[Federal Register Volume 64, Number 240 (Wednesday, December 15, 1999)]
[Proposed Rules]
[Pages 69937-69946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32009]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1703

Rural Business-Cooperative Service
Rural Utilities Service

7 CFR Part 4280

RIN 0570-AA19


Rural Economic Development Loan and Grant Program

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

ACTION: Proposed rule.

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SUMMARY: The Rural Business-Cooperative Service (RBS or Agency) is 
proposing to amend regulations for the Rural Economic Development Loan 
and Grant (REDLG) Program. This action is part of a reinvention 
laboratory initiative of the Department of Agriculture and RBS. It is 
written in a ``Plain Language'' format that is simpler and should 
improve ease of use by the public and program beneficiaries.

DATES: Written or e-mail comments must be received on or before 
February 14, 2000 to be assured of consideration. The comment period 
for information collections under the Paperwork Reduction Act of 1995 
continues through February 14, 2000.

ADDRESSES: Submit written comments via the U.S. Postal Service, in 
duplicate, to the Regulations and Paperwork Management Branch, 
Attention: Cheryl Thompson, Rural Development, U.S. Department of 
Agriculture, Stop 0742, 1400 Independence Avenue, SW., Washington, DC 
20250-0742. Submit written comments via commercial express carrier, in 
duplicate, to the Regulations and Paperwork Management Branch, 
Attention: Cheryl Thompson, USDA-Rural Development, 3rd Floor, 300 E. 
St., SW., Washington, DC 20546. Also, comments may be submitted via the 
Internet by addressing them to [email protected] and must contain 
the word ``economic'' in the subject line. All written comments will be 
available for public inspection during regular work hours at the 300 E. 
St., SW. address listed above.

FOR FURTHER INFORMATION CONTACT: Mark Wyatt, Specialty Lenders 
Division, Rural Business-Cooperative Service, U.S. Department of 
Agriculture, STOP 3225, 1400 Independence Ave. SW, Washington, DC 
20250-3225, Telephone (202) 720-2383.

SUPPLEMENTARY INFORMATION:

[[Page 69938]]

Classification

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

Programs Affected

    The Catalog of Federal Domestic Assistance number for the program 
impacted by this action is 10.854, Rural Economic Development Loans and 
Grants.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995, RBS 
announces its intention to seek OMB approval of the reporting and 
recordkeeping requirements associated with this proposed rule. The 
purpose of the REDLG program is to promote rural economic development 
and job creation projects. Loans are made to Rural Utilities Service 
(RUS) electric and telecommunications borrowers to finance a wide range 
of projects, including businesses. Grants are made to establish 
revolving loan funds. The information requirements contained within the 
regulation require information from loan and grant applicants and 
recipients. The information is vital for RBS to make prudent decisions 
regarding the eligibility of applicants, establish selection priority 
among competing applicants, ensure compliance with applicable laws and 
regulations, and evaluate the program. The requirements include 
information to allow RBS to determine that an applicant is a legally 
organized entity with authority to enter into contracts and carry out 
the proposed activities; provide for a description and scope of the 
proposed activities; include information to provide for evaluation of 
recipient accomplishments; and require information needed to ensure 
compliance with Executive Orders.

Public Burden in 7 CFR Part 4280, Subpart A

    At this time, RBS is requesting OMB clearance of the following 
burdens:
    Section 4280.16(b). The Agency allows the loan recipient to request 
a deferment period. This involves a letter or telephone call.
    Section 4280.16(d). A former RUS electric borrower that prepaid all 
their direct or insured electric program loans must provide an 
irrevocable letter of credit as security for the zero-interest loan 
because they no longer have property mortgaged to the Government.
    Section 4280.20. A RUS borrower that receives a grant to operate a 
Revolving Loan Fund would need to operate and administer the fund in 
accordance with its Revolving Loan Fund Plan. This involves reviewing 
loan applications, preparing loan documents, and disbursing funds.
    Section 4280.36(a). RBS uses a copy of the reports prepared by the 
Rural Utilities Service for its borrowers to ensure compliance with 
certain laws and Executive Orders. RUS borrowers are required to 
provide information to the RUS field person to complete the narrative 
report.
    Section 4280.39(a)(2). The RUS borrower must submit an acceptable 
resolution indicating their request for a loan or grant, agree to 
provisions of the regulation, etc.
    Section 4280.39(a)(4). Assurance as required by 49 CFR 24.4(a). A 
signed form provides the required assurance statement that any 
relocations of persons or acquisitions of real property, as part of 
this completing this project, will be handled in accordance with the 
law.
    Section 4280.39(a)(5). Certification For Contracts, Grants, and 
Loans is required by 31 U.S.C. 1352.
    Section 4280.39(a)(8). Seismic Certification as required by 42 
U.S.C. 7701.
    Section 4280.39(b)(1) and (2). The narrative portion of the 
application describes the project, discusses how the project satisfies 
the selection factors specified in the regulation, and provides 
information to assist in conducting the environmental review of the 
project. It also includes a business and project plan and feasibility 
study.
    Section 4280.39(b)(3). A Revolving Loan Fund Plan is required for 
grants to establish revolving loan funds. The plan governs the use of 
the funds for the life of the Revolving Loan Fund, how the Revolving 
Loan Fund will be administered by the RUS borrower, intended uses once 
the funds revolve and become non-Federal, and the review and approval 
of loans from the Revolving Loan Fund.
    Section 4280.48(a) and (b). Agreements, promissory notes, and 
opinion of counsel. The recipient of a loan or grant is required to 
sign legal documents that contain the terms and conditions of the 
financing provided. For loans, the recipient is also required to 
execute a promissory note.
    Section 4280.49. The RUS borrower is required to submit for 
approval copies of third party documents between the RUS borrower and 
the ultimate recipient to determine that the loan funds will be used 
for approved purposes and in accordance with the regulation. RBS must 
approve any changes in the third-party documents. The RUS borrower must 
submit for approval any previously approved document that it wishes to 
revise. RBS ensures that the revised document is consistent with the 
approved use of funds and the regulation.
    Section 4280.53. The RUS borrowers must submit payments through an 
electronic method set up to improve the efficiency of Government 
collections. This involves calling a bank on a touch-tone telephone and 
entering information.
    Section 4280.55(a) and (b). These subsections provide for a list of 
expenditures for zero-interest loans to determine the proper use of the 
Government's loan funds. It also requires an itemized list and 
documentation from the ultimate recipient and record of itemized 
receipts. This provides a very workable method for the ultimate 
recipient to provide the RUS borrower with a list of the uses of the 
loan funds.
    Section 4280.56(a). Form RD 4280-1, ``Survey of Recipients of Rural 
Economic Development Loan and Grant Program.'' This form will record 
the success of the project that was financed with either a loan or 
grant. It provides RBS with information on the jobs actually created 
from the projects financed under this program, and other information 
that would indicate the success of the project and its impact on the 
rural economy.
    Section 4280.56(b) and (c). For RUS borrowers with existing loans, 
RBS obtains from RUS a copy of the RUS borrower's audit. RUS borrowers 
without existing loans need to submit a copy of their audit to RBS. All 
audits must be conducted in accordance with Generally Accepted 
Government Auditing Standards. In addition, ultimate recipients may be 
required to send to RBS a copy of an audit conducted in accordance with 
7 CFR part 3052, if the recipient is organized as a non-profit 
corporation, state government, or local government. Audits pursuant to 
7 CFR part 3052 must be submitted only if the amount of federal funds 
an ultimate recipient spends in 1 year is $300,000 or more. RBS gets a 
copy of the audit to verify that funds are used for approved purposes.
    Section 4280.62. An applicant that receives an adverse decision may 
appeal the decision. This involves writing a letter requesting an 
appeal to the National Appeals Division of the United States Department 
of Agriculture.
    Estimate of Burden: Public reporting burden for this collection of 
information

