[Federal Register: October 15, 2008 (Volume 73, Number 200)]
[Proposed Rules]
[Page 61197-61254]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15oc08-36]
[[Page 61197]]
-----------------------------------------------------------------------
Part II
Department of Agriculture
-----------------------------------------------------------------------
Rural Utilities Service
Rural Business-Cooperative Service
Rural Housing Service
-----------------------------------------------------------------------
7 CFR Parts 1703, 1780, 3570 et al.
Rural Development Grants; Proposed Rule
[[Page 61198]]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Rural Utilities Service
Rural Business-Cooperative Service
Rural Housing Service
7 CFR Parts 1703, 1780, 3570, 4280, 4284, and 5002
RIN 0570-AA68
Rural Development Grants
AGENCIES: Rural Business-Cooperative Service, Rural Housing Service,
and Rural Utilities Service, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: Rural Development, a mission area within the U.S. Department
of Agriculture, is proposing a unified grant platform for enhanced
delivery of eight existing Rural Development grant programs--Community
Facility; Distance Learning and Telemedicine; Economic Impact
Initiatives; Renewable Energy Systems and Energy Efficiency Improvement
Projects; Rural Cooperative Development; Tribal College; Value-Added
Producer; and Water and Waste Disposal Facilities. This proposed rule
would eliminate or revise the grant regulations for the eight existing
programs and consolidate them under a new, single regulation.
DATES: Comments on the proposed rule must be received on or before
December 15, 2008. The comment period for the information collection
under the Paperwork Reduction Act of 1995 continues through December
15, 2008.
ADDRESSES: You may submit comments to this rule by any of the following
methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Submit written comments via the U.S. Postal Service
to the Branch Chief, Regulations and Paperwork Management Branch, U.S.
Department of Agriculture, STOP 0742, 1400 Independence Avenue, SW.,
Washington, DC 20250-0742.
Hand Delivery/Courier: Submit written comments via Federal
Express Mail or other courier service requiring a street address to the
Branch Chief, Regulations and Paperwork Management Branch, U.S.
Department of Agriculture, 300 7th Street, SW., 7th Floor, Washington,
DC 20024.
All written comments will be available for public inspection during
regular work hours at the 300 7th Street, SW., 7th Floor address listed
above.
FOR FURTHER INFORMATION CONTACT: Mr. Michael Foore, Rural Development,
Business and Cooperative Programs, U.S. Department of Agriculture, 1400
Independence Avenue, SW., Stop 3201, Washington, DC 20250-3201; e-mail:
Michael.Foore@wdc.usda.gov; telephone (202) 690-4730.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This proposed rule has been reviewed under Executive Order (EO)
12866 and has been determined to be significant by the Office of
Management and Budget. The EO defines a ``significant regulatory
action'' as one that is likely to result in a rule that may: (1) Have
an annual effect on the economy of $100 million or more or adversely
affect, in a material way, the economy, a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, or tribal governments or communities; (2)
Create a serious inconsistency or otherwise interfere with an action
taken or planned by another agency; (3) Materially alter the budgetary
impact of entitlements, grants, user fees, or loan programs or the
rights and obligations of recipients thereof; or (4) Raise novel legal
or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in this EO.
The Agency conducted a qualitative benefit-cost analysis to fulfill
the requirements of Executive Order 12866. The Agency has identified
potential benefits to the prospective grantee and to the Agency. These
benefits are associated with the increase in program transparency,
Administrative flexibility, and increased efficiency in delivering the
programs. While unable to quantify any costs or benefits associated
with this rulemaking, the agency believes that the overall effect of
the rule may be beneficial.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act 1995 (UMRA) of Public
Law 104-4 establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA,
Rural Development generally must prepare a written statement, including
a cost-benefit analysis, for proposed and final rules with ``Federal
mandates'' that may result in expenditures to State, local, or tribal
governments, in the aggregate, or to the private sector of $100 million
or more in any one year. When such a statement is needed for a rule,
section 205 of UMRA generally requires Rural Development to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, more cost-effective, or least burdensome alternative
that achieves the objectives of the rule.
This proposed rule contains no Federal mandates (under the
regulatory provisions of Title II of the UMRA) for State, local, and
tribal governments or the private sector. Thus, this rule is not
subject to the requirements of sections 202 and 205 of the UMRA.
Environmental Impact Statement
This document has been reviewed in accordance with 7 CFR part 1940,
subpart G, ``Environmental Program.'' Rural Development has determined
that this action does not constitute a major Federal action
significantly affecting the quality of the human environment, and in
accordance with the National Environmental Policy Act (NEPA) of 1969,
42 U.S.C. 4321 et seq., an Environmental Impact Statement is not
required. Grant applications will be reviewed individually to determine
compliance with NEPA.
Executive Order 12988, Civil Justice Reform
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. In accordance with this rule: (1) All State and
local laws and regulations that are in conflict with this rule will be
preempted; (2) no retroactive effect will be given this rule; and (3)
administrative proceedings in accordance with the regulations of the
Department of Agriculture's National Appeals Division (7 CFR part 11)
must be exhausted before bringing suit in court challenging action
taken under this rule unless those regulations specifically allow
bringing suit at an earlier time.
Executive Order 13132, Federalism
It has been determined, under Executive Order 13132, Federalism,
that this proposed rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment. The
provisions contained in the proposed rule will not have a substantial
direct effect on States or their political subdivisions or on the
distribution of power and responsibilities among the various government
levels.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601-602) (RFA) generally
requires an agency to prepare a regulatory flexibility analysis of any
rule subject to notice and comment rulemaking requirements under the
Administrative Procedure Act or any other statute unless the agency
certifies
[[Page 61199]]
that the rule will not have a significant economic impact on a
substantial number of small entities. Small entities include small
businesses, small organizations, and small governmental jurisdictions.
In compliance with the RFA, Rural Development has determined that
this action will not have a significant economic impact on a
substantial number of small entities. Rural Development made this
determination based on the fact that this regulation only impacts those
who choose to participate in the program. Small entity applicants will
not be affected to a greater extent than large entity applicants.
Executive Order 12372, Intergovernmental Review of Federal Programs
Rural Development grants are subject to the Provisions of Executive
Order 12372, which require intergovernmental consultation with State
and local officials. Rural Development will conduct intergovernmental
consultation in the manner delineated in RD Instruction 1940-J,
``Intergovernmental Review of Rural Development Programs and
Activities,'' available in any Rural Development office, on the
Internet at http://www.rurdev.usda.gov/regs, and in 7 CFR part 3015,
subpart V.
Executive Order 13175, Consultation and Coordination With Indian Tribal
Governments
This executive order imposes requirements on Rural Development in
the development of regulatory policies that have tribal implications or
preempt tribal laws. Rural Development has determined that the proposed
rule does not have a substantial direct effect on one or more Indian
tribe(s) or on either the relationship or the distribution of powers
and responsibilities between the Federal Government and the Indian
tribes. Thus, the proposed rule is not subject to the requirements of
Executive Order 13175.
Programs Affected
The Catalog of Federal Domestic Assistance Program numbers assigned
to this program are 10.766, Community Facilities Loans and Grants;
10.855, Distance Learning and Telemedicine Loans and Grants; 10.766,
Economic Impact Initiatives Grants; 10.775, Renewable Energy Systems
and Energy Efficiency Improvements Program; 10.771, Rural Cooperative
Development Grants; 10.352, Value-Added Producer Grants; and 10.760,
Water and Waste Disposal Loans and Grants (Section 306a); and 10.221,
Tribal College Educational Equity Grants.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995, Rural
Development will seek OMB approval of the reporting and recordkeeping
requirements contained in this proposed rule and hereby opens a 60-day
public comment period.
Title: Rural Development Grants.
Type of Request: New collection.
Abstract: Rural Development is implementing a new consolidated
grant platform. The new grant platform would combine the following
existing grant regulations into a consolidate rule: (1) The Community
Facility Program, (2) the Distance Learning and Telemedicine Program;
(3) the Economic Impact Initiatives Program; (4) the Rural Cooperative
Development Program, (5) the Tribal College Grant Program, (6) the
Value-Added Producer Program, (7) the Water and Waste Disposal
Facilities Program, and (8) the Renewable Energy Systems and Energy
Efficiency Improvement Program (now known as the Rural Energy for
America program). These programs provide grants for a variety of
projects intended to assist and improve rural America.
The information required under the proposed rule is similar to much
of the information currently being required under the separate
regulations. Under these separate regulations, the current information
being collected is approved under OMB control numbers as follows:
0570-0006 (Rural Cooperative Development Grants).
0570-0039 (Value-Added Producer Grants).
0570-0050 (Renewable Energy Systems and Energy . Efficiency Improvement
Grants).
0572-0096 (Distance Learning and Telemedicine).
0572-0121 (Water and Waste Loan and Grant Program).
0575-0173 (Community Facilities Grants).
The proposed rule creates a single set of common forms that
applicants can use across all eight programs, thereby creating
efficiencies in reporting.
The collection of information is vital to Rural Development to make
wise decisions regarding the eligibility of projects and applicants in
order to ensure compliance with the regulations and to ensure that the
funds obtained from the Government are used appropriately (i.e., being
used for the purposes for which the grant funds were awarded). In sum,
this collection of information is necessary in order to implement the
consolidated grant regulation being proposed.
The following estimates are based on the average over the first
three years the program is in place.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 4.8 hours per response.
Respondents: Rural developers, farmers and ranchers, rural
businesses, public bodies, local governments, institutions of higher
learning, hospitals and medical facilities, Indian tribes, agricultural
producers groups, farmer and rancher cooperatives, independent
producers, majority controlled producer-based businesses, private
corporations, non-profit organizations, rural electric cooperatives,
public power entities, faith-based organizations, and incorporated
organizations and partnerships.
Estimated Number of Respondents: 2.045.
Estimated Number of Responses per Respondent: 4.8.
Estimated Number of Responses: 24,650.
Estimated Total Annual Burden (hours) on Respondents: 118,802.
Copies of this information collection may be obtained from Cheryl
Thompson, Regulations and Paperwork Management Branch, Support Services
Division, U.S. Department of Agriculture, Rural Development, STOP 0742,
1400 Independence Ave., SW., Washington, DC 20250-0742 or by calling
(202) 692-0043.
Comments
Comments are invited on: (a) Whether the proposed collection of
information is necessary for the proper performance of the functions of
Rural Development, including whether the information will have
practical utility; (b) the accuracy of the new Rural Development
estimate of the burden of the proposed collection of information,
including the validity of the methodology and assumptions used; (c)
ways to enhance the quality, utility, and clarity of the information to
be collected; and (d) ways to minimize the burden of the collection of
information on those who are to respond, including through the use of
appropriate automated, electronic, mechanical, or other technological
collection techniques or other forms of information technology.
Comments may be sent to Cheryl Thompson, Regulations and Paperwork
Management Branch, U.S. Department of Agriculture, Rural Development,
STOP 0742, 1400 Independence Ave., SW., Washington, DC 20250. All
responses to this proposed rule will be summarized and
[[Page 61200]]
included in the request for OMB approval. All comments will also become
a matter of public record.
E-Government Act Compliance
Rural Development is committed to complying with the E-Government
Act, to promote the use of the Internet and other information
technologies to provide increased opportunities for citizen access to
Government information and services, and for other purposes.
I. Background
Rural Development proposes a unified platform for delivery of eight
existing Rural Development grant programs--Community Facility; Distance
Learning and Telemedicine; Economic Impact Initiatives; Renewable
Energy Systems and Energy Efficiency Improvement Projects (now known as
the Rural Energy for America program); Rural Cooperative Development;
Value-Added Producer; Water and Waste Disposal Facilities; and Tribal
College. These programs are administered by the Rural Housing Service
(Community Facilities, Economic Impact Initiatives, Tribal Grants),
Rural Utilities Service (Distance Learning and Telemedicine, Water and
Waste Disposal Facilities), and Rural Business-Cooperative Service
(Rural Cooperative Development, Value-Added Producer, Rural Energy for
America). Collectively, Rural Development's programs work together to
assist in building and maintaining entire, sustainable rural
communities.
For the reasons cited below, the Agency is proposing to incorporate
eight of its 39 existing grant programs into this proposed new
platform.
First. In selecting grant programs for inclusion in the proposed
consolidated grant program, the Agency's two principal priorities are
to include (1) grant programs associated with programs being included
in the consolidated guaranteed loan rule and (2) grant programs that
are representative of both State-allocated grant programs and
nationally-competed grant programs, which are the two main types of
grant programs administered by Rural Development.
As such, three of the seven grant programs are being proposed for
inclusion because their guaranteed loan programs are being included in
the Agency's new guaranteed loan program consolidating four of the
Agency's guaranteed loan programs. These three programs are: Community
Facilities, Water and Waste Disposal, and Rural Energy for America.
The Community Facilities and Water and Waste Disposal grant
programs are both State-allocated grant programs, while the Rural
Energy for America grant program is a nationally-competed grant
program. To ``round these out,'' the Agency is proposing to add three
additional nationally-competed grant programs--Rural Cooperative
Development grants, Value-Added Producer grants, and Distance Learning
and Telemedicine grants.
The Agency is proposing to include the Economic Impact Initiative
grant program because it is administered under the same regulation as
Community Facilities.
Second. The Agency is proposing to include Tribal College grants.
As mentioned elsewhere in this preamble, the Tribal College grants
program is neither a State-allocated or nationally-competed grant
program. However, it does rely on portions of the Community Facilities
grant program for its administration requirements. Because the proposed
rule would eliminate the Community Facilities grant rule once the
proposed rule is finalized, the Tribal College grant program would no
longer have a grant regulation for its administration. Thus, the Agency
was faced with two options--incorporate the Tribal College grant
program into the proposed rule or develop a new regulation specific to
Tribal College grants. The Agency believes that it makes more sense to
include Tribal College grants in the new rule, then to develop a
completely separate regulation for that one specific grant program.
As noted later in this preamble, the Agency is seeking specific
comment on the grant programs being proposed for inclusion in the
consolidated grant rule. Please see section II.C of this preamble.
The purpose of this proposed rule is to initiate the process of
developing a single regulation covering all grant programs of the Rural
Development Mission Area. Given the logistical and administrative
challenges for the Agency and the stakeholders associated with such a
consolidation, the Agency has decided to conduct this effort in stages.
The proposed rule represents the first stage of this process. In this
proposed rule stage the Agency selected grant programs to be included
that: (1) Represented a cross section of the Agency's grant programs to
ensure that the single regulatory platform being developed would be
flexible enough the accommodate all of the Agency's grant programs; (2)
corresponded to the loan guarantee programs that are covered by the
regulatory consolidation taking place with respect to the Agency's loan
guarantee programs (see 7 FR 52618, September 14, 2007); and (3)
allowed whole regulatory parts of the current program regulations to be
deleted.
After the Agency has the opportunity to determine the success of
this initial phase of this regulatory consolidation effort, the Agency
will decide whether it would be appropriate to continue to the next
phase of incorporating additional grant programs into this regulatory
platform and the schedule for the next phase. A key assumption the
Agency has made in deciding to initiate the process of consolidating
these regulations is that the platform is flexible enough to
accommodate all of the various grant programs of the Rural Development
Mission Area. Therefore, the Agency's decision to move forward to the
next phase of this effort and to add the regulations of new grant
programs to this platform will hinge on the degree the rulemaking
process of this proposed rule either supports or challenges this
assumption.
Under the unified grant platform, Rural Development will simplify,
improve, and enhance the delivery of these grant programs across their
service areas. The remainder of this section describes Rural
Development's mission, the eight grant programs being aligned under the
new platform, why the new platform is being proposed, and how the new
platform will work.
A. Rural Development's Mission
By statutory authority, Rural Development is the leading Federal
advocate for rural America, administering a multitude of programs,
ranging from housing and community facilities to infrastructure and
business development. Its mission is to increase economic opportunity
and improve the quality of life in rural communities by providing the
leadership, infrastructure, venture capital, and technical support that
enables rural communities to prosper and supports them in the dynamic
global environment defined by the Internet revolution, and the rise of
new technologies, products, and markets.
To achieve its mission, Rural Development provides financial
support (including direct loans, grants, and loan guarantees) and
technical assistance to help enhance the quality of life and provide
the foundation for economic development in rural areas. To improve the
delivery of this financial support for all of its programs and thereby
enhance its mission, Rural Development in February 2006 initiated the
Delivery Enhancement Task Force (DET). The DET is working to develop
consolidated program delivery platforms.
This proposed rulemaking presents the Agency's proposed
consolidated
[[Page 61201]]
grant platform. The Agency has already published a proposed rule in
support of its unified guaranteed loan platform, which was published in
the Federal Register on September 14, 2007 (72 FR 52618).
B. Current Grant Programs
The following paragraphs describe briefly the scope of each of the
current programs with regard to eligible projects and applicants.
Community Facilities Grant Program. The Community Facilities grant
program provides grants to develop essential community facilities in
rural areas. However, eligible utility-type service facilities, such as
telecommunications and hydroelectric, that serve both rural and non-
rural areas can be located in either rural or non-rural areas. Grant
funds may be used to construct, enlarge, or improve community
facilities for health care, public safety, and public services. This
can include costs to acquire land needed for a facility, pay necessary
professional fees, and purchase equipment required for its operation.
Eligible applicants for community facilities grants are public
bodies, such as municipalities, counties, districts authorities, or
other political subdivisions of a State; non-profit corporations and
associations, and Federally-recognized tribes. Further, applicants must
have the legal authority to own, construct, operate, and maintain the
proposed facility.
The amount of grant assistance provided under this program must be
the minimum amount sufficient for feasibility which will provide for
facility operation and maintenance, reasonable reserves, and debt
repayment. As statutorily required, grants may be made up to 75 percent
of the cost of developing essentially community facilities. Recently,
these grants have averaged $29,916, which is approximately 7 percent of
the average costs of the projects that the grants are funding.
Economic Impact Initiatives Grant Program. This program is
administered under the same regulations as the Community Facilities
grant program, but provides grants to rural communities with extreme
unemployment and severe economic depression. In addition, the essential
community facility must be located in a rural community where the ``not
employed rate'' is greater than the percentage specified in section
306(a)(20) of the Consolidated Farm and Rural Development Act (7 U.S.C.
1926(a)(20)(B)). (The ``not employed rate'' is the percentage of
individuals over the age of 18 who reside within the community and who
are ready, willing, and able to be employed but are unable to find
employment, as determined by the department of labor of the State in
which is the community is located.)
Notwithstanding the above, eligible applicants are otherwise the
same as under the Community Facilities grant program. Eligible projects
are also the same as under the Community Facilities grant program.
Under this program, the minimum grant amount awarded is that amount
needed to achieve financial feasibility for the project. Recently,
these grants have averaged $42,890, which is approximately 19 percent
of the average costs of the projects that the grants are funding.
Tribal College Grant Program. The Tribal College grant program is
designed to enhance educational opportunities at the Tribal colleges
and universities designated as the 1994 Land-Grant Institutions (1994
Institutions) by strengthening their educational programs. The program
provides funding for essential community facilities and equipment for
the Tribal colleges and universities.
To be eligible to receive a grant under this program, the applicant
must be one of the Tribal colleges or universities designated as the
1994 Institutions. Grant funds are disbursed in an attempt to provide
an equal distribution of funds to each of the 1994 Institutions when
possible. Recently, these grants have averaged $572,837, which is
approximately 32 percent of the average costs of the projects that the
grants are funding.
Distance Learning and Telemedicine Grant Program. The purpose of
the Distance Learning and Telemedicine (DLT) Loan and Grant program is
to encourage and improve telemedicine services and distance learning
services in rural areas through the use of telecommunications, computer
networks, and related advanced technologies by students, teachers,
medical professionals, and rural residents.
To be eligible to receive a grant under this program, the applicant
must be legally organized as an incorporated organization or
partnership, an Indian tribe or tribal organization, as defined in 25
U.S.C. 450b (b) and (c), a state or local unit of government, a
consortium, as defined in Sec. 1703.102, or other legal entity,
including a private corporation organized on a for profit or not-for
profit basis. In addition, each applicant must provide written evidence
of its legal capacity to contract with the Agency to obtain the grant,
loan and grant combination, or the loan, and comply with all applicable
requirements. If a consortium lacks the legal capacity to contract,
each individual entity must contract with the Agency in its own behalf.
As implemented by the program office, an applicant is responsible
for providing at least 15 percent of the grant amount requested and the
minimum amount of a grant under this program is $50,000. Recently,
these grants have averaged $294,950, which is approximately 60 percent
of the average costs of the projects that the grants are funding.
Renewable Energy Systems and Energy Efficiency Improvement Grant
Program. The current Renewable Energy Systems and Energy Efficiency
Improvement grant program provides grants for the purchase and
installation of renewable energy systems and energy efficiency
improvements. Eligible applicants are farmers, ranchers, and rural
small businesses who can demonstrate financial need, as determined by
the Agency.
The amount of the grant made available to an eligible project
cannot exceed 25 percent of total eligible project costs, as required
by the authorizing statute. Currently, the program office sets the
minimum amount of a grant at $2,500 and the maximum amount at $500,000
for renewable energy systems and $2,500 and $250,000, respectively, for
energy efficiency improvement projects. Unlike the 25 percent
limitation, these minimum and maximum grant amounts are not statutorily
specified, but are set by the Agency in implementing the program.
Recently, these grants have averaged $35,703, which is approximately 17
percent of the average costs of the projects that the grants are
funding.
Rural Cooperative Development Grant Program. The Rural Cooperative
Development grant program provides grants for the development or
continuation of the cooperative development center concept. Grant funds
and matching funds may be used for, but are not limited to, providing
the following to individuals, cooperatives, small businesses and other
similar entities in rural areas served by the Center:
Applied research, feasibility, environmental and other
studies that may be useful for the purpose of cooperative development.
Collection, interpretation and dissemination of
principles, facts, technical knowledge, or other information for the
purpose of cooperative development.
[[Page 61202]]
Providing training and instruction for the purpose of
cooperative development.
Providing loans and grants for the purpose of cooperative
development in accordance with the annual Notice of Solicitation of
Applications and applicable regulations.
Providing technical assistance, research services and
advisory services for the purpose of cooperative development.
Applicants eligible for rural cooperative development grants are
non-profit organizations and institutions, including institutions of
higher education. Public bodies are not eligible to receive grants.
Under the current Rural Cooperative Development grant regulation,
grant funds may be used to pay up to 75 percent (95 percent where the
grantee is a 1994 Institution) of the cost of establishing and
operating centers for rural cooperative development. Applicants must
verify in their application that all matching funds are available for
the time period of the grant. Recently, these grants have averaged
$189,000, which is approximately 58 percent of the average costs of the
projects that the grants are funding.
Value-added Producer Grant Program. The purpose of this program is
to provide grants to enable producers to develop businesses that
produce and market value-added agricultural products, including the
development of strategies, creation of marketing opportunities, and
development of business plans. The program distinguishes between
planning grants and working capital grants. Grant funds for planning
grants may be used for such purposes as, but not necessarily limited
to: Obtaining legal advice and assistance; conducting a feasibility
study; developing a business plan; and developing a marketing plan.
Grant funds for working capital grant may be used for such purposes as,
but not necessarily limited to: Designing or purchasing an accounting
system, paying for salaries, utilities, and rental office space; and
purchasing inventory, office equipment, and office supplies.
Applicants eligible for grants under this program are independent
producers, agricultural producer groups, farmer or rancher
cooperatives, and majority-controlled producer-based business ventures.
Except for independent producers, all other applicants must be entering
an emerging market in order to be eligible.
As required by its authorizing statute, grant funds may be used to
pay up to 50 percent of the costs for carrying out eligible projects.
Recently, these grants have averaged $150,000, which is approximately
50 percent of the average costs of the projects that the grants are
funding.
Water and Waste Disposal Facilities Grant Program. The Water and
Waste Disposal Facilities grant program provides grants to develop
water and wastewater systems, including solid waste disposal and storm
drainage, in rural areas and to cities and towns with a population of
10,000 or less. Example projects include construction of water lines,
pumping stations, wells, storage tanks, and sewage treatment
facilities.
Eligible applicants for water and waste disposal facilities grants
are public bodies, such as municipalities, counties, districts
authorities, or other political subdivisions of a State, territory, or
commonwealth; non-profit organizations, such as corporations and
associations; Indian tribes on Federal and State reservations or other
federally-recognized Indian tribes. Further, applicants must have the
legal authority to own, construct, operate, and maintain the proposed
facility.
As required by its authorizing statute, grant funds are limited to
no more than 75 percent of the Agency eligible project development
costs. As implemented by the program office, grant funds are limited
to: (1) No more than 75 percent of the Agency eligible project
development costs when the median household income of the service area
is below the higher of the poverty line or 80 percent of the state non-
metropolitan median income and the project is necessary to alleviate a
health or sanitary problem and (2) no more than 45 percent of the
Agency eligible project development costs when the median household
income of the service area exceeds 80 percent of the state non-
metropolitan median income but is not more than 100 percent of the
statewide non-metropolitan median household income. Recently, these
grants have averaged $663,190, which is approximately 20 percent of the
average costs of the projects that the grants are funding.
How the Current Programs Work
The grant programs being included in today's proposed rulemaking
have many similarities, with a few major differences. A major
difference between seven of the eight grant programs is whether the
grant program is administered as a Nationally-competed grant program or
a State-allocated grant program. The eighth grant program, Tribal
College grants, is a program with a small statutorily defined set of
beneficiaries.
The following paragraphs provide an overview of how the Nationally-
competed and State-allocated grant programs are currently implemented.
Nationally-competed grant programs. The following paragraphs
describe how the Agency currently administers its nationally-competed
grant programs, four of which are being consolidated under this
proposed rule--Distance Learning and Telemedicine, Renewable Energy
Systems and Energy Efficiency Improvement (now known as the Rural
Energy for America Program), Rural Cooperative Development, and Value-
added Producer.
As it currently administers its nationally-competed grant programs,
the Agency typically publishes a Federal Register notice announcing
that it is accepting applications for the program, either as a Notice
of Solicitation of Application (NOSA) or a Notice of Funding
Availability (NOFA). The primary purpose of this notice is to alert the
public to the opening of a period during which the Agency will accept
applications for the program. This creates a ``window'' for submitting
applications.
The amount and type of information contained in these NOSAs and
NOFAs varies from program to program and may vary greatly year to year.
Most notices include information on applicant and project eligibility,
application submittal and content requirements, minimum and/or maximum
grant amounts, and project priority categories and scoring.
Under the current administration of the nationally-competed grant
programs, applications are either submitted to a Rural Development
State Office or to the Rural Development National Office, depending on
the program, for review, evaluation, and scoring. For most of the
nationally-competed grant programs, the applicant will receive a letter
from the Agency acknowledging receipt and confirmation that a full
application was received. If an incomplete application is received, the
Agency notifies, for some nationally-competed grant programs, the
applicant as to what information is missing and the applicant has a set
period of time in which to provide the missing information. For other
nationally-competed grant programs, however, if an incomplete
application is received, the Agency does not go back to the applicant
for the missing information. This is done because some nationally-
competed grant programs receive a sufficient number of complete
applications to use all of the funds in a fiscal year and, accordingly,
the Agency does not pursue incomplete applications. If this is the
situation, the
[[Page 61203]]
NOSA or NOFA indicates this to the public.
As noted above, the nationally-competed grant programs provide a
window for which applications are accepted. This results generally in a
one time review and then scoring and ranking of applications. As
currently implemented, the Agency reviews an application upon its
receipt to determine whether the applicant and project are eligible for
that program. If the Agency determines that the applicant and/or
project are ineligible, the Agency notifies the applicant of such
determination. Applications that are determined to be eligible are
scored and ranked by National Office program staff. Depending on the
nationally-competed grant program, independent reviewers may be used to
evaluate and score applications. In addition, the nationally-competed
grant programs currently limit the Administrator's discretionary points
that can be included in the scoring of applications to 10 percent or
less of the total potential points that an application can score.
Based on this pool of applications, a nationally-competed grant
program's National Office selects applications for funding. Applicants
that are not selected due to a low priority rating are notified. The
Agency then proceeds to work with the applicants selected for funding
in order to make awards by the end of the Federal fiscal year.
In currently administering its nationally-competed grant programs,
the Agency begins the process of obligating funds and making awards
(disburse the grant) by sending the applicant a letter of conditions
that must be agreed to before the Agency and the grantee enter into a
binding agreement, such as a grant agreement.
Once the Agency has initiated funds disbursement, it monitors the
grantee to ensure conformance with the terms and conditions of the
grant agreement. Depending on the nationally-competed grant program,
the grantee is currently required to submit reports to the Agency
during the grant period. Once the project has been completed, the
Agency closes out the grant. If a grantee violates the terms and
conditions of the grant agreement, the Agency takes appropriate steps,
including, depending on the severity of the violation, the suspension
or termination of the agreement.
State-allocated grant programs. These paragraphs describe how the
Agency currently administers its State-allocated grant programs, three
which are being consolidated under this proposed rule--Community
Facilities, Economic Impact Initiatives, and Water and Waste Disposal
Facilities. In contrast to the Nationally-competed grant programs, the
Agency typically does not publish Federal Register (FR) notices for its
State-allocated programs, but instead relies on other methods for
alerting the public to the programs and the submittal of applications.
In addition, the Agency tends to accept applications for State-
allocated grant programs at any point during the course of the year.
Using Community Facilities (and the Economic Impact Initiatives) as
an example of how the Agency currently implements a State-allocated
grant program, applicants file a preapplication with requisite
documentation and supporting information to the Rural Development field
office. The Rural Development field office then reviews the package for
completeness of the documentation and for applicant and project
eligibility. If needed, the Rural Development field office will request
the opinion of the Office of General Counsel on the applicant's legal
existence and authority to perform the proposed project.
As currently being administered, the Rural Development field office
submits a copy of the application package to the Rural Development
State Office with a letter of recommendation. The Rural Development
State Office reviews the package and notifies the Rural Development
field office of its findings. If an application is determined to be
ineligible, the Rural Development field office notifies the applicant,
who has the right of appeal.
If an application is determined to be eligible, the Rural
Development field office provides the applicant with the necessary
forms and instructions for filing a complete application. For example,
the Community Facilities program requires Form SF 424, a preliminary
architecture report, a financial feasibility report, and environmental
information. If the project is small, the architectural and financial
feasibility reports may not be required.
If there is a concern (e.g., incomplete, not properly assembled)
with the application, the Rural Development field office will notify
the applicant as to what information is needed. If the applicant fails
to submit a complete application by the date specified by the Rural
Development State Office or in an otherwise timely manner, the Agency
may discontinue processing the application. If the application is
complete, the Agency will notify the applicant as to eligibility and
anticipated availability of funds.
Completed applications returned to the Rural Development field
office are evaluated. The Rural Development field office reviews the
application package for the amount of grant funds allowed and scores
the application for selection priority. As currently implemented,
applications may also receive discretionary points from the State
Director.
Generally, the Rural Development State Office authorizes grant
assistance to those eligible applicants with the highest priority
score. Other factors, however, may enter into selecting applications
for funding including the amount of funding being requested relative to
available funds and whether the application is for the continuation of
a project. Applicants who are eligible for funding, but cannot be
funded due to lack of Agency funds are advised by the State Office that
grant assistance is not available. If, based upon the application, it
appears that funds will be available for the project within a feasible
period of time, the Agency notifies the applicant that the application
will be retained until funding becomes available. If, based upon the
application, it is not likely that the project will be funded in the
near future, the Agency returns the application to the applicant at the
end of the fiscal year.
As for nationally-competed grant programs, the process the Agency
currently uses to obligate funds and make awards (disburse the grant)
for State-allocated grant programs begins with the Agency sending the
applicant a letter of conditions that must be agreed to before the
Agency and the grantee enter into a binding agreement, such as a grant
agreement.
Once funds have been disbursed, the Agency monitors the grantee to
ensure conformance with the terms and conditions of the grant
agreement. Depending on the State-allocated grant program, the grantee
is currently required to submit reports to the Agency during the grant
period. Once the project has been completed, the Agency closes out the
grant. If a grantee violates the terms and conditions of the grant
agreement, the Agency takes appropriate steps, including, depending on
the severity of the violation, the suspension or termination of the
agreement.
C. Goals of the New Platform
The grant programs that are being combined under the proposed new
platform were developed separately, and are administered independently
of each other. The platform being proposed seeks to achieve the
following objectives:
Reduce the burden to applicants;
[[Page 61204]]
Increase the efficiency in delivering grant programs; and
Improve the Agency's program monitoring and reporting
capabilities.
Reduce the burden to applicants. The new platform can potentially
reduce the burden to applicants in several ways.
First. When applicants seek grants under more than one of the
programs, they are required to learn how to fill out multiple forms.
This is inefficient and costly to the applicants and makes the programs
less attractive to the applicants. By combining common elements into a
single subpart, the new platform can reduce the burden to applicants
applying to multiple grant programs covered in this regulation.
Second. Many grant programs receive applications from applicants or
projects that are ineligible. In some cases, the applicant spends a
significant amount of resources in putting together such applications.
To help reduce the number of such applications, the new platform
incorporates a voluntary preapplication process that applicants can use
to help assess whether they and their projects are eligible. By getting
an early assessment of eligibility, the Agency believes that fewer
``non-eligible'' applications will be submitted, thereby saving the
applicant expenses in assembling and submitting a complete application.
Third. Under the new platform, applicants would be allowed to
submit applications, including preapplications, to any Rural
Development office or on-line through grants.gov. Allowing applicants
to submit applications to any Rural Development office, including Rural
Development field offices, provides applicants with additional
submittal options than under the current programs, which specify
locations where applications are to be submitted. For some applicants,
the ability to submit applications to their local Rural Development
field office will be more convenient. In addition, to the extent that
this platform can leverage and further promote the utilization of field
offices, it will serve to improve communication between the Agency and
the applicants.
Increase efficiency in delivering grant programs. There are several
ways in which the new platform will help the Agency improve the
efficiency in delivering the grant programs.
First. The new platform would improve the work flow for the
National and State Rural Development office personnel. The current
delivery platform creates significant processing peaks and valleys in
the delivery of the grant programs. The new platform seeks to ``smooth
out'' these peaks and valleys through an open application period. This
will also allow the Agency to better manage staffing requirements and
provide administrative consistency among the various grant programs.
Second. The new platform improves program delivery efficiency by
``separating'' the application process from the funding process.
Currently, consideration of grants waits until funds are made available
through the appropriations process. This creates uncertainty in work
flow and, at times, compresses the effort and resources required to
review applications and make decisions into a very short timeframe.
The new platform incorporates two different application submittal
schemes. Under the first scheme, applications are accepted at any time.
Under the second scheme, applications are submitted once each year.
These processes will occur regardless of when funds are available and
under what mechanism they are made available. By separating the
application submittal and review process from funding availability, the
Agency is creating a process that will allow both applicants and Agency
staff to better manage their resources.
