[Federal Register Volume 68, Number 114 (Friday, June 13, 2003)]
[Proposed Rules]
[Pages 35321-35334]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-14840]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 68, No. 114 / Friday, June 13, 2003 / 
Proposed Rules  

[[Page 35321]]



DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

Rural Housing Service

Rural Utilities Service

Farm Service Agency

7 CFR Parts 1951 and 4284

RIN 0570-AA40


Value-Added Producer Grants and Agriculture Innovation Centers

AGENCY: Rural Business-Cooperative Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: The Rural Business-Cooperative Service proposes to implement 
new regulations for value-added producer grants (Value-Added Producer 
Grants) and a new demonstration program whereby agriculture innovation 
centers provide technical and other assistance to agricultural 
producers to help them establish businesses that produce and sell 
value-added agricultural commodities or products (Agriculture 
Innovation Centers). The Agricultural Innovation Center program is 
authorized under the Farm Security and Rural Investment Act of 2002 
(2002 Farm Bill). The 2002 Farm Bill also modified and extended the 
authority of the Secretary of the U.S. Department of Agriculture 
(Secretary) (USDA) to make Value-Added Producer Grants.
    This proposed rule also implements regulations in one central 
location to consolidate requirements that are common to all grant 
programs administered by Cooperative Services within the Rural 
Business-Cooperative Service (RBS), thereby avoiding the necessity of 
repeating elements shared in common.
    This proposed rule also amends the regulations to reduce the 
matching requirement required of certain institutions of higher 
education with respect to Rural Cooperative Development Grants from 25 
percent to 5 percent and to adjust the scoring criteria to reflect this 
change.
    Finally, this proposed rule amends the regulations to add Value-
Added Producer Grants and Agriculture Innovation Center Grants to the 
list of RBS programs covered by the servicing regulation.

DATES: Written or email comments on this proposed rule must be 
submitted on or before August 12, 2003. The comment period for 
information collections under the Paperwork Reduction Act of 1995 
continues through August 12, 2003.

ADDRESSES: Submit written comments, in duplicate, via either the U.S. 
Postal Service or express courier. Comments sent via the U.S. Postal 
Service should be addressed to the Branch Chief, Regulations and 
Paperwork Management Branch, Rural Development, U.S. Department of 
Agriculture, STOP 0742, 1400 Independence Ave., SW., Washington, DC 
20250-0742. Written comments via Federal Express Mail, or via another 
mail courier service requiring a street address, should be addressed to 
the same attention at 300 7th Street, SW., 3rd Floor, Room 701, 
Washington, DC 20024. Also, comments may be submitted via the Internet 
by addressing them to [email protected] and must contain the word 
``Value-Added'' in the subject line. All written comments will be 
available for public inspection during regular work hours at the 300 
7th Street, SW., address listed above.

FOR FURTHER INFORMATION CONTACT: Jim Haskell, Assistant Deputy 
Administrator, Rural Business-Cooperative Service, USDA, Stop 3250, 
Room 4016, 1400 Independence Ave., SW., Washington, DC 20250-3250, 
telephone (202) 720-8460, or Internet e-mail [email protected].

SUPPLEMENTARY INFORMATION:

Classification

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

Programs Affected

    The Catalog of Federal Domestic Assistance Program numbers assigned 
to these programs are 10.352 (Value-Added Grants), 10.771 (Rural 
Cooperative Development Grants) and 10.776 (Agriculture Innovation 
Centers).

Program Administration

    These programs are administered through the Cooperative Services 
Program of the Rural Business-Cooperative Services Agency within the 
Rural Development mission area of USDA and delivered via the USDA Rural 
Development state directors.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 the Agency 
will seek OMB approval of the collection requirements contained in 
these proposed regulations for the Agriculture Innovation Center Grant 
program.
    The information collection requirements associated with Value-Added 
Producer Grants and Rural Development Cooperative Grants were granted 
standard OMB approval under control numbers 0570-0039 and 0570-0006.
    Title: Agriculture Innovation Centers.
    OMB No.: New Collection.
    Abstract: This program will be administered by Cooperative Services 
within the Rural Business-Cooperative Service. The Farm Security and 
Rural Investment Act of 2002 (Pub. L. 107-171, signed May 13, 2002) 
authorized the Secretary of the U.S. Department of Agriculture (USDA) 
to award grant funds for a demonstration program under which 
agricultural producers are provided technical and business development 
assistance enabling them to produce and market value-added products.
    This is a competitive grant program with a matching funds 
requirement. The rulemaking sets forth the policies and procedures 
associated with the grant application and evaluation procedures and 
ongoing administration requirements for the program. The paperwork 
burden associated with the application process and ongoing reporting is 
included in this collection.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 10 hours per response.
    Respondents: Public and private entities engaged in research and 
technical assistance for developing value added agricultural products.
    Estimated Number of Respondents: 25.

[[Page 35322]]

    Estimated Number of Responses per Respondent: 2.
    Estimated Number of Responses: 43.
    Estimate of Total Annual Burden on Respondents: 416.
    Copies of this information collection can be obtained from Cheryl 
Thompson, Regulations and Paperwork Management Branch, Support Services 
Division at (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' 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 may be sent 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. All responses to this notice will be 
summarized and included in the request for OMB approval. All comments 
will also become a matter of public record.

Environmental Impact Statement

    It is the determination of the Secretary that this action is not a 
major Federal action significantly affecting the environment. 
Therefore, in accordance with the National Environmental Policy Act of 
1969, an Environmental Impact Statement is not required.

Executive Order 12988

    This rule has been reviewed in accordance with E.O. 12988, Civil 
Justice Reform. In accordance with this rule: (1) All state and local 
laws and regulations that are in conflict with this rule will be 
preempted; (2) no retroactive effect will be given to this rule; and 
(3) administrative proceedings in accordance with 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.

The Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
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, USDA 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 
USDA 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. Therefore 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 (5 U.S.C. 601-
612), the undersigned has determined and certified by signature of this 
document that this rule will not have a significant economic impact on 
a substantial number of small entities. The Regulatory Flexibility Act 
is intended to encourage Federal agencies to utilize innovative 
administrative procedures in dealing with individuals, small 
businesses, small organizations, and small governmental bodies that 
would otherwise be unnecessarily adversely affected by Federal 
regulations. The provisions included in this rule will not impact a 
substantial number of small entities to a greater extent than large 
entities. Therefore, no regulatory flexibility analysis under the 
Regulatory Flexibility Act is necessary.

Executive Order 13132, Federalism

    The policies contained in this rule do not have any substantial 
direct effect on states, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on state and local 
governments. This rule is intended to foster cooperation between the 
Federal Government and the states and local governments, and reduces, 
where possible, any regulatory burden imposed by the Federal Government 
that impedes the ability of states and local governments to solve 
pressing economic, social and physical problems in their state.

I. Background

    Section 6402 of the Farm Security and Rural Investment Act of 2002 
(Pub. L. 107-171) (2002 Farm Bill) authorized a new grant initiative to 
establish up to 15 agriculture innovation demonstration centers 
(Agriculture Innovation Centers or AICs) with the intent of fostering 
the ability of agricultural producers to reap the benefits of producing 
and marketing value-added products. Section 6401 of the 2002 Farm Bill 
expanded a value-added producer grant program initially established by 
section 231 of the Agricultural Risk Protection Act of 2000 (Pub. L. 
106-224). These two provisions of the 2002 Farm Bill are the subject of 
this proposed rulemaking.
    The Value-Added Producer Grant program was authorized in 2000. Over 
$57,000,000 in value-added producer grants have been awarded since this 
program was first authorized. This proposed rule incorporates the 
broader standards for eligibility for future producer grants and 
reflects some of the lessons learned from the experiences of the U.S. 
Department of Agriculture in implementing this program over the past 
two years. For example, we have clarified that two separate types of 
grants are available, i.e., planning and working capital grants, with 
slight differences in the respective application requirements and 
evaluation criteria.
    The grant purposes for Value-Added Producer grants are primarily to 
support the development and implementation of business plans and 
marketing strategies for value-added products and are made directly to 
agricultural producers. The 2002 Farm Bill added a new dimension to 
value-added efforts with the authorization of grants for a third value-
added program, namely a demonstration program whereby the grant 
recipients are to be centers that provide technical assistance and 
marketing and development assistance to producers. The proposed rule 
contemplates that the centers in question are not new buildings, per 
se, but may be research and resource centers operating under the 
umbrella of an established entity.
    The eligibility requirements for the Agriculture Innovation Centers 
authorized in section 6402 of the 2002 Farm Bill place an emphasis on 
the recipients' capabilities and a plan and board management that 
reflect the needs of the agricultural community in their

[[Page 35323]]

state. Their mandate is to provide technical assistance for marketing 
and business development assistance to enable agricultural producers to 
produce value-added agricultural products.