[[Page 69939]]

is estimated to average 3.4 hours per response.
    Respondents: RUS borrowers.
    Estimated Number of Respondents: 180.
    Estimated Number of Responses per Respondent: 9.1.
    Estimated Number of Responses: 1,632.
    Estimated Total Annual Burden on Respondents: 5,509 hours.
    Copies of this information collection may be obtained from Cheryl 
Thompson, Regulations and Paperwork Management Branch, Support Services 
Division, telephone 202-692-0043.
    Comments: Comments are invited on: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of 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 
Cheryl Thompson, Regulations and Paperwork Management Branch, Support 
Services Division, U.S. Department of Agriculture, Rural Development, 
STOP 0742, 1400 Independence Ave. SW, Washington, DC 20250-0742. All 
responses to this notice will be summarized, included in the request 
for OMB approval, and will become a matter of public record. A comment 
to OMB is best assured of having full effect if OMB receives it within 
30 days of publication of this rule.

Intergovernmental Review

    Rural Economic Development Loans and Grants are subject to the 
provisions of Executive Order 12372, which requires intergovernmental 
consultation with State and local officials. RBS 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 part 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 
Department of Agriculture National Appeals Division (7 CFR part 11) 
must be exhausted before bringing suit in court challenging action 
taken under this rule unless those regulations specifically allow 
bringing suit at an earlier time.

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, 42 
U.S.C. 4321-4374, 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. This regulation only 
impacts those who choose to participate in the loan and grant program. 
Small entity applicants will not be impacted to a greater extent than 
large entity applicants.

Background

    The existing regulations for the Rural Economic Development Loan 
and Grant (REDLG) program are found at 7 CFR part 1703, subpart B, and 
will be removed upon publication of a final rule.
    This action is part of a reinvention laboratory initiative of the 
Department of Agriculture and Rural Business-Cooperative Service. It is 
written in a ``Plain Language'' style. The proposed regulation is 
simpler and should improve ease of use by the public and program 
beneficiaries. The regulation is in a question and answer format from 
the perspective of questions from an applicant or recipient under this 
program.
    The REDLG program was originally implemented in 1989 as part of the 
rural economic development program of Rural Electrification 
Administration, predecessor to the Rural Utilities Service (RUS). As a 
result of the United States Department of Agriculture reorganization, 
responsibility for this program was transferred to the Business 
Programs under RBS, which provides financing for rural areas. This 
program is administered at the State level through the Department of 
Agriculture's Rural Development State Offices.
    Since its inception in 1989, this program has had a substantial 
impact on economic development in rural areas. As of September 30, 
1998, it had provided $106 million in loans and $53 million in grants, 
leveraged $914 million in private capital, and directly created 
approximately 23,000 new jobs for rural areas.
    Under this program, loans and grants are provided to electric and 
telecommunications utilities that have borrowed funds from RUS. The 
purpose of the program is to encourage these electric and 
telecommunications utilities to promote rural economic development and 
job creation projects. The RUS utility can receive loans to help 
finance projects such as business start-up costs, business expansion, 
community development, and business incubator projects. The RUS utility 
uses the program loan funds to make a pass-through loan to an ultimate 
recipient such as a business. The RUS utility is responsible for fully 
repaying its loan to the government even if the ultimate recipient does 
not repay its loan. The RUS utility uses program grant funds, along 
with its required contribution, to create a revolving loan fund that it 
will

[[Page 69940]]

operate and administer. Loans are made from the revolving loan fund for 
a variety of community development projects.
    The regulation proposes to simplify the application format, review 
and selection process, and recipient recordkeeping requirements. A 
section is proposed to be added covering the appeal of certain adverse 
decisions under this program.
    This program will be available through the Rural Development 
Mission Area's Service Center Initiative.

List of Subjects

7 CFR Part 1703

    Community development, Grant programs--housing and community 
development, Loan programs--housing and community development, 
Reporting and recordkeeping requirements, Rural areas.

7 CFR Part 4280

    Business and industry, Community development, Economic development, 
Grant programs--housing and community development, Loan programs--
housing and community programs, Reporting and recordkeeping 
requirements, Rural areas.

