligibility may make an area ineligible to participate in an RD program that makes
economic sense from a regional perspective. For example, if a group of communities wanted to join together to apply for an
RD water infrastructure loan, then each of the communities must have a population of 10,000 or fewer people. Communities
that do not meet the population threshold would be ineligible for the RD program.
Congress may be concerned about how the following policy issues affect rural definitions: how eligible rural areas may
change due to changes in population over time, the potential benefits of non-rural projects on rural communities, and how
rural definitions that rely on population may impact regional planning.
Congressional Research Service

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Contents
Introduction ..................................................................................................................................... 4
Rural Definitions ............................................................................................................................. 5
The Rural Electrification Act of 1936 ....................................................................................... 5
The Housing Act of 1949 .......................................................................................................... 6
The Consolidated Farm and Rural Development Act of 1961 .................................................. 6
Rural in Character ............................................................................................................... 7
String Exception ................................................................................................................. 8
Programs Without a Rural Requirement ................................................................................... 8
Factors in Rural Definitions ............................................................................................................ 8
Population ................................................................................................................................. 9
Proximity to Urban Areas .......................................................................................................... 9
Grandfathering ........................................................................................................................ 10
Hawaii, Puerto Rico, and U.S. Territories ............................................................................... 10
Policy Considerations for Congress ............................................................................................... 11
Population Changes .................................................................................................................. 11
Non-Rural Projects .................................................................................................................. 12
Regional Planning ................................................................................................................... 12

Tables
Table 1. Eligible Rural Area Definitions for Selected USDA Rural Development
Programs..................................................................................................................................... 14

Contacts
Author Information ........................................................................................................................ 22

Congressional Research Service

link to page 14
Introduction
The U.S. Department of Agriculture (USDA) Office of Rural Development (RD) administers
more than 40 programs that support economic and community development in rural communities.
RD programs issue grants, loans, and loan guarantees to support business development, utility
systems, renewable energy, community facilities, and housing. Congress has limited eligibility for
many of these RD programs to rural areas that do not exceed certain population thresholds and
meeting other criteria.
Congress has established in statute seven rural definitions that primarily use population thresholds
to determine eligible areas for RD programs. USDA staff use these rural definitions to determine
eligible rural areas for the agency’s RD programs. Each type of RD program uses a different rural
definition, with its own population threshold. For example, RD business programs define eligible
rural areas as areas of 50,000 or fewer people, whereas RD utility programs define eligible rural
areas as areas of 10,000 or fewer people. As a result, a community that is considered an eligible
rural area for one RD program may not be considered an eligible rural area for other RD
programs.
Using multiple definitions of rural is not unique to RD. The USDA Economic Research Service
offers six rural definitions that each focus on different factors, such as population, proximity to
urban centers, commuting times to urban and suburban areas, level of natural amenities, and
economic and social characteristics.1 The U.S. Census Bureau also offers a series of rural
definitions, which include population and population density thresholds.2 In some cases, the
Office of Management and Budget’s designation of counties as being outside of metropolitan
statistical areas (referred to as nonmetro areas) is used to identify rural areas.3
Multiple definitions over many programs using a similar term—rural—can create confusion and
generate congressional interest regarding the history, use, and possible exemptions for such
definitions. This report provides an overview of the rural definitions used across RD programs,
factors considered in the definitions, and common issues impacting the definitions. It also
includes some potential policy considerations for Congress concerning rural definitions used in
RD programs. Table 1, located at the end of the report, provides an overview of the rural
definitions used across selected RD programs. The table is organized by program type:
broadband, business, community facilities, energy, housing, and utilities. Although this report lays
out some of the basic concepts used to determine rurality across USDA RD programs, it is not
intended to be an in-depth exploration of the definitions of rural used throughout federal policy.

1 John Cromartie, “Rural Classifications,” U.S. Department of Agriculture (USDA), Economic Research Service (ERS)
website, last updated November 29, 2022, at https://www.ers.usda.gov/topics/rural-economy-population/rural-
classifications.
2 U.S. Census Bureau, “Rural America: How Does the Census Bureau Define Rural?,” U.S. Census Bureau’s ArcGIS
Story Map, at https://arcg.is/0ieX00.
3 For example, “[USDA ERS] researchers and others who analyze conditions in ‘rural’ America most often use data on
nonmetropolitan (nonmetro) areas, defined by the Office of Management and Budget (OMB) on the basis of counties or
county-equivalent units (e.g., parishes, boroughs).” USDA, ERS, “What Is Rural?,” at https://www.ers.usda.gov/topics/
rural-economy-population/rural-classifications/what-is-rural/.
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Rural Definitions
RD uses various definitions of rural to determine eligible rural areas for its programs, as
established in various statutes. These definitions have evolved over time and use factors such as
population and proximity to urban areas to determine whether an area is rural.
The Rural Electrification Act of 1936
The Rural Electrification Act of 1936 (P.L. 81-171), as amended, includes three rural definitions
that apply to RD electric, telecommunications, and broadband programs, respectively.
1. Electric Program Definition. This definition is found in Section 13 of the Rural
Electrification Act of 1936, as amended.
 A rural area is an area with a population of 20,000 or fewer inhabitants, and
any area within a service area of a borrower for which a borrower has an
outstanding Rural Utilities Service (RUS) loan (7 U.S.C. §913).4
2. Telecommunications Program Definition. This definition is found in Section
203b of the Rural Electrification Act of 1936, as amended.
 A rural area is an area in the United States with a population of 5,000 or
fewer inhabitants (7 U.S.C. §924).5
3. Broadband Program Definition. This rural definition is found in Section 601 of
the Rural Electrification Act of 1936, as amended.
 For direct loans and grants, a rural area is an area with a population of
20,000 or fewer inhabitants (7 U.S.C. §950bb).6
 For loan guarantees, a rural area is an area with a population of 50,000 or
fewer inhabitants and not adjacent to a city with a population of over 50,000
inhabitants (7 U.S.C. §950bb).7

