[Federal Register Volume 63, Number 22 (Tuesday, February 3, 1998)]
[Proposed Rules]
[Pages 5474-5480]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-2553]


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DEPARTMENT OF AGRICULTURE

Rural Business--Cooperative Service
Rural Utilities Service

7 CFR Part 4284

RIN 0570-AA05


Rural Business Opportunity Grants

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

ACTION: Proposed rule.

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SUMMARY: The Rural Business-Cooperative Service (RBS) is proposing to 
issue new regulations for the Rural Business Opportunity Grant (RBOG) 
Program. This action is needed to implement a new program authorized by 
section 741 of the Federal Agriculture Improvement and Reform Act of 
1996, Public Law 104-127, to assist economic development in rural 
areas. The intended effect of this action is to implement the RBOG 
program.

DATES: Written or E-mail comments must be received on or before March 
20, 1998 to be assured of consideration. The comment period for 
information collections under the Paperwork Reduction Act of 1995 
continues through April 6, 1998.

ADDRESSES: Submit written comments in duplicate to the Branch Chief, 
Regulations And Paperwork Management Branch, Rural Development, U.S. 
Department of Agriculture, STOP 0743, Room 6345, 1400 Independence Ave. 
SW, Washington, DC 20250-0743. Comments may be submitted via the 
Internet by addressing them to ``C[email protected]'' and must 
contain the word ``opportunity'' in the subject. All written comments 
made pursuant to this notice will be available for public inspection 
between 8:00 a.m. and 4:30 p.m. Monday through Friday, except Holidays, 
at the above office.

FOR FURTHER INFORMATION CONTACT: M. Wayne Stansbery, Loan Specialist, 
Specialty Lenders Division, Rural Business-Cooperative Service, U.S. 
Department of Agriculture, STOP 1521, 1400 Independence Ave. SW, 
Washington, DC 20250, Telephone (202) 720-6819.

SUPPLEMENTARY INFORMATION:

Classification

    This rule has been determined to be significant and has been 
reviewed by the Office of Management and Budget under Executive Order 
12866.

Programs Affected

    The Catalog of Federal Domestic Assistance number for the program 
impacted by this action is 10.773, Rural Business Opportunity Grants.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
chapter 35), RBS announces its intention to seek Office of Management 
and Budget (OMB) approval of the reporting and recordkeeping 
requirements associated with this proposed rule.
    The purpose of the RBOG program is to promote sustainable economic 
development in rural communities with exceptional needs. This will be 
achieved through grants to public bodies, nonprofit community 
development corporations or entities and other agencies, to enable the 
recipients to carry on activities related to rural economic 
development, such as identifying and analyzing business opportunities, 
establishing business support centers, and providing training, 
technical assistance, and planning.
    The information requirements contained within the regulations are 
requested from grant applicants and grant recipients. The information 
is vital for RBS to make prudent decisions regarding eligibility of 
applicants and selection priority among competing applicants, to ensure 
compliance with applicable laws and regulations, and to evaluate the 
program. It includes information to allow the Agency to determine that 
an applicant is a legally organized entity with authority to enter into 
contracts and carry out the proposed activities. It provides for a 
description and scope of the proposed activities. It includes 
information on the applicant's financial condition and stability. It 
includes information to provide for evaluation of grantee 
accomplishments. It requires information needed to ensure compliance 
with Executive Orders and provides methods for applicants and grantees 
to appeal adverse decisions, request changes in grant conditions and 
request exceptions to the regulations. No new forms are created for 
this program.

