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Rural Business Enterprise Grant Program
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[Federal Register: April 20, 2007 (Volume 72, Number 76)]
[Proposed Rules]
[Page 19807-19818]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20ap07-13]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
Rural Business-Cooperative Service
Rural Utilities Service
Farm Service Agency
7 CFR Parts 1942 and 4284
RIN 0570-AA28
Rural Business Enterprise Grant Program
AGENCY: Rural Business-Cooperative Service, USDA.
ACTION: Proposed rule.
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SUMMARY: The Rural Business-Cooperative Service (RBS), an agency within
the United States Department of Agriculture (USDA), Rural Development
proposes to implement 7 CFR part 4284, subpart B in order to have an
all-inclusive processing and servicing regulation. USDA Rural
Development intends to provide a more user-friendly regulation that
will be a better resource for public understanding and improvement in
program administration.
DATES: Written comments on this proposed rule must be received on or
before June 19, 2007 to be assured of consideration. The comment period
for the information collection under the Paperwork Reduction Act of
1995 continues through June 19, 2007.
ADDRESSES: You may submit comments to this rule by any of the following
methods:
? Federal eRulemaking Portal: http://www.regulations.gov.
Follow instructions for submitting comments.
? Mail: Submit written comments via the U.S. Postal Service
to the Branch Chief, Regulations and Paperwork Management Branch, Rural
Development 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 another courier service requiring a street address to
the Branch Chief, Regulations and Paperwork Management Branch,
Attention: Cheryl Thompson, Rural Development, 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: Cindy Mason, Loan Specialist, Business
Programs, USDA Rural Development (U.S. Department of Agriculture) STOP
3225, 1400 Independence Ave., SW., Washington, DC 20250, Telephone
(202) 690-1433. The TDD number is (800) 795-3272 or (202) 720-6382.
SUPPLEMENTARY INFORMATION:
Classification
This rule has been determined to be non-significant under Executive
Order 12866 and has, therefore, not been reviewed by the Office of
Management and Budget (OMB).
Programs Affected
The Catalog of Federal Domestic Assistance number for the program
impacted by this action is 10.769, Rural Business Enterprise Grants.
Intergovernmental Review
The Rural Business Enterprise Grant (RBEG) Program is subject to
the provisions of Executive Order 12372, which requires
intergovernmental consultation with State and local officials. USDA
Rural Development will conduct intergovernmental consultation in the
manner delineated in RD Instruction 1940-J, ``Intergovernmental Review
of Rural Development Programs and Activities,'' and 7 CFR part 3015,
subpart V.
Regulatory Flexibility Act
In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
602), the undersigned has determined and certified by signature of this
document that this rule will not have a significant economic impact on
a substantial number of small entities. New provisions included in this
rule will not impact a substantial number of small entities to a
greater extent than large entities. Therefore, a regulatory flexibility
analysis was not performed.
Civil Justice Reform
This 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 to this rule, and
(3) administrative proceedings in accordance with 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.
Environmental Impact Statement
This document has been reviewed in accordance with 7 CFR part 1940,
subpart G, ``Environmental Program.'' RBS 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 of 1969, Pub. L. 91-190, an
Environmental Impact Statement is not required.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub.
L. 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, RBS
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 1
year. When such a statement is needed for a rule, section 205 of UMRA
generally requires USDA 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 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.
[[Page 19808]]
Federalism
It has been determined under Executive Order 13132, Federalism,
that this rule does not have sufficient federalism implications to
warrant the preparation of a Federalism Assessment. The provisions
contained in this 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 levels of government.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995, USDA Rural
Development will seek OMB approval of the reporting and recordkeeping
requirements contained in this proposed rule.
E-Government Act Compliance
USDA 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.
For information pertinent to E-GOV compliance related to this proposed
rule, please contact Jeanette Waters on (202) 720-4059.
Title: Rural Business Enterprise Grant Program.
Type of Request: New collection.
Abstract: The Rural Business Enterprise Grant (RBEG) Program is
authorized under section 310B(c) of the Consolidated Farm and Rural
Development Act, as amended. The purpose of the program is to finance
or facilitate the development of small and emerging private business
enterprises; to create, expand or operate rural distance learning
networks or programs that provide educational or job training
instruction related to the potential employment or job advancement of
adult students; and to provide technical assistance and training to
rural communities for the purpose of improving passenger transportation
services or facilities. An additional purpose authorized under section
310B(f) of the Consolidated Farm and Rural Development Act is for
statewide broadcasting systems that provide information on agriculture
and other issues of importance to farmers and other rural residents.
USDA Rural Development intends to incorporate all of the authorized
purposes discussed above into one program regulation, 7 CFR part 4284,
subpart B. This subpart contains various requirements for information
from grantees, and some requirements may cause the grantees to require
information from other parties. The information requested is vital for
USDA Rural Development to be able to process applications in a
responsible manner, make prudent program decisions, and effectively
monitor the grantees' activities to protect the Government's financial
interest and ensure that funds obtained from the Government are used
appropriately. This collection of information is necessary in order to
implement 7 CFR part 4284, subpart B.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 7 hours per response.
Respondents: Nonprofits and public bodies.
Estimated Number of Respondents: 700.
Estimated Number of Responses per Respondent: 12.
Estimated Number of Responses: 8,160.
Estimated Total Annual Burden on Respondents: 53,435.
Copies of this information collection can be obtained from Cheryl
Thompson, Regulations and Paperwork Management Branch, at (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
USDA Rural Development, including whether the information will have
practical utility; (b) the accuracy of the USDA 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 notice will be summarized and included in the request
for OMB approval. All comments will also become a matter of public record.
Background
The current 7 CFR part 1942, subpart G, has recently been updated
with a rural area definition change made by section 6020 of the Farm
Security and Rural Investment Act of 2002; however, the regulation has
not been completely reissued since 1992. USDA Rural Development
consistently reissues administrative notices year after year to our
field offices regarding clarifications and policies on our program.
This guidance should officially be made part of the regulation through
the Federal government regulatory review process and allow the public
the opportunity to make comments on the policy decisions. 7 CFR part
1942, subpart G, along with Attachment 1, is currently used to
administer the program and at times can be difficult to follow. USDA
Rural Development hopes to provide a more user-friendly regulation with
the implementation of 7 CFR part 4284, subpart B. The existing
regulation for the Rural Business Enterprise Grants and Television
Demonstration Grants founds in 7 CFR part 1942, subpart G, will be
removed upon publication of the final rule.
List of Subjects
7 CFR Part 1942
Business and industry, Grant programs--Housing and community
development, Industrial park, Rural areas.
7 CFR Part 4284
Business and industry, Economic development, Grant programs--
Housing and community development, Rural areas.
Therefore, chapters XVIII and XLII, title 7, of the Code of Federal
Regulations are proposed to be amended as follows:
CHAPTER XVIII--RURAL HOUSING SERVICE, RURAL BUSINESS-COOPERATIVE
SERVICE, RURAL UTILITIES SERVICE, AND FARM SERVICE AGENCY, DEPARTMENT
OF AGRICULTURE
PART 1942--ASSOCIATIONS
1. The authority citation for part 1942 continues to read as follows:
Authority: 5 U.S.C. 301, 7 U.S.C. 1932, 7 U.S.C. 1989, and 16
U.S.C. 1005.