4 7 U.S.C. §913(3) states, “the term ‘rural area’ means the farm and nonfarm population of (A) any area described in
section 1991(a)(13)(C) of this title; and (B) any area within a service area of a borrower for which a borrower has an
outstanding loan made under subchapters I through V as of the date of enactment of this paragraph.” 7 C.F.R. §1710.2
provides additional details concerning areas within the service area of Rural Utilities Service (RUS) borrowers. The
regulation states that for borrowers with RUS loans issued after June 18, 2008 (the date of enactment), the “‘rural’
character of an area is determined at the time of the initial loan to furnish or improve service in the area.”
5 7 U.S.C. §924(b) states, “the term ‘rural area’ shall be deemed to mean any area of the United States not included
within the boundaries of any incorporated or unincorporated city, village, or borough having a population in excess of
5,000 inhabitants.”
6 7 U.S.C. §950bb(b)(3)(A) states, “the term ‘rural area’ means any area other than (i) an area described in clause (i) or
(ii) of section 1991(a)(13)(A) of this title; and (ii) in the case of a grant or direct loan, a city, town, or incorporate area
that has a population of greater than 20,000 inhabitants.” 7 U.S.C. 1991(a)(13)(A) states, “the terms ‘rural’ and ‘rural
area’ mean any area other than (i) a city or town that has a population of greater than 50,000 inhabitants; and (ii) any
urbanized area contiguous and adjacent to a city or town described in clause (i).”
7 Ibid.
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The Housing Act of 1949
Section 520 of the Housing Act of 1949 (P.L. 81-171), as amended,8 defines rural for the purposes
of all RD rural housing programs.9 The definition is based on population thresholds and, in some
cases, other characteristics. Specifically, the law defines an area as rural if it is not part of, or
associated with, an urban area, and
 has a population not in excess of 2,500 inhabitants; or
 has a population in excess of 2,500 but not in excess of 10,000, if it is “rural in
character”; or
 has a population in excess of 10,000 but not in excess of 20,000 and (A) is not
contained within a standard metropolitan statistical area;10 and (B) “has a serious
lack of mortgage credit for lower and moderate-income families” (42 U.S.C.
§1490).
Additionally, any area that was deemed rural prior to October 1, 1990, or was deemed a rural area
between 2000 and 2020, retains that designation through the 2030 census, as long as it has a
population not in excess of 35,000; is “rural in character”; and has a serious lack of mortgage
credit for low- and moderate-income families.11
The Consolidated Farm and Rural Development Act of 1961
The Consolidated Farm and Rural Development Act of 1961 (ConAct; P.L. 87-128), as amended,
includes rural definitions to determine eligibility for RD business, energy, water and waste
disposal, and community facilities programs. Section 343(a)(13) of the ConAct includes three
rural definitions: a default definition, a water and waste disposal program definition, and a
community facilities program definition.
1. Default Definition. This definition applies to all existing and new RD programs
unless Congress specifically provides an alternative rural definition. In practice,
this definition applies to many of the RD business and energy programs, as well
as the Community Facilities Program loan guarantees.

8 The definition of rural area was added to the Housing Act of 1949 by the Housing and Urban Development Act of
1965 (P.L. 89-117). The U.S. Code for the rural area definition used in USDA RD housing programs is 42 U.S.C.
§1490.
9 USDA RD’s Rural Housing Service administers more than a dozen rural housing programs that use the same
definition of rural for purposes of eligibility for assistance. For more information, see CRS Report R47044, USDA
Rural Housing Programs: An Overview. Note that the Farm Labor Housing programs (Section 514 and Section 516) do
not base eligibility on rural location and instead base eligibility on employment in agriculture or aquaculture. This
definition was enacted in 1965 and amended numerous times over the years. For example, the original definition
included only two population tiers; made no mention of a lack of access to mortgage credit or “rural in character”; and
initially set at 5,500 the current population threshold of 10,000. The most frequent modifications to the statutory
definition of rural area for the RD rural housing programs have been to provide eligibility to, or grandfather, certain
communities that have had population growth that puts them at risk of losing eligibility for participation in RD rural
housing programs. Some version of the grandfathering provision has been included in response to every decennial
census since 1980.
10 Although the statute references standard metropolitan statistical areas (SMSAs), OMB replaced those designations
with new metropolitan statistical areas (MSAs) in 1990. See U.S. Census Bureau, “Metropolitan Areas,” at
https://www.census.gov/history/www/programs/geography/metropolitan_areas.html.
11 42 U.S.C. §1490.
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 A rural area is an area with a population of 50,000 or fewer inhabitants that
is not adjacent to a city with a population of more than 50,000 inhabitants (7
U.S.C. §1991(a)(13)(A)).12
2. Water and Waste Disposal Program Definition. This definition applies to
water and waste disposal grant and direct loan programs.
 A rural area is an area with a population of 10,000 or fewer inhabitants (7
U.S.C. §1991(a)(13)(B)).13
3. Community Facilities Program Loans and Grants Definition. This definition
applies to community facilities grant and direct loan programs.
 A rural area is an area with a population of 20,000 or fewer inhabitants (7
U.S.C. §1991(a)(13)(C)).14
The ConAct also includes provisions that allow exceptions for some areas that do not otherwise
meet the rural definitions to be considered eligible rural areas for RD programs. These particular
exceptions are allowed only for RD programs that use the default rural definition. In practice, the
exceptions apply primarily to RD business and energy programs. No exceptions are allowed for
RD water and waste disposal programs or RD community facilities programs. There are two
types of exceptions: “rural in character” and string exceptions. The following sections provide
more information about these exceptions.
Rural in Character
Section 343(a)(13)(D) of the ConAct provides authority to the Under Secretary for Rural
Development to grant “rural in character” exceptions to areas that otherwise do not meet the
requirements of the default rural definition. The provision states that the “rural in character”
exception is applicable to
 an area that “has 2 points on its boundary that are at least 40 miles apart” and is
not adjacent to a city with a population of more than 150,000 inhabitants and
 an area within an urbanized area or urban growth area “that is within ¼-mile of a
rural area” (7 U.S.C. 1991(a)(13)(D)(i)(II)).
The provision states that units of local government, the Under Secretary for Rural Development,
and Rural Development State Directors can petition to have an area considered “rural in
character”.15 The Under Secretary for Rural Development makes the final determination and is
not allowed to designate that authority to another entity.16

