[Federal Register Volume 69, Number 94 (Friday, May 14, 2004)]
[Proposed Rules]
[Pages 26777-26782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-10908]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 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.
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  Federal Register / Vol. 69, No. 94 / Friday, May 14, 2004 / Proposed 
Rules  

[[Page 26777]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1739

RIN 0572-AB94


Broadband Grant Program

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Utilities Service (RUS) is proposing regulations to 
administer the Community Connect Grant Program for the provision of 
broadband transmission service in rural America. This proposed rule is 
intended to establish eligibility and application requirements, the 
review and approval process, and grant administration procedures for 
the Community Connect Grant Program.

DATES: Comments on this proposed rule must be received by, or bear a 
postmark or equivalent, no later than June 14, 2004.

ADDRESSES: You may submit comments by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
     Agency Web site: http://www.usda.gov/rus/index2/Comments.htm. Follow the instructions for submitting comments.
     E-mail: [email protected]. Include in the subject line 
of the message ``Broadband Grant Program.''
     Mail: Addressed to Richard Annan, Acting Director, Program 
Development and Regulatory Analysis, Rural Utilities Service, United 
States Department of Agriculture, 1400 Independence Avenue, SW., STOP 
1522, Washington, DC 20250-1522.
     Hand Delivery/Courier: Addressed to Richard Annan, Acting 
Director, Program Development and Regulatory Analysis, Rural Utilities 
Service, United States Department of Agriculture, 1400 Independence 
Avenue, SW., Room 5168-S, Washington, DC 20250-1522. Instructions: All 
submissions received must include the agency name and the subject 
heading ``Broadband Grant Program''. All comments received must 
identify the name of the individual (and the name of the entity, if 
applicable) who is submitting the comment. All comments received will 
be posted without change to http://www.usda.gov/rus/index2/Comments.htm, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Roberta D. Purcell, Assistant 
Administrator, Telecommunications Program, Rural Utilities Service, 
STOP 1590, 1400 Independence Avenue SW., Washington, DC 20250-1590, 
Telephone (202) 720-9554, Facsimile (202) 720-0810. Email address: 
[email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866, and therefore has not been reviewed 
by the Office of Management and Budget (OMB).

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance (CFDA) Program number 
assigned to the Community Connect Grant Program is 10.863. The Catalog 
is available on a subscription basis from the Superintendent of 
Documents, the United States Government Printing Office, Washington, DC 
20402-9325, telephone number (202) 512-1800.

Executive Order 12372

    This program is not subject to the requirements of Executive Order 
12372, ``Intergovernmental Review of Federal Programs,'' as implemented 
under USDA's regulations at 7 CFR part 3015.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. RUS has determined that this proposed rule meets 
the applicable standards provided in section 3 of the Executive Order. 
In addition, all state and local laws and regulations that are in 
conflict with this rule will be preempted, no retroactive effect will 
be given to this rule, and, in accordance with Sec 212(e) of the 
Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 
6912(e)), administrative appeal procedures, if any, must be exhausted 
before an action against the Department or its agencies may be 
initiated.

Executive Order 13132, Federalism

    The policies contained in this proposed 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 
proposed rule impose substantial direct compliance costs on state and 
local governments. Therefore, consultation with states is not required.

Regulatory Flexibility Certification

    Pursuant to 5 U.S.C. 553(a)(2), this proposed rule related to 
grants is exempt from the rulemaking requirements of the Administrative 
Procedure Act (5 U.S.C. 551 et seq.), including the requirement to 
provide prior notice and an opportunity for public comment. Because 
this proposed rule is not subject to a requirement to provide prior 
notice and an opportunity for public comment pursuant to 5 U.S.C. 553, 
or any other law, the analytical requirements of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.) are inapplicable.

Unfunded Mandates

    This proposed rule contains no Federal mandates (under the 
regulatory provision of Title II of the Unfunded Mandates Reform Act of 
1995) for State, local, and tribal governments or the private sector. 
Therefore, this proposed rule is not subject to the requirements of 
sections 202 and 205 of the Unfunded Mandates Reform Act of 1995.