Public Burden in 7 CFR Part 4284, Subpart G

    At this time, the Agency is requesting OMB clearance of the 
following burden:
    Section 4284.638(a)(2)(i). Copies of organizational documents, such 
as Articles of Incorporation, Bylaws, and certificates of good 
standing, are part of the grant application. They are needed so RBS can 
be sure the applicant is a legal entity with authority to make 
commitments and perform the activities called for under the proposed 
grant. They also indicate who is officially in control of the applicant 
organization.
    Section 4284.638(a)(2)(ii). A written scope of work needed to 
document what the grant funds are to be used for and what is to be 
accomplished. This is important for evaluating the application and also 
for monitoring to ensure that funds are used for the purpose for which 
they were intended.
    Section 4284.638(a)(2)(iii). A written narrative is required to 
provide additional information, beyond what is provided in the scope of 
work, as to the need for the project, the service area, the applicant's 
ability to accomplish the planned activities, who will be assisted, 
what impact is expected, and how the work will be performed. The 
information is needed to properly evaluate each application and select 
the most deserving applications for funding.
    Section 4284.638(a)(2)(iv). A financial statement is required to 
help RBS to ensure that an applicant has the financial stability to 
remain in operation and supplement the grant funds as necessary to 
accomplish the grant purposes.
    Section 4284.638(a)(2)(v). It is an eligibility requirement that 
applicants include a basis for determining the success or failure of 
the project in their proposal. This requirement ensures that some 
method exists for evaluating the success or failure of each grant and 
that the applicants will have input in determining how they will be 
evaluated.
    Section 4284.638(a)(2)(vi). Intergovernmental Review comments,

[[Page 5475]]

obtained by the applicant through contact with the State Single Point 
of Contact, are required to comply with Executive Order 12372 and to 
ensure that the proposed activity is not in conflict with strategic 
plans of State and local governments.
    Section 4284.656(a). A project performance report is needed to help 
the Agency ensure that projects in process are progressing 
satisfactorily and that completed projects have, in fact been completed 
and paid for in full. If cost overruns, deviations from the approved 
scope, or other problems do develop this will help ensure that the 
Agency is made aware in time to help find a solution.
    Section 4284.656(b). A project evaluation is needed to assist the 
Agency in determining the impact of the grant and of the program.
    Section 4284.656(c). A project description is needed for selected 
projects in order that the information gained from the project can be 
shared with other communities, and thereby increase the overall 
effectiveness of the program.
    Section 4284.656 (d) and (e). It is necessary for the grantee to 
keep complete and accurate accounting records as evidence that the 
grant funds were used properly.
    Section 4284.657. Audits are required to help monitor grantee 
activities and financial condition and ensure the grant funds were used 
as planned, as well as to comply with OMB circulars and applicable USDA 
regulations located at 7 CFR 3015, 3016, 3019, and 3051.
    Section 4284.668. This provision allows grantees to request changes 
so that approved projects may be changed, with Agency review and 
approval, when the change is needed and still within program 
guidelines.
    Section 4284.684. A provision permits grantees to request and 
obtain, in limited circumstances, exceptions to provisions of this 
subpart.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 5.7 hours per response.
    Respondents: Public Bodies and Nonprofit Corporations.
    Estimated Number of Respondents: 100.
    Estimated Number of Responses per Respondent: 15.23.
    Estimated Total Annual Burden on Respondents: 8,704 hours.
    The complete text of the proposed rule is published herein for 
public review and comment. Additional copies of the proposed 
regulations or copies of referenced forms may be obtained from Sam 
Spencer, Rural Business Team Information Collection Coordinator, by 
calling (202) 720-9588. Written requests may also be submitted to Sam 
Spencer, Rural Business Team Information Collection Coordinator, 
Regulations and Paperwork Management Division, U.S. Department of 
Agriculture, Rural Development, STOP 0743, 1400 Independence Ave. SW, 
Washington, DC 20250-0743.
    Comments: Comments are invited on: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of RBS, including whether the information will have 
practical utility; (b) the accuracy of RBS's estimate of the burden of 
the proposed collection of information including the validity of the 
methodology and assumptions used; (c) ways to enhance the quality, 
utility and clarity of the information to be collected; and (d) ways to 
minimize the burden of the collection of information on those who are 
to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology. Comments should be submitted to 
the Desk Officer for Agriculture, Office of Information and Regulatory 
Affairs, Office of Management and Budget, Washington, DC 20503, and to 
Sam Spencer, Rural Business Team Information Collection Coordinator, 
Regulations and Paperwork Management Branch, U.S. Department of 
Agriculture, Rural Development, STOP 0743, 1400 Independence Ave. SW, 
Washington, DC 20250-0743. All responses to this notice will be 
summarized, be included in the request for OMB approval, and become a 
matter of public record. OMB is required to make a decision concerning 
the collections of information contained in these proposed regulations 
between 30 and 60 days after submission to OMB. Therefore, a comment to 
OMB is best assured of having full effect if OMB receives it within 30 
days of publication. This does not affect the deadline for the public 
to comment on the proposed regulation.

