[Federal Register Volume 89, Number 179 (Monday, September 16, 2024)]
[Rules and Regulations]
[Pages 75762-75796]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-19804]



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Vol. 89

Monday,

No. 179

September 16, 2024

Part IV





Department of Agriculture





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Rural Business-Cooperative Service





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7 CFR Part 4284





Modernizing Grant Program Regulation; Final Rule

  Federal Register / Vol. 89 , No. 179 / Monday, September 16, 2024 / 
Rules and Regulations  

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DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

7 CFR Part 4284

[Docket No. RBS-24-BUSINESS-0004]
RIN 0570-AB03


Modernizing Grant Program Regulation

AGENCY: Rural Business-Cooperative Service, USDA.

ACTION: Final rule; request for comment.

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SUMMARY: The Rural Business-Cooperative Service (RBCS or the Agency), 
an agency of the Rural Development (RD) mission area within the U.S. 
Department of Agriculture (USDA), is issuing a final rule with comment 
to implement the provisions of the Agriculture Improvement Act of 2018 
related to the Value-Added Producer Grant (VAPG) Program and the 
Agriculture Innovation Center (AIC) Program and to modernize the Rural 
Cooperative Development Grant Program (RCDG). In addition, this action 
will support ways to simplify and streamline RD program delivery by 
removing outdated and ineffective definitions, requirements, and 
scoring criteria for the grant programs above.

DATES: 
    Effective date: This final rule is effective November 15, 2024.
    Comment date: Comments must be submitted on or before October 16, 
2024.

ADDRESSES: Comments may be submitted by going to the Federal 
eRulemaking Portal at www.regulations.gov/ and in the ``Search 
Documents'' box, enter the Docket Number or the Regulatory Information 
Number (RIN) provided above in the headings to this final rule, and 
click the ``Search'' button. Locate this document in the displayed list 
and select the ``Comment'' button associated with this document. You 
will be redirected to a comment submission page and can begin typing 
your comment in the designated box and/or you may also upload a file. 
Once you have completed the information requested on the page, you will 
select the ``Submit Comment'' button at the bottom. 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 under the ``FAQ'' link at the bottom of 
the Home page.
    All submissions received must include the Agency name and docket 
number or RIN for this rulemaking. All comments received will be posted 
without change to https://www.regulations.gov, including any personal 
information provided.
    Other Information: Additional information about RD and its programs 
is available at https://www.rd.usda.gov/.

FOR FURTHER INFORMATION CONTACT: Melinda Martin, Program Management 
Division, U.S. Department of Agriculture, 1400 Independence Avenue SW, 
Washington, DC 20250-3201; telephone (202) 720-1400; email: 
[email protected].

SUPPLEMENTARY INFORMATION: 
    The information presented in this preamble is organized as follows:

I. Authority
II. Background
III. Stakeholder Engagement
IV. Summary of Changes to the Rule
    A. Subpart A--General Requirements for Cooperative Services 
Grant Programs
    B. Subpart F--Rural Cooperative Development Grants
    C. Subpart J--Value-Added Producer Grant Program
    D. Subpart K--Agriculture Innovation Center Demonstration 
Program
V. Executive Orders

I. Authority

    (A) The AIC program is authorized by section 6402 of the Farm 
Security and Rural Investment Act of 2002 (Pub. L. 107-171) (2002 Farm 
Bill) (7 U.S.C. 1632b), as amended by section 7608 of the Agriculture 
Improvement Act of 2018 (Pub. L. 115-334) (2018 Farm Bill) (see 7 
U.S.C. 1632b).
    (B) The RCDG program is authorized under section 310B(e) of the 
Consolidated Farm and Rural Development Act (CONACT) (7 U.S.C. 
1932(e)), as amended by the 2018 Farm Bill (sections 6412-15, 
6601(a)(1)(B), 6701(c), (d)(1)).
    (C) The VAPG program is authorized under section 231 of the 
Agriculture Risk Protection Act of 2000 (Pub. L. 106-224), as amended 
by section 10102 of the 2018 Farm Bill (Pub. L. 115-334) (see 7 U.S.C. 
1627c).

II. Background

    RD is a mission area within USDA comprised of RBCS, the Rural 
Utilities Service and the Rural Housing Service. RD's mission is to 
increase economic opportunity and improve the quality of life for all 
rural Americans. RD meets its mission by providing loans, grants, loan 
guarantees, and technical assistance through a multitude of programs 
aimed at creating and improving businesses, housing and infrastructure 
throughout rural America.
    This part, 7 CFR part 4284, contains the rules and requirements for 
four programs, however, only the following three programs will be 
affected by this action: (1) RCDG (subpart F--7 CFR 4284.501 through 
4284.600), which makes grants to Cooperative Development Centers that 
then provide technical assistance and business development help to 
individuals and businesses to start, expand or improve rural 
cooperatives and other mutually-owned businesses, (2) VAPG (subpart J--
7 CFR 4284.901 through 4284.999), which helps agricultural producers 
enter into value-added activities related to the processing and/or 
marketing of new products, and (3) AIC (subpart K--7 CFR 4284.1001 
through 4284.1100), which makes grants to Agriculture Innovation 
Centers that then provide services to agricultural producers seeking to 
develop and/or market value-added agricultural products. Subpart L (7 
CFR 4284.1101 through 4284.1131) relates to the Rural Innovation 
Stronger Economy Grant Program and is not being impacted by this 
rulemaking.
    The Agency has issued a standardized Federal Financial Assistance 
Agreement to incorporate provisions of 2 CFR part 200 which applies to 
these grant programs but has not updated the subparts of the regulation 
that govern the programs in over 16 years other than a March 2016 
amendment to subpart J to implement provisions of the Agricultural Act 
of 2014 (2014 Farm Bill; Pub. L. 113-79) and subpart L that was added 
in June 2021. Since the Agency must incorporate the provisions outlined 
in sections 7608 and 10102 of the Agriculture Improvement Act of 2018 
(2018 Farm Bill) (Pub. L. 115-334), it is using this rulemaking as an 
opportunity to update and reorganize subparts F, J and K of this 
regulation. The updates and reorganizing include modernizing the RCDG 
and AIC programs, improving processes, streamlining requirements, and 
providing clarity to the daily administration of the programs. Language 
in subpart J is being updated in preparation for a new application 
intake system that is being developed and will streamline the 
application process once it comes online. After the changes, each 
subpart will be a standalone set of definitions and requirements for 
each individual grant program.

III. Stakeholder Engagement

    Three Stakeholder Listening Sessions and Requests for Information, 
specific to each program, were held in the fall of 2021 to obtain the 
public's input on potential changes to program application processes 
and requirements. These sessions were announced through

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notices published in the Federal Register on August 24, 2021. The 
notices were published at: AIC--86 FR 47286, RCDG--86 FR 47289 and 
VAPG--86 FR 47284. Each of the notices included the option that the 
participants could officially submit their comments through 
Regulations.gov until October 25, 2021. The Agency received several 
written submissions in addition to the oral comments that were 
considered as they evaluated ways to streamline and improve the 
requirements outlined in this rulemaking.
    The Agency, through discussions with internal and external 
stakeholders while administering these programs on a daily basis, has 
received informal feedback that some of the program application 
processes and requirements could use clarification and/or updating. 
This stakeholder feedback was also taken into consideration while 
updating these subparts.

IV. Summary of Changes to the Rule

    This section presents the major changes to the existing grant 
regulation which includes removing and reserving subpart A and revising 
and reorganizing the sections in subparts F, J and K into a more 
sequential order of events as they occur during the application, award, 
and post-award processes. In addition, as stated above, each subpart 
has been reorganized to be a standalone set of definitions and 
requirements for each specific grant program. Defined terms have been 
capitalized throughout the preamble and regulatory text.

A. Subpart A--General Requirements for Cooperative Services Grant 
Programs

    Subpart A, consisting of Sec. Sec.  4284.1 through 4284.100, has 
been removed and reserved. Relevant sections of this subpart were moved 
to subparts F and K and obsolete sections, definitions, and language 
were removed.

