[Federal Register Volume 72, Number 149 (Friday, August 3, 2007)]
[Rules and Regulations]
[Pages 43131-43137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-15106]



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 Rules and Regulations
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  Federal Register / Vol. 72, No. 149 / Friday, August 3, 2007 / Rules 
and Regulations  

[[Page 43131]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1739

RIN 0572-AC09


Community Connect Broadband Grant Program

AGENCY: Rural Utilities Service, USDA.

ACTION: Direct final rule.

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SUMMARY: The Rural Utilities Service, an agency delivering the United 
States Department of Agriculture (USDA) Rural Development Utilities 
Program, hereinafter referred to as Rural Development and/or the 
Agency, amends its regulations for the Community-Oriented Connectivity 
Broadband Grant Program (Community Connect Grant Program). Since the 
inception of the Community Connect Grant Program, the Agency has faced 
the challenge of identifying eligible rural communities. The Agency has 
reviewed its method of identifying eligible communities and has 
determined that modifications to the program regulations are required 
in order to expand the resource material used to identify eligible 
communities. The use of additional resources should increase the number 
of communities eligible for grant funding. Additionally, the Agency has 
changed the test for economic hardship. The current regulations compare 
an applicant community's per capita personal income to the national per 
capita personal income. Because of the varying costs of living among 
the states, it was determined that a better measure of economic 
distress would be a comparison of the applicant community's median 
household income to that of its state. This change is also expected to 
increase the number of eligible grant applicants. Lastly, this rule 
amends the current regulations by specifying operating expenses which 
the Agency has approved for grant funding. These changes have been 
determined to be non controversial and are being enacted as a direct 
final rule.
    This rule is not applicable to Community Connect grant applications 
filed for funding during fiscal year 2007.

DATES: Effective Date: This rule is effective September 17, 2007, 
without further action, unless the Agency receives adverse comments 
within September 4, 2007. If adverse comments are received, the Agency 
will publish a timely Federal Register document withdrawing this rule. 
Comment Due Date: Comments must be received on or before September 4, 
2007.

ADDRESSES: Submit comments by either of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and, in the lower ``Search Regulations and Federal 
Actions'' box, select ``Rural Utilities Service'' from the agency drop-
down menu, then click on ``Submit.'' In the Docket ID column, select 
RUS-07-Telecom-0008 to submit or view public comments and to view 
supporting and related materials available electronically. Information 
on using Regulations.gov, including instructions for accessing 
documents, submitting comments, and viewing the docket after the close 
of the comment period, is available through the site's ``User Tips'' 
link.
     Postal Mail/Commercial Delivery: Please send your comment 
addressed to Michele Brooks, Acting Deputy Director, Program 
Development and Regulatory Analysis, USDA Rural Development, STOP 1522, 
Room 5159, 1400 Independence Avenue, Washington, DC 20250-1522. Please 
state that your comment refers to Docket No. RUS-07-Telecom-0008.
    Other Information: Additional information about Rural Development 
and its programs is available at http://www.rurdev.usda.gov/index.html.

FOR FURTHER INFORMATION CONTACT: Kenneth Kuchno, Director, Broadband 
Division, USDA Rural Development Utilities Program, STOP 1599, 1400 
Independence Avenue, SW., Washington, DC 20250-1599, Telephone (202) 
690-4673, Facsimile (202) 690-4389. E-mail address: 
[email protected].

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

    This final 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 (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 rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. The Agency has determined that this 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 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 
final 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 final 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

[[Page 43132]]

opportunity for public comment. Because this final 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 final 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 final rule is not subject to the requirements of sections 202 and 
205 of the Unfunded Mandates Reform Act of 1995.

Environmental Impact Statement

    This final rule has been examined under Agency environmental 
regulations at 7 CFR part 1794. The 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.

