[Federal Register Volume 64, Number 246 (Thursday, December 23, 1999)]
[Rules and Regulations]
[Pages 71984-71989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33203]


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DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

7 CFR Part 4284

RIN 0570-AA05


Rural Business Opportunity Grants

AGENCY: Rural Business-Cooperative Service, USDA.

ACTION: Final rule.

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SUMMARY: The Rural Business-Cooperative Service (RBS) is issuing 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 to 
assist economic development in rural areas. The intended effect of this 
action is to implement the RBOG program.

EFFECTIVE DATE: January 24, 2000.

FOR FURTHER INFORMATION CONTACT: M. Wayne Stansbery, Loan Specialist, 
Specialty Lenders Division, Rural Business-Cooperative Service, U.S. 
Department of Agriculture, STOP 3225, 1400 Independence Ave. SW, 
Washington, DC 20250, Telephone (202) 720-6819. The TTD number is (800) 
877-8339 or (202) 708-9300.

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

    The information collection requirements contained in this 
regulation have been approved by the Office of Management and Budget 
(OMB) under the provisions of 44 U.S.C. chapter 35 and have been 
assigned OMB control number 0570-0024 in accordance with the Paperwork 
Reduction Act (44 U.S.C. 3501 et seq.). This rule does not revise or 
impose any new information collection or recordkeeping requirements.

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 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 final 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, 42 
U.S.C. 4321 et seq., an Environmental Impact Statement is not required.

Unfunded Mandates

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 
U.S.C. chapters 17A and 25, 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.

Background

    RBS is implementing 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. 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;

[[Page 71985]]

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.

Discussion of Comments

    This rule was published in the Federal Register as a proposed rule 
on February 3, 1998 (60 FR 5474). Six comment letters were received, 
most of which contained comments on several issues. A summary of the 
comments follows.
    Two respondents commented on the definition of rural and rural 
area. Both thought the 10,000 population limit proposed was too low. 
This limit is statutory and cannot be changed.
    A respondent was concerned that a provision stating that grant 
funds may not be used to duplicate, replace, or substitute for current 
services might exclude organizations seeking to expand. We have added 
language to clarify that this restriction is not intended to prevent 
assistance for expanding the level of effort or services when the 
current level is insufficient.
    Respondents suggested that the terms sustainability and sustainable 
development should be defined. We agree, and have provided a definition 
consistent with Secretary's Memorandum 9500-6, ``Sustainable 
Development,'' dated September 13, 1996.
    A respondent objected to limiting grants to one or two years 
funding. The respondent believes two years is too short for capacity 
building projects. We are also concerned that there may be needed 
projects that cannot be completed in two years. However, we expect the 
appropriations for this program to be small and we do not want to 
commit limited funds to projects that cannot be expected to be 
completed within two years. Longer term projects may be funded, but 
funds will only be committed for one year at a time. Such projects will 
have to compete again for additional funds from future years 
appropriations. This provision of the rule is unchanged.
    We received three comments about the priority scoring criteria. One 
respondent stated that the RBOG should not be used as a disaster relief 
program and objected to giving priority points based on natural 
disasters. One of the goals of the Rural Development mission area is to 
target assistance to communities of greatest need, including 
communities that are experiencing trauma due to a major natural 
disaster. This criterion is not changed.
    The respondent also questioned the awarding of priority points to 
communities that have remained consistently poor for 60 years or more. 
The respondent felt data may not be reliable and the 60-year standard 
would penalize communities in the West, where communities are younger. 
Communities that have been persistently poor over a long term have also 
been identified as target communities for Rural Development and 60 
years has been used before as a rule-of-thumb. However, we agree that 
60 years is an excessive standard. For two other factors, population 
decline and job deterioration, the proposed rule only required the 
condition be ``long-term.'' In the final rule, we have also adopted the 
term ``long-term'' instead of ``60 years'' for the condition of 
consistently poor. We have defined ``long-term,'' to be the period of 
time covered by the three most recent decennial censuses to the 
present.
    Another respondent requested priority points for communities that 
have been adversely affected by changes in transportation. Although 
this is a concern in some rural areas, we do not believe it warrants 
special priority. The suggestion was not adopted.
    A respondent asked for ``business incubator'' to be added to the 
definition of Business Support Centers. Although some business 
incubators perform many of the services of a business support center, 
we believe including the term as suggested would imply that grant funds 
could be used to provide building space. That is not the intent of the 
RBOG program. The suggestion is not adopted.
    A respondent suggested ``National nonprofit organizations'' be 
included as eligible. We see no need to change the language that was 
used in the proposed rule. Nonprofit corporations were already listed 
as eligible, without regard to whether they are National, regional, or 
local.
    A respondent was concerned because the proposed rule did not 
require a detailed budget as part of the application. The application 
form required is Standard Form 424, ``Application for Federal 
Assistance (For Non-Construction).'' The form contains a budget format 
which we believe is adequate. No change is made in this regard from the 
proposed rule.
    A respondent was concerned because there is no reference to a grant 
agreement document. We believe a grant agreement document is 
unnecessary and have made no change as a result of the comment. Grant 
projects will be defined by the Scope of Work and Letter of Conditions. 
Grantees will be required to sign a Request for Obligation of Funds 
form containing a certification that the grantee will comply with all 
applicable regulations, including 7 CFR parts 3015, 3016, 3017, 3018, 
3019, and 3052. Most of the material that might be put in a grant 
agreement document is contained in those regulations.
    A respondent suggested clarifying whether grants can support 
indirect costs. Allowable costs are set out in 7 CFR parts 3015, 3016, 
and 3019 and in applicable OMB circulars referenced in 7 CFR parts 
3015, 3016, and 3019. We have purposely avoided restating material from 
those regulations to avoid repetition, the possibility of misstating 
requirements, and the need to amend this regulation if 7 CFR parts 
3015, 3016, or 3019 is amended. Therefore, we have not adopted the 
suggestion. Generally, indirect costs are allowable.
    A respondent correctly pointed out that the proposed rule made 
references to 7 CFR part 3051, ``Audits of Institutions of Higher 
Education and other Nonprofit Institutions,'' which has been replaced 
by 7 CFR part 3052, ``Audits of States, Local Governments, and Non-
profit Organizations.'' We have made the appropriate corrections.
    In addition to responding to public comments, we have removed a 
provision that would have prevented material developed with grant funds 
from being copyrighted because it conflicted with 7 CFR 3016 and 3019.