B. Subpart F--Rural Cooperative Development Grants

    1. Section 4284.501, Purpose, was revised to clarify the intent of 
the RCDG program and to describe generally the organizations that are 
eligible to apply.
    2. The section heading for Sec.  4284.502 was changed from 
``Policy'' to ``Organization of subpart''. The policy language was 
removed because the Agency's policies are incorporated into the 
regulation. This new section was added to identify the main sections of 
the revised subpart and summarize the information in each section.
    3. The section heading for Sec.  4284.503 was changed from 
``Program administration'' to ``Definitions''. The program 
administration language was removed from the subpart to streamline 
program language. The definitions in this section were formerly located 
in Sec.  4284.504 and several were added from Sec.  4284.3. The Agency 
revised some of the definitions to be consistent with the way that 2 
CFR part 200 defines terms. Language was also added to this section to 
clarify that defined terms are capitalized in the subpart and 
additional defined terms can be found in applicable regulations. The 
following summarizes the changes to the definitions in this section:
    a. Terms moved from subpart A, Sec.  4284.3. The terms Agency, 
Economic Development, Matching Funds, Nonprofit Institutions, Public 
Body, Rural and Rural Area, Rural Development, State, State Office and 
Value-Added were moved to this section from Sec.  4284.3.
    b. Revised terms. The definitions for the following terms have been 
revised:
    i. 1994 Institution was revised to indicate that the list of 
eligible colleges will now be included on the program website.
    ii. Center was updated to simplify the definition.
    iii. Cooperative Development was updated to simplify the definition 
and provide clarity around the types of activities that are considered 
eligible for this program.
    iv. Matching Funds was revised to provide clarification on the 
Matching Funds requirement for this program. Recipients are required by 
7 U.S.C. 1932(e) to commit to providing 25 percent (or 5 percent if a 
1994 Institution) of private funds and/or in-kind contributions to the 
Project.
    v. Project was revised to clarify the types of activities that can 
be funded under this program.
    vi. Rural and Rural Area were updated to be consistent with the 
definition used by the Agency.
    vii. State was updated to be consistent with the definition used 
across the Agency.
    viii. Value-Added was updated to be more consistent with the value-
added methods that are applicable to the program.
    ix. The definitions for Federal Award, Institutions of Higher 
Education, Period of Performance, Project Cost, and Recipient were 
revised to be in accordance with the definitions in 2 CFR part 200 
(Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards).
    c. Newly defined terms. Definitions for the following terms: 
Adverse Decision, Adverse Decision Letter, Applicant, Board of 
Directors, Cooperative, Grant Agreement/Financial Assistance Agreement, 
Key Personnel, Mutually-Owned Business, Networking, New Cooperative 
Approach, Operating Costs, Research and Development, Subaward, 
Technical Assistance, and Underserved and Economically Distressed were 
added to the definitions in this subpart in order to provide clarity 
and additional guidance on terms being used in the subpart.
    4. The section heading for Sec.  4284.504 was changed from 
``Definitions'' to ``Exception authority''. The definitions were moved 
to Sec.  4284.503. Exception authority was added to explain the 
circumstances under which the Agency may grant an exception to any 
requirement or provision of this subpart. The circumstances are 
consistent with other programs administered by the Agency.
    5. Section 4284.506 was unreserved and titled ``Conflict of 
interest''. The definition of conflict of interest and the Member 
delegate clause, Sec.  4284.17, were moved to this section. This 
section was added to clarify and expand the Agency's policy on 
conflicts of interest for the RCDG program, and on Recipient conflict 
of interest requirements from 2 CFR part 200.
    6. Section 4284.507 was removed and reserved. The eligibility 
information from this section was moved to the sections on Applicant 
and Project eligibility, Sec. Sec.  4284.520 and 4284.522.
    7. The section heading for Sec.  4284.508 was changed from ``Use of 
grant funds'' to ``Compliance with other laws and regulations''. The 
use of funds information from this section was moved to Sec.  4284.525. 
The information now in this section was relocated from Sec.  4284.16 
and includes an updated and more comprehensive list of applicable 
Federal laws, Federal regulations, departmental regulations, and Agency 
regulations. It also identifies the current official uniform resource 
locations that can be used to access the information.
    8. Section 4284.509 was removed and reserved. The limitations on 
grants information was moved to Sec.  4284.522, Project eligibility.
    9. Section 4284.510 was removed and reserved. The application 
processing information was moved to Sec.  4284.531, Application 
requirements.
    10. Sections 4284.511, .512 and .513 were removed and reserved. The 
evaluation screening information, evaluation process information, and 
evaluation criteria and weights were moved to Sec.  4284.540, 
Application processing.
    11. Section 4284.514 was removed and reserved. The grant closing

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information was moved to Sec.  4284.551, Notification of successful 
Applicants.
    12. Section 4284.520 was unreserved and titled ``Applicant 
eligibility''. The information in this section was relocated from Sec.  
4284.507 and updated to: (a) Specify that the Applicant must be located 
within the 50 United States or within a United States territory; (b) 
Add the Federal requirements for System for Award Management (SAM) 
registration and unique entity identifier (UEI); (c) Clarify that the 
Agency will only accept one application per Applicant; and (d) Include 
specific reasons certain applicants are ineligible.
    13. Section 4284.522 was unreserved and titled ``Project 
eligibility''. The information in this section was relocated from 
Sec. Sec.  4284.507 and 4284.509 and updated to: (a) Include 
information on the eligible location of the Project, Project focus, 
grant amount requested, and how long the Period of Performance is; (b) 
Provide clarification on what sources of Matching Funds are allowable 
and how they must be used; and (c) Include specific reasons a Project 
is not eligible.
    14. Section 4284.525 was unreserved and titled ``Use of grant and 
Matching Funds''. The information in this section was relocated from 
Sec.  4284.508 and updated as follows:
    a. More detail was provided on what costs will be considered 
allowable for establishing and operating a Center.
    b. The definitions of Technical Assistance and Cooperative 
Development are included in this section by reference because they have 
been updated to capture the eligible activities under this program.
    c. Language regarding provision of loans and grants was updated to 
make it clear that these must be provided as Subawards in accordance 
with 2 CFR part 200 and are only available for Technical Assistance, 
including Cooperative Development.
    d. The unallowable uses of funds for this program were added for 
clarity.
    15. Section 4284.530 was unreserved and titled ``Notifications''. 
The information in this section was relocated from Sec.  4284.510(a) 
and updated to clarify the process that the Agency will use to notify 
the public about the amount of funding available, where and when 
Applicants can find the requirements for identifying Underserved and 
Economically Distressed Areas, and other future requirements not 
addressed in this subpart.
    16. Section 4284.531 was unreserved and titled ``Application 
requirements''. The information in this section was relocated from 
Sec.  4284.510 and rearranged to present the information in a more 
clear and logical order which also included updates that streamline the 
requirements for applying to this program. The updates included:
    a. The term ``Required forms.'' was changed to ``Application 
forms.''
    b. The requirement for ``Assurances-Non-Construction Program'' was 
removed as they are now captured under SAM.
    c. The executive summary requirement was streamlined to reduce 
duplication.
    d. The proposal narrative section was revised to remove burden and 
reduce duplication. These revisions include:
    1. The requirements to include a Project Title and Information 
Sheet were removed.
    2. The title ``Goals of the project'' was removed, and the section 
revised to make it clear that Applicants are now required to submit a 
plan for establishing and operating a Center for Cooperative 
Development, including providing a description of how the Center will: 
(i) serve Rural areas, (ii) improve economic conditions, and (iii) seek 
to incorporate the knowledge and expertise from other organizations. In 
addition, the plan must describe how the Center plans to remain 
sustainable in accordance with 7 U.S.C. 1932(e).
    3. The title ``Work Plan'' was revised to ``Work plan and budget'' 
and moved under the merit evaluation criteria addressed in (4) below. 
The requirements for this section were revised to include a 
demonstration of the Applicant's commitment to providing Technical 
Assistance to Underserved and Economically Distressed areas and a 
commitment to Networking.
    4. The Agency will utilize the information provided in response to 
the Application Requirements to evaluate the merit of each Applicant. 
Therefore, the merit evaluation criteria, formerly ``Evaluation 
criteria'' were incorporated into this section and include: (i) An 
evaluation of the Applicant's experience with Technical Assistance, 
including Cooperative development, (ii) Work plan and budget, (iii) 
Qualifications of Key Personnel, and (iv) Verification of Matching 
funds.
    5. The title ``Performance Evaluation Criteria'' was revised to 
``Project outcomes'' and incorporates the Agency's baseline performance 
metrics.
    6. The title ``Undertakings'' was removed and these items will be 
captured under (d)(4)(ii) above.
    7. ``Delivery of Cooperative development assistance'' was changed 
to ``Experience'' and moved under merit evaluation criteria to reduce 
duplication. The section was revised to simplify the requirements.
    e. ``Qualifications of Personnel'' was revised to ``Qualifications 
of Key Personnel'' and moved under merit evaluation criteria. The 
section was updated to simplify requirements.
    f. ``Support and commitments'' and ``Future Support'' were removed 
to streamline and prevent duplication. The requirements are now 
captured under the proposal narrative.
    g. ``Verification of Matching Funds'' was placed under ``Merit 
evaluation criteria'' and was updated to simplify the requirement.
    17. Section 4284.533 was unreserved and titled ``Submission 
requirements''. The information in this section was relocated from 
Sec.  4284.7 and updated to provide specific information on the 
submission period, the submission address, and the submission format. 
This information was previously supplied in an annual notification.
    18. Section 4284.540 was unreserved and titled ``Application 
processing''. The information in this section was relocated from 
Sec. Sec.  4284.511, 4284.512, and 4284.513 and revised as follows:
    a. The process by which the Agency processes applications received 
by the program was added. This includes the Agency's risk evaluation 
process, required by 2 CFR 200.206, which requires Federal awarding 
agencies to have a framework in place for evaluating the risks posed by 
Applicants being considered for a Federal award.
    b. The merit evaluation criteria were revised to: (1) better 
reflect the goals of the program, (2) remove duplication, and (3) 
streamline the evaluation process. The evaluation criteria now include 
the scoring ranges for each criterion.
    c. ``Administrative capabilities'' was removed and the information 
required to determine if an applicant has the necessary experience to 
successfully run this program is now captured under ``Qualifications of 
Key Personnel''.
    d. The sections titled ``Technical assistance and other services'', 
``Economic development'', and ``Delivery'' were merged, and the title 
was changed to ``Experience'' to streamline and reduce duplication.
    e. The sections titled ``Commitment'' and ``Linkages'' were removed 
and now captured under ``Work plan and budget''. Reference to 
horizontal and vertical linkages was modified to express that Centers 
should be Networking with other Centers and/or organizations involved 
in Rural Economic Development efforts. This includes organizations in 
other States.