Third. The new platform would streamline the Agency's efforts in
administering the grant programs. Maintaining separate sets of basic
requirements creates complexity in administrative activities. For
example, with each program administered under separate regulations, any
change to basic requirements calls for multiple concurrences.
Similarly, adding a new program requires the addition of a new set of
basic requirements as these are not currently shared. The proposed
combined platform will streamline basic grant requirements, allowing
all the grant programs included in this regulation to reach a uniform
functionality of process.
Further, when new programs are implemented under the current
delivery platform, a new regulation is developed that, in many
respects, addresses or adopts many of the same requirements. Time and
effort are wasted in readdressing issues during the development of new
program regulations leading to inefficient rulemaking and a delay in
program implementation. The structure of the new platform provides for
the addition of other Agency, or newly authorized, grant programs as
needed without the addition of new sets of basic requirements. The
common elements (proposed subpart A) of the proposed rule are intended
to remain unchanged, while additional programs would be added to
proposed subpart B.
Fourth. Having a common rule for multiple programs will be easier
to administer, improve communication of basic program characteristics,
and reduce confusion among both staff and the public. A common
regulation will reduce the staff time, effort, and training necessary
for issuing grants. Efficiencies will be realized as common program
elements facilitate consolidation of information technology platforms
and systems' maintenance cost. Internal management controls will
improve with standardized servicing and oversight. Uniform processes
will facilitate electronic commerce between Rural Development and its
customers.
Improve the Agency's program monitoring and reporting capabilities.
Building on the efficiency improvements under a common grants platform,
monitoring and reporting program performance of grant recipients will
be conducted in conformance with uniform standards. With standardized
servicing and oversight, Agency staff will be better able to monitor
grant recipients to the extent necessary to ensure that facilities are
functioning in accordance with project performance goals.
Through the grantee's uniform standard semiannual performance
reporting and a final performance report, the Agency will be able to
compare actual accomplishments against the objectives and benchmarks
stated in the project's performance plan. To account for the diversity
in grant programs, additional grantee performance data may be needed
for a thorough evaluation. Any special reporting requirements not
specified in the rule or subsequent notices will be established in the
Agency's letter of conditions provided to the grantee.
Project monitoring and report data will be captured and retained
through the Agency's management information systems and data warehouse.
Drawing on standardized collected data, the Agency will be able to
generate more comprehensive program performance reports both within a
program and comparisons across several programs. This will be
especially useful where programs with common or complementary
performance measures may have a compounded impact on a community's
social and economic development.
D. The New Platform
By way of this rule, the Agency is initiating the process of
developing a single regulation covering all 39 grant programs of the
Rural Development Mission Area. For the grant programs listed in this
regulation, the proposed
[[Page 61205]]
new platform simplifies, improves, and enhances the delivery of the
grant programs. By applying the requirements shared among the eight
grant programs included in this rule while maintaining required
programmatic differences, this new structure will streamline the
promulgation of regulations for new grant programs.
As noted earlier, the Agency is proposing to include eight grant
programs within this proposed rule. Under the new platform, the common
features of the programs are incorporated into a single subpart
(subpart A), with program-specific features provided in a separate
subpart (subpart B). While key features (e.g., applicant and project
eligibility, funding) of the existing programs remain under the new
platform, key differences can be found in applying for a grant, in the
process in which applications are submitted, evaluated, and selected
for funding, and in the manner in which notifications will be used to
provide information to the public on the grant programs.
The following paragraphs address the new platform by examining the
proposed delivery mechanisms, beginning with a discussion on the use of
notifications under the new platform and concluding with grant close-
out. Figure 1 illustrates the overall application process for grant
programs with an application deadline. Figure 2 illustrates the overall
application process for grant programs with an open application period.
BILLING CODE 3410-XY-P
[[Page 61206]]
[GRAPHIC] [TIFF OMITTED] TP15OC08.004
[[Page 61207]]
[GRAPHIC] [TIFF OMITTED] TP15OC08.005
BILLING CODE 3410-XY-C
[[Page 61208]]
1. Notifications. Under the new platform, the Agency will use
notifications to provide information on program funding and on
programmatic changes relevant to applications and to program
administration. The primary notification method used to disseminate
this information depends on whether the program is a Nationally-
competed grant program or a State-allocated grant program. In addition,
the timing of when the Agency issues a notification depends on the type
of information the notification contains.
Funding. The Agency will issue notifications identifying the level
of funds are available for each program and their minimum and maximum
grant amounts.
The Agency may elect to provide additional funding information in
these notifications. Such information may include, but would not be
limited to:
Type of award;
Fiscal year funds;
Approximate total funding;
Approximate number of awards;
Approximate average award;
Floor of award range;
Ceiling of award range;
Budget period length; and
Project period length.
For Nationally-competed grant programs, the primary notification
method that the Agency will use will be a Federal Register notice. One
or more notices may be necessary to do this. For State-allocated grant
programs, the primary notification method will be through a link found
on Rural Development's Web site http://www.rurdev.usda.gov. Funding
information for both types of grant programs would also be available at
any Rural Development office. The Agency will provide funding
information on each program every fiscal year.
Programmatic changes. The Agency will also issue notifications that
identify changes to a program that would affect the applicant or the
applicant's application. These circumstances are discussed below.
Administrator and State Director priority categories.
Subpart A provides lists of Administrator and State Director priority
categories. Administrator priority categories apply to both State-
allocated grant programs and nationally-competed grant programs, while
State Director priority categories apply only to State-allocated grant
programs. Individual programs may elect to use any or all of the
priority categories identified in subpart A in scoring applications,
but would not be able to add to these lists (unless done through a
change to the rule). Subpart B specifies the specific sets of
Administrator and State Director priority categories that each program
can use each year to score applications.
If a program office determines that a different set of priority
categories (but still within the priority categories identified in
subpart A) will be applicable for a given fiscal year, the Agency will
issue a notification to announce the priority categories that will be
used in scoring applications for that fiscal year.
Administrator and State Director points. Subpart B
identifies how points will be allocated for both Administrator and
State Director priority categories for each of the grant programs. If a
program office determines that a different allocation of these points
is appropriate, whether or not in conjunction with a change in priority
categories, then that program office would issue a notification, as
applicable, to indicate the point allocation to be used in that fiscal
year.
Additional reports. A program office may determine that
additional reports on project performance that are generally applicable
across projects within the program are necessary in addition to those
required under the proposed rule. In such instances, the Agency would
issue a notification to the public.
Ranking dates. A program office may elect to change one
(or more) of the ranking dates specified in subpart B of the proposed
rule. For example, a program office that has a specified ranking date
(July 15) may determine that it is necessary to move the ranking date
to earlier in the year because the program office has determined that
additional time may be needed to rank the applications in order to
ensure sufficient time to obligate funds. In such instances, the Agency
would issue a notification to the public.
Application deadline. For those programs with a specified
application deadline, a program office may elect to change the
application deadline date specified in subpart B of the proposed rule.
For example, a program office that has a specified application deadline
(March 1) may determine that it is necessary to move the application
deadline to earlier in the year in order to better manage Agency
resources and program funds. In such instances, the Agency would issue
a notification to the public.
For changes in Administrator and State Director priority categories
and/or points, the program office would issue the notification(s) at
least 30 days prior to the first ranking date in the upcoming fiscal
year or the application deadline, as applicable, to allow sufficient
time for applicants to finish their applications. If multiple program
offices seek to make these types of changes, the Agency may issue,
where feasible, a single notification covering all of the affected
programs rather than individual notifications for each of the affected
programs. For other programmatic changes, the Agency would issue
notifications on an as needed basis.
Finally, a program's eligibility requirements may change or the
Agency may determine that certain types of projects are no longer
eligible for grants or certain ineligible projects may become eligible.
Such instances would require the Agency to change to the regulation. In
order to help ensure the public is aware of such changes, the Agency
may include such information in the programmatic change notifications
discussed above.
Administrator approval. Under the new platform, State Directors
would propose to the Administrator each year the minimum and maximum
grant amounts for each State-allocated grant program included in this
part. Upon approval from the Administrator, the Agency would then
notify the public of the minimum and maximum grant amounts approved by
the Administrator. Similarly, each State Director may propose to the
Administrator changes in State Director priority categories and
associated points for State-allocated grant programs included in this
part. Upon approval from the Administrator, the Agency would then
notify the public of the priority categories and associated points
approved by the Administrator for each affected State-allocated
program.
2. Acceptance of Applications. As noted above, Nationally-competed
grant programs establish defined ``windows'' for when applications can
be submitted and both types of programs (Nationally-competed and State-
allocated) frequently specify the Rural Development office (field,
State, National) to which applications are to be submitted. Under the
new platform, the Agency is proposing to implement two application
submittal schemes, depending on the needs of the individual program:
An open application period; and
A specified application deadline.
Under the open application period scheme, the Agency would accept
applications at any time during the year. By accepting applications at
any time, there would no longer be any ``window'' for when to submit an
application. This feature eliminates the need for the public to wait on
the Agency to publish Federal Register notices, or use other methods,
to solicit applications. It is
[[Page 61209]]
important to note, however, that the Agency will still undertake
activities to promote the various grant programs.
The second scheme (a specified application deadline) is similar to
current Nationally-competed grant programs, but the date for
application submittal would be fixed in the regulation in subpart B. By
providing a date, the public will not have to wait for the Agency to
publish a notice identifying when applications are due. This will allow
applicants to plan for the preparation of their applications with
certainty.
By accepting applications at any Rural Development office under
either scheme, the Agency is seeking to make it more convenient for
applicants to submit their applications. To the extent that this
facilitates interaction between Rural Development staff and the
applicants, the Agency expects better communication will occur. The
Agency will implement internal procedures to ensure all applications
are delivered to the appropriate Agency program office.
3. Eligibility. Under the current programs, Rural Development
offices (National and State offices, as appropriate) determine both
applicant and project eligibility based on the individual grant
program's requirements. As described below, the proposed rule continues
this determination process mainly unchanged.
Applicant eligibility is based on the applicant meeting the common
requirements, which are citizenship and legal authority and
responsibility, and program-specific criteria, which are contained in
proposed subpart B. The proposed rule also identifies applicants who
would be categorically ineligible. In terms of eligible and ineligible
applicants, little has changed under the new platform compared to the
current programs. In addition, these criteria cannot be voided under
the exception authority provided in the proposed rule.
Project eligibility is based on the proposed project meeting
criteria found in Subparts A and B, as applicable. Subpart A requires
each project to meet the following criteria, as applicable and unless
otherwise modified by a specific provision in subpart B for a program:
Being primarily for the benefit of a rural area;
For those projects and purposes that acquire or improve
real or personal property, the applicant must be the owner of the
property or have leasehold interest acceptable to the Agency in the
property and control the revenues and expenses of the project,
including operation and maintenance; and
For projects and purposes that are determined by a service
area, on the boundaries of the proposed service area meeting a non-
discrimination criterion.
Projects that do not meet the applicable proposed criteria (as
found in Subparts A and B, as applicable) would be ineligible under the
new platform. In addition, these criteria (as found in subpart A and as
may be modified in subpart B) cannot be voided under the exception
authority provided in the proposed rule.
The applicable program-specific project eligibility requirements,
which are located in subpart B, remain essentially unchanged for those
of the current programs. Some differences are being proposed and these
are discussed in section II of this preamble.
In addition to identifying eligible projects, the proposed rule
identifies specific projects and purposes that are ineligible under all
circumstances from receiving a grant. The Agency assembled this list
from the list of ineligible projects and purposes identified in the
regulations and associated program notices for the programs being
included in the proposed rule. In addition, the Agency added the
following projects and purposes as ineligible:
Investment or arbitrage, or speculative real estate
investment;
Prostitution or projects generating income from activities
of a prurient sexual nature;
Any project eligible for Rural Rental Housing and Rural
Cooperative Housing loans under sections 515, 521, and 538 of the
Housing Act of 1949, as amended;
Any project generating income from the sale of illegal
drugs, drug paraphernalia, or any other illegal product or activity;
Any project located in a special flood or mudslide hazard
area as designated by the Federal Emergency Management Agency in a
community that is not participating in the National Flood Insurance
Program unless the project is an integral part of a community's flood
control plan; and
Any other similar project or purpose that the Agency
determines is ineligible for funding under this part and publishes in a
Federal Register notice.
4. Applying for a Grant. All applicants would be required to submit
an application. For some applicants (i.e., a government that is
proposing a project that is for construction, land acquisition, or land
development and that would require more than $100,000 of Federal
funding), a preapplication would be required (as is currently the
situation). For all other applicants, however, the submittal of a
preapplication would be optional. The following paragraphs discuss
briefly preapplications and applications.
Preapplications. The primary purpose of the preapplication is for
the Agency to make an assessment as to both applicant eligibility and
project eligibility. In addition, use of preapplications facilitates
early communication between the Agency and the applicant. By reviewing
preapplications, the Agency reduces the time and effort spent by
applicants in preparing full applications where the applicant and/or
project are clearly not eligible.
Applications. Because of the varying nature of the projects that
are associated with the grant programs, the Agency has determined that
the information to be included in a grant application should be program
specific, as it is currently. The contents of grant applications will
be made available to applicants through any Rural Development office,
the Agency's Web site, or National Headquarters. The information
associated with a grant application will not be significantly different
than currently required under the current programs.
However, an applicant would be allowed to submit an application
(including preapplications) to any Rural Development office. Under the
current programs, applications are submitted to specified locations. As
noted earlier, the Agency is proposing this change to make it more
convenient for applicants to submit their applications and to foster
communication between Rural Development staff and applicants.
Rather than identifying the specific documents that must accompany
each application for each program in the regulation, the Agency would
provide all the necessary forms and instructions in program-specific
application packages. This proposed process is similar to the current
process for several existing grant programs, but represents a change
for those Nationally-competed programs where the regulations and/or
Federal Register notice identify specifically what is required in each
application under each of those programs. The Agency believes that
implementing the proposed process for all grant programs affected by
this rule will provide administrative flexibility to each program as
well as consistency in implementation.
5. Processing Applications. The Agency would review each
application for the determination of applicant and project eligibility
and the likelihood of the project's feasibility. It is at this stage of
the process that the Agency would
[[Page 61210]]
make the formal determination of eligibility, unless it has already
been made.
In order to determine eligibility, the application must contain
sufficient and necessary information to allow the Agency to make the
eligibility determination. The Agency will also review the application
for assessing whether or not the project is likely to be feasible. To
further process an application for a project or purpose that is likely
to be unfeasible would be an inefficient use of Agency resources. At
the same time, the amount of information that is needed to make this
assessment varies between programs because of the differing complexity
of projects and purposes. The information provided to the applicant for
preparation of an application will assist the applicant in identifying
the amount of information necessary to allow the Agency to make this
feasibility assessment.
When reviewing an application for applicant and project
eligibility, if the Agency finds that there is insufficient
information, including for example if a form has not been signed, to
make an eligibility determination, the Agency will notify the
applicant. Once an eligibility determination has been made, the Agency
will notify the applicant. If the Agency determines that either the
applicant or the project is ineligible, the applicant would have the
right to appeal the decision to the National Appeals Division (NAD).
The steps associated with eligibility under the new platform are
essentially the same as under the current programs.
Similarly, if the Agency makes an assessment that a project is not
likely to be feasible, the Agency will notify the applicant of its
concerns. The applicant will then have the opportunity to address those
concerns before the Agency continues processing the application.
For programs with open application periods, an application that is
revised and resubmitted to the Agency will be processed at the next
applicable ranking date for that program. For example, if a revised
application is received on January 15, the Agency will consider it at
the March 15 ranking date, which is the next applicable ranking date.
For grant programs with a specified application deadline, each revised
grant application will be processed by the Agency if it is received on
or before the application deadline for that grant program. If such
revised applications are not received by the specified application
deadline for the grant program, the Agency will not process the
application.
6. Scoring Applications. For those applications for which the
applicant and project are eligible and the project is feasible (or is
likely to be feasible), the Agency will continue processing the
application by scoring it. The Agency will score applications on the
basis of the information provided when the Agency receives the
application. Thus, it is the responsibility of the applicant to provide
all information necessary at the time of application for the Agency to
score the application.
The Agency will score each application using a set of program-
specific priority categories, a set of State Director priority
categories, and a set of Administrator priority categories and their
associated points that are specific to each grant program. State
Director priority categories and points are only applicable to State-
allocated grant programs. In addition, Administrator priority
categories and points may be applied to State-allocated grant
applications only when applications are submitted for the national pool
of funds.
These sets of priority categories are identified in subpart B of
the proposed rule. As noted earlier (Section I. D. 1.), the Agency may
use a revised set of Administrator and State Director priority
categories and point allocations through the issuance of a
notification.
Priority Categories. As noted above, the Agency is distinguishing
between program-specific priority categories and Administrator and
State Director priority categories. Program-specific priority
categories are those priority categories that the Agency must use in
scoring each application for that grant program. In contrast,
Administrator and State Director priority categories are not mandatory;
that is, the Administrator and State Director are not obligated to use
their specified priority categories in scoring applications. If the
Administrator or State Director elects not to use their priority
categories, then neither can affect the scoring of an application.
The specification of priority categories for the Administrator and
the State Directors is a major difference from the current process.
Currently, the Administrator and State Directors have significant
discretion to reflect their priorities. In contrast, the proposed rule
eliminates this discretionary aspect by specifying the sets of
Administrator and State Director priority categories for each program
that will be considered each year. This change provides the public with
a much greater understanding of how their applications can be evaluated
by the Administrator and the State Directors. Furthermore, these
priority categories would be used each year, unless otherwise specified
in a notification issued under proposed Sec. 5002.15. Note that
program-specific priority categories can only change, however, if the
Agency subsequently revises subpart B of the regulation.
Points. Currently, the total available points vary considerably
between grant programs. The Agency is proposing to standardize the
total points (to 100) that can be awarded to an application under any
of the grant programs. Standardizing point totals is intended to help
the Agency administer the grant programs.
One difference from the current programs is the proposed
Administrator and State Director points that could be awarded to an
application. Except for the Community Facilities grant program, as
discussed in the following paragraph, both State Director points and
Administrator points would be each limited to 10 points (10 percent of
the total potential points) and can only be awarded for the specific
set of priority categories in effect for that program. In other words,
the Administrator or State Director could not use discretionary
categories to establish specific earmarks. Note that only State-
allocated grant programs would be allowed to award points for State
Director priority categories.
For the Community Facilities grant program, the Agency is proposing
to limit Administrator points to 20 points (20 percent of the total
potential points). The Community Facilities grant program applies to
projects that are ``essential community facilities.'' The types of
projects that may qualify as essential community facilities are very
broad, much broader than any of the other grant programs being included
in the new platform. This diversity of community facility projects
presents unique challenges for meeting the overall goals of the
program. The Agency believes, regarding these broad based programs,
that it is appropriate to provide greater flexibility in order to meet
the goals and objectives of the program. Therefore, the Administrator
would be allowed to award up to 20 points for community facilities
applications. As noted earlier, Administrator points may be applied to
State-allocated programs only when the National Office makes the
determination of which grant applications to fund from the national
pool of funds.
As with the sets of Administrator and State Director priority
categories, the procedures used for awarding Administrator and State
Director points each year would be as specified in subpart B, unless a
notification is issued as specified in proposed Sec. 5002.15. The
[[Page 61211]]
maximum number of points that the Administrator and the State Director
can award, however, can only be changed through a revision to the
regulation.
Changes in Administrator and State Director priority categories and
points. As noted earlier in this preamble, if there is a change in
Administrator or State Director priority categories and/or point
allocation to be considered for a particular year, the proposed rule
allows the Administrator or State Director to change the priority
categories and/or point allocation (but not the Administrator's or
State Director's point total) contained in the rule by issuing an
appropriate notification in a timely fashion. To illustrate the award
of Administrator and State Director priority categories and points
under the new platform, consider the following examples.
Examples. These examples are for State Director priority categories
for community facility grants, which allow the State Director to award
up to 10 points to an individual application. These examples are also
illustrative of the award of State Director priority categories and
points for other programs.
Example 1. The Agency does not issue a notification for an
upcoming fiscal year and an application meets each of the 10 priority
categories listed in subpart A of Sec. 5002.42(b)(2). In this
situation, the scoring procedure specified in subpart B for community
facility grants (Sec. 5002.101(f)(3)) would be used to score the
application for awarding State Director points. The Agency determines
that the application can be awarded full points for all 10 priority
categories. This would total 100 points. However, because the rule
limits the total number of State Director points to 10 points for any
one application, this application would receive 10 State Director
points.
Example 2. The Agency issues a notification indicating
that only four of the 10 State Director priority categories in subpart
A will receive consideration. In this case, the notification also
identifies the specific points to be awarded to the four priority
categories, such that the total points to be awarded do not exceed 10
points. For example, Priority Category 6--up to 3 points; Priority
Category 7--up to 3 points; Priority Category 8--up to 2 points; and
Priority Category 9--up to 2 points. Note that in this example the
point distribution totals 10. In evaluating this application, the
Agency determines that the application should be awarded full points
for Priority Categories 6, 7, and 8, but only one point for Priority
Category 9. The application would, therefore, receive nine (9) State
Director points.
7. Award process for applications. The Agency is establishing a
consistent process for selecting applications for funding. The two main
areas of the proposed award process are:
Ranking of applications; and
Selection of applications for funding.
In addition, the proposed rule addresses the disposition of
applications not selected for funding.
Ranking of applications. For those grant programs that have an open
application period, which would receive applications on a continuous
basis, the Agency is establishing a process for ranking applications
that sufficiently demonstrates competition for grant funds. To
accomplish this, the Agency is proposing that all scored applications
for a program be ranked by the Agency four times per year. The four
proposed ranking dates are, in order of occurrence during the fiscal
year, December 15, March 15, July 15, and August 15. If any of these
dates fall on a weekend or a Federally-observed holiday, the affected
ranking date would move to the next Federal business day. Further, as
noted earlier in this preamble, a program may change one or more
ranking dates in a fiscal year if it publishes a notification as
specified in proposed Sec. 5002.15.
The first three ranking dates were selected to provide an even
spacing of ranking dates to help even out the work flow. The first date
was selected with enough time after the beginning of the fiscal year
and after the publication of any applicable notification for the
upcoming fiscal year to allow applicants to prepare and submit an
application to be considered during the first ranking period. The last
date, August 15, was included because some programs need to obligate
funds prior to the end of the fiscal year and this date provides
sufficient lead time to accommodate such obligations. While only a
month after the July 15 date, the Agency is including it because it
provides additional time for applicants to submit applications for
consideration during the current fiscal year.
Applications submitted after August 15 of a given fiscal year,
however, will not be ranked until December 15 of the following fiscal
year. In this situation, the Agency will retain these applications
through the next ranking date (i.e., through December 15 of the
following fiscal year). Such applications would be evaluated and scored
based on that program's priority categories for the following fiscal
year. Therefore, if a program's Administrator and/or State Director
priority categories selected to score applications were to change
between the current fiscal year and the next, applicants should
consider whether their retained applications need to be resubmitted in
order to better address the change in the program's selected
Administrator and/or State Director priority categories.
It is important to note that the ranking dates for programs with an
open application period are not the same as application deadlines.
Under the new platform, applicants can submit applications for such
programs at any time. Once the application is determined to be
eligible, the Agency will rank the application on or after the next
ranking date. Consider the following examples for grant programs with
an open application period.
Example 1. Applicant A submits an application to the Agency on
November 1, 2008. The Agency determines that the application is
eligible for further processing on November 30, 2008. The Agency will
rank the application on or after December 15, 2008.
Example 2. Applicant B submits an application to the Agency on
December 16, 2008. The Agency determines that the application eligible
for further processing on January 5, 2009. The Agency will rank the
application on or after March 15, 2009.
Example 3. Applicant C submits an application to the Agency on
August 17, 2009. The Agency determines that the application is eligible
for further processing on September 23, 2009. The Agency will rank the
application on or after December 15, 2009.
Example 4. Applicant D submits an application to the Agency on
November 15, 2009. The Agency determines that the application is
eligible on December 20, 2009, after the December 15 ranking date has
passed. The Agency will rank Applicant D's application at the next
scheduled ranking date after December 15, which would be, in this
example, on or after March 15, 2010.
For grant programs that have a specified application deadline, such
as the Distance Learning and Telemedicine grant program, either a
single ranking date--July 15--or two ranking dates--March 15 and July
15--is being proposed, depending on the needs of the specific program.
The July 15 date was selected to ensure sufficient time for the Agency
to obligate funds to those applications selected for funding. As noted
earlier in this preamble, a program office may determine that it is
necessary to move the application deadline to earlier in the year in
order to better manage Agency resources and program funds. In such
instances, the
[[Page 61212]]
Agency would provide notification to the public.
Whether for a grant program with an open application period or for
a grant program with a specified application deadline, applications
that are ranked in a given fiscal year will be considered for selection
for funding or for potential funding, as applicable, during that fiscal
year. For grant programs with an open application period, this means
that applications received early in the fiscal year will have a longer
timeframe to be considered for selection for potential funding than
those received later in the fiscal year.
Selection of applications for funding or potential funding. For all
grant programs, the Agency will create, on or after each ranking date,
a priority list of ranked applications from which to select
applications for consideration for (potential) funding. In considering
which applications to select for (potential) funding, the Agency will
consider three basic criteria, which are discussed below, and any
program-specific criteria, as specified in subpart B. For each
application that is selected for (potential) funding, the Agency will
so notify the applicant.
As noted in the previous paragraph, the Agency will consider three
basic criteria selecting applications for (potential) funding. These
criteria are: (1) Ranking, (2) availability of funds, and (3) other
funding sources.
Ranking. This refers to an application's place on the
program's priority list, which is based on the score each application
receives. Higher scoring applications would receive first consideration
for (potential) funding. However, as discussed below for the two other
basic criteria and as may be specified in subpart B for a specific
program, a lower scoring application may be selected for (potential)
funding ahead of a higher scoring application. For example, if there is
insufficient funding for the higher scoring project, the Agency may
pass over that project to fund a lower scoring project in order to
fully expend the budget authority.
Availability of funds. This refers to the size of the
grant request relative to the program funds that remain available to
the program during the fiscal year. In order for the Agency to better
manage the availability of program funds, the Agency could select,
under the new platform, a lower scoring application before an eligible,
higher-scoring application when the higher scoring application:
Would require grant assistance in an amount greater than
the funds remaining in a particular funding period,
Would require more than 25 percent of a State's allocated
funds, or
Would require more than 25 percent of a Nationally-
competed grant program's funds.
In these situations, the Agency would notify the applicant
associated with the higher scoring application and provide the
applicant an opportunity to revise the amount of funds being requested
in their application, provided the reduced funding request does not
change the project's purposes and financial feasibility. The applicant
would then be able to resubmit the application before the Agency
selects the next highest scoring application for funding.
The Agency is proposing the 25 percent threshold for nationally-
competed grant programs based on current practice in the Agency's water
and waste disposal grant program. The Agency is willing to consider a
different threshold. The Agency is concerned that too low of a
threshold might create a situation, especially in smaller nationally-
competed grant programs, where this provision could be used to override
the selection of applications based on their scores. The Agency is also
concerned that too high of a threshold might not be effective at
limiting applications that commit too high a percentage of a fiscal
year's available funding for a particular program. As stated later in
this preamble, the Agency is requesting comment on this threshold
level.
Availability of other funding sources. This refers to
whether Rural Development loans and other, non-Rural Development
funding sources should be available to an applicant. If an applicant
with a higher scoring application can accomplish the project using
Rural Development loans or other non-Rural Development funding sources,
the Agency may consider the next highest scoring application ahead of
the higher scoring application.
Disposition of applications not selected for potential funding--
grant programs with an open application period. There are four
scenarios in which a ranked application may not receive funding:
Application selected for potential funding, but not funded
due to the Agency's lack of funds;
Application selected for potential funding, but not funded
due to missing information;
Application not selected for potential funding due to its
ranking and the available level of funds to the Agency; and
Application not selected for potential funding due to very
low ranking.
As summarized in Table 1 and described in the following paragraph,
the process for handling these four situations would be slightly
different.
BILLING CODE 3410-XY-P
[[Page 61213]]
[GRAPHIC] [TIFF OMITTED] TP15OC08.006
BILLING CODE 3410-XY-C
[[Page 61214]]
An application that is selected for potential funding, but is not
funded due to the Agency's lack of funds, will be carried forward in
the fiscal year in which it was selected for potential funding until
either it is funded or the end of the fiscal year in which it was
selected, whichever occurs first. If the selected application is not
funded by the end of the fiscal year in which it was selected for
potential funding, the Agency will carry the application forward into
the next fiscal year unless the applicant requests in writing the
Agency to withdraw the application from further consideration. Unless
there is a change to the regulation or authorizing statute that would
affect this process, a selected application that is carried forward
into the next fiscal year would not be subject to re-evaluation or re-
scoring, even if the priority categories applicable to that application
change for the next fiscal year, because it has already been completed.
However, the application may be required to be updated if information
in it becomes outdated.
If a ranked application has been selected for potential funding,
but has not been funded because additional information is needed, the
Agency will notify the applicant as to what information is needed,
including a timeframe for the applicant to provide the information. If
the applicant does not provide the information within the specified
timeframe, the Agency will remove the application from further
processing.
If a ranked application has not been selected for potential funding
because of its ranking and the available level of funds to the Agency,
it will be included in the set of applications considered in each
subsequent ranking date in the fiscal year in which it was ranked until
it is either selected for potential funding, funded, or the end of the
fiscal year in which the application was ranked is reached, whichever
occurs first. The Agency will retain the application for consideration
in the next fiscal year. All such retained applications must be updated
by the applicant as required by the Agency (e.g., financial conditions,
change in supporting documentation requirements). In this instance and
in addition to satisfying Agency requirements, the applicant is
afforded the opportunity to otherwise revise the application. The
application will then be re-evaluated and re-scored along with new
applications received for consideration for funding in the next fiscal
year.
If a ranked application has not been selected for potential funding
because it is determined by the Agency to be non-competitive due to its
very low score by the end of the fiscal year in which it was scored,
the Agency will remove the application from further consideration and
will notify the applicant that the Agency is no longer considering the
application.
Disposition of applications not selected for funding--grant
programs with an application deadline. All ranked applications that are
not funded in the fiscal year in which they were submitted will not be
carried forward into the next fiscal year. The Agency will so notify
the applicant in writing.
If an application has been selected for funding, but has not been
funded because additional information is needed, the Agency will notify
the applicant as to what information is needed, including a timeframe
for the applicant to provide the information. If the applicant does not
provide the information within the specified timeframe, the Agency will
remove the application for further consideration and will so notify the
applicant. In this situation, the application is also not carried
forward into the next fiscal year.
8. Grant agreement and conditions. This section of the new platform
addresses the mechanism the Agency will use an Agency-approved grant
agreement to make awards to those applicants selected for funding. This
section also identifies additional conditions that must be met by
grantees both prior to the award being made and after the award is
made. In general, the proposed requirements are the same as those for
the grant programs currently in place. The proposed rule, though,
provides a consistent structure for the administration of all of the
grant programs covered by the proposed rule.
9. Post-award activities and requirements. As for grant agreements
and conditions, the proposed rule generally adopts current practices
and provides a consistent structure for all of the grant programs
covered by the proposed rule.
10. Grant close out and related activities. As for the previous two
sections, the requirements in this section generally adopt current
practices and provide a consistent structure for all of the grant
programs covered by the proposed rule.
II. Discussion of Proposed Rule
In this section, the proposed rule is further described. First, an
overall organization of the proposed rule is presented, followed by a
section-by-section discussion of each part. Please note that the
discussion in this section applies in its entirety to seven of the
eight grant programs being included; it does not apply in its entirety
to Tribal College grants. The provisions discussed in this section that
apply to Tribal College grants are contained in proposed Sec. Sec.
5002.1 through 5002.14 and in proposed Sec. Sec. 5002.60 through
5002.80. The discussions in this section on eligibility, applying for a
grant, processing applications, application scoring, and award process
do not apply to Tribal College grants. A discussion of these aspects of
the proposed rule for Tribal College grants is presented in section
II.B.
A. Overall Organization of the Rule
The proposed rule is divided into two main parts, subparts A and B.
Subpart A, contains the provisions that apply to all of the grant
programs, except for Tribal College grants as described in the previous
paragraph, covered by the proposed rule. In addition, subpart A
contains provisions applicable to cooperative agreements. These subpart
A provisions would not become effective until cooperative agreements
are provided and published in subpart B to this part.
Subpart B, contains the provisions specific to the grant programs
covered by the proposed rule. The Agency is not proposing to include
cooperative agreements in subpart B at this time, but may consider
adding cooperative agreements to subpart B at a future date.
Subpart A. Subpart A is divided into nine major elements. The first
element, General Provisions, covers general provisions associated with
this part, and addresses the purpose of this part (Sec. 5002.1), the
definitions and abbreviations used in this part (Sec. 5002.2), appeal
rights (Sec. 5002.3), exception authority (Sec. 5002.4), compliance
with other Federal laws (Sec. 5002.5) and with State and local laws
(Sec. 5002.6), environmental requirements (Sec. 5002.7), and forms,
regulations, and instructions (Sec. 5002.8).
The second element, Funding and Programmatic Change Notifications,
covers funding and programmatic change notifications (Sec. 5002.15).
The third element, Eligibility, covers the basic eligibility
requirements for eligible applicants (Sec. 5002.20), ineligible
applicants (Sec. 5002.21), eligible projects and purposes (Sec.
5002.22), and ineligible projects and purposes (Sec. 5002.23).
The fourth element, Applying for a Grant, covers the basic
requirements associated with applying for a grant (Sec. 5002.30),
including preapplications (Sec. 5002.31) and applications (Sec.
5002.32).
The fifth element, Processing and Scoring Applications, addresses
the steps that the Agency will use in
[[Page 61215]]
processing and scoring applications. The steps associated with
processing applications (Sec. 5002.40) cover initial review of
applications by the Agency, notifications to the applicants,
resubmittal of applications by applicants, and applications that are
subsequently found to be ineligible. This element also addresses the
processes for dealing with application withdrawal (Sec. 5002.41) and
the scoring of applications (Sec. 5002.42), including the priority
categories that the Administrator and the State Directors may use in
scoring applications. Specific priority categories and points to be
used are found in subpart B for each individual program.
The sixth element, Awarding Grants, covers the award process (Sec.
5002.50). In this element, the process that the Agency will use in
ranking and selecting applications for funding is presented. In
addition, this element covers processes associated with applications
that are not selected and those that are selected, but do not receive
funding.
The seventh element, Grant Agreements and Conditions, addresses the
grant agreement and conditions for applications that are funded. This
element covers actions that must occur prior to grant closing or start
of construction (Sec. 5002.60), the process used in making the grant
agreement (Sec. 5002.61), and the use of remaining funds (Sec.
5002.62).
The eighth element, Post Award Activities and Requirements,
addresses activities and requirements once an award has been made. This
element covers the following areas:
Monitoring and reporting program performance (Sec.
