[Federal Register Volume 61, Number 23 (Friday, February 2, 1996)]
[Rules and Regulations]
[Pages 3779-3787]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1578]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
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Federal Register / Vol. 61, No. 23 / Friday, February 2, 1996 / Rules
and Regulations
[[Page 3779]]
DEPARTMENT OF AGRICULTURE
Rural Housing Service
Rural Business--Cooperative Service
Rural Utilities Service
Farm Service Agency
7 CFR Parts 1901, 1940, 1951, and 2003
Rural Business--Cooperative Service
Rural Utilities Service
7 CFR Chapter XLII and Part 4284
RIN 0570-AA02
Rural Technology and Cooperative Development Grants
AGENCY: Rural Housing Service, Rural Business-Cooperative Service,
Rural Utilities Service, and Farm Service Agency, USDA.
ACTION: Final rule.
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SUMMARY: The Rural Business-Cooperative Service (RBS) revises its
regulations for Rural Technology and Cooperative Development Grants
(RTCDG) and amends other regulations utilized by RBS in administering
its grant programs. This action is necessary to comply with legislation
which authorizes grants for establishing and operating centers for
rural technology or cooperative development. The intended effect of
this action is to implement this grant program.
EFFECTIVE DATE: February 2, 1996.
FOR FURTHER INFORMATION CONTACT: Joseph R. Binder, Director, Specialty
Lenders Division, Rural Business-Cooperative Service, US Department of
Agriculture, Room 2245, South Agriculture Building, 14th and
Independence Ave. SW, Washington, D.C. 20250. Telephone (202) 720-1400.
SUPPLEMENTARY INFORMATION:
Classification
We are issuing this final rule in conformance with Executive Order
12866, and the Office of Management and Budget has determined that it
is not a ``significant regulatory action.''
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.
Executive Order 12778
This final rule has been reviewed under Executive Order 12778,
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 the regulations of
the Agency at 7 CFR, part 1900, subpart B, or those regulations
published by the Department of Agriculture to implement the provisions
of the National Appeals Division as mandated by the Department of
Agriculture Reorganization Act of 1994, whichever is applicable, 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.
Intergovernmental Review
This program is listed in the Catalog of Federal Domestic
Assistance under number 10.771 and is subject to the provisions of
Executive Order 12372 which requires intergovernmental consultation
with state and local officials. RBS has conducted intergovernmental
consultation in the manner delineated in FmHA Instruction 1940-J.
National Performance Review
This regulatory action is being taken as part of the National
Performance Review program to eliminate unnecessary regulations and
improve those that remain in force.
Unfunded Mandate Reform Act of 1995
Title II of the Unfunded Mandate 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
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
the UMRA generally requires RBS 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 today's rule is not subject to
the requirements of sections 202 and 205 of the UMRA.
Paperwork Reduction Act
The information collection and record keeping requirements
contained in these regulations were previously approved by the Office
of Management and Budget (OMB) under the provisions of 44 U.S. C.
Chapter 35 and have been assigned OMB control numbers 0575-0018, 0575-
0066, and 0570-0006, in accordance with the Paperwork Reduction Act of
1980. This final rule does not impose any new information or record
keeping requirements from those approved by OMB.
Background
The RTCDG program was established by interim rule on August 12,
1994 (59 Fed. Reg. 41386-98). The public comment period ended October
11, 1994. The RTCDG program is authorized by section 310B(f) through
(h) of the Consolidated Farm and Rural Development Act (7 U.S.C.
Sec. 1932 Act). The primary objective of the program is to improve the
economic condition of rural areas. The RTCDG program will achieve this
objective by supporting the creation or enhancement of institutions
including cooperatives capable of
[[Page 3780]]
promoting the development and commercialization of new services,
products, processes, and enterprises. The program is administered
through Rural Economic and Community Development (RECD) State Offices
acting on behalf of RBS. RBS, formerly known as the Rural Business and
Cooperative Development Service, is the successor of the Rural
Development Administration as to the RTCDG program pursuant to the
Department of Agriculture Reorganization Act of 1994 (Pub. L. 103-354).
Discussion of Public Comments
A total of 14 commenters offered comments to the interim rule. The
commenters represented the federal agencies, Arkansas Enterprise
Groups, National Rural Cooperative Development Task Force, New York
Department of City & Regional Planning, Winrock International in
Arkansas, Southwest Grain of North Dakota, The Maine Ambulatory Care
Coalition, and The North Dakota Associations of Rural Electric and
Telephone Cooperatives.
Several respondents objected to the kinds of demographic data
required because they believe it was not available, did not accurately
represent, or only partially represented the distressed economic
conditions of rural areas. The Agency agrees and, therefore, amends the
regulation to allow applicants to use their choice of data as long as
they reflect the intent of serving economically distressed communities
and the data are from established official independent sources. This
change will give applicants flexibility to use available data that best
describe the conditions impacted by their proposal. The Agency,
however, still will give preference in selecting those projects
demonstrating their ability to effectively serve rural areas with few
rural industries and agribusinesses, high levels of unemployment or
underemployment, high rates of outmigration of people, businesses, and
industries, or low levels of per capita income. This preferential
treatment is required by Conact Sec. 310B (f) (3).
Three respondents objected to the use of the terms, ``industry''
and ``agribusiness'' because there were no definitions provided and
there is no consistent source of comprehensive data available. These
terms also did not explain how to consider other points such as
temporary businesses, and small vs. large businesses. These comments
were adopted to allow applicants to use their choice of data with
regard to industries and agribusinesses as long as they provided an
accurate, comprehensive description of the economic conditions of their
community and their data are secured from established official
independent sources.