Intergovernmental Review

    Rural Business Opportunity Grants are subject to the provisions of 
Executive Order 12372 which requires intergovernmental consultation 
with State and Local officials. RBS has conducted or will conduct 
intergovernmental consultation in the manner delineated in RD 
Instruction 1940-J, ``Intergovernmental Review of Farmers Home 
Administration Programs and Activities,'' and in 7 CFR 3015, subpart V.

Civil Justice Reform

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

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' RBS has determined that this 
proposed 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.

Unfunded Mandates

    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 
must prepare a written statement, including a cost-benefit analysis, 
for proposed and final rules with ``Federal mandates'' that may result 
in expenditures to State, local or tribal governments, in the 
aggregate, or to the private sector, of $100 million or more in any one 
year. When such a statement is needed for a rule, section 205 of UMRA 
generally requires 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 UMRA.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act, RBS has 
determined that this action would not have a significant economic 
impact on a substantial number of small entities because the action 
will not affect a significant number of small entities as defined by 
the Regulatory Flexibility Act (5 U.S.C.

[[Page 5476]]

601). RBS made this determination based on the fact that this 
regulation only impacts those who choose to participate in the grant 
program. Small entity applicants will not be impacted to a greater 
extent than large entity applicants.

Background

    RBS proposes a new regulation to implement a grant program to fund 
technical assistance and planning activities in rural areas for the 
purpose of improving economic conditions in the areas. This action is 
necessary to comply with section 741 of the Federal Agriculture 
Improvement and Reform Act of 1996, Public Law 104-127. Grants will be 
available to public bodies, nonprofit corporations, Indian tribes, and 
cooperatives. Grants may be used for technical assistance for business 
development and economic development planning; identifying and 
analyzing business opportunities that will use local rural materials or 
human resources, including opportunities in export markets as well as 
feasibility and business plan studies; identifying, training, and 
providing technical assistance to existing or prospective rural 
entrepreneurs and managers; establishing business support centers and 
otherwise assisting in the creation of new rural businesses; conducting 
local community or multi-county economic development planning; 
establishing centers for training, technology, and trade that will 
provide training to rural businesses in the utilization of interactive 
communications technologies to develop international trade 
opportunities and markets; and conducting leadership development 
training of existing or prospective rural entrepreneurs and managers.
    Nonmetropolitan median family income stagnated during the 1980's 
and continued substantially unchanged through the early 1990's. The 
1992 rural poverty rate of 16.8 percent was not statistically different 
from the 1989 rate, but was significantly higher than the urban poverty 
rate of 13.9 percent. Perhaps of more concern than the average or 
median figures is that rural income, poverty levels, and employment are 
uneven. During the 1980's, over one half of rural counties suffered 
declines in real median household income. Median real income generally 
increased in metropolitan areas, held steady in counties adjacent to 
metropolitan areas, and fell in more isolated rural counties. This put 
remote and persistently low-income counties in a relatively worse 
income position compared to metropolitan areas. Also, rural minorities 
continue to be disproportionately poor, with poverty rates highest 
among blacks, but increasing more rapidly among Hispanics.
    The implementation of this program is part of an initiative to 
enhance the future prosperity of rural people through investments that 
enhance rural competitiveness, facilitate industrial conversion, and 
enable rural citizens to profit from private economic activity. The 
implementation of this program will provide rural business with 
technical assistance not previously available. The business will be 
able to provide jobs, economic activity, and economic diversification 
in rural communities.

List of Subjects in 7 CFR Part 4284

    Business and industry, Economic development, Grant programs--
Housing and community development, Rural areas.

    Therefore, 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 continues to read as 
follows:

    Authority: 5 U.S.C. 301, 7 U.S.C. 1989, 16 U.S.C. 1005.