5002.70);
Programmatic changes and budget revisions (Sec. 5002.71);
and
Transfer of obligations (Sec. 5002.72).
The ninth element, Grant Close Out and Related Activities, covers
grant close out, non-compliance, and termination (Sec. 5002.80).
Subpart B. This subpart addresses provisions that are specific to
the individual programs as follows:
Provisions specific to the Community Facilities grant
program are in found in Sec. 5002.101;
Provisions specific to the Rural Energy for America grant
program are found in Sec. 5002.102;
Provisions specific to the Rural Cooperative Development
grant program are found in Sec. 5002.103;
Provisions specific to the Distance Learning and
Telemedicine grant program are found in Sec. 5002.104;
Provisions specific to the Value-Added Producer grant
program are found in Sec. 5002.105;
Provisions specific to the Water and Waste Disposal
Facilities grant program are found in Sec. 5002.106;
Provisions specific to the Economic Impact Initiatives
grant program are found in Sec. 5002.107; and
Provisions specific to the Tribal College grant program
are found in Sec. 5002.108.
The intent of subpart B is to identify all of the provisions
specific to each of the eight programs. In this way, each program
maintains its integrity under the new platform. Within subpart B, each
program specific provisions are related back, where applicable, to a
corresponding section in subpart A. For example, each section has
subsections that address applicant and project eligibility. In
addition, some program-specific requirements in subpart B supersede
specific subpart A requirements. For example, there is a subpart B
provision for value-added producer grants that indicates that the
subpart A requirement for the project to primarily serve a rural area
does not apply to value-added producer grants.
B. Discussion of Sections
Purpose and Scope (Sec. 5002.1)
This section defines the purpose, scope, and applicability of this
part (Sec. 5002.1(a), (b), and (c)), respectively.
This rule applies to ``grant only'' applications and not to loan
grant applications (Sec. 5002.1(c)(1)). A loan and grant combination
application is one in which an entity is seeking both a loan and a
grant in order to fund its project. This part would apply only to
``grant only'' applications, unless another 7 CFR part incorporates
provisions from the proposed rule. If an applicant is seeking a grant
as part of a ``grant and loan'' application, this part would not apply
to the grant portion of the grant and loan application, unless another
7 CFR part incorporates provisions from the proposed rule.
This section also includes the incorporation by reference (Sec.
5002.1(d)) of all of the regulations of the Department of Agriculture's
Office of Chief Financial Officer (or successor office) as codified in
7 CFR parts 3000 through 3099, including, but not necessarily limited
to, 7 CFR parts 3015 through 3019, 7 CFR part 3021, and 7 CFR part
3052, and successor regulations. These parts are referred to in the
preamble and the rule as the ``Departmental regulations,'' and
constitute the existing Department's regulations affecting all grant
programs. Note that this phrase is not used in all sections of the
rule. The absence of this phrase from a section of the rule does not
mean that the Departmental regulations do not apply to that section.
Definitions and Abbreviations (Sec. 5002.2)
This section presents the definitions and abbreviations used in
this part, including terms that may be specific to one of the eight
programs found in subpart B. It also incorporates by reference terms
used in the Departmental regulations.
The proposed rule contains fewer definitions than found in the
existing regulations, primarily because the deleted terms are not used.
Some definitions have been added or revised.
The proposed rule includes a definition for ``poverty line.''
Poverty line is used determining project eligibility under the
Community Facilities program. The Agency determines the poverty line in
a manner consistent with criteria established by the Department of
Health and Human Services (DHHS) and the Department of Housing and
Urban Development. Current poverty line information published by DHHS,
however, does not cover Puerto Rico, the Western Pacific Islands, and
the Virgin Islands. As it is possible for the Community Facilities
grant program to award grants to applications from these locations, the
Agency has established poverty lines for these locations, based on the
level of income.
Appeal Rights (Sec. 5002.3)
As currently provided, this paragraph provides the legal basis for
a person to file an appeal of an adverse decision made by the Agency in
implementing the proposed program. When the Agency makes an adverse
decision, a person may file an appeal to the National Appeals Division
in accordance with 7 CFR part 11.
Exception Authority (Sec. 5002.4)
This section identifies the situations under which the
Administrator may make exceptions to the requirements contained in the
regulation.
Unlike the current regulations, the proposed rule identifies three
exceptions to this Exception Authority, where the Administrator would
not be allowed to make exceptions. These three exceptions are:
Applicant eligibility;
Project eligibility; and
Rural area definition.
The Agency believes that applicant and project eligibility criteria
must be maintained at all times in order to be consistent with
statutory authority.
[[Page 61216]]
Compliance With Other Federal Laws (Sec. 5002.5)
This section states that applicants must comply with other
applicable Federal laws including, but not limited to, Equal Employment
Opportunities, Americans with Disabilities Act, Equal Credit
Opportunity Act, Fair Housing Act, and the Civil Rights Act of 1964.
State Laws, Local Laws, and Regulatory Commission Regulations (Sec.
5002.6)
This section states that the provisions of this part will be
controlling in all cases where there are conflicts between the
provisions of this part and State or local laws or regulatory
commissions regulations.
Environmental Requirements (Sec. 5002.7)
The applicant would be required to comply with Agency environmental
requirements as found under subpart G of either 7 CFR part 1940 (for
Rural Housing, Business-Cooperative, and Utilities Services) or 7 CFR
part 1794 (for Rural Utilities Services), as appropriate. These
requirements are consistent with those under the eight current
programs.
In addition, the applicant must not take any action or incur any
obligation with respect to the proposed project that would either limit
the range of alternatives to be considered during the Agency's
environmental review process or which would have an adverse effect on
the environment. If such actions or obligations have been incurred that
would limit the range of alternatives, the project will be ineligible
for a grant under this part.
Forms, Regulations, and Instructions (Sec. 5002.8)
This section states that all forms, regulations, instructions, and
other materials necessary to submit applications for each of the grant
programs included in this part may be obtained through the Agency. This
material, including application packages, will be available from Agency
offices, including but not limited to Rural Development State Offices,
and the Agency's Web site.
Funding and Programmatic Change Notifications
This part of the proposed rule identifies the types of information
to be included in the notifications, the methods that the Agency will
use to disseminate this information, and when the notifications will be
made.
Notifications (Sec. 5002.15)
This section identifies the types of information the Agency will
include in the notifications, which includes the level of available
funds, the minimum and maximum grant amounts, and various programmatic
changes (e.g., changes in Administrator and State Director priority
categories and points, changes in ranking dates, changes in application
deadlines for those programs with specified application deadlines). The
primary notification methods that the Agency will use to make this
information are Federal Register notices for Nationally-competed grant
programs and Rural Development's Web site for State-allocated grant
programs. All information contained in these notifications would also
be available at any Rural Development office.
Notifications involving funding will be made each fiscal year for
each grant program. Notifications involving changes in Administrator
and State Director priority categories and points will be made at least
30 days prior to the first ranking date in the year or the application
deadline, as applicable. Notifications involving all other programmatic
changes will be made on an as needed basis.
Eligibility
This section covers requirements associated with both applicant and
project eligibility and is divided into four sections, which are
described below. In order for a project to be considered for a grant,
both the applicant and the project must be determined by the Agency to
be eligible.
Applicant Eligibility (Sec. 5002.20)
This section identifies the requirements for applicant eligibility.
For an applicant to be eligible for a grant under this part, the
applicant must meet the criteria in this section and the applicant
eligibility criteria in subpart B for the applicable grant program. The
program-specific applicant eligibility requirements found in subpart B
for the program under which their project falls are discussed later in
this preamble when the individual programs are presented.
This section identifies two common applicant eligibility
requirements that all applicants must meet. These two criteria address
citizenship (Sec. 5002.20(a)) and legal authority and responsibility
(Sec. 5002.20(b)).
To be eligible, an applicant must either (1) be a citizen of the
United States (U.S.), the Republic of Palau, the Federated States of
Micronesia, the Republic of the Marshall Islands, or American Samoa or
(2) reside in the U.S. after legal admittance for permanent residence.
If the applicant is an entity other than an individual, the applicant
must be at least 51 percent owned by persons who are either citizens of
one of the countries identified above or legally admitted permanent
residents residing in the U.S.
In addition, the applicant must have, or be able to obtain, the
legal authority to carry out the purposes of the grant.
Ineligible Applicants (Sec. 5002.21)
This section identifies criteria that would make an applicant
ineligible for a grant under this part. An applicant would be
ineligible if the applicant (1) Is debarred, suspended, or otherwise
excluded from or ineligible for participation in Federal assistance
programs under Executive Order 12549, (2) has an outstanding judgment
obtained by the U.S. in a Federal Court (other than U.S. Tax Court),
(3) is delinquent on the payment of Federal income taxes, or (4) is
delinquent on Federal debt. These conditions are generally consistent
with those found in the current programs.
Project Eligibility (Sec. 5002.22)
This section identifies three criteria required for a project to be
eligible to receive a grant under this part. To be eligible, a project
must meet the criteria in this section that are applicable to the
project, unless otherwise specified in subpart B for a specific
program. For most programs, additional project eligibility criteria are
found in subpart B for specific programs. Thus, for a project to be
eligible for a grant under this part, the project must meet both the
applicable criteria in this section (unless otherwise specified in
subpart B) and the criteria in subpart B for the applicable grant
program.
A grant application for a project that meets its applicable project
eligibility criteria as specified in subparts A and B will not
automatically receive grant funding. However, a project that fails to
meet any one of its applicable project eligibility criteria would be
automatically ineligible for consideration for a grant, regardless of
the other attributes of the project.
Primarily serve a rural area. The first criterion (Sec.
5002.22(a)), which applies to all projects and purposes, except those
under the Value-Added Producer grant program (Sec. 5002.105) and the
Rural Energy for America grant program (Sec. 5002.102), addresses the
purpose of the project--the project must primarily serve a rural area.
This criterion is generally consistent with what the current programs
require, but, unless otherwise specified in subpart B, does not require
the project to be physically located within a rural area.
[[Page 61217]]
For both the Value-Added Producer grant program and the Rural
Energy for America grant program, the rule would require all projects
to be located in a rural area. For the Rural Energy for America grant
program, the Agency is proposing to continue the current requirement
that the project must be located in a rural area. For the Value-Added
Producer grant program, however, this is a new requirement from the
current program.
Ownership and control requirement. The second criterion (Sec.
5002.22(b)) applies only to those projects and purposes that acquire or
improve real or personal property, unless otherwise specified in
subpart B. This criterion requires the applicant to be the owner of the
property or have leasehold interest acceptable to the Agency in the
project and control the revenues and expenses of the project, including
operation and maintenance.
Service area selection. The third criterion (Sec. 5002.22(c))
applies only to those projects and purposes that are determined by a
service area. This criterion specifies that the proposed service area
of the project must be chosen in a way that no user or area is excluded
because of race, color, religion, sex, marital status, age, disability,
or national origin. This criterion, where applicable, is the same as
found under the current regulations of the Community Facilities and the
Water and Waste Disposal Facilities grant programs.
To reiterate, a project or purpose must meet each one of the
project eligibility criteria applicable to it in order to be eligible
for a grant. Meeting only some of the criteria is insufficient to be
eligible. These criteria cannot be waived under the Exception Authority
(Sec. 5002.4).
Ineligible Projects and Purposes (Sec. 5002.23)
This section identifies projects and purposes that are ineligible
for grants under this part regardless of whether the project meets the
conditions specified in subpart B and Sec. 5002.22. These projects
represent primarily an aggregation of projects and purposes already
prohibited under the programs being included in today's proposed
rulemaking. The Agency added to this aggregation a number of additional
projects and purposes as ineligible, which are identified earlier in
this preamble.
As also noted earlier in this preamble, the Agency will provide a
notification as needed to identify additional projects or purposes that
the Agency has determined are ineligible for grants under this part.
Applying for a Grant
Applying for a Grant (Sec. 5002.30)
This section discusses the submittal of preapplications and
applications when applying for a grant. For most applicants, submitting
a preapplication is optional, but is required by the Departmental
regulation incorporated herein for certain government applicants based
on criteria contained in the Departmental regulations. This section
also points out that the submission of a preapplication, or the lack
thereof, does not affect in any way the evaluation and scoring of the
subsequent application, and applicants who submit a preapplication do
not receive any priority for funding.
This section also contains requirements for the filing of
preapplications and applications, including:
When they are to be submitted;
Where to submit them; and
Their format.
Lastly, this section addresses incomplete applications. The Agency
will reject incomplete applications. If the Agency receives an
incomplete application, the Agency will notify the applicant of the
elements that made the application incomplete. The Agency points out
that applicants need to consider that applications must be submitted
sufficiently ahead of the applicable application deadline to allow for
Agency review, notification to the applicant of missing elements, and
resubmittal of the application before the applicable application
deadline. If a resubmitted application is received by the applicable
application deadline, the Agency will reconsider the application.
Preapplications (Sec. 5002.31)
This section presents the requirements associated for submitting
preapplications, and applies to both Nationally-competed grants and to
State-allocated grants. Submittal of a preapplication or, in lieu of a
preapplication, a written request for an eligibility determination, is
optional unless otherwise required under the Departmental regulations
(as defined in Sec. 5002.2). In addition, all applicants (governmental
and non-governmental) must comply with the provisions of the
Departmental regulations when submitting a preapplication.
This section also points out that, unless the preapplication is
required by department regulations, the Agency's assessment of
applicant and project eligibility based on a preapplication is advisory
in nature and does not constitute a formal determination by the Agency
of either applicant or project eligibility. The formal determination of
eligibility would be made once the application is received. If the
preapplication is submitted because it is required by the Departmental
regulations, the Agency will assess it in accordance with the
Departmental regulations.
Applications (Sec. 5002.32)
This section identifies the application forms required for grant
applications under this part and states that the Agency will make
available to the public program-specific application packages, which
will include the necessary forms and instructions for filing an
application for the specific grant program. For some programs,
additional application requirements are being proposed. These are found
in subpart B and are discussed later in this preamble.
Finally, all applications must be consistent with Departmental
regulations and must be submitted with the appropriate standard form
(i.e., forms in the SF 424 series).
Processing Applications
Processing Applications (Sec. 5002.40)
This section identifies the process that the Agency will use to
review and process applications including the initial review of
application, notification to the applicants of the Agency's review
results, the resubmittal of applications, and subsequent ineligibility
determinations. The processing of applications was discussed earlier in
the preamble (see Section D, Item 5).
Application Withdrawal (Sec. 5002.41)
This section outlines actions to be performed by the applicant and
the Agency if, during the period between the submission of an
application and the execution of documents, the project is no longer
viable or the applicant no longer is requesting financial assistance
for the project. Upon such notification by the applicant, the Agency
will either withdraw the application or, if it has already been
selected for funding, rescind the selection of the application.
Application Scoring
Scoring Applications (Sec. 5002.42)
This section identifies the process that the Agency will use to
score applications. As noted earlier in this preamble, the Agency will
only score applications for which it has determined that both the
applicant and
[[Page 61218]]
project are eligible and the project is feasible or is likely to be
feasible.
As provided under Sec. 5002.42(a), for grant programs with an open
application period, all such applications received in a Federal fiscal
year will be scored in the fiscal year in which it was submitted unless
it is received after the last ranking date of the fiscal year for that
program. Unless a program issues a notification indicating otherwise,
this would be August 15. If the application is received after the last
ranking date of the fiscal year, the Agency will score the application
no later than the first ranking date of the next fiscal year. Such
applications will be scored against the priority categories and their
point values effective for the next fiscal year.
For grant programs with a specified application deadline, each such
application received will be scored in the year it was received unless
it is received after the applicable application deadline. Any
application received after the application deadline for that program
will not be considered by the Agency.
As stated in Sec. 5002.42(b), the Agency will score applications
for each grant program based on the priority categories and their
associated points using the procedures specified in subpart B. This
paragraph also states that the Agency will score applications based on
the information supplied by the applicant at the time the applicant
submits the application to the Agency.
Paragraphs (b)(1) and (2) of this section present, respectively,
the inclusive list of Administrator and State Director priority
categories that each grant program may consider when awarding points
for these priority categories. The specific set of priority categories
that each program will consider in scoring applications, and the points
that can be awarded for these priority categories, are found in subpart
B for each grant program.
Awarding Grants
Award Process (Sec. 5002.50)
This section describes the award process that will be used in
selecting application for (potential) funding.
As stated in Sec. 5002.50(a), the Agency will rank all scored
applications for each program on or after each ranking date for that
program to create a priority list of all scored applications for
consideration for (potential) funding. (Note that the ranking dates for
each program are found in subpart B.) If the ranking date falls on a
weekend or a Federally-observed holiday, the next Federal business day
will become the applicable ranking date. Finally, applications that are
ranked in a given Federal fiscal year will be considered for selection
for funding for the fiscal year in which the application was ranked.
Paragraph (b) of this section describes the process the Agency will
use in selecting applications for funding or for potential funding.
From a program's priority list, the Agency will select applications for
funding using criteria specified in Sec. 5002.50(b)(1)(i) through
(iii) (which were discussed earlier in this preamble in Section D, Item
7) and any additional program-specific criteria found in subpart B for
the grant program. Selection of applications for funding will also be
conducted in a manner consistent with the Departmental regulations. For
each application selected for (potential) funding, the Agency will
notify the applicant in writing.
Paragraph (c) of this section identifies the process the Agency
will use for applications that are selected for (potential) funding,
but are not funded. This process was described earlier in this preamble
in Section D, Item 7.
Lastly, Sec. 5002.50(d) addresses the process the Agency will use
if a State or local government raises objections to a proposed project
under the intergovernmental review process and the objections are not
resolved within 90 days of the Agency's selection of the application.
Grant Agreements and Conditions
This section addresses the grant agreement and conditions that
recipients (and subrecipients) of grants are required to satisfy in
order to receive the grant funds and to be complied with once the grant
agreement has been signed and funds awarded.
Actions Prior to Grant Closing or Start of Construction, Whichever
Occurs First (Sec. 5002.60)
This section addresses three areas--excess grant funds (Sec.
5002.60(a)), evidence and disbursement of other funds (Sec.
5002.60(b), and the acquisition of land, easements, water rights, and
existing facilities (Sec. 5002.60(c)). The proposed requirements in
this section are consistent with existing program implementation.
As stated in Sec. 5002.60(a), which addresses excess grant funds,
the Agency will reassess the applicant's funding needs whenever there
is a significant reduction in project cost or a change in project
scope. This paragraph identifies the factors and procedures that the
Agency will use in making this reassessment and any attending decreases
in funding needs. The Agency will deobligate any obligated grant funds
not needed to complete the project.
Under Sec. 5002.60(b), which addresses evidence of and
disbursement of other funds, applicants expecting funds from other
sources for use in completing projects being partially financed with
Agency funds would be required to present evidence of the commitment of
these funds from such other sources. An agreement should be reached
with all funding sources on how funds are to be disbursed before the
start of construction.
Lastly, under Sec. 5002.60(c), which addresses acquisition of
land, easements, water rights, and existing facilities, applicants
would be responsible for acquiring all property rights necessary for
the project and determining that prices paid are reasonable and fair.
The Agency may require an appraisal by an independent appraiser or
Agency employee. Requirements are specified for rights-of-way and
easements (Sec. 5002.60(c)(1)), for title for land and for existing
facilities (Sec. 5002.60(c)(2)), for water rights, and for lease
agreements (Sec. 5002.60(c)(3)).
Grant Agreement (Sec. 5002.61)
The section identifies the documents and steps that the Agency will
use to enter into a grant agreement with the applicant.
Section 5002.61(a) states that the Agency will notify each
applicant whose application has been selected for funding using a
letter of conditions. The letter of conditions will set out the
conditions under which the grant will be made. After reviewing the
conditions and requirements set forth in the letter of conditions, if
the applicant agrees with those conditions, the applicant would be
required to acknowledge, in writing, acceptance of the conditions. If,
however, the applicant believes that certain conditions cannot be met,
the applicant may propose alternate conditions to the Agency. The
Agency must concur with any changes proposed to the letter of
conditions by the applicant before the application will be further
processed.
As provided under Sec. 5002.61(b), the Agency will execute grant
awards through the issuance of an Agency-approved grant agreement
between the Agency and the grantee. In addition, other documents as
identified by the Agency will be executed. The Agency notes that it
will not advance any grant funds to the grantee until this agreement is
signed by the grantee.
As provided under Sec. 5002.61(c), the Agency will execute
cooperative agreements through the issuance of an
[[Page 61219]]
Agency-approved cooperative agreement, or similar Agency-approved
document, between the Agency and the recipient of the cooperative
agreement. In addition, other documents as identified by the Agency
will be executed. Finally, this paragraph states that there will be
significant Agency involvement in cooperative agreements.
Lastly, Sec. 5002.61(d) states that the Agency will disburse grant
funds according to the letter of conditions or the grant agreement, as
applicable.
Use of Remaining Funds (Sec. 5002.62)
This section provides requirements on the handling of funds that
remain after all costs incident to the basic project have been paid or
provided for as follows:
Remaining funds are not to include grantee contributions
(Sec. 5002.62(a)).
Remaining funds may be refunded to each source in direct
proportion to the amounts obtained from each source (Sec. 5002.62(b)).
Remaining funds may be used for eligible grant purposes,
provided the use will not result in major changes to the project, the
purpose of the grant remains the same, and the project remains within
its original scope (Sec. 5002.62(c)).
Under Sec. 5002.62(d), grant funds not expended after being used
for eligible grant purposes will be canceled. Before the Agency cancels
these unexpended grant funds, the Agency will provide written
notification to the grantee of the Agency's intent to cancel the
remaining funds.
Post Award Activities and Requirements
Monitoring and Reporting Program Performance (Sec. 5002.70)
In Sec. 5002.70(a), the Agency will monitor grantees to the extent
necessary to ensure that facilities are constructed in accordance with
Agency-approved plans and specifications and to ensure that funds are
expended for approved purposes.
Section 5002.70(b) would require grantees to submit performance
reports on a semiannual basis, unless otherwise specified in subpart B,
and a final performance report. The semiannual performance reports are
to include a comparison of accomplishments with the objectives stated
in the application.
The grantee would also be required to submit additional reports
that may be specified in the grant agreement, in a notification issued
under Sec. 5002.15, or as specified in subpart B.
Finally, the Agency is reserving the right to collect additional
project and/or performance data for projects that have received grant
funds.
Programmatic Changes and Budget Revisions (Sec. 5002.71)
In addition to the requirements specified in the Departmental
regulations, this section would allow the Agency, at its sole
discretion, to require an applicant to submit a new application if
there is a change to the scope of the project whose application has
been selected. If a new application is submitted, it would be re-ranked
in accordance with this part.
Transfer of Obligations (Sec. 5002.72)
This section addresses the conditions under which an obligation of
funds established for an applicant can be transferred to a different
(substituted) applicant. The two conditions are:
The substituted applicant is eligible, has a close and
genuine relationship with the original applicant, and has the authority
to receive the assistance approved for the original applicant (Sec.
5002.72(a)); and
The need, purpose(s), and scope of the project for which
the Agency funds will be used remain substantially unchanged (Sec.
5002.72(b)).
Grant Close Out and Related Activities
Grant Close Out and Related Activities (Sec. 5002.80)
This section addresses grant close out for all grants awarded under
this part. In addition to requiring compliance with the Departmental
regulations, this section allows the Agency to suspend or terminate a
grant if the grantee fails to submit satisfactory reports on time under
the provisions of Sec. 5002.70(b).
Subpart B--Program-Specific Provisions
Subpart B presents the program-specific requirements for each of
the programs covered by this subpart.
Community Facilities (Sec. 5002.101)
This section identifies program-specific requirements for community
facility projects. The prospective grantee must comply both with
subpart A provisions and the provisions in this section when seeking a
community facilities grant. The program-specific provisions for
community facility projects follow.
Applicant Eligibility
To be eligible for a community facilities grant, an applicant must
not only meet the applicant eligibility criteria specified in subpart
A, but also the applicant eligibility criteria specified in subpart B
for this program. Specifically, the subpart B criteria (Sec.
5002.101(a)), which are the same as for the current program, are:
The applicant must be a public body, such as a
municipality, county, district, authority, or other political
subdivision of a State; a non-profit corporation or association; or a
Federally recognized Indian tribe; and
The applicant must have significant ties with the local
rural community. Such ties are necessary to ensure to the greatest
extent possible that a facility under private control will carry out a
public purpose and continue to primarily serve rural areas.
The proposed rule identifies two conditions under which ties with
the local rural community can be evidenced. These conditions, which are
not exclusive, are:
Association with, or controlled by, a local public body or
bodies or broadly based ownership and controlled by members of the
community, and
Substantial public funding through taxes, revenue bonds,
or other local government sources, or substantial voluntary community
funding such as would be obtained through a community-wide funding
campaign.
These community tie provisions are the same as found in the current
Community Facilities regulation.
Project Eligibility
To be eligible for community facilities grant funding, the project
would have to meet the applicable project eligibility requirements
specified in subpart A and be for an essential community facility
(Sec. 5002.101(b)). Essential community facilities include, but are
not limited to, fire, rescue, health and public safety facilities or
equipment, telecommunications, supplemental and supporting structures
for other rural electrification or telephone systems, the purchase of
major equipment that in themselves provide an essential service to
rural residents, and the purchase of facilities necessary to improve or
prevent a loss of service.
In addition, subpart B requires community facility projects to:
Be located in a rural area (except for eligible utility-
type of facilities such as hydroelectric and telecommunication
systems);
Meet certain median household income and population
requirements for those to be served by the project;
Be based on satisfactory sources of revenue;
Have an applicant who is responsible for operating,
maintaining, and managing the facility and providing for its continued
availability and use at reasonable rates and terms; and
Be unable to finance the proposed project from their own
resources or
[[Page 61220]]
through commercial credit at reasonable rates and terms.
These conditions are the same as found in the current grant program
for community facilities.
Uses of Grant Funds
Subpart B for community facilities grants identifies additional
eligible and ineligible uses of grant funds ((Sec. 5002.101(c) and
(d), respectively). These uses are the same as found in the current
implementation of the Community Facilities grant program, with the
exception, as discussed below, of adding two additional eligible uses
and identifying recreational facilities (except for community parks and
community wellness centers) as an ineligible use. Eligible uses of
grant funds (Sec. 5002.101(c)) include:
Construction, enlargement, extension, or otherwise
improvement of essential community facilities providing essential
service primarily to rural residents and rural businesses;
Construction or relocation of public buildings, roads,
bridges, fences, or utilities and to make other public improvements
necessary to the successful operation or protection of eligible
facilities;
Relocation of private buildings, roads, bridges, fences,
or utilities, and other private improvements necessary to the
successful operation or protection of eligible facilities;
Facilities that have no more than 25 percent of the floor
space occupied by Federal Agencies, State Agencies, or other ineligible
entities or purposes, when these entities enhance the primary purpose
of the facility; and
Payment of certain expenses that are a necessary part of a
project to finance eligible facilities.
The proposed rule also adds the following eligible purpose:
Facilities that house State funded organizations that are
typically housed in community funded facilities and offering services
provided by an essential community facility.
Examples of ineligible uses of grant funds, which are listed in
Sec. 5002.101(d), are:
Payment of initial operating expenses or annual recurring
costs, including purchases or rentals that are generally considered to
be operating and maintenance expenses (unless a Community Facilities
loan is part of the funding package, in which case the grant would be
part of a grant-loan combination and would not be subject to this
proposed rule);
Construction or repair of electric generating plants,
electric transmission lines, or gas distribution lines to provide
services for commercial sale;
Refinancing of existing indebtedness;
Payment of interest;
Payment of any costs when the median household income of
the population to be served is higher than specified percentages of the
State non-metropolitan median household income;
Recreational facilities, except for community parks and
community wellness centers; and
Payment for any purposes restricted by the Community
Facilities direct loan program (see 7 CFR 1942.17(d)(2)).
One type of project that the Agency is adding to the list of
ineligible projects under the Community Facilities grant program is
recreational facilities, with two exceptions as discussed below. The
Community Facilities grant program is, and has been, oversubscribed;
that is, it receives more grant requests than it can fund. The Agency
has found that the types of grant requests it receives are usually for
projects that more directly address essential community needs, such as
health and safety needs, than do most recreational facilities. Given
this situation, it is highly unlikely that recreational facilities
would be funded. Thus, the Agency is proposing to include recreational
facilities, except as discussed below, in the list of ineligible
projects. If the Agency does not explicitly exclude recreational
facilities, except as indicated, applicants might be otherwise
encouraged to submit applications with little chance of scoring high
enough relative to other types of projects to be funded.
As noted above, the Agency is proposing to allow grants to be used
for two types of recreational facilities. These are community parks and
community wellness centers. Community parks could include sport fields
that would be used for citizen-based sports (e.g., youth soccer league
fields, community softball fields), but would exclude professional and
semi-professional sports venues. Many communities have found that
providing community parks and community wellness centers allow them to
attract and, equally important, retain citizens. The Agency believes
that these two types of recreational facilities provide an essential
service to such communities and should be eligible for grants under the
Community Facilities grant program.
Finally, with regard to recreational facilities that would be
excluded from the Community Facilities grant program, the Agency
recognizes that conditions may change in the future such that the
Agency would accept applications for other types of recreational
facilities. If this occurs, the Agency would propose to allow specific
types of recreational facilities, through a proposed rulemaking change,
to apply for a Community Facilities grant.
Funding Limitations and Matching Funds
The proposed rule incorporates the current Community Facilities
grant program's maximum grant assistance and funding limitations (Sec.
5002.101(e)(1) and (e)(2), respectively). The proposed rule (Sec.
5002.101(e)(3)), consistent with the current program, allows funding of
the balance of project costs to consist of other Community Facilities
financial assistance, applicant contributions, and loans and grants
from other sources. However, other Federal grant funds cannot be used
as matching funds unless provide by other authorizing legislation.
Scoring Applications
The priority categories and points associated with those priority
categories that would be used to score applications are identified in
Sec. 5002.101(f)(1) through (3), and are divided into program-specific
priority categories and points, Administrator priority categories and
points, and State Director priority categories and points. The maximum
number of points an application can receive would be 100 points.
The program-specific priority categories and points are in Sec.
5002.101(f)(1). These priority categories are the same as currently
used in scoring community facilities grant applications, with two minor
differences (i.e., the population levels for a couple of scoring
criteria changed and under ``Other priorities,'' the proposed rule
replaces conformance with State strategic plan with educational
facility). The points associated with the priority categories, however,
have been modified to total 70 points. The relative point values were
not changed between priority categories.
The Administrator and State Director priority categories and points
are identified in Sec. 5002.101(f)(2) and (f)(3), respectively. With
regard to Administrator priority categories and points, the Community
Facilities grant program would allow the Administrator to award up to
20 points (compared to 10 points for the other grant programs) to
improve the geographic diversity of awardees in a fiscal year. The
current Community Facilities grant program identifies additional
Administrator priority categories, which are generally
[[Page 61221]]
covered in subpart A of the proposed rule.
With regard to State Director priority categories, the Community
Facilities grant program would use the State Director priority
categories identified in Sec. 5002.42(b)(2)(i) through (x) under
subpart A and could award up to 10 points for the State Director
priority categories. The proposed State Director priority categories
expand upon and repackage those found in the current regulation.
Ranking Applications
Unless otherwise specified in a notification, the Agency will rank
grant applications under this program four times per year (Sec.
5002.101(g)). The proposed ranking dates are (in the order in which
they occur each fiscal year): December 15, March 15, July 15, and
August 15.
Additional Criteria for Selecting Applications
Consistent with Departmental regulations, Sec. 5002.101(h) would
allow the Agency to consider in selecting applications for funding
whether an application is a subsequent request for a previously
approved project. If the lower scoring application is for the
continuation of an existing funded project, the Agency may give the
lower scoring application consideration ahead of a higher scoring
application. However, if the request for additional grant funds is due
to cost overruns, the Agency will give consideration to the lower
scoring application only if the cost overrun is due to certain causes.
Specifically, the cost overruns must be due to either high bids or
unexpected construction problems neither of which can be reduced by
negotiations, redesign, use of bid alternatives, rebidding, or other
means. However, if the cost overrun exceeds 20 percent of the
development cost at time of grant approval or if the scope of the
original purpose has changed, the Agency would not use this criterion
as a factor in choosing a lower scoring application over a higher
scoring application. Such an application could still be selected for
funding, but it would need to compete based on its ranking and other
award criteria.
Public Information Process
This section (Sec. 5002.101(i)) would require all grants awarded
under this section to comply with the public information process
specified for community facilities direct loan program (see 7 CFR part
1942.17(j)(9)), as is currently required for community facilities
grants. This public information process, in part, requires the
applicant to inform the general public regarding the development of any
proposed project.
Rural Energy for America (Sec. 5002.102)
This section identifies program-specific requirements for renewable
energy system or energy efficiency improvement projects. The
prospective grantee must comply both with subpart A provisions and the
provisions in this section when seeking a Rural Energy for America
grant. The program-specific provisions for renewable energy systems and
energy efficiency improvement projects follow.
Applicant Eligibility
To be eligible for a Rural Energy for America grant, an applicant
must not only meet the applicant eligibility criteria specified in
subpart A of the proposed rule, but also the applicant eligibility
criteria specified in subpart B for this program. Specifically, the
subpart B criteria (Sec. 5002.102(a)) require the applicant to be an
agricultural producer or rural small business. This requirement is the
same as in the current program for renewable energy systems and energy
efficiency improvement grants. However, unlike the current program, the
applicant would no longer be required to demonstrate financial need to
be considered an eligible applicant. This change was made as a result
of the 2008 Farm Bill. As noted below, the Agency, however, is
incorporating financial need as a scoring criterion.
Project Eligibility
To be eligible for a Rural Energy for America grant, a project
would have to meet the applicable project eligibility requirements in
subpart A and subpart B requirements (Sec. 5002.102(b)). Subpart B
identifies two general types of projects--(1) those for renewable
energy systems and energy efficiency improvements (Sec.
5002.102(b)(1)) and (2) those for feasibility studies (Sec.
5002.102(b)(2)).
Under Sec. 5002.102(b)(1), the project must:
Be for the purchase, installation, expansion, and/or other
energy-related improvement of a renewable energy system or to make
energy efficiency improvements;
Be located in a rural area;
Be for technology that is replicable and either pre-
commercial or commercially available; and
Have technical merit as determined by the Agency. If the
Agency determines that the project is without technical merit, the
project would be ineligible for a grant.
Under Sec. 5002.102(b)(2), feasibility studies are eligible
projects provided they are for a project that meets the criteria
specified in Sec. 5002.102(b)(1).
The project eligibility provisions in Sec. 5002.102(b)(1), and
those in subpart A for project eligibility, are found in the current
regulations for this program. The project eligibility provisions in
Sec. 5002.102(b)(2) are being included in response to section 9007 of
the 2008 Farm Bill.