    Therefore, chapters XVII and XLII, title 7, Code of Federal 
Regulations, are proposed to be amended as follows:

CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE

PART 1703--RURAL DEVELOPMENT

    1. The authority citation for part 1703 continues to read as 
follows:

    Authority: 7 U.S.C. 901, et seq. and 950aaa, et seq.

    2. Subpart B of part 1703 is removed and reserved.

CHAPTER XLII--RURAL BUSINESS--COOPERATIVE SERVICE AND RURAL UTILITIES 
SERVICE, DEPARTMENT OF AGRICULTURE

    3. A new part 4280, consisting only of subpart A (Sec. Sec. 4280.1 
through 4280.100), is added to chapter XLII to read as follows:

PART 4280--RURAL ECONOMIC DEVELOPMENT LOANS AND GRANTS

Subpart A--Rural Economic Development Loan and Grant Program

Sec.

Am I Eligible Under This Program?

4280.1  Point of reference.
4280.2  What is the Rural Economic Development Loan and Grant 
Program?
4280.3  Definitions.
4280.4-4280.12  [Reserved]
4280.13  Am I eligible to apply?
4280.14  [Reserved]

What Purposes Are Eligible for Loans?

4280.15  What type of projects may I finance with a zero-interest 
loan?
4280.16  What would be the terms of my zero-interest loan?
4280.17  If I receive a zero-interest loan, what happens if the 
ultimate recipient fails to repay me?
4280.18  What security do I need on the loan to the ultimate 
recipient?

What Purposes Are Eligible for Grants?

4280.19  What can I use a grant to fund?
4280.20  Do I operate and administer the fund?
4280.21  What types of projects may I finance with the initial loans 
I make from the grant funds I receive?
4280.22  [Reserved]
4280.23  What level of contribution must I make into the fund?
4280.24  How long must my contribution remain in the fund and what 
happens if the fund is terminated?
4280.25  What must I do in operating the fund?
4280.26  May I use grant funds to cover operating costs of the fund?

What Is Not Eligible for Either a Loan or Grant?

4280.27  What may I not do with program funds?
4280.28  [Reserved]

What Are the Other Terms and Conditions for Loans and Grants?

4280.29  Do I need supplemental financing?
4280.30  What other restrictions are there on the use of loan or 
grant funds?
4280.31-4280.35  [Reserved]
4280.36  What are some other laws that contain compliance 
requirements for this program?

How Do I Apply and How Much May I Request?

4280.37  How do I obtain and submit an application?
4280.38  What are the maximum and minimum amounts I may request for 
loans and grants?
4280.39  What must be included in my application for a loan or 
grant?
4280.40  [Reserved]
4280.41  What environmental review will be required after I submit 
my application?

How Are Applications Selected?

4280.42  How is my application evaluated and how are applications 
selected?
4280.43  Is there a possibility for discretionary points and how are 
they awarded?
4280.44  Are there limits on the number of loans or grants I may 
receive?
4280.45-4280.46  [Reserved]
4280.47  What if I am not selected?

What Must I do After Selection?

4280.48  If I am selected, what documents must I execute?
4280.49  What documents must I submit for approval before I can 
receive my funds?
4280.50  How do I obtain the approved loan or grant funds?
4280.51-4280.52  [Reserved]
4280.53  How do I make loan payments?
4280.54  Do I have to follow certain construction procurement 
requirements?
4280.55  What are my responsibilities to monitor and review the 
project?
4280.56  What reports or audits must I and ultimate recipients 
submit?
4280.57-4280.61  [Reserved]
4280.62  How may I appeal an adverse decision?
4280.63  Exception authority.
4280.64-4280.99  [Reserved]
4280.100  OMB control number.  [Reserved]

    Authority: 5 U.S.C. 301; 7 U.S.C. 940c; 7 CFR 2.17(a)(21).

Subpart A--Rural Economic Development Loan and Grant Program

Am I Eligible Under This Program?


Sec. 4280.1    Point of reference.

    This subpart is written from the perspective of questions from an 
RUS borrower, the applicant under this program. Therefore, ``I'', 
``My'', and ``Me'' in the question and ``You'' and ``Your'' in the 
answer in refer to the RUS borrower. ``Our'', ``Us'' and ``We'' in the 
answer refer to the Agency.


Sec. 4280.2  What is the Rural Economic Development Loan and Grant 
Program?

    This program provides financing to Rural Utilities Service (RUS) 
electric or telecommunications borrowers to promote rural economic 
development and job creation projects.
    (a) Loans. Zero-interest loans are made to you, the RUS borrower, 
which you, in turn, relend at a zero interest rate to ultimate 
recipients. You transmit ultimate recipient repayments of the loan to 
the U.S. Treasury.
    (b) Grants. Grants are made to you, the RUS borrower, to establish 
revolving loan funds and to finance specific projects. You use the 
grant funds to make zero-interest loans to ultimate recipients to 
finance the approved projects. The repaid principal on these loans is 
retained in your revolving loan fund to finance other rural economic 
development projects.


Sec. 4280.3  Definitions.

    The following definitions are applicable to this subpart:
    Advanced telecommunications. Using communications equipment for 
purposes, such as the simultaneous transmission of images and voice or 
the electronic transmission of data between multiple sites, that do not 
consist primarily of providing local exchange voice communications. It 
does not include providing only local exchange