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

Overview

    The USDA Rural Development Utilities Programs (the Agency) improve 
the quality of life in rural America by providing investment capital, 
in the form of loans and grants, for the deployment of rural 
telecommunications infrastructure. Financial assistance is provided to 
rural utilities; municipalities; commercial corporations; limited 
liability companies; public utility districts; Indian tribes; and 
cooperative, nonprofit, limited-dividend, or mutual associations. In 
order to achieve the goal of increasing economic opportunity in rural 
America, the Agency finances infrastructure that enables access to a 
seamless, nation-wide telecommunications network. With access to the 
same advanced telecommunications networks of its urban counterparts, 
especially broadband networks designed to accommodate distance 
learning, telework and telemedicine, rural America will see improving 
educational opportunities, health care, economies, safety and security, 
and ultimately higher employment. Of particular concern to the Agency 
are communities where broadband service is not available and where 
population densities are such that the cost of deployment to them is 
high and build-out of infrastructure is unlikely. The Agency is 
committed to ensuring rural communities will have access to affordable, 
reliable, advanced communications services, comparable to those 
available throughout the rest of the United States, to provide a 
healthy, safe and prosperous place to live and work.
    The Community Connect Grant Program was started as a Pilot Program 
with the Fiscal Year 2002 budget and has been funded ever since through 
the appropriations process. After administering the program as a pilot 
program for two years, the Agency proposed rules for the program, and 
on July 28, 2004, the current rules were published, and the program was 
formally implemented. Since then more than 670 requests for grant funds 
totaling over $410 million were requested through Fiscal Year 2006. Of 
those requests, 129 were granted for $57 million to bring broadband 
service to 129 communities in 26 states and Puerto Rico.
    While the Agency is proud of the results achieved in the Community 
Connect Grant Program thus far, it believes that the overall 
effectiveness of the program can be improved by modifying the existing 
rules. Through these changes, the Agency is increasing eligibility 
criteria to include communities that clearly meet the intent of the 
program. Specifically, this rule will: (1) Add the Rand McNally Atlas 
as a community locator; (2) change the income measure for eligibility 
from a national comparison to a state comparison; and (3) clarify the 
items that are eligible to be considered as operating expenses.

Discussion of Changes

    1. Adding the Rand McNally Atlas as a community locator. Currently 
the regulation states that a project must serve an incorporated or 
unincorporated town, village, or borough recognized in the latest 
decennial census of the Bureau of the Census to be eligible for 
funding. While this program has been successful in reaching much of 
rural America, the Agency recognizes that areas not identified in the 
2000 census are excluded from funding. It is advisable to add another 
resource, updated more frequently than the decennial census and 
including communities not found in the census, to identify rural 
communities. The Agency therefore adds the Rand McNally Atlas as a 
resource to identify rural communities. It is anticipated that the 
addition of the Rand McNally Atlas as a community locator will increase 
the number of communities eligible for funding.
    2. Change the income measure from a national comparison to a state 
comparison. Rural communities that would otherwise be eligible for 
grant funding have been previously excluded because their per capita 
personal income is relatively high in comparison to the national 
average. However, using the communities median household income 
compared to their state's median household income, these communities 
would qualify as economically challenged. Given the variable cost of 
living among the states, the comparison of state statistics is a better 
indicator of economic distress. The intent of this program is to allow 
all rural communities without broadband service facing economic 
hardship to fairly compete for funding. By comparing a community's 
median household income to their state's median household income, all 
rural economically challenged communities may compete fairly for 
funding.
    3. Clarify the items that are eligible to be considered as 
operating expenses. Currently the regulation states that operating 
expenses incurred in providing broadband transmission service to 
critical facilities is an eligible purpose and that the salaries and 
administrative costs associated with these expenses may be limited by 
the Agency. Through the course of this program, applicants have not 
clearly understood what operating expenses are eligible. Many 
applicants have requested funds for ineligible operating expenses and 
had to be eliminated from the grant competition. To assist the 
applicant with better understanding what operating expenses are 
considered eligible, the Agency is specifically defining the eligible 
operating expenses.
    Other corresponding changes were made throughout the regulation to 
reflect the addition of the Rand McNally Atlas and the change to state 
income measures.