Subpart G [Removed and Reserved]
2. Subpart G of part 1942 is removed and reserved.
CHAPTER XLII--RURAL BUSINESS-COOPERATIVE SERVICE AND RURAL UTILITIES
SERVICE, DEPARTMENT OF AGRICULTURE
PART 4284--GRANTS
3. The authority citation for part 4284 is revised to read as follows:
[[Page 19809]]
Authority: 5 U.S.C. 301, 7 U.S.C. 1932, 7 U.S.C. 1989, and 16
U.S.C. 1005.
4. Subpart B is added to part 4284 to read as follows:
Subpart B--Rural Business Enterprise Grant Program
Sec.
4284.101 Purpose.
4284.102 Policy.
4284.103 Definitions.
4284.104 Exception authority.
4284.105 [Reserved]
4284.106 Applicant eligibility requirements.
4284.107-4284.108 [Reserved]
4284.109 Eligible purposes.
4284.110 Ineligible purposes.
4284.111-4284.112 [Reserved]
4284.113 Project eligibility.
4284.114-4284.115 [Reserved]
4284.116 Small business eligibility certification.
4284.117 Small business eligibility exception.
4284.118 Private tribally-owned business.
4284.119-4284.120 [Reserved]
4284.121 Grant ownership.
4284.122 Leveraging.
4284.123-4284.124 [Reserved]
4284.125 Preapplication.
4284.126 Preapplication contents.
4284.127 Scope of work requirements.
4284.128 Other narrative information.
4284.129-4284.130 [Reserved]
4284.131 Program income.
4284.132 Indirect cost rate.
4284.133-4284.134 [Reserved]
4284.135 Civil rights requirements.
4284.136 Environmental review.
4284.137-4284.138 [Reserved]
4284.139 Project selection criteria.
4284.140-4284.141 [Reserved]
4284.142 Application.
4284.143 Application contents.
4284.144 Revolving loan fund work plan requirements.
4284.145-4284.148 [Reserved]
4284.149 Application selection.
4284.150-4284.151 [Reserved]
4284.152 Letter of Conditions.
4284.153 Grant Agreement.
4284.154-4284.155 [Reserved]
4284.156 Time frame for use of grant funds.
4284.157 Financial management system.
4284.158 Grant disbursement.
4284.159-4284.160 [Reserved]
4284.161 Insurance requirements.
4284.162-4284.163 [Reserved]
4284.164 Changes in scope of work, work plan or budget.
4284.165-4284.166 [Reserved]
4284.167 Reporting requirements.
4284.168-4284.169 [Reserved]
4284.170 Site visits.
4284.171-4284.172 [Reserved]
4284.173 Record retention.
4284.174-4284.177 [Reserved]
4284.178 Disposition of real property, equipment, and supplies.
4284.179-4284.180 [Reserved]
4284.181 Construction requirements.
4284.182-4284.183 [Reserved]
4284.184 Clarification of revolving loan fund operation.
4284.185-4284.188 [Reserved]
4284.189 Grant termination.
4284.190 Transfer and assumption.
4284.191-4284.193 [Reserved]
4284.194 Appeal rights.
4284.195-4284.200 [Reserved]
Subpart B--Rural Business Enterprise Grant Program
Sec. 4284.101 Purpose.
This subpart outlines policies and procedures for administering the
Rural Business Enterprise Grant (RBEG) Program. The purpose of this
program is to provide grants to stimulate economic activity and
employment in rural areas by:
(a) Financing and facilitating development of small and emerging
private business enterprises;
(b) Creating, expanding, and operating rural distance learning
networks or rural learning programs that provide educational or job
training instruction related to the potential employment or job
advancement of adult (as defined per State law) students;
(c) Providing technical assistance and training to rural
communities for the purpose of improving passenger transportation
services or facilities; and
(d) Financing statewide broadcasting systems that provide
information on agriculture and other issues of importance to farmers
and other rural residents.
Sec. 4284.102 Policy.
(a) The RBEG Program will be administered under this subpart;
however, the requirements of 7 CFR parts 3015, 3016, 3017, 3018, 3019,
and 3052 also govern the United States Department of Agriculture (USDA)
grant programs. USDA Rural Development has attempted to address these
requirements in this subpart. Nevertheless, any conflicts between those
parts and this subpart will be resolved in favor of the applicable 7
CFR parts of 3015, 3016, 3017, 3018, 3019, and 3052.
(b) Grants will not be awarded under this program unless all
eligibility requirements are met in accordance with this subpart.
(c) Any processing or servicing activity conducted pursuant to this
subpart involving authorized assistance to USDA Rural Development
employees, members of their families, close relatives, or business or
close personal associates is subject to the provisions of RD
Instruction 1900-D. Applicants will be required to identify any
relationship or association with a USDA Rural Development employee.
(d) Grantees and USDA Rural Development program administrators will
be held accountable for following the procedures provided in this subpart.
Sec. 4284.103 Definitions.
The following definitions pertain to this subpart:
Agriculture production. The cultivation, production, growing,
raising, feeding, housing, breeding, hatching, or managing of crops,
plants, animals or birds, either for fiber, food for human consumption
or livestock feed.
Cognizant agency. The Federal agency that has the largest dollar
value of awards with a grantee and the one responsible for negotiating
and approving indirect cost rates for that grantee.
Conflict of interest. When the grantee's immediate family,
employees, or board of directors including their immediate families
have a legal or personal financial interest in the recipient(s)
receiving the benefits or services of the grant.
Corporation. A body of persons granted a charter legally by a state
government or Federally recognized Indian tribe recognizing it as a
separate entity having its own rights, privileges, and liabilities
distinct from its members.
Cost of goods sold. The amount determined by subtracting the value
of the ending merchandise inventory from the sum of the beginning
merchandise inventory and the net purchase for the fiscal period.
Grant closeout. When all required work is completed, administrative
actions relating to the completion of work and expenditures of funds
have been accomplished, and USDA Rural Development accepts final
expenditure information.
Grant period. The period of time to complete a project and receive
grant funds as reimbursement for allowable expenses.
Gross profit. Net sales minus cost of goods sold.
Indirect cost rate. A percentage of an organization's total
indirect costs to its direct cost base.
Long-term. The period of time covered by the three most recent
decennial censuses of the United States to the present.
Net sales. Gross sales less discounts, allowances and returns.
Non-metropolitan median household income. Median household income
of the state's non-metropolitan counties and portions of metropolitan
counties outside of cities, towns, and places of 50,000 or more population.
Predominantly rural coverage area. The area covered by the signal
of a statewide, private, nonprofit public
[[Page 19810]]
television system that is more than 50 percent of the rural (as defined
in this section) population according to the latest decennial census of
the United States.
Private business. A business owned and controlled either by
individuals or by a nonpublic entity, which is legally organized under
State law or under the laws or codes of a Federally recognized Indian
tribe.
Private nonprofit corporation. A corporation created for private
purposes including Federal Credit Unions if properly organized as a
private nonprofit corporation (not controlled or associated with
government interest) that does not distribute any part of its income to
its members and has a 501(c)(3) Internal Revenue Service tax-exempt
revenue code.
Program income. Gross income earned by the grantee directly
generated by the grant-supported activity or earned as a result of the
grant award during the grant period.
Project. The real property, equipment, supplies, revolving loan
fund, technical assistance or any other assistance funded under this
program.