Three respondents recommended that a higher score or priority be
given to applicants who collaborate with others. The comment was not
adopted because collaboration will strengthen the preapplication in all
or most of the listed selection criteria so that it would not be a
distinguishing factor. One respondent suggested that a higher priority
be given to regional and multistate projects. The rule was not amended
to adopt this comment because it would work unfairly against those
organizations which do not have multistate responsibilities. Under the
final rule there is no prohibition against multistate projects. In
fact, applicants who propose multistate projects may get more points
because of their project's ability to demonstrate national
applicability of innovations developed under the program. One of the
preferential selection criteria is the transferability or demonstration
value of the project in helping rural areas outside the project area.
One respondent suggested that a higher priority be given to
applicants in states who have not received RTCDG grants. This comment
was not adopted because it would work unfairly against organizations
which produce multiple quality applications.
One respondent suggested that a higher priority be given to
organizations which administer multiple projects through several
organizations. Another respondent suggested that fewer points be given
to organizations which administer multiple projects. These comments
were not adopted because the Agency sees no clear advantages or
disadvantages to funding organizations who administer multiple
projects. The possibility exists that organizations which administer
multiple projects would have a broader perspective, a better ability to
disseminate their innovations nationally, and a stronger capacity to
manage projects effectively; however, the possibility also exists that
this organization would increase overhead costs and provide fewer
resources to benefit rural communities. Thus, the Agency finds no basis
for treating multiple project applicants differently than single
project applicants.
Two respondents suggested that a higher priority be given to
organizations with demonstrated ability to administer effective
projects. The Agency agrees and has adopted the comment as part of the
criteria for scoring. Specifically, the Agency will consider the
experience, organizational skills, and background needed to
successfully carry out the project.
One respondent suggested that the requirement for 25 percent
matching funds be limited to administrative costs. The rule was not
amended because program funds are limited and it is believed that
organizations need to match some of the funding to demonstrate local
support for the application.
One respondent suggested that all projects must be exclusively
rural. The comment was not adopted. The projects will serve rural
areas; however, there is nothing wrong with indirect benefits
supporting urban interests as well as rural.
Two respondents recommended that the requirement to secure
``evidence of support'' for the project from all of the affected local
governmental bodies be dropped. The rule was not amended because all
affected governmental bodies should be on record as supporting the
project. The time spent documenting this support will be worth the time
spent in order to avoid misunderstandings later.
One respondent recommended that projects be selected in all major
rural areas of the United States. The comment was not adopted in order
to allow for the highest quality preapplications to be selected.
One respondent recommended that a different theme be selected each
year. The Agency agrees that this is a desirable policy and plans to
adopt it to the extent possible in keeping with rule-making
requirements of the Administrative Procedures Act.
One respondent recommended that the preapplications be sent to the
RECD State Office for initial processing to determine eligibility and
to ensure that all necessary forms were in place before sending the
preapplications to the RBS National Office for scoring and selection.
The RBS National Office will follow this process. This is a better
process because the RECD State Office employees know the area,
applicants, and conditions of the communities better and can advise the
National Office. Organizations who prepare multistate preapplications
are to submit their preapplications through the state where the
organization's headquarters are located.
One respondent commented that using RTCDG funds for revolving loans
should be given a low priority. The Agency agrees that the RTCDG
program should emphasize those statutory factors that will benefit
economically distressed communities. However, Conact Sec. 310B (f) (2)
(C) specifically
[[Page 3781]]
provides that an acceptable center activity is a program providing
loans and grants to individuals, small businesses, and cooperatives in
rural areas served by the center for purposes of generating,
evaluating, developing, and commercializing new products, processes, or
services. The Agency will continue to carry out this mandate in its
review and selection process.
In addition to the changes made in response to public comments, the
Agency has made some administrative revisions. The Agency has revised
its selection criteria to provide for Administrator's points. The
Administrator may give emphasis to geographical distribution,
interagency cooperation, or other appropriate factors. This change will
allow the Administrator the flexibility to choose the best applicants
for limited grant funds.
The Agency has added definitions for ``center'' and ``subcenter''
for clarity.
The Agency also has added references to the applicability of
recently adopted departmental regulations to RTCDG grants made to
nonprofit institutions. The Uniform Administrative Requirements For
Grants and Agreements with Institutions of Higher Education, Hospitals,
and Other Non-profit Organizations, 7 CFR part 3019, were adopted by
interim final rule (60 Fed. Reg. 44122-39) on August 24, 1995.
The final rule removes the points from the selection criteria. The
points assigned to each of the selection criteria will be given in the
Federal Register notice to be published in advance each year. This will
allow the Agency to adjust the priorities given to each of the
preferential factors on a yearly basis to best meet the objectives set
forth in the regulations.
All references to Farmers Home Administration in the organization
procedures of 7 CFR part 2003 will be left in place but will be revised
in the near future. At that time they will be changed to reflect the
current names of the new agencies which were formed as a result of the
reorganization.
Internal management procedures have been removed from the
regulations but will appear in internal agency instructions.
List of Subjects
7 CFR Part 1901
Civil rights, Compliance reviews, Fair housing, Minority groups.
7 CFR Part 1940
Allocations, Administrative practice and procedure, Agriculture,
Grant programs--Housing and community development, Loan programs--
Agriculture, Rural areas.
7 CFR Part 1951
Account servicing, Grant programs--Housing and community
development, Reporting requirements, Rural areas.
7 CFR Part 2003
Organization and functions (Government agencies).
7 CFR Part 4284
Business and Industry, Grant programs--Housing and community
development, Rural areas.