Environmental Impact Statement

    This proposed rule has been examined under RUS environmental 
regulations at 7 CFR part 1794. The RUS Administrator has determined 
that this action is not a major Federal action significantly affecting 
the environment. Therefore, in accordance with the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), an 
Environmental Impact Statement or Assessment is not required.

[[Page 26778]]

Information Collection and Recordkeeping Requirements

    This rule contains no new reporting or recordkeeping burdens under 
OMB control number 0572-0127 that would require approval under the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

Background

    On July 8, 2002, RUS published a Notice of Funds Availability 
(``NOFA'') in the Federal Register (67 FR 45079) announcing its 
Community Connect pilot grant program for the provision of broadband 
transmission service in extremely rural, lower-income American 
communities. Initially, twenty million dollars in grant authority was 
made available to promote ``community-oriented connectivity,'' which 
would stimulate economic development and enhance educational and health 
care opportunities in rural areas through theretofore unavailable 
broadband transmission service. See Agriculture, Rural Development, 
Food and Drug Administration, and Related Agencies Act of 2002, Pub. L. 
107-76, Title III, Distance Learning and Telemedicine Program (2001). 
In addition, a community center that would provide such service free to 
area residents for two years was required.
    In response to the July 8, 2002, NOFA, RUS received more than 300 
applications totaling more than $185 million in funding requests. As 
part of a national competition, RUS reviewed the applications for 
eligibility and scored the applications according to the rurality of 
the project, the economic need of the project service area, and the 
``community-oriented-connectivity'' benefits to be derived from the 
proposed service. On May 16, 2003, Secretary of Agriculture, Ann 
Veneman, announced the 40 highest scoring grants totaling $20,184,642. 
This announcement fully utilized RUS' 2002 appropriation.
    Due to the overwhelming response to that NOFA, RUS had eligible 
applications on hand totaling more than the $10 million appropriation 
received for Fiscal Year 2003. See Consolidated Appropriations 
Resolution of 2003, Pub. L. 108-7, 117 Stat. 11, Title III, Distance 
Learning and Telemedicine Program (2003). To eliminate the need for 
fully eligible applicants to resubmit applications during Fiscal Year 
2003, RUS utilized its 2003 appropriation by funding eligible projects 
submitted in accordance with the July 8, 2002 NOFA. The 2003 grant 
announcements were made September 24, 2003.
    For Fiscal Year 2004, $9 million in grants will be made available 
through a national competition to applicants proving broadband 
transmission service on a ``community-oriented connectivity'' basis. 
See Consolidated Appropriations Act of 2004, Pub. L. 108-199, 118 Stat. 
3, Title III, Distance Learning and Telemedicine Program (2004). RUS 
now proposes the following regulation to administer the program for 
Fiscal Year 2004 and will open a new window for the submission of 
applications.
    To encourage ``community-oriented connectivity,'' RUS will provide 
grants to eligible applicants who will deploy broadband transmission 
service in rural communities where such service does not currently 
exist; who will connect all critical community facilities such as local 
schools, education centers, libraries, hospitals, health care 
providers, law enforcement agencies, public safety organizations, fire, 
and rescue services, as well as residents and businesses; and who will 
operate a community center which provides free and open access to area 
residents. Grants will be made available, on a competitive basis, for 
the deployment of broadband transmission services to critical community 
facilities, rural residents, and rural businesses and for the 
construction, acquisition, expansion, and/or operation of a community 
center which would provide free access to broadband transmission 
services to community residents for at least two years. Funding is also 
available for end-user equipment, software, and installation costs. A 
state-of-the-art community center will not only provide improved access 
but will aid rural residents in developing on-line businesses and will 
allow them to reap the benefits of Internet-based advanced placement 
courses and continuing adult education. Applications are limited to one 
project, as defined in this regulation. Applicants wishing to serve 
multiple projects must submit an application for each project.
    The 30-day comment period for this proposed regulation is based on 
two factors. First, the program will essentially operate as it has been 
since the pilot phase. No significant changes are being proposed with 
the implementation of this proposed regulation. Second, in an effort to 
expedite the application process this year, RUS believes that a 30-day 
comment period is necessary in order to proceed with final regulations 
that will enable application processing and approval of grants during 
this fiscal year.

List of Subjects in 7 CFR Part 1739

    Broadband, Grant programs--communications, Rural areas, 
Telecommunications, Telephone.