Public body. A state; county; city; township; and incorporated
towns and villages, boroughs, authorities, districts; and Federally
recognized Indian tribes.
Qualified national nonprofit organization. A corporation created
for private purposes (not controlled or associated with government
interest) that does not distribute any part of its income to its
members and has a 501(c)(3) Internal Revenue Service tax-exempt revenue
code. The corporation must also operate in a Multi-state area.
Revolved funds. The portion of the revolving loan fund that is not
composed of USDA Rural Development grant funds including principal and
interest payments and fees collected on loans made from the revolving
loan fund. Revolved funds shall not be considered Federal funds.
Revolving loan fund. A fund created with grant funds under this
program and/or funds from other sources used to make loans to small
businesses for economic development and job creation purposes that uses
the loan repayments to make additional loans in accordance with the
approved work plan.
Rural and rural area. Any area other than a city or town that has a
population of greater than 50,000 inhabitants and the urbanized area
contiguous and adjacent to such a city or town according to the latest
decennial census of the United States.
Rural Development. For purposes of this regulation, the Rural
Business-Cooperative Service (RBS), an Agency of the United States
Department of Agriculture, or a successor Agency, will be referred to
as USDA Rural Development.
Rural distance learning networks. A telecommunication link between
instructors and adult students.
Rural distance learning programs. A system or means of providing
education or job training instruction relating to potential employment
or job advancement of adult students.
Small and emerging private business enterprise. Any private
business that will employ 50 or fewer new employees and has less than
$1 million in projected gross profit (per generally accepted accounting
principles). Small and emerging private business enterprise is referred
to as ``small business'' in this subpart.
State. Any of the 50 States, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands of the United States,
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.
Statewide. Having a coverage area of not less than 90 percent of
the population of a State and not less than 80 percent of the rural
land area of the State.
Technical assistance. Providing support by analyzing, evaluating,
or training to solve a problem. USDA Rural Development will determine
whether a specific activity qualifies as technical assistance.
Third-party, in-kind contributions. The value of non-cash
contributions provided by non-Federal third parties. Third-party, in-
kind contributions may be in the form of real property, equipment,
supplies and other expendable property. The value of the goods and
services must directly benefit and be specifically identifiable to the
project.
Total project cost. The sum of all costs associated with a
completed, operational project.
Sec. 4284.104 Exception authority.
The Administrator may, in individual cases, make an exception to
any requirement or provision of this subpart that is not inconsistent
with the authorizing statute or any applicable law if the Administrator
determines that requirement or provision would adversely affect the
government's interest.
Sec. 4284.105 [Reserved]
Sec. 4284.106 Applicant eligibility requirements.
The applicant eligibility requirements will be listed by type of
grant followed by other requirements that must be met by the applicant
for eligibility unless otherwise noted.
(a) Project grant (other than paragraphs (b) or (c) of this
section). Applicants must be a public body or a private, nonprofit
corporation.
(b) Passenger transportation technical assistance grant. Applicants
must be a qualified national nonprofit organization with experience in
providing technical assistance and training to rural communities for
the purpose of improving passenger transportation service or facilities.
(c) Television demonstration grant. Applicants must be a statewide,
private, nonprofit public television system (licensed by the Federal
Communications Commission under its non-commercial classification),
whose coverage area is predominantly rural, for the purpose of
demonstrating the effectiveness of such systems in providing
information on agriculture and other issues of importance to farmers
and other rural residents. The National Public Broadcasting System
makes the determination of eligibility for statewide and predominantly
rural coverage area as defined in this subpart.
(d) Other applicant eligibility requirements. Applicants must also
meet the following requirements to be eligible for assistance. A
certification must be signed stating that the applicant has:
(1) The legal authority to carry out the purpose(s) of the proposed
project;
(2) No delinquent debt to the Federal Government or any outstanding
Federal judgments;
(3) At least 3 years experience as an organization in the proposed
type of project. The only exception is if the project is for a
revolving loan fund and a third-party with the required experience will
be hired to do the credit and financial analysis. The applicant may
certify if this is the case;
(4) No conflict of interest in the proposed project;
(5) Ownership and control of the proposed project; and
(6) At least 51 percent ownership by those who are either citizens
of the United States or reside in the United States after being legally
admitted for permanent residence (applies only if the applicant is a
private nonprofit).
[[Page 19811]]
Sec. Sec. 4284.107-4284.108 [Reserved]
Sec. 4284.109 Eligible purposes.
Grant funds may be used to do the following; however, if the grant
is to benefit a small business by using purposes defined in paragraphs
(a) through (c) of this section, the small business must lease any real
property or equipment from the applicant at rates that would ensure
sustainability of the project (i.e., the grantee's cost of operating
the facility including insurance premiums):
(a) Purchase and develop land, easements, and right-of-ways;
(b) Construct or improve buildings; plants; access streets and
roads; parking areas; utilities; and pollution control and abatement
facilities;
(c) Purchase of machinery and equipment;
(d) Provide technical assistance or training;
(e) Create, expand, and operate rural distance learning networks or
rural learning programs that provide educational instruction or job
training instruction related to potential employment or job advancement
of adult (as defined per State law) students. Paragraphs (a) through
(d) of this section may be utilized for this purpose;
(f) Establish or recapitalize a revolving loan fund;
(g) Pay for reasonable fees and charges for professional services
necessary for the planning and development of a construction project;
(h) Pay off an interim financing loan incurred in connection with a
construction project when a preapplication is received by USDA Rural
Development before construction is started;
(i) Pay for on-site technical assistance and training to local and
regional governments, public transit agencies, and related nonprofit
and for-profit organizations in rural areas, the development of
training materials, and the provision of necessary training assistance
to local officials and agencies in rural areas for the purpose of
improving passenger transportation services or facilities; and
(j) Pay for capital equipment expenditures, start-up and program
costs, and other costs necessary to the operation of television
demonstration programs.
Sec. 4284.110 Ineligible purposes.
Grant funds may not be used for the following:
(a) Costs incurred on the project before receipt of the completed
preapplication by USDA Rural Development unless it is for professional
services necessary for the planning and development of a construction
project;
(b) Agriculture production;
(c) Residential housing;
(d) Any illegal or gambling activities;
(e) Lending and investment institutions and insurance companies;
(f) Charitable institutions and fraternal organizations;
(g) Duplicating current services or replacing or substituting
support previously provided beyond a 2-year period of time;
(h) Paying the costs of preparing the preapplication or application
package for funding under this program;
(i) Technical assistance which duplicates assistance provided by
the Forest Service to implement an action plan under the National
Forest-Dependent Rural Communities Economic Diversification Act;
(j) Making loans from a revolving loan fund that do not have
reasonable rates and terms as compared to what is charged in the area
where the project is located;
(k) Transferring jobs from one area to another or increasing the
production of goods when there is not sufficient demand or the
availability of services or facilities;
(l) Funding part of a project that is dependent on other funding
unless there is a firm commitment in writing of other funding to ensure
completion of the project;
(m) Projects where USDA Rural Development determines that
construction was initiated to avoid Federal environmental compliance
requirements;
(n) Financial assistance requests in excess of $500,000;
(o) Passing grant funds directly to a third-party recipient;
(p) Using technical assistance to pay for operating expenses of a
small business.