    2. Subpart G of part 4284, consisting of Sec. Sec. 4284.601 through 
4284.700, is added to read as follows:

Subpart G--Rural Business Opportunity Grants

Sec.
4284.601  Purpose.
4284.602  Policy.
4284.603  Definitions.
4284.604-4284.619 [Reserved]
4284.620  Applicant eligibility.
4284.621  Eligible grant purposes.
4284.622-4284.628 [Reserved]
4284.629  Ineligible grant purposes.
4284.630  Other considerations.
4284.631-4284.637 [Reserved]
4284.638  Application processing.
4284.639  Grant selection criteria.
4284.640  Appeals.
4284.641-4284.646 [Reserved]
4284.647  Grant approval and obligation of funds.
4284.648  Fund disbursement.
4284.649-4284.655 [Reserved]
4284.656  Reporting.
4284.657  Audit requirements.
4284.658-4284.666 [Reserved]
4284.667  Grant servicing.
4284.668  Programmatic changes.
4284.669-4284.683 [Reserved]
4284.684  Exception authority.
4284.685-4284.698 [Reserved]
4284.699  Congress.
4284.700  OMB control number.

Subpart G--Rural Business Opportunity Grants


Sec. 4284.601  Purpose.

    This subpart outlines Agency policies and authorizations and sets 
forth procedures for making grants to provide technical assistance for 
business development and conduct economic development planning in rural 
areas. The purpose of this program is to promote sustainable economic 
development in rural communities with exceptional needs by:
    (a) Promoting economic development that is sustainable over the 
long term through local effort without subsidies or external support 
and that leads to improvements in quality as well as the quantity of 
economic activity in the community;
    (b) Catalyzing economic development projects by providing critical 
investments that enable effective development projects to be undertaken 
by rural communities that, with the assistance, will be able to 
identify their needs and take full advantage of available resources and 
opportunities;
    (c) Focusing assistance on priority communities (defined in 
Sec. 4284.603); and
    (d) Sponsoring economic development activities with significant 
potential to serve as examples of ``best practices'' that merit 
implementation in rural communities in similar circumstances.


Sec. 4284.602  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 Indian tribes within the State 
regardless of whether State development strategies include Indian 
reservations within the State's boundaries. Indians residing on such 
reservations must have equal opportunity, along with other rural 
residents, to participate in the benefits of these programs.


Sec. 4284.603  Definitions.

    Agency--The Federal agency within the United States Department of 
Agriculture (USDA) with responsibility assigned by the Secretary of 
Agriculture to administer the Rural Business Opportunity Grants (RBOG) 
Program. At the time of publication, of this part in the Federal 
Register, that agency is the Rural Business-Cooperative Service.
    Best practice project--An action that has potential applicability 
in other rural communities and which potentially has instructional 
value when shared with those communities.

[[Page 5477]]

    Business support centers--Centers established to provide assistance 
to businesses in such areas as counseling, business planning, training, 
management assistance, marketing information, and locating financing 
for business operations. The centers need not be located in a rural 
area, but must provide assistance to businesses located in rural areas.
    Economic development--The industrial, business and financial 
augmentation of an area as evidenced by increases in total income, 
employment opportunities, value of production, duration of employment, 
or diversification of industry, reduced outmigration, higher labor 
force participation rates or wage levels, or gains in other 
measurements of economic activity, such as land values.
    Planning--A process to coordinate economic development activities, 
develop guides for action, or otherwise assist local community leaders 
in the economic development of rural areas.
    Priority communities--Communities targeted for Agency assistance as 
determined by the USDA Under Secretary for Rural Development. Priority 
communities are those that are experiencing trauma due to natural 
disasters or are undertaking or completing fundamental structural 
changes, have remained persistently poor over the past 60 years or 
longer, or have experienced long-term population decline or job 
deterioration.
    Project--The result of the use of grant funds provided under this 
subpart through technical assistance or planning relating to the 
economic development of a rural area.
    Rural and rural area--Any area of a State that is not within the 
boundaries of a city with a population in excess of 10,000 inhabitants 
according to the latest decennial census of the United States.
    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.
    Technical assistance--A nonconstruction, problem solving activity 
performed for the benefit of a business or community to assist in the 
economic development of a rural area. The Agency will determine whether 
a specific activity qualifies as technical assistance.
    United States. The 50 States of the United States of America, 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.