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    f. The ``Matching Funds'' section was revised to reflect that 
points will only be awarded for eligible Projects that meet the 25 
percent Matching Funds requirement. No additional points will be 
awarded for cash or in-kind contributions above the Matching Funds 
requirement.
    g. The title ``Work plan/Budget'' was revised to ``Work plan and 
budget.'' The section was streamlined to include an evaluation of the 
Applicant's commitment to Underserved and Economically Distressed 
Areas, as well as its commitment to Networking.
    h. The title ``Qualifications of those Performing the Tasks'' was 
revised to ``Qualifications of Key Personnel'' and streamlined to 
reduce burden and clarify the requirements for demonstrating how Key 
Personnel are qualified to perform the Project tasks.
    i. The sections on ``Local support'' and ``Future support'' were 
removed to streamline and reduce burden.
    19. Section 4284.541 was unreserved and titled ``Application 
withdrawal''. This is a new section that explains how an applicant can 
withdraw an application from consideration. The language is consistent 
with other Agency programs.
    20. Section 4284.550 was unreserved and titled ``Award selection''. 
The information in this section was relocated from Sec.  4284.512 and 
updated to clarify how applications will be selected for an award.
    21. Section 4284.551 was unreserved and titled ``Notification of 
successful Applicants''. The information in this section was relocated 
from Sec.  4284.514 and updated to clarify and expand the process on 
how applicants will be notified if their applications have been 
selected for an award.
    22. Section 4284.552 was unreserved and titled ``Notification of 
unsuccessful Applicants''. This section was added to clearly state the 
process used to notify unsuccessful applicants and to place this 
information in a section of the regulation that corresponds to the 
sequential order of events in the application processing timeline.
    23. Section 4284.553 was unreserved and titled ``Award approval''. 
The information in this section was relocated from Sec.  4284.514. and 
clarifies how an award is approved.
    24. Section 4284.554 was unreserved and titled ``Multi-year 
award''. This section was added to notify Applicants that the program 
may accept applications for multi-year awards in the future. Any 
details regarding the requirements for the multi-year process will be 
published in the annual notification.
    25. Section 4284.560 was unreserved and titled ``Reporting 
requirements''. The information in this section was relocated from 
Sec.  4284.12. The financial and performance reporting requirements 
were updated, and guidance was provided on what information must be in 
the reports as well as the report format and timing. The program also 
added the requirement that the Recipient, once the project is complete, 
provide two annual outcome performance reports. The additional reports 
are needed to demonstrate the viability and final outcome of the 
Project.
    26. Section 4284.561 was unreserved and titled ``Monitoring 
awards''. The information in this section was relocated from Sec.  
4284.14 and the description of how awards will be monitored was 
updated.

C. Subpart J--Value-Added Producer Grants

    1. Section 4284.901, Purpose, was revised to clarify that the VAPG 
program is intended to support for-profit businesses.
    2. The section heading for Sec.  4284.902 was changed from 
``Definitions'' to ``Organization of subpart''. This is a new section 
and was added to explain how the subpart is organized. The definition 
section was moved to Sec.  4284.903.
    3. The section heading for Sec.  4284.903 was changed from ``Review 
or appeal rights'' to ``Definitions''. The Review or appeal rights 
information was moved to Sec.  4284.952, Notification of unsuccessful 
Applicants, and the definitions in this section were relocated from 
Sec.  4284.902. The format of this section was revised to be consistent 
with the format of the definitions section in 2 CFR part 200. Also, 
language was added to clarify that defined terms are capitalized in the 
subpart and additional defined terms can be found in applicable 
regulations cited in Sec.  4284.908. The following terms were removed, 
revised or newly added:
    a. Removed terms. The following terms have been removed from this 
section:
    i. Administrator was removed to eliminate redundancy.
    ii. Conflict of interest has been removed as a definition and is 
discussed in Sec.  4284.906.
    iii. Departmental regulations was removed. The term is only used in 
Sec.  4284.908 and its meaning is included there. A separate definition 
is no longer needed.
    iv. State Office was removed. The term is only used once in the 
regulation and the meaning of State Office is included there.
    v. Total project cost was removed. The term is no longer used in 
the regulation.
    vi. Venture was removed. The term is no longer used in the 
regulation.
    b. Revised terms. The definitions for the following terms have been 
revised:
    i. Agricultural Commodity was revised to now include horses.
    ii. Agricultural Food Product, Change in Physical State, Harvester, 
Local or Regional Supply Network, Physical Segregation, and Produced in 
a Manner that Enhances the Value of the Agricultural Commodity were 
revised to remove the examples from the defined terms. Examples for 
each are now included in the application tool kit for the program.
    iii. Agricultural Producer was revised to have the same meaning as 
Independent Producer and Producer. After much experience in 
administering the program and receiving feedback from stakeholders, it 
was determined that the previous Independent Producer term was 
confusing because it directed the reader to the Agricultural Producer 
definition to understand the meaning of the Independent Producer term 
but did not include language that differentiated the terms from one 
another. Additionally, the terms have been used interchangeably in 
explanatory material prepared on the program. The term `Producer' is 
utilized in the 2018 Farm Bill definition for Majority-controlled 
producer-based business venture and has the same meaning as 
Agricultural Producer and Independent Producer. Therefore, the three 
terms all have the same meaning. While reworking the definition, the 
information on Tribes and Tribal entities was moved to Sec.  4284.920, 
Applicant eligibility.
    iv. Applicant was revised to clarify that the term refers to the 
legal entity and/or owners of the legal entity regardless of ownership 
percentage.
    v. Beginner Farmer or Rancher was revised to remove the language 
discussing eligibility for reserved funding and priority points. 
Reserved funding eligibility is now discussed in Sec.  4284.923, 
Reserved Funds Eligibility and priority points eligibility is now 
discussed in Sec.  4284.924, Priority points eligibility.
    vi. Emerging Market and Farm-or Ranch-Based Renewable Energy were 
revised to simplify the language.
    vii. Family Farm was revised to add more flexibility regarding 
eligibility.
    viii. Feasibility Study was revised to remove the language 
requiring a Qualified Consultant to conduct a Feasibility Study. That 
requirement is now discussed in Sec.  4284.931, Application 
requirements. Also,