    For reasons set forth in the preamble, RUS proposes amending 
Chapter XVII of title 7 of the Code of Federal Regulations by adding 
part 1739 as follows:

PART 1739--BROADBAND GRANT PROGRAM

Subpart A--Community Connect Grant Program
Sec.
1.1 Purpose.
1.2 Funding availability and application dates and submission.
1.3 Definitions.
1739.4-1739.9 [Reserved]
1739.10 Eligible applicant.
1739.11 Eligible project.
1739.12 Eligible grant purposes.
1739.13 Ineligible grant purposes
1739.14 Matching contributions.
1739.15 Completed application.
1739.16 Review of grant applications.
1739.17 Scoring of applications.
1739.18 Grant documents.
1739.19 Reporting and oversight requirements.
1739.20 Audit requirements.
1739.21 OMB control number.
Subpart B--[Reserved]

    Authority: Title III, Pub. L. 108-199, 118 Stat. 3.

Subpart A--Community Connect Grant Program


Sec.  1739.1  Purpose.

    (a) The provision of broadband transmission service is vital to the 
economic development, education, health, and safety of rural Americans. 
The purpose of the Community Connect Grant Program is to provide 
financial assistance in the form of grants to eligible applicants that 
will provide, on a ``community-oriented connectivity'' basis, broadband 
transmission service that fosters economic growth and delivers enhanced 
educational, health care, and public safety services. RUS will give 
priority to rural areas that it believes have the greatest need for 
broadband transmission services, based on the criteria contained 
herein.
    (b) Grant authority will be used for the deployment of broadband 
transmission service to extremely rural, lower-income communities on a 
``community-oriented connectivity'' basis. The ``community-oriented 
connectivity'' concept will stimulate practical, everyday uses and 
applications of broadband by cultivating the deployment of new 
broadband transmission services that improve

[[Page 26779]]

economic development and provide enhanced educational and health care 
opportunities in rural areas. Such an approach will also give rural 
communities the opportunity to benefit from the advanced technologies 
that are necessary to achieve these goals.


Sec.  1739.2  Funding availability and application dates and 
submission.

    (a) RUS will publish, annually in the Federal Register, a Notice of 
Funds Availability (hereinafter ``NOFA'') that will set forth the total 
amount of funding available; the maximum and minimum funding for each 
grant; the application submission dates; and the appropriate addresses 
and agency contact information. The NOFA will also outline and explain 
the procedures for submission of applications, including electronic 
submissions. RUS may publish more than one NOFA should additional 
funding become available.
    (b) Notwithstanding paragraph (a) of this section, RUS may, in 
response to a surplus of qualified eligible applications which could 
not be funded from the previous fiscal year, decline to publish a NOFA 
for the following fiscal year and fund said applications without 
further public notice.


Sec.  1739.3  Definitions.