Additional Preapplication and Application Requirements
In addition to the preapplication and application requirements
specified in subpart A, subpart B for this program contains program-
specific provisions for the submittal of preapplications and
applications (Sec. 5002.102(c)). If an applicant elects to submit a
preapplication, it must be received by the Agency on or before January
15 to be considered for funding by the Agency for that fiscal year.
For applications, the proposed rule would require applications to
be received by the Agency on or before June 15 each year to be
considered for funding for that fiscal year. Applications received by
the Agency after June 15 would not receive consideration for funding
for that fiscal year.
The proposed rule also allows for the submittal of lower
documentation applications (referred to as ``simplified applications''
under the current program) for renewable energy systems and energy
efficiency improvement projects. The proposed rule contains criteria to
determine if an applicant is eligible to submit a lower documentation
application. These criteria are:
Total eligible project costs are $200,000 or less; and
The proposed project uses either commercially available
renewable energy systems or energy efficiency improvements.
In addition, the applicant would be required to agree to grant
reimbursement after the project is completed. Project completion would
be demonstrated when the applicant has provided a written final project
development, testing, and performance report acceptable to the Agency.
The proposed criteria for submitting a lower documentation
application are consistent with the current program. The current
regulation, however, has additional criteria (e.g., addressing project
construction, timeframe for project completion, and interim financing)
that the Agency is not
[[Page 61222]]
including in this proposed rule. Such information would still be
considered by the Agency in evaluating grant applications, but would
use the application package for this program to ensure such information
was included in the application.
As under the current program, it is the Agency's intent to allow
lower documentation applications to exclude certain financial
information and the business-level study for renewable energy systems
from the application. In addition, the technical reports associated
with lower documentation applications can be less detailed than other
applications submitted under this program. For example, the technical
reports for lower documentation applications are not required to
provide authoritative evidence that project service providers have the
necessary professional credentials or relevant experience to perform
the required services. Instead, such technical reports are to list all
key service providers.
Eligible Project Costs
Subpart B for Rural Energy for America grants identifies eligible
project costs (Sec. 5002.102(d)(1) through (9)). These eligible
project costs are the same as allowed under the current grant program
for these types of projects.
The proposed rule would allow eligible project costs in mixed
business and residential projects under certain circumstances. Eligible
project costs would apply to a mixed business and residential renewable
energy system or energy efficiency improvement project if the applicant
is an agricultural producer. However, if the mixed business and
residential project is from an applicant who is a rural small business,
the proposed rule would allow these eligible project costs to apply to
the applicant's project only if the residential portion of the project
is less than 25 percent of the square footage of the entire project.
Funding Limitations, Matching Funds, Availability of Other Funding, and
Grant-Loan Guarantee Combinations
The proposed funding limitation provisions (Sec. 5002.102(e)(1)),
which are the same as in the current Renewable Energy Systems and
Energy Efficiency Improvement regulation, would limit:
The amount of grant assistance to an eligible project
under this program to 25 percent of total eligible project costs, which
are identified in Sec. 5002.102(e); and
The maximum amount of grant assistance to one individual
or entity to no more than $750,000 in any one Federal fiscal year.
In meeting the applicant share of costs (Sec. 5002.102(e)(2)),
other Federal grant funds and applicant in-kind contributions would not
be allowed. Third-party, in-kind contributions, however, would be
allowed, provided they do not exceed 10 percent of the matching fund
requirement. Passive investor contributions would be acceptable.
Finally, the Agency seeks to leverage the amount of funds available
to grantees by requiring certain applicants seeking grants of over
$50,000 to seek loan guarantees before being considered for grant funds
(Sec. 5002.102(e)(3)). In addition, the 2008 Farm Bill encourages the
Agency to fund smaller grant requests. The Agency, therefore, is
proposing provisions to make the program more available to those
seeking smaller grants.
Specifically, if the size of the grant amount being requested in
the application is $50,000 or less, the Agency will consider funding
the application on its own merit, without consideration of other
sources of funding. However, if the size of the grant amount being
requested in the application is more than $50,000, the Agency will
consider funding the application only to the extent that:
1. The applicant cannot obtain a loan guaranteed by the Agency for
any portion of the project; or
2. The amount being requested in the grant application is necessary
for the bank to make a guaranteed loan to the applicant.
If neither of the two situations described above exist, then the
Agency will not consider the application under this rule.
As noted in this preamble, the proposed rule is specific to ``grant
only'' projects. However, there is an associated issue with projects
seeking a grant-loan guarantee combination under this program. In
fiscal year 2008, the Agency began funding the grant portion of a
grant-loan guarantee combination from the monies administratively
allocated for loan guarantees. The Agency intends to continue this
practice subject to future appropriations.
Grant Award Amount
As under the current grant program, the Agency will take into
account certain criteria when determining the amount of a grant to be
awarded (Sec. 5002.102(f)). The eight criteria being proposed are:
The type of renewable energy system to be purchased;
The estimated quantity of energy to be generated by the
renewable energy system;
The expected environmental benefits of the renewable
energy system;
The extent to which the renewable energy system will be
replicable;
The amount of energy savings expected to be derived from
the activity, as demonstrated by an energy audit comparable to an
energy audit under 7 U.S.C. 8105;
The estimated length of time it would take for the energy
savings generated by the activity to equal the cost of the activity;
The expected energy efficiency of the renewable energy
system; and
The amount of energy output per amount of grant award.
Six of these eight criteria are in the current regulation. The
seventh criterion, expected energy efficiency of the renewable energy
system, is required under section 9007 of the Food, Conservation, and
Energy Act of 2008 (2008 Farm Bill). The eighth criterion, energy
output per amount of grant award, is being proposed as part of the
results on an Office of Inspector General audit that recommended
considering such a criterion for this program.
Scoring Applications
The priority categories and points associated with those priority
categories that would be used to score applications are identified in
Sec. 5002.102(g)(1) and (g)(2), and are divided into program-specific
priority categories and points and Administrator priority categories
and points. The maximum number of points an application can receive
would be 100 points.
The program-specific priority categories and points are in Sec.
5002.102(g)(1). With two exceptions, these priority categories are the
same as currently used in scoring renewable energy systems and energy
efficiency improvement grant applications. One exception is the award
of points for ``hybrid technology'' projects (i.e., a combination of
two or more renewable energy technologies incorporated into a single
project), which replaces the ``previous grantee/borrowers'' priority
category. The other exception is the award of points for demonstrated
financial need. Demonstrated financial need is being proposed as a
scoring criterion because it is no longer an eligibility criterion and
the Agency has determined that an applicant's financial need is an
appropriate criterion for receiving a grant under this program.
The points associated with the priority categories, however, have
been modified to total 90 points. The relative point values between
priority categories have been modified slightly, with the
[[Page 61223]]
largest change associated with environmental benefits.
The Administrator priority categories and points are identified in
Sec. 5002.102(g)(2). The current program regulation does not address
Administrator priority categories. The Rural Energy for America grant
program would allow the Administrator to award an application up to 10
points in the following priority categories:
Unserved or underserved areas;
Geographic diversity;
Emergency conditions;
Public health and safety; and
Presidential initiatives.
Ranking Applications
Unless otherwise specified in a notification, the Agency will rank
grant applications under this program twice each year, on or after
March 15 and on or after July 15 (Sec. 5002.102(h)).
Rural Cooperative Development Grants (Sec. 5002.103)
This section identifies program-specific requirements for rural
cooperative development projects. The prospective grantee must comply
both with subpart A provisions and the provisions in this section when
seeking a rural cooperative development grant. The program-specific
provisions for rural cooperative development projects follow.
Definition
The proposed rule provides a specific definition (Sec.
5002.103(a)) for the word ``Center,'' because this term has a unique
meaning when used in the context of rural cooperative grants.
Applicant Eligibility
To be eligible for a rural development cooperative grant, an
applicant must not only meet the applicant eligibility criteria
specified in subpart A of the proposed rule, but also the applicant
eligibility criterion specified in subpart B for this program.
Specifically, this subpart B criterion (Sec. 5002.103(b)), which is
the same as in the current Rural Cooperative Development grant
regulation, requires that the applicant to be a non-profit organization
or institution, including an accredited institution of higher
education. Public bodies would not be eligible to receive grants under
this section.
Project Eligibility
To be eligible for a rural cooperative development grant, a project
would have to meet the applicable project eligibility requirements in
subpart A and the following subpart B requirements (Sec. 5002.103(c)):
Applications that focus on only one cooperative will not
be considered for funding;
Except for 1994 Institutions, the applicant must provide
25 percent of total project cost; and
Applications that provide for the sharing of information
among centers will not be considered for funding if more than 10
percent of the funding request is for the provision of sharing of
information among centers.
The first and third project eligibility criteria are consistent
with the current implementation of this program. The second criterion
is being added as a result of the 2008 Farm Bill.
The Agency notes that it is proposing to include specifically in
the regulation the ``sharing of information among centers'' as an
eligible project purpose (Sec. 5002.103(c)(3)), but to limit the
amount of funds that can be awarded to this purpose. The Agency is
proposing to include sharing of information as an eligible project
purpose because such sharing can assist other centers with proven
strategies in cooperative development that could possibly be
transferred to other areas of the nation. However, the goal of the
Rural Community Development grant program is to facilitate the creation
of jobs in rural areas through development of new rural cooperative,
value added processing, and rural businesses. With a historically-
limited funded program, the sharing of information among centers is not
necessarily the highest priority for funding at the current time.
Therefore, the Agency is proposing the 10 percent limit on the amount
of grant funds that can be awarded to this purpose.
Additional Application Requirements
In addition to the application requirements specified in subpart A,
subpart B for this program (Sec. 5002.103(d)) would require the
applicant to include in the application a plan for the establishment
and operation by the institution of a center or centers for cooperative
development. This plan, which is required under the current regulations
for rural cooperative development grants, must contain specific
elements, which are statutorily required (Sec. 5002.103(d)(1) through
(5)).
Uses of Grant Funds
Subpart B for rural cooperative development grants identifies
eligible and ineligible uses of grant funds (Sec. 5002.103(e) and (f),
respectively). These uses are generally consistent with those allowed
under the current grant program (7 CFR 4284, subpart A) for these types
of projects.
Grant Agreement and Conditions
Under paragraph Sec. 5002.103(g), three conditions would affect
the term of the grant agreement. The first two of the conditions (Sec.
5002.103(g)(1) and (2)) are required under section 6013 of the 2008
Farm Bill, while the third condition (Sec. 5002.103(g)(3)) is part of
the current implementation of this program. These three conditions are:
A grant awarded to a center that has received no prior
funding under this section shall be made for a period of one year;
If the Agency determines that it is in the best interest
of the program, grants will be awarded for a period of more than one
year, but not more than three years, to a center that has successfully
met the parameters described in Sec. 5002.103(i)(1)(i) through (v), as
determined by the Agency; and
The Agency will not approve requests to extend the grant
period for more than 12 months.
Funding Limitations and Matching Funds
Under paragraph Sec. 5002.103(h)(1), the maximum amount of a grant
awarded under this section for 1994 Institutions would be no more than
95 percent of the total cost of the Center. The Agency would be
prohibited from requiring a match of more than 5 percent of the total
cost of the Center. This is consistent with current program
requirements.
Paragraph Sec. 5002.103(h)(2) addresses requirements associated
with matching funds. The proposed matching fund requirements are the
same as under the current program and address, in general, the form of
the matching funds, the acceptable sources for matching funds, and the
use of the matching funds.
Scoring Applications
The priority categories and points associated with those priority
categories that would be used to score applications are identified in
proposed Sec. 5002.103(i)(1) and (i)(2), and are divided into program-
specific priority categories and points and Administrator priority
categories and points. The maximum number of points an application can
receive would be 100 points.
The program-specific priority categories and points are in Sec.
5002.103(i)(1). These priority categories are similar to those
currently used in scoring rural community development grant
applications, with some modification as required under section 6013 of
the 2008 Farm Bill. Specifically, the priority categories of
[[Page 61224]]
``linkages'' and ``matching funds'' have been removed, and a priority
category for ``networking and regional focus'' has been added. In
addition, the points associated with the priority categories have been
modified to total 90 points. The relative point values were not changed
between priority categories.
The Administrator priority categories and points are identified in
Sec. 5002.103(i)(2). The Administrator may award an application up to
10 points to improve the geographic diversity of awardees in a fiscal
year.
Ranking Applications
Unless otherwise specified in a notification, the Agency will rank
grant applications under this program once each year, on or after July
15 (Sec. 5002.103(j)).
Additional Criteria for Selecting Applications for Funding
If two projects obtain the same score, the Agency will select the
project whose score for the five criteria identified in the authorizing
statute for this program (Sec. 5002.103(i)(1)(i) through (v)) is
higher (Sec. 5002.103(k)).
Distance Learning and Telemedicine Grants (Sec. 5002.104)
This section identifies program-specific requirements for distance
learning and telemedicine projects. The prospective grantee must comply
both with subpart A provisions and the provisions in this section when
seeking a distance learning and telemedicine grant. The program-
specific provisions for distance learning and telemedicine projects
follow.
Definition
The proposed rule provides a specific definition (Sec.
5002.104(a)) for the term ``Telecommunications or electric borrower,''
because this term has a unique meaning when used in the context of the
Distance Learning and Telemedicine grant program.
Applicant Eligibility
To be eligible for a distance learning or telemedicine grant, an
applicant must not only meet the applicant eligibility criteria
specified in subpart A of the proposed rule, but also the applicant
eligibility criteria specified in subpart B for this program.
Specifically, these subpart B criteria (Sec. 5002.104(b)), which are
in the current Distance Learning and Telemedicine grant regulation,
require that:
The applicant be legally organized as an incorporated
organization or partnership; be an Indian tribe or tribal organization,
as defined in 25 U.S.C. 450b (b) and (c); be a state or local unit of
government or a consortium; or be an other legal entity, including a
private corporation organized on a for profit or not-for profit basis;
and
The applicant have the legal capacity to contract with the
Agency to obtain the grant, and comply with all applicable
requirements. If a consortium lacks the legal capacity to contract,
each individual entity must contract with the Agency on its own behalf.
Individuals would not be eligible for grants under this program
directly. Further, entities that are electric or telecommunication
borrowers under the Rural Electrification Act of 1936 would not be
eligible for grants under this program provided, however, that such
borrowers are eligible for funding under the Distance Learning
Telemedicine Combination Loan and Grant Program (7 CFR 1703, subpart D)
and the Distance Learning Telemedicine Loan Program (7 CFR 1703,
subpart G). These eligibility requirements and conditions are in the
current Distance Learning and Telemedicine grant program.
Project Eligibility
To be eligible for a grant under this program, a project would have
to meet the applicable project eligibility requirements in subpart A
and the following subpart B program-specific requirements (Sec.
5002.104(c)):
The project must deliver distance learning or telemedicine
services to entities that operate a rural community facility, including
libraries, or to residents of rural areas at rates calculated to ensure
that the benefit of the financial assistance is passed through to such
entities or to residents of rural areas; and
DLT end-user sites must be located in one of the four
rural areas identified in Sec. 5002.104(h)(1)(ii)(A), although the DLT
hub site may be located in either a rural or non-rural area. DLT end-
user facilities not within one of these four defined rural areas are
not eligible for grant funding under this section.
The first of these two criteria is in the current Distance Learning
and Telemedicine grant regulation. The second criterion, however, is
new, as discussed in the following paragraph.
Under the current DLT regulation, each application must apply
certain population criteria to each of its end-user sites, and hubs
that are also proposed as end-user sites, in order to determine a
rurality score. The rurality score is the average of all end-user
sites' rurality scores. For the project to be eligible, the average
score of the end user sites must meet a specified minimum threshold
score. Under the current scheme for determining the project's
eligibility, non-rural end user sites are eligible as long as the
minimum rurality score is met. This was not a desired outcome by the
Agency. Therefore, all end user sites in each application would be
required to be in a rural area in order to be eligible, and, thus, the
current minimum rurality score criterion is unnecessary.
Additional Preapplication and Application Requirements
In addition to the preapplication and application requirements
specified in subpart A, subpart B for this program contains program-
specific provisions for preapplications and applications (Sec.
5002.104(d)).
If an applicant submits a preapplication (either as required or
voluntarily), the proposed rule would require the preapplication to be
received on or before January 1 each year in order to be considered for
funding in that fiscal year. If the Agency receives a preapplication
after January 1, it will not consider the preapplication.
For applications, the proposed rule would require an original and
two copies of the application to be submitted. In addition, all
applications must be received on or before March 31 of each year to be
considered for funding for that fiscal year. If the Agency receives the
application after March 31, it will not be considered for funding.
Lastly, the applicant must include with the application evidence from
the Agency State Director, Rural Development that the application
conforms with the State strategic plan as prepared under section 381D
of the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et
seq.). If a State strategic plan does not exist, the applicant should
so indicate in its application.
Uses of Grant Funds
Subpart B for this program identifies additional eligible and
ineligible uses of grant funds (Sec. 5002.104(e) and (f),
respectively). These uses are the same as found in the current program
for these types of projects.
Funding Considerations and Matching Funds
Consistent with the implementation of the current program, Sec.
5002.104(g)(1) limits the amount of funds (to 10 percent) that can be
used when an application includes any of the three purposes identified
in Sec. 5002.104(e)(3), (e)(4), or (e)(5). This limit applies whether
the application contains one, two, or all three of these eligible uses.
[[Page 61225]]
The provisions for matching funds (Sec. 5002.104(g)(2)) are
consistent with the current Distance Learning and Telemedicine grant
regulation. Applicants would be required to provide at least 15 percent
of the grant amount requested (i.e., grant funds can be used to pay up
to 85 percent of the cost of the project). Matching funds must
generally be in the form of cash. In-kind contributions may be
substituted for cash if they are used solely for the purposes specified
in Sec. 5002.104(e). Additional in-kind contribution requirements are
specified in Sec. 5002.104(g)(2)(ii) through (iv). Lastly, any
financial assistance from Federal sources would not be considered as
matching contributions for this program unless there is a Federal
statutory exception specifically authorizing the Federal financial
assistance to be considered as a matching contribution, and that
exception is documented in the application.
Scoring Applications
The priority categories and points associated with those priority
categories that would be used to score applications are identified in
Sec. 5002.104(h)(1) and (2), and are divided into program-specific
priority categories and points and Administrator priority categories
and points. The maximum number of points an application can receive
would be 100 points.
The program-specific priority categories and points are in Sec.
5002.104(h)(1). While covering the same areas as the program-specific
priority categories used in grant applications under the current
program, the proposed rule greatly consolidates the scoring into three
priority categories, which are:
Critical need for the project;
Comparative population sparsity of the service area; and
The economic need of the applicant's service area.
The points associated with these priority categories have been
modified to total 90 points, with points being assigned as 35 for
critical need, 30 for population sparsity, and 25 for economic need of
the applicant's service area.
Under the current program, the Administrator may select a lower
scoring application for funding in order to improve geographic
diversity without including Administrator points in the application's
scoring. Under the proposed rule, the Agency would retain the ability
of the Administrator to consider geographic diversity in selecting
applications for funding, but would require the actual awarding of
points to applications. As provided for in Sec. 5002.104(h)(2), the
Distance Learning and Telemedicine grant program would allow the
Administrator to award an application up to 10 points to improve the
geographic diversity of awardees in a fiscal year.
Ranking Applications
Unless otherwise specified in a notification, the Agency will rank
grant applications under this program once each year, on or after July
15 (Sec. 5002.104(i)).
Value-Added Producer Grants (Sec. 5002.105)
This section identifies program-specific requirements for value-
added producer projects. The prospective grantee must comply both with
subpart A provisions and the provisions in this section when seeking a
value-added producer grant. The program-specific provisions for value-
added producer projects follow.
Definitions
Several terms are being defined in Sec. 5002.105(a) because the
terms have a unique meaning when used in the context of the Value-added
producer grant program. The terms being defined are: ``agricultural
producer,'' ``beginning farmer or rancher,'' ``family farm,'' ``special
purpose equipment,'' and ``socially disadvantaged farmer or rancher.''
Applicant Eligibility
To be eligible for a value-added producer grant, an applicant must
not only meet the applicant eligibility criteria specified in subpart A
of the proposed rule, but also the applicant eligibility criteria
specified in subpart B for this program. Specifically, the subpart B
criteria (Sec. 5002.105(b)), which are in the current Value-Added
Producer grant regulation, require that:
The applicant be an independent producer, an agricultural
producer group, a farmer or rancher cooperative, or a majority-
controlled, producer-based business; and
If the applicant is a farmer or rancher cooperative, an
agriculture producer group, or a majority-controlled producer-based
business venture, the applicant must be entering into an emerging
market as a result of the proposed project. This requirement does not
apply to an independent producer because the authorizing statute does
not require it.
Examples of agricultural producers include: A logger who has a
majority interest in the logs harvested that are then converted to
boards, a fisherman that has a majority interest in the fish caught
that are then smoked, a wild herb gatherer that has a majority interest
in the gathered herbs that are then converted into essential oils, a
cattle feeder that has a majority interest in the cattle that are fed,
slaughtered and sold as boxed beef, and a corn grower that has a
majority interest in the corn produced that is then converted into corn
meal.
Venture Eligibility
To be eligible for a value-added producer grant, a venture would
have to meet the eligibility requirements found in Sec. 5002.105(c) in
subpart B, which requires the venture to evidence a high likelihood of
creating value-added for an agricultural product by meeting at least
one of the following categories: (1) A change in its physical state,
(2) differentiated production or marketing, as demonstrated in a
business plan, or (3) product segregation. The project eligibility
requirements in Sec. 5002.22 in subpart A would not apply in
determining venture eligibility.
Other program-specific considerations that the Agency will use in
determining whether an application for a venture under this program
will be considered are:
The venture must be located in a rural area;
Working capital grants must have a feasibility study and
business plan completed specifically for the proposed venture before
the application is submitted. The feasibility study and business plan
must be submitted when requested by the Agency during application
processing;
Applicants who have already received a planning grant for
the proposed venture would be ineligible to receive another planning
grant for the same venture. Applicants who have already received a
working capital grant for a venture would be ineligible to receive any
additional grants for that venture;
No venture may be the subject of more than one planning
grant or more than one working capital grant under this section. The
same venture may, however, be awarded one planning grant and
subsequently apply for and receive a working capital grant;
Not more than one venture per funding cycle per applicant
may receive grant funding under this program; and
If the agricultural product is a value-added product,
agricultural producers must have a majority ownership interest in the
agricultural product to which value-added is to accrue.
[[Page 61226]]
These requirements and considerations are currently being used in
implementing the Value-Added Producer grant program.
Uses of Grant Funds
Subpart B for value-added producer grants identifies additional
eligible and ineligible uses of grant funds (Sec. 5002.105(d) and (e),
respectively). The eligible uses, which depend on whether the grant is
a planning grant or a working capital grant, and ineligible uses, which
are the same for both types of grants, are general consistent with the
current grant program for these projects (7 CFR 4284, subparts A and
J).
Additional Preapplication and Application Requirements
In addition to the preapplication and application requirements
specified in subpart A, subpart B for this program contains program-
specific provisions for preapplications and applications (Sec.
5002.105(f)).
For preapplications, if submitted, they must be received by the
Agency on or before January 15 each year to be considered for funding
in that fiscal year. If the Agency receives a preapplication after
January 15, it will not consider the preapplication. In addition, all
preapplications must be submitted to the program's National Office.
For applications, all applications must be received by the Agency
on or before March 1 of each year to be considered for funding for that
fiscal year. If the Agency receives the application after March 1, it
will not be considered for funding. The proposed rule also contains
program-specific application requirements for business plans and
feasibility studies. Business plans must include at least three years
of pro forma financial statements. Feasibility studies should show how
the venture would operate under a set of assumptions, the technology
used, the qualifications of the management team, and the financial
aspects of the venture.
Lastly, in response to section 6013 of the 2008 Farm Bill,
applicants with ventures requesting less than $50,000 would be allowed
to submit applications with less documentation (referred to as
``simplified applications'').
Grant Agreement and Conditions
As required by the 2008 Farm Bill, the length of grant agreements
made under this section would not be allowed to not exceed three years
(Sec. 5002.105(g)).
Funding Limitation and Matching Funds
Consistent with the current Value-Added Producer grant regulation,
grant funds can be used to pay up to 50 percent of the cost of the
venture and the aggregate amount of awards to majority controlled
producer-based business ventures may not exceed ten percent of the
total funds obligated under this program during any fiscal year (Sec.
5002.105(h)(1)). The proposed rule would also limit the total amount of
grant funds awarded to a recipient in any one year to $500,000.
The provisions for matching funds (Sec. 5002.105(h)(2)) are also
consistent with those being used for the current Value-Added Producer
grant program. Specifically,
Applicants must verify in their applications that matching
funds are available for the time period of the grant;
Matching funds must be at least equal to the amount of
grant funds requested;
Unless provided by other authorizing legislation, other
Federal grant funds cannot be used as matching funds;
Matching funds must be spent at a rate equal to or greater
than the rate at which grant funds are expended; and
Matching funds must be provided by either the applicant or
by a third party in the form of cash or in-kind contributions.
Scoring Applications
The priority categories and points associated with those priority
categories that would be used to score applications are identified in
Sec. 5002.105(i), and are divided into program-specific priority
categories and points and Administrator priority categories and points.
The maximum number of points an application can receive would be 100
points.
The program-specific priority categories and points are in Sec.
5002.105(i)(1). While covering the same areas as these priority
categories used in grant applications under the current program, the
proposed rule greatly consolidates the scoring into four priority
categories, and adds a fifth category (type of applicant), in response
to section 6202 of the 2008 Farm Bill. These priority categories, which
apply to both planning grants and working capital grants, are:
Nature of the proposed venture;
Personnel qualifications;
Commitments and support;
Work plan/budget; and
Type of applicant.
The points associated with these priority categories have been
modified to total 90 points, with up to 25 points available for the
first two criteria (nature of the proposed venture and personnel
qualifications) and up to 20 points available for the last two criteria
(commitments and support and work plan/budget).
The Administrator priority categories and points are identified in
Sec. 5002.105(i)(2). The Value-Added Producer grant program would
allow the Administrator to award an application up to 10 points to
improve the geographic diversity of awardees in a fiscal year.
Ranking Applications
Unless otherwise specified in a notification, the Agency will rank
grant applications under this program once each year, on or after July
15 (Sec. 5002.105(j)).
Water and Waste Disposal Facilities (Sec. 5002.106)
This section identifies program specific requirements for water and
waste disposal facilities projects. The prospective grantee must comply
both with subpart A provisions and the provisions in this section when
seeking a water or waste disposal facilities grant. The program-
specific provisions for water and waste disposal facilities projects
follow.
General
Consistent with the current Water and Waste Disposal Facilities
grant regulations, Sec. 5002.106(a) discusses the Agency's general
expectations of the experience and expertise of all applicants for
water and waste disposal facilities projects.
Applicant Eligibility
To be eligible for a water and waste disposal facilities grant, a
prospective grantee must not only meet the eligibility criteria
specified in subpart A of the proposed rule, but also the applicant
eligibility criterion specified in subpart B for this program. This
program-specific criterion (Sec. 5002.106(b)) requires the applicant
to be one of the following:
A public body, such as a municipality, county, district,
authority, or other political subdivision of a State located in a rural
area;
An organization operated on a not-for-profit basis, such
as an association, cooperative, or private corporation. The
organization must be an association controlled by a local public body
or bodies, or have a broadly based
[[Page 61227]]
ownership by or membership of people of the local community; or
An Indian tribe on a Federal or State reservation or any
other Federally-recognized Indian tribe.
This criterion is found in the current Water and Waste Disposal
Facilities grant program.
Project Eligibility
To be eligible for a water and waste disposal facilities grant, the
project would have to meet the applicable project eligibility
requirements specified in subpart A and program-specific project
eligibility criteria found in subpart B for this program. The project
eligibility criteria in subpart B require, in summary (Sec.
5002.105(c)(1) through (6)), that the project:
Serve a rural area that, if such project is completed, is
not likely to decline in population below that for which the project
was designed;
Be designed and constructed so that adequate capacity will
or can be made available to serve the present population of the area to
the extent feasible and to serve the reasonably foreseeable growth
needs of the area to the extent practicable;
Must be necessary for orderly community development and
consistent with a current comprehensive community water, waste
disposal, or other current development plan for the rural area;
Must be based on taxes, assessments, income, fees, or
other satisfactory sources of revenues in an amount sufficient to
provide for facility operation and maintenance, reasonable reserves,
and debt payment;
Must be for public use and installed so as to serve any
potential user within the service area who desires service and can be
feasibly and legally served; and
Be unable to finance the proposed project from their own
resources or through commercial credit at reasonable rates and terms.
These criteria are the same as found in the current Water and Waste
Disposal Facilities grant program.
Notice of Intent To Apply for Grant
Consistent with its statutory authority and the current program,
subpart B for this program (Sec. 5002.106(d)) would require an
applicant to provide public notice of its intent to apply for a grant
under this program at not more than 60 days before the applicant files
its application with the Agency.
Uses of Grant Funds
Subpart B for water and waste disposal facilities grants identifies
additional eligible and ineligible uses of grant funds (Sec.
5002.106(e) and (f), respectively). The proposed eligible and
ineligible uses in the current grant program for these types of
projects.
Funding Considerations and Matching Funds
Proposed subpart B identifies additional funding considerations
that the Agency will use in determining whether or not to fund an
application. These considerations, which are found in Sec.
5002.106(g)(1) and are consistent with the current provisions for
grants for this program, are, in summary:
If the grant results in an annual equivalent dwelling unit
(EDU) cost that is not comparable with similar systems, the Agency will
determine a grant amount based on achieving EDU costs that are not
below similar system user costs;
The amount of grant needed to achieve a reasonable
wholesale user cost if the applicant provides wholesale sales or
services on a contract basis to another system or entity; and
The amount necessary to reduce delivery cost to a
reasonable level when the annual cost for delivery of service is
subsidized.
The provisions for matching funds (Sec. 5002.106(g)(2)) are
consistent with the current Water and Waste Disposal Facilities grant
regulation--either 75 percent or 45 percent, depending on the median
household income of the service area relative to the poverty line or
state nonmetropolitan median income.
Scoring Applications
The priority categories and points associated with those priority
categories that would be used to score applications are identified in
Sec. 5002.106(h)(1) through (3), and are divided into program-specific
priority categories and points, Administrator priority categories and
points, and State Director priority categories and points. The maximum
number of points an application can receive would be 100 points.
The program-specific priority categories and points are in Sec.
5002.106(h)(1). These priority categories are the same as currently
used in scoring water and waste disposal facilities grant applications.
The points associated with the priority categories, however, have been
modified to total 80 points. The relative point values were not changed
between priority categories.
The Administrator and State Director priority categories and points
are identified in Sec. 5002.106(h)(2) and (h)(3), respectively. With
regard to Administrator priority categories and points, the Water and
Waste Disposal Facilities grant program would allow the Administrator
to award up to 10 points based on grant size and to improve the
geographic diversity of awardees in a fiscal year. No more than 10
Administrator points would be awarded to an application.
With regard to State Director priority categories, the Water and
Waste Disposal Facilities grant program would use the State Director
priority categories identified in subpart A (Sec. 5002.42(b)(2)(i)
through (x)) plus two additional priority categories. These two
priority categories are:
Arsenic (as specified in a memorandum of understanding
with the USEPA); and
Areas located within 100 miles of New York City's ``ground
zero'' as the result of the September 11, 2001, attacks.
Each application under this program is eligible for up to 10 points
for the State Director priority categories.
Ranking Applications
Unless otherwise specified in a notification, the Agency will rank
grant applications under this program four times per year (Sec.
5002.106(i)). The proposed ranking dates are (in the order in which
they occur each fiscal year): December 15, March 15, July 15, and
August 15.
Selecting Applications for Funding--Continuing Projects
Consistent with Departmental regulations, the Agency will, in
selecting applications for funding, consider whether an application is
for a project that has previously received grant funding from the
Agency (Sec. 5002.106(j)). In this situation, the Agency may give a
lower scoring application consideration ahead of a higher scoring
application if the lower scoring application is for the continuation of
an existing funded project. However, if the request for additional
grant funds is due to cost overruns, the Agency will give consideration
to the lower scoring application only if the cost overrun is due to
certain causes. Specifically, the cost overruns must be due to either
high bids or unexpected construction problems neither of which can be
reduced by negotiations, redesign, use of bid alternatives, rebidding,
or other means. However, if the cost overrun exceeds 20 percent of the
development cost at time of grant approval or if the scope of the
original purpose has changed, the Agency would not use this criterion
as a factor in choosing a lower scoring application over a higher
scoring application. Such an application
[[Page 61228]]
could still be selected for funding, but it would need to compete based
on its ranking and other award criteria.
User Charges
Consistent with the current program, Sec. 5002.106(k) identifies
expectations for user charges. Specifically, user charges should be
reasonable and produce enough revenue to provide for all costs of the
facility after the project is complete. In addition, the planned
revenue should be sufficient to provide for all debt service, debt
reserve, operation and maintenance, and, if appropriate, additional
revenue for facility replacement of short-lived assets without building
a substantial surplus.
Professional Services and Contracts Related to the Facility
Consistent with the current program, Sec. 5002.106(l) identifies
specific requirements for the Water and Waste Disposal Facilities grant
program related to professional services and contracts for these types
of projects. Areas specifically covered, which are part of the current
grant program for water and waster disposal projects, are:
Fees provided in contracts and agreements;
Engineering and architectural services;
Other professional services; and
Contracts for other services.
User Estimates
Consistent with the current Water and Waste Disposal Facilities
grant program, Sec. 5002.106(m) would require applicants who are
dependent on users' fees for operation and maintenance expenses to base
their income forecast on realistic base estimates. If users are not
currently receiving service, the number of maximum users should not be
used in making this estimate and the amount of cash contributions
required must be set by the applicant and concurred with by the Agency.
For most applicants, an enforceable user agreement with a penalty
clause would be required. All applicants would be required to provide a
positive program to encourage connection by all users as soon as
service is available.
Water Rights
Consistent with the current program, Sec. 5002.106(n) would
require the applicant to provide the Agency with, as applicable:
A statement by the applicant's attorney regarding the
nature of the water rights owned or to be acquired by the applicant
(such as conveyance of title, appropriation and decree, application and
permit, public notice and appropriation and use) and
A copy of a contract with another company or municipality
to supply water; or stock certificates in another company which
represents the right to receive water.
Economic Impact Initiatives Grants (Sec. 5002.107)
The Economic Impact Initiatives grant program is currently being
administered under the Community Facilities grant program. The Agency
is proposing to continue the current relationship of the Economic
Impact Initiative grant program with the Community Facilities grant
program. Except for changes that would occur under subpart A of the
proposed rule, the Agency is not proposing any changes to the
requirements specific to the Economic Impact Initiatives grant program.