Implementation

    It is the policy of this Department that rules relating to public 
property, loans, grants, benefits, or contracts shall comply with 5 
U.S.C. 553, notwithstanding the exemption of that section with respect 
to such rules. Accordingly, this rule has previously been published as 
a proposed rule, on February 3, 1998 (63 FR 5474), for public comment, 
and will be effective 30 days after publication of this final rule in 
the Federal Register.

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 
amended as follows:

PART 4284--GRANTS

    1. The authority citation for part 4284 is amended to read as 
follows:

    Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.


[[Page 71986]]


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

PART 4284--GRANTS

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  Member delegate clause.
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 Rural Business Opportunity Grants 
(RBOG) 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 RBOG Program. At the time of publication, 
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.
    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.
    Long-term. The period of time covered by the three most recent 
decennial censuses of the United States to the present.
    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, 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.
    Sustainable development. Development planned and designed to 
consider and balance environmental quality, economic needs, and social 
concerns.
    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.
    (1) Financial strength will be analyzed by the Agency based on 
financial data provided in the application. The

[[Page 71987]]

analysis will consider the applicant's tangible net worth, which must 
be positive, and whether the applicant has dependable sources of 
revenue or a successful history of raising revenue sufficient to meet 
cash requirements.
    (2) Expertise will be analyzed by the Agency based on the applicant 
staff's training and experience in activities similar to those proposed 
in the application and, if consultants will be used, on the staff's 
experience in choosing and supervising consultants.
    (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. 4284.622-4287.628  [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. If the current service is inadequate, however, 
grant funds may be used to expand the level of effort or services 
beyond what is currently being 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 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 provided the assistance is not related to 
the development of a specific site. Applicants for grant funds must 
consider and document within their plans the important environmental 
factors within the planning area and the potential environmental 
impacts of the plan on the planning area, 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;
    (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 3052, Audits of States, Local Governments, and Non-
profit Organizations.


Secs. 4284.631-4284.637  [Reserved]


Sec. 4284.638  Application processing.

    (a) Applications.
    (1) Applicants will file an original and one copy of ``Application 
For
    Federal Assistance (For Nonconstruction),'' with the Agency State 
Office (available in any Agency office).
    (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;

[[Page 71988]]

    (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 notify the approved 
applicant in writing, 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.
    (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, 
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 3 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 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 experienced long-term poverty--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) The State Director 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. Permissible justifications are geographic 
distribution of funds, special importance for implementation of a 
strategic plan in partnership with other organizations, or 
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. If 
the Agency makes a determination that a decision is not appealable, a 
request for a determination of appealability may be made to the 
National Appeals Staff.


Secs. 4284.641-4287.646  [Reserved]


Sec. 4284.647  Grant approval and obligation of funds.

    (a) 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 with and will 
continue to comply with all applicable laws; regulations; Executive 
Orders; and other generally applicable requirements, including those 
contained in 7 CFR part 4284, subpart G, and 7 CFR parts 3015, 3016, 
3017, 3018, 3019, and 3052 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, (available in 
any Agency office) 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 (available in any Agency office) and 
a project performance activity report will

[[Page 71989]]

be required of all grantees on a quarterly 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).
    (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.

    Grantees must provide an annual audit in accordance with 7 CFR part 
3052. The audit requirements apply to the years in which grant funds 
are received 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.


Sec. 4284.668  Programmatic changes.

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


Secs. 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 provided the Administrator 
determines that application of the requirement or provision would 
adversely affect USDA's interest.


Secs. 4284.685-4284.698  [Reserved]


Sec. 4284.699  Member delegate clause.

    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.

    The reporting and recordkeeping requirements contained in this 
regulation have been approved by the Office of Management and Budget 
under the provisions of 44 U.S.C. chapter 35 and have been assigned OMB 
control number 0570-0024 in accordance with the Paperwork Reduction Act 
of 1995. You are not required to respond to this collection of 
information unless it displays a valid OMB control number.

    Dated: December 13, 1999.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 99-33203 Filed 12-22-99; 8:45 am]
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