[[Page 69941]]

voice telephone service. Providing the local exchange voice telephone 
service for an area is not an eligible purpose for funding under this 
program.
    Agency. The Rural Business-Cooperative Service (RBS), an agency of 
the United States Department of Agriculture, or a successor agency. 
Agency is referred to in this subpart as ``we'', ``our'', and ``us''.
    Agricultural production. The cultivation, production, growing, 
raising, feeding, housing, breeding, hatching, or managing of crops, 
plants, animals, or birds, either for fiber, food for human 
consumption, or livestock feed.
    Business incubator. A facility in which small businesses can share 
premises, support staff, computers, software or hardware, 
telecommunications terminal equipment, machinery, janitorial services, 
utilities, or other overhead expenses, and where such businesses can 
receive technical assistance, financial advice, business planning 
services or other support.
    Conflict of interest. A situation in which your officers, manager, 
board of directors, their spouses, or children, have a financial 
interest in the project, including its construction or development.
    Cushion of credit payment. A voluntary unscheduled payment made by 
you pursuant to 7 U.S.C. 940c.
    Fund. A revolving loan fund that is created in part with grant 
funds under this program that makes loans and uses the loan repayments 
to make subsequent loans until the fund is terminated.
    Grant. A transfer of monies from the Agency to the borrower under 
the program other than a loan.
    Independent provider. An entity other than the RUS borrower that is 
not owned by a subsidiary or an affiliate of the RUS borrower.
    Loan. A zero-interest loan made to the RUS borrower under the 
program.
    Program. The Rural Economic Development Loan and Grant Program.
    Project. The facility, equipment, or other assistance funded under 
this program, which is authorized by 7 U.S.C. 940c(b)(2).
    Revolving Loan Fund Plan. A plan developed by the RUS borrower that 
governs the use of the fund established with grants, including how the 
fund will be administered by the RUS borrower, intended uses once the 
funds are repaid by the ultimate recipient, and the review and approval 
of loans from the fund.
    Rural area. Any area of the United States not included within the 
boundaries of any urban area, as defined by the United States Bureau of 
the Census.
    Rural Utilities Service (RUS). The Rural Utilities Service, an 
agency of the United States Department of Agriculture, or a successor 
agency.
    RUS Borrower. An entity that has borrowed funds under the Rural 
Electrification Act of 1936. RUS borrower is referred to as ``you'' or 
``your'' in the answers and ``I'', ``me'' and ``my'' in the questions.
    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.
    Technical assistance. Managerial, financial and operational 
analysis and consultation by independent providers to assist project 
owners in identifying and evaluating problems or potential problems and 
to provide training that enable project owners to successfully 
implement, manage, operate and maintain viable projects.
    Ultimate recipient. An entity that receives a loan from you and 
which may be a sole proprietorship, corporation, cooperative, political 
subdivision of a state or locality, and a Federally recognized Indian 
tribe.
    Uniform Act. The Uniform Relocation Assistance and Real Property 
Acquisition Act of 1970 (42 U.S.C. 4601-4655).
    USDA. The United States Department of Agriculture.


Sec. Sec. 4280.4-4280.12  [Reserved]


Sec. 4280.13  Am I eligible to apply?

    You are eligible to apply if you are:
    (a) A RUS borrower that currently has an outstanding electric or 
telephone program debt; or
    (b) A former RUS electric borrower that prepaid its direct or 
insured electric program loans.


Sec. 4280.14  [Reserved]

What Purposes Are Eligible for Loans?


Sec. 4280.15  What type of projects may I finance with a zero-interest 
loan?

    You may use zero-interest loans to finance the following types of 
economic development or job creation projects for residents of rural 
areas:
    (a) Start-up costs, including business start-up costs;
    (b) Business expansion;
    (c) Business incubator projects;
    (d) Technical assistance;
    (e) Project feasibility studies;
    (f) Advanced telecommunications services and computer networks for 
medical, educational, and job training services; or
    (g) Other rural economic development projects that we approve.


Sec. 4280.16  What would be the terms of my zero-interest loan?

    (a) The maximum term of your zero-interest loan is 10 years, 
including any principal deferment period.
    (b) Deferments will automatically be granted on your request as 
follows:
    (1) A deferment of principal of up to 1 year for projects involving 
a business expansion or established operation; or
    (2) A deferment of principal of up to 2 years for projects 
involving a start-up venture.
    (c) You must provide the ultimate recipient the same repayment 
terms you receive from us.
    (d) If you are a former RUS electric borrower that prepaid all your 
direct or insured electric program loans, you must provide an 
irrevocable letter of credit or other security, satisfactory to us, for 
the term of the loan as security for our zero-interest loan.


Sec. 4280.17  If I receive a zero-interest loan, what happens if the 
ultimate recipient fails to repay me?

    You are responsible for fully repaying the zero-interest loan to us 
even if the ultimate recipient does not repay you.


Sec. 4280.18  What security do I need on the loan to the ultimate 
recipient?

    You determine an adequate level of security on your loan to the 
ultimate recipient to ensure recovery of funds in the event of 
nonpayment of the loan.

What Purposes Are Eligible for Grants?


Sec. 4280.19  What can I use a grant to fund?

    You use a program grant to partially finance the fund that you will 
operate and administer. Grants are subject to 7 CFR parts 3015 and 
3016, as applicable, and any conflicts between 7 CFR parts 3015 and 
3016 and this part will be resolved in favor of the applicable 
provision of 7 CFR parts 3015 and 3016.


Sec. 4280.20  Do I operate and administer the fund?

    Yes, you operate and administer the fund. You may contract for the 
daily administration of the fund. However, you must permanently retain 
all project review and approval authority.


Sec. 4280.21  What types of projects may I finance with the initial 
loans I make from the grant funds I receive?

    You may make initial loans from the fund only to:
    (a) Non-profit entities or public bodies for community development 
projects

[[Page 69942]]

that will create or save employment (but not for projects that are for-
profit businesses). Community facilities must serve a wide area of 
beneficiaries in rural areas and must be owned by the non-profit entity 
or public body receiving the loan;
    (b) Non-profit or for-profit entities, or public bodies for 
facilities and equipment to provide education and training to residents 
of rural areas that will facilitate economic development;
    (c) Non-profit or for-profit entities, or public bodies for 
facilities and equipment to provide medical care to residents of rural 
areas. Equipment and facilities may be funded to enable eligible 
entities to provide medical training and related professional health 
care skills to rural health care providers;
    (d) Non-profit or for-profit entities, or public bodies for 
projects which utilize advanced telecommunications or computer networks 
to facilitate medical or educational services or job training;
    (e) Non-profit entities or public bodies for business incubators; 
or
    (f) Non-profit or for-profit entities, or public bodies for project 
feasibility studies and technical assistance. An independent provider 
must perform feasibility studies. Qualified entities independent of you 
and the project owner must provide technical assistance.