[[Page 75766]]

clarification was added that the Feasibility Study must provide a 
comprehensive analysis of the proposed Project.
    ix. Independent Producer now has the same meaning as Agricultural 
Producer. Applicant eligibility requirements previously included in the 
term are now discussed in Sec.  4284.920, Applicant eligibility.
    x. Majority-Controlled Producer-Based Business Venture was revised 
to match the definition in the 2018 Farm Bill.
    xi. Matching Funds has been revised to simplify the language. 
Matching Funds requirements have been removed and are now discussed in 
Sec.  4284.922, Project eligibility.
    xii. Mid-Tier Value Chain has been revised to move supply chain 
requirements to Sec.  4284.923, Reserved funds eligibility.
    xiii. Socially-Disadvantaged Farmer or Rancher has been revised to 
move reserved fund eligibility requirements to Sec.  4284.923, Reserved 
funds eligibility.
    xiv. Veteran Farmer or Rancher was revised to move discussion on 
priority points eligibility to Sec.  4284.924, Priority points 
eligibility.
    c. Newly defined terms. The following terms were added to the 
definitions in this section:
    i. Food Safety, as defined by USDA, was added to incorporate 2018 
Farm Bill requirements into the program.
    ii. Key Personnel was added to clarify who should be listed in the 
application as a member of Key Personnel.
    iii. Market Expansion was added to provide clarity on eligibility.
    iv. The terms Equipment, Letter of Conditions, Period of 
Performance, Program Income, Project Cost, Producer, Recipient, and TTB 
Permit were added to this subpart in order to provide clarity and 
additional guidance on terms being used in the subpart.
    4. Section 4284.904, Exception authority, was updated to simplify 
the language used.
    5. Section 4284.905 has been removed and reserved. The 
Nondiscrimination and compliance with other Federal laws information 
has been moved to Sec.  4284.908, Compliance with other laws and 
regulations, to condense all sections that discuss compliance with laws 
and regulations into one section.
    6. The section heading for Sec.  4284.906 was changed from ``State 
laws, local laws, regulatory commission regulations'' to ``Conflict of 
interest''. The State laws, local laws, regulatory commission 
regulations information was moved to Sec.  4284.908, Compliance with 
other laws and regulations, to condense all sections that discuss 
compliance with laws and regulations into one section. This new section 
was added to provide clarity on the Agency's policy regarding conflict 
of interest and on Recipient conflict of interest requirements from 2 
CFR part 200.
    7. Section 4284.907 has been removed and reserved. The 
environmental requirements have been moved to Sec.  4284.908 to 
condense all sections that discuss compliance with laws and regulations 
into one section.
    8. Section 4284.908, Compliance with other laws and regulations, 
has been revised to condense all sections that discuss compliance with 
laws and regulations into one section.
    9. Section 4284.909 has been removed and reserved. The forms, 
regulations, and instructions information were removed and will now be 
discussed in the annual notification for the program.
    10. Section 4284.915 has been removed and reserved. The information 
pertaining to notifications was moved to Sec.  4284.930, Notifications.
    11. Section 4284.916 was unreserved and titled ``Reserved funds''. 
This section has been added to provide a listing of the reserved funds 
and their respective percentage of total program funding that will be 
available each Fiscal Year. The deadline for the obligation of reserves 
has been changed from June 30 to September 30, as required by the 2018 
Farm Bill.
    12. The section heading for Sec.  4284.920 was changed from 
``Applicant eligibility'' to ``Eligible Applicants''. The following 
revisions and updates were made to this section:
    a. The section was revised into eight distinct paragraphs to 
clarify the Applicant eligibility requirements.
    b. SAM and UEI requirements were added to further clarify that SAM 
registration and a UEI number are required to be an eligible Applicant 
for the program.
    c. Legal authority paragraph was added to clarify that all 
applicants must demonstrate legal authority and good standing in the 
State in which they operate.
    d. All Applicant eligibility requirements regarding ownership and 
control of the Agricultural Commodity have been moved to a new 
paragraph titled ``Ownership and control'' for easier identification.
    e. The language regarding the submission of multiple grants was 
revised to clarify that an Applicant may only submit one application 
each grant cycle unless they are also applying as a member of a Farmer 
or Rancher Cooperative or an Agricultural Producer Group.
    13. Section 4284.921, Ineligible Applicants, was revised to include 
additional items that would render a VAPG Applicant ineligible.
    14. Section 4284.922, Project eligibility, has been revised as 
follows:
    a. Project eligibility requirements were broken into six distinct 
paragraphs to provide more clarity.
    b. Clarification was added that the Applicant must be currently 
producing the Agricultural Commodity that is the subject of the 
Project.
    c. Language was included to clarify that only a Qualified 
Consultant can complete a feasibility study.
    d. Clarified that Applicant in-kind contributions may satisfy 100 
percent of the Matching Funds requirement whereas third-party in-kind 
contributions can only be used to satisfy up to 49 percent of the 
Matching Funds requirement.
    e. Information that does not pertain to general project eligibility 
requirements was moved to sections deemed more appropriate.
    i. Discussion on the work plan and budget was moved to Sec.  
4284.940, Application processing.
    ii. Discussion on Feasibility Studies, Business Plans, and Market 
Expansion Projects was moved to Sec.  4284.931, Application 
requirements.
    iii. Discussion on simplified applications was moved to Sec.  
4284.932, Simplified application.
    iv. Discussion on the Applicant eligibility requirement regarding 
quantity of the Agricultural Commodity that will be provided for the 
project was moved to Sec.  4284.920, Applicant eligibility.
    15. Section 4284.923, Reserved funds eligibility, was rearranged to 
present eligibility requirements in a more clear and logical order. It 
was also updated to include the new Food Safety reserved fund. The 
current subpart requires Beginning Farmers or Ranchers and Socially-
Disadvantaged Farmers or Ranchers Applicants with multiple owners to be 
``comprised entirely'' of individuals that meet the applicable reserved 
funds definition. This requirement was changed to ``comprised of more 
than 50 percent'' to match the requirement for receiving priority 
points in these categories.
    16. Section 4284.924, Priority points eligibility, was revised to 
allow Applicants that qualify for priority points to self-certify their 
status as a Beginning Farmers or Rancher, Socially-Disadvantaged 
Farmers or Rancher, Veteran Farmers or Rancher, operator of a Small- or 
Medium-Sized Farms or Ranches that is structured as a Family

[[Page 75767]]