Accordingly, chapters XVIII and XLII, title 7, Code of Federal
Regulations, are amended as follows:
CHAPTER XVIII--RURAL HOUSING SERVICE, RURAL BUSINESS COOPERATIVE
SERVICE, RURAL UTILITIES SERVICE, AND FARM SERVICE AGENCY
PART 1901--PROGRAM-RELATED INSTRUCTIONS
1. The authority citation for part 1901, subpart E, is revised as
follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 40 U.S.C. 442; 42 U.S.C.
1480, 2942.
Subpart E--Civil Rights Compliance Requirements *C*
2. Section 1901.204 is amended by revising paragraph (a)(27) to
read as follows:
Sec. 1901.204 Compliance reviews.
(a) * * *
(27) Rural Technology and Cooperative Development Grants in subpart
F of part 4284 of this title.
* * * * *
PART 1940--GENERAL
3. The authority citation for part 1940 is revised to read as
follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
Subpart L--Methodology and Formulas for Allocation of Loan and
Grant Program Funds
Sec. 1940.590 [Removed and Reserved]
4. Section 1940.590 is removed and reserved.
PART 1951--SERVICING AND COLLECTIONS
5. The authority citation for part 1951 is revised to read as
follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
Subpart E--Servicing of Community and Insured Business Programs
Loans and Grants
6. Section 1951.201 is revised to read as follows:
Sec. 1951.201 Purpose.
This subpart prescribes the Rural Economic and Community
Development (RECD) mission area policies, authorizations, and
procedures for servicing Water and Waste Disposal System loans and
grants; Community Facility loans; Rural Business Enterprise/Television
Demonstration grants; loans for Grazing and other shift-in-land-use
projects; Association Recreation loans; Association Irrigation and
Drainage loans; Watershed loans and advances; Resource Conservation and
Development loans; Insured Business loans; Economic Opportunity
Cooperative loans; loans to Indian Tribes and Tribal Corporations;
Rural Renewal loans; Energy Impacted Area Development Assistance
program grants; National Nonprofit Corporation grants; Water and Waste
Disposal Technical Assistance and Training grants; Emergency Community
Water Assistance grants; System for Delivery of Certain Rural
Development Programs panel grants; section 306C WWD loans and grants in
subpart E of part 4284 of this title; and Rural Technology and
Cooperative Development Grants in subpart F of part 4284 of this title.
RECD State Offices act on behalf of the Rural Housing Service, the
Rural Business-Cooperative Service and the Rural Utilities Service as
to loan and grant programs formerly administered by the Farmers Home
Administration, the Rural Development Administration, and the Rural
Electrification Administration. Loans sold without insurance to the
private sector will be serviced in the private sector and will not be
serviced under this subpart. The provisions of this subpart are not
applicable to such loans. Future changes to this subpart will not be
made applicable to such loans.
* * * * *
PART 2003--ORGANIZATION
7. The authority citation for part 2003 is revised to read as
follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480; Public
Law 100-82, 101 Stat. 545.
[[Page 3782]]
Subpart A--Functional Organization of the Farmers Home
Administration or its Successor Agency Under Public Law 103-354
Exhibit A to part 2003 [Amended]
8. In part 2003, Exhibit A of subpart A, paragraph 2, under the
heading of Assistant Administrator--Community and Business Programs is
amended by revising ``rural technology development grants'' to read
``rural technology and cooperative development grants.''
9. The heading of 7 CFR chapter XLII is revised to read as follows:
CHAPTER XLII--RURAL BUSINESS-COOPERATIVE SERVICE AND RURAL UTILITIES
SERVICE, DEPARTMENT OF AGRICULTURE
Chapter XLII (Parts 4284 and 4285) [Amended]
10. In 7 CFR chapter XLII (consisting of parts 4284 and 4285),
everywhere ``Farmers Home Administration'', ``FmHA'', ``Rural
Development Administration'', or ``RDA'' appear, except ``FmHA
Instruction'' and ``Form FmHA'' references, add the phrase ``or its
successor agency'' immediately thereafter.
PART 4284--GRANTS
11. The authority citation for part 4284 is revised to read as
follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.
12-13. Subpart F of part 4284 is revised to read as follows:
Subpart F--Rural Technology and Cooperative Development Grants
Sec.
4284.501 Purpose.
4284.502 Policy.
4284.503 [Reserved]
4284.504 Definitions.
4284.505 Applicant eligibility.
4284.506-4284.514 [Reserved]
4284.515 Grant purposes.
4284.516 Ineligible grant purposes.
4284.517-4284.526 [Reserved]
4284.527 Other considerations.
4284.528 Application processing.
4284.529-4284.539 [Reserved]
4284.540 Grant selection criteria.
4284.541 Grant approval, fund obligation, grant closing, and third-
party financial assistance.
4284.542-4284.556 [Reserved]
4284.557 Fund disbursement.
4284.558 Reporting.
4284.559-4284.570 [Reserved]
4284.571 Audit requirements.
4284.572 Grant servicing.
4284.573 Programmatic changes.
4284.574 Subsequent grants.
4284.575 Grant suspension, termination, and cancellation.
4284.576-4284.586 [Reserved]
4284.587 Exception authority.
4284.588-4284.599 [Reserved]
4284.600 OMB control number.
Subpart F-Rural Technology and Cooperative Development Grants
Sec. 4284.501 Purpose.
(a) This subpart outlines the Rural Business-Cooperative Service's
(RBS) policies and authorizations and sets forth procedures to provide
grants for technology and cooperative development in rural areas.
(b) Grants for establishing and operating centers for rural
technology or cooperative development will be for the primary purpose
of improving the economic condition of rural areas by promoting the
development (through technological innovation, cooperative development,
and adaptation of existing technology) and commercialization of new
services and products that can be produced or provided in rural areas;
new processes that can be utilized in the production of products in
rural areas; and new enterprises or cooperatives that can add value to
on-farm production through processing or marketing.