(q) Operating expenses of an eligible applicant unless it is for
television demonstration projects or the salaries and expenses related
to employees who directly perform technical assistance to small
businesses, adult students or passenger transportation projects;
(r) Fund political activities; and
(s) Paying for construction or improvement projects when the
applicant is leasing the real property where the construction or
improvement will occur.
Sec. Sec. 4284.111-4284.112 [Reserved]
Sec. 4284.113 Project eligibility.
The applicant must provide supporting documentation to illustrate
the project:
(a) Has a demonstrated need;
(b) Is economically feasible to ensure sustainability beyond grant
assistance unless the project is for a feasibility study;
(c) Is located in a rural area;
(d) Will benefit small business or provide job placement or
advancement for adult students as the end result of the project unless
the project is for passenger transportation or television demonstration
grants; and
(e) Is measurable to document performance outcomes and demonstrate
results of the program.
Sec. Sec. 4284.114-4284.115 [Reserved]
Sec. 4284.116 Small business eligibility certification.
Any small business receiving assistance under this program must be
a separate, private business and cannot be the grantee or any affiliate
thereof. Each small business must sign a certification stating they:
(a) Meet the small and emerging private business enterprise
definition contained in Sec. 4284.103 of this subpart;
(b) Are located in a rural area as defined in Sec. 4284.103 of
this subpart;
(c) Have no delinquent debt to the Federal Government or any
outstanding Federal judgments;
(d) Have no conflict of interest in the proposed project;
(e) Have at least 51 percent ownership by those who are either
citizens of the United States or reside in the United States after
being legally admitted for permanent residence.
Sec. 4284.117 Small business eligibility exception.
If the small business is a nonprofit entity or other tax-exempt
organization (as defined by the Internal Revenue Service revenue codes)
located in a city, town or unincorporated area with a population of
5,000 or less and has a principal office on land of an existing or
former Native American reservation, the small business does not need to
meet the small business definition contained in Sec. 4284.103 of this
subpart. However, the small business receiving assistance must sign a
certification stating they meet the requirements of paragraphs (b)
through (e) defined in Sec. 4284.116.
Sec. 4284.118 Private tribally-owned business.
For a tribally-owned business to be considered a private business,
it must be
[[Page 19812]]
held through a separate entity, such as a tribal corporation. The
corporation may be owned by the tribe and distribute profits to the
tribe. However, the governing board must be independent from the tribal
government and elected or appointed for a specific time period. Board
members must not be subject to removal without cause by the tribal
government. A majority of the board members must not now or in the
future, as long as they are board members, be members of the tribal
council or other governing board of the tribe. Tribally-owned small
businesses will be required to sign a small business certification in
accordance with either Sec. 4284.116 or Sec. 4284.117.
Sec. Sec. 4284.119-4284.120 [Reserved]
Sec. 4284.121 Grant ownership.
The grantee must have ownership and control of the project until
transfer, disposition, or termination of the project occurs.
(a) The grantee must retain ownership of any real property that
will be purchased or improved with grant funds. In the case of
installation or improvements to utilities or streets, the grantee does
not have to own the land, utility, or street that is improved in the
public right of way, but must retain ownership of the land surrounding
the improvements.
(b) The grantee must retain ownership of any equipment or supplies
acquired with grant funds.
(c) The grantee must establish a separate bank account for a
revolving loan fund, secure the account by signing a control agreement
(available from any USDA Rural Development State Office) and direct and
manage the fund.
(d) The grantee must oversee and control technical assistance,
passenger transportation and television demonstration projects until
the grants are closed out.
Sec. 4284.122 Leveraging.
Supplemental funding at a minimum of 20 percent of the total
project cost must be included in the project. Supplemental funds may be
from cash injection by the applicant, financial institutions, state or
local governmental sources, or third-party, in-kind contributions.
Third-party, in-kind contributions will be limited to 10 percent of
supplemental funding and USDA Rural Development will advise if the
third-party, in-kind contributions are acceptable. Applicants may not
use third-party, in-kind contributions for revolving loan fund
projects. Other Federal grant awards cannot be used to meet the 20
percent leveraging match.
Sec. Sec. 4284.123-4284.124 [Reserved]
Sec. 4284.125 Preapplication.
A preapplication is required to establish communication between the
potential applicant and USDA Rural Development, determine the potential
applicant's eligibility, and identify projects which have little or no
chance for funding before applicants incur significant costs.
Sec. 4284.126 Preapplication contents.
A complete preapplication must be submitted to the USDA Rural
Development State Office where the project is located. Multi-state
projects must be submitted to the USDA Rural Development State Office
where the applicant is headquartered. A complete preapplication must
include:
(a) An SF-424, ``Application for Federal Assistance,'' including
the appropriate non-construction (SF-424A and SF-424B) or construction
(SF-424C and SF-424D) budget and assurance forms, and a Dun and
Bradstreet Universal Numbering System (DUNS) number handwritten or
typed on the SF-424;
(b) Intergovernmental review comments from the State Single Point
of Contact, or evidence that the State has elected not to review the
program under Executive Order 12372. Applicants can obtain the
necessary state clearinghouse contacts from the USDA Rural Development
State Office where the project is located;
(c) Evidence of legal existence including a copy of the articles of
incorporation, by-laws, and certificate of good standing or
incorporation;
(d) Form RD 1940-20, ``Request for Environmental Information,''
unless the project is considered a categorical exclusion in accordance
with 7 CFR part 1940, subpart G. Applicants can verify if their project
is a categorical exclusion with the USDA Rural Development State Office
where the project is located;
(e) A signed applicant eligibility certification;
(f) A copy of the most recent year-end financial statements that
should include a balance sheet and income statement prepared in
accordance with generally accepted accounting principles;
(g) A preliminary architectural or engineering report for
construction projects that includes a description of the facility;
including size, location, related facilities, schematic cost estimate,
and schematic plans; and
(h) A scope of work.
Sec. 4284.127 Scope of work requirements.
The scope of work is a detailed written narrative identifying the
aspects of a proposed project. It must be completed for all projects
and contain the following:
(a) Specific purposes, objectives, and need for grant funds including
identification of the proposed project in a local or regional plan;
(b) Timeframes to complete the proposed project;
(c) Names and responsibilities of key personnel who will carry out
the objectives of the proposed project;
(d) Experience specifically related to the type of project proposed;
(e) Availability of other funds and sources;
(f) Number and type of small businesses to be assisted as a result
of the grant including number of jobs created and/or saved and other
anticipated goals and/or benefits of the proposed project, if
applicable. This should be based on letters of interest or commitments;
(g) Number of adult students to be assisted as a result of the
grant and other anticipated goals and/or benefits of the proposed
project when the grant is for a rural distance learning network or
rural learning program, if applicable. This should be based on letters
of interest or commitments; and
(h) Anticipated goals and/or benefits for passenger transportation
or television demonstration projects as a result of the grant, if
applicable.
Sec. 4284.128 Other narrative information.
The following narrative information should be addressed in your
preapplication to assist USDA Rural Development in assigning points
under the scoring criteria. You may address it in the scope of work or
in a separate document.
(a) Documented statistical information on population, unemployment
rate, and median household income for the area to be served by the
proposed project;
(b) Documented information on sudden and severe economic
dislocation produced by such factors as the departure or downsizing of
a major employer, or natural disaster, if applicable; and
(c) Documented statistical information on long-term decline in
population, if applicable.