Sec. 4280.22  [Reserved]


Sec. 4280.23  What level of contribution must I make into the fund?

    You must contribute from your funds an amount equal to 20 percent 
of the amount of our funds. The contribution may not be provided from 
other federal loans or grants. For example, if you receive a program 
grant of $200,000, you must deposit $40,000 of your funds into the 
fund.


Sec. 4280.24  How long must my contribution remain in the fund and what 
happens if the fund is terminated?

    Your contribution must remain until the fund is terminated. Until 
the total amount in the fund has been loaned, all loans must be for the 
purposes contained in Sec. 4280.21. After the total amount in the fund 
has been loaned for the purposes of Sec. 4280.21, you may make loans 
from the repayments and any additional amounts you contribute to the 
fund for any rural economic development purpose eligible under this 
program in accordance with the Revolving Loan Fund Plan. We may 
terminate the fund and require repayment of our grant funds if funds 
being re-lent are not being used according to the Revolving Loan Fund 
Plan. Termination will be in accordance with 7 CFR part 3015 or 3016, 
as applicable.


Sec. 4280.25  What must I do in operating the fund?

    Your Revolving Loan Fund Plan must specify that:
    (a) The initial loans made from the fund using our funds must carry 
an interest rate of zero percent and have a maximum term of 10 years;
    (b) Loans made from your contribution to the fund and from loan 
repayments may carry an interest rate greater than zero percent but 
less than, or equal to, the prime rate. You determine the other 
repayment terms on these loans;
    (c) Until all our funds have been loaned, each loan from the fund 
will consist of your contribution and our contribution in the ratio of 
the respective contributions to the fund. The interest rate for our 
contribution will be at zero percent and the interest rate on your 
contribution will be based on paragraph (b) of this section. Whether or 
not multiple projects are involved, the percent of your funds in a loan 
cannot be less than the percent you have contributed in accordance with 
Sec. 4280.23. Loan security and recovery of loan losses must provide 
for the pro rata recovery and distribution between you and us based on 
the respective amounts of each contribution to the total loan amount 
for the project;
    (d) Loans made from repayments of the initial and subsequent loans 
may be used for any rural economic development purpose eligible under 
this program in accordance with the Revolving Loan Fund Plan. These 
loans may carry an interest rate greater than zero percent. The maximum 
interest rate is the prime rate; and
    (e) Once you have provided assistance with project loans in an 
amount equal to the grant monies provided by us, future loans from the 
fund shall not be considered as being derived from federal funds.


Sec. 4280.26  May I use grant funds to cover operating costs of the 
fund?

    Yes, up to 10 percent of our grant funds may be applied toward 
operating expenses of the fund. Operating expenses include the costs of 
administering the fund and technical assistance provided to project 
owners by independent entities.

What Is Not Eligible for Either a Loan or Grant?


Sec. 4280.27  What may I not do with program funds?

    You may not use zero-interest loans and grants:
    (a) For any costs incurred on the project prior to our receipt of 
your completed application;
    (b) For activities that would adversely affect the environment, or 
activities that limit the choice of reasonable alternatives prior to 
satisfying our environmental requirements;
    (c) To pay off or refinance your existing indebtedness incurred 
prior to our receipt of your completed application unless approved by 
us;
    (d) For any electric or telephone purpose; or for your electric or 
telephone operations or other affiliated operations except those 
purposes contained in Sec. 4280.15(f);
    (e) To pay the salaries of your employees or those of your owner, 
its subsidiaries, or affiliates except for salaries incurred in 
administering a fund established under this program;
    (f) For community antenna television systems or facilities;
    (g) For residential purposes such as residential dwellings and land 
sites; facilities to provide entertainment television; or personal, 
non-business related vehicles;
    (h) Where you have a conflict of interest in the project;
    (i) For any purpose when receipt of loan funds is conditioned upon 
the requirement that the ultimate recipient acquire electric or 
telephone service from you;
    (j) For an otherwise eligible project when any of the revenues of 
the project are derived from a gambling activity;
    (k) For a project that would result in the transfer of existing 
employment or business activity more than 25 miles from its existing 
location;
    (l) For proposed projects located in areas covered by the Coastal 
Barrier Resources Act (16 U.S.C. 3501-3510);
    (m) For any illegal activity or any activity involving 
prostitution; or
    (n) For agricultural production.


Sec. 4280.28  [Reserved]

What Are the Other Terms and Conditions for Loans and Grants?


Sec. 4280.29  Do I need supplemental financing?

    (a) Is supplemental financing for the project required? Yes, the 
ultimate recipient must have supplemental financing at least equal to 
20 percent of the zero interest loan and grant.
    (b) What are possible sources? The owner of the project, banks, 
other governmental sources, the RUS borrower, or other appropriate 
sources may provide the supplemental funds.
    (c) What are the timeframes for supplying these funds? Only 
supplemental funds that are provided to

[[Page 69943]]

the project after we receive your completed application may be used to 
meet this requirement.
    (d) When must I obtain commitments for the supplemental funds? The 
funds must be committed in writing to the project before we will 
advance any funds to you.


Sec. 4280.30  What other restrictions are there on the use of loan or 
grant funds?

    (a) You must not own or manage any ultimate recipient project, 
unless the project is acquired as a result of servicing a loan made 
from the fund.
    (b) You may charge reasonable loan servicing fees, which are 
limited to one percent of the principal amount outstanding on the loan, 
reasonable professional service fees that are customary for the service 
being provided and in accordance with any standard fee schedules that 
have been established for the service, and expenses you have incurred 
from independent providers.
    (c) Any interest earned on advances of our loan or grant funds must 
be returned to the Agency.


Sec. Sec. 4280.31--4280.35  [Reserved]


Sec. 4280.36  What are some other laws that contain compliance 
requirements for this program?