(c) Copies of all forms and Instructions referenced in this subpart
are available in the RBS National Office or any RECD State Office.
Sec. 4284.502 Policy.
(a) The grant program will be used to assist in the economic
development of rural areas.
(b) Funds allocated for use in accordance with this subpart are
also to be considered for use by Native American tribes within the
state regardless of whether state development strategies include Indian
reservations within the state's boundaries. Native American tribes
residing on such reservations must have equal opportunity along with
other rural residents to participate in the benefits of these programs.
This includes equal application of outreach activities of RECD
servicing offices.
Sec. 4284.503 [Reserved]
Sec. 4284.504 Definitions.
Approval official--Any authorized agency official.
Center--The place established and operated by the grantee for rural
technology or cooperative development.
Cooperative--An association organized to provide a specific service
with open membership, equality in ownership and control, limited return
on members' capital, and equitable methods to distribute any excess
earnings back to its members.
Cooperative development--The startup, expansion, or operational
improvement of a cooperative which will promote the development of new
services and products that can be produced or provided in rural areas,
new processes that can be utilized in the production of products in
rural areas, or new enterprises that can add value to on-farm
production through processing or marketing. Operational improvement
includes making the cooperative more efficient, better managed, etc.
Economic development--The growth of an area as evidenced by
increases in total income, employment opportunities, decreased
outmigration of populations, value of production, increased
diversification of industry, higher labor force participation rates,
increased duration of employment, higher wage levels, or gains in other
measurements of economic activity, such as land values.
Nonprofit institution--Any organization or entity, including an
accredited institution of higher education, no part of the net earnings
of which inures, or may lawfully inure, to the benefit of any private
shareholder or individual.
Project--The undertaking for which funds will be used to develop or
operate a technology or cooperative development center.
Public body--Any state, county, city, township, incorporated town
or village, borough, authority, district, economic development
authority, or Indian tribe on federal and state reservation or other
federally recognized Indian tribe in rural areas.
RBS--The Rural Business-Cooperative Service, an agency of the
United States Department of Agriculture, or a successor agency.
RECD--Rural Economic and Community Development mission area.
Rural and rural area--Includes all territory of a state that is not
within the outer boundary of any city having a population of 50,000 or
more and its immediately adjacent urbanized and urbanizing areas with a
population density of more than 100 persons per square mile, as
determined by the Secretary of Agriculture according to the latest
decennial census of the United States.
Servicing office. Any RECD State Office or successor office.
Small business--A business which does not exceed the maximum number
of employees or annual receipts allowed for a concern (including its
affiliates) to be considered small according to the established size
standards for Small Business Administration (SBA) assistance as set
forth in Sec. 121.601, 13 CFR, part 121. The business may be operated
on a profit or nonprofit basis but must rely primarily on revenues of
the business for operation rather than outside support.
[[Page 3783]]
State--Any of the 50 States, 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.
Subcenter--A unit of a center acting under the same direction as
and having a purpose consistent with that of the center.
Technology--The application of science to industrial or commercial
objectives. The entire body of methods and material used to achieve
such objectives.
Technology development--The creation of new technology or the use
and application of existing technology to promote the development and
commercialization of new products, new processes, and new services that
can be produced or provided in rural areas.
Urbanized area--An area immediately adjacent to a city having a
population of 50,000 or more which, for general social and economic
purposes, constitutes a single community and has a boundary contiguous
with that of the city. Such community may be incorporated or
unincorporated to extend from the contiguous boundaries to recognizable
open country, less densely settled areas, or natural boundaries such as
forests or water. Minor open spaces such as airports, industrial sites,
recreational facilities, or public parks shall be disregarded. Outer
boundaries of an incorporated community extend at least to its legal
boundaries. Cities which may have a contiguous border with another
city, but are located across a river from such city, are recognized as
a separate community and are not otherwise considered a part of an
urbanized or urbanizing area, as defined in this section, are not in a
nonrural area.
Urbanizing area--A community which is not now, or within the
foreseeable future not likely to be, clearly separate from and
independent of a city of 50,000 or more population and its immediately
adjacent urbanized areas. A community is considered ``separate from''
when it is separated from the city and its immediately adjacent
urbanized area by open country, less densely settled areas, or natural
barriers such as forests or water. Minor open spaces such as airports,
industrial sites, recreational facilities, or public parks shall be
disregarded. A community is considered ``independent of'' when its
social and economic structure (e.g. government; educational, health,
and recreational facilities; and business, industry, tax base, and
employment opportunities) is not primarily dependent on the city and
its immediately adjacent urbanized areas.
Sec. 4284.505 Applicant eligibility.
(a) Grants may be made to public bodies or nonprofit institutions.
(b) Grants may be made for technology and cooperative development
in ``rural areas.'' In determining whether an area is rural, the Agency
will determine whether the area is urbanized or urbanizing and then the
population density per square mile. All such density determinations
will be made on the basis of minor civil division or census county
division as used by the Bureau of the Census. In making the density
calculations, large nonresidential tracts devoted to urban land uses
such as railroad yards, airports, industrial sites, parks, golf
courses, and cemeteries or land set aside for such purposes will be
excluded.
(c) An outstanding judgement obtained against an applicant by the
United States in a Federal Court (other than in the United States Tax
Court), which has been recorded, shall cause the applicant to be
ineligible to receive any grant or loan until the judgement is paid in
full or otherwise satisfied. RBS grant funds may not be used to satisfy
the judgement.
Secs. 4284.506-4284.514 [Reserved]
Sec. 4284.515 Grant purposes.