Sec. Sec. 4287.604-4287.619  [Reserved]


Sec. 4284.620  Applicant eligibility.

    (a) Grants may be made to public bodies, nonprofit corporations, 
Indian tribes on Federal or State reservations and other Federally 
recognized tribal groups, and cooperatives with members that are 
primarily rural residents and that conduct activities for the mutual 
benefit of the members.
    (b) Applicants must have sufficient financial strength and 
expertise in activities proposed in the application to ensure 
accomplishment of the described activities and objectives.
    (c) Any delinquent debt to the Federal Government shall cause the 
applicant to be ineligible to receive any RBOG funds until the debt has 
been paid.


Sec. 4284.621  Eligible grant purposes.

    (a) Grant funds may be used to assist in the economic development 
of rural areas by providing technical assistance for business 
development and economic development planning. Grant funds may be used 
for, but are not limited to, the following purposes:
    (1) Identify and analyze business opportunities that will use local 
rural materials or human resources. This includes opportunities in 
export markets, as well as feasibility and business plan studies;
    (2) Identify, train, and provide technical assistance to existing 
or prospective rural entrepreneurs and managers;
    (3) Establish business support centers and otherwise assist in the 
creation of new rural businesses;
    (4) Conduct local community or multi-county economic development 
planning;
    (5) Establish centers for training, technology, and trade that will 
provide training to rural businesses in the utilization of interactive 
communications technologies to develop international trade 
opportunities and markets;
    (6) Conduct leadership development training of existing or 
prospective rural entrepreneurs and managers; or
    (7) Pay reasonable fees and charges for professional services 
necessary to conduct the technical assistance, training, or planning 
functions.
    (b) Grants may be made only when there is a reasonable prospect 
that the project will result in the economic development of a rural 
area.
    (c) Grants may be made only when the proposal includes a basis for 
determining the success or failure of the project and individual major 
elements of the project and outlines procedures that will be taken to 
assess the project's impact at its conclusion.
    (d) Grants may be made only when the proposed project is consistent 
with local and area-wide strategic plans for community and economic 
development, coordinated with other economic development activities in 
the project area and consistent with any USDA Rural Development State 
Strategic Plan.
    (e) A grant may be considered for the amount needed to assist with 
the completion of a proposed project, provided that the project can 
reasonably be expected to be completed within 2 full years after it is 
begun. If grant funds are requested to establish or assist with an 
activity of more than 2 years duration, the amount of a grant approved 
in any fiscal year will be limited to the amount needed to assist with 
no more than 1 full year of operation. Subsequent grant requests may be 
considered in subsequent years, if needed to continue the operation, 
but funding for 1 year provides no assurance of additional funding in 
subsequent years.


Sec. Sec. 4284.622-4284.628  [Reserved]


Sec. 4284.629  Ineligible grant purposes.

    Grant funds may not be used to:
    (a) Duplicate current services or replace or substitute support 
previously provided;
    (b) Pay costs of preparing the application package for funding 
under this program;
    (c) Pay costs of the project incurred prior to the effective date 
of the grant made under this subpart;
    (d) Fund political activities;
    (e) 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;
    (f) Pay any judgment or debt owed to the United States; or
    (g) Pay costs of real estate acquisition or development or building 
construction.


Sec. 4284.630  Other considerations.