    (a) Equal opportunity and nondiscrimination requirements. All loans 
and grants made under this subpart are subject to the nondiscrimination 
provisions of title VI of the Civil Rights Act of 1964, (42 U.S.C. 
2000(d)); section 504 of the Rehabilitation Act of 1973, (29 U.S.C. 
794); and the Age Discrimination Act of 1975, (42 U.S.C. 6101-6107).
    (b) Architectural barriers. All facilities financed with zero-
interest loans or grants that are open to the public or in which 
persons may be employed or reside must be designed, constructed, or 
altered to be readily accessible to, and usable by disabled persons. 
Standards for these facilities must comply with the Architectural 
Barriers Act of 1968, (42 U.S.C. 4151-4157) and the ``Uniform Federal 
Accessibility Standards'', (41 CFR part 101.19, subpart 101--19.6, 
Appendix A).
    (c) Uniform relocation assistance. Relocations in connection with 
this program are subject to 49 CFR part 24 as referenced by 7 CFR part 
21, ``Uniform Relocation Assistance and Real Property Acquisition for 
Federal and Federally Assisted Programs,'' except that the provisions 
in title III, ``Uniform Real Property Acquisition Policy,'' of the 
Uniform Act do not apply to this program.
    (d) Drug-free workplace. Grants made under this program are subject 
to the requirements contained in 7 CFR part 3017, subpart F, ``Drug-
Free Workplace Requirements (Grants)'', which implements the Drug-Free 
Workplace Act of 1988 (41 U.S.C. 701-706). A borrower requesting a 
grant will be required to certify that it will establish and make a 
good faith effort to maintain a drug-free workplace program.
    (e) Debarment and suspension. The requirements of 7 CFR part 3017, 
subparts A through E, regarding Governmentwide debarment and suspension 
(nonprocurement) are applicable to this program.
    (f) Intergovernmental review of Federal programs. This program is 
subject to the requirements of Executive Order 12372, 
``Intergovernmental Review of Federal Programs'' (3 CFR 1982 Comp., p. 
197) and 7 CFR part 3015, subpart V, ``Intergovernmental Review of 
Department of Agriculture Programs and Activities,'' which implements 
Executive Order 12372. Proposed projects are subject to the state and 
local government review process contained in 7 CFR part 3015.
    (g) Restrictions on lobbying. The restrictions and requirements 
imposed by 31 U.S.C. 1352, entitled ``Limitation on Use of Appropriated 
Funds to Influence Certain Federal Contracting and Financial 
Transactions'' and the implementing regulation, 7 CFR part 3018, ``New 
Restrictions on Lobbying,'' are applicable to this program.
    (h) Earthquake hazards. This program is subject to the seismic 
requirements of the Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 
7701-7706).
    (i) Environmental requirements. The requirements of 7 CFR part 
1940, subpart G, are applicable to the program and the loans made from 
the revolving loan fund using our funds.
    (j) Affirmative fair housing. If applicable, the RUS borrower will 
be required to comply with the Affirmative Fair Housing Act (42 U.S.C. 
3601-3631)

How Do I Apply and How Much May I Request?


Sec. 4280.37  How do I obtain and submit an application?

    (a) You may obtain forms that supplement the written narrative 
sections of your application from the USDA Rural Development State 
Office for the state where the project is located.
    (b) You need to file an original only of your application with the 
USDA Rural Development State Office on any official working day.


Sec. 4280.38  What are the maximum and minimum amounts I may request 
for loans and grants?

    During a fiscal year:
    (a) The maximum amount of a single loan application is 3 percent of 
the available fiscal year loan funds, or $200,000, whichever is 
greater. This is a limit on the maximum amount of an application, not 
the number of applications.
    (b) The maximum amount of a single grant application is 3 percent 
of the available fiscal year grant funds. This is a limit on the 
maximum amount of an application, not the number of applications.
    (c) We will publish a notice of available fiscal year loan and 
grant funds and the maximum loan and grant amounts per application in 
the Federal Register on an annual basis.
    (d) The minimum loan or grant amount to you is $20,000.


Sec. 4280.39  What must be included in my application for a loan or 
grant?

    Your application for a loan and a grant must contain the following:
    (a) Required forms and certifications:
    (1) ``Application for Federal Assistance,'' signed by you;
    (2) A board resolution certified by your board secretary. The board 
resolution must indicate whether you are requesting a loan or grant, 
agree to the provisions of this subpart and loan or grant agreement, 
and that you have the legal authority to enter in a loan or grant 
agreement under this program;
    (3) ``Certification Regarding Debarment, Suspension, and Other 
Responsibility Matters--Primary Covered Transactions,'' and 
``Ineligibility and Voluntary Exclusion--Lower Tier Covered 
Transactions'';
    (4) Assurance statement for the Uniform Act signed by the ultimate 
recipient. This statement provides us with the required assurance 
statement that any relocations of persons or acquisitions of real 
property, as part of completing this project, will be handled in 
accordance with this statute;
    (5) ``Certification for Contracts, Grants and Loans'' (If your loan 
is greater than $150,000 or your grant is greater than $100,000);
    (6) ``Disclosure of Lobbying Activities,'' (If you engage in 
lobbying activities);
    (7) ``Certification Regarding Drug-Free Workplace Requirements 
(Grants),'' for grants only;
    (8) Seismic certification if construction of a building is 
proposed. The project owner certifies that any building constructed 
will comply with standards that reduce the damage caused by 
earthquakes; and

[[Page 69944]]

    (9) ``Request for Environmental Information''.
    (b) Your written narrative section of the application must consist 
of the following:
    (1) Project description, including the work to be performed with 
our funds;
    (2) A discussion of how the project meets each selection factor in 
Sec. 4280.42(b);
    (3) A Revolving Loan Fund Plan. A plan is required if you apply for 
a grant to establish a fund.


Sec. 4280.40  [Reserved]


Sec. 4280.41  What environmental review will be required after I submit 
my application?

    (a) We will conduct a review of the environmental impact of the 
project in your application and inform you of any additional 
information we need and any environmental requirements for the project.
    (b) We will conduct all necessary environmental reviews as 
prescribed in 7 CFR part 1940, subpart G. These reviews must be 
completed before your application can be considered for approval.

How Are Applications Selected?