II. Program Descriptions

A. Value-Added Producer Grants

Value-Added Agricultural Product
    The term value-added agricultural product means any agricultural 
commodity or product that has been changed, produced, or segregated 
such that the market for the product has expanded and where the greater 
portion of the revenue derived from the value-added activity accrues to 
the producer of the commodity or product.
Use of Grant Funds
    The purpose of this program is to enable producers of agricultural 
commodities to participate in the economic returns to be found in the 
value-added market. Grants are to be used to develop business plans and 
develop strategies for creating marketing opportunities. Grants may 
also be used for feasibility studies and to provide capital to 
establish alliances or business ventures that allow the producers of 
the value-added agricultural product to better compete in domestic and 
international markets.
    Grant funds may not be used for planning, repair, rehabilitation, 
acquisition, or construction of a building or a facility (including a 
processing facility), or for the purchase, rental, or installation of 
fixed equipment.
Eligibility
    Grants will be awarded only to independent producers, eligible 
agricultural producer groups, farmer or rancher cooperatives or 
majority-controlled producer based business ventures. Independent 
producers include agricultural producers, steering committees of 
producers and producer-owned corporations and associations who do not 
produce the agricultural product under contract or joint ownership with 
any other organization.
Matching Funds
    Grant recipients will provide matching non-Federal funds equal to 
the amount of the grant received. These matching funds must be provided 
in advance of grant funding, such that for every dollar of grant that 
is advanced, an equal amount of match funds shall have been funded 
prior to submitting the request for reimbursement.

B. Agriculture Innovation Centers

Use of Grant Funds
    Grant funds are to be used for a demonstration program whereby 
centers are established to provide agricultural producers with 
technical and business development assistance for establishing 
businesses producing and selling value-added agricultural products, 
assistance in marketing, market development and business planning and 
organizational and development assistance to increase the viability, 
growth and sustainability of value-added businesses.
    Grants may be used for the following purposes: applied research, 
consulting services, hiring of employees, the making of matching 
grants, legal services and other related costs of conducting the above 
activities. Funds for these purposes may not be used to plan, repair, 
rehabilitate, acquire, or construct a building or a facility (including 
a processing facility) or to purchase, rent, or install fixed 
equipment.
Eligibility
    A grant may be made to an entity that demonstrates the capacity and 
technical expertise to conduct the activities described above. In 
addition to the capacity factor, the entity must provide a plan with 
specific goals to be met and support for the entity in the agricultural 
community. Also, the entity must demonstrate that adequate resources 
(in cash or in kind) are available, or have been committed for this 
purpose which will allow the grant recipient to achieve the goals 
established. Finally, the entity must have a board of directors such 
that there are representatives of each of the following groups on the 
board: (a) The two general agricultural organizations with the greatest 
number of members in the State in which the entity is located, (b) the 
applicable State department of agriculture and (c) entities 
representing the four highest grossing commodities produced in the 
State, determined on the basis of annual gross cash sales. Trade 
associations are eligible to apply.

III. Rural Cooperative Development Grants and Conforming Amendments

    Section 6015 of the 2002 Farm Bill reduced the match funding 
requirements for rural cooperative development grants imposed on 
certain institutions of higher learning from 25 percent to 5 percent. 
These institutions are defined as ``1994 Institutions'' and are listed 
by name in the Equity in Educational Land-Grant Status Act of 1994 (7 
U.S.C. 301 note). This rulemaking proposes to amend the regulation 
applicable to this grant program to provide for this targeted reduced 
match funding requirement.
    The amendments proposed for subpart F within 7 CFR part 4284 
conform the regulations for the rural cooperative development grant 
program with the newly implemented subpart A that consolidates 
provisions common to all grant programs administered by Cooperative 
Services within RBS.

List of Subjects

7 CFR Part 1951

    Grant programs--Housing and community development, Reporting 
requirements, Rural development.

7 CFR Part 4284

    Agricultural commodities, Agriculture innovation centers, 
Agricultural marketing research, Business and industry, Grant 
programs--housing and community development, Rural areas, Rural 
development, Value-added.

    Accordingly, RBS proposes to amend Chapters XVIII and XLII, title 
7, of the Code of Federal Regulations as follows:

PART 4284--GRANTS

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

    Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Subpart F also issued under 7 U.S.C 1932(e)
Subpart G also issued under 7 U.S.C 1926(a)(11)
Subpart J also issued under 7 U.S.C 1621 note
Subpart K also issued under 7 U.S.C. 1621 note

    2. Subpart A of part 4284, consisting of Sec. Sec.  4284.1 through 
4284.100 is added to read as follows:

Subparts B Through E--[Reserved]

Subpart A--General Requirements for Cooperative Services Grant 
Programs

Sec.
4284.1 Purpose.
4284.2 Policy.
4284.3 Definitions.
4284.4 Appeals.
4284.5 [Reserved]
4284.6 Applicant eligibility.
4284.7 Electronic submission.
4284.8 Grant approval and obligation of funds.
4284.9 Grant disbursement.
4284.10 Ineligible grant purposes.
4284.11 Award requirements.
4284.12 Reporting requirements.
4284.13 Confidentiality of reports.
4284.14 Grant servicing.
4284.15 Performance reviews.
4284.16 Other considerations.
4284.17 Member delegate clause.
4284.18 Audit requirements.
4284.19 Programmatic changes.
4284.20-4284.100 [Reserved]

[[Page 35324]]

Sec.  4284.1  Purpose.

    The purpose of this subpart is to set forth definitions and 
requirements which are common to all grant programs set forth in this 
part administered by Cooperative Services within the Rural Business-
Cooperative Service (RBS). Programs administered by the Business 
Programs within RBS are not affected by this subpart.


Sec.  4284.2  Policy.

    It is the policy of Cooperative Services to administer grant 
programs as uniformly as possible to minimize unnecessary 
inconsistencies in the administration of the grant programs provided 
for in this part. The specific provisions or definitions provided in 
the subparts that are specific to Cooperative Services are supplemental 
to these general provisions. Where a specific program provision is 
expressly different from what is provided in this subpart, the program 
specific subpart shall prevail.


Sec.  4284.3  Definitions.

    Agency--Rural Business-Cooperative Service (RBS), an agency of the 
United States Department of Agriculture (USDA), or a successor agency.
    Agriculture Producer Group--An organization that represents 
Independent Producers, whose mission includes working on behalf of 
Independent Producers and the majority of whose membership and board of 
directors is comprised of Independent Producers.
    Agricultural Product--Plant and animal products and their by-
products to include forestry products, fish and seafood products.
    Cooperative--A user-owned and controlled business from which 
benefits are derived and distributed equitably on the basis of use.
    Cooperative Services`` The office within RBS, and its successor 
organization, that administers programs authorized by the Cooperative 
Marketing Act of 1926 (7 U.S.C. 451 et seq.) and such other programs so 
identified in USDA regulations.
    Economic development--The economic growth of an area as evidenced 
by increase in total income, employment opportunities, decreased out-
migration of population, value of production, increased diversification 
of industry, higher labor force participation rates, increased duration 
of employment, higher wage levels, or gains in other measurements of 
economic activity, such as land values.
    Emerging Market--A new or developing market for the applicant, 
which the applicant has not traditionally supplied.
    Farmer or Rancher Cooperative--A duly recognized farmer or rancher 
cooperative in good standing under State law.
    Fixed equipment--Tangible personal property used in trade or 
business that would ordinarily be subject to depreciation under the 
Internal Revenue Code, including processing equipment, but not 
including property for equipping and furnishing offices such as 
computers, office equipment, desks or file cabinets.
    Independent Producers--Agricultural producers, to include 
individuals, for profit and not for profit corporations, LLCs, 
partnerships or LLPs, solely owned or controlled by producers who do 
not produce the agricultural product under contract or joint ownership 
with any other organization. An independent producer can also be a 
steering committee composed of independent agricultural producers in 
the process of organizing an association to operate a value-added 
venture that will be owned and controlled by the independent producers 
supplying agricultural product to the market.
    Majority-Controlled Producer-Based Business Venture--A venture 
where more than 50% of the ownership and control is held by Independent 
Producers and or partnerships, LLCs, LLPs, corporations or cooperatives 
that are themselves 100 percent owned and controlled by Independent 
Producers.
    Matching Funds--Cash or confirmed funding commitments from non-
Federal sources unless otherwise provided by law. Unless otherwise 
provided, matching funds must be at least equal to the grant amount. 
Unless otherwise provided, in-kind contributions that conform to the 
provisions of 7 CFR 3015.50 and 7 CFR 3019.23, as applicable, can be 
used as matching funds. Examples of in-kind contributions include 
volunteer services furnished by professional and technical personnel, 
donated supplies and equipment, and donated office space. Matching 
funds must be provided in advance of grant funding, such that for every 
dollar of grant that is advanced, not less than an equal amount of 
match funds shall have been funded prior to submitting the request for 
reimbursement. Matching funds are subject to the same use restrictions 
as grant funds. Funds used for an ineligible purpose will not be 
considered matching funds.
    National Office--USDA RBS headquarters in Washington, D.C.
    Nonprofit institution--Any organization or institution, including 
an accredited institution of higher education, no part of the net 
earnings of which may inure, to the benefit of any private shareholder 
or individual.
    Product segregation--Physical separation of a product or commodity 
from similar products. Physical separation requires a barrier to 
prevent mixing with the similar product.
    Public body--Any state, county, city, township, incorporated town 
or village, borough, authority, district, economic development 
authority, or Indian tribe on federal or state reservations or other 
federally recognized Indian tribe in rural areas.
    RFP--Request for Proposals.
    Rural and rural area--includes all the territory of a state that is 
not within the outer boundary of any city or town having a population 
of 50,000 or more and the urbanized area contiguous and adjacent to 
such city or town, as defined by the U.S. Bureau of the Census using 
the latest decennial census of the United States.
    Rural Development--A mission area within the USDA consisting of the 
Office of Under Secretary for Rural Development, Office of Community 
Development, Rural Business-Cooperative Service, Rural Housing Service 
and Rural Utilities Service and their successors.
    State--includes each of the several States, the Commonwealth of 
Puerto Rico, the Virgin Islands of the United States, Guam, American 
Samoa, the Commonwealth of the Northern Mariana Islands, and, as may be 
determined by the Secretary to be feasible, appropriate and lawful, the 
Freely Associated States and the Federated States of Micronesia.
    State Office--USDA Rural Development offices located in each state.
    Value-Added--The incremental value that is realized by the producer 
from an agricultural commodity or product as the result of a change in 
its physical state, differentiated production or marketing, as 
demonstrated in a business plan, or product segregation. Also, the 
economic benefit realized from the production of farm or ranch-based 
renewable energy. Incremental value may be realized by the producer as 
a result of either an increase in value to buyers or the expansion of 
the overall market for the product. Examples include milling wheat into 
flour, slaughtering livestock or poultry, making strawberries into jam, 
the marketing of organic products, an identity-preserved marketing 
system, and collecting and converting methane from animal waste to 
generate energy. Identity-preserved marketing systems