Farm, or Farmer or Rancher Cooperative.
    17. The section heading for Sec.  4284.925 was changed from 
``Eligible uses of grant and Matching Funds'' to ``Allowable use of 
grant and Matching Funds'' to match the language used in 2 CFR part 
200. The section has been revised to move language related to valuation 
of in-kind Matching Funds to Sec.  4284.922, Project eligibility. The 
section has also been revised to include the Food Safety equipment 
exception of $6,500 as an allowable use of funds.
    18. The section heading for Sec.  4284.926 was changed from 
``Ineligible uses of grant and matching funds'' to ``Unallowable use of 
grant and Matching Funds'' to match the language used in 2 CFR part 
200. This section has been updated to move language related to conflict 
of interest to Sec.  4284.906, Conflict of interest. Clarifying 
language was added to include labor related to the care of live plants 
as an unallowable activity. Also, several of the unallowable uses of 
grant and Matching Funds listed were clarified further.
    19. Section 4284.927 has been removed and reserved. The information 
from this section on funding limitations has been moved to Sec.  
4284.928, Funding limitations.
    20. Section 4284.928 was unreserved and titled ``Funding 
limitations''. The information in this section was relocated from Sec.  
4284.927 and revised as follows:
    a. Language related to project eligibility was relocated to Sec.  
4284.922, Project eligibility.
    b. The 2018 Farm Bill requirement to change the Agricultural 
Marketing Resource Center yearly appropriation to no more than 2.5 
percent of VAPG funds has been included.
    c. The discussion on reserved funds was moved to Sec.  4284.916, 
Reserved funds.
    21. The section heading for Sec.  4284.930 was changed from 
``Preliminary Review'' to ``Notifications''. The information on 
preliminary reviews has been removed. Agency resources are not 
available to conduct thorough eligibility reviews of applications both 
before the application deadline and after it. However, Applicants are 
still able to contact Agency staff to ask questions and discuss 
Applicant and Project eligibility potential.
    The notification information in this section was relocated from 
Sec.  4284.915 and rearranged to present the information on public 
notifications in a more clear and logical order. In addition, the 
section was revised to change the notification method to the program 
website versus through the Federal Register and the timing of 
notifications was updated to clarify that public notifications will be 
published no later than the date the application period opens. The 
annual notice of funding opportunity will continue to be published in 
the Federal Register. This change allows the Agency to use the program 
website for other types of programmatic changes.
    22. The section heading for Sec.  4284.931 was changed from 
``Application package'' to ``Application requirements'' to more clearly 
identify what is covered in the section. In addition, this section was 
updated as follows:
    a. All elements that must be included in an application for the 
program were included.
    b. The application forms no longer collected by the Agency because 
the information is now being collected by SAM were removed.
    c. The discussion on the type of performance data that should be 
collected was moved to Sec.  4284.960, Reporting requirements.
    d. The detailed discussion on Matching Funds requirements was moved 
to Sec.  4284.922, Project eligibility.
    e. Added `Customer Base and Revenue Increase Metrics' paragraph to 
ensure all data needed for metrics required by the program's statute is 
submitted by Applicants.
    23. Section 4284.932, Simplified application, was revised to add a 
simplified application process for Food Safety Projects. Also, 
clarification was added that Agricultural Producers requesting a 
working capital grant of $50,000 or more may submit a simplified 
application.
    24. The section heading for Sec.  4284.933 was changed from 
``Filing instructions'' to ``Submission requirements'' to match the 
language used in 2 CFR part 200. The section format was revised to 
separately address the three critical questions that must be answered 
to successfully submit an application for the program: how, where, and 
when to submit an application. Additionally, an open application period 
of November 1 through February 15 was codified to allow grant 
applications to be accepted at a consistent time each funding cycle.
    25. Section 4284.940, Application processing, was revised to update 
the procedure used by the Agency to process applications received for 
the program. In addition, the following revisions were made:
    a. A risk evaluation section was added to comply with the language 
in 2 CFR part 200 requiring Federal awarding agencies to have a 
framework in place for evaluating the risks posed by Applicants before 
they receive Federal Awards.
    b. Scoring ranges were added to each evaluation criterion. This 
will codify the evaluation criteria so the Agency will no longer have 
to include this information in the annual notification for the program.
    c. Criterion 3, Commitments and support, was revised to award 
additional points to Applicants that have not received a VAPG award 
previously.
    d. Criterion 4, Work plan and budget, was updated to include 
language clarifying that the basis for valuation of proposed expenses 
must be included.
    e. The sections titled Notifications and Resubmittal by Applicants 
were removed because the described process was obsolete.
    f. The discussion on notifying an Applicant of an ineligible 
determination has been moved to Sec.  4284.952, Notification of 
unsuccessful Applicants.
    26. Section 4284.942 has been removed and reserved. The proposal 
evaluation criteria and scoring information was moved to Sec.  
4284.940, Application processing.
    27. The section heading for Sec.  4284.950 was changed from ``Award 
process'' to ``Award selection'' to identify more clearly what is 
covered in the section. The section was revised as follows:
    a. Additional information on the award and ranking process for 
awards, including the minimum acceptable score for funding was added.
    b. The discussion on notifying Applicants whether or not they have 
been selected for funding was moved to Sec. Sec.  4284.951 and 4284.952 
on notifying successful and unsuccessful applications.
    c. Discussion on Intergovernmental review (IR) was removed. This 
process does not apply to the VAPG program as determined by the Agency 
and in concurrence with the USDA Office of the Chief Financial Officer 
(OCFO). OCFO maintains a website page that describes the IR process and 
includes a listing of USDA financial assistance programs and activities 
that are subject to IR requirements. See www.usda.gov/ocfo/federal-financial-assistance-policy/intergovernmental-review.
    28. The section heading for Sec.  4284.951 was changed from 
``Obligate and award funds'' to ``Notification of successful 
Applicants'' to identify more clearly what is covered in the section. 
This section was revised to remove application forms no longer 
collected by the Agency because the information is now being collected 
by SAM. The section was also revised to add the requirement for a valid 
producer license

[[Page 75768]]

for hemp-related projects, documentation of legal rights for 
Harvesters, and organizational documents demonstrating legal authority 
and good standing.
    29. Section 4284.952 was unreserved and titled ``Notification of 
unsuccessful Applicants''. This section was added to clearly state the 
process used to notify unsuccessful Applicants and to place this 
information in a section of the regulation that corresponds to the 
sequential order of events in the application processing timeline.
    30. The section heading for Sec.  4284.960 was changed from 
``Monitoring and reporting program performance'' to ``Reporting 
requirements''. Monitoring information was moved to Sec.  4284.961, 
Grant monitoring. The reporting requirements were revised to clearly 
separate the discussion on financial and performance reporting 
requirements into two separate sections. The Agency also corrected a 
technical error to change the reporting period from 45 days to 30 days.
    31. The section heading for Sec.  4284.961 was changed from ``Grant 
servicing'' to ``Grant monitoring'' to identify more clearly what is 
covered in the section. The monitoring discussion from Sec.  4284.960 
was incorporated into this section. The information on compliance with 
specific regulations was moved to Sec.  4284.908, Compliance with other 
laws and regulations.
    32. Section 4284.1000 was added to include the Office of Management 
and Budget (OMB) control Number 0570-0064, for the burden associated 
with the VAPG Program.