12 7 U.S.C. §1991(a)(13)(A) states, “the terms ‘rural’ and ‘rural area’ mean any area other than (i) a city or town that
has a population of greater than 50,000 inhabitants; and (ii) any urbanized area contiguous and adjacent to a city or
town described in clause (i).”
13 7 U.S.C. §1991(a)(13)(B) states, “For the purpose of water and waste disposal grants and direct loans provided under
paragraphs (1) and (2) of section 1926(a) of this title, the terms ‘rural’ and ‘rural area’ mean a city, town, or
unincorporated area that has a population of no more than 10,000 inhabitants.”
14 7 U.S.C. §1991(a)(13)(C) states, “For the purpose of community facility direct loans and grants under paragraphs (1),
(19), (20), and (21) of section 1926(a) of this title, the terms ‘rural’ and ‘rural area’ mean any area other than a city,
town, or unincorporated area that has a population of greater than 20,000 inhabitants.”
15 7 U.S.C. §1991(a)(13)(D) and 7 C.F.R. §5001.3.
16 7 U.S.C. §1991(a)(13)(D).
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String Exception
Section 343(a)(13)(E) of the ConAct allows USDA to provide exceptions to areas that do not
meet the requirements of the default rural definition because they are adjacent to string
developments. String developments are narrow areas (i.e., not more than 2 census blocks wide)
that are connected to urban areas. String developments are often the developments that occur
along highways or busy roadways that extend out of urban areas. The provision states that USDA
can consider areas adjacent to string developments to be rural areas.17
The provision does not state which entities can request a string exception for an area. The
provision states that USDA makes the final determination of which areas receive string
exceptions.
Programs Without a Rural Requirement
Some RD programs do not require that service areas be in eligible rural areas. These programs
include some RD business programs, some energy programs, and the Off-Farm Labor Housing
Program. One reason for not having a rural siting requirement for some programs is that there
may be non-rural projects that benefit rural communities. A 2013 USDA report to Congress stated
that Congress did not include rural area eligibility requirements for some RD energy programs
because Congress recognized “that proximity to transportation hubs and consumer markets very
well could make projects far more successful and far more beneficial to farmers, rural
entrepreneurs, and consumers than siting projects solely in rural locations.”18
Six RD programs do not include rural area requirements:
 Biobased Markets Program
 Bioenergy Program for Advanced Biofuels
 Healthy Food Financing Initiative
 High Energy Cost Program
 Off-Farm Labor Housing Program
 Value-Added Producer Grant Program
In addition to the six programs without a rural requirement, two other programs provide awards to
non-rural businesses that meet certain conditions:
 Rural Energy for America Program (REAP)19
 Business and Industry Loan Guarantee Program20
Factors in Rural Definitions
As discussed above, the rural definitions used in RD programs include factors such as population
and proximity to urban areas to determine whether an area is an eligible rural area. In some cases,

17 7 U.S.C. §1991(a)(13)(E) states, “Notwithstanding any other provision of this paragraph, in determining which
census blocks in an urbanized area are not in a rural area (as defined in this paragraph), the Secretary shall exclude any
cluster of census blocks that would otherwise be considered not in a rural area only because the cluster is adjacent to
not more than 2 census blocks that are otherwise considered not in a rural area under this paragraph.”
18 USDA, Report on the Definition of Rural, February 2013, p. 8.
19 7 U.S.C. §8107.
20 7 U.S.C. §1932(g)(6).
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link to page 14
Congress has provided some flexibility in statute to accommodate certain communities that do
not otherwise meet the rural definitions. Provisions in statute provide flexibility through
grandfathering, “rural in character” exceptions, and string exceptions. Provisions are also
included in statute that provide alternative processes for areas located in Hawaii, Puerto Rico, and
the U.S. territories to determine whether they are eligible rural areas.
Population
The primary factor used in rural definitions to determine eligible rural areas is total population.
All RD rural definitions include population thresholds. Areas must have populations at or below
the population threshold set for a given program to be considered eligible rural areas.
The population thresholds differ across the types of RD programs. For example, RD business and
energy programs have a population threshold of 50,000 people and the Telecommunications
Infrastructure Program has a population threshold of 5,000 people. Table 1 at the end of this
report provides an overview of the population thresholds for the different categories of RD
programs. Thirteen RD programs specify in their regulations that data from the most recent
decennial census of the United States should be used to determine population of an area and
whether the area should be considered rural.21
The default rural definition established under the ConAct, used primarily for RD energy and
business programs, allows for the exclusion of certain populations when determining an area’s
total population.22 For example, populations of incarcerated individuals are not to be included
when determining whether an area is rural.23 In addition, up to 1,500 individuals living on
military bases are excluded when determining whether an area is rural.24 In terms of rural housing
programs, prison populations and college populations are excluded when determining the
population of an area but individuals living on military bases are not excluded.25
Proximity to Urban Areas
In addition to the population thresholds, the rural definitions that apply to the RD programs often
include requirements that a place not be part of, associated with, or adjacent to an urban area. For
example, as discussed earlier,
 the ConAct default definition that is used for several RD business and energy
programs, and is referenced in the definition used for many broadband programs,
requires that areas that are otherwise below the relevant population thresholds not