Grant funds may be used to pay up to 75 percent of the costs for
establishing or operating centers for rural technology or cooperative
development. Applicant's contribution may be in cash or third party in-
kind contribution in accordance with parts 3015, 3016 and 3019 of this
title and must be from nonfederal funds except that a loan from another
federal source can be used for the applicant's contribution. Grant
funds may be used for, but are not limited to, the following purposes:
(a) Technology research, investigations, and basic feasibility
studies in any field or discipline for the purpose of generating
principles, facts, technical knowledge, new technology, or other
information that may be useful to rural industries, cooperatives,
agribusinesses, and other persons or entities in rural areas served by
such centers in the development and commercialization of new products,
processes, or services.
(b) The collection, interpretation, and dissemination of
principles, facts, technical knowledge, new technology, or other
information that may be useful to rural industries, cooperatives,
agribusinesses, and other persons or entities in rural areas served by
the center in the development and commercialization of new products,
processes, or services.
(c) Providing training and instruction for individuals residing in
rural areas served by the center with respect to the development
(through technological innovation, cooperative development, and
adaptation of existing technology) and commercialization of new
products, processes, or services.
(d) Providing loans and grants to individuals, small businesses and
cooperatives in rural areas for purposes of generating, evaluating,
developing and commercializing new products, processes, or services.
(e) Providing technical assistance and advisory services to
individuals, small businesses, cooperatives, and industries in rural
areas served by the center for purposes of developing and
commercializing new products, processes, or services.
(f) Providing research and support to individuals, small
businesses, cooperatives, and industries in rural areas served by the
center for purposes of developing new agricultural enterprises to add
value to on-farm production through processing or marketing.
(g) Paying up to 75 percent of the administrative costs of the
applicant in carrying out its projects.
(h) Equipment and materials necessary to carry out other eligible
grant purposes under this section.
Sec. 4284.516 Ineligible grant purposes.
Grant funds may not be used to:
(a) Pay more than 75 percent of project costs.
(b) Pay more than 75 percent of administrative costs.
(c) Duplicate current services or replace or substitute support
previously provided.
(d) Pay costs of preparing the application package for funding
under this program.
(e) Pay costs incurred prior to the effective date of the grant
made under this subpart.
(f) Pay for building construction or the purchase of real estate or
vehicles; improving or renovation of office space; or repair or
maintenance of privately-owned property.
(g) Fund political activities.
(h) Pay for assistance to any private business enterprise which
does not 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.
[[Page 3784]]
Secs. 4284.517-4284.526 [Reserved]
Sec. 4284.527 Other considerations.
(a) Civil rights compliance requirements. All grants made under
this subpart are subject to the requirements of title VI of the Civil
Rights Act of 1964 which prohibits discrimination on the basis of race,
color, and national origin as outlined in subpart E of part 1901 of
this title. In addition, the grants made under this subpart are subject
to the requirements of section 504 of the Rehabilitation Act of 1973,
as amended, which prohibits discrimination on the basis of handicap;
the requirements of the Age Discrimination Act of 1975 which prohibits
discrimination on the basis of age; and title III of the Americans with
Disabilities Act, Pub. L. 101-336, which prohibits discrimination on
the basis of disability by private entities in places of public
accommodations.
(b) Environmental requirements.
(1) General applicability. Unless specifically modified by this
section, the requirements of subpart G of part 1940 of this title apply
to this subpart. For example, the Agency's general and specific
environmental policies contained in Secs. 1940.303 and 1940.304 of
subpart G of part 1940 of this title must be met. Although the purpose
of the grant program established by this subpart is to improve
business, industry, and employment in rural areas, this purpose is to
be achieved, to the extent practicable, without adversely affecting
important environmental resources of rural areas such as important
farmland and forest lands, prime rangelands, wetland, and flood plains.
Prospective recipients of grants, therefore, must consider the
potential environmental impacts of their applications at the earliest
planning stages and develop plans and projects that minimize the
potential to adversely impact on the environment.
(2) Technical assistance. An application for a technical assistance
project is generally excluded from the environmental review process by
Sec. 1940.333 of subpart G of part 1940 of this title. However, as
further specified in that section, the grantee of a technical
assistance grant, in the process of providing technical assistance,
must consider and generally document within their plans the potential
environmental impacts of the plan and recommendations provided to the
recipient of the technical assistance.
(3) Applications for grants to provide financial assistance to
third-party recipients. As part of the preapplication, the applicant
must provide a complete Form FmHA 1940-20, ``Request for Environmental
Information,'' for each project specifically identified in its plan to
provide financial assistance to third parties who will undertake
eligible projects with such assistance. The Agency will review the
preapplication, supporting materials, and any required Forms FmHA 1940-
20 and initiate an appropriate environmental review for the
preapplication. This assessment will focus on the potential cumulative
impacts of the projects as well as any environmental concerns or
problems that are associated with individual projects that can be
identified at this time from the information submitted. Because the
Agency's approval of this type of grant application does not constitute
a commitment to the use of grant funds for any identified third-party
projects (see Sec. 4284.541 of this subpart), no public notification
requirements will apply to the preapplication. After the grant is
approved, each third-party project to be assisted under the grant will
undergo the applicable environmental review and public notification
requirements in subpart G of part 1940 of this title prior to the
Agency providing its consent to the grantee to assist the third-party
project. If the preapplication reflects only one specific project which
is specifically identified as the third-party recipient for financial
assistance, the Agency may perform the appropriate environmental
assessment with no public notification. However, the applicant must be
advised that if the recipient or project changes after the grant is
approved, the project to be assisted under the grant will undergo the
applicable environmental review and public notification requirements .