    As used in this subpart:
    Bandwidth means the capacity of the radio frequency band or 
physical facility needed to carry the Broadband Transmission Services.
    Basic Broadband Transmission Service means the broadband 
transmission service level provided by the applicant at the lowest rate 
or service package level for residential or business customers, as 
appropriate, provided that such service meets the requirements of this 
part.
    Broadband Transmission Service means providing an information-rate 
equivalent to at least 200 kilobits/second in the consumer's connection 
to the network, both from the provider to the consumer (downstream) and 
from the consumer to the provider (upstream).
    Community means any incorporated or unincorporated town, village, 
or borough recognized in the U.S. Census in a Rural Area.
    Community Center means a public building, or a section of a public 
building with at least ten (10) Computer Access Points, that is used 
for the purposes of providing free access to and/or instruction in the 
use of broadband Internet service, and is of the appropriate size to 
accommodate this purpose. The community center must be open and 
accessible to area residents before, during, and after normal working 
hours and on Saturday or Sunday. Examples of facilities that may be 
partially used for the described purposes include school, library, or 
city hall.
    Computer Access Point means a new computer terminal with access to 
Basic Broadband Transmission Service.
    Critical Community Facility means a public school, public library, 
public medical clinic, public hospital, community college, public 
university, or law enforcement, fire and ambulance stations.
    Eligible Applicant shall have the meaning as set forth in Sec.  
1739.10 of this part.
    Eligible Grant Purposes shall have the meaning as set forth in 
Sec.  1739.12 of this part.
    End-User Equipment means computer hardware and software, audio or 
video equipment, computer network components, telecommunications 
terminal equipment, inside wiring, interactive video equipment, or 
other facilities required for the provision and use of Broadband 
Transmission Services.
    Matching Contribution means the applicant's qualified contribution 
to the Project, as outlined in Sec.  1739.14 of this part.
    Project means the applicant's proposed Basic Broadband Transmission 
Service financed by the grant and Matching Contribution for the 
proposed Service Area.
    Rural Area means any area not included within the boundaries of any 
incorporated or unincorporated city, town, village, or borough having a 
population of more than 20,000 inhabitants within the United States, 
the Commonwealth of Puerto Rico, the Commonwealth of the Northern 
Marianas Islands, the Western Pacific Territories, Marshall Islands, 
Federated States of Micronesia, Republic of Palau, and the U.S. Virgin 
Islands.
    RUS means the Rural Utilities Service, an agency of the United 
States Department of Agriculture, which is part of the Rural 
Development Utilities Program.
    Service Area means a single Community and, may include the 
unincorporated areas or locally recognized communities, not recognized 
in the U.S. Census, located outside and contiguous to the Community's 
boundaries.
    Spectrum means a defined band of frequencies that will accommodate 
the Broadband Transmission Services.
    Telecommunications Terminal Equipment means the assembly of 
telecommunications equipment at the end of a circuit or path of a 
signal, including but not limited to facilities that receive or 
transmit over-the-air broadcast, satellite, and microwave, normally 
located on the premises of the end user, that interfaces with 
telecommunications transmission facilities, and that is used to modify, 
convert, encode, or otherwise prepare signals to be transmitted via 
such telecommunications facilities, or that is used to modify, 
reconvert, or carry signals received from such facilities, the purpose 
of which is to accomplish the goal for which the circuit or signal was 
established.
    USDA means the United States Department of Agriculture.


Sec. Sec.  1739.4-1739.9  [Reserved]


Sec.  1739.10  Eligible applicant.

    To be eligible for a grant, the applicant must:
    (a) Be legally organized as an incorporated organization, an Indian 
tribe or tribal organization, as defined in 25 U.S.C. 450b(b) and (c), 
a state or local unit of government, or other legal entity, including 
private corporations or limited liability companies organized on a for 
profit or not-for profit basis.
    (b) Have the legal capacity and authority to own and operate the 
broadband facilities as proposed in its application, to enter into 
contracts and to otherwise comply with applicable federal statutes and 
regulations.


Sec.  1739.11  Eligible project.

    To be eligible for a grant, the Project must:
    (a) Serve a Rural Area where Broadband Transmission Service does 
not currently exist, to be verified by RUS prior to the award of the 
grant;
    (b) Serve one Community recognized in the latest U.S. Census. 
Additional communities located in the contiguous areas outside the 
Community's boundaries that are not recognized (due to size) in the 
U.S. Census, can be included in the applicant's proposed Service Area, 
but must be supported by documentation, acceptable to RUS, as to their 
existence;
    (c) Deploy Basic Broadband Transmission Service, free of all 
charges for at least 2 years, to all Critical Community Facilities 
located within the proposed Service Area;
    (d) Offer Basic Broadband Transmission Service to residential and 
business customers within the proposed Service Area; and
    (e) Provide a Community Center with at least ten (10) Computer 
Access Points within the proposed Service Area, and

[[Page 26780]]

make Broadband Transmission Service available therein, free of all 
charges to users for at least 2 years.


Sec.  1739.12  Eligible grant purposes.

