[Federal Register Volume 62, Number 58 (Wednesday, March 26, 1997)]
[Proposed Rules]
[Pages 14354-14359]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7743]


 ========================================================================
 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.
 
 ========================================================================
 

  Federal Register / Vol. 62, No. 58 / Wednesday, March 26, 1997 / 
Proposed Rules  

[[Page 14354]]



DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service
Rural Utilities Service

7 CFR Part 4284

RIN 0570-AA20


Rural Cooperative Development Grants

AGENCIES: Rural Business-Cooperative Service and Rural Utilities 
Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Rural Business-Cooperative Service (RBS) proposes to 
revise its regulations published previously under Rural Technology 
Development Grants (RTDG). This action is necessary to comply with the 
Federal Agriculture Improvement and Reform Act of 1996 (the 1996 Act) 
(Pub. L. 104-127), which removed ``technology'' from RTDG, thereby 
directing the focus of the program specifically to cooperative 
development. The 1996 Act also clarified that public bodies were not 
eligible applicants, and modified application requirements and 
applicant selection criteria. Exhibit A will be removed since it 
contains administrative material. The intended effect of this action is 
to improve the economic condition of rural areas through cooperative 
development.

DATES: Comments must be submitted on or before April 25, 1997.

ADDRESSES: Submit written comments in duplicate to the Director, 
Regulations and Paperwork Management Division, Rural Housing Service, 
USDA, Stop 0743, 1400 Independence Avenue, SW., Washington, DC 20250-
0743. Comments may also be submitted via the internet by addressing 
them to: [email protected] and must contain ``Rural Cooperative 
Development Grants'' in the subject. All written comments will be 
available for public inspection at the above address during normal 
working hours.

FOR FURTHER INFORMATION CONTACT: James E. Haskell, Assistant Deputy 
Administrator, Cooperative Services, Rural Business-Cooperative 
Service, U.S. Department of Agriculture, Stop 3250, Room 4016, South 
Agriculture Building, 1400 Independence Avenue, SW., Washington, DC 
20250. Telephone (202) 720-8460.

SUPPLEMENTARY INFORMATION:

Classification

    We are issuing this proposed 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, Public Law 91-190, an 
Environmental Impact Statement is not required.

Executive Order 12778

    This proposed rule has been reviewed under Executive Order 12988, 
Civil
    Justice Reform. In accordance with this rule: (1) All state and 
local laws and regulations that are in conflict with this rule will be 
preempted; (2) no retroactive effect will be given to this rule; and 
(3) administrative proceedings in accordance with the regulations of 
the Agency at 7 CFR part 11, must be exhausted before bringing suit in 
court challenging action taken under this rule unless these 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 RD 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 Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, 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 this rule is not 
subject to the requirements of sections 202 and 205 of the UMRA.

Regulatory Flexibility Act

    This proposed rule has been reviewed with regard to the 
requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). 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 since this rulemaking action does 
not involve a new or expanded program. The removal of ``technology'' 
from RTDG substantially narrows the scope of this program. No provision 
of this rule requires action on the part of small businesses not 
required of large businesses. This rule requires no action on the part 
of any applicant not previously required by an applicant.

Paperwork Reduction Act

    The information collection and recordkeeping requirements contained 
in this regulation were previously approved by the Office of Management 
and Budget (OMB) under the provisions of 44 U.S.C. chapter 35 and were 
assigned OMB control number 0570-0006, in accordance with the Paperwork 
Reduction Act of 1995. This proposed

[[Page 14355]]

rule does not impose any new information or recordkeeping requirements 
from those approved by OMB. 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 the Department of Agriculture, 
Clearance Officer, OIRM, Stop 7630, Washington, D.C. 20250.