Sec. 4280.42  How is my application evaluated and how are applications 
selected?

    (a) We will evaluate your application and score it based on the 
selection factors in this section. All applications will be ranked on a 
nationwide basis based on the total points scored.
    (b) Your application will be evaluated and scored using the 
information provided in accordance with Sec. 4280.39(b)(2). Points will 
be awarded based on the following:
    (1) Nature of your project. We will award points based on whether 
your project:
    (i) Is a for-profit business start-up or expansion, business 
incubator, industrial building or park, or infrastructure necessary to 
connect only for-profit businesses to existing infrastructure--20 
points;
    (ii) Provides technical assistance to rural businesses or rural 
residents, or educates or provides medical care to rural residents--20 
points;
    (iii) Will enhance rural economic development by providing advanced 
telecommunications services and computer networks for medical, 
educational, and job training services. This review will be based on 
your application's telecommunications design--20 points.
    (2) Number of full-time jobs.

------------------------------------------------------------------------
 If the number of direct full-time rural
jobs either created or saved per $100,000        Then we will award
        of total project costs is
------------------------------------------------------------------------
(i) Greater than five....................  25 points;
------------------------------------------------------------------------
(ii) From one to five....................  15 points.
------------------------------------------------------------------------

    (3) Supplemental funds for your project. Points will be based on a 
calculation of the amount of supplemental funds to be provided to the 
project. Supplemental funds must be provided on a pro rata basis to the 
project within a 12 month period that begins on the day our funds are 
provided to the project. All supplemental funds used in the following 
calculation must be disbursed to the project between the date of our 
receipt of your application and 1 year after our first advance of 
funds:

------------------------------------------------------------------------
 If supplemental funds as a percentage of
 the Agency loan or grant to be provided         Then we will award
            to the project are
------------------------------------------------------------------------
(i) Greater than 200%....................  20 points;
------------------------------------------------------------------------
(ii) From 100% to 200%...................  10 points;
------------------------------------------------------------------------
(iii) From 50% to less than 100%.........  5 points.
------------------------------------------------------------------------

    (4) Unemployment rate for the county(ies) where your project is 
located. We will compare the unemployment rate(s) in the county(ies) to 
the state and national unemployment rates, as follows:

------------------------------------------------------------------------
    If the unemployment rate(s) in the
  county(ies) where your project will be         Then we will award
                 located
------------------------------------------------------------------------
(i) Exceeds the national unemployment      15 points;
 rate by 30% or more.
------------------------------------------------------------------------
(ii) Is greater than the national           5 points;
 unemployment rate, but is less than 130%
 of the national unemployment rate.
------------------------------------------------------------------------
(iii) Exceeds the state unemployment rate  10 points;
 by 30% or more.
------------------------------------------------------------------------
(iv) Is greater than the state             5 points.
 unemployment rate but is less than 130%
 of the state unemployment rate.
------------------------------------------------------------------------

    (5) Median household income for the county(ies) where your project 
is located. We will compare the median household income in the 
county(ies) where your project will be located to the national and 
state median household income levels, as follows:

[[Page 69945]]



------------------------------------------------------------------------
 If the median household income level in
           the county(ies) is:                   Then we will award
------------------------------------------------------------------------
(i) Less than or equal to 90% national     15 points;
 level.
------------------------------------------------------------------------
(ii) Between 90 and 100% of the national   5 points;
 level.
------------------------------------------------------------------------
(iii) Less than or equal to 90% state      10 points;
 level.
------------------------------------------------------------------------
(iv) Between 90 and 100% of the state      5 points.
 level.
------------------------------------------------------------------------

    (6) Decline in population for the county(ies) where your project is 
located. If there has been a long-term decline in population in the 
county(ies) where your project will be located over the time period 
covered by the three most recent decennial censuses of the United 
States to the present--10 points.
    (7) Cushion of credit payments. We will determine the level of your 
cushion of credit payments, as follows:

------------------------------------------------------------------------
 If your cushion of credit account level
                    is                           Then we will award
------------------------------------------------------------------------
(i) In excess of $300,000, or a dollar     15 points;
 amount in excess of three percent of
 your total assets, whichever is less.
------------------------------------------------------------------------
(ii) Within the range of $100,000 to less  10 points;
 than $300,000, or a dollar amount that
 is within the range of one percent to
 less than three percent of your total
 assets, whichever is less.
------------------------------------------------------------------------
(iii) Within the range of $10,000 to less  5 points.
 than $100,000, or a dollar amount that
 is within the range of 0.5 percent to
 less than one percent of your total
 assets, whichever is less.
------------------------------------------------------------------------

    (8) Initial loan and grant. If your loan application would be the 
first loan awarded to you under this program or the grant application 
is the first grant awarded to you under this program--10 points.
    (9) County participation. If your project would be the first 
project this program financed in the county where your project is to be 
located--10 points.
    (10) Ultimate recipient's plan. We will evaluate the ultimate 
recipient's business plan or telecommunications design that would 
include the following:
    (i) A description of the business or project plans and, if 
applicable, its products and operating plans. (For applications for 
advanced telecommunications, the business plan we evaluate would be the 
application's telecommunications and engineering design)--15 points; 
and
    (ii) An appropriate financial plan, including a feasibility study 
with projected balance sheets, income statements and cash flow 
statements for the term of the loan--20 points.


Sec. 4280.43  Is there a possibility for discretionary points and how 
are they awarded?

    Yes, the Administrator, based on the State Director's 
recommendation, has the discretion to designate up to 25 points based 
on whether your project:
    (a) Is located in a Rural Empowerment Zone, Rural Enterprise 
Community, or Champion Community;
    (b) Is located in a county that has experienced the loss, removal, 
or closing of a major source or sources of employment in the last 3 
years which causes an increase of 2 percentage points or more in the 
county's most recent unemployment rate compared with the period 
immediately before the dislocation;
    (c) Is located in a county that has experienced chronic or long-
term economic deterioration;
    (d) Utilizes advanced telecommunications or computer networks to 
facilitate medical or educational services or job training;
    (e) Is located in a county that was designated a disaster area by 
the President of the United States or Secretary of Agriculture that 
significantly affected rural economic development and job creation. The 
county must have been designated within 3 years prior to your applying 
to us; or
    (f) Is consistent with the Rural Development State Office's 
approved strategic plan and mission area objectives.