21 The 12 programs are as follows: Community Connect Program, Community Facilities Grant Program, Community
Facilities Loan Guarantee Program, Emergency and Imminent Community Water Assistance Program, Renewable
Energy for America Program, Rural Economic Development Loan and Grant Program, Rural Innovation Stronger
Economy (RISE) Program, Rural Microentrepreneur Assistance Program, Solid Waste Management Grant Program,
Telecommunication Infrastructure Program, Water and Waste Disposal Grant Program, and Water and Waste Facility
Loans and Grants to Alleviate Health Risks for Colonias and on Tribal Lands.
22 The default rural definition is provided at 7 U.S.C. §1991(a)(13).
23 7 U.S.C. §1991(a)(13)(H).
24 7 U.S.C. §1991(a)(13)(I).
25 USDA, Direct Single Family Housing Loans and Grants - Field Office Handbook, HB-1-3550, p. 5-5, at
https://www.rd.usda.gov/files/hb-1-3550.pdf (hereinafter, USDA Handbook HB-1-3550).
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link to page 6
be in an urbanized area that is adjacent or contiguous to a city of more than
50,000 inhabitants.26
 the definition used for RD rural housing programs requires that areas that
otherwise meet the population thresholds not be “part of or associated with an
urban area” and that, for areas with populations between 10,000 and 20,000
people, the area not be contained within a metropolitan statistical area.27
Requirements restricting proximity to urban areas limit the eligibility of smaller communities that
are otherwise part of larger urban economies and commuting patterns and that therefore may lack
some of the other features generally associated with rural areas. However, such requirements may
raise questions about different ways to define proximity to urban areas, including questions about
how to treat natural barriers such as rivers or mountains.28
Grandfathering
If communities experience a population increase, they risk losing eligibility for RD programs. In
the RD rural housing programs, it has been common for Congress to create exceptions to allow
communities that have population changes between decennial censuses to retain their eligibility
for rural housing programs (i.e. grandfathering). None of the other RD programs have
grandfathering provisions. These provisions have been in place in one form or another since the
1980 decennial census. They generally do not offer unlimited eligibility; communities can remain
eligible only if they are found to be “rural in character”, have a “serious lack of mortgage credit,”
and stay within upper population thresholds (most recently, 35,000). For more information on
these requirements, see the “The Housing Act of 1949” section earlier in this report.
Grandfathering provisions are common across federal programs. They can help create
predictability for communities. However, they also result in more communities being made
eligible for what are often limited resources, as well as in differential treatment of otherwise
similar communities.
Hawaii, Puerto Rico, and U.S. Territories
The statute for the default rural definition established under the ConAct, which is used primarily
for the RD business and energy programs, states that the Secretary of Agriculture may designate
any parts of the County of Honolulu, HI, and the Commonwealth of Puerto Rico as rural, except
for the Honolulu Census Designated Place and the San Juan Census Designated Place.29
The statute for the default rural definition and other rural definitions used across RD programs
does not include specific guidelines for determining eligible rural areas in the U.S. territories and

26 7 U.S.C. §1991(a)(13)(A).
27 42 U.S.C. §1490.
28 For example, for the rural housing programs, USDA Handbook HB-1-3550 states, “A site that is in ‘open country not
part of or associated with an urban area’ is one that is separated by open space from any adjacent densely populated
urban area. Open space includes undeveloped land, agricultural land, or sparsely settled areas. Open space does not
include physical barriers (such as rivers or canals), public parks, commercial and industrial developments, small areas
reserved for recreational purposes, and open space set aside for future development.” This suggests that areas separated
from urban areas by natural physical barriers could be considered part of or associated with an urban area, even if the
natural barrier served to limit the area’s integration with the adjacent urban area.
29 7 U.S.C. §1991(a)(13)(G).
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the freely associated states.30 Program regulations for certain RD programs include guidelines
concerning specific U.S. territories. Some program regulations require that areas in the U.S.
territories and insular possessions, including the Federated States of Micronesia, the Republic of
the Marshall Islands, and the Republic of Palau, not exceed a certain population threshold to be
considered rural.31 Other program regulations specify that USDA will determine what areas
within the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic
of Palau will be considered rural areas.32
Policy Considerations for Congress
Certain issues that often arise related to the rural definitions used in RD programs and community
eligibility include changes in population, non-rural projects that benefit rural areas, and regional
planning. These issues could be subjects of debate as Congress considers legislation for the next
farm bill.
Population Changes
Population thresholds are a primary component of the rural definitions used in RD programs.
Populations generally are determined based on decennial census data. Some rural housing
programs also incorporate interim periodic reviews to determine populations.33
Area populations do not necessarily remain consistent over time. Areas may experience
population growth or decline that affects their eligibility for RD programs.34 For this reason,
Congress enacted grandfathering provisions for RD rural housing programs that allow certain
previously eligible communities to retain eligibility for certain programs for a period of time or if
the communities meet certain additional criteria, even if their population exceeds the thresholds
that otherwise apply.