    Grant funds may be used to finance:
    (a) The construction, acquisition, or lease of facilities, 
including spectrum, to deploy Broadband Transmission Services to all 
Critical Community Facilities and all required facilities needed to 
offer such service to residential and business customers located within 
the proposed Service Area;
    (b) The improvement, expansion, construction, or acquisition of a 
Community Center that furnishes free access to broadband Internet 
service, provided that the Community Center is open and accessible to 
area residents before, during, and after normal working hours and on 
Saturday or Sunday. Grant funds provided for such costs shall not 
exceed the greater of five percent (5%) of the grant amount requested 
or $100,000;
    (c) End-User Equipment needed to carry out the Project;
    (d) Operating expenses incurred in providing Broadband Transmission 
Service to Critical Community Facilities for the first 2 years of 
operations and in providing training and instruction. Salary and 
administrative expenses will be subject to review, and may be limited 
by RUS for reasonableness in relation to the scope of the Project; and
    (e) The purchase of land, buildings, or building construction 
needed to carry out the Project.


Sec.  1739.13  Ineligible grant purposes.

    (a) Grant funds may not be used to finance the duplication of any 
existing Broadband Transmission Services provided by other entities.
    (b) Facilities financed with grant funds cannot be utilized, in any 
way, to provide local exchange telecommunications service to any person 
or entity already receiving such service.


Sec.  1739.14  Matching contributions.

    (a) The grant applicant must contribute a Matching Contribution 
which is at least fifteen percent (15%) of the grant amount requested 
and shall be in the form of:
    (1) Cash for eligible grant purposes.
    (2) In-kind contributions for purposes that could have been 
financed with grant funds under this part. In-kind contributions must 
be new or non-depreciated assets with established monetary values. 
Manufacturers' or service providers' discounts are not Matching 
Contributions.
    (3) The rental value of space provided within an existing Community 
Center, provided that the space is provided free of charge to the 
applicant, for the first 2 years of operations.
    (4) Salary expenses incurred for the individual(s) operating the 
Community Center, for the first 2 years of operations.
    (5) Expenses incurred in operating the Community Center, for the 
first 2 years of operations.
    (b) Costs incurred by the applicant, or by others on behalf of the 
applicant, for facilities, installed equipment, or other services 
rendered prior to submission of a completed application shall not be 
considered as an Eligible Grant Purpose or Matching Contribution.
    (c) Rental values of space provided must be substantiated by rental 
agreements documenting the cost of space of a similar size in a similar 
location.
    (d) Rental values, salaries, and other expenses incurred in 
operating the Community Center will be subject to review by RUS for 
reasonableness in relation to the scope of the Project.
    (e) Any financial assistance from federal sources will not be 
considered as Matching Contributions unless there is a federal 
statutory exception specifically authorizing the federal financial 
assistance to be considered as a Matching Contribution.


Sec.  1739.15  Completed application.

    A completed application must include the following documentation, 
studies, reports and information in form satisfactory to RUS. 
Applications should be prepared in conformance with the provisions of 
this part and applicable USDA regulations including 7 CFR parts 3015, 
3016, and 3019. Applicants must use the RUS Application Guide for this 
program, found at http://www.usda.gov/rus/telecom/ containing 
instructions and all necessary forms, as well as other important 
information, in preparing their application. Completed applications 
must include the following:
    (a) An application for Federal assistance. A completed Standard 
Form 424.
    (b) An executive summary of the Project. The applicant must provide 
RUS with a general project overview that addresses the following 
categories:
    (1) A description of why the Project is needed;
    (2) A description of the applicant;
    (3) An explanation of the total Project cost;
    (4) A general overview of the broadband telecommunications system 
to be developed, including the types of equipment, technologies, and 
facilities to be used;
    (5) Documentation describing the procedures used to determine the 
unavailability of existing Broadband Transmission Service; and
    (6) A description of the participating Critical Community 
Facilities (such as schools, health care providers, police and fire 
departments, etc.).
    (c) Scoring criteria documentation. Each grant applicant must 
address and provide documentation on how it meets each of the scoring 
criteria detailed in Sec.  1739.17 of this part.
    (d) System design. The applicant must submit a system design that 
contains the following, satisfactory to RUS:
    (1) A narrative discussing the proposed Community Center, all costs 
of the Project, all existing and proposed facilities that are a part of 
the Project, the services to be provided by the Project, and the 
proposed Service Area;
    (2) Engineering design studies providing an economical and 
practical engineering design of the Project, including a detailed 
description of the facilities to be funded, technical specifications, 
data rates, and costs; and
    (3) A map of the proposed Service Area reflecting the proposed 
location of the Community Center and all Critical Community Facilities.
    (e) Scope of work. The scope of work must include, at a minimum:
    (1) The specific activities and services to be performed under the 
Project;
    (2) Who will carry out the activities and services;
    (3) The time-frames for accomplishing the Project objectives and 
activities; and
    (4) A budget for all capital and administrative expenditures 
reflecting the line item costs for Eligible Grant Purposes, the 
Matching Contribution, and other sources of funds necessary to complete 
the Project.
    (f) Community-Oriented Connectivity Plan. The applicant must 
provide a Community-Oriented Connectivity Plan consisting of the 
following:
    (1) A listing of all Critical Community Facilities to be connected, 
including local public schools, education center, public libraries, 
public medical clinics, public hospitals, community colleges, public 
universities, and law enforcement, fire, and ambulance stations. For 
those Critical Community Facilities in the Service Area which will not 
be included in the Project, an explanation of why they are not being 
included should be provided. The applicant must also provide 
documentation that it has consulted with agents of all Critical 
Community Facilities in the Service Area, and must provide statements 
as to their willingness to participate, or not to participate, in the 
proposed Project;