Tribal College Grants (Sec. 5002.108)
As noted earlier, the Tribal College grant program is distinctly
different than the other existing grant programs in that it is a very
small grant program with a small, statutorily defined set of eligible
applicants. Certain provisions in subpart A would apply to this program
and certain provisions would not. The provisions that would apply are
contained in Sec. Sec. 5002.1 through 5002.14 and Sec. Sec. 5002.60
through 5002.80. These provisions generally deal with general
requirements of the grant programs and with provisions affecting the
actual award of the grants (grant agreement) through grant close-out.
The provisions in subpart A that do not apply to Tribal College
grants generally address program notifications, preapplications and
applications, applicant eligibility, and processing, scoring, ranking,
and selecting applications for funding. These aspects are found in the
subpart B program-specific provisions for Tribal College grants in
Sec. 5002.108.
Program Notification
Consistent with current program implementation, the Agency will
issue a notice each year to the eligible Tribal colleges and
universities, identifying the maximum grant size and the date that
preapplications are due (Sec. 5002.108(a)).
Applicant Eligibility
To be eligible for a Tribal College grant, the applicant must be
one of the tribal colleges or universities that are identified as 1994
Institutions (Sec. 5002.108(b)).
Project Eligibility
Grant funds can only be used to develop facilities provided by the
Tribal college or university (Sec. 5002.108(c)). Project eligibility
requirements for Tribal College grants are the same as for the
Community Facilities grant program, except that a Tribal College grant
project does not need to demonstrate economic feasibility (Sec.
5002.101(b)(3)).
Preapplications and Applications
Both preapplications and applications would have dates by which
each should be received by the Agency at the State Office in the State
in which the Tribal college or university is located (Sec.
5002.108(d)). For preapplications, the submittal date will be
identified in the annual notification the Agency sends to the Tribal
colleges and universities. For applications, the proposed rule would
establish March 31 as the application submittal date. The Agency will
give priority to preapplications and applications that are received on
or before their respective submittal dates over those preapplications
and applications that are received after their respective submittal
dates.
The proposed rule also requires applicants submitting more than one
application in a year to provide a priority listing for the grants it
is seeking that year.
Funding Limitations
The maximum amount of a grant awarded under this section would be
limited to no more than 95 percent of the total cost of the facility.
Further, the Agency would be prohibited from requiring a match of more
than 5 percent of the total cost of the facility. (Sec. 5002.108(e)).
These requirements are in response to section 6007 of the 2008 Farm
Bill and are different from the current program.
Award Process
In selecting applications for funding, the Agency will use a
graduated scale, which is found in Sec. 5002.101(e)(2). In addition,
in selecting applications for funding (Sec. 5002.108(f)), the Agency
may:
Choose to fund only one grant per round from a single
applicant;
Reduce the grant amount for all applicants to a maximum
level that will fund at least one application per Tribal college or
university that applied during that round; and
Negotiate to increase the scope of Tribal College projects
and grants if funds remain available after the grant selection round.
[[Page 61229]]
III. Request for Comments
The Agency is interested in receiving comments on all aspects of
the proposed rule. In particular, the Agency is seeking comments in the
areas listed below. All comments should be submitted as indicated in
the ADDRESSES section of this preamble.
A. Criteria for Determining Grant Award Amount for the Rural Energy for
America Grant Program (Sec. 5002.102(f))
The Rural Energy for America program is an evolving area.
Therefore, the Agency is seeking comment on whether there are any other
criteria that the Agency should consider when awarding funding to
grants under this program. Please be sure to provide sufficient detail
on each criterion, how it would be measured, and any limitations in its
applicability to the various technologies for which grants could be
awarded under this program.
B. Project Scoring Criteria for the Rural Energy for America Grant
Program (Sec. 5002.102(g)(1))
In scoring applications under the Rural Energy for America grant
program, the proposed rule would apply the same program-specific
criteria to feasibility studies as to the actual renewable energy
system project or the energy efficiency improvement project. Because
the program-specific priority categories and points were developed
under the current program for renewable energy systems and energy
efficiency improvement projects, the Agency is seeking comment on
whether these criteria are appropriate for scoring feasibility studies.
The Agency is also seeking comment on alternative scoring criteria for
feasibility studies if the ones in the proposed rule are not
appropriate. Please be sure to be specific on what criteria you
propose, how they would be applied, and your rationale.
C. Minimum Funding Requirements for the Rural Energy for America Grant
Program
In the current Renewable Energy System and Energy Efficiency
Improvement program, a minimum grant size of $1,500 is specified for
energy efficiency improvement projects and $2,500 for renewable energy
system projects. In this proposed rule, the Agency is not proposing a
minimum grant size for this program. The Agency seeks comment on
whether there should be a minimum grant size for either or both types
of projects under this program and, if so, what that level should be
and why. If the Agency decides to implement a minimum grant size for
either type of project, the Agency wants to make sure that it is a
``meaningful'' level; that is, that the minimum level is not so low
that potential applicants would not consider applying for the grant.
D. The Grant Programs Being Included in the Proposed Rule
Earlier in this notice, the Agency provided an explanation as to
how the eight grant programs were selected for inclusion in the
proposed rule. The Agency is seeking comment on whether it is
appropriate to include these specific grant programs and, if not, which
of the grant programs should be removed and why.
E. Grant Request Relative to Remaining Available Program Funds
As proposed, the Agency would be able to select the next highest
scoring application if the higher scoring application requests grant
funds in excess of 25% of the remaining available funds for a
nationally competed grant program. The Agency is seeking specific
comment on whether the proposed threshold of 25% is appropriate and why
or why not. The Agency is also seeking comment on alternative
thresholds and on the applicability of such thresholds (i.e., should
they be program-specific or applied to all nationally competed grant
programs). Please be sure to provide the rationale for the suggested
thresholds and their applicability.
F. Minimum Score for Determining Applications To Be Eligible
The Agency is seeking comment as to whether applications must
obtain a minimum score in order to be considered eligible for funding
and, if so, what that minimum score should be. At this stage, the
Agency has considered a minimum score in the vicinity of 40 points, but
has decided at this point not to include a specific number in the
proposed rule. By including such a minimum score, applicants would be
given an understanding of how an application must score to receive
consideration. However, the Agency is also concerned about the merits
of establishing such a uniform score upfront without consideration of
the availability of funds as well as the size and quality of the
applicant pool.
If the Agency were to establish a minimum score, the Agency would
consider including a provision that would allow it to adjust the
minimum score each year through the issuance of a notification (e.g., a
Federal Register notice).
List of Subjects
7 CFR Part 1703
Community development, Grant programs--education, Grant programs--
health care, Grant programs--housing and community development,
Reporting and recordkeeping requirements, Rural areas.
7 CFR Part 1780
Business and industry, Community development, Community facilities,
Grant programs--housing and community development, Reporting and
recordkeeping requirements, Rural areas, Waste treatment and disposal,
Water supply, Watersheds.
7 CFR Part 3570
Accounting, Administrative practice and procedure, Conflicts of
interests, Environmental impact statements, Fair housing, Grant
programs--housing and community development, Loan programs--housing and
community development, Rural areas, Subsidies.
7 CFR Part 4280
Rural development assistance, Economic development, Energy, Grant
programs, Renewable energy systems, Energy efficiency improvements,
Rural areas.
7 CFR Part 4284
Agricultural commodities, Agriculture innovation centers,
Agricultural marketing research, Business and Industry, Grant
programs--housing and community development, Rural areas, Rural
development, Value-added.
7 CFR Part 5002
Accounting, Agriculture innovation centers, Community development,
Economics, Energy efficiency improvements, Environmental impact
statements, Renewable energy systems, Rural areas, Rural development,
Value-added, Waste treatment and disposal, Water supply.
For the reasons set forth in the preamble, under the authority at 5
U.S.C. 301 and 7 U.S.C. 1989, Chapters XVII, XXXV, and XLII of title 7
of the Code of Federal Regulations are proposed to be amended and
Chapter L is proposed to be amended as follows:
CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
PART 1703--Rural Development
1. The authority citation for part 1703 continues to read as
follows:
Authority: 7 U.S.C. 901 et seq. and 950aaa et seq.
[[Page 61230]]
Subpart E of Part 1703 [Removed and reserved]
2. Subpart E of part 1703 is removed and reserved.
CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
PART 1780--Rural Development
3. The authority citation for part 1780 continues to read as
follows:
Authority: U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.
Subpart A of Part 1780 [Amended]
4. Section 1780.10 is amended by removing paragraph (b)(4) and
revising paragraphs (b)(2) and (b)(3) to read as follows:
Sec. 1780.10 Limitations.
(a) * * *
(b) * * *
(1) * * *
(2) Pay any costs of a project when the median household income of
the service area is more than 100 percent of the nonmetropolitan median
household income of the State; and
(3) Pay project costs when other loan funding for the project is
not at reasonable rates and terms.
* * * * *
CHAPTER XXXV--RURAL HOUSING SERVICE, DEPARTMENT OF AGRICULTURE
PART 3570--Community Programs
5. The authority citation for part 3570 continues to read as
follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989.
Subpart B of Part 3570 [Amended]
6. Section 3570.51 is amended by adding paragraphs (a)(1) and
(a)(2) to read as follows:
Sec. 3570.51 General.
(a) * * *
(1) The provisions of 7 CFR part 3570, subpart B, do not apply to
grants made under 7 CFR part 5002.
(2) Grants made in combination with loans that are issued under
either 7 CFR part 1942, subpart A or 7 CFR part 5001 shall be subject
to the requirements of 7 CFR part 3570, subpart B.
* * * * *
CHAPTER XLII--RURAL BUSINESS--COOPERATIVE SERVICE AND RURAL UTILITIES
SERVICE, DEPARTMENT OF AGRICULTURE
PART 4280--LOANS AND GRANTS
7. The authority citation for part 4280 continues to read as
follows:
Authority: 7 U.S.C. 8106.
Subpart B of Part 4280 [Amended]
8. Section 4280.101 is amended by adding paragraphs (a)(1) and
(a)(2) to read as follows:
Sec. 4280.101 Purpose.
(a) * * *
(1) The provisions of 7 CFR part 4280 ,subpart A, do not apply to
grants made under 7 CFR part 5002.
(2) Grants made in combination with loans that are issued under 7
CFR part 4280, subpart D, shall be subject to the requirements of 7 CFR
part 4280, subpart A.
* * * * *
PART 4284--GRANTS
9. The authority citation for part 4284 continues to read as
follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Subpart F also issued under 7 U.S.C. 1932(e).
Subpart G also issued under 7 U.S.C. 1926(a)(11).
Subpart J also issued under 7 U.S.C. 1621 note.
Subpart K also issued under 7 U.S.C. 1621 note.
Subpart F of Part 4284 [Removed and Reserved]
10. Subpart F of part 4284 is removed and reserved.
Subpart J of Part 4284 [Removed and Reserved]
11. Subpart J of part 4284 is removed and reserved.
12. Chapter L consisting of parts 5000 through 5099 is established
and a new part 5002 is added to read as follows:
CHAPTER L--RURAL DEVELOPMENT, DEPARTMENT OF AGRICULTURE
PART 5002--GRANTS
Subpart A--General Provisions
Sec.
5002.1 Purpose and scope.
5002.2 Definitions and abbreviations.
5002.3 Appeal rights.
5002.4 Exception authority.
5002.5 Compliance with other Federal laws.
5002.6 State laws, local laws, and regulatory commission
regulations.
5002.7 Environmental requirements.
5002.8 Forms, regulations, and instructions.
5002.9--5002.14 [Reserved]
Funding and Programmatic Change Notifications
5002.15 Notifications.
5002.16--5002.19 [Reserved]
Eligibility
5002.20 Applicant eligibility.
5002.21 Ineligible applicants.
5002.22 Project eligibility.
5002.23 Ineligible projects and purposes.
5002.24--5002.29 [Reserved]
Applying for a Grant
5002.30 Applying for a grant.
5002.31 Preapplications.
5002.32 Applications.
5002.33--5002.39 [Reserved]
Processing and Scoring Applications
5002.40 Processing applications.
5002.41 Application withdrawal.
5002.42 Scoring applications.
5002.43--5002.49 [Reserved]
Awarding Grants
5002.50 Award process.
5002.51--5002.59 [Reserved]
Grant Agreements and Conditions
5002.60 Actions prior to grant closing or start of construction,
whichever comes first.
5002.61 Grant agreement.
5002.62 Use of remaining funds.
5002.63--5002.69 [Reserved]
Post Award Activities and Requirements
5002.70 Monitoring and reporting program performance.
5002.71 Programmatic changes and budget revisions.
5002.72 Transfer of obligations.
5002.73--5002.79 [Reserved]
Grant Close Out and Related Activities
5002.80 Grant close out and related activities.
5002.81--5002.100 [Reserved]
Subpart B--Program Specific Provisions
5002.101 Community Facilities.
5002.102 Rural Energy for America Grants.
5002.103 Rural Cooperative Development Grants.
5002.104 Distance Learning and Telemedicine Grants.
5002.105 Value-Added Producer Grants.
5002.106 Water and Waste Disposal Facilities Grants.
5002.107 Economic Impact Initiatives Grants.
5002.108 Tribal College Grants.
5002.109--5002.200 [Reserved]
Authority: 5 U.S.C. 301; 7 U.S.C. 1926(a)(1); 7 U.S.C. 1932(a);
7 U.S.C. 8106.
Subpart A--General Provisions
Sec. 5002.1. Purpose and scope.
(a) General. The purpose and scope of this part is to simplify,
standardize, and improve the administration and implementation of
grants and cooperative agreements made by Rural Development. This part
applies to those grant and cooperative agreement programs specified in
subpart B of this part.
(b) Terminology applicable to subpart A. This subpart's substantive
rules are the same for grants and cooperative agreements. Therefore,
certain
[[Page 61231]]
simplified terminology is used in the text. Specifically in all
portions of this subpart:
(1) Each provision that applies to ``grants'' also applies to
``cooperative agreements,'' even if the latter term does not appear in
the provisions unless the context otherwise means specifically
cooperative agreement.
(2) Each provision that applies to ``applicants'' for grants or
``grantees'' applies to ``applicants'' for cooperative agreements or
``recipients of cooperative agreements,'' even if the latter terms do
not appear in the provision unless the context otherwise means
specifically a cooperative agreement applicant or recipient.
(3) The term ``grantee'' or ``applicant'' refers equally to
recipients or applicants of grants and recipients or applicants of
cooperative agreements.
(4) The term ``Agency'' refers equally to a Rural Development
agency that awards a grant and to one that awards a cooperative
agreement.
(5) The term ``subgrant'' refers equally to certain awards under
grants and to the same kinds of awards under cooperative agreements.
(c) Applicability. (1) ``Grant only'' applications. Unless
otherwise specified in another part, the requirements of this part
apply only to applicants submitting a ``grant only'' application. Any
grant that is requested in combination with a loan (a loan and grant
combination) will be determined based on the process associated with
loan selection.
(2) Tribal College Grants. Unless otherwise specified in Sec.
5002.108, the provisions in Sec. 5002.15 through Sec. 5002.59 do not
apply to Tribal College grants.
(d) Incorporation by reference. Unless specifically stated, this
part incorporates by reference the regulations of the Department of
Agriculture's Office of Chief Financial Officer (or successor office)
as codified in 7 CFR parts 3000 through 3099, including but not
necessarily limited to 7 CFR parts 3015 through 3019, 7 CFR part 3021,
and 7 CFR part 3052, and successor regulations to these parts.
(e) Relationship between subpart A and subpart B requirements. All
grant programs subject to this part are subject to the requirements and
definitions specified in subpart A, unless there is a program specific
provision or definition in subpart B that overrides the corresponding
subpart A provision. Such a subpart B provision may modify the scope of
or replace entirely the corresponding subpart A provision.
Sec. 5002.2 Definitions and abbreviations.
Each term used in this part shall have the meaning as found in the
Departmental regulations and in this part. If a term is defined in this
part and in the Departmental regulations, such term shall have the
meaning as found in this part. If there is a conflict in how a term is
defined in this part and in how it is defined in the Departmental
regulations, it shall have the meaning as defined in this part.
(a) Definitions.
1994 Institution. A college identified as such for purposes of the
Equity in Educational Land-Grant Status Act of 1994 (7 U.S.C. 301
note).
Administrator. Each of the Administrators of the Rural Utilities
Service, the Rural Business-Cooperative Service, the Rural Housing
Service or their respective designees or successors, as appropriate.
Agency identified target areas. An identified area in the State
strategic plan or other plans developed by the Rural Development State
Director.
Agency. The Rural Housing Service or successor for the programs it
administers; the Rural Utilities Service or successor for the programs
it administers; and the Rural Business-Cooperative Service or successor
for the programs it administers.
Agricultural commodity. An unprocessed product of farms, ranches,
nurseries, and forests. Agricultural commodities include: Livestock,
poultry, and fish; fruits and vegetables; grains, such as wheat,
barley, oats, rye, triticale, rice, corn, and sorghum; legumes, such as
field beans and peas; animal feed and forage crops; seed crops; fiber
crops, such as cotton; oil crops, such as safflower, sunflower, corn,
and cottonseed; trees grown for lumber and wood products; nursery stock
grown commercially; Christmas trees; ornamentals and cut flowers; and
turf grown commercially for sod. Agricultural commodities do not
include horses or animals raised as pets, such as cats, dogs, and
ferrets.
Agricultural producer. An individual or entity directly engaged in
the production of agricultural products, including crops (including
farming); livestock (including ranching); forestry products;
hydroponics; nursery stock; or aquaculture, whereby 50 percent or
greater of their gross income is derived from the operations.
Agricultural producer group. An organization that represents
independent producers, whose mission includes working on behalf of
independent producers and the majority of whose membership and board of
directors are comprised of independent producers.
Agricultural product. Plant and animal products and their by-
products to include crops (including farming); livestock (including
ranching); forestry products, hydroponics; nursery stock; aquaculture;
fish and seafood products.
Annual receipts. The total income or gross income (sole
proprietorship) plus cost of goods sold.
Biomass. Any organic material that is available on a renewable or
recurring basis, including agricultural crops; trees grown for energy
production; wood waste and wood residues; plants, including aquatic
plants and grasses; fibers; animal waste and other waste materials; and
fats, oils, and greases, including recycled fats, oils, and greases. It
does not include paper that is commonly recycled or un-segregated solid
waste.
Commercially available. A system that has a proven operating
history of viability of at least one year, specific to the proposed
application. Such a system is based on established design, and
installation procedures and practices. Professional service providers,
trades, large construction equipment providers, and labor are familiar
with installation procedures and practices. Proprietary and balance of
system equipment and spare parts are readily available. Service is
readily available to properly maintain and operate the system. An
established warranty exists for parts, labor, and performance.
Cooperative agreement. A legal instrument reflecting a relationship
between the Agency and a State, a local government, or other recipient
when:
(i) The principal purpose of the relationship is to transfer a
thing of value to the State, local government, or other recipient to
carry out a public purpose of support or stimulation authorized by a
law of the United States instead of acquiring (by purchase, lease, or
barter) property or services for the direct benefit or use of the
Agency; and
(ii) Substantial involvement is expected between the Agency and the
State, local government, or other recipient when carrying out the
activity contemplated in this agreement.
Cooperative development. The startup, expansion or operational
improvement of a cooperative to promote development in rural areas of
services and products, processes that can be used in the marketing of
products, or enterprises that add value to farm products through
processing or marketing activities. Development activities may include,
but are not limited to, technical assistance, research services,
educational services and
[[Page 61232]]
advisory services. Operational improvement includes making the
cooperative more efficient or better managed.
Data terminal equipment. Equipment that converts user information
into data signals for transmission, or reconverts the received data
signals into user information, and is normally found on the terminal of
a circuit and on the premises of the DLT end user.
Day. Calendar day, unless otherwise stated.
Departmental regulations. The regulations of the Department of
Agriculture's Office of Chief Financial Officer (or successor office)
as codified in 7 CFR parts 3000 through 3099, including but not
necessarily limited to 7 CFR parts 3015 through 3019, 7 CFR part 3021,
and 7 CFR part 3052, and successor regulations to these parts.
Distance learning. A telecommunications link to a DLT end user
through the use of eligible equipment to:
(i) Provide educational programs, instruction, or information
originating in one area, whether rural or not, to students and teachers
who are located in a rural area; or
(ii) Connect teachers and students, located in one area, whether
rural or not, with teachers and students that are located in a rural
area.
DLT end user. One or more of the following:
(i) Rural elementary, secondary schools, and other educational
institutions, such as institutions of higher education, vocational and
adult training and education centers, libraries, and teacher training
centers, and students, teachers and instructors using such rural
educational facilities, that participate in a rural distance learning
telecommunications program through a project funded under this subpart;
(ii) Rural hospitals, primary care centers or facilities, such as
medical centers, nursing homes, and clinics, and physicians and staff
using such rural medical facilities, that participate in a rural
telemedicine program through a project funded under this subpart; or
(iii) Other rural community facilities, institutions, or entities
that receive distance learning or telemedicine services.
DLT end-user site. A facility that is part of a network or
telecommunications system that is utilized by DLT end users.
Eligible project costs. The total project costs that are eligible
to be paid with program funds.
Emerging market. A new or developing market.
Energy assessment. An assessment conducted by an experienced energy
assessor, certified energy manager or professional engineer assessing
energy cost and efficiency by analyzing energy bills and briefly
surveying the target building, machinery, or system. The assessment
identifies and provides a savings and cost analysis of low-cost/no-cost
measures. The assessment will estimate the overall costs and expected
energy savings from these improvements, and dollars saved per year. The
assessment will estimate weighted-average payback period in years.
Energy audit. An audit conducted by a certified energy manager or
professional engineer that focuses on potential capital-intensive
projects and involves detailed gathering of field data and engineering
analysis. The audit will provide detailed project costs and savings
information with a high level of confidence sufficient for major
capital investment decisions similar to but in more detail than an
energy assessment.
Energy efficiency improvement. Improvements to a facility,
building, or process that reduces energy consumption, or reduces energy
consumed per square foot.
Equivalent dwelling unit. The level of service provided to a
typical rural residential dwelling.
Essential community facilities. The physical structure financed or
the resulting service provided to primarily rural residents that is
operated on a non-profit basis and that combined or severally must:
(i) Perform or fulfill a function customarily provided by a local
unit of government;
(ii) Be a public improvement needed for the orderly development of
a rural community;
(iii) Not include a project that benefits a single individual or
group of single individuals as opposed to a class within a community;
(iv) Not include private affairs or commercial or business
undertakings (except for limited authority for industrial parks,
agricultural exposition centers, fair grounds, farmers markets,
assisted living facilities, adult day care facilities, and child care
facilities) unless it is a minor part of the total facility; and
(v) Be within the area of jurisdiction or operation for eligible
public bodies or a similar local rural service area of a non-profit
corporation.
Facility. The physical structure financed by the Agency or the
resulting service provided to rural residents.
Farm or ranch. Any place from which $1,000 or more of agricultural
products (crops and livestock) were raised and sold or would have been
raised and sold during the previous year, but for an event beyond the
control of the farmer or rancher.
Farmer or rancher cooperative. A farmer or rancher owned and
controlled business from which benefits are derived and distributed
equitably on the basis of use by each of the farmer or rancher owners.
Feasibility study. An analysis by a qualified consultant of the
economic, market, technical, financial, and management capabilities of
a proposed project, venture, or business in terms of its expectation
for success.
Financial feasibility. The ability of a project or business to
achieve the income, credit, and cash flows to financially sustain a
project over the long term.
Fiscal year. Means the Federal government's fiscal year.
Grant. A legal instrument reflecting a relationship between the
Agency and a State, a local government, or other recipient when the
principal purpose of the relationship is to transfer a thing of value
to the State, local government, or other recipient to carry out a
public purpose of support or stimulation authorized by a law of the
United States instead of acquiring (by purchase, lease, or barter)
property or services for the direct benefit or use of the Agency.
Hub. A facility that is part of a network or telecommunications
system that provides educational or medical services to DLT end-user
sites.
In-kind contributions. Applicant or third-party real or personal
property or services benefiting the Federally assisted project or
program that are provided by the applicant or a third-party entity
consistent with this part. The identifiable value of goods and services
must be considered eligible expenditures, must be used for eligible
purposes of the grant program, and must directly benefit the project.
Independent producers. Agricultural producers, individuals or
entities (including for-profit and non-profit corporations, limited
liability companies (LLCs), partnerships, or limited liability
partnerships (LLPs), where the entities are solely owned or controlled
by agricultural producers who own a majority ownership interest in the
agricultural product that is produced. Independent producers must
produce and own the agricultural product to which value is being added.
Producers who produce the agricultural product under contract for
another entity but do not own the product produced are not independent
producers. Independent producers must
[[Page 61233]]
supply product they produce and own the value-added venture.
Indian tribe. This term has the meaning given it in section 4 of
the Indian Self-Determination and Education Assistance Act (25 U.S.C.
450b).
Institution of higher education. This term has the meaning given it
in section 102(a) of the Higher Education Act of 1965 (20 U.S.C.
1002(a)).
Instructional programming. Educational material, including computer
software, that would be used for educational purposes in connection
with eligible equipment but does not include salaries, benefits, and
overhead of medical or educational personnel.
Interactive video equipment. Equipment used to produce and prepare
for transmission audio and visual signals from at least two distant
locations so that individuals at such locations can orally and visually
communicate with each other. Such equipment includes monitors, other
display devices, cameras or other recording devices, audio pickup
devices, and other related equipment.
Local exchange carrier. A commercial, cooperative or mutual-type
association, or public body that is engaged in the provision of
telephone exchange service or exchange access.
Majority-controlled producer-based business venture. A venture
where more than 50 percent of the ownership and control is held by
independent producers, or, partnerships, LLCs, LLPs, corporations, or
cooperatives that are themselves 100 percent owned and controlled by
independent producers.
Matching funds. The applicant's contribution for approved purposes
in accordance with the Departmental regulations.
Non-profit. Any entity or organization no part of the net earnings
of which inures or may lawfully inure to the benefit of any private
shareholder or individual.
Passive investor. A third-party equity investor that does not
actively participate in management and operation decisions of the
business entity as evidenced by a contractual arrangement.
Planning grants. Grants to facilitate the development of a defined
program of economic activities to determine the viability of a
potential value-added venture, including feasibility studies, marketing
strategies, business plans and legal evaluations.
Post-application. The period of time after the Agency has received
an essentially completed application. An ``essentially completed''
application is an application that contains all parts necessary for the
Agency to determine applicant and project eligibility, to score the
application, and to conduct the technical evaluation.
Poverty line. The level of income for a family of four, as
determined consistent with criteria established by the Department of
Health and Human Services or the Department of Housing and Urban
Development, as determined by the Agency.
Pre-commercial technology. Technology that has emerged through the
research and development process and has technical and economic
potential for commercial application, but is not yet commercially
available.
Product segregation. Physical separation of a product or commodity
from similar products. Physical separation requires a barrier to
prevent mixing with the similar product.
Public body. A municipality, county, or other political subdivision
of a State; a special purpose district; or an Indian tribe on a Federal
or State reservation or other Federally-recognized Indian tribe or an
organization controlled by any of the above.
Qualified consultant. An independent, third-party possessing the
knowledge, expertise, and experience to perform in an efficient,
effective, and authoritative manner the specific task required.
Ranking date. A specified date on or after which the Agency will
rank all scored applications for a specific grant program to create a
priority list of applications. Grant programs may have more than one
ranking date.
Renewable biomass.
(i) Materials, pre-commercial thinnings, or invasive species from
National Forest System land and public lands (as defined in section 103
of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702))
that:
(A) Are byproducts of preventive treatments that are removed to
reduce hazardous fuels; to reduce or contain disease or insect
infestation; or to restore ecosystem health;
(B) would not otherwise be used for higher-value products; and
(C) are harvested in accordance with applicable law and land
management plans and the requirements for old-growth maintenance,
restoration, and management direction of paragraphs (2), (3), and (4)
of subsection (e) of section 102 of the Healthy Forests Restoration Act
of 2003 (16 U.S.C. 6512) and large-tree retention of subsection (f) of
that section; or
(ii) any organic matter that is available on a renewable or
recurring basis from non-Federal land or land belonging to an Indian or
Indian tribe that is held in trust by the United States or subject to a
restriction against alienation imposed by the United States, including:
(A) renewable plant material, including feed grains; other
agricultural commodities; other plants and trees; and algae; and
(B) waste material, including crop residue; other vegetative waste
material (including wood waste and wood residues); animal waste and
byproducts (including fats, oils, greases, and manure); and food waste
and yard waste.
Renewable energy.
(i) Energy derived from a wind, solar, renewable biomass, ocean
(including tidal, wave, current, and thermal), geothermal, or
hydroelectric source;
(ii) Hydrogen derived from renewable biomass or water using an
energy source described in paragraph (i) of this definition.
Renewable energy system. A system that produces or produces and
delivers usable energy from a renewable energy source.
Rural or rural area.
(i) For purposes of providing Renewable Energy/Energy Efficiency
and Rural Cooperative Development grants, rural and rural area are
defined as any area of a State not in a city or town that has a
population of more than 50,000 inhabitants, according to the latest
decennial census of the United States, and the contiguous and adjacent
urbanized area.
(ii) For the purpose of providing Community Facilities and Economic
Impact Initiatives grants, rural and rural area are defined as any area
not in a city, town, or Census Designated Place with a population of
more than 20,000 inhabitants according to the latest decennial census
of the United States.
(iii) For the purpose of providing Distance Learning and
Telemedicine grants, rural and rural area are defined as any area not
within the boundary of (A) an urbanized area or (B) an urban cluster in
excess of 20,000 inhabitants according to the latest decennial census
of the United States.
(iv) For the purpose of providing Water and Waste Disposal
facilities grants, rural and rural area are defined as any area not in
a city, town, or Census Designated Place with a population in excess of
10,000 inhabitants, according to the latest decennial census of the
United States.
(v) For cooperative agreements, the definition of rural or rural
area is the definition for the program which provides the source of
funds for the cooperative agreement.
(vi) For the purposes of this definition, cities and towns are
[[Page 61234]]
incorporated population centers with definite boundaries, local self-
government, and legal powers set forth in a charter granted by the
State. For Puerto Rico, Census Designated Place (CDP), as defined by
the U.S. Census Bureau, will be used as the equivalent to city or town.
For the purpose of defining a rural area in the Republic of Palau, the
Federated States of Micronesia, and the Republic of the Marshall
Islands, the Agency shall determine what constitutes rural and rural
area based on available population data.
Rural community facility. A facility such as a school, library,
learning center, training facility, hospital, or medical facility that
provides educational or health care benefits primarily to residents of
rural areas.
Rural Development. A mission area of the Under Secretary for Rural
Development within the U.S. Department of Agriculture (USDA), which
includes Rural Housing Service, Rural Utilities Service, and Rural
Business-Cooperative Service and their successors.
Service area. The area reasonably expected to be served by the
project/facility.
Small business. An entity is considered a small business in
accordance with the Small Business Administration's (SBA) small
business size standards by the North American Industry Classification
System found in Title 13 CFR part 121. A private entity, including a
sole proprietorship, partnership, corporation, cooperative (including a
cooperative qualified under section 501(c)(12) of the Internal Revenue
Code), and an electric utility, including a Tribal or governmental
electric utility, that provides service to rural consumers on a cost-
of-service basis without support from public funds or subsidy from the
Government authority establishing the district, provided such utilities
meet SBA's definition of small business. These entities must operate
independent of direct Government control. With the exception of the
entities described above, all other non-profit entities are excluded.
State. Any of the 50 States of the United States, the Commonwealth
of Puerto Rico, the District of Columbia, the U.S. Virgin Islands,
Guam, American Samoa, the Commonwealth of the Northern Mariana Islands,
the Republic of Palau, the Federated States of Micronesia, and the
Republic of the Marshall Islands.
State director. The term ``State Director'' means, with respect to
a State, the Director of the Rural Development State Office.
State office. USDA Rural Development offices located in each state.
State program official. The Agency official at the State level who
has been delegated the responsibility of administering the water and
waste disposal facilities programs under this regulation for a
particular State or States.
State strategic plan. A plan developed by each State for Rural
Development initiatives and the type of assistance required. Plans
shall identify goals, methods, and benchmarks for measuring success.
Statewide nonmetropolitan median household income. The median
household income of the State's nonmetropolitan counties and portions
of metropolitan counties outside of cities, towns or places of 50,000
or more population.
Technical assistance. Assistance in learning to manage, operate, or
use equipment or systems; and studies, analyses, designs, reports,
manuals, guides, literature, or other forms of creating, acquiring, or
disseminating information.
Telecommunications systems plan. The plan submitted by an applicant
in accordance with Sec. 1703.125 for grants.
Telecommunications terminal equipment. The assemblage of
telecommunications equipment at the end of a circuit or path of a
signal, including but not limited to facilities that receive or
transmit over the air broadcast, satellite, and microwave, normally
located on the premises of the DLT end user, that interfaces with
telecommunications transmission facilities, and that is used to modify,
convert, encode, or otherwise prepare signals to be transmitted via
such telecommunications facilities, or that is used to modify,
reconvert, or carry signals received from such facilities, the purpose
of which is to accomplish the goal for which the circuit or signal was
established.
Telecommunications transmission facilities. Facilities that
transmit, receive, or carry voice, video, or data between the
telecommunications terminal equipment at each end of the
telecommunications circuit or path. Such facilities include microwave
antennae, relay stations and towers, other telecommunications antennae,
fiber-optic cables and repeaters, coaxial cables, communication
satellite ground station complexes, copper cable electronic equipment
associated with telecommunications transmissions, and similar items.
Telemedicine. A telecommunications link to a DLT end user through
the use of eligible equipment that electronically links medical
professionals at separate sites in order to exchange health care
information in audio, video, graphic, or other formats for the purpose
of providing improved health care services primarily to residents of
rural areas.
Total project cost. The sum of all costs associated with a
completed project.
Tribal college or university. An institution of higher education
that is formally controlled, or has been formally sanctioned, or
chartered, by the governing body of an Indian tribe or tribes, except
that no more than one such institution shall be recognized with respect
to any such tribe, and includes an institution listed in the Equity in
Educational Land Grant Status Act of 1994.
Used equipment. Any equipment that has been used in any previous
application and is provided in an ``as is'' condition.
Value-added. The incremental value that is realized by the producer
from an agricultural commodity or product as the result of (i) A change
in its physical state, (ii) differentiated production or marketing, as
demonstrated in a business plan, (iii) product segregation, or (iv) is
aggregated and marketed as a locally-produced agricultural food
product. Also, the economic benefit realized from the production of
farm or ranch-based renewable energy, including E-85 fuel. Incremental
value may be realized by the producer as a result of either an increase
in value to buyers or the expansion of the overall market for the
product. Examples include milling wheat into flour, slaughtering
livestock or poultry, making strawberries into jam, the marketing of
organic products, an identity-preserved marketing system, wind or hydro
power produced on land that is farmed and collecting and converting
methane from animal waste to generate energy. Identity-preserved
marketing systems include labeling that identifies how the product was
produced and by whom.