[[Page 35325]]

include labeling that identifies how the product was produced and by 
whom.


Sec.  4284.4  Appeals.

    Any appealable adverse decision made by the Agency may be appealed 
in accordance with USDA appeal regulations found at 7 CFR part 11 and 
subpart B of part 1900. If the Agency makes a determination that a 
decision is not appealable, a participant may request that it be 
reviewed by the Director of the National Appeals Division.


Sec.  4284.5  [Reserved]


Sec.  4284.6  Applicant eligibility.

    An outstanding judgment obtained against an applicant by the United 
States in a Federal Court (other than in the United States Tax Court), 
which has been recorded, shall cause the applicant to be ineligible to 
receive any assistance until the judgment is paid in full or otherwise 
satisfied. RBS grant funds may not be used to satisfy the judgment.


Sec.  4284.7  Electronic submission.

    Applicants and grant awardees are encouraged, but not required, to 
submit applications and reports in electronic form as prescribed in 
requests for proposals issued by USDA and in the applicable grant 
agreements.


Sec.  4284.8  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 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.

    (b) [Reserved]


Sec.  4284.9  Grant 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. The Agency may limit the frequency in which a Request 
for Advance or Reimbursement may be submitted.


Sec.  4284.10  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 date of grant 
approval;
    (d) Fund political activities;
    (e) Pay for assistance to any private business enterprise which 
does not have a 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;
    (g) Plan, repair, rehabilitate, acquire, or construct a building or 
facility (including a processing facility);
    (h) Purchase, rent or install Fixed Equipment; or
    (i) Pay for the repair of privately owned vehicles.


Sec.  4284.11  Award requirements.

    In addition to specific grant requirements, all approved applicants 
will be required to do the following:
    (a) Enter into a grant agreement with USDA in form and substance 
similar to the form of agreement as may be published within or as an 
appendix to the applicable RFP;
    (b) Submit a feasibility study and business plan showing the 
viability of the venture, if any Federal grant and matching funds are 
to be used as working capital;
    (c) Use ``Request for Advance or Reimbursement'' to request 
advances or reimbursements, as applicable, but not more frequently than 
once a month;
    (d) Maintain a financial management system that is acceptable to 
the Agency; and
    (e) Collect and maintain data on race, sex and national origin of 
the beneficiaries of the project.


Sec.  4284.12  Reporting requirements.

    Grantees must submit the following to USDA:
    (a) A ``Financial Status Report'' listing expenditures according to 
agreed upon budget categories, on a semi-annual basis. Reporting 
periods end each March 31 and September 30. Reports are due 30 days 
after the reporting period ends.
    (b) Semi-annual performance reports that compare accomplishments to 
the objectives stated in the proposal. Identify all tasks completed to 
date and provide documentation supporting the reported results. If the 
original schedule provided in the work plan is not being met, the 
report should discuss the problems or delays that may affect completion 
of the project. Objectives for the next reporting period should be 
listed. Compliance with any special condition on the use of award funds 
should be discussed. Reports are due as provided in paragraph (a) of 
this section. The supporting documentation for completed tasks include, 
but are not limited to, feasibility studies, marketing plans, business 
plans, articles of incorporation and bylaws and an accounting of how 
working capital funds were spent.
    (c) Final project performance reports, inclusive of supporting 
documentation. The final performance report is due within 30 days of 
the completion of the project.


Sec.  4284.13  Confidentiality of reports.

    All reports submitted to the Agency will be held in confidence to 
the extent permitted by law.


Sec.  4284.14  Grant servicing.

    Grants will be serviced in accordance with 7 CFR part 1951, 
subparts E and O. 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.  4284.15  Performance reviews.

    (a) USDA will incorporate performance criteria in grant award 
documentation and will regularly evaluate the progress and performance 
of grant awardees.
    (b) USDA may elect to suspend or terminate a grant in all or part, 
or funding of a particular workplan activity, but nevertheless fund the 
remainder of a request for advance or reimbursement, as applicable, 
where USDA has determined:
    (1) That the grantee or subrecipient of grant funds has 
demonstrated insufficient progress in complying with the terms of the 
grant agreement;
    (2) There is reason to believe that other sources of joint funding 
have not been or will not be forthcoming on a timely basis; or
    (3) Such other cause as USDA identifies in writing to the grantee 
(including but not limited to the use of federal grant funds for 
ineligible purposes).


Sec.  4284.16  Other considerations.

    (a) Environmental review. All grants made under this subpart are 
subject to the requirements of 7 CFR part 1940, subpart G. Applications 
for technical assistance or planning projects are generally excluded 
from the environmental review process by

[[Page 35326]]

Sec.  1940.333, provided the assistance it 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.
    (b) Civil rights. All grants made under this subpart are subject to 
the requirements of title VI of the Civil Rights Act of 1964, which 
prohibits discrimination on the basis of race, color and national 
origin as outlined in 7 CFR part 1901, subpart E. In addition, the 
grants made under this subpart are subject to the requirements of 
section 504 of the Rehabilitation Act of 1973, as amended, which 
prohibits discrimination on the basis of disability; the requirements 
of the Age Discrimination Act of 1975, which prohibits discrimination 
on the basis of age; and title III of the Americans with Disabilities 
Act, which prohibits discrimination on the basis of disability by 
private entities in places of public accommodations. This program will 
also be administered in accordance with all other applicable Civil 
Rights Law.
    (c) Other USDA regulations. The grant programs under this part are 
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.


Sec.  4284.17  Member delegate clause.

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


Sec.  4284.18  Audit requirements.

    Grantees must comply with the audit requirements of 7 CFR part 
3052. The audit requirements apply to the years in which grant funds 
are received and years in which work is accomplished using grant funds.


Sec.  4284.19  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.


Sec. Sec.  4284.204-284.100  [Reserved]

    3. Subpart J of part 4284, consisting of Sec. Sec.  4284.901 
through 4284.1000 is added to read as follows:

Subpart J--Value-Added Producer Grants

Sec.
4284.901 Purpose.
4284.902 Policy.
4284.903 Program administration.
4284.904 Definitions.
4284.905-906 [Reserved]
4284.907 Eligibility for grant assistance.
4284.908 Use of grant and matching funds.
4284.909 Limitations on use of funds.
4284.910 Application processing.
4284.911 Evaluation screening.
4284.912 Evaluation process.
4284.913 Evaluation criteria and weights.
4284.914 Grant closing.
4284.915-4284.999 [Reserved]
4284.1000 OMB control number.