    (a) Civil rights compliance requirements. All grants made under 
this subpart are subject to Title VI of the Civil Rights Act of 1964 
and part 1901, subpart E, of this title.
    (b) Environmental review. All grants made under this subpart are 
subject to

[[Page 5478]]

the requirements of subpart G of part 1940 of this title. Applications 
for technical assistance or planning projects are generally excluded 
from the environmental review process by Sec. 1940.333 of this title. 
However, as further specified in that section, the grantee in the 
process of providing technical assistance, must consider the potential 
environmental impacts of the recommendations provided to the ultimate 
recipient of the technical assistance. Plans developed with grant funds 
received under this subpart must be generally documented to include the 
important environmental resources within the planning area and the 
potential environmental impacts of the plan as well as the alternative 
planning strategies that were reviewed.
    (c) Other USDA regulations. This program is subject to the 
provisions of the following regulations, as applicable, which are 
incorporated by reference herein:
    (1) 7 CFR part 3015, ``Uniform Federal Assistance Regulations'';
    (2) 7 CFR part 3016, ``Uniform Administrative Requirements for 
Grants and Cooperative Agreements to State and Local Governments'';
    (3) 7 CFR part 3017, ``Governmentwide Debarment and Suspension 
(Nonprocurement) and Governmentwide Requirements for Drug-Free 
Workplace (Grants)'';
    (4) 7 CFR part 3018, ``New Restrictions on Lobbying'';
    (5) 7 CFR part 3019, ``Uniform Administrative Requirements for 
Grants and Agreements with Institutions of Higher Education, Hospitals, 
and Other Non-Profit Organizations''; and
    (6) 7 CFR part 3051, ``Audits of Institutions of Higher Education 
and other Nonprofit Institutions.''


Secs. 4284.631-4284.637  [Reserved]


Sec. 4284.638  Application processing.

    (a) Applications. (1) Applicants will file an original and one copy 
of an ``Application For Federal Assistance (For Nonconstruction)'' with 
the Agency State Office. This form is available in all Agency offices.
    (2) All applications shall be accompanied by:
    (i) Copies of applicant's organizational documents showing the 
applicant's legal existence and authority to perform the activities 
under the grant;
    (ii) A proposed scope of work, including a description of the 
proposed project, details of the proposed activities to be accomplished 
and timeframes for completion of each task, the number of months 
duration of the project, and the estimated time it will take from grant 
approval to beginning of project implementation;
    (iii) A written narrative which includes, at a minimum, the 
following items:
    (A) An explanation of why the project is needed, the benefits of 
the proposed project, and how the project meets the grant selection 
criteria;
    (B) Area to be served, identifying each governmental unit, i.e., 
town, county, etc., to be affected by the project;
    (C) Description of how the project will coordinate economic 
development activities with other economic development activities 
within the project area;
    (D) Business to be assisted, if appropriate; economic development 
to be accomplished;
    (E) An explanation of how the proposed project will result in 
increased or saved jobs in the area and the number of projected new and 
saved jobs;
    (F) Description of the applicant's demonstrated capability and 
experience in providing the proposed project assistance or similar 
economic development activities, including experience of key staff 
members and persons who will be providing the proposed project 
activities and managing the project;
    (G) Method and rationale used to select the areas and businesses 
that will receive the service;
    (H) Brief description of how the work will be performed including 
whether organizational staff or consultants or contractors will be 
used; and
    (I) Other information the Agency may request to assist it in making 
a grant award determination.
    (iv) The latest financial information to show the organization's 
financial capacity to carry out the proposed work. At a minimum, the 
information should include the most recent balance sheet and an income 
statement. A current audited report is required if available;
    (v) An evaluation method to be used by the applicant to determine 
if objectives of the proposed activity are being accomplished; and
    (vi) Intergovernmental review comments from the State Single Point 
of Contact, or evidence that the State has elected not to review the 
program under Executive Order 12372.
    (b) Letter of conditions. The Agency will deliver a letter to the 
applicant setting out the conditions under which the grant will be 
made.
    (c) Applicant's intent to meet conditions. Upon reviewing the 
conditions and requirements in the letter of conditions, the applicant 
must complete, sign and return a ``Letter of Intent to Meet 
Conditions,'' to the Agency; or if certain conditions cannot be met, 
the applicant may propose alternate conditions to the Agency. The 
Agency must concur with any changes proposed to the letter of 
conditions by the applicant before the application will be further 
processed.


Sec. 4284.639  Grant selection criteria.