Very small business. A business with fewer than 15 employees and
less than $1 million in annual receipts.
Working capital grants. Grants to provide funds to operate ventures
and pay the normal expenses of the venture that are eligible uses of
grant funds.
(b) Abbreviations:
CDP--Census Designated Place.
DLT--Distance Learning and Telemedicine.
EDU--Equivalent Dwelling Unit.
LLC--Limited liability company.
[[Page 61235]]
LLP--Limited liability partnership.
NSLP--National School Lunch Program.
RUS--The Rural Utilities Service or a successor agency, an agency
within USDA established pursuant to section 232 of the Department of
Agriculture Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat.
3178), successor to the Rural Electrification Administration and
successor to the Farmer's Home Administration and the Rural Development
Administration with respect to certain water and waste disposal loan
and grant programs.
SBA--Small Business Administration.
USDA--United States Department of Agriculture.
Sec. 5002.3 Appeal rights.
A person may seek a review of an Agency decision under this part
from the appropriate Agency official that oversees the program in
question or appeal to the National Appeals Division in accordance with
7 CFR part 11 of this title.
Sec. 5002.4 Exception authority.
Except as specified in paragraphs (a) through (c) of this section,
the applicable Administrator may make exceptions to any requirement or
provision of this part, if such exception is necessary to implement the
intent of the authorizing statute in a time of national emergency or in
accordance with a Presidentially-declared disaster, or, on a case-by-
case basis, when such an exception is in the best financial interests
of the Federal Government and is otherwise not in conflict with
applicable laws.
(a) Applicant eligibility. No exception to applicant eligibility
can be made.
(b) Project eligibility. No exception to project eligibility can be
made.
(c) Rural area definition. No exception to the definition of rural
area can be made.
Sec. 5002.5 Compliance with other Federal laws.
Applicants must comply with other applicable Federal laws including
Equal Employment Opportunities, Americans with Disabilities Act, Equal
Credit Opportunity Act, Fair Housing Act, and the Civil Rights Act of
1964.
Sec. 5002.6 State laws, local laws, regulatory commission
regulations.
If there are conflicts between this part and State or local laws or
regulatory commission regulations, the provisions of this part will
control.
Sec. 5002.7 Environmental requirements.
(a) All grants awarded under this part are subject to the
environmental requirements in subpart G of 7 CFR part 1940 or 7 CFR
1794, as applicable, or successor regulations.
(b) The applicant must not take any action or incur any obligations
during the time of application or application review and processing
that would either limit the range of alternatives to be considered or
that would have an adverse effect on the environment, such as the
initiation of construction. If the applicant takes such adverse
actions, the project will be ineligible for funding under this part.
Sec. 5002.8 Forms, regulations, and instructions.
Copies of all forms, regulations, instructions, and other materials
related to programs referenced in this part may be obtained through the
Agency.
Sec. Sec. 5002.9--5002.14 [Reserved]
Funding and Programmatic Change Notifications
Sec. 5002.15 Notifications.
In implementing this part, the Agency will issue notifications
addressing funding and programmatic changes, as specified in paragraphs
(a) and (b) of this section, respectively, for each grant program under
this part. The methods that the Agency will use in making these
notifications is specified in paragraph (c) of this section, and the
timing of these notifications is specified in paragraph (d) of this
section.
(a) Funding. The Agency will issue notifications concerning funding
for each program as described in paragraphs (a)(1) through (3) of this
section.
(1) For each Nationally-competed grant program, the funding level
and the minimum and maximum grant amount.
(2) For each State-allocated grant program, the funding level and
minimum and maximum grant amount, as proposed by State Directors and as
approved by the Agency.
(3) Any additional funding information associated with an
individual grant program as determined by the Agency.
(b) Programmatic changes. For each program, as applicable, the
Agency will issue notifications of the programmatic changes specified
in paragraphs (b)(1) through (5) of this section.
(1) The set of Administrator priority categories or their point
allocation, if the provisions specified in subparts A and B are not to
be used for awarding Administrator points.
(2) The set of State Director priority categories or their point
allocation, if the provisions specified in subparts A and B are not to
be used for awarding State Director points, as proposed by State
Directors and as approved by the Agency.
(3) Additional reports that are generally applicable across
projects within a program associated with the monitoring of and
reporting on project performance.
(4) Any change in a program's ranking dates.
(5) For programs with a specified application date, any change in
the application date.
(c) Notification methods. The Agency will issue the information
specified in paragraphs (a) and (b) of this section as specified in
paragraphs (c)(1) through (3) of this section.
(1) For Nationally-competed grant programs covered by this part,
the Agency will issue one or more Federal Register notices.
(2) For State-allocated grant programs covered by this part, the
Agency will make the information available on the Agency's Web site.
(3) For both Nationally-competed grant programs and State-allocated
grant programs, all information will be available at any Rural
Development office.
(d) Timing. The Agency will make the information specified in
paragraphs (a) and (b) of this section available as specified in
paragraphs (d)(1) through (3) of this section.
(1) The Agency will make the information specified in paragraph (a)
of this section available each fiscal year.
(2) The Agency will make the information specified in paragraphs
(b)(1) and (b)(2) of this section available at least 30 days prior to
the first ranking date in the year or the application deadline, as
applicable.
(3) The Agency will make the information specified in paragraphs
(b)(3) through (b)(5) of this section available on an as needed basis.
Sec. 5002.16--5002.19 [Reserved]
Eligibility
Sec. 5002.20 Applicant eligibility.
To be eligible for a grant under this part, an applicant must meet
the applicant eligibility requirements for the applicable grant program
as specified in subpart B of this part and the requirements specified
in paragraphs (a) and (b) of this section.
(a) Citizenship.
(1) Individual applicants must:
(i) be citizens of the United States (U.S.), the Republic of Palau,
the Federated States of Micronesia, the Republic of the Marshall
Islands, or American Samoa, or
(ii) reside in the U.S. after legal admittance for permanent
residence.
[[Page 61236]]
(2) Entities other than individuals must be at least 51 percent
owned by persons who are either citizens as identified under paragraph
(a)(1)(i) of this section or legally admitted permanent residents
residing in the U.S.
(b) Legal authority and responsibility. Each applicant must have,
or obtain, the legal authority necessary to carry out the purpose of
the grant.
Sec. 5002.21 Ineligible applicants.
(a) Consistent with the department regulations, an applicant is
ineligible if the applicant is debarred or suspended or is otherwise
excluded from or ineligible for participation in Federal assistance
programs under Executive Order 12549, ``Debarment and Suspension.''
(b) An applicant will be considered ineligible for a grant due to
an outstanding judgment obtained by the U.S. in a Federal Court (other
than U.S. Tax Court), is delinquent on the payment of Federal income
taxes, or is delinquent on Federal debt.
Sec. 5002.22 Project eligibility.
To be eligible for a grant under this part, a project or purpose
must, at a minimum, meet the project or purposes eligibility
requirements for the applicable grant program as specified in subpart B
of this part. In addition, the project or purpose must meet each of the
requirements specified in paragraphs (a) through (c) of this section,
as applicable.
(a) The project or purpose must primarily serve a rural area.
(b) For those projects and purposes that acquire or improve real or
personal property, the applicant must be the owner of the property or
have leasehold interest acceptable to the Agency in the property and
control the revenues and expenses of the project, including operation
and maintenance.
(c) For projects and purposes that are determined by a service
area, boundaries for the proposed service area must be chosen in such a
way that no user or area will be excluded because of race, color,
religion, sex, marital status, age, disability, or national origin.
This does not preclude:
(1) Financing or constructing projects in phases when it is not
practical to finance or construct the entire project at one time, and
(2) Financing or constructing facilities where it is not
economically feasible to serve the entire area, provided economic
feasibility is determined on the basis of the entire system or facility
and not by considering the cost of separate extensions to, or parts
thereof. Additionally, the applicant must publicly announce a plan for
extending service to areas not initially receiving service and must
provide written notice to potential users located in such areas.
Sec. 5002.23 Ineligible projects and purposes.
Grants under this part must not be used for:
(a) Investment or arbitrage, or speculative real estate investment.
(b) Prostitution or projects generating income from activities of a
prurient sexual nature.
(c) Any project eligible for Rural Rental Housing and Rural
Cooperative Housing loans under sections 515, 521, and 538 of the
Housing Act of 1949, as amended.
(d) Any facility used primarily for the purpose of housing Federal
or State agencies.
(e) Finders', packagers', or loan brokers' fees. Pay costs of
preparing the application package for funding under this program.
(f) Any project deriving income from illegal drugs, drug
paraphernalia, or any other illegal product or activity.
(g) To pay the applicant for the rental of equipment or machinery
owned by the applicant.
(h) The payment of either a judgment or a debt owed to the United
States.
(i) Any project that creates, directly or indirectly, a conflict of
interest or an appearance of a conflict of interest.
(j) Properties to be used for commercial rent when the grantee has
no control over tenants and services offered except for industrial-site
infrastructure development and limited sections of essential community
facilities when the activity in the leased space is related to and
enhances the primary purpose for which the facility is being
established by the grantee.
(k) Any project located within the Coastal Barriers Resource System
that does not qualify for an exception as defined in section 6 of the
Coastal Barriers Resource Act, 16 U.S.C. 3501 et seq.
(l) Any project located in a special flood or mudslide hazard area
as designated by the Federal Emergency Management Agency in a community
that is not participating in the National Flood Insurance Program
unless the project is an integral part of a community's flood control
plan.
(m) Fund political activity.
(n) Any other similar project or purpose that the Agency determines
is ineligible for funding under this part and publishes in a Federal
Register notice.
Sec. Sec. 5002.24--5002.29 [Reserved]
Applying for a Grant
Sec. 5002.30 Applying for a grant.
(a) Preapplications. Unless required under the Departmental
regulations, the public has the option of submitting a preapplication
as specified in Sec. 5002.31. The submission of a preapplication, or
the lack thereof, does not affect in any way the scoring of the
subsequent application. In addition, applicants who submit a
preapplication do not receive any priority for funding under this part.
(b) Conformance with Sec. 5002.32. All applicants are required to
submit an application, as specified in Sec. 5002.32.
(c) Filing instructions. Unless otherwise specified in a
notification issued under Sec. 5002.15, the following requirements
apply to all grant preapplications and applications submitted under
this part.
(1) When to submit.
(i) Preapplications. For grant programs with an open application
period, preapplications for all programs may be submitted at any time.
For grant programs with an application deadline, preapplications must
be submitted at least 90 days before the application deadline.
(ii) Applications. For grant programs with an open application
period, applications may be submitted at any time. For grant programs
with an application deadline, applications must be received on or
before the application deadline to receive consideration for funding
for that fiscal year.
(iii) Incomplete applications. Incomplete applications will be
rejected. Applicants will be informed of the elements that made the
application incomplete. If a resubmitted application is received by the
applicable application deadline, the Agency will reconsider the
application.
(2) Where to submit. All preapplications and applications may be
submitted to any Rural Development office or on line through
grants.gov.
(3) Format. Preapplications and applications may be submitted as
hard copy or electronically via grants.gov. If submitted as hard copy,
an original and one hard copy of the entire application and supporting
documentation must be submitted.
Sec. 5002.31 Preapplications.
Unless otherwise excepted, the provisions of this section apply to
all programs under this part.
(a) Submittal of a preapplication is optional under this part
unless it is otherwise required under the Departmental regulations.
[[Page 61237]]
(1) When submitting a preapplication, all applicants must comply
with the Departmental regulations, except as provided in paragraph
(a)(2) of this section.
(2) In lieu of filing SF 424, ``Application for Federal
Assistance,'' a member of the public may instead submit a written
request for an eligibility determination alone. Members of the public
should contact a Rural Development office to obtain a list of the items
needed to make an eligibility assessment for the specific grant program
in which the member is interested.
(b) The Agency will review all preapplications to make an
assessment as to applicant and project eligibility. If the
preapplication is submitted by a government applicant as required under
the Departmental regulations, the Agency will make its assessment in
accordance with the Departmental regulations. If the preapplication is
submitted on a voluntary basis, the Agency will make an informal
assessment of both the applicant's eligibility and the project's
eligibility. In all instances, the Agency will then provide a written
response to the applicant on its assessment.
Sec. 5002.32 Applications.
(a) Application forms. The following application forms, as
applicable, must be used in applying for a grant under this part.
(1) Form SF-424, ``Application for Federal Assistance.''
(2) Form SF-424A, ``Budget Information--Non-Construction
Programs.''
(3) Form SF-424B, ``Assurances--Non-Construction Programs.''
(4) Form SF-424C, ``Budget Information--Construction Programs.''
(5) Form SF-424D, ``Assurances--Construction Programs.''
(b) Other forms and instructions. The Agency will make available to
the public the necessary forms and instructions for filing an
application on a program-specific basis. These forms and instructions
may be obtained from any Rural Development office, Rural Development
National Headquarters, and the Agency's Web site.
Sec. Sec. 5002.33--5002.39 [Reserved]
Processing and Scoring Applications
Sec. 5002.40 Processing applications.
(a) Initial review. Upon receipt of an application, the Agency will
conduct a review to determine if the applicant and project are eligible
and if the project is feasible or is likely to be feasible with regard
to financial, technical, and environmental feasibility and
sustainability of the project. If applicant or project eligibility has
already been determined through the submittal of a required
preapplication, the Agency will review the application to ensure no
changes have occurred that would affect eligibility.
(b) Notifications. After the review in paragraph (a) of this
section has been conducted, the Agency will notify the applicant in
writing of the Agency's findings. If the Agency has determined that
either the applicant or project is ineligible or that the project is
not likely to be feasible, it will include in the notification the
reason(s) for its determination(s).
(c) Resubmittal by applicants. Applicants may submit revised
applications to the Agency in response to the notification received
under paragraph (b) of this section. For grant programs with an open
application period, each revised grant application will be processed by
the Agency at the next applicable ranking date for the applicable grant
program. For grant programs with a specified application deadline, each
revised grant application will be processed by the Agency if it is
received on or before the application deadline for that grant program.
If such revised applications are not received by the specified
application deadline for the grant program, the Agency will not process
the application.
(d) Subsequent ineligibility determinations. If at any time an
application is determined to be ineligible, the Agency will notify the
applicant in writing of its determination.
Sec. 5002.41 Application withdrawal.
During the period between the submission of an application and the
execution of documents, the applicant must notify, in writing, the
Agency if the project is no longer viable or the applicant no longer is
requesting financial assistance for the project. When the applicant so
notifies the Agency, the selection will be rescinded or the application
withdrawn.
Sec. 5002.42 Scoring applications.
(a) General. The Agency will only score applications for which it
has determined that the applicant and project are eligible and that the
project is feasible or is likely to be feasible.
(1) For grant programs with an open application period, each such
application the Agency receives in a Federal fiscal year will be scored
in the fiscal year in which it was submitted, unless it is received
after the last ranking date in the fiscal year for that program. If an
application is received after the last ranking date of the fiscal year,
the Agency will score the application no later than the first ranking
date of the next fiscal year. Such applications will be scored based on
the priority categories and points effective for that next fiscal year.
(2) For grant programs with an application deadline, each such
application the Agency receives on or before the application deadline
in a fiscal year will be scored in the fiscal year in which it was
received. All applications received after a program's application
deadline will not be considered.
(b) Scoring. The Agency will score applications for each grant
program based on the priority categories and their associated points
using the procedures specified in subpart B. All applications for
grants under this part will be scored based on the information supplied
by the applicant at the time the applicant submits the application to
the Agency.
(1) Administrator priority categories. Paragraphs (b)(1)(i) through
(vi) of this section present the list of Administrator priority
categories that a grant program may consider in awarding Administrator
points to applications. The specific set of Administrator priority
categories that each program will use is specified in subpart B. The
Agency may elect to use a different set of Administrator priority
categories than specified in subpart B, if it issues a notification in
accordance with Sec. 5002.15. However, the Agency cannot add to the
list of priority categories specified in this paragraph.
(i) Unserved or underserved areas.
(ii) Geographic diversity.
(iii) Emergency conditions.
(iv) To accomplish the mission area's plans, goals, and objectives.
(v) Public health and safety.
(vi) Presidential initiatives.
(2) State Director priority categories. Paragraphs (b)(2)(i)
through (x) of this section present the list of State Director priority
categories that a grant program may consider in awarding State Director
points to applications. The specific set of State Director priority
categories that each program will use is specified in subpart B. The
Agency may elect to use a different set of State Director priority
categories than specified in subpart B, if it issues a notification in
accordance with Sec. 5002.15. However, the Agency cannot add to the
list of priority categories specified in this paragraph.
(i) Persistent poverty counties and out-migration counties.
(ii) Unserved or underserved areas.
(iii) Geographic diversity.
[[Page 61238]]
(iv) Emergency conditions.
(v) State, local, or regional governmental, and Tribal strategic
plans and goals (must be consistent with program goals and objectives).
(vi) To accomplish the mission area's plans, goals, and objectives.
(vii) Leveraging.
(viii) Loss of essential services.
(ix) Public health and safety.
(x) Presidential initiatives.
Sec. Sec. 5002.43--5002.49 [Reserved]
Awarding Grants
Sec. 5002.50 Award process.
(a) Ranking of applications. All scored applications for a program
will be ranked by the Agency on or after each ranking date, as
specified in subpart B, to create a priority list of scored
applications for that program.
(1) If a ranking date falls on a weekend or Federally-observed
holiday, the ranking date will be the next Federal business day.
(2) All applications that are ranked in a given fiscal year will be
considered for selection for funding or potential funding, as
applicable, for that entire fiscal year.
(b) Selection of applications for funding and for potential
funding.
(1) Using the priority list created under paragraph (a) of this
section for each grant program, the Agency will select applications for
funding or for potential funding based on the criteria specified in
paragraphs (b)(1)(i) through (iii) of this section and any additional
criteria specified in subpart B for a specific program. The Agency will
notify, in writing, applicants whose applications have been selected
for funding or for potential funding.
(i) Ranking. The Agency will consider the score an application has
received compared to the scores of other applications in the priority
list, with higher scoring applications receiving first consideration
for funding.
(ii) Availability of funds. The Agency will consider the size of
the request relative to the funds that remain available to the program
during the fiscal year.
(A) If there are insufficient funds during a particular funding
period to select a higher scoring application, the Agency may elect to
select the next highest scoring application for further processing.
Before this occurs, the Administrator or State Director, as applicable,
will provide the applicant of the higher scoring application the
opportunity to reduce the amount of its grant request to the amount of
funds available. If the applicant agrees to lower its grant request, it
must certify that the purposes of the project can be met, and the
Administrator or State Director, as applicable, must determine the
project is financially feasible at the lower amount.
(B) If the amount of funding required is greater than 25 percent of
a State's allocated funds for a State-allocated grant program, or is
greater than 25 percent of a program's funds for a Nationally-competed
grant program, then the Agency may elect to select the next highest
scoring application for further processing, provided the higher scoring
applicant is notified of this action and given an opportunity to revise
their application and resubmit it.
(iii) Availability of other funding sources. If other financial
assistance is needed for the project, the Agency will consider the
availability of Rural Development loans and of other non-Rural
Development funding sources. If funds for these other sources are not
available at the time of selecting applications for funding or
potential funding, the Agency may instead select the next highest
scoring application for further processing ahead of the higher scoring
application.
(2) [Reserved]
(c) Ranked applications not funded. The disposition of ranked
applications not funded depends on whether the program has an open
application period or an application deadline, and on the reason for
which the application was not funded.
(1) Grant programs with an open application period.
(i) If a ranked application has been selected for potential
funding, but has not been funded due to the Agency's lack of funds by
the next ranking date or by the end of the fiscal year in which it was
selected for potential funding, the Agency will carry the application
forward into the next fiscal year unless the applicant otherwise
notifies the Agency in writing to withdraw the application from further
consideration. Such applications are not subject to re-evaluation or
re-scoring, but information in the application may need to be updated.
(ii) If a ranked application has been selected for potential
funding, but has not been funded because additional information is
needed, the Agency will notify the applicant of what information is
needed, including a timeframe for the applicant to provide the
information. If the applicant does not provide the information within
the specified timeframe, the Agency will remove the application for
further processing.
(iii) If a ranked application has not been selected for potential
funding because of its ranking and the available level of funds to the
Agency, it will be included in the set of applications considered in
each subsequent ranking date in the fiscal year in which it was ranked
until it is either selected for potential funding, funded, or the end
of the fiscal year in which the application was ranked is reached,
whichever occurs first. The Agency will retain the application for
consideration in the next fiscal year. The Agency will provide
applicants the opportunity to update their application accordingly. At
a minimum, all such retained applications must be updated by the
applicant as required by the Agency (e.g., financial conditions, change
in supporting documentation requirements). The application will then be
re-evaluated and re-scored along with new applications received for
consideration for funding in the next fiscal year.
(iv) If a ranked application has not been selected for potential
funding because the Agency has determined the application is non-
competitive due to a very low score, the Agency will remove the
application from further consideration and will so notify the
applicant.
(2) Grant programs with an application deadline. (i) A ranked
application that is not funded in the fiscal year in which it was
submitted will not be carried forward into the next fiscal year. The
Agency will notify the applicant in writing.
(ii) If an application has been selected for funding, but has not
been funded because additional information is needed, the Agency will
notify the applicant of what information is needed, including a
timeframe for the applicant to provide the information. If the
applicant does not provide the information within the specified
timeframe, the Agency will remove the application from further
consideration and will so notify the applicant.
(d) Intergovernmental review. If State or local governments raise
objections to a proposed project under the intergovernmental review
process that are not resolved within 90 days of the Agency's selection
of the application, the Agency will rescind the selection and will
provide the applicant with a written notice to that effect. The Agency,
in its sole discretion, may extend the 90-day period if it appears
resolution is imminent.
[[Page 61239]]
Sec. Sec. 5002.51-5002.59 [Reserved]
Grant Agreements and Conditions
Sec. 5002.60 Actions prior to grant closing or start of construction,
whichever occurs first.
(a) Excess grant funds. If there is a significant reduction in
project cost or changes in project scope, the applicant's funding needs
will be reassessed. Decreases in Agency funds will be based on revised
project costs and current number of users. However, other factors
including Agency regulations used at the time of grant approval will
remain the same. Obligated grant funds not needed to complete the
project will be de-obligated.
(b) Evidence of and disbursement of other funds. Applicants
expecting funds from other sources for use in completing projects being
partially financed with Agency funds will present evidence of the
commitment of these funds from such other sources. Agency funds will
not be used to pre-finance funds committed to the project from other
sources without prior Agency approval.
(c) Acquisition of land, easements, water rights, and existing
facilities. Applicants are responsible for acquiring all property
rights necessary for the project and determining that prices paid are
reasonable and fair. The Agency may require an appraisal by an
independent appraiser or Agency employee.
(1) Rights-of-way and easements. Where applicable, applicants will
obtain valid, continuous, and adequate rights-of-way and easements
needed for the construction, operation, and maintenance of the
facility. For user connections funded by the Agency, applicants will
obtain adequate rights to construct and maintain the connection line or
other facilities located on the user's property.
(2) Title for land or existing facilities. Title to land essential
to the successful operation of facilities or title to facilities being
purchased must not contain any restrictions that will adversely affect
the suitability, successful operation, security value, or
transferability of the facility. The Agency may waive title defects or
restrictions, such as utility easements, that do not adversely affect
the suitability, successful operation, security value, or
transferability of the facility.
(3) Lease agreements. Where the right of use or control of real
property not owned by the applicant is essential to the successful
operation of the facility, such right will be evidenced by written
agreements or contracts, acceptable to the Agency, between the owner of
the property and the applicant.
Sec. 5002.61 Grant agreement.
(a) Letter of conditions. When a grant is obligated subject to
conditions established by the Agency, the Agency will notify, in
writing, each applicant whose application has been selected for funding
using a letter of conditions, which will set out the conditions under
which the grant will be made. If the applicant agrees with the
conditions, the applicant must acknowledge, in writing, acceptance of
the conditions. If the applicant believes that certain conditions
cannot be met, the applicant may propose alternate conditions to the
Agency. The Agency must concur with any changes proposed to the letter
of conditions by the applicant before the application will be further
processed.
(b) Grant agreement. Each grant awarded under this part must be
executed through an Agency-approved grant agreement between the Agency
and the grantee and through any other documents as identified by the
Agency.
(c) Cooperative agreement. Each cooperative agreement made under
this part must be executed through an Agency-approved cooperative
agreement, or similar Agency-approved document, between the Agency and
the grantee and through any other documents as identified by the
Agency. Cooperative Agreements must provide for significant Agency
involvement.
(d) Grant disbursements. Grant disbursement will be made in
accordance with the letter of conditions or the grant agreement as
applicable.
Sec. 5002.62 Use of remaining funds.
Funds remaining after all costs incident to the basic project have
been paid or provided for are to be handled as specified in this
section.
(a) Remaining funds are not to include grantee contributions.
(b) Remaining funds may be refunded to each source in direct
proportion to the amounts obtained from each source.
(c) Remaining funds may be used based on prior approval by the
Agency for eligible grant purposes, provided:
(1) The use will not result in major changes to the project;
(2) The purpose of the grant remains the same; and
(3) The project remains within its original scope.
(d) Grant funds not expended after being used for eligible grant
purposes will be cancelled by the Agency. Prior to the actual
cancellation, the Agency will notify, in writing, the grantee of the
Agency's intent to cancel the remaining funds.
Sec. Sec. 5002.63-5002.69 [Reserved]
Post Award Activities and Requirements
Sec. 5002.70 Monitoring and reporting program performance.
The requirements specified in this section shall apply to grants
made under this part.
(a) Grantees will be monitored to the extent necessary to ensure
that facilities are constructed in accordance with Agency-approved
plans and specifications and to ensure that funds are expended for
approved purposes.
(b) Grantees shall submit performance reports that include a
comparison of accomplishments with the objectives stated in the
application.
(1) Performance reports shall be submitted on a semiannual basis. A
final performance report is required.
(2) Additional reports shall be submitted as specified in the grant
agreement, as otherwise provided in a notification issued under Sec.
5002.15, or as specified in subpart B.
(3) The Agency may request any additional project and/or
performance data for the project for which grant funds have been
received.
Sec. 5002.71 Programmatic changes and budget revisions.
In addition to the requirements specified in the Departmental
regulations, if an application has been selected and the scope of the
project changes, the Agency, at its sole discretion, may require the
applicant to submit a new application. A new application will be re-
ranked in accordance with this part.
Sec. 5002.72 Transfer of obligations.
An obligation of funds established for an applicant may be
transferred to a different (substituted) applicant provided:
(a) The substituted applicant
(1) Is eligible;
(2) Has a close and genuine relationship with the original
applicant; and
(3) Has the authority to receive the assistance approved for the
original applicant; and
(b) The need, purpose(s), and scope of the project for which the
Agency funds will be used remain substantially unchanged.
Sec. Sec. 5002.73-5002.79 [Reserved]
Grant Close Out and Related Activities
Sec. 5002.80 Grant close out and related activities.
In addition to the requirements specified in the Departmental
[[Page 61240]]
regulations, failure to submit satisfactory reports on time under the
provisions of Sec. 5002.70(b) may result in the suspension or
termination of a grant. The provisions of this section apply to grants
and sub-grants.
Sec. Sec. 5002.81-5002.100 [Reserved]
Subpart B--Program-Specific Provisions
Sec. 5002.101 Community Facilities.
The Community Facilities grant program is a State-allocated grant
program with an open application period.
(a) Applicant eligibility. In addition to the requirements
specified in Sec. 5002.20 in subpart A of this part, as appropriate,
the following requirements also apply where applicable:
(1) Type of applicant. The applicant must be one of the following:
(i) A public body, such as a municipality, county, district,
authority, or other political subdivision of a State;
(ii) Non-profit corporation or association; or
(iii) Federally recognized Indian tribe.
(2) Local community ties. Applicants must have significant ties
with the local rural community. Ties may be evidenced by items such as:
(i) Association with, or controlled by, a local public body or
bodies or broadly based ownership and controlled by members of the
community; or
(ii) Substantial public funding through taxes, revenue bonds, or
other local government sources, or substantial voluntary community
funding such as would be obtained through a community-wide funding
campaign.
(b) Project eligibility. In addition to the requirements specified
in Sec. 5002.22 in subpart A of this part, the project must be an
essential community facility primarily serving rural areas. In
addition, the project must meet the conditions specified in paragraphs
(b)(1) through (5) of this section.
(1) Located in rural area. Except for eligible utility-type
services, such as telecommunications or hydroelectric, serving both
rural and non-rural areas, the project must be located in a rural area.
In the case of an eligible utility-type service project serving both
rural and non-rural areas, grant funds issued under this section may be
used to fund only that portion serving rural areas, regardless of the
facility's location.
(2) Household income. The median household income of the population
to be served by the proposed facility must be below the higher of the
poverty line or the eligible percentage (60, 70, 80, or 90) of the
State non-metropolitan median household income (paragraph (e)(2) of
this section).
(3) Economic feasibility. All projects funded under the provisions
of this section must be based on satisfactory sources of revenues as
outlined in the economic feasibility requirements for the Community
Facility direct loan program. The amount of grant assistance must be
the minimum amount sufficient for feasibility that will provide for
facility operation and maintenance, reasonable reserves, and debt
repayment. The applicant's available excess funds must be used to
supplement eligible project costs.
(4) Facility operation and maintenance. The applicant shall be
responsible for operating, maintaining, and managing the facility and
providing for its continued availability and use at reasonable rates
and terms. This responsibility shall be the applicant's even though the
facility may be operated, maintained, or managed by a third party under
contract or management agreement.
(5) Credit elsewhere. Applicants must certify in writing and the
Agency shall determine and document that the applicant is unable to
finance the proposed project from their own resources or through
commercial credit at reasonable rates and terms.
(c) Eligible uses of grant funds. Grant funds made under this
section may be used for the purposes listed in paragraphs (c)(1)through
(6) of this section.
(1) Construct, enlarge, extend, or otherwise improve essential
community facilities providing essential service primarily to rural
residents and rural businesses. ``Otherwise improve'' includes, but is
not limited to, the following:
(i) The purchase of major equipment that will in themselves provide
an essential service to rural residents; and
(ii) The purchase of existing facilities when it is necessary
either to improve or to prevent a loss of service.
(2) Construct or relocate public buildings, roads, bridges, fences,
or utilities and to make other public improvements necessary to the
successful operation or protection of facilities authorized in
paragraph (c)(1) of this section.
(3) Relocate private buildings, roads, bridges, fences, or
utilities, and other private improvements necessary to the successful
operation or protection of facilities authorized in paragraph (c)(1) of
this section.
(4) Facilities that have no more than 25 percent of the floor space
occupied by Federal Agencies, State Agencies, or other ineligible
entities or purposes, when these entities enhance the primary purpose
of the facility;
(5) Facilities that house State funded organizations that are
typically housed in community funded facilities and offering services
provided by an essential community facility;
(6) Pay the following expenses, but only when such expenses are a
necessary part of a project to fund facilities authorized in paragraphs
(c)(1) through (5) of this section:
(i) Reasonable fees and costs such as legal, engineering,
architectural, accounting, environmental, archeological, and appraisal.
(ii) Costs of acquiring interest in land; rights, such as water
rights, leases, permits, and rights-of-way; and other evidence of land
or water control necessary for development of the facility.
(iii) Purchasing or renting equipment necessary to install,
maintain, extend, protect, operate, or utilize facilities.
(iv) Obligations for construction incurred before grant approval.
Construction work should not be started and obligations for such work
or materials should not be incurred before the grant is approved.
However, if there are compelling reasons for proceeding with
construction before grant approval, applicants may request Agency
approval to pay such obligations. Such requests may be approved if the
Agency determines that:
(A) Compelling reasons exist for incurring obligations before grant
approval;
(B) The obligations will be incurred for authorized grant purposes;
(C) Contract documents have been approved by the Agency;
(D) All environmental requirements applicable to the Agency and the
applicant have been met; and
(E) The applicant has the legal authority to incur the obligations
at the time proposed, and payment of the debts will remove any basis
for any mechanic's, material, or other liens that may attach to the
security property.
(7) The Agency may authorize payment of such obligations at the
time of grant closing. The Agency's authorization to pay such
obligations, however, is on the condition that it is not committed to
make the grant; it assumes no responsibility for any obligations
incurred by the applicant; and the applicant must subsequently meet all
grant approval requirements. The applicant's request and the Agency's
authorization for paying such obligations shall be in writing.
(d) Ineligible uses of grant funds. Grant funds under this section
may not be used to fund:
[[Page 61241]]
(1) Initial operating expenses or annual recurring costs, including
purchases or rentals that are generally considered to be operating and
maintenance expenses;
(2) Construction or repair of electric generating plants, electric
transmission lines, or gas distribution lines to provide services for
commercial sale;
(3) Refinancing of existing indebtedness;
(4) Interest;
(5) Any cost of a project when the median household income of the
population to be served by the proposed facility is above the higher of
the poverty line or eligible percent (60, 70, 80, or 90) of the State
non-metropolitan median household income (paragraph (e)(2) of this
section);
(6) Recreational facilities, except for community parks and
community wellness centers; or
(7) Any purposes restricted under the Community Facilities direct
loan program.
(e) Funding limitations and matching funds. Grant assistance cannot
exceed the applicable percentages contained in this paragraph and may
be further limited due to availability of funds or by the maximum grant
assistance allowable determined in accordance with paragraph (e)(1) of
this section.
(1) Maximum grant assistance. Grant assistance cannot exceed the
lower of:
(i) Qualifying percentage of eligible project cost determined in
accordance with paragraph (e)(2) of this section;
(ii) Minimum amount sufficient to provide for economic feasibility
as determined in accordance with paragraph (b)(3) of this section; or
(iii) Either 50 percent of the annual State allocation or $50,000,
whichever is greater, unless otherwise concurred with Agency approval.
(2) Funding limitations. Not more than 75 percent Federal grant
funds, including CF grant funds, may be used to fund a project funded
with CF grant funds. Grant assistance will be provided on a graduated
scale with smaller communities with the lowest median household incomes
being eligible for projects with a higher proportion of grant funds.
Grant assistance is limited to the following percentages of eligible
project costs:
(i) 75 percent when the proposed project is:
(A) Located in a rural community having a population of 5,000 or
less; and
(B) The median household income of the population to be served by
the proposed facility is below the higher of the poverty line or 60
percent of the statewide non-metropolitan median household income.
(ii) 55 percent when the proposed project is:
(A) Located in a rural community having a population of 12,000 or
less; and
(B) The median household income of the population to be served by
the proposed facility is below the higher of the poverty line or 70
percent of the statewide non-metropolitan median household income.
(iii) 35 percent when the proposed project is:
(A) Located in a rural community having a population of 20,000 or
less; and
(B) The median household income of the population to be served by
the proposed facility is below the higher of the poverty line or 80
percent of the statewide non-metropolitan median household income.