Sec.  4284.901  Purpose.

    This subpart implements the value-added agricultural product market 
development grant program (Value-Added Producer Grants) administered by 
the Rural Business-Cooperative Service whereby grants are made to 
enable producers to develop businesses that produce and market value-
added agricultural products.


Sec.  4284.902  Policy.

    It is the policy of the Secretary of Agriculture to fund a broad 
diversity of projects that help increase the agricultural producers' 
customer base and share of the food and agricultural system profit, 
including projects likely to increase the profitability and viability 
of small and medium-sized farms and ranches.


Sec.  4284.903  Program Administration.

    The Value-Added Producer Grant program is administered by 
Cooperative Services within the Agency.


Sec.  4284.904  Definitions.

    Planning Grants. Grants to facilitate the development of a defined 
program of economic activities to determine the viability of a 
potential value-added venture, including feasibility studies, marketing 
strategies, business plans and legal evaluations.
    Working Capital Grants. Grants to provide funds to operate ventures 
and pay the normal expenses of the venture that are eligible uses of 
grant funds.


Sec. Sec.  4284.905-906  [Reserved]


Sec.  4284.907  Eligibility for grant assistance.

    (a) The proposed project must generate Value-Added for an 
Agricultural Product.
    (b) Independent Producers, Agricultural producer groups, Farmer or 
Rancher cooperatives and Majority-Controlled Producer-Based Business 
Ventures, are eligible for grants under this subpart.
    (c) Applicants that are a Farmer or Rancher cooperative, an 
Agriculture producer group or a Majority-Controlled Producer-Based 
Business Venture must be entering into an Emerging Market as a result 
of the proposed project. Independent Producers do not have to be 
entering into an Emerging Market.
    (d) No project may be the subject of more than one Planning Grant 
or more than one Working Capital Grant. The same project may, however, 
be awarded one Planning Grant and subsequently apply for and receive a 
Working Capital Grant.
    (e) Not more than one project per applicant may receive grant 
funding under this subpart.
    (f) The total amount provided to any grant recipient shall not 
exceed $500,000.


Sec.  4284.908  Use of grant and matching funds.

    (a) An application may be for either a Planning Grant or a Working 
Capital Grant, but not both.
    (b) Grant funds may be used to pay up to 50 percent of the costs 
for carrying out relevant projects. Matching funds must be provided for 
the balance of costs.
    (c) Matching funds may only be used for the same purposes allowed 
for grant funds.
    (d) Planning Grant funds may be used to develop a business plan or 
perform a feasibility study to establish a viable marketing opportunity 
for a value-added producer. These uses include, but are not limited to, 
the following:
    (1) Conduct, or hire a qualified consultant to conduct, a 
feasibility analysis of the proposed value added project to help 
determine the potential success of the project;
    (2) Develop, or hire a qualified consultant to develop, a business

[[Page 35327]]

operations plan that provides comprehensive detail on the management, 
planning and other operational aspects of the proposed project; and
    (3) Develop, or hire a qualified consultant to develop, a marketing 
plan for the proposed value-added product(s) including the 
identification of a market window, potential buyers, a description of 
the distribution system and possible promotional campaigns;
    (e) Working Capital Grant funds may be used to provide capital to 
establish alliances or business ventures that allow the producer of the 
value-added agricultural product to better compete in domestic or 
international markets. These uses include, but are not limited to, the 
following:
    (1) Establish a working capital account to fund operations prior to 
obtaining sufficient cash flow from operations;
    (2) Hire counsel to provide legal advice and to draft 
organizational and other legal documents related to the proposed 
venture;
    (3) Hire a Certified Public Accountant or other qualified 
individual to design an accounting system for the proposed venture; and
    (4) Pay salaries, utilities and other operating costs such as 
inventory financing, the purchase of office equipment, computers and 
supplies and finance other related activities.


Sec.  4284.909  Limitations on use of funds.

    In addition to the limitations provided in 7 CFR subpart A, neither 
grant nor matching funds may be used to fund architectural or 
engineering design work, or other planning work, for a physical 
facility.


Sec.  4284.910  Application processing.

    (a) Applications. USDA will solicit applications on a competitive 
basis by publication of one or more RFPs. Unless otherwise specified in 
the applicable RFP, applicants must file an original and one copy of 
the required forms and a proposal.
    (b) Required forms. The following forms must be completed, signed 
and submitted as part of the application package. Other forms may be 
required. This will be published in the applicable RFP.
    (1) ``Application for Federal Assistance.''
    (2) ``Budget Information--Non-Construction Programs.''
    (3) ``Assurances--Non-Construction Programs.''
    (c) Proposal. Each proposal must contain the following elements. 
Additional elements may be published in the applicable RFP.
    (1) Title page.
    (2) Table of contents.
    (3) Executive summary. A summary of the proposal should briefly 
describe the project including goals, tasks to be completed and other 
relevant information that provides a general overview of the project. 
In this section the applicant must clearly state whether the 
application is for a Planning Grant or a Working Capital Grant and the 
amount requested.
    (4) Eligibility. The narrative must include a detailed discussion 
of how the applicant meets the eligibility requirements.
    (5) Proposal narrative. The narrative portion of the proposal must 
include, but is not limited to, the following:
    (i) Project title. The title of the proposed project must be brief, 
not to exceed 75 characters, yet describe the essentials of the 
project.
    (ii) Information sheet. A separate one page information sheet 
listing each of the evaluation criteria referenced in the RFP followed 
by the page numbers of all relevant material and documentation 
contained in the proposal that address or support the criteria.
    (iii) Goals of the project. A clear statement of the ultimate goals 
of the project. There must be an explanation of how a market will be 
expanded and the degree to which incremental revenue will accrue to the 
benefit of the agricultural producer(s).
    (iv) Work plan. The narrative must contain a description of the 
project and set forth the tasks involved in reasonable detail.
    (v) Performance evaluation criteria. Performance criteria suggested 
by the applicant for incorporation in the grant award in the event the 
proposal receives grant funding under this subpart. These suggested 
criteria are not binding on USDA.
    (vi) Proposal evaluation criteria. Each of the proposal evaluation 
criteria referenced in the RFP must be addressed, specifically and 
individually, in narrative form.
    (6) Verification of matching funds. Applicants must provide a 
budget to support the work plan showing all sources and uses of funds 
during the project period. Applicants will be required to verify 
matching funds, both cash and in-kind. Sufficient information should be 
included such that USDA can verify all representations.
    (7) Certification. Applicants must certify that matching funds will 
be available at the same time grant funds are anticipated to be spent 
and that matching funds will be spent in advance of grant funding, such 
that for every dollar of grant that is advanced, not less than an equal 
amount of match funds will have been funded prior to submitting the 
request for reimbursement.


Sec.  4284.911  Evaluation screening.

    The Agency will conduct an initial screening of all proposals to 
determine whether the applicant is eligible and whether the application 
is complete and sufficiently responsive to the requirements set forth 
in the RFP to allow for an informed review. Failure to address any of 
the required evaluation criteria will disqualify the proposal. 
Submissions which do not pass the initial screening may be returned to 
the Applicant. If the submission deadline has not expired and time 
permits, returned applications may be revised and re-submitted.


Sec.  4284.912  Evaluation process.

    (a) Applications will be evaluated by agricultural economists or 
other technical experts appointed by the Agency.
    (b) After all proposals have been evaluated and scored in 
accordance with the point allocation specified in the applicable RFP, 
Agency officials will present to the Administrator of RBS a list of all 
applications in rank order, together with funding level 
recommendations.
    (c) The Administrator reserves the right to award additional 
points, as specified in the applicable RFP, to accomplish agency 
objectives (e.g. to ensure geographic distribution, distribution of a 
commodity or accomplish presidential initiatives.) The maximum number 
of points that can be added to an application cannot exceed ten percent 
of the total points of the original score.
    (d) After giving effect to the Administrator's point awards, 
applications will be funded in rank order until all available funds 
have been obligated.
    (e) In the event an insufficient number of eligible applications 
are received in response to a given RFP, time permitting, subsequent 
rounds of competition will be initiated by publishing subsequent RFPs.
    (f) Unless a proposal is withdrawn, eligible but unfunded proposals 
from preceding competitions in a given fiscal year will be considered 
for funding in subsequent competitions in the same fiscal year.


Sec.  4284.913  Evaluation criteria and weights.