Background

    The RTDG program was established by rule on August 12, 1994 (59 FR 
41386-98) and was authorized by section 310B(f) through (h) of the 
Consolidated Farm and Rural Development Act (7 U.S.C. 1932). The 1996 
Act removed ``technology'' from RTDG, thereby directing the focus of 
the program specifically to cooperative development. The 1996 Act also 
clarified that public bodies were not eligible applicants, and modified 
application requirements and applicant selection criteria. The primary 
objective of the Rural Cooperative Development Grant (RCDG) program is 
to improve the economic condition of rural areas through cooperative 
development. The program is administered through Rural Development 
State Offices acting on behalf of RBS. RBS is one of the successors of 
the Rural Development Administration pursuant to the Department of 
Agriculture Reorganization Act of 1994 (Pub. L. 103-354).

Other Regulations Affected

    Conforming changes which are necessary as a result of the revisions 
proposed to part 4284, subpart F will be done at the Final Rule stage.

List of Subjects 7 CFR Part 4284

    Business and industry, Grant programs--Housing and community 
development, Rural areas.
    Accordingly, chapter XLII, title 7, Code of Federal Regulations, is 
proposed to be amended as follows:

PART 4284--GRANTS

    1. 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.

Subpart F--Rural Cooperative Development Grants

    2. Part 4284, subpart F is revised to read as follows:

Subpart F--Rural Cooperative Development Grants

Table of Contents

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 Cooperative Development Grants


Sec. 4284.501  Purpose.

    (a) This subpart outlines the Rural Business-Cooperative Service's 
policies and authorizations and sets forth procedures to provide grants 
for cooperative development in rural areas.
    (b) Grants will be made available to nonprofit corporations and 
institutions of higher education for the purpose of establishing and 
operating centers for rural cooperative development.
    (c) Copies of all forms and Instructions referenced in this subpart 
are available in the RBS National Office or any Rural Development State 
Office.


Sec. 4284.502  Policy.

    The grant program will be used to facilitate the creation or 
retention of jobs in rural areas through the development of new rural 
cooperatives, value-added processing, and rural businesses.


Sec. 4284.503  [Reserved]


Sec. 4284.504  Definitions.

    Agency--Rural Business-Cooperative Service (RBS) or a successor 
agency.
    Approval official--Any authorized agency official.
    Center--The entity established or operated by the grantee for rural 
cooperative development.
    Cooperative--A user-owned and controlled business from which 
benefits are derived and distributed equitably on the basis of use.
    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 or better managed.
    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 institution, 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 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 or state reservations 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.
    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.
    Rural Development--Rural Development mission area.
    Servicing office--Any Rural Development State Office or successor 
office.

[[Page 14356]]

    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.
    Subcenter--A unit of a center acting under the same direction as 
and having a purpose consistent with that of the center.
    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'' 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'' when its social 
(e.g., government, educational, health, and recreational facilities) 
and economic structure (e.g., business, industry, tax base, and 
employment opportunities) are not primarily dependent on the city and 
its immediately adjacent urbanized areas.


Sec. 4284.505  Applicant eligibility.

    (a) Grants may be made to nonprofit corporations and institutions 
of higher education. Grants may not be made to public bodies.
    (b) An outstanding judgment 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 judgment is paid in 
full or otherwise satisfied. RBS grant funds may not be used to satisfy 
the judgment.


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 
carrying out relevant projects. Applicant's contribution may be in cash 
or in-kind contribution in accordance with 7 CFR parts 3015 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) Applied research and feasibility studies that may be useful to 
individuals, cooperatives, small businesses, and other similar entities 
in rural areas served by the center.
    (b) Collection, interpretation, and dissemination of principles, 
facts, technical knowledge, or other information that may be useful to 
individuals, cooperatives, small businesses, and other similar entities 
in rural areas served by the center.
    (c) Providing training and instruction for individuals, 
cooperatives, small businesses, and other similar entities in rural 
areas served by the center.
    (d) Providing loans and grants to individuals, cooperatives, small 
businesses, and other similar entities in rural areas served by the 
center.
    (e) Providing technical assistance, research services, and advisory 
services to individuals, cooperatives, small businesses, and other 
similar entities in rural areas served by the center.