(iv) 15 percent when the proposed project is:
(A) Located in a rural community having a population of 20,000 or
less; and
(B) The median household income of the population to be served by
the proposed facility is below the higher of the poverty line or 90
percent of the statewide non-metropolitan median household income.
(v) 60 percent when the proposed project is:
(A) Located in a rural community having a population of 20,000 or
less; and
(B) The median household income of the population to be served by
the proposed facility is below the higher of the poverty line or 90
percent of the State non-metropolitan median household income. The 60
percent grants are only available to communities affected by a
catastrophic natural disaster that has resulted in a loss of 60 percent
of the community's population and is located in a county designated as
a major disaster area by the President.
(3) Matching. Funding for the balance of the project may consist of
other Community Facility financial assistance, applicant contributions,
or loans and grants from other sources. However, other Federal grant
funds cannot be used as matching funds unless provided by other
authorizing legislation. Matching funds may not be made up of in-kind
contributions other than real estate donated to the project from any
entity other than the grantee.
(f) Scoring applications. Each application for a grant under this
section will be scored based on the priority categories and points
specified in paragraphs (f)(1) through (3) of this section. The maximum
number of points that will be awarded to an application is 100.
(1) Program-specific priority categories and points. The Agency
will award program-specific points for the priority categories
described in paragraphs (f)(1)(i) through (iii) of this section.
(i) Population priorities. The proposed project is located in a
rural community having a population of:
(A) 5,000 or less--25 points;
(B) Between 5,001 and 12,000, inclusive--15 points; and
(C) Between 12,001 and 20,000, inclusive--10 points;
(ii) Income priorities. The median household income of the
population to be served by the proposed project is below the higher of
the poverty line or:
(A) 60 percent of the statewide non-metropolitan median household
income--25 points;
(B) 70 percent of the statewide non-metropolitan median household
income--15 points;
(C) 80 percent of the statewide non-metropolitan median household
income--10 points; or
(D) 90 percent of the statewide non-metropolitan median household
income--5 points.
(iii) Other priorities. If the project is for health care, for
public safety, or for an educational facility, 20 points will be
awarded.
(2) Administrator priority categories and points. Unless otherwise
specified in a notification issued under Sec. 5002.15 of subpart A of
this part, the Administrator may award up to 20 points to an
application under this section to improve the geographic diversity of
awardees in a fiscal year.
(3) State director priority categories and points. Unless otherwise
specified in a notification issued under Sec. 5002.15 of subpart A of
this part, a State Director may award up to 10 points to an application
that meets any of the State Director priority categories to specified
in Sec. 5002.42(b)(2)(i) through (x). No more than a total of 10 State
Director points may be awarded under this paragraph to an application.
(g) Ranking applications. Unless otherwise specified in a
notification issued under Sec. 5002.15 of subpart A of this part, the
Agency will rank applications on or after the following dates each
fiscal year: December 15, March 15, July 15, and August 15.
(h) Additional criteria for selecting applications for funding. The
Agency may select the next highest scoring application for funding
before a higher scoring application when the application is a
subsequent request for a previously approved project. If the
[[Page 61242]]
request is due to cost overruns, the cost overruns must be due to high
bids or unexpected construction problems that cannot be reduced by
negotiations, redesign, use of bid alternatives, rebidding, or other
means. Cost overruns exceeding 20 percent of the development cost at
time of grant approval or where the scope of the original purpose has
changed will not be considered in selecting the next highest scoring
application over the higher scoring application.
(i) Public Information Process. All grants awarded under this
section are subject to the public information process required under
the Community Facility direct loan program.
Sec. 5002.102 Rural Energy for America Grants.
The Rural Energy for America grant program is a Nationally-competed
grant program with a specified application deadline.
(a) Applicant eligibility. In addition to the requirements
specified in Sec. 5002.20 in subpart A of this part, an applicant must
be an agricultural producer or rural small business.
(b) Project eligibility. In addition to the requirements specified
in Sec. 5002.22(b) and (c) in subpart A of this part, the project must
also meet the criteria specified in paragraphs (b)(1) or (2) of this
section. The requirement specified in Sec. 5002.22(a) in subpart A
does not apply to projects seeking a grant under this section.
(1) The project must:
(i) Be for the purchase, installation, expansion and/or other
energy-related improvement of a renewable energy system or to make
energy efficiency improvements;
(ii) Be located in a rural area;
(iii) Be for technology that is:
(A) Pre-commercial or commercially available, and
(B) Replicable; and
(iv) Have technical merit as determined by the Agency. Projects
that the Agency determines are without technical merit are ineligible
for grants.
(2) The project must be for a feasibility study for a project that
meets the criteria specified in paragraph (b)(1) of this section.
(c) Additional preapplication and application considerations. In
addition to the requirements specified in Sec. Sec. 5002.30, 5002.31,
and 5002.32, the following requirements apply to preapplications and
applications submitted under this section.
(1) Preapplications. If an applicant elects to submit a
preapplication, the preapplication must be received by the Agency on or
before January 15 of each year to be considered. Preapplications
received after January 15 will not be considered by the Agency.
(2) Applications--(i) Application deadline. Applications must be
received on or before June 15 of each year to be considered for funding
for that fiscal year. Applications received by the Agency after June 15
will not be considered.
(ii) Business plans. The business plan submitted with the
application must include at least three years of pro forma financial
statements.
(iii) Simplified applications. Applicants with projects that meet
both criteria specified in paragraphs (c)(2)(iii)(A) and (B) of this
section and agree to the terms specified in paragraph (c)(2)(iii)(C) of
this section will be allowed to submit an application under this
section that has less documentation than for applications that do not
meet these two criteria. The requirements for simplified applications
are available at any Rural Development office and on the Agency Web
site.
(A) The total eligible project costs are $200,000 or less.
(B) The proposed project uses either commercially available
renewable energy systems or energy efficiency improvements.
(C) The project is complete when the applicant has provided a
written final project development, testing, and performance report
acceptable to the Agency. Upon notification of receipt of an acceptable
project completion report, the applicant may request grant
reimbursement. The Agency reserves the right to observe the testing.
(d) Eligible project costs. Grant funds under this section may only
be used for those costs associated with the items listed in paragraphs
(d)(1) through (9) of this section, as long as the items are an
integral and necessary part of the renewable energy system or energy
efficiency improvement. The eligible project costs also apply to a
mixed business and residential project if the applicant is an
agricultural producer. If the mixed business and residential project,
however, is from an applicant who is a rural small business, these
eligible project costs apply to the applicant's mixed business and
residential project only if the residential portion of the project is
less than 25 percent of the square footage of the entire project.
(1) Post-application purchase and installation of equipment (new,
refurbished, or remanufactured), except agricultural tillage equipment,
used equipment, and vehicles.
(2) Post-application construction or improvements.
(3) Energy audits or assessments.
(4) Permit and license fees.
(5) Professional service fees, except for application preparation.
(6) Feasibility studies and technical reports.
(7) Business plans.
(8) Retrofitting.
(9) Construction of a new energy efficient facility only when the
facility is used for the same purpose, is approximately the same size,
and based on the energy audit will provide more energy savings than
improving an existing facility. Only costs identified in the energy
audit for energy efficiency improvements are allowed.
(e) Funding limitations, matching funds, and availability of other
funds--(1) Funding limitations. (i) The amount of grant funds that will
be made available to an eligible project under this section must not
exceed 25 percent of total eligible project costs. Eligible project
costs are specified in paragraph (d) of this section.
(ii) The maximum amount of grant assistance to one individual or
entity will not exceed $750,000 per Federal fiscal year.
(2) Matching funds. (i) Without specific statutory authority, other
Federal grant funds and applicant in-kind contributions cannot be used
to meet the matching fund requirement. Third-party, in-kind
contributions are limited to 10 percent of the matching fund
requirement of the grant.
(ii) Passive investor equity contributions are acceptable for
renewable energy system projects, including those that are eligible for
Federal production tax credits, provided the passive investor meets the
requirements of paragraph (a) of this section.
(3) Availability of other funds. In determining funding grant
applications, the Agency will consider the following:
(i) If the size of the grant amount being requested in the
application is $50,000 or less, the Agency will consider funding the
application on its own merit, without consideration of other sources of
funding.
(ii) If the size of the grant amount being requested in the
application is more than $50,000, the Agency will consider funding the
application only to the extent that:
(A) The applicant cannot obtain a loan guaranteed by the Agency for
any portion of the project; or
(B) the amount being requested in the grant application is
necessary for the bank to make a guaranteed loan to the applicant.
(C) If neither of the two situations described in paragraphs
(e)(3)(ii)(A) or
[[Page 61243]]
(B) of this section apply, then the Agency will not consider the
application under this rule.
(f) Grant award amount. In determining the amount of a grant
awarded, the Agency will take into consideration the following eight
criteria:
(1) The type of renewable energy system to be purchased;
(2) The estimated quantity of energy to be generated by the
renewable energy system;
(3) The expected environmental benefits of the renewable energy
system;
(4) The extent to which the renewable energy system will be
replicable;
(5) The amount of energy savings expected to be derived from the
activity, as demonstrated by an energy audit comparable to an energy
audit under 7 U.S.C. 8105;
(6) The estimated length of time it would take for the energy
savings generated by the activity to equal the cost of the activity;
(7) The expected energy efficiency of the renewable energy system;
and
(8) The amount of energy produced per amount of grant award.
(g) Scoring applications. Each application for a grant under this
section will be scored based on the priority categories and points
specified in paragraphs (g)(1) and (2) of this section. The maximum
number of points that will be awarded to an application is 100.
(1) Program-specific priority categories and points. The Agency
will award program-specific points for the priority categories
described in paragraphs (g)(1)(i) through (x) of this section.
(i) Quantity of energy replaced, produced, or saved (maximum score
of 13 points). Points may only be awarded for energy replacement,
energy savings, or energy generation. Points will not be awarded for
more than one category. Renewable energy projects are eligible for
points under either paragraph (g)(1)(i)(A) or (g)(1)(i)(C). Energy
efficiency improvement projects are eligible for points under paragraph
(g)(1)(i)(B) only.
(A) Energy replacement (maximum score of 13 points). If the
proposed renewable energy system is intended primarily for self-use by
the agricultural producer or rural small business and will provide
energy replacement of greater than zero, but equal to or less than 25
percent, 6 points will be awarded; greater than 25 percent, but equal
to or less than 50 percent, 9 points will be awarded; or greater than
50 percent, 13 points will be awarded. Energy replacement is to be
determined by dividing the estimated quantity of renewable energy to be
generated over a 12-month period by the estimated quantity of energy
consumed over the same 12-month period during the previous year by the
applicable energy application. The estimated quantities of energy must
be converted to either British thermal units, Watts, or similar energy
equivalents to facilitate scoring. If the estimated energy produced
equals more than 150 percent of the energy requirements of the
applicable process(es), the project will be scored as an energy
generation project.
(B) Energy savings (maximum score of 13 points). If the estimated
energy expected to be saved by the installation of the energy
efficiency improvements will be from 20 percent up to, but not
including 30 percent, 6 points will be awarded; 30 percent up to, but
not including 35 percent, 9 points will be awarded; or, 35 percent or
greater, 13 points will be awarded. Energy savings will be determined
by the projections in an energy assessment or audit. Projects with
total eligible project costs of $50,000 or less that opt to obtain a
professional energy audit will be awarded an additional 3 points.
(C) Energy generation (maximum score of 13 points). If the proposed
renewable energy system is intended primarily for production of energy
for sale, 13 points will be awarded.
(ii) Environmental benefits (maximum score of 3 points). If the
purpose of the proposed system contributes to the environmental goals
and objectives of other Federal, State, or local programs, 3 points
will be awarded. Points will only be awarded for this paragraph if the
applicant is able to provide documentation from an appropriate
authority supporting this claim.
(iii) Commercial availability (maximum score of 9 points). If the
proposed system or improvement is currently commercially available and
replicable, 5 points will be awarded. If the proposed system or
improvement is commercially available and replicable and is also
provided with a 5-year or longer warranty providing the purchaser
protection against system degradation or breakdown or component
breakdown, 9 points will be awarded.
(iv) Technical merit score (maximum score of 30 points). The
Technical Merit of each project will be determined using the procedures
specified in paragraphs (g)(1)(iv)(A) and (B) of this section. The
procedures specified in paragraph (g)(1)(iv)(A) will be used to score
paragraphs (g)(1)(iv)(A)(1) through (10) of this section. The final
score awarded will be calculated using the procedures described in
paragraph (g)(1)(iv)(B) of this section.
(A) Technical merit. Paragraphs (g)(1)(iv)(A)(1) through (10) of
this section have their own maximum possible score and will be scored
according to the following criteria: If the description in the
subparagraph has no significant weaknesses and exceeds the requirements
of the subparagraph, 100 percent of the total possible score for the
subparagraph will be awarded. If the description has one or more
significant strengths and meets the requirements of the subparagraph,
80 percent of the total possible score will be awarded for the
subparagraph. If the description meets the basic requirements of the
subparagraph, but also has several weaknesses, 60 percent of the points
will be awarded. If the description is lacking in one or more critical
aspects, key issues have not been addressed, but the description
demonstrates some merit or strengths, 40 percent of the total possible
score will be awarded. If the description has serious deficiencies,
internal inconsistencies, or is missing information, 20 percent of the
total possible score will be awarded. If the description has no merit
in this area, 0 percent of the total possible score will be awarded.
The total possible points for Technical Merit is 30 points.
(1) Qualifications of the project team (maximum score of 10
points). The applicant has described the project team service
providers, their professional credentials, and relevant experience. The
description supports that the project team service, equipment, and
installation providers have the necessary professional credentials,
licenses, certifications, or relevant experience to develop the
proposed project.
(2) Agreements and permits (maximum score of 5 points). The
applicant has described the necessary agreements and permits required
for the project and the schedule for securing those agreements and
permits.
(3) Energy or resource assessment (maximum score of 10 points). The
applicant has described the quality and availability of a suitable
renewable resource or an assessment of expected energy savings for the
proposed system.
(4) Design and engineering (maximum score of 30 points). The
applicant has described the design, engineering, and testing needed for
the proposed project. The description supports that the system will be
designed, engineered, and tested so as to meet its intended purpose,
ensure public safety, and comply with applicable laws, regulations,
agreements, permits, codes, and standards.
[[Page 61244]]
(5) Project development schedule (maximum score of 5 points). The
applicant has described the development method, including the key
project development activities and the proposed schedule for each
activity. The description identifies each significant task, its
beginning and end, and its relationship to the time needed to initiate
and carry the project through to successful completion. The description
addresses grantee or borrower project development cash flow
requirements.
(6) Project economic assessment (maximum score of 20 points). The
applicant has described the financial performance of the proposed
project, including the calculation of simple payback. The description
addresses project costs and revenues, such as applicable investment and
production incentives, and other information to allow the assessment of
the project's cost effectiveness.
(7) Equipment procurement (maximum score of 5 points). The
applicant has described the availability of the equipment required by
the system. The description supports that the required equipment is
available, and can be procured and delivered within the proposed
project development schedule.
(8) Equipment installation (maximum score of 5 points). The
applicant has described the plan for site development and system
installation.
(9) Operation and maintenance (maximum score of 5 points). The
applicant has described the operations and maintenance requirements of
the system necessary for the system to operate as designed over the
design life.
(10) Dismantling and disposal of project components (maximum score
of 5 points). The applicant has described the requirements for
dismantling and disposing of project components at the end of their
useful life and associated wastes.
(B) Calculation of Technical Merit Score (maximum score of 30
points). To determine the actual points awarded a project for Technical
Merit, the following procedure will be used: The scores awarded for
paragraphs (g)(1)(iv)(A)(1) through (10) of this section will be added
together and then divided by 100, the maximum possible score, to
achieve a percentage. This percentage will then be multiplied by the
total possible points of 30 to achieve the points awarded for the
proposed project for Technical Merit.
(v) Readiness (maximum score of 10 points). If the applicant has
written commitments from the source(s) confirming commitment of 50
percent up to but not including 75 percent of the matching funds prior
to the Agency receiving the complete application, 3 points will be
awarded. If the applicant has written commitments from the source(s)
confirming commitment of 75 percent up to but not including 100 percent
of the matching funds prior to the Agency receiving the complete
application, 6 points will be awarded. If the applicant has written
commitments from the source(s) of matching funds confirming commitment
of 100 percent of the matching funds prior to the Agency receiving the
complete application, 10 points will be awarded.
(vi) Small agricultural producer/very small business (maximum score
of 8 points). If the applicant is an agricultural producer producing
agricultural products with a gross market value of less than $600,000
in the preceding year, 4 points will be awarded. If the applicant is an
agricultural producer producing agricultural products with a gross
market value of less than $200,000 in the preceding year or is a very
small business, 8 points will be awarded.
(vii) Simplified application/low cost project (maximum score of 3
points). If the applicant is eligible for and uses the simplified
application process or the project has total eligible project costs of
$200,000 or less, 3 points will be awarded.
(viii) Hybrid technology (maximum score of 3 points). If the
application is for a combination of two or more renewable energy
technologies incorporated into a single project, 3 points will be
awarded.
(ix) Return on investment (maximum score of 6 points). If the
proposed project will return the cost of the investment in less than 4
years, 6 points will be awarded; 4 years up to but not including 8
years, 4 points will be awarded; or 8 years up to 11 years, 2 points
will be awarded.
(x) Financial need (maximum score of 5 points). If the applicant
can demonstrate either that the applicant is unable to finance the
project from its own and commercially available resources without grant
assistance or that the project proposed by the applicant cannot achieve
the income and cash flows to sustain it financially over the long term
without grant assistance, 5 points will be awarded.
(2) Administrator priority categories and points. Unless otherwise
specified in a notification issued under Sec. 5002.15 of subpart A of
this part, the Administrator may award up to 10 points to an
application under this section in the priority categories specified in
paragraphs (g)(2)(i) through (v) of this section. No more than 10
Administrator points will be awarded to an application.
(i) Unserved or underserved areas;
(ii) Geographic diversity;
(iii) Emergency conditions;
(iv) Public health and safety; and
(v) Presidential initiatives.
(h) Ranking applications. Unless otherwise specified in a
notification issued under Sec. 5002.15 of subpart A of this part, the
Agency will rank applications on or after March 15 and July 15 each
year.
Sec. 5002.103 Rural Cooperative Development Grants
The Rural Cooperative Development grant program is a Nationally-
competed grant program with a specified application deadline.
(a) Definition. For the purpose of this section, ``Center'' is
defined as the entity established or operated by the grantee for rural
cooperative development. It may or may not be an independent legal
entity separate from the grantee.
(b) Applicant eligibility. In addition to the requirements
specified in Sec. 5002.20 in subpart A of this part, as appropriate,
the applicant must be a non-profit organization or institution,
including an accredited institution of higher education. Public bodies
are not eligible to receive grants under this section.
(c) Project eligibility. In addition to the requirements specified
in Sec. 5002.22 in subpart A of this part, the project must be for the
establishment and operation or the continuation of a rural cooperative
development center (Center).
(1) Applications that focus on only one cooperative will not be
considered for funding.
(2) Except for 1994 Institutions, applicants must provide 25
percent of total project cost.
(3) Applications for providing for the sharing of information among
Centers will not be considered for funding if more than 10 percent of
the funding request is for the provision of sharing of information
among Centers.
(d) Additional application requirements. In addition to the
application requirements specified in Sec. 5002.32, all applications
under this section must include a plan for the establishment and
operation by the institution of a Center or Centers for cooperative
development. This plan must contain the following elements:
(1) A provision that substantiates that the Center will effectively
serve rural areas in the United States;
(2) A provision that the primary objective of the Center will be to
improve the economic condition of rural areas through cooperative
development;
[[Page 61245]]
(3) A description of the contributions that the proposed activities
are likely to make to the improvement of the economic conditions of the
rural areas for which the Center will provide services.
(4) Provisions that the Center, in carrying out the activities,
will seek, where appropriate, the advice, participation, expertise, and
assistance of representatives of business, industry, educational
institutions, the Federal Government, and State and local governments.
(5) Provisions that the applicant will:
(i) Take all practicable steps to develop continuing sources of
financial support for the Center, particularly from sources in the
private sector;
(ii) Make arrangements for the activities by the non-profit
operating the Center to be monitored and evaluated; and
(iii) Provide an accounting for the money received by the grantee
under this section.
(e) Eligible uses of grant funds. Grant funds may be used for, but
are not limited to, providing the following to individuals,
cooperatives, small businesses and other similar entities in rural
areas served by the Center:
(1) Applied research, feasibility, environmental and other studies
that may be useful for the purpose of cooperative development.
(2) Collection, interpretation and dissemination of principles,
facts, technical knowledge, or other information for the purpose of
cooperative development.
(3) Providing training and instruction for the purpose of
cooperative development.
(4) Providing loans and grants for the purpose of cooperative
development in accordance with this section.
(5) Providing technical assistance, research services and advisory
services for the purpose of cooperative development.
(6) Providing for the coordination or services and the sharing of
information among Centers.
(f) Ineligible uses. Grant funds under this section will not be
provided and cannot be used to:
(1) Duplicate current services or replace or substitute support
previously provided. If the current service is inadequate, however,
grant funds may be used to expand the level of effort or services
beyond that which is currently being provided;
(2) pay costs of the project incurred prior to the date of grant
approval;
(3) plan, repair, rehabilitate, acquire, or construct a building or
facility, including a processing facility;
(4) purchase, rent, or install fixed equipment. Fixed equipment
means nonexpendable, tangible personal property having a useful life of
more than one year and an acquisition cost of greater than or equal to
$5,000.
(5) Pay for the repair of privately owned vehicles; or
(6) Fund research and development.
(g) Grant agreement and conditions. The length of grant agreements
made under this section are subject to the conditions specified in
paragraphs (g)(1) through (3) of this section.
(1) A grant awarded to a center that has received no prior funding
under this section shall be made for a period of one year.
(2) If the Agency determines that it is in the best interest of the
program, grants will be awarded for a period of more than one year, but
not more than three years, to a center that has successfully met the
parameters described in paragraphs (i)(1)(i) through (v) of this
section, as determined by the Agency.
(3) The Agency will not approve requests to extend the grant period
for more than 12 months.
(h) Funding limitations and matching funds.
(1) Funding limitations. For 1994 Institutions, the maximum amount
of a grant awarded under this section will be no more than 95 percent
of the total cost of the Center. The Agency shall not require a match
of more than 5 percent of the total cost of the Center.
(2) Matching funds.
(i) Applicants must verify in their application that all matching
funds are available for the time period of the grant.
(ii) Matching funds must be spent in advance of, or as a pro rata
portion of, grant funds being expended.
(iii) All matching funds must be spent on eligible expenses and
must be from eligible sources.
(iv) All matching funds must be provided by either the applicant or
a third party in the form of cash or in-kind contributions.
(A) Matching funds contributed by the applicant may include a loan
from another federal source. However, other Federal grant funds cannot
be used as matching funds unless provided by other authorizing
legislation.
(B) Any in-kind contributions must be performed for the benefit of
the Center. The Center must be able to document and verify the number
of hours worked and the value associated with the contribution. In-kind
contributions provided by individuals, businesses, or cooperatives who
are being assisted by the Center cannot be provided for the benefit of
their own projects because the Agency considers this a conflict of
interest or the appearance of a conflict of interest.
(i) Scoring applications. Each application for a grant under this
section will be scored based on the priority categories and points
specified in paragraphs (i)(1) and (2) of this section. The maximum
number of points that will be awarded to an application is 100.
(1) Program-specific priority categories and points. The Agency
will award program-specific points for the priority categories
described in paragraphs (i)(1)(i) through (viii) of this section.
(i) Administrative capabilities (maximum score of 10 points). The
Agency will evaluate the application to determine whether the applicant
has a proven track record of carrying out activities to promote and
assist the development of cooperatively and mutually owned businesses.
The applicant must also discuss their financial systems and audit
controls, personnel and program administration performance measures and
rules of governance. Applicants that evidence capable systems and
controls and clear rules of governance will receive more points.
(ii) Technical assistance and other services (maximum score of 15
points). The Agency will evaluate the applicant's demonstrated
expertise in providing technical assistance and accomplishing effective
outcomes in cooperative development in rural areas to promote and
assist the development of cooperatively and mutually owned businesses.
The applicant should also discuss their potential for delivering
effective technical assistance, the expected effects of that
assistance, and the sustainability of organizations receiving the
assistance. Applicants that evidence effective delivery systems for
cooperative development will receive more points.
(iii) Economic development (maximum score of 15 points). The Agency
will evaluate the applicant's demonstrated ability to assist in the
retention of businesses, facilitate the establishment of cooperatives
and new cooperative approaches and generate employment opportunities
that will improve the economic conditions of rural areas. Applicants
that provide statistics and identify their role in the economic
development outcomes will receive more points.
(iv) Networking and regional focus (maximum score of 10 points).
The Agency will evaluate the applicant's demonstrated commitment to:
[[Page 61246]]
(A) networking with and sharing the results of the efforts of the
center with other cooperative development centers and other
organizations involved in rural economic development efforts (maximum
score of 5 points); and
(B) developing multiorganization and multistate approaches to
addressing the economic development and cooperative needs of rural
areas (maximum score of 5 points).
(v) Commitment (maximum score of 10 points). The Agency will
evaluate the applicant's commitment to providing technical assistance
and other services to underserved and economically distressed areas in
rural areas of the United States. Applicants that provide statistics
and tie their service area and projects to the underserved and the
economically distressed areas as appropriate will receive more points.
(vi) Qualifications of those performing the tasks (maximum score of
10 points). The Agency will evaluate the application to determine if
the personnel expected to perform key Center tasks have a track record
of positive solutions for complex cooperative development and/or
marketing problems, or a successful record of conducting accurate
feasibility studies, business plans, marketing analysis, or other
activities relevant to cooperative development Center success as
determined by the tasks identified in applicant's work plan. Applicants
that evidence commitment/availability of qualified personnel expected
to perform the tasks will receive more points.
(vii) Local support (maximum score of 10 points). The Agency will
evaluate the applications for previous and expected local support for
the Center and plans for coordinating with other developmental
organizations (including state and local institutions) in the proposed
service area. Applicants that evidence strong support from potential
beneficiaries and formal evidence of intent to coordinate with other
developmental organizations will receive more points.
(viii) Future support (maximum score of 10 points). The Agency will
evaluate the applicant's vision for funding Center operations for
future years. Discussion should include issues such as sources and uses
of alternative funding; reliance on Federal, State, and local grants;
and the use of in-house personnel for providing services versus
contracting out for that expertise. Applicants that evidence vision of
long-term sustainability with diversification of funding sources and
building in-house technical assistance capacity will receive more
points.
(2) Administrator priority categories and points. Unless otherwise
specified in a notification issued under Sec. 5002.15 of subpart A of
this part, the Administrator may award up to 10 points to an
application under this section to improve the geographic diversity of
awardees in a fiscal year.
(j) Ranking applications. Unless otherwise specified in a
notification issued under Sec. 5002.15 of subpart A of this part, the
Agency will rank applications on or after July 15 each year.
(k) Additional criteria for selecting applications for funding. If
two projects obtain the same total score, the Agency will select the
project whose aggregate score for the criteria specified in paragraphs
(i)(1)(i) through (v) of this section is higher.
Sec. 5002.104 Distance Learning and Telemedicine Grants.
The Distance Learning and Telemedicine (DLT) grant program is a
Nationally-competed grant program with a specified application
deadline.
(a) Definition. For the purpose of this section,
``Telecommunications or electric borrower'' is defined as an entity
that has outstanding RUS or Rural Telephone Bank electric or
telecommunications loans or loan guarantees under the provisions of the
Rural Electrification Act of 1936.
(b) Applicant eligibility. In addition to the requirements
specified in Sec. 5002.20, except for Sec. 5002.20(c), in subpart A
of this part:
(1) The applicant must be:
(i) Legally organized as an incorporated organization or
partnership;
(ii) An Indian tribe or tribal organization, as defined in 25
U.S.C. 450b (b) and (c);
(iii) A state or local unit of government or a consortium; or
(iv) Other legal entity, including a private corporation organized
on a profit or non-profit basis.
(v) If the applicant is a consortium, at least one member of the
consortium must meet the requirements of paragraphs (b)(1)(i) through
(iv) of this section. If a consortium lacks the legal capacity to
contract, each individual entity must contract with the Agency in its
own behalf.
(2) Each applicant must provide written evidence of its legal
capacity to contract with the Agency to obtain the grant, and comply
with all applicable requirements. If a consortium lacks the legal
capacity to contract, each individual entity must contract with the
Agency on its own behalf.
(3) Individuals are not eligible for program financial assistance
under this program directly.
(4) Telecommunications or electric borrowers under the Rural
Electrification Act of 1936 ((7 U.S.C. 950aaa et seq.) are not eligible
for grants, provided, however, that such borrowers are eligible for
funding under the Distance Learning Telemedicine Combination Loan and
Grant Program (7 CFR 1703, subpart D) and the Distance Learning
Telemedicine Loan Program (7 CFR 1703, subpart G).
(c) Project eligibility. In addition to the requirements specified
in Sec. 5002.22 in subpart A of this part:
(1) The project must be to deliver distance learning or
telemedicine services to entities that operate a rural community
facility, including libraries, or to residents of rural areas at rates
calculated to ensure that the benefit of the financial assistance is
passed through to such entities or to residents of rural areas; and
(2) DLT end-user sites must be located in a rural area described in
one of the four rural areas described in paragraph (h)(1)(ii)(A) of
this section, although the DLT hub site may be located in either a
rural or non-rural area. DLT end-user facilities not within one of
these four defined rural areas are not eligible for grant funding under
this section.
(d) Additional preapplication and application requirements. In
addition to, or in lieu of, as applicable, the requirements specified
in Sec. Sec. 5002.30, 5002.31, and 5002.32, the following requirements
apply to preapplications and applications submitted under this section.
(1) Preapplications. If an applicant elects to submit a
preapplication, the preapplication must be received by the Agency on or
before January 1 of the year in which a related application is
received. Preapplications received after January 1 will not be
considered by the Agency.
(2) Applications--(i) Application submittal. When submitting
applications, the applicant shall submit one original and two copies of
the application to the Agency.
(ii) Application deadline. Applications must be received on or
before March 31 of each year to be considered for funding for that
fiscal year. Applications received by the Agency after March 31 will
not be considered for funding that fiscal year.
(iii) State strategic plan. The application must contain evidence
from the Agency State Director, Rural Development, that the application
conforms with the State strategic plan as prepared under section 381D
of the
[[Page 61247]]
Consolidated Farm and Rural Development Act (7 U.S.C. 1921). The
applicant should indicate if such a plan does not exist.
(e) Eligible uses of grant funds. Grant funds under this section
must be used to fund only the costs for approved purposes as defined in
paragraphs (e)(1) through (5) of this section. Grants shall be expended
only for the costs associated with the initial capital assets
associated with the project.
(1) Acquiring, by lease or purchase, constructing, or installing
eligible equipment, which is computer hardware and software, audio or
video equipment, computer network components, telecommunications
terminal equipment, data terminal equipment, inside wiring, interactive
video equipment, or similar equipment, or other facilities that would
further telemedicine services or distance learning services.
(2) Acquiring or installing instructional programming.
(3) Providing technical assistance and instruction for using
eligible equipment, including any related software.
(4) Developing instructional programming.
(5) Providing engineering or environmental studies relating to the
establishment or expansion of the phase of the project that is being
funded with the grant.
(f) Ineligible uses of grant funds. Grant funds under this section
will not be provided and cannot be used:
(1) To cover the costs of acquiring, installing or constructing
telecommunications transmission facilities;
(2) To pay for medical equipment not having telemedicine as its
essential function;
(3) To pay salaries, wages, or employee benefits to medical or
educational personnel;
(4) To pay for the salaries or administrative expenses of the
applicant or the project;
(5) To purchase equipment that will be owned by the local exchange
carrier or another telecommunications service provider unless that
service provider is the applicant;
(6) To duplicate facilities providing distance learning or
telemedicine services in place or to reimburse the applicant or others
for costs incurred prior to the Agency's receipt of the completed
application;
(7) To pay costs of preparing the application package for financial
assistance under this program;
(8) For projects whose primary objective is to provide links
between teachers and students or between medical professionals who are
located at the same facility;
(9) For site development and the destruction or alteration of
buildings;
(10) For the purchase of land, buildings, or building construction;
(11) For any purpose that the Administrator has not specifically
approved; or
(12) Except for leases provided for in paragraph (e)(1) of this
section, to pay the cost of recurring or operating expenses for the
project.
(g) Funding considerations and matching funds--(1) Limitation on
funding certain purposes. No more than 10 percent of the funds for a
grant under this section can be used for any one of the purposes listed
in paragraphs (e)(3) through (5) of this section, or for any
combination thereof.
(2) Matching funds. The grant applicant's minimum matching
contribution must equal 15 percent of the grant amount requested and
shall be used for approved purposes for grant funds listed in paragraph
(e) of this section.
(i) Matching contributions generally must be in the form of cash.
However, in-kind contributions solely for the purposes listed in
paragraph (e) of this section may be substituted for cash.
(ii) In-kind items listed in paragraph (e) of this section must be
non-depreciated, new assets with established monetary values.
Manufacturers', vendors', or service providers' discounts are not
considered in-kind matching.
(iii) Costs incurred by the applicant, or others on behalf of the
applicant, for facilities or equipment installed, or other services
rendered prior to submission of a completed application, shall not be
considered as an eligible in-kind matching contribution.
(iv) Costs incurred for non-approved purposes identified in
paragraph (f) of this section shall not be used as an in-kind matching
contribution.
(v) Any financial assistance from Federal sources will not be
considered as matching contributions under this section unless there is
a Federal statutory exception specifically authorizing the Federal
financial assistance to be considered as a matching contribution, and
that exception is documented in the application.
(h) Scoring applications. Each application for a grant under this
section will be scored based on the priority categories and points
specified in paragraphs (h)(1) and (2) of this section. The maximum
number of points that will be awarded to an application is 100.
(1) Program-specific priority categories and points. The Agency
will award program-specific points for the priority categories
described in paragraphs (h)(1)(i) through (iii) of this section.
(i) The critical need for the project (maximum score of 35 points).
(A) This criterion will be used to score applications based on the
documentation in support of the need for services, the benefits derived
from the services proposed by the project, the local community
involvement in planning and implementing the project, the local
participation in financing the project, the financial need of the
applicant, and the technical and functional quality of the project.
Technical and functional quality is determined in part by the
utilization of existing or non-project telecommunications resources in
an area, the integration of the project into other networks, and the
ability of the project to serve the greatest practical number of
residents in the project's area. This determination will be made by the
Agency based on information submitted by the applicant under paragraph
(d)(2) of this section.