    Unless supplemented in a RFP, the criteria listed in this section 
will be used to evaluate proposals submitted under this subpart. The 
distribution of

[[Page 35328]]

points to be awarded per criterion will be identified in the applicable 
RFP.
    (a) Planning grants. (1) Nature of the proposed venture. Projects 
will be evaluated for technological feasibility, operational 
efficiency, profitability, sustainability and the likely improvement to 
the local rural economy. Points will be awarded based on the greatest 
expansion of markets and increased returns to producers. Evaluators may 
rely on their own knowledge and examples of similar ventures described 
in the proposal to form conclusions regarding this criterion.
    (2) Qualifications of those doing work. Proposals will be reviewed 
for whether the personnel who are responsible for doing proposed tasks, 
including those hired to do studies, have the necessary qualifications. 
If a consultant or others are to be hired, more points may be awarded 
if the proposal includes evidence of their availability and commitment 
as well.
    (3) Project leadership. The leadership abilities of individuals who 
are proposing the venture will be evaluated as to whether they are 
sufficient to support a conclusion of likely project success. Credit 
may be given for leadership evidenced in community or volunteer 
efforts.
    (4) Commitments and support. Producer commitments will be evaluated 
on the basis of the number of Independent Producers currently involved 
as well as how many may potentially be involved, and the nature, level 
and quality of their contributions. End user commitments will be 
evaluated on the basis of potential markets and the potential amount of 
output to be purchased. Proposals will be reviewed for evidence that 
the project enjoys third party support and endorsement, with emphasis 
placed on financial and in kind support as well as technical 
assistance.
    (5) Work plan/Budget. The work plan will be reviewed for to whether 
it provides specific and detailed planning task descriptions that will 
accomplish the project's goals and the budget will be reviewed for a 
detailed breakdown of estimated costs associated with the planning 
activities. The budget must present a detailed breakdown of all 
estimated costs associated with the planning activities and allocate 
these costs among the listed tasks. Points may not be awarded unless 
sufficient detail is provided to determine whether or not funds are 
being used for qualified purposes. Matching funds as well as grant 
funds must be accounted for in the budget to receive points.
    (6) Amount requested. Points will be awarded based on the size of 
the grant request. Generally, requests for lower amounts will receive a 
higher score for this criterion than higher requests. The points to be 
awarded and request ranges will be established in the applicable RFP.
    (7) Project cost per owner-producer. This is calculated by dividing 
the amount of Federal funds requested by the total number of producers 
that are owners of the venture. Points to be awarded will be 
established in the applicable RFP.
    (8) Presidential initiatives. Points may be awarded for proposals 
that focus on Presidential initiatives. Descriptions of these 
initiatives and the points to be awarded will be established in the 
applicable RFP.
    (b) Working capital grants. (1) Business viability. Proposals will 
be evaluated on the basis of the technical and economic feasibility and 
sustainability of the venture and the efficiency of operations.
    (2) Customer base/increased returns. Proposals that demonstrate 
strong growth in a market or customer base and greater value-added 
revenue accruing to producer-owners will receive more points than those 
that demonstrate less growth in markets and realized Value-Added 
returns.
    (3) Commitments and support. Producer commitments will be evaluated 
on the basis of the number of Independent Producers currently involved 
as well as how many may potentially be involved, and the nature and 
level and quality of their contributions. End user commitments will be 
evaluated on the basis of identified markets, letters of intent or 
contracts from potential buyers and the amount of output to be 
purchased. Proposals will be reviewed for evidence that the project 
enjoys third party support and endorsement, with emphasis placed on 
financial and in kind support as well as technical assistance.
    (4) Management team/work force. The education and capabilities of 
project managers and those who will operate the venture must reflect 
the skills and experience necessary to effect project success. The 
availability and quality of the labor force needed to operate the 
venture will also be evaluated. Proposals that reflect successful track 
records managing similar projects will receive higher points for this 
criterion than those that do not reflect successful track records.
    (5) Work plan/Budget. The work plan will be reviewed for whether it 
provides specific and detailed planning task descriptions that will 
accomplish the project's goals and the budget will be reviewed for a 
detailed breakdown of estimated costs associated with the planning 
activities. The budget must present a detailed breakdown of all 
estimated costs associated with the venture's operations and allocate 
these costs among the listed tasks. Points may not be awarded unless 
sufficient detail is provided to determine whether or not funds are 
being used for qualified purposes. Matching funds as well as grant 
funds must be accounted for in the budget to receive points.
    (6) Amount requested. Points will be awarded based on the size of 
the grant request. Requests for lower amounts will receive a higher 
score for this criterion than higher requests. The points to be awarded 
and request ranges will be established in the applicable RFP.
    (7) Project cost per owner-producer. This is calculated by dividing 
the amount of Federal funds requested by the total number of producers 
that are owners of the venture. Points to be awarded will be 
established in the applicable RFP.
    (8) Presidential initiatives. Points may be awarded for proposals 
that focus on Presidential initiatives. Descriptions of these 
initiatives and the points to be awarded will be established in the 
applicable RFP.


Sec.  4284.914  Grant closing.

    (a) Letter of conditions. The Agency will notify an approved 
applicant in writing, setting out the conditions under which the grant 
will be made.
    (b) Applicant's intent to meet conditions. Upon reviewing the 
conditions and requirements in the letter of conditions, the applicant 
must complete, sign and return the Agency's ``Letter of Intent to Meet 
Conditions,'' 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.
    (c) Grant agreement. The Agency and the grantee must sign the 
Agency's ``Value-Added Producer Grant Agreement'' prior to the advance 
of funds.


Sec. Sec.  4284.915-999  [Reserved]


Sec.  4284.1000  OMB control number.

    The reporting and recordkeeping requirements contained in this 
subpart have been approved by the Office of Management and have been 
assigned OMB control number 0570-0039 in

[[Page 35329]]

accordance with the Paperwork Reduction Act of 1995.
    4. Subpart K of part 4284, consisting of Sec. Sec.  4284.1001 
through 4284.1100 is added to read as follows:

Subpart K--Agriculture Innovation Demonstration Centers

Sec.
4284.1001 Purpose.
4284.1002 Policy.
4284.1003 Program administration.
4284.1004 Definitions.
4284.1005-1006 [Reserved]
4284.1007 Eligibility for grant assistance.
4284.1008 Use of grant funds.
4284.1009 Application processing.
4284.1010 Evaluation screening.
4284.1011 Evaluation process.
4284.1012 Evaluation criteria and weights.
4284.1013 Grant closing.
4284.1014--4284.1100 [Reserved]


Sec.  4284.1001  Purpose.

    This subpart implements a demonstration program administered by the 
Rural Business-Cooperative Service whereby grants are made to 
innovation centers responsible for providing technical and business 
development assistance to agricultural producers seeking to engage in 
the marketing or the production of value-added products.


Sec.  4284.1002  Policy.

    It is the policy of the Secretary of Agriculture to fund centers 
which evidence broad support from the agricultural community in the 
state or region, significant coordination with end users (processing 
and distribution companies and regional grocers), strategic alliances 
with entities having technical research capabilities and a focused 
delivery plan for reaching out to the producer community. It is also 
the policy of the Secretary, using the research and technical services 
of the U.S. Department of Agriculture, to assist the grantees in 
establishing Centers. This program is not intended to fund scientific 
research.


Sec.  4284.1003  Program administration.

    The Agriculture Innovation Demonstration Center program is 
administered by Cooperative Services within the Agency.


Sec.  4284.1004  Definitions.

    Board of Directors--The group of individuals that govern the 
Center.
    Center--The Agriculture Innovation Center to be established and 
operated by the grantees. It may or may not be an independent legal 
entity, but it must be independently governed in accordance with the 
requirements of this subpart.
    Qualified Board of Directors--A Board of Directors that includes 
representatives from each of the following groups:
    (1) The two general agricultural organizations with the greatest 
number of members in the State in which the Center is located,
    (2) The State department of agriculture, or equivalent, of the 
State in which the Center is located and
    (3) Entities representing the four highest grossing commodities 
produced in the State in which the Center is located, as determined on 
the basis of annual gross cash sales.
    Producer Services--are those services to be provided by the Centers 
to agricultural producers. Producer services consist of the following 
types of services:
    (1) Technical assistance, consisting of engineering services, 
applied research, scale production, and similar services, to enable the 
agricultural producers to establish businesses to produce value-added 
agricultural commodities or products;
    (2) Assistance in marketing, market development and business 
planning, including advisory services with respect to leveraging 
capital assets; and
    (3) Organizational, outreach and development assistance to increase 
the viability, growth and sustainability of businesses that produce 
value-added agricultural commodities or products.


Sec. Sec.  4284.1005-1006  [Reserved]


Sec.  4284.1007  Eligibility for grant assistance.