D. Subpart K--Agriculture Innovation Center Demonstration Program

    1. Section 4284.1001, Purpose, was updated to simplify the language 
and to provide clarity on what services the Centers must provide.
    2. The section heading for Sec.  4284.1002 was changed from 
``Policy'' to ``Organization of subpart''. The policy language was 
removed because the Agency's policies are incorporated into the 
regulation. This section was added to identify the main sections of the 
revised subpart and to summarize the information included in each 
section.
    3. The section heading for Sec.  4284.1003 was changed from 
``Program administration'' to ``Definitions''. The program 
administration information is now incorporated throughout the subpart 
by identifying when the Agency is responsible for a process. The 
definitions in this section were formerly located in Sec.  4284.1004 
and several were moved from Sec.  4284.3. The Agency revised some 
definitions to be consistent with the way that 2 CFR part 200 defines 
terms. Language was also added to this section to clarify that defined 
terms are capitalized in the subpart. The following summarizes the 
changes to the definitions in this section:
    a. Terms moved from subpart A, Sec.  4284.3. The terms Agency, 
Agricultural Producer, Equipment, Matching Funds, Nonprofit 
Institution, State, State Office and Value-Added were moved to this 
section from Sec.  4284.3.
    b. Removed terms. Scale production assessments was removed because 
the definition is now incorporated into the definition for Producer 
Services.
    c. Revised terms. The definitions for the following terms have been 
revised:
    i. Center was revised to simplify the definition.
    ii. Equipment replaces the former term ``fixed equipment'' to be 
consistent with 2 CFR part 200.
    iii. Nonprofit Organization replaces the former term ``Nonprofit 
Institution'' and the definition was revised to reference 2 CFR part 
200 as the location for how the term is to be defined.
    iv. Producer Services was revised to clarify the types of services 
that Centers may provide.
    v. Qualified Board of Directors was revised to incorporate the 
required changes from the 2018 Farm Bill. The first change was to allow 
a State Legislator to serve on the Board of Directors instead of a 
representative from the State department of agriculture, or its 
equivalent. The second change was to allow representation from any four 
Agricultural Commodity Organizations instead of organizations 
representing the four highest grossing Commodities in the State.
    vi. Value-Added Agricultural Product replaces the term Value-Added 
and the definition was updated to reference the VAPG program.
    d. Newly defined terms. Definitions for the following terms: 
Adverse Decision, Adverse Decision Letter, Agricultural Commodity 
Organization, Agricultural Food Product, Applicant, Business Plan, 
Change in Physical State, Commercial Organization, Family Farm, Farm or 
Ranch, Farm- or Ranch-Based Renewable Energy, Feasibility Study, 
Federal Award, Financial Assistance Agreement, General Agricultural 
Organization, Harvester, Indian Tribe, Indirect Costs, Institution of 
Higher Education, Key Personnel, Letter of Conditions, Local 
Agricultural Producer, Local Government, Locally-Produced Agricultural 
Food Product, Period of Performance, Physical Segregation, Produced in 
a Manner that Enhances the Value of the Agricultural Commodity, Program 
Income, Project Costs, Real Property, Recipient, Third Party In-Kind 
Contributions, and Underserved and Economically Distressed were added 
to this subpart in order to provide clarity and additional guidance on 
terms being used in the subpart.
    4. The section heading for Sec.  4284.1004 was changed from 
``Definitions'' to ``Exception authority''. The definitions were moved 
to Sec.  4284.1003. This section was added to explain the circumstances 
under which the Agency may grant an exception to any requirement or 
provision of this subpart. The circumstances are consistent with other 
programs administered by the Agency.
    5. Section 4284.1006 was unreserved and titled ``Conflict of 
interest''. The contents of this section were relocated from Sec. Sec.  
4284.3 and 4284.17. This section was made a stand-alone section to 
clarify and expand the Agency's policy on conflicts of interest for the 
AIC program and on Recipient conflict of interest requirements from 2 
CFR part 200.
    6. Section 4284.1007 has been removed and reserved. The eligibility 
information from this section was moved to the sections on Applicant 
and project eligibility, Sec. Sec.  4284.1020 and 4284.1022.
    7. The section heading for Sec.  4284.1008 was changed from ``Use 
of grant funds'' to ``Compliance with other laws and regulations''. The 
use of funds information was moved to Sec.  4284.1025, Use of funds. 
The compliance information was relocated from Sec.  4284.16 and 
includes an updated and more comprehensive list of applicable Federal 
laws and regulations, departmental regulations, and agency regulations. 
It also identifies the current official uniform resource locations that 
can be used to access the information.
    8. Section 4284.1009 has been removed and reserved. The limitations 
on awards information was moved to Sec.  4284.1022, Project 
eligibility.
    9. Section 4284.1010 was removed and reserved. The application 
processing information was moved to Sec.  4284.1031, Application 
requirements.
    10. Sections 4284.1011, 4284.1012, and 4284.1013 were removed and 
reserved. The information on evaluation screening, evaluation process, 
and the evaluation criteria and weights was moved to Sec.  4284.1040, 
Application processing.
    11. Section 4284.1014 was removed and reserved. The grant closing 
information was moved to Sec.  4284.1051, Notification of successful 
Applicants.

[[Page 75769]]

    12. Section 4284.1020 was unreserved and titled ``Applicant 
eligibility''. The information in this section was relocated from 
Sec. Sec.  4284.6 and 4284.1007 and has been updated as follows:
    a. The Federal requirement for a UEI was added and program 
requirements were clarified.
    b. The requirement to provide information on technical expertise 
was combined with the requirement to demonstrate experience with 
providing Producer Services to remove duplication.
    c. The paragraph on Matching Funds was moved to Sec.  4284.1022, 
Project eligibility, because it fits better in that section.
    d. Specific reasons applicants are not eligible was added.
    13. Section 4284.1022 was unreserved and titled ``Project 
eligibility''. The information in this section was relocated from 
Sec. Sec.  4284.1007 and 4284.1009 and updated to include information 
on what ``local'' means, what the minimum award size is, how long the 
Period of Performance is, and limitations on contracts with other 
Centers. The section also clarifies how Matching Funds are calculated 
and what sources can be used.
    14. Section 4284.1025 was unreserved and titled ``Use of funds''. 
The information in this section was relocated from Sec. Sec.  4284.10 
and 4284.1008 and updated to clarify allowable and unallowable uses of 
funds.
    15. Section 4284.1030 was unreserved and titled ``Notifications''. 
The information in this section was relocated from Sec.  4284.1010(a) 
and updated to clarify the process that the Agency will use to notify 
the public about the amount of funding available and any other future 
requirements not addressed by this subpart.
    16. Section 4284.1031 was unreserved and titled ``Application 
requirements''. The information in this section was relocated from 
Sec.  4284.1010 and updated to streamline the requirements for an 
application. In particular, the program has moved to a form submission 
in lieu of a narrative. The new form will be provided to the Office of 
Information and Regulatory Affairs for review and approval along with 
the updated information and collection package prior to it being 
provided to Applicants. The burden for some requirements, such as 
verification of Matching Funds and demonstrating a Qualified Board of 
Directors, has been moved to the award phase of the process to reduce 
burden on Applicants who are not successful in obtaining funding.
    17. Section 4284.1033 was unreserved and titled ``Submission 
requirements''. The information in this section was relocated from 
Sec.  4284.7 and updated to provide specific information on the 
submission period, address, and format. This information was previously 
supplied in an annual notification to provide more detail but will now 
be codified.
    18. Section 4284.1040 was unreserved and titled ``Application 
processing''. The information in this section was relocated from 
Sec. Sec.  4284.1011, 4284.1012, and 4284.1013 to combine all the 
application evaluation information into one section. The information 
was updated as follows:
    a. The Agency's risk evaluation process, required by 2 CFR 200.206, 
was added.
    b. The merit evaluation criteria, also called scoring criteria, 
were revised to better reflect the goals of the program, remove 
duplication, and streamline the evaluation process.
    c. Priority points were added to reflect the Agency's commitment to 
prioritizing projects that meet current mission area priorities.
    19. Section 4284.1041 was unreserved and titled ``Application 
withdrawal''. This section was added to explain how an Applicant can 
withdraw an application from consideration. The language is consistent 
with other Agency programs.
    20. Section 4284.1050 was unreserved and titled ``Award 
selection''. The information in this section was relocated from Sec.  
4284.1012 and clarifies how applications will be selected for an award.
    21. Section 4284.1051 was unreserved and titled ``Notification of 
successful Applicants''. The information in this section was relocated 
from Sec.  4284.1014 and updated to clarify and expand the process for 
how Applicants will be notified if their applications have been 
selected for an award.
    22. Section 4284.1052 was unreserved and titled ``Notification of 
unsuccessful Applicants''. The information in this section was 
relocated from Sec.  4284.4 and was updated to provide information 
about how unsuccessful Applicants will be notified.
    23. Section 4284.1053 was unreserved and titled ``Award approval''. 
The information in this section was relocated from Sec.  4284.1014 and 
clarifies how an award is approved.
    24. Section 4284.1060 was unreserved and titled ``Reporting 
requirements''. The information in this section was relocated from 
Sec. Sec.  4284.12 and 4284.1014 and updated to clarify the financial 
and performance reporting requirements to include additional guidance 
on content and report format.
    25. Section 4284.1061 was unreserved and titled ``Monitoring 
awards''. The information in this section was relocated from Sec.  
4284.14 and updated to better describe how awards will be monitored.