(B) The Agency will consider the extent of the applicant's
documentation explaining the economic, education, or health care
challenges facing the community; the applicant's proposed plan to
address these challenges; how the grant can help; and why the applicant
cannot complete the project without a grant. The Agency will also
consider the extent to which the applicant provides evidence that
economic, education, or health care challenges could not be addressed
without employing the specific technology proposed. The Agency will
also consider any support by recognized experts in the related
educational or health care field, any documentation substantiating the
educational or health care underserved nature of the applicant's
proposed service area, and any justification for specific educational
or medical services that are needed and will provide direct benefits to
rural residents. The Agency will consider the extent to which the
applicant demonstrates that the project most efficiently provides the
needed services. The Agency will also consider evidence of local
support of the project, including demonstrations of local (applicant
and community) financial contributions for eligible and ineligible
grant purposes, planning and administrative support for the project,
and support from community and institutional leaders. When an applicant
believes a project area's or beneficiaries' financial need is
[[Page 61248]]
greater than the need expressed by the project's National School Lunch
Program (NSLP) eligibility score, the Agency will consider evidence of
this unusual need.
(ii) The comparative population sparsity of the service area
(maximum score of 30 points). This criterion will be used to evaluate
the relative rurality of service areas for various projects. Under this
system, the DLT end-user sites contained within the service area are
identified and given a score according to the population of the area
where the DLT end-user sites are located.
(A) The following definitions are used in the evaluation of
sparsity:
(1) Most Rural Area means any area of the United States not
included within the boundaries of any Census-defined urban cluster or
urbanized area having a population of 2,500 or more inhabitants.
(2) Extremely Rural Area means any area of the United States not
included within the boundaries of any Census-defined urbanized area but
which is included in an urban cluster of from 2,501 to 5,000
inhabitants.
(3) Mid-Rural Area means any area of the United States not included
within the boundaries of any Census-defined urbanized area but which is
included within the boundaries of an urban cluster having a population
of from 5,001 to 10,000 inhabitants.
(4) Rural Area means any area of the United States not included
within the boundaries of any Census-defined urbanized area but which is
included in an urban cluster of from 10,001 to 20,000 inhabitants.
(B) There are a total of 30 possible points for this criterion.
Each end-user site will receive points based on its location in
accordance with paragraphs (h)(1)(ii)(B)(1) through (4) of this
section. If a hub is utilized as an end-user site, the hub will be
considered as an end-user site. The applicant will receive points as
follows:
(1) If the end-user site is located in a Most Rural Area, it will
receive 30 points.
(2) If the end-user site is located in an Extremely Rural Area, it
will receive 25 points.
(3) If the end-user site is located in a Mid-Rural Area, it will
receive 15 points.
(4) If the end-user site is located in a Rural Area, it will
receive 0 points.
(C) The total score for this criterion will be based on the average
score for all the end-user sites included in the project.
(iii) The economic need of the applicant's service area as
estimated by the NSLP (maximum score of 25 points). This criterion will
be used to evaluate the relative financial need of the applicant,
community, and project. All applicants are required to provide the
applicable percentage of students eligible to participate in the NSLP
for each area to be served by the end-user site. The appropriate State
or local organization administering the program must certify the
percentages as being correct. The applicant must provide a listing of
the location of each end-user site (city, town, village, borough or
rural area) discussing how the appropriate NSLP percentage was
determined in accordance with this section. These percentages may be
obtained from the State or local organization that administers the
program and must be certified by that organization as being correct by
such entity. For purposes of this section, the NSLP percentage will
reflect the percentage of eligibility rather than the percentage of
actual participation.
(A) The following guidelines will be used to determine the
applicable NSLP percent for a particular application:
(1) The eligibility percentage for each end-user site is the
eligibility percentage of the school district where the end-user will
be located.
(2) Percentage ratios will be rounded up to the next highest or
rounded down to the next lowest whole number for fraction of
percentages at or greater than 0.5 or less than 0.5, respectively.
(3) The project NSLP percentage will be determined by the average
of the NSLP percentages of the end-user sites. If end-user sites fall
within different percentile categories, the eligibility percentages
associated with each end-user site will be averaged to determine the
percentile category. For purposes of averaging, if a hub is also
utilized as an end-user site, the hub will be considered as an end-user
site.
(B) The applicant will receive economic need points based on the
project NSLP percentage, as follows:
(1) NSLP percentage greater than or equal to 74 percent receives 25
points.
(2) NSLP percentage less than 25 percent receives zero points.
(3) One point is scored for each two percentage point increase in
project NSLP percentage. For example, if the project NSLP percentage is
25 percent or 26 percent, the economic need score is 1 point. If the
project NSLP percentage is 47 percent or 48 percent, the economic need
score is 12 points.
(2) Administrator priority categories and points. Unless otherwise
specified in a notification issued under Sec. 5002.15 of subpart A of
this part, the Administrator may award up to 10 points to an
application under this section to improve the geographic diversity of
awardees in a fiscal year.
(i) Ranking applications. Unless otherwise specified in a
notification issued under Sec. 5002.15 of subpart A of this part, the
Agency will rank applications on or after July 15 each year.
Sec. 5002.105 Value-Added Producer Grants.
The Value-Added Producer grant program is a Nationally-competed
grant program with a specified application deadline. For the purposes
of the application of the requirements in subpart A, in the case of
this section the term ``venture'' means ``project'' as that term is
used in subpart A and includes the project and any other activities
related to the production, processing, and marketing of the value-added
product that is the subject of the value-added producer grant request.
(a) Definitions.
Agricultural producer. Persons or entities, including farmers,
ranchers, loggers, agricultural harvesters, and fishermen, that engage
in the production or harvesting of an agricultural product. Producers
may or may not own the land or other production resources, but must
have majority ownership interest in the agricultural product to which
value-added is to accrue as a result of the venture. Examples of
agricultural producers include: a logger who has a majority interest in
the logs harvested that are then converted to boards, a fisherman that
has a majority interest in the fish caught that are then smoked, a wild
herb gatherer that has a majority interest in the gathered herbs that
are then converted into essential oils, a cattle feeder that has a
majority interest in the cattle that are fed, slaughtered and sold as
boxed beef, and a corn grower that has a majority interest in the corn
produced that is then converted into corn meal.
Beginning farmer or rancher. The term ``beginning farmer or
rancher'' has the meaning given the term in section 343(a) of the
Consolidated Farm and Rural Development Act (7 U.S.C. 1991(a)).
Family farm. The term ``family farm'' has the meaning given the
term in section 761.2 of title 7, Code of Federal Regulations (as in
effect on December 30, 2007).
Special purpose equipment. Equipment that is used only for
research, medical, scientific, or other technical activities.
Socially disadvantaged farmer or rancher. The term ``socially
disadvantaged farmer or rancher'' has the meaning given the term in
section 355(e) of the Consolidated Farm and
[[Page 61249]]
Rural Development Act (7 U.S.C. 2003(e)).
(b) Applicant eligibility. In addition to the requirements
specified in Sec. 5002.20 in subpart A of this part:
(1) The applicant must be:
(i) An independent producer;
(ii) Agricultural producer group;
(iii) Farmer or rancher cooperative; or
(iv) A majority-controlled producer-based business venture.
(2) An applicant that is a farmer or rancher cooperative, an
agriculture producer group, or a majority-controlled producer-based
business venture must be entering into an emerging market as a result
of the proposed venture.
(3) An applicant that is an independent producer does not have to
be entering into an emerging market.
(c) Venture eligibility. In order for a venture to be eligible for
grant funding under this section, the venture must evidence a high
likelihood of creating value-added for an agricultural product by
meeting at least one of the categories in the definition of value-
added. The project eligibility requirements specified in Sec. 5002.22
in subpart A of this part do not apply to ventures seeking a grant
under this section.
(1) The venture must be located in a rural area.
(2) Working capital grants must have a feasibility study and
business plan completed specifically for the proposed venture before
the application is submitted. The feasibility study and business plan
must be submitted when requested by the Agency during application
processing.
(3) Applicants who have already received a planning grant for the
proposed venture cannot receive another planning grant for the same
venture. Applicants who have already received a working capital grant
for a venture cannot receive any additional grants for that venture.
(4) No venture may be the subject of more than one planning grant
or more than one working capital grant under this section. The same
venture may, however, be awarded one planning grant and subsequently
apply for and receive a working capital grant.
(5) Not more than one venture per funding cycle per applicant may
receive grant funding under this section.
(6) If the agricultural product is a value-added product,
agricultural producers must have a majority ownership interest in the
agricultural product to which value-added is to accrue.
(d) Eligible uses of grant funds. Grant funds under this section
must be used to fund only the costs for approved purposes as defined in
paragraphs (d)(1) and (2) of this section.
(1) Planning grant funds may be used to develop a business plan or
perform a feasibility study to establish a viable marketing opportunity
for a value-added producer. These uses include, but are not limited to,
the following:
(i) Conduct, or hire a qualified consultant to conduct, a
feasibility analysis of the proposed value added venture to help
determine the potential success of the venture;
(ii) Develop, or hire a qualified consultant to develop, a business
operations plan that provides comprehensive detail on the management,
planning and other operational aspects of the proposed venture;
(iii) Develop, or hire a qualified consultant to develop, a
marketing plan for the proposed value-added product(s) including the
identification of a market window, potential buyers, a description of
the distribution system and possible promotional campaigns; and
(iv) Hire counsel to provide legal advice and to draft
organizational and other legal documents related to the proposed
venture.
(2) Working capital grant funds may be used to provide capital to
establish alliances or business ventures that allow the producer of the
value-added agricultural product to better compete in domestic or
international markets. These uses include, but are not limited to, the
following:
(i) Establish a working capital account to fund operations prior to
obtaining sufficient cash flow from operations;
(ii) Hire counsel to provide legal advice and to draft legal
documents related to the proposed venture;
(iii) Hire a certified public accountant or other qualified
individual to design an accounting system for the proposed venture; and
(iv) Pay salaries, utilities and other operating costs such as
inventory financing, the purchase of office equipment, computers and
supplies and finance other related activities.
(v) Conduct a marketing campaign for a proposed value-added
product.
(e) Ineligible uses of grant funds. Grant funds under this section
may not be used to:
(1) Duplicate current services or replace or substitute support
previously provided. If the current service is inadequate, however,
grant funds may be used to expand the level of effort or services
beyond what is currently being provided;
(2) Pay costs of the venture incurred prior to the date of grant
approval;
(3) Plan, repair, rehabilitate, acquire, or construct a building or
facility (including a processing facility);
(4) Purchase, rent, or install fixed equipment. Fixed equipment
means nonexpendable, tangible personal property having a useful life of
more than one year and an acquisition cost of greater than or equal to
$5,000. Rental or purchase of special purpose equipment for specific,
limited applications related to planning grants may be approved at the
discretion of the Agency;
(5) Pay for the repair of privately owned vehicles;
(6) Fund research and development;
(7) Purchase real property and/or vehicles, including boats;
(8) Pay expenses not directly related to the funded venture;
(9) Fund architectural or engineering design work for a specific
physical facility;
(10) Fund any expenses related to the production of any commodity
or product to which value will be added, including seed, rootstock,
labor for harvesting the crop, and delivery of the commodity to a
processing facility. The Agency considers these expenses to be
ineligible because the intent of the program is to assist producers
with marketing value-added products rather than producing agricultural
commodities; or
(11) Conduct activities on behalf of anyone other than a specific
independent producer or group of independent producers. The Agency
considers conducting industry-level feasibility studies and business
plans that are also known as feasibility study templates or guides or
business plan templates or guides to be ineligible because the
assistance is not provided to a specific group of independent
producers.
(f) Additional preapplication and application requirements. In
addition to the requirements specified in Sec. Sec. 5002.30, 5002.31,
and 5002.32, the following requirements apply to preapplications and
applications submitted under this section.
(1) Preapplications. If an applicant elects to submit a
preapplication, the preapplication must be received by the Agency on or
before January 15 of each year to be considered. Preapplications
received after January 15 will not be considered by the Agency.
(2) Applications--(i) Deadline. Unless otherwise specified in a
notification issued under Sec. 5002.15, applications must be received
on or before March 1 of each year to be considered for funding for that
fiscal year. Applications received by the Agency after March 1 will not
be considered.
[[Page 61250]]
(ii) Business plan. The business plan must include at least three
years of pro forma financial statements.
(iii) Feasibility study. The feasibility study should show how the
venture would operate under a set of assumptions, the technology used
(the facilities, equipment, production process, etc.), the
qualifications of the management team, and the financial aspects
(capital needs, volume, cost of goods, wages, etc.) of the venture. The
analysis should answer the following questions about the venture.
(A) Where is it now?
(B) Where does the group want to go?
(C) Why does the group want to go forward with the venture?
(D) How will the group accomplish the venture?
(E) What resources are needed?
(F) Who will provide assistance?
(G) When will the venture be completed?
(H) How much will the venture cost?
(I) What are the risks?
(3) Simplified application. Applicants with ventures requesting
less than $50,000 will be allowed to submit an application under this
section that has less documentation than for applicants with ventures
requesting $50,000 or more. The requirements for simplified
applications are available at any Rural Development office and on the
Agency Web site.
(g) Grant agreement and conditions. The length of grant agreements
made under this section shall not exceed three years.
(h) Funding limitations and matching funds--(1) Funding
Limitations. (i) Grant funds may be used to pay up to 50 percent of the
costs for carrying out relevant ventures.
(ii) The aggregate amount of awards to majority controlled
producer-based business ventures may not exceed ten percent of the
total funds obligated under this program during any fiscal year.
(iii) The total amount provided to a grantee in any one year shall
not exceed $500,000.
(2) Matching funds. (i) Applicants must verify in their
applications that matching funds are available for the time period of
the grant.
(ii) Matching funds must be at least equal to the amount of grant
funds requested.
(iii) Unless provided by other authorizing legislation, other
Federal grant funds cannot be used as matching funds.
(iv) Matching funds must be spent at a rate equal to or greater
than the rate at which grant funds are expended.
(v) Matching funds must be provided by either the applicant or by a
third party in the form of cash or in-kind contributions.
(vi) Matching funds must be spent on eligible expenses and must be
from eligible sources.
(i) Scoring applications. Each application for a grant under this
section will be scored based on the priority categories and points
specified in paragraphs (i)(1) and (2) of this section. The maximum
number of points that will be awarded to an application is 100.
(1) Program-specific priority categories and points. The Agency
will award program-specific points for the priority categories
described in paragraphs (i)(1)(i) through (v) of this section, as
applicable.
(i) Nature of the proposed venture (maximum score of 25 points).
Ventures will be evaluated for technological feasibility, operational
efficiency, profitability, sustainability and the likely improvement to
the local rural economy. Also considered will be the potential for
expanding the customer base for the Value-Added product and the
expected increase in returns to the producer-owners of the venture.
(ii) Personnel qualifications (maximum score of 20 points).
Ventures will be evaluated for whether the personnel who are
responsible for completing the proposed tasks, including those leading
or managing the venture and those leading the venture, have the
necessary qualifications.
(iii) Commitments and support (maximum score of 20 points).
Commitment to the venture will be evaluated on the basis of the number
of independent producers currently involved as well as how many may
potentially be involved, and the nature, level, and quality of their
contributions. End-user commitments will be evaluated on the basis of
potential markets and the potential amount of output to be purchased.
Applications will also be reviewed for evidence that the venture has
significant third party support, with financial support being most
important, followed by in-kind support and finally general support.
(iv) Work plan/budget (maximum score of 20 points). The work plan
will be evaluated based on whether it provides specific and detailed
task descriptions, reasonable and specific timeframes for the tasks,
and the key personnel responsible for the tasks that will accomplish
the venture's goals. The budget will be evaluated based on whether it
provides a detailed breakdown of all estimated costs (both grant and
matching) associated with the proposed activities, allocates these
costs among the listed tasks, and is reasonable.
(v) Type of applicant (maximum score of 5 points). If an
application is from an applicant that is a beginning farmer or rancher,
a socially disadvantaged farmer or rancher, or an operator of a small-
or medium-sized farm or ranch that is structured as a family farm, 3
points will be awarded. If the application is from an applicant that
meets any two of these three applicant types, 4 points will be awarded.
If the application is from an applicant that meets all three applicant
types, 5 points will be awarded.
(2) Administrator priority categories and points. Unless otherwise
specified in a notification issued under Sec. 5002.15 of subpart A of
this part, the Administrator may award up to 10 points to an
application under this section to improve the geographic diversity of
awardees in a fiscal year.
(j) Ranking applications. Unless otherwise specified in a
notification issued under Sec. 5002.15 of subpart A of this part, the
Agency will rank applications on or after July 15 each year.
Sec. 5002.106 Water and Waste Disposal Facilities Grants.
The Water and Waste Disposal Facilities grant program is a State-
allocated grant program with an open application period.
(a) General. Water and waste applicants must demonstrate that they
possess the financial, technical, and managerial capability necessary
to consistently comply with pertinent Federal and State laws and
requirements. In developing water and waste systems, applicants must
consider alternatives of ownership, system design, and the sharing of
services.
(b) Applicant eligibility. In addition to the requirements
specified in Sec. 5002.20 in subpart A of this part, as appropriate,
an applicant must be:
(1) A public body, such as a municipality, county, district,
authority, or other political subdivision of a State, territory or
commonwealth;
(2) An organization operated on a non-profit basis, such as an
association, cooperative, or private corporation. The organization must
be an association controlled by a local public body or bodies, or have
a broadly based ownership by or membership of people of the local
community; or
(3) An Indian tribe on Federal and State reservations and other
Federally-recognized Indian tribe.
(c) Project eligibility. In addition to the requirements specified
in Sec. 5002.22
[[Page 61251]]
in subpart A of this part, the project must meet the following
requirements:
(1) Rural area. The project must serve a rural area that, if such
project is completed, is not likely to decline in population below that
for which the project was designed. Facilities funded by the Agency may
be located in non-rural areas. However, loan and grant funds may be
used to fund only that portion of the facility serving rural areas,
regardless of facility location.
(2) Capacity. The project must be designed and constructed so that
adequate capacity will or can be made available to serve the present
population of the area to the extent feasible and to serve the
reasonably foreseeable growth needs of the area to the extent
practicable.
(3) Community development and plan. The project must be necessary
for orderly community development and consistent with a current
comprehensive community water, waste disposal, or other current
development plan for the rural area.
(4) Revenue sources. All projects funded under the provisions of
this section must be based on taxes, assessments, income, fees, or
other satisfactory sources of revenues in an amount sufficient to
provide for facility operation and maintenance, reasonable reserves,
and debt payment. If the primary use of the facility is by business and
the success or failure of the facility is dependent on the business,
then the economic viability of that business must be assessed.
(5) Public use. All facilities funded under the provisions of this
section shall be for public use. The facilities will be installed so as
to serve any potential user within the service area who desires service
and can be feasibly and legally served.
(i) This does not preclude:
(A) Financing or constructing projects in phases when it is not
practical to finance or construct the entire project at one time; and
(B) Financing or constructing facilities where it is not
economically feasible to serve the entire area, provided economic
feasibility is determined on the basis of the entire system or facility
and not by considering the cost of separate extensions to or parts
thereof. Additionally, the applicant must publicly announce a plan for
extending service to areas not initially receiving service.
Additionally, the applicant must provide written notice to potential
users located in the areas not to be initially served.
(ii) Should the Agency determine that inequities exist within the
applicant's service area for the same type service proposed (i.e.,
water or waste disposal) such inequities will be remedied by the
applicant prior to grant approval or included as part of the project.
Inequities are defined as unjustified variations in availability,
adequacy or quality of service. User rate schedules for portions of
existing systems that were developed under different funding, rates,
terms or conditions do not necessarily constitute inequities.
(iii) Developers are expected to provide utility-type facilities in
new or developing areas in compliance with appropriate State statutes.
(6) Credit elsewhere. Applicants must certify in writing and the
Agency shall determine and document that the applicant is unable to
finance the proposed project from their own resources or through
commercial credit at reasonable rates and terms.
(d) Notice of intent to apply for grant. An applicant must publish
a notice of intent to apply for a grant under this program not more
than 60 days before filing the application with the Agency. The notice
of intent must be published in a newspaper of general circulation in
the proposed area to be served.
(e) Eligible uses of grant funds. Grant funds under this section
may be used only for the following purposes:
(1) To construct, enlarge, extend, or otherwise improve rural
water, sanitary sewage, solid waste disposal, and storm wastewater
disposal facilities.
(2) To construct or relocate public buildings, roads, bridges,
fences, or utilities, and to make other public improvements necessary
for the successful operation or protection of facilities authorized in
paragraph (e)(1) of this section.
(3) To relocate private buildings, roads, bridges, fences, or
utilities, and other private improvements necessary for the successful
operation or protection of facilities authorized in paragraph (e)(1) of
this section.
(4) For payment of other utility connection charges as provided in
service contracts between utility systems.
(5) When a necessary part of the project relates to those
facilities authorized in paragraphs (e)(1) through (4), grant funds may
be used for:
(i) Reasonable fees and costs such as legal, engineering,
architectural, accounting, environmental, archeological, and appraisal;
(ii) Costs of acquiring interest in land; rights, such as water
rights, leases, permits, rights-of-way; and other evidence of land or
water control or protection necessary for development of the facility;
(iii) Purchasing or renting equipment necessary to install,
maintain, extend, protect, operate, or utilize facilities;
(iv) Cost of additional applicant labor and other expenses
necessary to install and extend service; and
(v) In unusual cases, the cost for connecting the user to the main
service line.
(vi) To restore loan funds used to prepay grant obligated costs.
(6) Construction incurred before grant approval.
(i) Funds may be used to pay obligations for eligible project costs
incurred before grant approval if such requests are made in writing by
the applicant and the Agency determines that:
(A) Compelling reasons exist for incurring obligations before grant
approval;
(B) The obligations will be incurred for authorized grant purposes;
and
(C) The Agency's authorization to pay such obligations is on the
condition that it is not committed to make the grant; it assumes no
responsibility for any obligations incurred by the applicant; and the
applicant must subsequently meet all grant approval requirements,
including environmental and contracting requirements.
(ii) If construction is started without Agency approval, post-
approval in accordance with this section may be considered, provided
the construction meets applicable requirements including those
regarding approval and environmental matters.
(f) Ineligible uses of grant funds. Grant funds under this section
may not be used to fund:
(1) Facilities that are not modest in size, design, and cost;
(2) Loan or grant finder's fees;
(3) The construction of any new combined storm and sanitary sewer
facilities;
(4) Any portion of the cost of a facility that does not serve a
rural area;
(5) That portion of project costs normally provided by a business
or industrial user, such as wastewater pretreatment, etc.;
(6) For other purposes not directly related to operating and
maintenance of the facility being installed or improved;
(7) Reduce equivalent dwelling unit (EDU) costs to a level less
than similar system cost;
(8) Pay any costs of a project when the median household income of
the service area is more than 100 percent of the nonmetropolitan median
household income of the State;
(9) Pay project costs when other loan funding for the project is
not at reasonable rates and terms; or
[[Page 61252]]
(10) Pay project costs when other funding is a guaranteed loan
obtained in accordance with the guaranteed loan program for water and
waste disposal facilities.
(g) Funding considerations and matching funds--(1) Funding
considerations. Grants will be determined by the Agency in accordance
with the provisions of this paragraph.
(i) Similar system cost. If the grant results in an annual EDU cost
that is not comparable with similar systems, the Agency will determine
a grant amount based on achieving EDU costs that are not below similar
system user costs.
(ii) Wholesale service. When an applicant provides wholesale sales
or services on a contract basis to another system or entity, similar
wholesale system cost will be used in determining the amount of grant
needed to achieve a reasonable wholesale user cost.
(iii) Subsidized cost. When annual cost to the applicant for
delivery of service is subsidized by the state, commonwealth, or
territory, and uniform flat user charges regardless of usage are
imposed for similar classes of service throughout the service area, the
Agency may proceed with a grant in an amount necessary to reduce such
delivery cost to a reasonable level.
(2) Matching funds. Grants may not be made in excess of the
percentages specified in paragraphs (g)(2)(i) and (ii) of this section.
These percentages are based on Agency eligible project development
costs. Facilities previously installed will not be considered in
determining the development costs. Applicants are advised that the
percentages contained in paragraphs (g)(2)(i) and (ii) of this section
are maximum amounts and may be further limited due to availability of
funds or the grant determination procedures contained in paragraph
(g)(1) of this section.
(i) When the median household income of the service area is below
the higher of the poverty line or 80 percent of the state
nonmetropolitan median income and the project is necessary to alleviate
a public health and safety or security problem, the maximum amount of
the grant will not exceed 75 percent of Agency eligible project
development costs.
(ii) When the median household income of the service area exceeds
the 80 percent, but is not more than 100 percent of the statewide
nonmetropolitan median household income, the maximum amount of the
grant will not exceed 45 percent of Agency eligible project development
costs.
(h) Scoring applications. Each application for a grant under this
section will be scored based on the priority categories and points
specified in paragraphs (h)(1) and (2) of this section. The maximum
number of points that will be awarded to an application is 100.
(1) Program-specific priority categories and points. The Agency
will award program-specific points for the priority categories
described in paragraphs (h)(1)(i) through (iv) of this section.
(i) Population priorities (maximum score of 10 points).
(A) 10 points will be awarded if the proposed project will
primarily serve a rural area having a population not in excess of
1,000;
(B) 7 points will be awarded if the proposed project primarily
serves a rural area having a population between 1,001 and 2,500;
(C) 2 points will be awarded if the proposed project primarily
serves a rural area having a population between 2,501 and 5,500.
(ii) Health priorities (maximum score of 30 points). (A) 12 points
will be awarded if the proposed project is needed to alleviate an
emergency situation, correct unanticipated diminution or deterioration
of a water supply, or to meet Safe Drinking Water Act requirements that
pertain to a water system;
(B) 12 points will be awarded if the proposed project is required
to correct inadequacies of a wastewater disposal system, or to meet
health standards that pertain to a wastewater disposal system;
(C) 6 points will be awarded if the proposed project is required to
meet administrative orders issued to correct local, State, or Federal
solid waste violations.
(iii) Median household income priorities (maximum score of 10
points). If the median household income of the population to be served
by the proposed project is:
(A) Less than the poverty line if the poverty line is less than 80
percent of the statewide non-metropolitan median household income, 10
points will be awarded;
(B) Less than 80 percent of the statewide non-metropolitan median
household income, 8 points will be awarded;
(C) Equal to or more than the poverty line and between 80 percent
and 100 percent, inclusive, of the statewide non-metropolitan median
household income, 6 points will be awarded.
(iv) Other priorities (maximum score of 30 points). (A) 7 points
will be awarded if the proposed project will merge ownership,
management, and operation of smaller facilities providing for more
efficient management and economical service;
(B) 5 points will be awarded if the proposed project will enlarge,
extend, or otherwise modify existing facilities to provide service to
additional rural areas;
(C) 2 points will be awarded if the applicant is a public body or
Indian tribe;
(D) If the amount of other than Agency funds committed to the
proposed project is:
(1) 50 percent or more, 6 points will be awarded;
(2) 20 percent to 49 percent, 4 points will be awarded;
(3) 5 percent to 19 percent, 2 points will awarded;
(E) 4 points will be awarded if the proposed project will serve
Agency identified target areas;
(F) 2 points will be awarded if the proposed project primarily will
recycle solid waste products thereby limiting the need for solid waste
disposal;
(G) 4 points will be awarded if the proposed project will serve an
area that has an unreliable quality or supply of drinking water.
(2) Administrator priority categories and points. Unless otherwise
specified in a notification issued under Sec. 5002.15 of subpart A of
this part, the Administrator may award up to 10 points to an
application under this section for grant size and to improve the
geographic diversity of awardees in a fiscal year. No more than 10
Administrator points will be awarded to an application.
(3) State director priority categories and points. Unless otherwise
specified in a notification issued under Sec. 5002.15 of subpart A of
this part, a State Director may award up to 10 points to an application
that meets any of the State Director priority categories specified in
Sec. 5002.42(b)(2)(i) through (x) and paragraphs (h)(3)(i) and (ii) of
this section. No more than a total of 10 State Director points may be
awarded under this paragraph to an application.
(i) Arsenic (as specified in a memorandum of understanding with the
U.S. Environmental Protection Agency).
(ii) Areas located within 100 miles of New York City's ``ground
zero'' as the result of the September 11, 2001, attacks.
(i) Ranking applications. Unless otherwise specified in a
notification issued under Sec. 5002.15 of subpart A of this part, the
Agency will rank applications on or after the following dates each
fiscal year: December 15, March 15, July 15, and August 15.
[[Page 61253]]
(j) Additional criteria for selecting applications for funding. The
Agency may select the next highest scoring application for funding
before a higher scoring application when the application is a
subsequent request for a previously approved project. If the request is
due to cost overruns, the cost overruns must be due to high bids or
unexpected construction problems that cannot be reduced by
negotiations, redesign, use of bid alternatives, rebidding, or other
means. Cost overruns exceeding 20 percent of the development cost at
time of grant approval or where the scope of the original purpose has
changed will not be considered in selecting the next highest scoring
application over the higher scoring application.
(k) User charges. The user charges should be reasonable and produce
enough revenue to provide for all costs of the facility after the
project is complete. The planned revenue should be sufficient to
provide for all debt service, debt reserve, operation and maintenance,
and, if appropriate, additional revenue for facility replacement of
short-lived assets without building a substantial surplus.
(l) Professional services and contracts related to the facility.
Fees provided for in contracts or agreements shall be reasonable. The
Agency shall consider fees to be reasonable if they are not in excess
of those ordinarily charged by the profession as a whole for similar
work when Agency funding is not involved. Applicants will be
responsible for providing the services necessary to plan projects
including design of facilities, environmental review and documentation
requirements (in accordance with the environmental policies and
procedures of the Rural Utilities Service), preparation of cost and
income estimates, development of proposals for organization and
funding, and overall operation and maintenance of the facility.
Applicants should negotiate for procurement of professional services,
whereby competitors' qualifications are evaluated and the most
qualified competitor is selected, subject to negotiations of fair and
reasonable compensation. Contracts or other forms of agreement between
the applicant and its professional and technical representatives are
required and are subject to Agency concurrence.
(1) Engineering and architectural services. (i) Applicants shall
publicly announce all requirements for engineering and architectural
services, and negotiate contracts for engineering and architectural
services on the basis of demonstrated competence and qualifications for
the type of professional services required and at a fair and reasonable
price.
(ii) When project design services are procured separately, the
selection of the engineer or architect shall be done by requesting
qualification-based proposals and in accordance with this section.
(iii) Applicants may procure engineering and architectural services
in accordance with applicable State statutes or local requirements
provided the State Director determines that such procurement meets the
intent of this section.
(2) Other professional services. Professional services of the
following may be necessary: Attorney, bond counsel, accountant,
auditor, appraiser, and environmental professionals (if desired by
applicant).
(3) Contracts for other services. Contracts or other forms of
agreements for other services including management, operation, and
maintenance will be developed by the applicant and presented to the
Agency for review and concurrence.
(m) User estimates. Applicants dependent on users' fees for
operation and maintenance expenses shall base their income and expense
forecast on realistic user estimates. For users presently not receiving
service, consideration must be given to the following:
(1) An estimated number of maximum users should not be used when
setting user fees and rates since it may be several years before all
residents will need service by the system. In establishing rates, a
realistic number of users should be employed.
(2) The amount of cash contributions required will be set by the
applicant and concurred in by the Agency. A new user cash contribution
is not required when:
(i) The Agency determines that the potential users as a whole in
the applicant's service area cannot make cash contributions; or
(ii) State statutes or local ordinances require mandatory use of
the system and the applicant or legal entity having such authority
agrees in writing to enforce such statutes, or ordinances.
(n) Water rights. The following will be furnished as applicable:
(1) A statement by the applicant's attorney regarding the nature of
the water rights owned or to be acquired by the applicant (such as
conveyance of title, appropriation and decree, application and permit,
public notice and appropriation and use).
(2) A copy of a contract with another company or municipality to
supply water; or stock certificates in another company that represents
the right to receive water.
Sec. 5002.107 Economic Impact Initiatives Grants.
(a) The Economic Impact Initiatives grant program is a State-
allocated grant program with an open application period.
(b) The Economic Impact Initiatives grant program will be
implemented according the requirements of subpart A and the
requirements of Sec. 5002.101, except that the essential community
facility must be located in a rural community where the ``not employed
rate'' is greater than the percentage established under section
306(a)(2) of the Consolidated Farm and Rural Development Act (7 U.S.C.
1926(a)(20)(B)). The ``not employed rate'' is the percentage of
individuals over the age of 18 who reside within the community and are
ready, willing, and able to be employed but are unable to find
employment, as determined by the Department of Labor of the State in
which the community is located.
Sec. 5002.108 Tribal College Grants.
The requirements specified in Sec. Sec. 5002.1 through 5002.14 and
Sec. Sec. 5002.60 through 5002.80 of this part apply to Tribal College
grants. In addition, the requirements specified in paragraphs (a)
through (f) of this section apply to Tribal College grants.
(a) Notifications. The Agency will issue each year a notice to
Tribal colleges and universities that identifies:
(1) maximum grant size and
(2) the date that preapplications are to be submitted.
(b) Applicant eligibility. Only applicants that are 1994
Institutions are eligible for grants under this section.
(c) Eligible projects and purposes. Grant funds can only be used to
develop facilities provided by the Tribal college or university.
(1) Eligible projects are those projects that meet the requirements
specified in Sec. 5002.101(b), except that Sec. 5002.101(b)(3) does
not apply to projects under this section.
(2) Eligible purposes are identified in Sec. 5002.101(c) of this
part.
(d) Preapplications and applications. All preapplications and
applications must be submitted to the State Office in the State in
which the Tribal college or university is located.
(1) Preapplications. Preapplications received by the Agency on or
before the date specified in the notification issued under paragraph
(a) of this section will receive priority consideration over
preapplications received after the specified preapplication date.
(2) Applications. (i) Applications received on or before March 31
of each year will receive priority consideration
[[Page 61254]]
for funding over applications received by the Agency after March 31 for
that fiscal year.
(ii) An applicant submitting more than one application in a year
must provide a priority listing for the grants it is seeking.
(e) Funding limitations. The maximum amount of a grant awarded
under this section will be no more than 95 percent of the total cost of
the facility. The Agency shall not require a match of more than 5
percent of the total cost of the facility.
(f) Award process. The Agency will use a graduated scale, as
specified in Sec. 5002.101(e)(2), in selecting applications for
funding. In addition, the Agency may:
(1) Choose to fund only one grant per round from a single
applicant;
(2) reduce the grant amount for all applicants to a maximum level
that will fund at least one application per Tribal college or
university that applied during that round; and
(3) negotiate to increase the scope of Tribal College projects and
grants if funds remain available after the grant selection round.
Sec. Sec. 5002.109-5002.200 [Reserved.]
Dated: September 25, 2008.
Thomas C. Dorr,
Under Secretary for Rural Development.
[FR Doc. E8-23286 Filed 10-14-08; 8:45 am]
BILLING CODE 3410-XY-P