    Non-profit and for-profit corporations, institutions of higher 
learning and other entities, including a consortium where a lead entity 
has been designated and agrees to act as funding agent, that meet the 
following requirements are eligible for grant assistance:
    (a) The entity--
    (1) Has provided services similar to those listed for Producer 
Services; or
    (2) Demonstrates the capability of providing Producer Services;
    (b) The application includes a plan that meets the requirements of 
Sec.  4284.1009(c)(5)(iv) that also outlines--
    (1) The support for the entity in the agricultural community;
    (2) The technical and other expertise of the entity;
    (3) The goals of the entity for increasing and improving the 
ability of local agricultural producers to develop markets and 
processes for value-added agricultural commodities or products;
    (c) The entity demonstrates that adequate resources (in cash or in 
kind) are available, or have been committed to be made available to the 
entity, to increase and improve the ability of local agricultural 
producers to develop markets and processes for value-added agricultural 
commodities or products; and
    (d) The proposed Center has a Qualified Board of Directors.


Sec.  4284.1008  Use of grant funds.

    Grant funds may be used to assist eligible recipients in 
establishing Centers that provide Producer Services and may only be 
used to support operations of the Center that directly relate to 
providing Producer Services. Grant funds may be used for the following 
purposes, subject to the limitations set forth in Sec.  4284.10:
    (a) Consulting services for legal, accounting and technical 
services to be used by the grantee in establishing and operating a 
Center;
    (b) Hiring of employees, at the discretion of the Qualified Board 
of Directors;
    (c) The making of matching grants to agricultural producers, 
individually not to exceed $5,000, where the aggregate amount of all 
such matching grants made by the grantee does not exceed $50,000;
    (d) Applied research;
    (e) Legal services; and
    (f) Such other related purposes as the Agency may announce in the 
RFP.


Sec.  4284.1009  Application processing.

    (a) Applications. USDA will solicit applications on a competitive 
basis by publication of one or more Requests for Proposals (RFPs). 
Unless otherwise specified in the applicable RFP, applicants must file 
an original and one copy of the required forms and a proposal.
    (b) Required forms. The following forms must be completed, signed 
and submitted as part of the application package. Other OMB approved 
forms may be required. This will be published in the applicable RFP.
    (1) ``Application for Federal Assistance.''
    (2) ``Budget Information--Non-Construction Programs.''
    (3) ``Assurances--Non-Construction Programs.''
    (c) Proposal. Each proposal must contain the following elements. 
Additional elements may be published in the applicable RFP.
    (1) Title page.
    (2) Table of contents.
    (3) Executive summary. A summary of the proposal should briefly 
describe the project including goals, tasks to be completed and other 
relevant information that provides a general overview of the project 
and the amount requested.

[[Page 35330]]

    (4) Eligibility. A detailed discussion describing how the applicant 
meets the eligibility requirements.
    (5) Proposal narrative. The narrative portion of the proposal must 
include, but is not limited to, the following:
    (i) Project title. The title of the proposed project must be brief, 
not to exceed 75 characters, yet describe the essentials of the 
project.
    (ii) Information sheet. A separate one page information sheet 
listing each of the evaluation criteria referenced in the RFP followed 
by the page numbers of all relevant material and documentation 
contained in the proposal that address or support the criteria.
    (iii) Goals of the project. The first part of this section should 
list each Provider Service to be offered by the Center. The second part 
of this section should list one or more specific goals relating to 
increasing and improving the ability of identified local agricultural 
producers to develop a market or process for value-added agricultural 
commodities or products.
    (iv) Work plan. Actions that must be taken in order for the 
Provider Services to be available from the Center. Each action listed 
should include a target date by which it will be completed. General 
start up tasks should be listed, followed by specific tasks listed for 
each Provider Service to be offered, as well as tasks associated with 
the start of operations. The tasks associated with the start of 
operations should include a focused marketing and delivery plan 
directed to the local agricultural producers that were identified in 
paragraph (c)(5)(iii) of this section. The actions to be taken should 
include steps for identifying customers, acquiring personnel and 
contracting for services to the Center, including arrangements for 
strategic alliances.
    (v) Performance evaluation criteria. Performance criteria suggested 
by the applicant for incorporation in the grant award in the event the 
proposal receives grant funding under this subpart. These suggested 
criteria are not binding on USDA.
    (vi) Agricultural community support. Evidence of support from the 
local agricultural community should be included in this section. 
Letters in support should reflect that the writer is familiar with the 
provisions of the Plan for the Center, including the stated goals. 
Evidence of support can take the form of making employees available to 
the Center, service as a board member and other in-kind contributions.
    (vii) Strategic coordination and alliances. Describe arrangements 
in place or planned with end users (processing and distribution 
companies and regional grocers) as well as arrangements with entities 
having technical research capabilities, broad support from the 
agricultural community in the State or region, significant coordination 
with end users (processing and distribution companies and regional 
grocers), strategic alliances with entities having technical research 
capabilities and a focused delivery plan for reaching out to the 
producer community.
    (viii) Capacity. Evidence of the ability of the grantee(s) to 
successfully establish and operate a Center. A description of the 
grantee's track record in providing services similar to those listed 
for Producer Services or evidence that the entity has the capability to 
provide Producer Services. Resumes of key personnel should be included 
in this section. Past successes should be described in detail, with a 
focus on lessons learned, best practices, familiarity with producer 
problems in value-added ventures, and how these barriers are best 
overcome should be elaborated on in this section. For every challenge 
identified, the applicant should demonstrate how they are addressed in 
the Work Plan (see paragraph (c)(5)(iv) of this section). All successes 
should include a monetary estimate of the value-added achieved.
    (ix) Legal structure. Provide a description of the legal 
relationship between the grantee(s) and the proposed Center. If the 
Center is to be an independent corporate entity, provide copies of the 
corporate charter, bylaws and other relevant organizational documents. 
Describe how funds for the Center will be handled and include copies of 
the agreements documenting the legal relationships between the Center 
and related parties. If the Center is not to be an independent legal 
entity, provide copies of the corporate governance documents that 
describe how members of the Board of Directors for the Center are to be 
determined.
    (x) Evaluation criteria. Each of the evaluation criteria referenced 
in the RFP must be specifically and individually addressed in narrative 
form. Supporting documentation, as applicable, should be included in 
this section, or a cross reference to other sections in the application 
should be provided, as applicable.
    (xi) Verification of adequate resources. Present a budget to 
support the work plan showing sources and uses of funds during the 
start up period prior to the start of operations and for the first year 
of full operations. Present a copy of a bank statement evidencing 
sources of funds equal to amounts required in excess of the grant 
requested, or, in the alternative, a copy of confirmed funding 
commitments from credible sources such that USDA is satisfied that the 
Center has adequate resources to complete a full year of operation. 
Include information sufficient to facilitate verification by USDA of 
all representations.
    (xii) Certification of adequate resources. Applicants must certify 
that non-Federal funds identified in the budget pursuant to paragraph 
(c)(5)(xi) of this section will be available and funded commensurately 
with grant funds.


Sec.  4284.1010  Evaluation screening.

    The Agency will conduct an initial screening of all proposals to 
determine whether the applicant is eligible and whether the application 
is complete and sufficiently responsive to the requirements set forth 
in the applicable RFP so as to allow for an informed review. Incomplete 
or non-responsive applications will not be evaluated further, and may 
be returned to the applicant. Applicants may revise their applications 
and re-submit them prior to the published deadline if there is 
sufficient time to do so.


Sec.  4284.1011  Evaluation process.

    (a) Applications will be evaluated by qualified reviewers appointed 
by the Agency.
    (b) After all proposals have been evaluated using the evaluation 
criteria and scored in accordance with the point allocation specified 
in the applicable RFP, Agency officials will present to the 
Administrator of RBS a list of all applications in rank order, together 
with funding level recommendations.
    (c) The Administrator reserves the right to award additional 
points, as specified in the applicable RFP, to accomplish agency 
objectives (e.g., to ensure geographic distribution, put emphasis on a 
specific commodity, or to accomplish presidential initiatives.) The 
maximum number of points that can be added to an application under this 
paragraph cannot exceed ten percent of the total points the application 
originally scored.
    (d) After giving effect to the Administrator's point awards, 
applications will be funded in rank order until all available funds 
have been obligated.


Sec.  4284.1012  Evaluation criteria and weights.

    Unless supplemented in a RFP, the criteria listed in this section 
will be used to evaluate grants under this subpart. The distribution of 
points to be awarded per criterion will be identified in the applicable 
RFP.