(c) Government wide debarment and suspension (non-procurement) and
requirements for drug-free workplace. Persons who are disbarred or
suspended are excluded from federal assistance and benefits including
grants under this subpart. Grantees must certify that they will provide
a drug free workplace. See part 3017 of this title and FmHA Instruction
1940-M (available in any RECD State Office) for further guidance.
(d) Restrictions on lobbying. All grants must comply with the
lobbying restrictions set forth in part 3018 of this title.
(e) Excess capacity or transfer of employment.
(1) If a proposed grant is for more than $1 million and will
increase direct employment by more than 50 employees, the applicant
will be requested to provide written support for an Agency
determination that the proposal will not result in a project which is
calculated to, or likely to, result in:
(i) The transfer of any employment or business activity from one
area to another (this limitation will not prohibit assistance for the
expansion of an existing business entity through the establishment of a
new branch, affiliate, or subsidiary of such entity if the expansion
will not result in an increase in the unemployment in the area of
original location or in any other area where such entity conducts
business operations, or
(ii) An increase in the production of goods, materials, or
commodities or the availability of services or facilities in the area
when there is not sufficient demand for such goods, materials,
commodities, services, or facilities to employ the efficient capacity
of existing competitive commercial or industrial enterprises, unless
such financial or other assistance will not have an adverse effect upon
existing competitive enterprises in the area. The applicant's written
support will consist of a resolution from the applicant and Form FmHA
449-22, ``Certification of Non-Relocation and Market and Capacity
Information Report,'' from each existing and future occupant of the
site. The applicant may use Guide 2 of subpart G of part 1942 of this
title (available in any RECD State Office) as an example in preparing
the resolution. Future occupants of the site must be certified by the
Department of Labor (DOL) as outlined in paragraph (e)(3) of this
section for a period of 3 years after the initial certification by DOL.
(2) [Reserved]
(3) Grants shall not be made if the Secretary of Labor certifies
within 30 days after the matter has been submitted by the Secretary of
Agriculture that the provisions of paragraph (e) (1) of this section
have not been met. Information for obtaining this certification will be
submitted, in writing, by the applicant to RECD. Grant approval may be
given and funds may be obligated, subject to the DOL certification
being received, provided RBS has made its own separate determinations
of paragraphs (e) (1) (i) and (ii) of this section when applicable.
(f) Management assistance. Grant recipients will be supervised, as
necessary, to ensure that projects are completed in accordance with
approved plans and specifications and that funds are expended for
approved purposes. Grants made under this subpart will be administered
under, and are subject to, parts 3015, 3016, 3017 and 3019 of this
title, as appropriate, and established RBS guidelines.
[[Page 3785]]
(g) National Historic Preservation Act of 1966. All projects will
be in compliance with the National Historic Preservation Act of 1966 in
accordance with subpart F of part 1901 of this title.
(h) Uniform Relocation Assistance and Real Property Acquisition
Policies Act. All projects must comply with the requirements set forth
in part 21 of this title.
(i) Flood plains and wetlands. All projects must comply with
Executive Order 11988, ``Flood Plain Management,'' and Executive Order
11990, ``Protection of Wetlands.''
(j) Flood or mudslide hazard area precautions. If the grantee
financed project is in a flood or mudslide area, flood or mudslide
insurance must be provided.
(k) Termination of Federal requirements. Once the grantee has
provided assistance with project loans in an amount equal to the grant
provided by RBS, the requirements imposed on the grantee shall not be
applicable to any new projects thereafter financed from the RTCDG
funds. Such new projects shall not be considered as being derived from
federal funds. The purposes of such new projects , however, shall be
consistent with these regulations.
(l) Intergovernmental review. Grant projects are subject to the
provisions of Executive Order 12372 which requires intergovernmental
consultation with state and local officials. A loan fund established in
whole, or in part, with grant funds will also be considered a project
for the purpose of intergovernmental review as well as the specific
projects funded with grant funds from the RTCDG funds. For each project
to be assisted with a grant under this subpart and which the state has
elected to review under their intergovernmental review process, the
state point of contact must be notified. Notification, in the form of a
project description, can be initiated by the grantee. Any comments from
the state must be included with the grantee's request to use RBS grant
funds for the specific project. Prior to RBS's decision on the request,
compliance with requirements of intergovernmental consultation must be
demonstrated for each project. These requirements should be completed
in accordance with ``Intergovernmental Review of Department of
Agriculture Programs and Activities,'' subpart V of part 3015 of this
title (see FmHA Instruction 1940-J, available in any RECD State
Office).
Sec. 4284.528 Application processing.
(a) Preapplications.
(1) Applicants will file an original and one copy of Standard Form
(SF)-424.1, ``Application for Federal Assistance (For Non-
construction),'' with the appropriate RECD State Office. This form is
available in any RECD State Office.
(2) All preapplications shall be accompanied by:
(i) Evidence of applicant's legal existence and authority to
perform the proposed activities under the grant.
(ii) Latest financial information to show the organization's
financial capacity to carry out the proposed work. At a minimum, the
information should include a balance sheet and an income statement. A
current audit report is preferred where one is reasonably obtainable.
(iii) Estimated breakdown of total costs, including costs to be
funded by the applicant as well as other sources. Other sources should
be identified. Certification must be provided from the applicant that
its matching share to the project is available and will be used for the
project. The matching share must meet the requirements of parts 3015,
3016 and 3019 of this title. Certifications from an authorized
representative of each source of funds must be provided indicating that
funds are available and will be used for the proposed project.
(iv) Budget and description of the accounting system in place or
proposed.
(v) Area to be served, identifying each government unit, i.e.,
town, county, etc., if affected by the proposed project and evidence of
support and concurrence in the proposed project from the affected local
governmental bodies as evidenced by a resolution or a written statement
from the chief elected local official.