V. Executive Orders

A. Executive Order 12866--Classification

    This final rule has been determined to be not significant for 
purposes of Executive Order 12866 and, therefore, has not been reviewed 
by OMB.

B. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this final 
rule as not a major rule, as defined by 5 U.S.C. 804(2).

C. Assistance Listing Number (Formally Known as the Catalog of Federal 
Domestic Assistance)

    The assigned Assistance Listing Number for the AIC Program is 
10.377, for the RCDG Program is 10.771, and for the VAPG Program is 
10.352. The Assistance Listing Numbers are available on the internet at 
sam.gov/.

D. Executive Order 12372--Intergovernmental Consultation

    These programs are not subject to the requirements of Executive 
Order 12372, ``Intergovernmental Review of Federal Programs,'' as 
implemented under USDA's regulations at 2 CFR 415, subpart C.

E. Paperwork Reduction Act

    The information collection and recordkeeping requirements contained 
in this rulemaking are covered under three (3) OMB Control Numbers:
    1. RCDG (OMB No. 0570-0006). The information collection and 
recordkeeping requirements for this subpart were updated as part of the 
three (3) year renewal/revision process and has been provided to OMB in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 
35).
    2. AIC (OMB No. 0570-0045). The information collection and 
recordkeeping requirements for this subpart were reviewed and approved 
by OMB pursuant to the Paperwork Reduction Act 1995 (44 U.S.C. chapter 
35).
    3. VAPG (OMB No. 0570-0064). The VAPG subpart contains no new 
reporting or recordkeeping burdens that would require approval under 
the

[[Page 75770]]

Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35).

F. National Environmental Policy Act

    In accordance with the National Environmental Policy Act of 1969, 
Public Law 91-190, this final rule has been reviewed in accordance with 
7 CFR part 1970 (``Environmental Policies and Procedures''). The Agency 
has determined that (i) this rulemaking action is a categorical 
exclusion in accordance with 7 CFR 1970.53(f); (ii) no extraordinary 
circumstances exist; and (iii) the action is not ``connected'' to other 
actions with potentially significant impacts, is not considered a 
``cumulative action,'' and is not precluded by 40 CFR 1506.1. 
Therefore, the Agency has determined that the action does not have a 
significant effect on the human environment, and therefore neither an 
Environmental Assessment nor an Environmental Impact Statement is 
required.

G. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (``RFA'') 
generally requires an agency to prepare a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements under the Administrative Procedure Act (``APA'') or any 
other statute. The APA exempts from notice and comment requirements 
rules ``relating to agency management or personnel or to public 
property, loans, grants, benefits, or contracts'' (5 U.S.C. 553(a)(2)), 
so therefore an analysis has not been prepared for this final rule.

H. Executive Order 12988--Civil Justice Reform

    This final rule has been reviewed under Executive Order 12988. In 
accordance with this rule: (1) unless otherwise specifically provided, 
all State and local laws that conflict with this rule will be 
preempted; (2) no retroactive effect will be given to this rule except 
as specifically prescribed in the rule; and (3) administrative 
proceedings of the National Appeals Division of the Department of 
Agriculture (7 CFR part 11) must be exhausted before bringing suit in 
court that challenges action taken under this rule.

I. Executive Order 13132--Federalism

    The policies contained in this final 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 the States is not 
required.

J. Executive Order 13175--Consultation and Coordination With Indian 
Tribal Governments

    This executive order imposes requirements on RBCS in the 
development of regulatory policies that have Tribal implications or 
preempt Tribal laws. RBCS has determined that the final rule does not 
have a substantial direct effect on one or more Indian Tribe(s) or on 
either the relationship or the distribution of powers and 
responsibilities between the Federal Government and Indian Tribes. 
Thus, this final rule is not subject to the requirements of Executive 
Order 13175. If Tribal leaders are interested in consulting with RBCS 
on this final rule, they are encouraged to contact USDA's Office of 
Tribal Relations or RD's Native American Coordinator at: [email protected] 
to request such a consultation.

K. E-Government Act Compliance

    Rural Development is committed to the E-Government Act, which 
requires Government agencies in general to provide the public the 
option of submitting information or transacting business electronically 
to the maximum extent possible and to promote the use of the internet 
and other information technologies to provide increased opportunities 
for citizen access to Government information and services, and for 
other purposes.

L. Administrative Pay-As-You-Go-Act of 2023

    Section 270 of the Administrative Pay-As-You-Go-Act of 2023 (Pub. 
L. 118-5, div. B, title III, 137 Stat 31) amended 5 U.S.C. 801(a)(2)(A) 
to require U.S. Government Accountability Office (GAO) to assess agency 
compliance with the Act, which establishes requirements for 
administrative actions that affect direct spending, in GAO's major rule 
reports. The Act does not apply to this final rule because it does not 
increase direct spending.

M. Civil Rights Impact Analysis

    Rural Development has reviewed this final rule in accordance with 
USDA Regulation 4300-004, Civil Rights Impact Analysis, to identify any 
major civil rights impacts the rule might have on program participants 
on the basis of age, race, color, national origin, sex, disability, 
marital or familial status. Based on the review and analysis of the 
rule and all available data, issuance of this Final Rule is not likely 
to negatively impact low and moderate-income populations, minority 
populations, women, Indian tribes or persons with disability, by virtue 
of their age, race, color, national origin, sex, disability, or marital 
or familial status. No major civil rights impact is likely to result 
from this final rule.

N. USDA Non-Discrimination Statement

    In accordance with Federal civil rights laws and USDA civil rights 
regulations and policies, the USDA, its Mission Areas, agencies, staff 
offices, employees, and institutions participating in or administering 
USDA programs are prohibited from discriminating based on race, color, 
national origin, religion, sex, gender identity (including gender 
expression), sexual orientation, disability, age, marital status, 
family/parental status, income derived from a public assistance 
program, political beliefs, or reprisal or retaliation for prior civil 
rights activity, in any program or activity conducted or funded by USDA 
(not all bases apply to all programs). Remedies and complaint filing 
deadlines vary by program or incident.
    Program information may be made available in languages other than 
English. Persons with disabilities who require alternative means of 
communication to obtain program information (e.g., Braille, large 
print, audiotape, American Sign Language) should contact the 
responsible Mission Area, agency, or staff office; or the 711 Relay 
Service.
    To file a program discrimination complaint, a complainant should 
complete a Form AD-3027, USDA Program Discrimination Complaint Form, 
which can be obtained online at www.usda.gov/sites/default/files/documents/ad-3027.pdf from any USDA office, by calling (866) 632-9992, 
or by writing a letter addressed to USDA. The letter must contain the 
complainant's name, address, telephone number, and a written 
description of the alleged discriminatory action in sufficient detail 
to inform the Assistant Secretary for Civil Rights (ASCR) about the 
nature and date of an alleged civil rights violation. The completed AD-
3027 form or letter must be submitted to USDA by:
    a. Mail: U.S. Department of Agriculture, Office of the Assistant 
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 
20250-9410; or
    b. Fax: (833) 256-1665 or (202) 690-7442; or
    c. Email: [email protected].

[[Page 75771]]

List of Subjects in 7 CFR Part 4284

    Agriculture, Business and industry, Business development, Economic 
development, Grant programs--technical assistance, Grant programs--
business development, Reporting and recordkeeping requirements, Rural 
areas.