[[Page 26781]]

    (2) A description of the services available to local residents 
through the use of the Community Center;
    (3) A listing of the proposed Telecommunications Terminal 
Equipment, telecommunications transmission facilities, data terminal 
equipment, interactive video equipment, computer hardware and software 
systems, and components that process data for transmission via 
telecommunications, computer network components, communication 
satellite ground station equipment, or any other elements of the 
Project designed to further the deployment and use of Broadband 
Transmission Service, that the applicant intends to build or fund using 
RUS grant funds and the Matching Contribution; and
    (4) If other telecommunications carriers (including interexchange 
carriers, cable television operators, enhanced service providers, 
providers of satellite services and telecommunications equipment 
manufacturers and distributors) are participating in the delivery of 
services, a description of the consultations and the anticipated role 
of such providers in the proposed Project.
    (g) Financial information and sustainability. The applicant must 
provide a narrative description demonstrating the sustainability of the 
Project during the first two years and after completion and the 
sufficiency of resources and expertise necessary to undertake and 
complete the Project. The following financial information is required:
    (1) Certified financial statements, if available; otherwise, the 
most current income statement and balance sheet for existing 
operations; and
    (2) Pro-forma financial information for 5 years, evidencing the 
sustainability of the Project.
    (h) A statement of experience. Information on the owners' and 
principal employees' relevant work experience that would ensure the 
success of the Project. The applicant must provide a written narrative 
describing its demonstrated capability and experience, if any, in 
operating a broadband telecommunications system.
    (i) Evidence of legal authority and existence. The applicant must 
provide evidence of its legal existence and authority to enter into a 
grant agreement with RUS and to perform the activities proposed under 
the grant application.
    (j) Funding commitment from other sources. If the Project requires 
additional funding from other sources in addition to the RUS grant, the 
applicant must provide evidence that funding agreements have been 
obtained to ensure completion of the Project.
    (k) Compliance with other federal statutes. The applicant must 
provide evidence of compliance with other federal statutes and 
regulations, including, but not limited to the following:
    (1) 7 CFR part 15, subpart A--Nondiscrimination in Federally 
Assisted Programs of the Department of Agriculture--Effectuation of 
Title VI of the Civil Rights Act of 1964.
    (2) 7 CFR part 3015--Uniform Federal Assistance Regulations.
    (3) 7 CFR part 3017--Governmentwide Debarment and Suspension (Non-
procurement).
    (4) 7 CFR part 3018--New Restrictions on Lobbying.
    (5) 7 CFR part 3021--Governmentwide Requirements for Drug-Free 
Workplace (Financial Assistance).
    (6) Certification regarding Architectural Barriers.
    (7) Certification regarding Flood Hazard Precautions.
    (8) An environmental report, in accordance with 7 CFR part 1794.
    (9) Certification that grant funds will not be used to duplicate 
lines, facilities, or systems providing Broadband Transmission 
Services.
    (10) Federal Obligation Certification on Delinquent Debt.


Sec.  1739.16  Review of grant applications.