Sec. Sec. 4284.129-4284.130 [Reserved]
Sec. 4284.131 Program income.
Program income must be addressed in the SF-424 and the respective
budget forms. Any program income earned during the grant period may be
retained by the grantee to further the objectives and goals of the project.
[[Page 19813]]
Sec. 4284.132 Indirect cost rate.
The maximum indirect cost rate USDA Rural Development will pay is
25 percent of the grant request unless the grantee already has a
negotiated agreement with its cognizant agency. A copy of the
negotiated agreement must be provided with the preapplication.
Sec. Sec. 4284.133-4284.134 [Reserved]
Sec. 4284.135 Civil rights requirements.
(a) All grants made under this subpart are subject to Title VI of
the Civil Rights Act of 1964, Title IX of the Education Amendments of
1972, Section 504 of the Rehabilitation Act of 1973, the Age
Discrimination Act of 1975, and part 1901, subpart E of this title.
(b) USDA Rural Development will inform grantees of their civil
rights requirements in accordance with paragraph (a) of this section.
Grantees may be required to collect certain information on their
project or program to ensure that they are serving the public without
discrimination.
Sec. 4284.136 Environmental review.
(a) All grants under this subpart are subject to the environmental
requirements of 7 CFR part 1940, subpart G before any application is
approved. The grantee must not take any actions that would have an
adverse impact on the environment or limit the range of alternatives
USDA Rural Development considers during the environmental review. If
USDA Rural Development finds evidence that construction was initiated
to avoid compliance requirements, the preapplication will not be
considered for assistance. Any mitigation measures will be included in
the Letter of Conditions or other grant approval document. The grantee
is responsible for communicating the mitigation measures to the project
designers for inclusion in the project construction documents.
(b) USDA Rural Development will conduct an initial environmental
review on revolving loan fund projects and a separate environmental
review on each loan the grantee is proposing to provide funds for until
all grant funds have been expended. However, if the grantee has one
loan project committed to use the total amount of the grant, USDA Rural
Development will only conduct an individual project review.
(c) The grantee will be responsible for preparation of
environmental reviews after they have lent out an amount equal to the
grant award. Preparation will be accomplished using professional
consultant services and the review document will conform to the
requirements and formats of 7 CFR part 1940, subpart G.
Sec. Sec. 4284.137-4284.138 [Reserved]
Sec. 4284.139 Project selection criteria.
USDA Rural Development will evaluate the preapplication and give it
a priority score based on criteria in this section. This process will
assist USDA Rural Development in prioritizing for funding approval. Any
scoring criteria not addressed will automatically receive zero points.
Applicants may average any figures that are based on the rural area to
be served. All written commitment supporting documentation for priority
points must be submitted to USDA Rural Development no later than the
application stage. Points will be distributed as follows:
(a) Population. Figures from the latest decennial census of the
United States must be used to score population on the area to be served
by the proposed project as follows:
(1) The proposed project will be located in areas of under 5,000
population--15 points;
(2) The proposed project will be located in areas of between 5,000
and 15,000 population--10 points;
(3) The proposed project will be located in areas of between 15,001
and 25,000 population--5 points.
(b) Economic Conditions. Figures must be used for the area to be
served by the proposed project as follows:
(1) Unemployment rate. Unemployment figures must come from the most
recent published unemployment data by the Bureau of Labor Statistics,
U.S. Department of Labor or State Department of Labor Statistics.
Projects serving all of a State's rural area or Multi-State rural areas
will compare State unemployment rates to the national unemployment rate.
(i) The proposed project will be located in areas where the
unemployment rate exceeds the State rate by 50 percent or more--20 points;
(ii) The proposed project will be located in areas where the
unemployment rate exceeds the State rate by 25 percent or more but less
than 50 percent--10 points;
(iii) The proposed project will be located in areas where the
unemployment rate exceeds the State rate by less than 25 percent--5 points.
(2) Median household income. Income figures must come from the
latest decennial census of the United States, updated according to
changes in the consumer price index. The poverty line figure used must
be as defined in section 673(2) of the Community Services Block Grant
Act (42 U.S.C. 9902 (2)) for a family of four for the State. Projects
serving all of a State's rural area or Multi-State rural areas will
compare State non-metropolitan median household incomes to the national
poverty line.
(i) The proposed project will be located in areas where the median
household income is less than poverty line--25 points;
(ii) The proposed project will be located in areas where the median
household income is more than the poverty line, but less than 85
percent of the State non-metropolitan median household income--15 points;
(iii) The proposed project will be located in areas where the
median household income is between 85 percent and 100 percent of the
State non-metropolitan median household income--10 points;
(c) Supplemental funding. Written commitments from other financing
sources must be provided with the application. Third-party, in-kind
contributions will not be considered under this criterion only as part
of the matching requirement. Points are awarded as follows:
(1) The proposed project will have supplemental funding in an
amount equal to or greater than 75 percent of total project cost--25 points;
(2) The proposed project will have supplemental funding in an
amount equal to or more than 50 percent, but less than 75 percent of
total project cost--15 points;
(3) The proposed project will have supplemental funding in an
amount equal to or more than 25 percent, but less than 50 percent of
total project cost--10 points.
(4) The proposed project will have supplemental funding above 20
percent, but less than 25 percent of the total project cost--5 points.
(d) Full-time direct jobs created or saved. Evidence of full-time
direct jobs created or saved must be included in the application. Full-
time direct jobs must be calculated based on the total project cost and
scored as follows:
(1) The proposed project will create or save one job per each
$15,000 of the total project cost--10 points;
(2) The proposed project will create or save one job per each
$25,000 of the total project cost--5 points.
(e) Fund utilization. Points will be awarded if the proposed
project will utilize grant funds of $100,000 or less--25 points;
(f) Local or regional plans. The proposed project is identified in
a local or regional economic development plan adopted by the area to be
served by the project--5 points. A copy of the plan
[[Page 19814]]
must be included with the application to receive points.
(g) Small business. The small business to be assisted is a
nonprofit entity or other tax-exempt organization (as defined by the
Internal Revenue Service revenue codes) located in a city, town or
unincorporated area with a population of 5,000 or less and has a
principal office on land of an existing or former Native American
reservation--5 points. Evidence of organization and location must be
provided with the application.
(h) Discretionary points. USDA Rural Development may assign up to
additional 30 points for discretionary items if the proposed project is
an initial grant. An initial grant means that this would be the first
time grant funds are being requested for the proposed project.
Subsequent grant requests are not eligible for discretionary points.
Evidence must be provided in the application to receive points. In
addition, discretionary points will be awarded in the following situations:
(1) The proposed project is located in a Champion Community--5 points;
(2) The area to be served by the proposed project has had a loss of
a major employer or industry within the last 3 years--5 points;
(3) The area to be served by the proposed project has had a
Presidential or Secretarial natural disaster designation within the
last 3 years--5 points;
(4) The area to be served by the proposed project has had a long-
term decline in population--5 points;
(5) This would be the applicant's first grant award under the RBEG
Program--10 points;
Sec. Sec. 4284.140--4284.141 [Reserved]
Sec. 4284.142 Application.
USDA Rural Development will issue Form AD-622, ``Notice of
Preapplication Review Action,'' or similar letter notifying the
applicant that they are eligible to complete and submit an application
or ineligible for assistance under this subpart due to legal existence
or intended use of grant funds.