30 The U.S. territories and freely associated states include American Samoa, the Commonwealth of Northern Mariana
Islands, the Federated States of Micronesia, Guam, the Republic of the Marshall Islands, and the Republic of Palau.
31 Emergency and Imminent Community Water Assistance Program (7 C.F.R. §1778.4), Water and Waste Disposal
Loans and Grants to Alleviate Health Risks (7 C.F.R. §1777.4), Electric Infrastructure Loan and Loan Guarantee
Program (7 C.F.R. §1710.2(a)), Telecommunications Infrastructure Program (7 C.F.R. §1735.2).
32 Business and Industry Loan Guarantee Program (7 C.F.R. §5001.3), Intermediary Relending Program (7 C.F.R.
§4274.203), Rural Microentrepreneur Assistance Program (7 C.F.R. §4280.302(a)), and the Renewable Energy for
America Program (7 C.F.R. §4280.103).
33 For example, for rural housing programs, see USDA Handbook HB-1-3550, Paragraph 5.3.C, stating, “Each Field
Office must review all areas under its jurisdiction every 5 years to identify areas that no longer qualify as rural. In areas
experiencing rapid growth and in eligible communities within MSAs, the review should take place every 3 years.” The
handbook also states, “In addition to periodic reviews, the State Director is responsible for implementing re-
designations based on the decennial U.S. Census of Population and any biannual updates” (see
https://www.rd.usda.gov/sites/default/files/hb-1-3550_2.pdf#page=235). For the purposes of the decennial census,
people who reside at two or more residences are counted at their “usual residence,” where they live and sleep most of
the time. If they cannot determine a usual residence, however, these people are counted at the place they are staying on
April 1 of that year. See U.S. Census Bureau, “Residence Criteria and Residence Situations for the 2020 Census of the
United States,” at https://www.census.gov/content/dam/Census/programs-surveys/decennial/2020-census/2020-Census-
Residence-Criteria.pdf.
34 For example, see USDA, RD, Report on the Definition of Rural, February 1, 2013, pp. 12-13, at
https://www.rd.usda.gov/progressreport/report-definition-rural, discussing certain communities’ changing eligibility for
some RD programs due to population changes.
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Some areas may be particularly likely to experience rapid population changes or have populations
that fluctuate over time. For example, certain areas have significant seasonal tourism that can
cause an area’s population, and its economic activity, to vary over the course of a year. Although
population for the purposes of RD programs is based on decennial census counts, an area with a
population that predictably fluctuates over the course of a year may raise questions about its
perceived rurality or lack thereof. Other areas might experience rapid population increases for
reasons such as discovery of a natural resource in the area, among other factors, and such
population increases may or may not be sustained. Such changing populations may affect an
area’s eligibility for RD programs and can raise questions about which types of communities
should be considered rural for the purposes of RD programs.
Whether grandfathering provisions should be used more widely to help rural areas retain their
eligibility for RD programs could be an issue for congressional consideration.
Non-Rural Projects
Some projects located in non-rural areas may benefit rural communities but are not eligible for
RD program funding. For example, some Members of Congress have cited the inability of certain
health clinics and fairgrounds that support rural communities to receive funding through the
USDA Community Facility Programs because they are located in non-rural areas.35 In addition,
some projects located in non-rural areas may benefit rural businesses because they provide access
to larger markets. As previously mentioned, USDA stated in its 2013 report on rural definitions
that sometimes “proximity to transportation hubs and consumer markets very well could make
projects far more successful and far more beneficial to farmers, rural entrepreneurs, and
consumers than siting projects solely in rural locations.”36 Current RD programs do not allow the
rural requirement for program eligibility to be waived for non-rural projects that support rural
communities. Whether the rural requirement should be waived when projects would benefit rural
communities could be a question for congressional consideration.
Regional Planning
USDA stated in its 2013 report to Congress that the rural definitions used in RD programs may
present obstacles to regional planning.37 Regional planning involves considering the assets and
deficits within a region as a whole, rather than considering the assets and deficits in a single town
or city. Regional planning researchers explain, “The places where we work, live, shop, recreate,
and socialize constitute a territory that seldom corresponds to a single town or city.”38 The rural
definitions use population to determine eligible rural areas, and different RD definitions use
different population thresholds. As a result, some communities may qualify for some RD
programs but not others. These definitions do not account for how the area fits into the larger
region or consider the economies of scale that may be attained by including rural and non-rural
areas in a project. Entities that apply for RD programs may have difficulty obtaining funding for

35 Ellyn Ferguson, “Working on Farm Bill, Senators Frustrated by What Counts As Rural,” CQ News, November 15,
2022.
36 U.S. Department of Agriculture, Report on the Definition of Rural, February 2013, p. 8.
37 Ibid., p. 10.
38 Ethan Seltzer and Armando Carbonell, eds., Regional Planning in America: Practice and Prospect, Lincoln Institute
of Land Policy, 2011, see p. 1.
CRS-12

projects that take a regional approach, because every community within the region must be within
the population thresholds.
USDA stated in its 2013 report to Congress that if “a regional sewer project encounters a
municipality of greater than 10,000 population, for example, that community cannot be part of the
Rural Development financing application no matter how much sense it might make to project
engineers geographically and no matter what the impact of including the larger community might
have had on end user rates as fixed costs got spread over a larger number of end users.”39
Whether to allow the rural requirement to be waived for projects that fit into regional plans that
benefit rural communities could be an issue for congressional consideration.