Sec. 4284.516  Ineligible grant purposes.

    Grant funds may not be used to:
    (a) Pay more than 75 percent of relevant project or administrative 
costs.
    (b) Duplicate current services or replace or substitute support 
previously provided.
    (c) Pay costs of preparing the grant application package.
    (d) Pay costs incurred prior to the effective date of the grant 
made under this subpart.
    (e) Pay for building construction, the purchase of real estate or 
vehicles, improving or renovating office space, or the repair or 
maintenance of privately-owned property.
    (f) Fund political activities.
    (g) 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.


Sec. 4284.517-4284.526  [Reserved]


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 part 1901, subpart E 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, Public Law 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 part 1940, subpart G 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 part 
1940, subpart G 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 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.

[[Page 14357]]

    (3) Applications for grants to provide financial assistance to 
third-party recipients. As part of the preapplication, the applicant 
must provide a complete ``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 ``Request for Environmental Information'' 
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), 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 
part 1940, subpart G 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 project which is specifically 
identified as the third-party recipient for financial assistance, the 
Agency may proceed directly to the appropriate environmental assessment 
for the third-party recipient with public notification as required. 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 7 CFR part 3017 and RD Instruction 1940-M 
(available in any Rural Development State Office) for further guidance.
    (d) Restrictions on lobbying. All grants must comply with the 
lobbying restrictions set forth in 7 CFR part 3018.
    (e) Excess capacity or transfer of employment. 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 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.
    (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, 7 CFR parts 3015, 3017, 3019, and 3051, as 
appropriate, and established RBS guidelines.
    (g) National Historic Preservation Act of 1966. All projects will 
be in compliance with the National Historic Preservation Act of 1966 in 
accordance with part 1901, subpart F of this title.
    (h) Uniform Relocation Assistance and Real Property Acquisition 
Policies Act. All projects must comply with the requirements set forth 
in 7 CFR part 21.
    (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 RCDG 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 RCDG 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 the RBS 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,'' part 3015, subpart V of this 
title (see RD Instruction 1940-J, available in any Rural Development 
State Office).


Sec. 4284.528  Application processing.

    (a) Preapplications.
    (1) Applicants will file an original and one copy of the 
``Application for Federal Assistance (For Non-construction),'' with the 
appropriate Rural Development State Office. This form is available in 
any Rural Development 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 applicant's financial 
capacity to carry out the project. At a minimum, the information should 
include a balance sheet and an income statement. A current audited 
report is preferred where one is reasonably obtainable.
    (iii) Estimated breakdown of total costs, including costs to be 
funded by the applicant or other identified sources. 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 7 CFR parts 3015 and 3019 as applicable. 
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 to be used.
    (v) Area to be served, identifying within that area each 
governmental unit (i.e., town, county, etc.) affected by the proposed 
project. Evidence of support and concurrence from each affected 
governmental unit must be provided by either a resolution or a written

[[Page 14358]]