    (a) All applications for grants must be delivered to RUS at the 
address and by the date specified in the NOFA (see Sec.  1739.2 of this 
part) to be eligible for funding. RUS will review each application for 
conformance with the provisions of this part. RUS may contact the 
applicant for additional information or clarification.
    (b) Incomplete applications as of the deadline for submission will 
not be considered. If an application is determined to be incomplete, 
the applicant will be notified in writing and the application will be 
returned with no further action.
    (c) Applications conforming with this part will then be evaluated 
competitively by a panel of RUS employees selected by the Administrator 
of RUS, and will be awarded points as described in the scoring criteria 
in Sec.  1739.17 of this part. Applications will be ranked and grants 
awarded in rank order until all grant funds are expended.
    (d) Regardless of the score an application receives, if RUS 
determines that the Project is technically or financially infeasible, 
RUS will notify the applicant, in writing, and the application will be 
returned with no further action.


Sec.  1739.17  Scoring of applications.

    (a) All eligible applications will receive points for the following 
scoring criteria:
    (1) The rurality of the Project (up to 40 points);
    (2) The economic need of the Project's Service Area (up to 20 
points); and
    (3) The ``community-oriented connectivity'' benefits derived from 
the proposed service (up to 30 points).
    (b) Scoring criteria:
    (1) The rurality of the project--up to 40 points.
    (i) This criterion will be used to evaluate the rurality of the 
Community served by the Project, in accordance with the following 
method of scoring. Rurality shall be determined by the 2000 population 
data contained in the U.S. Bureau of the Census at http://factfinder.census.gov. The following categories are used in the 
evaluation of rurality:
    (A) Level 1 means any Community having a population of less than 
500 inhabitants.
    (B) Level 2 means any Community having a population of at least 500 
and not in excess of 1,000 inhabitants.
    (C) Level 3 means any Community having a population over 1,000 and 
not in excess of 2,000 inhabitants.
    (D) Level 4 means any Community having a population over 2,000 and 
not in excess of 3,000 inhabitants.
    (E) Level 5 means any Community having a population over 3,000 and 
not in excess of 4,000 inhabitants.
    (F) Level 6 means any Community having a population over 4,000 and 
not in excess of 5,000 inhabitants.
    (G) Level 7 means any Community having a population over 5,000 and 
not in excess of 10,000 inhabitants.
    (H) Level 8 means any Community having a population over 10,000 and 
not in excess of 20,000 inhabitants.
    (ii) Each application will receive points based on the location of 
the facilities financed using the definitions in paragraphs 
(b)(1)(i)(A) through (H) of this section.
    (A) For a Service Area that includes a Level 1 Community, it will 
receive 40 points.
    (B) For a Service Area that includes a Level 2 Community, it will 
receive 35 points.
    (C) For a Service Area that includes a Level 3 Community, it will 
receive 30 points.
    (D) For a Service Area that includes a Level 4 Community, it will 
receive 25 points.

[[Page 26782]]

    (E) For a Service Area that includes a Level 5 Community, it will 
receive 20 points.
    (F) For a Service Area that includes a Level 6 Community, it will 
receive 15 points.
    (G) For a Service Area that includes a Level 7 Community, it will 
receive 10 points.
    (H) For a Service Area that includes a Level 8 Community, it will 
receive 5 points.
    (2) The economic need of the Project Service Area--up to 30 points.
    (i) This criterion will be used to evaluate the economic need of 
the Service Area. Applicants must utilize the per capita personal 
income for the Community serviced, as determined by the U.S. Bureau of 
the Census at http://factfinder.census.gov. Applicants will be awarded 
points as outlined below for service provided in the Community where 
the per capita personal income (PCI) is less than 70 percent of the 
national average per capita personal income (NAPCI):
    (A) PCI is 75 percent or greater of NAPCI; 0 points;
    (B) PCI is less than 75 percent and greater than or equal to 70 
percent of NAPCI; 5 points;
    (C) PCI is less than 70 percent and greater than or equal to 65 
percent of NAPCI; 10 points;
    (D) PCI is less than 65 percent and greater than or equal to 60 
percent of NAPCI; 15 points;
    (E) PCI is less than 60 percent and greater than or equal to 55 
percent of NAPCI; 20 points;
    (F) PCI is less than 55 percent and greater than or equal to 50 
percent of NAPCI; 25 points;
    (G) PCPI is less than 50 percent of NAPCPI; 30 points;
    (ii) [Reserved]
    (3) The ``community-oriented connectivity'' benefits derived from 
the proposed service--up to 30 points.
    (i) This criterion will be used to score applications based on the 
documentation in support of the need for services, benefits derived 
from the services proposed by the Project, and local community 
involvement in planning and implementation of the Project. Applicants 
may receive up to 30 points for documenting the need for services and 
benefits derived from service as explained in this section.
    (ii) RUS will consider:
    (A) The extent of the applicant's documentation explaining the 
economic, education, health care, and public safety issues facing the 
community and the applicant's proposed plan to address these challenges 
on a community-wide basis;
    (B) The extent of the Project's planning, development, and support 
by local residents, institutions, and community facilities will be 
considered. This includes evidence of community-wide involvement, as 
exemplified in community meetings, public forums, and surveys. In 
addition, applicants should provide evidence of local residents' 
participation in the Project planning and development;
    (C) The extent to which the Community Center will be used for 
instructional purposes including Internet usage, Web-based curricula, 
and Web page development; and
    (D) Web-based community resources enabled or provided by the 
applicant, such as community bulletin boards, directories, and public 
web-hosting.