39 USDA, Report on the Definition of Rural, February 2013, p. 8.
CRS-13

link to page 21 link to page 21
Table 1. Eligible Rural Area Definitions for Selected USDA Rural Development Programs
Code of
Factors Used in Rural
Federal
Definition
Program
U.S. Code
Regulations
Program Description
Eligible Rural Area (Citation)
Broadband Programsa
Community Connect
7 U.S.C. §950bb-3
7 C.F.R. §1739
Provides grants to help expand
Areas that have populations of 20,000 Population
Program
rural residents’ access to
or fewer inhabitants and are not in an Proximity to urban areas
broadband for noncommercial
urbanized area that is adjacent or
uses.
contiguous to a city of more than
50,000 inhabitants.
(7 U.S.C. §950bb(b)(3)(A))
Distance Learning and 7 U.S.C. §950aaa-2
7 C.F.R. §1734
Provides grants to help rural
Areas that have populations of 20,000 Population
Telemedicine
communities acquire the
or fewer inhabitants and are not in an Proximity to urban areas
Program
technology and training
urbanized area that is adjacent or

necessary to connect educational contiguous to a city of more than
and medical professionals with
50,000 inhabitants.
students, teachers, and patients
(7 U.S.C. §950bb(b)(3)(A))
in rural areas.
ReConnect Program
—b
7 C.F.R. §1740
Provides grants, loans, and loan-
Areas that have populations of 20,000 Population
grant combinations to build and
or fewer inhabitants and are not in an Proximity to urban areas
update facilities or equipment
urbanized area that is adjacent or
needed to provide broadband
contiguous to a city of more than
access to rural areas.
50,000 inhabitants, as defined in the
U.S. Department of Agriculture Rural
Utilities Service mapping tool.
(7 C.F.R. §1740.2(a))
CRS-14

Code of
Factors Used in Rural
Federal
Definition
Program
U.S. Code
Regulations
Program Description
Eligible Rural Area (Citation)
Rural Broadband
7 U.S.C. §950bb
7 C.F.R. §1738
Provides loans and loan
For direct loans, areas that have
Population
Direct Loan and Loan
guarantees to construct or
populations of 20,000 or fewer
Proximity to urban areas
Guarantee Program
improve facilities and equipment
inhabitants and are not in an
used to provide broadband
urbanized area that is adjacent or
access to rural areas.
contiguous to a city of more than
50,000 inhabitants.
(7 U.S.C. §950bb(b)(3)(A) and 7
U.S.C. §1991(a)(13)(A))

For loan guarantees, areas that have
populations of 50,000 or fewer
inhabitants and are not in an
urbanized area that is adjacent or
contiguous to a city of more than
50,000 inhabitants.
(7 U.S.C. §1991(a)(13))
Telecommunications
7 U.S.C. §§901 et
7 C.F.R. §1735
Provides loans and loan
Any area of the United States having
Population
Infrastructure
seq.
guarantees for the construction,
a population of 5,000 or fewer
Program
maintenance, and expansion of
inhabitants.
broadband and telephone service (7 U.S.C. §924(b))
in rural areas.
Business Programs
Business and Industry
7 U.S.C. §1932
7 C.F.R. §5001
Provides loan guarantees to
Areas that have a population of
Population
Loan Guarantee
selected financial institutions,
50,000 or fewer inhabitants and are
Proximity to urban areas
Program
which then provide sub-loans to
not in an urbanized area that is
eligible businesses.
adjacent or contiguous to a city of
Exceptions allowed
more than 50,000 inhabitants. “Rural
in character” exceptions are allowed.
(7 U.S.C. §§1991(a)(13)(A) and (D) et
seq.)
CRS-15

Code of
Factors Used in Rural
Federal
Definition
Program
U.S. Code
Regulations
Program Description
Eligible Rural Area (Citation)
Intermediary
7 U.S.C. §1932
7 C.F.R. §4274,
Provides loans to lenders that
Areas that have a population of
Population
Relending Program
Subpart D
provide sub-loans to businesses
50,000 or fewer inhabitants and are
Proximity to urban areas
to improve economic conditions
not in an urbanized area that is
and create jobs in rural
adjacent or contiguous to a city of
Exceptions allowed
communities.
more than 50,000 inhabitants. “Rural
in character” exceptions are allowed.
(7 U.S.C. §§1991(a)(13)(A) and (D) et
seq.)
Rural Business
7 U.S.C. §1932(c)
7 C.F.R. §4280,
Provides grants for technical
Areas that have a population of
Population
Development Grant
Subpart E
assistance and training to small
50,000 or fewer inhabitants and are
Proximity to urban areas
Program
rural businesses.
not in an urbanized area that is
adjacent or contiguous to a city of
Exceptions allowed
more than 50,000 inhabitants. “Rural
in character” exceptions are allowed.
(7 U.S.C. §§1991(a)(13)(A) and (D) et
seq.)
Rural Cooperative
7 U.S.C. §1932(e)
7 C.F.R. §4284,
Provides grants to nonprofits
Areas that have a population of
Population
Development Grant
Subpart F
and institutions to help
50,000 or fewer inhabitants and are
Proximity to urban areas
Program
individuals and businesses start,
not in an urbanized area that is
expand, or improve rural
adjacent or contiguous to a city of
Exceptions allowed
cooperatives through
more than 50,000 inhabitants. “Rural
Cooperative Development
in character” exceptions are allowed.
Centers.
(7 U.S.C. §§1991(a)(13)(A) and (D) et
seq.)
Rural Economic
7 U.S.C. §940c-2
7 C.F.R. §4280,
Provides loans and grants to
Areas that have a population of
Population
Development
Subpart A
eligible Rural Utilities Service
50,000 or fewer inhabitants and are
Proximity to urban areas
Program
(RUS) electric and
not in an urbanized area that is
telecommunications borrowers
adjacent or contiguous to a city of
Exceptions allowed
to promote rural economic
more than 50,000 inhabitants. “Rural
development.
in character” exceptions are allowed.
(7 U.S.C. §§1991(a)(13)(A) and (D) et
seq.)
CRS-16