(vi) Evidence that the proposed project will serve or have the
potential to serve economically distressed areas supported by
established official independent sources of data which are sufficient
to verify the extent to which economically distressed conditions exist.
(Preference will be given in selecting projects demonstrating their
ability to effectively serve rural areas with few rural industries and
agribusinesses, high levels of unemployment or underemployment, high
rates of outmigration of people, businesses, and industries, or low
levels of per capita income).
(vii) A listing of businesses to be assisted.
(viii) Applicant's experience, including experience of key staff
members and persons who will be providing the proposed services and
managing the project.
(ix) The number of months duration of the project or service and
the estimated time it will take from grant approval to beginning of
service.
(x) Method and rationale used to select the areas or businesses
that will receive the service.
(xi) Brief description of how the work will be performed and
whether organizational staff, consultants or contractors will be used.
(xii) Evaluation method to be used by the applicant to determine if
objectives of the proposed activity are being accomplished.
(xiii) A brief plan which contains the following provisions and
describes how the applicant will meet those provisions:
(A) A provision that substantiates that the applicant will
effectively serve rural areas in the United States.
(B) A provision that the primary objective of the applicant will be
to improve the economic condition of rural areas by promoting the
development (through technological innovation, cooperative development,
and adaptation of existing technology) and commercialization of:
(1) New services and products that can be produced or provided in
rural areas;
(2) New processes that can be utilized in the production of
products in rural areas; and
(3) New enterprises that can add value to on-farm production
through processing or marketing.
(C) Copies of the established official independent sources of data
need to be included in the plan along with any documentation that more
fully explains the date produced, methodology, source, or
interpretation of the data.
(D) A description of the activities that the applicant will carry
out to accomplish such objective.
(E) A description of the proposed activities to be funded under
this subpart.
(F) A description of the contributions that the applicant's
proposed activities are likely to make to the improvement of the
economic conditions of the rural areas served by the applicant.
(G) Provisions that the applicant, in carrying out its activities,
will seek, where appropriate, the advice, participation, expertise, and
assistance
[[Page 3786]]
of representatives of business, industry, educational institutions, the
federal government, and state and local governments.
(H) Provisions that the applicant will consult with any college or
university administering Extension Service programs and cooperate with
such college or university in the coordination of the center's
activities and programs.
(I) Provisions that the applicant will take all practicable steps
to develop continuing sources of financial support for the center,
particularly from sources in the private sector.
(J) Provisions for:
(1) Monitoring and evaluating its activities; and
(2) Accounting for money received and expended by the institution
under this subpart.
(K) Provisions that the applicant will provide for the optimal
application of technology and cooperative development in rural areas,
especially those areas adversely affected by agricultural economic
conditions, through the establishment of demonstration projects and
subcenters for:
(1) Rural technology development where the technology can be
implemented by communities, community colleges, businesses,
cooperatives, and other institutions; or
(2) Cooperative development where such development can be
implemented by cooperatives to improve local economic conditions.
(xiv) If grant funds are to be used for the purpose of making loans
or grants to individuals, small businesses, or cooperatives (ultimate
recipients) in rural areas for eligible purposes under this subpart,
the preapplication must include the agreement proposed to be used
between the applicant and the ultimate recipients which includes the
following:
(A) An assurance that the responsibilities of the grantee, as a
recipient of grant funds under this subpart, are passed on to the
ultimate recipient and the ultimate recipient understands its
responsibilities to comply with the requirements set forth in this
subpart, including parts 3015, 3016, and 3019 of this title.
(B) Provisions that the ultimate recipient will comply with
debarment and suspension requirements contained in part 3017 of this
title and will execute Form AD-1048, ``Certification Regarding
Debarment, Suspension, Ineligibility and Voluntary Exclusion--Lower
Tier Covered Transactions.''
(C) Provisions that the ultimate recipient will execute Forms FmHA
400-1, ``Equal Opportunity Agreement,'' and FmHA 400-4, ``Assurance
Agreement.''
(D) Documentation that the ultimate recipient understands its
responsibilities to the applicant.
(E) Documentation that the applicant understands its
responsibilities in monitoring the ultimate recipient's activities
under the grant and the applicant's plan for such monitoring.
(F) Documentation when other references or sources of information
are used, along with copies if possible, to provide dates, addresses,
page numbers and explanations of how interpretations are made to
substantiate that such things as economically distressed conditions do
exist.
(G) Narrative addressing all items in Sec. 4284.540 (a) of this
subpart regarding grant selection criteria.
(b) Applications. Upon notification that the applicant has been
selected for funding, the following will be submitted to the RECD by
the applicant:
(1) SF 424.1, ``Application for Federal Assistance (for Non-
construction)''.
(2) Proposed scope of work, detailing the proposed activities to be
accomplished and time frames for completion of each activity.
(3) Proposed budget, including source and amount of applicant
contribution and any other funding sources for the proposed project.
(4) Other information requested by RECD to make a grant award
determination.
(c) Applicant response. If the applicant fails to submit the
application and related material by the date shown on the notice, RECD
may discontinue consideration of the preapplication.
Secs. 4284.529-4284.539 [Reserved]
Sec. 4284.540 Grant selection criteria.
Grants will be awarded under this subpart on a competitive basis.
The priorities described in this paragraph will be used by RBS to rate
preapplications. Preference will be given to applicants demonstrating
factors in paragraphs (a) (4) and (5) of this section. RBS' review of
preapplications will include the complete preapplication package
submitted to the RECD State Office. Points will be distributed
according to ranking as compared with other preapplications on hand.