statement from the chief elected local official.
    (vi) A listing of cooperative businesses to be assisted or created.
    (vii) Applicant's experience with similar projects, including 
experience of key staff members and persons who will be providing the 
proposed services and managing the project.
    (viii) The number of months duration of the project and the 
estimated time it will take from grant approval to beginning of 
service.
    (ix) Method and rationale used to select the areas or businesses 
that will receive the service.
    (x) Brief description of how the work will be performed and whether 
organizational staff, consultants or contractors will be used.
    (xi) Evaluation method to be used by the applicant to determine if 
objectives of the proposed activity are being accomplished.
    (xii) A brief plan that contains the following provisions and 
describes how the applicant will meet these 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 
development of new cooperatives or improvement of existing 
cooperatives.
    (C) Supporting data from established official independent sources 
along with any explanatory documentation.
    (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 of representatives of business, industry, educational 
institutions, the federal, 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 applicant 
under this subpart.
    (K) Provisions that the applicant will provide for the optimal 
application of cooperative development in rural areas, especially those 
areas adversely affected by economic conditions, such that local 
economic conditions can be improved through cooperative development.
    (xiii) If grant funds are to be used for the purpose of making 
loans or grants to individuals, cooperatives, small businesses, and 
other similar entities (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 that 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 7 CFR parts 3015 and 3019 as applicable.
    (B) Provisions that the ultimate recipient will comply with 
debarment and suspension requirements contained in 7 CFR part 3017 and 
will execute a ``Certification Regarding Debarment, Suspension, 
Ineligibility and Voluntary Exclusion--Lower Tier Covered 
Transactions.''
    (C) Provisions that the ultimate recipient will execute an ``Equal 
Opportunity Agreement,'' and an ``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, that provides 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 4284.540(a) regarding grant 
selection criteria.
    (b) Applications. Upon notification that the applicant has been 
selected for funding, the following will be submitted to Rural 
Development by the applicant:
    (1) Proposed scope of work, detailing the proposed activities to be 
accomplished and time frames for completion of each activity.
    (2) Other information requested by RBS 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 invitation 
for applications, which will follow the final rulemaking notice, Rural 
Development 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. RBS review of preapplications will include the 
complete preapplication package submitted to the Rural Development 
State Office. Points will be distributed according to ranking as 
compared with other preapplications on hand. All factors will receive 
equal weight with points awarded to each factor on a 5, 4, 3, 2, 1 
basis depending on the applicant's ranking compared to other 
applicants.
    (a) Preference will be given to applications that:
    (1) demonstrate a proven track record in administering a nationally 
coordinated, regionally or State-wide operated project;
    (2) demonstrate previous expertise in providing technical 
assistance in rural areas;
    (3) demonstrate the ability to assist in the retention of business, 
facilitate the establishment of cooperatives and new cooperative 
approaches, and generate employment opportunities that will improve the 
economic conditions of rural areas;
    (4) demonstrate the ability to create horizontal linkages among 
businesses within and among various sectors in rural areas of the 
United States and vertical linkages to domestic and international 
markets;
    (5) commit to providing technical assistance and other services to 
underserved and economically distressed rural areas of the United 
States;
    (6) commit to providing greater than a 25 percent matching 
contribution with private funds and in-kind contributions; and
    (7) evidence transferability or demonstration value to assist rural 
areas outside of project area.
    (b) Each preapplication for assistance will be carefully reviewed 
in accordance with the priorities established in this

[[Page 14359]]

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 RBS 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) A ``Request for Advance or Reimbursement'' will be completed by 
the applicant and submitted to Rural Development not more frequently 
than monthly. Payments will be made by electronic funds transfer 
pursuant to the Debt Collection Improvement Act of 1996 (Pub. L. 104-
134).
    (b) 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.

    A ``Financial Status Report'' and a project performance activity 
report will be required of all grantees on a quarterly calendar basis. 
A final project performance report will be required with the last 
Financial Status Report. The final report may serve as the last 
quarterly report. The final report must include a final evaluation of 
the project. Grantees must 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 Rural 
Development. 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 this title. 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 part 1951, subpart E 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. Cooperative development 
projects receiving assistance under this program will be evaluated one 
year after assistance is received. If it is determined to be in the 
best interests of the program, preference may be given to a project or 
projects for an additional grant in the immediately succeeding year.


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 7 
CFR parts 3015 and 3019, as applicable.


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 if the Administrator 
determines that application of the requirement or provision would 
adversely affect U.S. Department of Agriculture interest.


Secs. 4284.588--4284.599  [Reserved]


Sec. 4284.600  OMB control number.

    The information collection requirements contained in this 
regulation have been approved by the Office of Management and Budget 
(OMB) and have been assigned OMB control number 0575-0006. You are not 
required to respond to this collection of information unless it 
displays a valid OMB control number.

    Dated: March 17, 1997.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 97-7743 Filed 3-25-97; 8:45 am]
BILLING CODE 3410-XY-U