Code of
Factors Used in Rural
Federal
Definition
Program
U.S. Code
Regulations
Program Description
Eligible Rural Area (Citation)
Rural Innovation
7 U.S.C. §2008w
7 C.F.R. §4284,
Provides grants to create and
Areas that have a population of
Population
Stronger Economy
Subpart L
augment high-wage jobs,
50,000 or fewer inhabitants and are
Proximity to urban areas
(RISE) Program
accelerate the formation of new
not in an urbanized area that is
businesses, support industry
adjacent or contiguous to a city of
Exceptions allowed
clusters, and maximize the use of more than 50,000 inhabitants. “Rural
local productive assets in eligible
in character” exceptions are allowed.
low-income, rural areas.
(7 U.S.C. §§1991(a)(13)(A) and (D) et
seq.)
Rural
7 U.S.C. §2008s
7 C.F.R. §4280,
Provides loans and grants to
Areas that have a population of
Population
Microentrepreneur
Subpart D
microenterprise development
50,000 or fewer inhabitants and are
Proximity to urban areas
Assistance Program
organizations that use the funds
not in an urbanized area that is
(RMAP)
to create a rural microloan
adjacent or contiguous to a city of
Exceptions allowed
revolving fund.
more than 50,000 inhabitants. “Rural
in character” exceptions are allowed.
(7 U.S.C. §§1991(a)(13)(A) and (D) et
seq.)
Community Facilities Program
Community Facilities
7 U.S.C.
7 C.F.R. §1942,
Provides loans, grants, and loan
For loans and grants, areas that have
Population
Programs
§1926(a)(19)
Subpart A
guarantees to develop or
a population of 20,000 or fewer

inhabitants.
7 C.F.R. §3570,
improve essential public services
(7 U.S.C. §1991(a)(13)(C))
Subpart A
and facilities in rural areas.

7 C.F.R. §5001
For loan guarantees, areas that have a Population
population of 50,000 or fewer
inhabitants and are not an urbanized
Proximity to urban areas
area that is adjacent or contiguous to
Exceptions allowed
a city of more than 50,000
inhabitants. “Rural in character”
exceptions are allowed.
(7 U.S.C. §1991(a)(13)(A) and (D) et
seq.)
CRS-17

link to page 21
Code of
Factors Used in Rural
Federal
Definition
Program
U.S. Code
Regulations
Program Description
Eligible Rural Area (Citation)
Energy Programsc
Biorefinery,
7 U.S.C. §8103
7 C.F.R. §4279,
Facilitates the development of
Areas that have populations of 50,000 Population
Renewable Chemical,
Subpart C
new and emerging technologies
or fewer inhabitants and are not
Proximity to urban areas
and Biobased Product
7 C.F.R. §4287,
for advanced biofuels, renewable
adjacent or contiguous to an
Manufacturing
Exceptions allowed
Subpart D
chemicals, and biobased product
urbanized area with more than
Assistance Program
manufacturing by providing loan
50,000 inhabitants. “Rural in
guarantees for the development,
character” exceptions are allowed.
construction, or retrofitting of
(7 U.S.C. §§1991(a)(13)(A) and (D) et
commercial-scale biorefineries.
seq.)
Rural Energy for
7 U.S.C. §8107
7 C.F.R. §4280,
Provides grants for energy audits Agricultural producers can be in rural Population
America (REAP)
Subpart B
and renewable energy
or non-rural areas.
Proximity to urban areas
Program
7 C.F.R. §5001,
development assistance, and
Non-farm businesses must be located
Exceptions allowed
Subpart A
provides loan guarantees and
in eligible rural areas. A rural area is
grants for energy efficiency
defined as “Any area of a State not in
improvements and renewable
a city or town that has a population
energy systems.
of more than 50,000 inhabitants, not
in the urbanized area contiguous and
adjacent to a city or town that has a
population of more than 50,000
inhabitants, and excluding certain
populations pursuant to 7 U.S.C.
1991(a)(13)(H) and (I).” :”Rural in
character” exceptions are allowed.
(7 C.F.R. §4280.103)
Rural Energy Savings
7 U.S.C. §8107a
7 C.F.R. §1719
Provides loans to rural
Any area that has a population of
Population
Program
households and small businesses
50,000 or fewer inhabitants or any
to achieve cost savings through
other area designated eligible by
the implementation of durable,
statute.
cost-effective energy efficiency
(7 C.F.R. §1719.2)
measures.
CRS-18

link to page 21
Code of
Factors Used in Rural
Federal
Definition
Program
U.S. Code
Regulations
Program Description
Eligible Rural Area (Citation)
Housing Programsd
Rural Housing
42 U.S.C.
7 C.F.R.
Provide loans, loan guarantees,
Any open country, place, town, vil age Population (including
Programs
Subchapter III
Chapter XXXV
grants, and other assistance to
or city that is not part of an urban
grandfathering provisions)
7 C.F.R.
support housing for low-income
area and (1) has a population of 2,500 Not in a standard
Chapter XVIII,
households in rural areas. Single-
or fewer; (2) has a population
metropolitan statistical
Subchapter B
family programs include loans to
between 2,500 and 10,000, if it is
area
purchase homes, loans and
“rural in character”; or (3) has a
7 C.F.R.
grants to repair homes, and
population greater than 10,000 but
Lack of mortgage credit
Chapter XVIII,
grants to support self-help
fewer than 20,000, if it is not in a
Exceptions allowed
Subchapter H,
housing program. Multifamily
standard metropolitan statistical area
Part 1944
programs include loans to
and has “a serious lack of mortgage
develop or rehabilitate rental
credit” for lower and moderate-
housing and associated rental
income families.
assistance.
Select provisions allow communities
that were previously designated as
rural to retain that designation
through the 2030 census, as long as
their population does not exceed
35,000, they are “rural in character”,
and have “a serious lack of mortgage
credit” for lower and moderate-
income families.
(42 U.S.C. §1490)
Utilities Programs
Electric Infrastructure
7 U.S.C §935
7 C.F.R. §1710
Provides loans and loan
Areas with a population of 20,000 or
Population
Loan and Loan
7 U.S.C. §936
7 C.F.R. §1714
guarantees for the construction
fewer inhabitants and any area within
Service area of a
Guarantee Program
of electric distribution,
a service area of a borrower for
7 C.F.R. §1717
borrower with a RUS
transmission, and generation
which a borrower has an outstanding
loan
facilities, including energy
RUS loan.
conservation programs and on-
(7 U.S.C. §913)
grid and off-grid renewable
energy systems.
CRS-19