List of Subjects in 7 CFR 1739

    Broadband, Grant programs--Communications, Rural Areas, 
Telecommunications, and Telephone.

0
For reasons set forth in the preamble, the Rural Utilities Service 
amends Chapter XVII of title 7 of the Code of

[[Page 43133]]

Federal Regulations by revising part 1739 as follows:

PART 1739--BROADBAND GRANT PROGRAM

Subpart A--Community Connect Grant Program
Sec.
1739.1 Purpose.
1739.2 Funding availability and application dates and addresses.
1739.3 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. The Agency 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 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) The Agency 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. The Agency may publish more than one NOFA 
should additional funding become available.
    (b) Notwithstanding paragraph (a) of this section, the Agency 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:
    Agency shall mean the Rural Utilities Service, which administers 
the United States Department of Agriculture (USDA) Rural Development 
Utilities Programs.
    Bandwidth means the capacity of the radio frequency band or 
physical facility needed to carry the Broadband Transmission Service.
    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 latest decennial census as published by 
the Bureau of the Census or in the most recent edition of a Rand 
McNally Atlas that is located 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.
    Computer Access Point means a new computer terminal with access to 
Basic Broadband Transmission Service.
    Critical Community Facilities means the Community Center and every 
public school or education center, public library, public medical 
clinic, public hospital, community college, public university, or law 
enforcement, fire and ambulance stations in the proposed Service Area.
    Eligible Applicant shall have the meaning as set forth in Sec.  
1739.10.
    Eligible Grant Purposes shall have the meaning as set forth in 
Sec.  1739.12.
    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 Service.
    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, as verified by the latest decennial 
census of the Bureau of the Census or the latest edition of the Rand 
McNally Atlas, which is not located within the boundaries of any 
incorporated or unincorporated city, village, or borough having a 
population in excess of 20,000 inhabitants.
    Service Area means a single Community, and may include the 
unincorporated areas located outside and contiguous to the Community's 
boundaries, in which the applicant proposes to provide Broadband 
Transmission Service.
    Spectrum means a defined band of frequencies that will accommodate 
the Broadband Transmission Service.
    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

[[Page 43134]]

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.


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 
cooperatives or 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 the Agency prior to the award of 
the grant;
    (b) Serve one Community recognized in the latest U.S. Census or the 
latest edition of the Rand McNally Atlas;
    (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 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 leasing of facilities, 
including spectrum, to deploy Broadband Transmission Service to all 
participating 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) (1) Operating expenses incurred in providing Broadband 
Transmission Service to Critical Community Facilities for the first 2 
years of operation and in providing training and instruction. In order 
to qualify as eligible costs for grant coverage or as matching fund 
contributions, operating expenses for providing broadband transmission 
service to Critical Community Facilities must:
    (i) Be incurred for the purpose of providing broadband service to 
the Critical Community Facilities and be for costs incurred during the 
first two years of operation; and
    (ii) Be for the following purposes subject to the specified maximum 
amounts:
    (A) Salary for operations manager, not to exceed $30,000 per year.
    (B) Salary for technical support staff, not to exceed $30,000 per 
year.
    (C) Salary for community center staff, not to exceed $25,000 per 
year.
    (D) Bandwidth expenses, not to exceed $25,000 per year.
    (E) Training courses on the use of the Internet, not to exceed 
$15,000 per year.
    (2) The operating costs to be funded by the grant or used as 
matching contributions cannot exceed in the aggregate $250,000. No 
other operating expenses are eligible for grant funding or to be 
considered as matching funds; 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 Service provided by another entity.
    (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 shall not be considered 
as a Matching Contribution.
    (3) The rental value of space provided within an existing building 
to be used as the Community Center, provided that the space is free of 
charge to the applicant, for the first 2 years of operation.
    (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) Any financial assistance from federal sources shall not be 
considered as a Matching Contribution unless there is a federal 
statutory exception specifically authorizing the federal financial 
assistance to be considered as such.


Sec.  1739.15  Completed application.