Recognizing that a wide variety of individual strategies and approaches
may be used to promote economic development and that specific needs
vary according to geographic region and over time, the Agency has
determined to publish an informational notice annually in the Federal
Register which will contain those objective strategies or approaches,
consistent with this subpart with weighted priorities, that the Agency
wishes to emphasize during that year. The notice will establish the
period of time that the Agency will accept preapplications for
consideration of that fiscal year's funding.
(a) The selection criteria are as follows:
(1) Likelihood of project being effective in achieving one or more
of the following: technological innovation, adaptation of existing
technology, cooperative development, commercialization of new services
and products, and promotion of new processes and enterprises.
(2) Innovativeness or originality of project in addressing
authorized grant purposes.
(3) Experience, organizational skills, and background that are
needed for applicant to successfully carry out project.
(4) Transferability or demonstration value of project to help rural
areas outside of project area.
(5) Ability of project to contribute to the improvement of economic
conditions in rural areas with one or more of the following: few rural
industries and agribusinesses; high levels of unemployment or
underemployment; high rates of outmigration of people, businesses,
industries; and low levels of per capita income.
(6) The Administrator may award discretionary points to focus on
geographical distribution, interagency cooperation or other appropriate
factors.
(b) Each preapplication for assistance will be carefully reviewed
in accordance with the priorities established in this section. A
priority rating will be assigned to each preapplication.
Preapplications selected for funding will be based on the priority
rating assigned each preapplication and the total funds available. All
preapplications submitted for funding should contain sufficient
information to permit RBS to complete a thorough priority rating.
Sec. 4284.541 Grant approval, fund obligation, grant closing, and
third-party financial assistance.
The grantee will execute all documents required by the Agency to
make a grant under this subpart.
Secs. 4284.542-4284.556 [Reserved]
Sec. 4284.557 Fund disbursement.
Grants will be disbursed as follows:
(a) An SF-270, ``Request for Advance or Reimbursement,'' will be
completed by the applicant and submitted to RECD
[[Page 3787]]
not more frequently than monthly. The grantee will only be reimbursed
for allowable costs incurred.
(b) [Reserved]
(c) The grantee's share in the cost of the project will be
disbursed in advance of grant funds or on a pro-rata distribution basis
with grant funds during the disbursement period. The grantee may not
provide its contribution at the end of the grant period.
Sec. 4284.558 Reporting.
An SF-269, ``Financial Status Report,'' and a project performance
activity report will be required of all grantees on a quarterly basis.
A final project performance report will be required with the last SF-
269. The final report may serve as the last quarterly report. The final
report must include a final evaluation of the project. Grantees shall
constantly monitor performance to ensure that time schedules are being
met, projected work by time periods is being accomplished, and other
performance objectives are being achieved. Grantees are to submit an
original of each report to RECD. The project performance reports shall
include, but not be limited to, the following:
(a) A comparison of actual accomplishments to the objectives
established for that period;
(b) Reasons why established objectives (if any) were not met;
(c) Problems, delays, or adverse conditions which will affect
attainment of overall project objectives, prevent meeting time
schedules or objectives, or preclude the attainment of particular
project work elements during established time periods. This disclosure
shall be accompanied by a statement of the action taken or planned to
resolve the situation; and
(d) Objectives and timetable established for the next reporting
period.
Secs. 4284.559-4284.570 [Reserved]
Sec. 4284.571 Audit requirements.
The grantee will provide an audit report in accordance with
Sec. 1942.17 of subpart A of part 1942 of this title. The audit
requirements only apply to the years in which grant funds are received.
Audits must be prepared in accordance with general accounting
principles and standards using the publication, ``Standards for Audit
of Governmental Organizations, Programs, Activities and Functions.''
Sec. 4284.572 Grant servicing.
Grants will be serviced in accordance with subpart E of part 1951
of this title.
Sec. 4284.573 Programmatic changes.
The grantee shall obtain prior approval for any change to the scope
or objectives of the approved project. Failure to obtain prior approval
of changes to the scope or budget can result in suspension or
termination of grant funds.
Sec. 4284.574 Subsequent grants.
Subsequent grants will be processed in accordance with the
requirements set forth in this subpart.
Sec. 4284.575 Grant suspension, termination, and cancellation.
Grants may be canceled by RBS by written notice. Grants may be
suspended or terminated for cause or convenience in accordance with
parts 3015, 3016, and 3019 of this title.
Secs. 4284.576-4284.586 [Reserved]
Sec. 4284.587 Exception authority.
The Administrator may, in individual cases, make an exception to
any requirement or provision of this subpart which is not inconsistent
with the authorizing statute, an applicable law, or a decision of the
Comptroller General, if the Administrator determines that application
of the requirement or provision would adversely affect the Government's
financial interest and shows how the adverse impact will be eliminated
or minimized if the exception is made.
Secs. 4284.588-4284.599 [Reserved]
Sec. 4284.600 OMB control number.
The reporting and record keeping requirements contained in this
regulation have been approved by the Office of Management and Budget
(OMB) and have been assigned OMB control number 0570-0006. Public
reporting burden for this collection of information is estimated to
vary from 30 minutes to 8 hours per response, with an average of 1.85
hours per response, including time for reviewing instructions,
searching existing data sources, gathering and maintaining the data
needed, and completing and reviewing the collection of information.
Send comments regarding this burden estimate or any other aspect of
this collection of information, including suggestions for reducing this
burden, to Department of Agriculture, Clearance Officer, OIRM, AG Box
7630, Washington, DC 20250, and to the Office of Management and Budget,
Paperwork Reduction Project (OMB#0570-0006), Washington, D.C. 20503.
Dated: January 3, 1996.
Jill Long Thompson,
Under Secretary, Rural Economic and Community Development.
[FR Doc. 96-1578 Filed 2-1-96; 8:45 am]
BILLING CODE 3410-32-U