Sec. 4284.143 Application Contents.
A complete application will be submitted to the USDA Rural
Development State Office and include the following:
(a) An updated SF-424 signed by the applicant, if necessary;
(b) Preliminary plans and specifications for construction projects;
which will include a preliminary floor plan, site plan and elevations
in sufficient detail for preparing an appraisal along with a
preliminary estimate of construction costs;
(c) Comments from the State Historical Preservation Office or the
Tribal Historical Preservation Office for construction projects;
(d) An independent third-party appraisal if the proposed project is
to purchase real property;
(e) A work plan if the proposed project is for a revolving loan fund;
(f) Written commitments for supplemental funding;
(g) Letters of interest or commitment from small businesses needing
assistance, if applicable;
(h) Small business certification, if applicable;
(i) Letters of interest or commitment from local employers,
schools, training facilities, etc. to show the need of employment or
job advancement opportunities for adult students, if applicable;
(j) A copy of the local or regional plan in which the proposed
project is identified;
(k) Form RD 400-1, ``Equal Opportunity Agreement'' if the proposed
project includes construction;
(l) Form RD 400-4, ``Assurance Agreement';
(m) Form AD 1049, ``Certification Regarding Drug-Free Workplace
Requirements'';
(n) Form AD 1047, ``Certification Regarding Debarment, Suspension,
and Other Responsibility Matters--Primary Covered Transactions'';
(o) RD Instruction 1940-Q, Exhibit A-1, ``Certification for
Contracts, Grants and Loans (Lobbying Activities)'' if the grant
request is over $100,000; and
(p) SF-LLL, ``Disclosure of Lobbying Activities,'' if the grant is
over $100,000 and the applicant has made or has agreed to make any
payments to influence a decision in connection with the specific project.
Sec. 4284.144 Revolving loan fund work plan requirements.
If the grant will be used to create or add to a revolving loan
fund, the requirements of this section must be met. The revolving loan
fund plan governs the operation of the fund and must have sufficient
detail to provide USDA Rural Development with a complete understanding
of what will be accomplished. It must contain the following:
(a) Demonstrated need of the fund including identification of the
proposed project in a local or regional plan and the accomplishments to
be completed with the fund. This should include a list of eligible
small businesses (based on letters of interest or commitments) that
need loans with the anticipated amount needed, purpose, and number of
jobs to be created and/or saved.
(b) Experience of the organization in operating a revolving loan fund;
(c) Marketing and outreach plan with specific timeframes to
complete the proposed accomplishments of the fund;
(d) Key personnel involved in the operation of the fund and their
specific responsibilities;
(e) Availability of other funds and their sources;
(f) Service area where the loans will be offered;
(g) Eligibility criteria, loan purposes, and loan limits of the fund;
(h) Proposed fees, loan interest rate, and loan terms and how they
are determined. These charges should be sufficient to support the
operating expenses of the fund;
(i) Proposed collateral requirements;
(j) Application review and loan committee approval process;
(k) A copy of your application that must include, at a minimum, a
space for the name and address of the loan recipient; loan purpose;
interest rate and terms; location, nature, and scope of the project
being financed; other funding included in the project; type and lien
priority of collateral; and jobs to be created and/or saved.
(l) Process to be followed if a loan applicant is rejected;
(m) Monitoring system for distribution of approved funds and loan
recipient accomplishments;
(n) Monitoring system for financial and activity reports; and
(o) Any other information pertinent to the revolving loan fund.
Sec. Sec. 4284.145-4284.148 [Reserved]
Sec. 4284.149 Application selection.
(a) Pending the availability of sufficient funds, USDA Rural
Development State Offices receive an allocation of funds under this
subpart each fiscal year. State Offices use the scoring criteria as
defined in Sec. 4284.139 to select the highest-ranking applications
until the state allocation has been depleted. State Offices set
internal cut-off dates for receipt of preapplications and attempt to
make the information public knowledge. However, it is recommended that
applicants contact the State Office to find out the specific amounts
available and funding deadlines for this program. Applicants will
receive a Letter of Conditions for grant approval and instructions from
the State Office if the application is selected for funding.
(b) The National Office generally holds a minimal amount of appropriated
[[Page 19815]]
funds for a national reserve competition each fiscal year. State
Offices that have depleted the state allocation are eligible to submit
applications to the National Office for competition. Starting with the
highest-ranking application received nationwide, the highest-ranking
application per state is selected until the reserve is exhausted. This
ensures USDA Rural Development is distributing funds on a geographical
basis. If a tie exists in the competition, projects are selected based
on viability of the projects in accordance with the funds available.
State Offices will submit applications to the National Office for
reserve competition. Applicants will receive a Letter of Conditions and
instructions for grant approval from the USDA Rural Development State
Office if the application is selected for funding.
Sec. Sec. 4284.150-4284.151 [Reserved]
Sec. 4284.152 Letter of Conditions.
The Letter of Conditions establishes conditions that must be
understood and agreed to by the applicant before any obligation of
funds can occur. The applicant must sign a Form RD 1942-46, ``Letter of
Intent to Meet Conditions,'' and a Form RD 1940-1, ``Request for
Obligation of Funds,'' if they wish to accept the conditions of the
grant. These forms will be enclosed with the Letter of Conditions. The
grant will be obligated when the USDA Rural Development State Office
receives an executed Letter of Intent and Request for Obligation of
Funds from the applicant.
Sec. 4284.153 Grant Agreement.
The applicant will also be required to sign a Form RD 4284-1,
``Grant Agreement,'' which is a contract between the grantee and USDA
Rural Development for receipt of grant funds under the RBEG Program.
The Grant Agreement will also be enclosed with the Letter of Conditions
and must be signed and returned to the USDA Rural Development State
Office before any grant funds can be disbursed.
Sec. Sec. 4284.154-4284.155 [Reserved]
Sec. 4284.156 Timeframe for use of grant funds.
The grant period will be established in your Letter of Conditions
for a 12-month timeframe unless USDA Rural Development approves the
scope of work or work plan for a longer period of time.
Sec. 4284.157 Financial management system.
The grantee will provide for a financial management system, which
will include:
(a) Accurate, current, and complete disclosure of the financial
result of each grant.
(b) Records that identify adequately the source and application of
funds for grant-supporting activities, together with documentation to
support the records. These records shall contain information pertaining
to grant awards, authorizations, obligations, unobligated balances,
assets, outlays, income and interest.
(c) Effective control over and accountability for all funds,
property and other assets. Grantee shall adequately safeguard all such
assets and assure that funds are used solely for authorized purposes.
Sec. 4284.158 Grant disbursement.
Grant funds are disbursed on a reimbursement basis except if they
are for revolving loan funds. Grant disbursement for revolving loan
funds will be advanced. The financial management system of the grantee
must provide for effective control and accountability of all funds.
Grant funds may be requested as follows:
(a) Reimbursement requests. An SF-270, ``Request for Advance or
Reimbursement,'' may be submitted to USDA Rural Development once every
30 days for reimbursement on allowable grant expenses. A pro rata
portion of supplemental funds must be included in the request. An SF-
271, ``Outlay Report and Request for Reimbursement for Construction
Programs,'' or similar form may be submitted to USDA Rural Development
once every 30 days on construction projects.