Sec.  1739.18  Grant documents.

    The terms and conditions of grants shall be set forth in grant 
documents prepared by RUS. The documents shall require the applicant to 
own all equipment and facilities financed by the grant. Among other 
matters, RUS may prescribe conditions to the advance of funds that 
address concerns regarding the Project feasibility and sustainability. 
RUS may also prescribe terms and conditions applicable to the 
construction and operation of the Project and the delivery of Broadband 
Transmission Services to Rural Areas, as well as other terms and 
conditions applicable to the individual Project.


Sec.  1739.19  Reporting and oversight requirements.

    (a) A project performance activity report will be required of all 
recipients on an annual basis until the Project is complete and the 
funds are expended by the applicant. Recipients are to submit an 
original and one copy of all project performance reports, including, 
but not limited to, the following:
    (1) A comparison of actual accomplishments to the objectives 
established for that period;
    (2) A description of any problems, delays, or adverse conditions 
which have occurred, or are anticipated, and which may affect the 
attainment of overall Project objectives, prevent the meeting of time 
schedules or objectives, or preclude the attainment of particular 
Project work elements during established time periods. This disclosure 
shall be accompanied by a statement of the action taken or planned to 
resolve the situation; and
    (3) Objectives and timetable established for the next reporting 
period.
    (b) A final project performance report must be provided by the 
recipient. It must provide an evaluation of the success of the Project 
in meeting the objectives of the program. The final report may serve as 
the last annual report.
    (c) RUS will monitor recipients, as it determines necessary, to 
assure that Projects are completed in accordance with the approved 
scope of work and that the grant is expended for Eligible Grant 
Purposes.
    (d) Recipients shall diligently monitor performance to ensure that 
time schedules are being met, projected work within designated time 
periods is being accomplished, and other performance objectives are 
being achieved.


Sec.  1739.20  Audit requirements.

    A grant recipient shall provide RUS with an audit for each year, 
beginning with the year in which a portion of the financial assistance 
is expended, in accordance with the following:
    (a) If the recipient is a for-profit entity, an existing 
Telecommunications or Electric Borrower with RUS, or any other entity 
not covered by the following paragraph, the recipient shall provide an 
independent audit report in accordance with 7 CFR part 1773, ``Policy 
on Audits of RUS Borrowers.''
    (b) If the recipient is a State or local government, or non-profit 
organization, the recipient shall provide an audit in accordance with 7 
CFR part 3052, ``Audits of States, Local Governments, and Non-Profit 
Organizations.''


Sec.  1739.21  OMB Control Number.

    The information collection requirements in this part are approved 
by the Office of Management and Budget (OMB) and assigned OMB control 
number 0572-0127.

Subpart B--[Reserved]

    Dated: April 22, 2004.
Blaine D. Stockton,
Acting Administrator, Rural Utilities Service.
[FR Doc. 04-10908 Filed 5-13-04; 8:45 am]
BILLING CODE 3410-15-P