[[Page 35331]]

    (a) Ability to deliver. The application will be evaluated as to 
whether it evidences unique abilities to deliver Producer Services so 
as to create sustainable value-added ventures. Abilities that are 
transferable to a wide range of agricultural value-added commodities 
are preferred over highly specialized skills. Strong skills must be 
accompanied by a credible and thoughtful plan.
    (b) Successful track record. The applicant's track record in 
achieving value-added successes.
    (c) Work plan/Budget. The work plan will be reviewed for detailed 
actions and an accompanying timetable for implementing the proposal. 
Clear, logical, realistic and efficient plans will result in a higher 
score. Budgets will be reviewed for completeness and the strength of 
non Federal funding commitments.
    (d) Qualifications of personnel. Proposals will be reviewed for 
whether the key personnel who are to be responsible for performing the 
proposed tasks have the necessary qualifications and whether they have 
a track record of performing activities similar to those being 
proposed. If a consultant or others are to be hired, points may be 
awarded for consultants only if the proposal includes evidence of their 
availability and commitment as well. Proposals using in-house employees 
with strong track records in innovative activities will receive higher 
points relative to proposals that out-source expertise.
    (e) Local support. Proposed Centers must show local support and 
coordination with other developmental organizations in the proposed 
service area and with state and local institutions. Support 
documentation should include recognition of rural values that balance 
employment opportunities with environmental stewardship and other rural 
amenities. Proposed Centers that show strong support from potential 
beneficiaries and coordination with other developmental organizations 
will receive more points than those not evidencing such support.
    (f) Future support. Applicants that can demonstrate financial 
independence in future years will receive more points for this 
criterion. Points will be awarded only where future funding sources are 
documented by letters of commitment.


Sec.  4284.1013  Grant closing.

    (a) Letter of conditions. The Agency will notify an approved 
applicant in writing, setting out the conditions under which the grant 
will be made.
    (b) Applicant's intent to meet conditions. Upon reviewing the 
conditions and requirements in the letter of conditions, the applicant 
must complete, sign and return the Agency's ``Letter of Intent to Meet 
Conditions,'' 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.
    (c) Grant agreement. The Agency and the grantee must enter into an 
``Agriculture Innovation Center Grant Agreement'' prior to the advance 
of funds.


Sec. Sec.  4284.1014-4284.1100  [Reserved]

    5. Subpart F of part 4284, consisting of Sec. Sec.  4284.501 
through 4284.600 is revised to read as follows:

Subpart F--Rural Cooperative Development Grants

Sec.
4284.501 Purpose.
4284.502 Policy.
4284.503 Program administration
4284.504 Definitions.
4284.505-506 [Reserved]
4284.507 Eligibility for grant assistance.
4284.508 Use of grant funds.
4284.509 Limitations on grants.
4284.510 Application processing.
4284.511 Evaluation screening.
4284.512 Evaluation process.
4284.513 Evaluation criteria and weights.
4284.514 Grant closing.
4284.515-4284.599 [Reserved]
4284.600 OMB control number.


Sec.  4284.501  Purpose.

    This subpart outlines the Agency's polices and procedures for 
making grants for cooperative development in rural areas.


Sec.  4284.502  Policy.

    Rural cooperative development grants will be used to facilitate the 
creation or retention of jobs in rural areas through the development of 
new rural cooperatives, Value-Added processing and rural businesses.


Sec.  4284.503  Program administration.

    The rural cooperative development grant program is administered by 
Cooperative Services within the Agency.


Sec.  4284.504  Definitions.

    Center--The entity established or operated by the grantee for rural 
cooperative development. It may or may not be an independent legal 
entity separate from the grantee.
    Cooperative development--The startup, expansion or operational 
improvement of a cooperative to promote development in rural areas of 
services and products, processes that can be used in the marketing of 
products, or enterprises that create value-added to farm products 
through processing or marketing activities. Development activities may 
include, but are not limited to, technical assistance, research 
services, educational services and advisory services. Operational 
improvement includes making the cooperative more efficient or better 
managed.
    1994 Institutions--means those colleges identified as such for 
purposes of the Equity in Educational Land-Grant Status Act of 1994 (7 
U.S.C. 301 note). Contact the Agency for a list of currently eligible 
colleges.
    Project--A planned undertaking by a Center that utilizes the funds 
provided to it to promote economic development in rural areas through 
the creation and enhancement of cooperatives.


Sec.  4284.505-506  [Reserved]


Sec.  4284.507  Eligibility for grant assistance.

    Grants may be made to Nonprofit corporations and institutions of 
higher education. Grants may not be made to Public bodies.


Sec.  4284.508  Use of grant funds.

    Grant funds may be used to pay up to 75 percent (95 percent where 
the grantee is a 1994 Institution) of the cost of establishing and 
operating centers for rural cooperative development. Matching funds 
contributed by the applicant may include a loan from another federal 
source. Grant funds may be used for, but are not limited to, providing 
the following to individuals, cooperatives, small businesses and other 
similar entities in Rural areas served by the Center:
    (a) Applied research, feasibility, environmental and other studies 
that may be useful for the purpose of cooperative development.
    (b) Collection, interpretation and dissemination of principles, 
facts, technical knowledge, or other information for the purpose of 
cooperative development.
    (c) Providing training and instruction for the purpose of 
cooperative development.
    (d) Providing loans and grants for the purpose of cooperative 
development in accordance with the subpart.
    (e) Providing technical assistance, research services and advisory 
services for the purpose of cooperative development.


Sec.  4284.509  Limitations on grants.

    Grants made pursuant to this subpart shall be for one year or less.

[[Page 35332]]

Sec.  4284.510  Application processing.

    (a) Applications. USDA will solicit applications on a competitive 
basis by publication of one or more Requests for Proposals (RFPs). 
Unless otherwise specified in the applicable RFP, applicants must file 
an original and one hard copy of the required forms and a proposal.
    (b) Required forms. The following forms must be completed, signed 
and submitted as part of the application package. Other forms may be 
required. This will be published in the applicable RFP.
    (1) ``Application for Federal Assistance''
    (2) ``Budget Information--Non-Construction Programs''
    (3) ``Assurances--Non-Construction Programs''
    (c) Proposal. Each proposal must contain the following elements. 
Additional elements may be published in the applicable RFP.
    (1) Title page.
    (2) Table of contents.
    (3) Executive summary. A summary of the proposal should briefly 
describe the Center, including goals and tasks to be accomplished, the 
amount requested, how the work will be performed and whether 
organizational staff, consultants or contractors will be used.
    (4) Eligibility. A detailed discussion describing how the applicant 
meets the eligibility requirements.
    (5) Proposal narrative. The narrative portion of the proposal must 
include, but is not limited to, the following:
    (i) Project title. The title of the proposed project must be brief, 
not to exceed 75 characters, yet describe the essentials of the 
project.
    (ii) Information sheet. A separate one-page information sheet 
listing each of the evaluation criteria referenced in the RFP, followed 
by the page numbers of all relevant material and documentation 
contained in the proposal that address or support the criteria.
    (iii) Goals of the project. This section must include the 
following:
    (A) A provision that substantiates that the Center will effectively 
serve rural areas in the United States;
    (B) A provision that the primary objective of the Center will be to 
improve the economic condition of rural areas through cooperative 
development;
    (C) A description of the contributions that the proposed activities 
are likely to make to the improvement of the economic conditions of the 
rural areas for which the Center will provide services.
    (D) Provisions that the Center, in carrying out the activities, 
will seek, where appropriate, the advice, participation, expertise, and 
assistance of representatives of business, industry, educational 
institutions, the Federal Government, and State and local governments.
    (iv) Work plan. Applicants must discuss the specific tasks to be 
completed using grant and matching funds. The work plan should show how 
customers will be identified, key personnel to be involved, and the 
evaluation methods to be used to determine the success of specific 
tasks and overall objectives of Center operations. The budget must 
present a breakdown of the estimated costs associated with cooperative 
development activities as well as the operation of the Center and 
allocate these costs to each of the tasks to be undertaken. Matching 
funds as well as grant funds must be accounted for in the budget.
    (v) Performance evaluation criteria. Performance criteria suggested 
by the applicant for incorporation in the grant award in the event the 
proposal receives grant funding under this subpart. These suggested 
criteria are not binding on USDA.
    (vi) Undertakings. The applicant should expressly undertake to do 
the following:
    (A) Take all practicable steps to develop continuing sources of 
financial support for the Center, particularly from sources in the 
private sectors;
    (B) Make arrangements for the activities by the nonprofit 
institution operating the Center to be monitored and evaluated; and
    (C) Provide an accounting for the money received by the grantee 
under this subpart.
    (vii) Delivery of Cooperative development assistance. The applicant 
must describe its previous accomplishments and outcomes in Cooperative 
development activities and/or its potential for effective delivery of 
Cooperative development services to rural areas. The applicant should 
also describe the type(s) of assistance to be provided, the expected 
impacts of that assistance, the sustainability of cooperative 
organizations receiving the assistance, and the transferability of its 
Cooperative development strategy and focus to other areas of the U.S.
    (viii) Qualifications of personnel. Applicants must describe the 
qualifications of personnel expected to perform key center tasks, and 
whether these personnel are to be full/part-time center employees or 
contract personnel. Those personnel having a track record of positive 
solutions for complex Cooperative development or marketing problems, or 
those with a record of conducting feasibility studies that later proved 
to be accurate, business planning, marketing analysis, or other 
activities relevant to the Center's success should be highlighted.
    (ix) Support and commitments. Applicants must describe the level of 
support and commitment in the community for the proposed Center and the 
services it would provide. Plans for coordinating with other 
developmental organizations in the proposed service area, or with state 
and local government institutions should be included. Letters 
supporting cooperation and coordination from potential local customers 
should be provided.
    (x) Future support. Applicants should describe their vision for 
Center operations beyond the first year, including issues such as 
sources and uses of alternative funding; reliance on Federal, state, 
and local grants; and the use of in-house personnel for providing 
services versus contracting out for that expertise. To the extent 
possible, applicants should document future funding sources that will 
help achieve long-term sustainability of the Center.
    (xi) Evaluation criteria. Each of the evaluation criteria 
referenced in the RFP must be specifically and individually addressed 
in narrative form.
    (6) Verification of matching funds. Applicants must provide a 
budget to support the work plan showing all sources and uses of funds 
during the project period. Applicants will be required to verify 
matching funds, both cash and in-kind. Sufficient information should be 
included such that USDA can verify all representations.
    (7) Certification. Applicants must certify that matching funds will 
be available at the same time grant funds are anticipated to be spent 
and that matching funds will be spent in advance of grant funding, such 
that for every dollar of grant that is advanced, not less than an equal 
amount of match funds will have been funded prior to submitting the 
request for advance.