(b) Advance requests. An SF-270 may be submitted once every 30 days
for an advance of funds. A pro rata portion of supplemental funds must
be included in the request for an advance. Before any grant funds can
be advanced, the grantee must submit information on each loan that they
are proposing to make for review and concurrence by USDA Rural
Development. The specific information required is defined in Sec.
4284.184. Grantees must remit any interest earned on advanced grant
funds. Interest should be forwarded to USDA Rural Development on a
quarterly basis.
Sec. Sec. 4284.159-4284.160 [Reserved]
Sec. 4284.161 Insurance requirements.
(a) Fidelity bond coverage will be required on grantees that are
nonprofit organizations. Coverage may be provided either for all
individual positions or persons, or through blanket coverage that
provides protection for all appropriate employees and officials. The
amount of coverage will be at least equal to the maximum amount of
monies that the grantee will have on hand at any one time. The grantee
must renew fidelity bond coverage on a yearly basis if they are
operating a revolving loan fund. There are no fidelity bond coverage
requirements for a public body.
(b) Hazard insurance will be maintained by grantees whose project
involves purchase or improvements to real property or purchase of
machinery or equipment. In the case of a revolving loan fund, the loan
recipient will be required to maintain hazard insurance with a standard
mortgagee clause naming the grantee as beneficiary as long as a lien
exists. The grantee's interest in the insurance will be assigned to
USDA Rural Development, upon USDA Rural Development's request, in the
event of termination of the revolving loan fund. The amount of coverage
should be at least the lesser of the depreciated replacement value of
the property being insured or the amount of the grant or loan. Hazard
insurance includes fire, windstorm, lightning, hail, business
interruption, explosion, riot, civil commotion, vehicle, marine, smoke,
builder's risk, public liability, property damage, and any other hazard
insurance that may be required to protect the property being insured or
the grantee's security.
(c) Worker's compensation insurance will be required on the grantee
and any recipient who receives a loan from a revolving loan fund in
accordance with State law.
(d) Flood insurance will be required on grantees and loan
recipients if their project is located in a special flood or mudslide
hazard area.
Sec. Sec. 4284.162-4284.163 [Reserved]
Sec. 4284.164 Changes in scope of work, work plan or budget.
(a) Prior approval must be obtained from USDA Rural Development for
any of the following changes to the approved project:
(1) Project scope or objectives;
(2) Need to extend the period of availability of funds;
(3) Change in key personnel as specified in the application;
(b) Prior approval must be obtained from USDA Rural Development for
any of the following budget revisions:
(1) Transfer of amounts budgeted for indirect costs to absorb
increases in direct costs, or vice versa;
(2) Transfer of amounts previously budgeted for training allowances
to other categories of expense;
[[Page 19816]]
(3) Costs that require prior approval in accordance with the
applicable OMB cost principles circulars; or
(4) Need for additional funds.
(c) Prior approval must be obtained from USDA Rural Development on
projects that have both construction and nonconstruction activities
before making any fund or budget transfer from the nonconstruction or
construction budgets or vice versa.
(d) Prior approvals will not be valid unless they are in writing
and approved by USDA Rural Development. Failure to obtain prior
approval of changes to the approved project or budget may result in
suspension or termination of grant funds.
Sec. Sec. 4284.165-4284.166 [Reserved]
Sec. 4284.167 Reporting requirements.
(a) Project performance reports. Grantees shall constantly monitor
performance to ensure time schedules and other performance objectives
are being achieved. A project performance report is not required for
construction projects. On-site technical inspections and certified
percentage-of-completion data will serve as the performance monitoring
system for construction projects. This will be done in accordance with
RD Instruction 1942-A, Sec. 1942.18. A project performance report is
required for all non-construction projects on a quarterly basis. The
report is due 30 days after the end of the quarter. The final report
can serve as the last quarterly report. The report should include the
following:
(1) A comparison of actual accomplishments to the objectives
established for that period;
(2) Reasons why established goals were not met;
(3) Any significant developments that would have an adverse or
favorable affect on the overall project objectives. This notification
must include a statement of the action taken or contemplated, and any
assistance needed to resolve the situation;
(4) Objectives and timetables for the next reporting period; and
(5) Additional information on the final report as follows:
(i) Actual accomplishments as a result of the grant, i.e. number of
jobs created, saved, and number of businesses assisted or other
performance goals established in the scope of work.
(ii) What have been the most challenging or unexpected aspects of
this program?
(iii) What advice would the grantee give to other organizations
planning a similar program? These should include strengths and
limitations of the program. If the grantee had the opportunity, what
would they have done differently?
(iv) If an innovative approach was used successfully, the grantee
should describe its program in detail so that other organizations might
consider replication in their areas.
(b) Financial reports. The following financial reports will be
required and are available in any USDA Rural Development State Office:
(1) All projects. An SF 269 or 269A, ``Financial Status Report,''
is required for all nonconstruction and construction projects on a
quarterly basis. The report is due 30 days after the end of the
quarter. SF 269A may be used by the grantee if there is no program
income being generated in the project.
(2) Additional revolving loan fund reports. Grantees will also be
required to submit a Form RD 1951-4, ``Reporting of IRP/RDLF Lending
Activity,'' report on a quarterly basis until all of the grant funds
have been loaned out to small businesses. The report is due 30 days
after the end of the quarter. Thereafter, reports will be required
semiannually 30 days after the end of the period.
(c) Audits. Grantees must provide an annual audit in accordance
with 7 CFR part 3052. USDA Rural Development will inform the grantee of
its auditing requirements.
Sec. Sec. 4284.168-4284.169 [Reserved]
Sec. 4284.170 Site visits.
(a) The grantee is responsible for managing the day-to-day
operations of the project to ensure time schedules are met and that
performance goals are achieved. However, USDA Rural Development will
make site visits, as necessary, to assure compliance with applicable
Federal requirements. After all grant funds have been disbursed for
revolving loan fund, capital improvements or equipment purchase
projects, a site visit will occur every 3 years until the project is
transferred, terminated, disposed of, or has met its useful life term
in accordance with the Grant Agreement.
(b) During the site visit the USDA Rural Development representative
will perform and document due diligence if actual or potential site
contamination by hazardous materials or petroleum products is observed
on the site or adjacent sites. Due diligence documentation is necessary
to assure USDA Rural Development maintains lender liability protection
under the Comprehensive Environmental Response, Conservation and
Liability Act (CERCLA).
(c) Site visits can include a civil rights compliance review; a
physical inventory of any property purchased or improved with grant
funds or equipment purchased with grant funds; a revolving loan fund
review to ensure the fund is still operating in accordance with the
work plan, if applicable; and other reviews as needed to ensure the
project is in compliance with the Letter of Conditions and Grant Agreement.
Sec. Sec. 4284.171-4284.172 [Reserved]
Sec. 4284.173 Record retention.
USDA Rural Development must have access to grantees records
including financial, supporting documents, statistical or other records
pertinent to the grant. Records must be retained for 3 years after the
date of the final grant disbursement unless there is:
(a) Any litigation, claim, negotiation, audit or other action
involving the records that have been started before the expiration date
of the 3-year period. The records must be retained until completion of
the action and resolution of all issues that arise from it or until the
end of the regular 3-year period, whichever is later.