Code of
Factors Used in Rural
Federal
Definition
Program
U.S. Code
Regulations
Program Description
Eligible Rural Area (Citation)
Emergency and
7 U.S.C. §1926a
7 C.F.R. §1778
Provides grants to eligible
Areas with a population of 10,000 or
Population
Imminent Community
communities to prepare for, or
fewer inhabitants.
Water Assistance
recover from, an emergency that (7 U.S.C. §1991(a)(13)(B))
Program
threatens the availability of safe,
reliable drinking water.
Rural Decentralized
7 U.S.C. §1926e
7 C.F.R. §1776
Provides grants to eligible
Areas that have populations of 50,000 Population
Water Systems
entities to set up revolving loan
or fewer inhabitants and are not
Proximity to urban areas
Program
funds for homeowners.
adjacent or contiguous to an
Homeowners can use the loans
urbanized area with more than
Exceptions allowed
to construct, refurbish, or
50,000 inhabitants. “Rural in
service household water well
character” exceptions are allowed.
and septic systems.
(7 U.S.C. §§1991(a)(13)(A) and (D) et
seq.)
Solid Waste
7 U.S.C. §1932
7 C.F.R. §1775
Provides grants to eligible
Areas with a population of 10,000 or
Population
Management Program
organizations to offer training
fewer inhabitants.
and technical assistance to
(7 U.S.C. §1991(a)(13)(B))
improve the planning and
management of solid waste sites.
Water and Waste
7 U.S.C. §1926
7 C.F.R. §1780
Provides loans and grants for
Areas with a population of 10,000 or
Population
Disposal (WWD)
projects that build or enhance
fewer inhabitants.
Loan and Grant
clean and reliable drinking water
(7 U.S.C. §1991(a)(13)(B))
Program
systems, sanitary sewage disposal
systems, and stormwater
drainage to households and
businesses in eligible rural areas.
WWD Grant
7 U.S.C. §1926d
7 C.F.R. §1784
Provides grants to remote
Areas with a population of 10,000 or
Population
Program for Rural and
Alaskan vil ages for safe, reliable
fewer inhabitants.
Native Alaskan
drinking water and waste
(7 U.S.C. §1991(a)(13)(B))
Vil ages
disposal systems for households
and businesses.
CRS-20

Code of
Factors Used in Rural
Federal
Definition
Program
U.S. Code
Regulations
Program Description
Eligible Rural Area (Citation)
WWD Loans and
7 U.S.C. §1926c
7 C.F.R. §1777
Provide low-income
Areas with a population of 10,000 or
Population
Grants to Alleviate
communities that are facing
fewer inhabitants.
Health Risks
significant health risks with loans
(7 U.S.C. §1991(a)(13)(B))
and grants to provide safe,
reliable water and waste disposal
facilities.
WWD Technical
7 U.S.C.
7 C.F.R. §1775
Provides grants to qualified
Areas with a population of 10,000 or
Population
Assistance and
§1926(a)(14)
nonprofits that provide technical
fewer inhabitants.
Training Grant
assistance and training to identify (7 U.S.C. §1991(a)(13)(B))
Program
and evaluate solutions to water
and waste problems. Helps
applicants prepare applications
for water and waste disposal
loans and grants.
Source: Congressional Research Service, compiled from the U.S. Code, the Code of Federal Regulations, and U.S. Department of Agriculture (USDA) Rural Development
program web pages.
Notes: Information in the columns headed “Program Purpose” and “Eligible Rural Areas” is from the U.S. Code and/or pertinent regulations. “Rural in character”, as used
in this table, means exceptions for areas that meet certain qualifications to be considered rural and eligible for certain USDA Rural Development programs even if they
do not meet the rural definition population requirements. Six USDA Rural Development programs do not use rural definitions: The Biobased Markets Program,
Bioenergy Program for Advanced Biofuels, Healthy Food Financing Initiative, Higher Energy Cost Program, Off-Farm Labor Housing Program, and the Value-Added
Producer Grant Program.
a. For more information about USDA Rural Development broadband programs, see CRS Report R46912, USDA Rural Broadband, Electric, and Water Programs: FY2022
Appropriations.
b. As of April 2023, the ReConnect Program is a pilot program without specific statutory authority. Congress provided USDA general statutory authority to create the
pilot program through the Rural Electrification Act of 1936, as amended (7 U.S.C. §§901 et seq.).
c. For more information about USDA Rural Development energy programs, see CRS In Focus IF10639, Farm Bill Primer: Energy Title.
d. The Rural Housing Service administers over a dozen rural housing programs that use the same definition of rural for purposes of eligibility for assistance. For more
information about USDA Rural Development housing programs, see CRS Report R47044, USDA Rural Housing Programs: An Overview.
CRS-21

Rural Definitions Used For Eligibility Requirements in USDA Rural Development Programs

Author Information

Lisa S. Benson, Coordinator
Katie Jones
Analyst in Agricultural Policy
Analyst in Housing Policy

Maggie McCarty
Kelsi Bracmort
Specialist in Housing Policy
Specialist in Natural Resources and Energy Policy

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
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under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
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