    A completed application must include the following documentation, 
studies, reports and information in form satisfactory to the Agency. 
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 Agency's 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. Paper copies of the 
application guide can be requested by contacting the Director, 
Broadband Division at the following address: Stop 1599, South 
Agriculture Building, Room 2868, Washington, DC 20250. 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 
the Agency 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

[[Page 43135]]

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.
    (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.
    (d) System design. The applicant must submit a system design that 
contains the following, satisfactory to the Agency:
    (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 participating 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 participating Critical Community Facilities to 
be connected. 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;
    (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 
the Agency's 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 the Agency 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 Agency's 
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 1794.
    (9) Certification that grant funds will not be used to duplicate 
lines, facilities, or systems providing Broadband Transmission Service.
    (10) Federal Obligation Certification on Delinquent Debt.


Sec.  1739.16  Review of grant applications.

    (a) All applications for grants must be delivered to the Agency at 
the address and by the date specified in the NOFA (see Sec.  1739.2) to 
be eligible for funding. The Agency will review each application for 
conformance with the provisions of this part. The Agency 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 the Agency's employees selected by the 
Administrator of the Agency, and will be awarded points as described in 
the scoring criteria in Sec.  1739.17. 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 the Agency 
determines that the Project is technically or financially infeasible, 
the Agency will notify the applicant, in writing, and the application 
will be returned with no further action.

[[Page 43136]]

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 30 
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. If a Community is identified in the latest decennial 
Census, the applicant must use the Census information. If a Community 
is not identified in the Census but is identified in the latest edition 
of the Rand McNally Atlas, the applicant will use the Rand McNally 
Atlas information. Rurality shall be determined by the following 
criteria:
    (A) The 2000 population data contained in the U.S. Bureau of the 
Census at http://factfinder.census.gov: or
    (B) The population data contained in the latest edition of the Rand 
McNally Atlas. If no population data is contained in the Rand McNally 
Atlas for a community that is recognized in the Atlas, then that 
community is not eligible for a grant.
    (ii) 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.
    (iii) Each application will receive points based on the location of 
the facilities financed using the definitions in paragraphs (b)(1)(i) 
and (b)(1)(ii) 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.
    (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. 
This criterion will be used to evaluate the economic need of the 
Service Area. Applicants must utilize the median household income (MHI) 
for the Community serviced and the state in which the Community is 
located, as determined by the U.S. Bureau of the Census at http://factfinder.census.gov. If the community was qualified using the Rand 
McNally Atlas, the applicant must use the MHI, contained in the 
decennial census, of the county in which the Community resides as the 
Community MHI. Applicants will be awarded points as outlined below for 
service provided in the Community where the MHI is less than 75 percent 
of the state MHI:
    (i) MHI is 75 percent or greater of state MHI; 0 points;
    (ii) MHI is less than 75 percent and greater than or equal to 70 
percent of state MHI; 5 points;
    (iii) MHI is less than 70 percent and greater than or equal to 65 
percent of state MHI; 10 points;
    (iv) MHI is less than 65 percent and greater than or equal to 60 
percent of the state MHI; 15 points;
    (v) MHI is less than 60 percent and greater than or equal to 55 
percent of the state MHI; 20 points;
    (vi) MHI is less than 55 percent and greater than or equal to 50 
percent of the state MHI; 25 points;
    (vii) MHI is less than 50 percent of the state MHI; 30 points;
    (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) The Agency 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 the Agency. The documents shall require the 
applicant to own all equipment and facilities financed by the grant. 
Among other matters, the Agency may prescribe conditions to the advance 
of funds that address concerns regarding the Project feasibility and 
sustainability. The Agency may also prescribe terms and conditions 
applicable to the construction and operation of the Project and the 
delivery of Broadband Transmission Service 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

[[Page 43137]]

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) The Agency 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 the Agency 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 the Agency, 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 the Agency's 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: July 19, 2007.
James M. Andrew,
Administrator, Rural Utilities Service.
[FR Doc. E7-15106 Filed 8-2-07; 8:45 am]
BILLING CODE 3410-15-P