(b) Real property; equipment; and revolving loan fund project
records. Records must be retained until transfer, termination,
disposition, or replacement occurs or the useful life term has expired
in accordance with the grant agreement. The 3-year retention period
would start the date of transfer, termination, disposition, replacement
or the date the useful life term has expired.
(c) Indirect cost rate proposals, cost allocation plans, etc.
Records must be retained for 3 years from the date the proposal is
submitted for negotiation. If the proposal is not required to be
submitted for negotiation, then the 3-year retention period starts the
end of the fiscal year covered by the proposal.
Sec. Sec. 4284.174-4284.177 [Reserved]
Sec. 4284.178 Disposition of real property, equipment, and supplies.
(a) If grant funds are used to acquire or improve real property,
and if the property is sold or is no longer needed for any reason, USDA
Rural Development will have an interest in the current fair market
value of the property in proportion to its participation in the
project. Installation or improvements to utilities or streets in the
public right of way is considered improving the surrounding property or
land owned by the grantee. USDA Rural Development also has the right to
the current fair market value of that property in proportion to its
participation in the project if that property is sold or not used for
its originally approved purpose. The
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grantee may be required to file a Notice of Interest when grants funds
are used to purchase or improve real property unless it is prohibited
by State law.
(b) If grant funds are used to purchase equipment and the equipment
is no longer needed for any reason, the grantee may retain, sell or
otherwise dispose of the equipment with no further obligation to USDA
Rural Development if the current fair market value of the equipment
(per unit) is less than $5,000. However, if the current fair market
value (per unit) is $5,000 or more USDA Rural Development has the right
to an amount calculated by multiplying the current fair market value
(per unit) if it is retained or proceeds from the sale if sold by the
Federal share of the equipment.
(c) If the grant funds are used to purchase supplies and the grant
is closed out, the grantee may keep unused supplies if the total
aggregate fair market value of the supplies was less than $5,000.
Otherwise, the grantee will compensate USDA Rural Development the
current fair market value of the unused supplies to its participation.
Sec. Sec. 4284.179-4284.180 [Reserved]
Sec. 4284.181 Construction requirements.
Section 1942.18 of this title will be followed in the planning and
performance of construction projects.
Sec. Sec. 4284.182-4284.183 [Reserved]
Sec. 4284.184 Clarification of revolving loan fund operation.
The following paragraphs will provide clarification on operating
revolving loan funds under this subpart:
(a) A revolving loan fund must be operated on a long-standing basis
and not duplicate services provided by an existing loan fund serving
the same geographic area. It should not be established to assist one
small business with a short-term working capital need and never have
another loan made from it to assist other small businesses.
(b) A third-party with required experience can be hired to do the
credit and financial analysis, but the grantee is still responsible for
approving loans and managing the fund. USDA Rural Development will
review and concur in any service agreement when this is the case before
the grant is approved.
(c) Grantees are required to deposit grant funds and the 20 percent
matching funds into a separate FDIC insured account. A control
agreement will be executed to allow USDA Rural Development a security
interest in the revolving loan fund deposit account as well as access
to account information. The control agreement will also ensure that the
deposit account/revolving loan fund will not be closed without prior
approval of USDA Rural Development.
(d) Loans made from the revolving loan fund must be for purposes in
accordance with the revolving loan fund work plan. However, the loan
purposes are limited to the eligible purposes defined in paragraphs (a)
through (c) of Sec. 4284.109, working capital and debt refinancing.
(e) Loans made from the revolving loan fund must be economically
feasible to ensure sustainability of the revolving loan fund.
(f) The receivables created by making loans from the fund, the
grantee's security interest in collateral pledged by small businesses,
collections on the receivables, interest, fees, and any other income
from the operation of the revolving loan fund are considered to be part
of the revolving loan fund.
(g) All debt instruments and collateral documents used by the
grantee in connection with making loans from the fund must be
assignable. Security for a loan from the revolving loan fund to a third
party will be negotiated between the grantee and the third party within
the policies established in the work plan.
(h) USDA Rural Development will review and concur in each loan the
grantee is proposing to make until all of the grant funds are expended.
Eligibility, environmental concerns, and other issues necessary to
ensure sustainability of the fund will be reviewed. The following will
be required for each loan:
(1) A copy of the application;
(2) Loan Committee recommendation or write-up;
(3) Intergovernmental comments;
(4) Small business certification;
(5) Form RD 1940-20;
(6) Form AD 1048, ``Certification of Debarment, Suspension,
Ineligibility and Voluntary Exclusion--Lower Tier Covered
Transactions;'' and
(7) Form RD 400-4.
(i) USDA Rural Development loan review and concurrence will not be
necessary once the grantee lends out an amount equal to the grant.
However, the grantee must continue to operate the revolving loan fund
in accordance with the work plan, collect civil rights data and obtain
all required items defined in paragraphs (h)(1) through (7) of this
section for each loan made thereafter. USDA Rural Development will
conduct a site visit at least every 3 years to ensure the grantee is
complying with all Federal requirements and administering the fund in
accordance with the work plan.
(j) Grantees may use principal and interest payments plus fee
income received from their borrowers (revolved funds) for debt service,
administrative expenses, or making additional loans.
(k) A reasonable amount of revolved funds should be used to create
a reserve for bad debts. USDA Rural Development recommends a reserve
for bad debts of 6 percent of outstanding loans, which can be
accumulated over 3 years and should be maintained from then on.
(l) Grantees may also use up to a maximum of 20 percent of interest
and fee income per fiscal year for the administrative costs associated
with operating the revolving loan fund.
(m) Failure, inability or unwillingness of the grantee to carry out
or comply with the work plan, grant agreement or any applicable Federal
or State law is cause for termination. If the grant is terminated, USDA
Rural Development takes control of the deposit account in which the
fund is located, the pending note receivables and any security interest
pledged on the pending note receivables.
Sec. Sec. 4284.185-4284.188 [Reserved]
Sec. 4284.189 Grant termination.
The grant award can be terminated in the following situations:
(a) Termination for cause. If the grantee fails to comply with the
conditions of the Letter of Conditions or the Grant Agreement, USDA
Rural Development can terminate the grant. USDA Rural Development will
notify the grantee in writing of the decision to terminate, including
the reasons and the effective date of the grant termination.
(b) Termination by mutual agreement. The grantee must provide
written notification to USDA Rural Development explaining the reasons
why they wish to terminate the grant and the proposed effective date.
If USDA Rural Development mutually agrees that the continuation of the
project would not produce beneficial results the grant can be terminated.
(c) Deobligation of grant funds. USDA Rural Development will
automatically deobligate grant funds if a project is not completed
within 3 years from the date of obligation.
Sec. 4284.190 Transfer and assumptions.
USDA Rural Development will not approve any transfer and
assumptions on grants awarded under this subpart.
Sec. Sec. 4284.191-4284.193 [Reserved]
Sec. 4284.194 Appeal rights.
The applicant or grantee may have review or appeal rights on
adverse decisions made by USDA Rural
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Development. Written instructions will be provided to the applicant or
grantee by USDA Rural Development when review or appeal rights are
applicable in accordance with 7 CFR part 11.
Sec. Sec. 4284.195-4284.200 [Reserved]
Dated: March 29, 2007.
Thomas C. Dorr,
Under Secretary, Rural Development.
[FR Doc. 07-1922 Filed 4-19-07; 8:45 am]
BILLING CODE 3410-XY-P