Sec. 4280.44  Are there limits on the number of loans or grants I may 
receive?

    Yes, depending on the amount of funds available, we may limit you 
to one selected grant application and two selected loan applications in 
a fiscal year.


Secs. 4280.45-4280.46  [Reserved]


Sec. 4280.47  What if I am not selected?

    (a) If you are not selected, you may elect to have your application 
reconsidered.
    (b) Your application will be considered for a total of four of our 
selection competitions. You may reapply if the application is revised 
and be considered for another four selection competitions.

What Must I do After Selection?


Sec. 4280.48  If I am selected, what documents must I execute?

    We will notify you in writing if your application is selected. The 
documents to be executed will include:
    (a) Loan. (1) A Letter of Agreement with specific terms and 
conditions;
    (2) A loan agreement with general terms and conditions;
    (3) A note covering the repayment terms of the loan; and
    (4) A legal opinion concerning your authority to engage in the 
project.
    (b) Grant. (1) A Letter of Agreement with project specific terms 
and conditions;
    (2) A grant agreement with general terms and conditions; and
    (3) A legal opinion concerning your authority to participate in the 
project.


Sec. 4280.49  What documents must I submit for approval before I can 
receive my funds?

    We must approve any agreements or changes in agreements between you 
and the ultimate recipient. We must also approve agreements involved in 
any multi-step financial transaction that involves lending our funds to 
any intermediate entities, which will subsequently lend the funds to 
the ultimate recipient.


Sec. 4280.50  How do I obtain the approved loan or grant funds?

    (a) We will disburse zero-interest loan funds to you in accordance 
with the terms of the executed loan agreement. All loan funds will be 
disbursed in

[[Page 69946]]

advance to you at one time once you have complied with our 
requirements.
    (b) We will disburse grant funds to you in accordance with 7 CFR 
parts 3015 and 3016, as applicable. Specifically, we will disburse the 
grant funds in advance if the following requirements are met:
    (1) You have demonstrated to us the willingness and ability to 
establish written procedures that will minimize the time elapsing 
between the transfer of funds from us and their disbursement to the 
ultimate recipient;
    (2) Your financial management system meets the requirements of 7 
CFR parts 3015 and 3016, as applicable;
    (3) All necessary supplemental funds for the project have been 
obligated or committed to the project; and
    (4) Your request for cash advances from us are limited to the 
minimum amounts needed and timed to be in accordance with the actual, 
immediate cash needs of carrying out the project.
    (c) You must provide to the ultimate recipient all loan funds that 
we have disbursed to you within 6 months of your receiving them.


Secs. 4280.51-4280.52  [Reserved]


Sec. 4280.53  How do I make loan payments?

    You must make all loan payments to us by electronic funds transfer 
or other means as specified in the loan documents.


Sec. 4280.54  Do I have to follow certain construction procurement 
requirements?

    Yes, construction, including bidding and awarding of contracts, 
must be conducted in a manner that provides maximum open and free 
competition.


Sec. 4280.55  What are my responsibilities to monitor and review the 
project?

    (a) If you receive a loan or grant, you must monitor the project to 
the extent necessary to ensure that:
    (1) Funds are used only for approved purposes;
    (2) Disbursements and expenditures of funds are properly supported 
with certifications, invoices, contracts, bills of sale, or other forms 
of evidence, which are maintained on your premises;
    (3) Project time schedules are being met, projected work by time 
periods is being accomplished, and other performance objectives are 
being achieved; and
    (4) The project is in compliance with all applicable regulations.
    (b) We may inspect and copy your records and documents that pertain 
to the project which you must retain for the term of the project loan 
plus 2 years. In addition, we may also perform project site visits and 
reviews of the use of loan or grant proceeds.
    (c) We will review and monitor grants in accordance with 
appropriate United States Department of Agriculture regulations at 7 
CFR parts 3015, 3016, 3017, 3018, and 3052.


Sec. 4280.56  What reports or audits must I and ultimate recipients 
submit?

    (a) If you receive a loan or grant, you must submit the following 
report:
    (1) Loan. You must submit the ``Survey of Recipients of Rural 
Economic Development Loan and Grant Program,'' to us on an annual basis 
until the project is completed.
    (2) Revolving Loan Fund (Grant). You must submit the ``Survey of 
Recipients of Rural Economic Development Loan and Grant Program,'' to 
us on an annual basis until the projects financed with our proceeds are 
completed and, thereafter, on a triennial basis until the fund is 
terminated.
    (b) If you have an outstanding loan with RUS, we will obtain a copy 
of your audit from RUS. If you do not have an existing loan with RUS, 
you will need to submit a copy of your annual audit to us. All audits 
must be conducted in accordance with Generally Accepted Government 
Auditing Standards and/or Generally Accepted Accounting Principles.
    (c) We may require ultimate recipients of grant funds provided 
under this program to submit annual audits to comply with federal audit 
regulations. In accordance with 7 CFR part 3052, if an ultimate 
recipient spends $300,000 or more of Federal funds in one year and they 
are a nonprofit entity, or a State or local government, then they may 
be required to submit an audit.


Secs. 4280.57-4280.61  [Reserved]


Sec. 4280.62  How may I appeal an adverse decision?

    You may appeal any appealable adverse decision we make that affects 
you in accordance with 7 CFR part 11.


Sec. 4280.63  Exception authority.

    The Administrator of the Agency may, in individual cases, grant an 
exception to any non-statutory requirement or provision of this 
subpart, provided the Administrator determines in writing that the 
application of the requirement or provision would adversely affect 
USDA's interest.


Secs. 4280.64-4280.99  [Reserved]


Sec. 4280.100  OMB control number. [Reserved]

    Dated: December 3, 1999.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 99-32009 Filed 12-14-99; 8:45 am]
BILLING CODE 3410-XY-U