    Agency officials will select projects to receive assistance under 
this program according to the following criteria:
    (a) A score of 0 to 10 points will be awarded based on the Agency 
assessment of the extent to which economic development resulting from 
the proposed project will be sustainable over the long term by local 
efforts, without the need for continued subsidies by governments or 
other organizations outside the community or communities that will 
receive the primary benefit of the grant.
    (b) A score of 0 to 10 points will be awarded based on the Agency 
assessment of the extent to which the project should lead to 
improvements in the quality of economic activity within the community 
or communities that will receive the primary benefit of the grant, such 
as higher wages, improved benefits, greater career potential, and the 
use of higher levels of skills than currently are typical within the 
economy.
    (c) If the grant will fund a critical element of a larger program 
of economic development, without which the overall program either could 
not proceed or would be far less effective, or if the program to be 
assisted by the grant will also be partially funded from other sources, 
points will be awarded as follows based on the percentage of the cost 
of the overall program that will be funded by the grant.
    (1) Less than 20 percent--30 points;
    (2) 20 but less than 50 percent--20 points;
    (3) 50 but less than 75 percent--10 points; or
    (4) More than 75 percent--0 points.
    (d) Points will be awarded for each of the following criteria met 
by the community or communities that will receive the primary benefit 
of the grant. However, regardless of the mathematical total of points 
indicated by paragraphs (d)(1) through (d)(5) of this section, total 
points awarded under paragraph (d) must not exceed 40.
    (1) Experiencing trauma due to a major natural disaster that 
occurred not more than three years prior to the filing of the 
application for RBOG assistance--15 points;
    (2) Undergoing fundamental structural change in the local economy, 
such as that caused by the closing or

[[Page 5479]]

major downsizing of a military facility or other major employer not 
more than 3 years prior to the filing of the application for RBOG 
assistance--15 points;
    (3) Has remained consistently poor over the past 60 years or more--
10 points;
    (4) Has experienced long-term population decline--10 points; and
    (5) Has experienced long-term job deterioration--10 points.
    (e) A score of 0 to 10 points will be awarded based on the Agency 
determination of the extent of the project's usefulness as a new best 
practice as defined in Sec. 4284.603.
    (f) State Directors may assign up to 15 discretionary points to an 
application. If allocation of funds under National Office control is 
being considered, the Agency Administrator may assign up to 20 
additional discretionary points. Assignment of discretionary points by 
either the State Director or the Agency Administrator must include a 
written justification. Justifications are geographic distribution of 
funds, special importance for implementation of a strategic plan in 
partnership with other organizations, and extraordinary potential for 
success due to superior project plans or qualifications of the grantee.


Sec. 4284.640  Appeals.

    Any appealable adverse decision made by the Agency may be appealed 
in accordance with USDA appeal regulations found at 7 CFR part 11.


Secs. 4284.641-4284.646  [Reserved]


Sec. 4284.647  Grant approval and obligation of funds.

    The following statement will be entered in the comment section of 
the ``Request for Obligation of Funds,'' which must be signed by the 
Grantee:

    ``The Grantee certifies that it is in compliance and will 
continue to comply with all applicable laws; regulations; Executive 
Orders; and other generally applicable requirements, including those 
set forth in 7 CFR part 4284, subpart G, and 7 CFR parts 3015, 3016, 
3017, 3018, 3019, and 3051 in effect on the date of grant approval; 
and the approved Letter of Conditions.''


Sec. 4284.648  Fund disbursement.

    The Agency will determine, based on 7 CFR parts 3015, 3016, and 
3019 as applicable, whether disbursement of a grant will be by advance 
or reimbursement. A ``Request for Advance or Reimbursement'' must be 
completed by the grantee and submitted to the Agency no more often than 
monthly to request either advance or reimbursement of funds.


Secs. 4284.649-4284.655  [Reserved]


Sec. 4284.656  Reporting.