Sec.  4284.511  Evaluation screening.

    The Agency will conduct an initial screening of all proposals to 
determine whether the applicant is eligible and whether the application 
is complete and sufficiently responsive to the requirements set forth 
in the applicable RFP so as to allow for an informed review. Incomplete 
or non-responsive applications will not be evaluated further. 
Applicants may revise their applications and re-submit them prior to 
the published deadline if there is sufficient time to do so.

[[Page 35333]]

Sec.  4284.512  Evaluation process.

    (a) Applications will be evaluated by qualified reviewers appointed 
by the Agency.
    (b) After all proposals have been evaluated using the evaluation 
criteria and scored in accordance with the point allocation specified 
in the applicable RFP, the Agency will present to the Administrator of 
RBS a list of all applications in rank order, together with funding 
level recommendations.


Sec.  4284.513  Evaluation criteria and weights.

    Unless supplemented in a RFP, the criteria listed in this section 
will be used to evaluate grants under this subpart. Preference will be 
given to items in paragraphs (a) through (f). The distribution of 
points to be awarded per criterion will be identified in the applicable 
RFP.
    (a) Administrative capabilities. The application will be evaluated 
to determine whether the subject Center has a track record of 
administering a nationally coordinated, regional or state-wide operated 
project. Centers that have capable financial systems and audit 
controls, personnel and program administration performance measures and 
clear rules of governance will receive more points than those not 
evidencing this capacity.
    (b) Technical assistance and other services. The Agency will 
evaluate the applicant's demonstrated expertise in providing technical 
assistance in Rural areas.
    (c) Economic development. The Agency will evaluate the applicant's 
demonstrated ability to assist in the retention of businesses, 
facilitate the establishment of cooperatives and new cooperative 
approaches and generate employment opportunities that will improve the 
economic conditions of Rural areas.
    (d) Linkages. The Agency will evaluate the applicant's demonstrated 
ability to create horizontal linkages among businesses within and among 
various sectors in rural areas of the United States and vertical 
linkages to domestic and international markets.
    (e) Commitment. The Agency will evaluate the applicant's commitment 
to providing technical assistance and other services to underserved and 
economically distressed areas in Rural areas of the United States.
    (f) Matching Funds. All applicants must demonstrate Matching Funds 
equal to at least 25 percent (5 percent for 1994 Institutions) of the 
grant amount requested. Applications exceeding these minimum commitment 
levels will receive more points.
    (g) Delivery. The Agency will evaluate whether the Center has a 
track record in providing technical assistance in Rural areas and 
accomplishing effective outcomes in Cooperative development. The 
Center's potential for delivering effective Cooperative development 
assistance, the expected effects of that assistance, the sustainability 
of cooperative organizations receiving the assistance, and the 
transferability of the Center's Cooperative development strategy and 
focus to other States will also be assessed.
    (h) Work plan/Budget. The work plan will be reviewed for detailed 
actions and an accompanying timetable for implementing the proposal. 
Clear, logical, realistic and efficient plans will result in a higher 
score. Budgets will be reviewed for completeness and the quality of non 
Federal funding commitments.
    (i) Qualifications of those performing the tasks. The application 
will be evaluated to determine if the personnel expected to perform key 
center tasks have a track record of positive solutions for complex 
Cooperative development or marketing problems, or a successful record 
of conducting accurate feasibility studies, business plans, marketing 
analysis, or other activities relevant to Cooperative development 
center success.
    (j) Local support. Applications will be reviewed for previous and 
expected local support for the Center, plans for coordinating with 
other developmental organizations in the proposed service area and 
coordination with state and local institutions. Support documentation 
should include recognition of rural values that balance employment 
opportunities with environmental stewardship and other positive rural 
amenities. Centers that demonstrate strong support from potential 
beneficiaries and formal evidence of the Center's intent to coordinate 
with other developmental organizations will receive more points than 
those not evidencing such support and formal intent.
    (k) Future support. Applications that demonstrate financial 
independence beyond the year for which grant funding is sought will 
receive more points for this criterion. Points will be awarded only 
where future funding sources are documented by letters of commitment.
    (l) Amount requested. Points may be awarded based on the size of 
the grant request. Lower requested amounts will receive more points. 
The points to be awarded and request ranges will be established in the 
applicable RFP.


Sec.  4284.514  Grant closing.

    (a) Letter of Conditions. The Agency will notify an approved 
applicant in writing, setting out the conditions under which the grant 
will be made.
    (b) Applicant's intent to meet conditions. Upon reviewing the 
conditions and requirements in the letter of conditions, the applicant 
must complete, sign and return the Agency's ``Letter of Intent to Meet 
Conditions,'' 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.
    (c) Grant agreement. The Agency and the grantee must enter into the 
Agency's ``Agriculture Innovation Center Grant Agreement'' prior to the 
advance of funds.


Sec. Sec.  4284.515-4284.599  [Reserved]


Sec.  4284.600  OMB control number.

    The reporting and recordkeeping requirements contained in this 
subpart have been approved by the Office of Management and Budget and 
have been assigned OMB control number 0570-0006 in accordance with the 
Paperwork Reduction Act of 1995.

PART 1951--SERVICING AND COLLECTIONS

    6. The authority citation for part 1951 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 1932 Note; 7 U.S.C. 1989; 31 
U.S.C. 3716; 42 U.S.C. 1480.

    7. Revise Sec.  1951.201 to read as follows:

Subpart E--Servicing of Community and Direct Business Programs 
Loans and Grants


Sec.  1951.201  Purposes.

    This subpart prescribes the Rural Development mission area 
policies, authorizations and procedures for servicing the following 
programs: Water and Waste Disposal System loans and grants, Community 
Facility loans and grants, Rural Business Enterprise/Television 
Demonstration grants; loans for Grazing and other shift-in-land-use 
projects; Association Recreation loans; Association Irrigation and 
Drainage loans; Watershed loans and advances; Resource Conservation and 
Development loans; Direct Business loans; Economic Opportunity 
Cooperative loans; Rural Renewal loans; Energy Impacted Area 
Development Assistance Program grants; National Nonprofit Corporation 
grants; Water and

[[Page 35334]]

Waste Disposal Technical Assistance and Training grants; Emergency 
Community Water Assistance grants; System for Delivery of Certain Rural 
Development Programs panel grants; section 306C WWD loans and grants; 
and, in part 4284 of this title, Rural and Cooperative Development 
Grants, Value-Added Producer Grants and Agriculture Innovation Center 
Grants. Rural Development State Offices act on behalf of the Rural 
Utilities Service, the Rural Business-Cooperative Service and the Farm 
Service Agency as to loan and grant programs formerly administered by 
the Farmers Home Administration and the Rural Development 
Administration. Loans sold without insurance to the private sector will 
be serviced in the private sector and will not be serviced under this 
subpart. The provisions of this subpart are not applicable to such 
loans. Future changes to this subpart will not be made applicable to 
such loans.

    Dated: June 5, 2003.
Thomas C. Dorr,
Under Secretary, Rural Development.
[FR Doc. 03-14840 Filed 6-12-03; 8:45 am]
BILLING CODE 3410-XY-P