    (a) A ``Financial Status Report'' and a project performance 
activity report will be required of all grantees on a quarterly 
calendar year basis. The Grantee will cause said program to be 
completed within the total sums available to it, including the grant, 
in accordance with the scope of work and any necessary modifications 
thereof prepared by Grantee and approved by the Agency. A final project 
performance report will be required with the final Financial Status 
Report. The final report may serve as the last quarterly report. The 
final report must provide complete information regarding the jobs 
created and saved as a result of the grant. 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 the Agency. The project performance reports 
shall include, but not be limited to, the following:
    (1) A comparison of actual accomplishments to the objectives 
established for that period;
    (2) Problems, delays, or adverse conditions, if any, which have 
affected or 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
    (3) Objectives and timetable established for the next reporting 
period.
    (b) Within 1 year after the conclusion of the project, the grantee 
will provide a project evaluation report based on criteria developed in 
accordance with Sec. Sec. 4284.621(c) and 4284.638(a)(2)(v) of this 
subpart.
    (c) The Agency may also require grantees to prepare a report 
suitable for public distribution describing the accomplishments made 
through the use of the grant and, in the case where the grant funded 
the development or application of a ``best practice,'' to describe that 
``best practice.''
    (d) The grantee will provide for Financial Management Systems which 
will include:
    (1) Accurate, current, and complete disclosure of the financial 
result of each grant.
    (2) Records which identify adequately the source and application of 
funds for grant-supporting activities, together with documentation to 
support the records. Those records shall contain information pertaining 
to grant awards and authorizations, obligations, unobligated balances, 
assets, liabilities, outlays, and income.
    (3) Effective control over and accountability for all funds. 
Grantee shall adequately safeguard all such assets and shall assure 
that funds are used solely for authorized purposes.
    (e) The grantee will retain financial records, supporting 
documents, statistical records, and all other records pertinent to the 
grant for a period of at least 3 years after grant closing except that 
the records shall be retained beyond the 3-year period if audit 
findings have not been resolved or if directed by the United States. 
Microfilm copies may be substituted in lieu of original records. The 
Agency and the Comptroller General of the United States, or any of 
their duly authorized representatives, shall have access to any books, 
documents, papers, and records of the grantee which are pertinent to 
the specific grant program for the purpose of making audit, 
examination, excerpts, and transcripts.


Sec. 4284.657  Audit requirements.

    Public body grantees will provide an annual audit in accordance 
with 7 CFR part 3015, subpart I. Nonprofit corporation grantees will 
provide an annual audit in accordance with 7 CFR part 3051. The audit 
requirements apply to the years in which grant funds are disbursed to 
the grantee and years in which work is accomplished that will be paid 
for with grant funds.


Secs. 4284.658-4284.666  [Reserved]


Sec. 4284.667  Grant servicing.

    Grants will be serviced in accordance with part 1951, subparts E 
and O, of this title. Grantees will permit periodic inspection of the 
program operations by a representative of the Agency. All non-
confidential information resulting from the Grantee's activities shall 
be made available to the general public on an equal basis. Grantee 
shall relinquish any and all copyrights or privileges to the material 
developed under this grant as published in whole or in part. The 
material shall contain notice and be identified by language to the 
following effect: ``This material is the result of tax-supported 
research and as such is not copyrightable. It may be freely reprinted 
with the customary crediting of the source.''


Sec. 4284.668  Programmatic changes.

    The Grantee shall obtain prior approval for any change to the scope 
or

[[Page 5480]]

objectives of the approved project. Failure to obtain prior approval of 
changes to the scope of work or budget may result in suspension, 
termination, and recovery of grant funds.


Sec. Sec. 4284.669-4284.683  [Reserved]


Sec. 4284.684  Exception authority.

    The Administrator may, in individual cases, grant an exception to 
any requirement or provision of this subpart which is not inconsistent 
with any applicable law, provided the Administrator determines that 
application of the requirement or provision would adversely affect 
USDA's interest.


Sec. Sec. 4284.685-4284.698  [Reserved]


Sec. 4284.699  Congress.

    No member of Congress shall be admitted to any share or part of 
this grant or any benefit that may arise therefrom; but this provision 
shall not be construed to bar as a contractor under the grant a 
publicly held corporation whose ownership might include a member of 
Congress.


Sec. 4284.700  OMB control number.

    Dated: January 22, 1998.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 98-2553 Filed 2-2-98; 8:45 am]
BILLING CODE 3410-XY-U