    For the reasons set forth in the preamble, the Agency amends 7 CFR 
part 4284 as follows:

PART 4284--GRANTS

0
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 J also issued under 7 U.S.C. 1627c.
    Subpart K also issued under 7 U.S.C. 1632b.

Subpart A [Removed and Reserved]

0
2. Remove and reserve subpart A, consisting of Sec. Sec.  4284.1 
through 4284.100.

0
3. Revise subpart F to read as follows:

Subpart F--Rural Cooperative Development Grants

Sec.
4284.501 Purpose.
4284.502 Organization of subpart.
4284.503 Definitions.
4284.504 Exception authority.
4284.505 [Reserved]
4284.506 Conflict of interest.
4284.507 [Reserved]
4284.508 Compliance with other laws and regulations.
4284.509-4284.519 [Reserved]
4284.520 Applicant eligibility.
4284.521 [Reserved]
4284.522 Project eligibility.
4284.523-4284.524 [Reserved]
4284.525 Use of grant and Matching Funds.
4284.526-4284.529 [Reserved]
4284.530 Notifications.
4284.531 Application requirements.
4284.532 [Reserved]
4284.533 Submission requirements.
4284.534-4284.539 [Reserved]
4284.540 Application processing.
4284.541 Application withdrawal.
4284.542-4284.549 [Reserved]
4284.550 Award selection.
4284.551 Notification of successful Applicants.
4284.552 Notification of unsuccessful Applicants.
4284.553 Award approval.
4284.554 Multi-year award.
4284.555-4284.559 [Reserved]
4284.560 Reporting requirements.
4284.561 Monitoring awards.
4284.562-4284.599 [Reserved]
4284.600 OMB control number.


Sec.  4284.501  Purpose.

    This subpart implements the Rural Cooperative Development Grant 
(RCDG) Program. Grants are made to Nonprofit Institutions who in turn 
provide Technical Assistance including Cooperative Development to 
start, expand or improve Cooperatively and Mutually Owned Businesses in 
Rural Areas.


Sec.  4284.502  Organization of subpart.

    The information in this subpart is organized into six main topics:
    (a) General information. Sections 4284.501 through 4284.519 discuss 
the purpose of the program, definitions, exception authority, conflict 
of interest, and compliance with other laws and regulations.
    (b) Eligibility information. Sections 4284.520 through 4284.529 
discuss the eligibility requirements for the program. The sections 
include information on Applicant eligibility, Project eligibility, and 
the use of funds. See Sec.  4284.522 for information about the award 
amounts, Period of Performance, and Matching Funds requirements.
    (c) Application requirements information. Sections 4284.530 through 
4284.539 discuss the requirements for submitting an application. The 
sections include information on what forms and other information are 
required for a complete application as well as the format of the 
application, the application deadline, and how to submit the 
application.
    (d) Application processing information. Sections 4284.540 through 
4284.549 discuss how the Agency will process applications. The sections 
include information on how applications will be reviewed for 
eligibility, how applications will be evaluated for merit, and how an 
Applicant can withdraw an application from consideration.
    (e) Award information. Sections 4284.550 through 4284.559 discuss 
how the Agency will make awards. The sections include information about 
how applications will be selected for funding, how Applicants will be 
notified if their applications are selected for funding, how Applicants 
can resolve disputes regarding funding selections, and the requirements 
for an Applicant to accept an award and be approved as a Recipient of 
an award.
    (f) Post-award information. Sections 4284.560 through 4284.561 
discuss the reporting requirements for Recipients after an award is 
approved as well as monitoring procedures that the Agency will use.
    (g) Other. (1) Sections 4284.562 through 4284.599 are reserved.
    (2) Section 4284.600 includes the Office of Management and Budget 
(OMB) control number for reporting and recordkeeping requirements under 
this subpart.


Sec.  4284.503  Definitions.

    These are the definitions for terms used in this subpart. 
Additional terms used in this subpart are found in the applicable laws 
and regulations, in particular 2 CFR part 200 and 7 CFR part 11.
    1994 Institution means a college identified as such for purposes of 
the Equity in Educational Land-Grant Status Act of 1994 (7 U.S.C. 301 
note).
    Adverse Decision has the meaning located at 7 CFR 11.1.
    Adverse Decision Letter means a letter issued by the Agency to the 
Applicant or Recipient that explains the Adverse Decision.
    Agency means the Rural Business-Cooperative Service (RBCS or the 
Agency), an agency of the United States Department of Agriculture (USDA 
or the Department), or a successor agency.
    Applicant means the Nonprofit Institution that is applying for 
funding through the RCDG program.
    Board of Directors (Board) means the group of individuals that 
manage or direct the Center.
    Business Plan means a formal statement of a set of business goals, 
the reasons why they are believed attainable, and the plan for reaching 
those goals, including pro forma financial statements appropriate to 
the term and scope of the Project and sufficient to evidence the 
viability of the Project. It may also contain background information 
about the organization or team attempting to reach those goals.
    Center means the Rural Cooperative Development Center to be 
established and/or operated by a Recipient of the RCDG program.
    Cooperative means a business or organization owned, democratically 
governed, controlled and operated by those who use and benefit from it. 
Profits and losses generated by the organization are distributed in 
proportion to use as patronage to the user-owners, also known as 
members. Investment returns to non-members are limited.
    Cooperative Development refers to a type of Technical Assistance 
that establishes and promotes Cooperative businesses through hands-on 
activities, often but not exclusively, assisting a group through a 
series of stages. These stages include but are not limited to the 
following: idea exploration by a group with shared needs, member-use 
analysis, identifying a steering

[[Page 75772]]

committee and guiding them through the development process, modeling 
effective democratic processes and good governance practices, creation 
of legal and policy documents, conducting a membership drive, raising 
member equity, acquiring sufficient capital, supporting operations, 
ongoing education and training, ongoing Board development and relations 
with management, supporting decision-making regarding patronage, and 
fostering an environment that is supportive of Cooperatives.
    Economic Development means the economic growth of an area as 
evidenced by an 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.
    Equipment has the meaning located at 2 CFR 200.1.
    Feasibility Study means a comprehensive analysis of the economic, 
market, technical, financial, and management capabilities of a Project 
or business in terms of the Project's expectation for success.
    Federal Award has the meaning located at 2 CFR 200.1.
    Grant Agreement or Financial Assistance Agreement has the meaning 
located at 2 CFR 200.1.
    Institutions of Higher Education has the meaning located at 2 CFR 
200.1.
    Key Personnel means employees, new hires, consultants, and/or 
contractors of the Center who provide Technical Assistance including 
Cooperative Development and oversee and/or complete the tasks in the 
work plan.
    Letter of Conditions means the letter that the Agency issues to an 
entity whose application is selected for funding. The letter outlines 
all the conditions of the award that must be met before the award can 
be approved. Other agencies may call this letter an award letter or 
award notice.
    Matching Funds means a cost-sharing contribution to the Project 
that is 25 percent of the eligible Project Cost. For 1994 Institutions, 
a cost-sharing contribution that is 5 percent of the eligible Project 
Cost.
    Mutually Owned Business means a business not incorporated under a 
Cooperative statute but operating as a Cooperative. Cooperative 
operation of the business is reflected in the articles and by-laws.
    Networking means the creation and sharing of knowledge, best 
practices and transferrable strategies, engaging in mentor/mentee 
relationships amongst Centers, and developing joint Technical 
Assistance Projects with other Centers and other organizations engaged 
in Economic Development with the intent of advancing Cooperative 
Development and its practice.
    New Cooperative Approach refers to development of a Cooperatively 
or Mutually Owned Business approach in a new industry, utilizing a new 
Cooperative structure, or serving a new function. This industry, 
structure, or function must be new to the Center or new to the service 
area.
    Nonprofit Institution means any organization or institution, 
including an accredited Institution of Higher Education, no part of the 
net earnings of which inures, or may lawfully inure, to the benefit of 
any private shareholder or individual.
    Operating Cost means the day-to-day expenses of running a business; 
for example: utilities, rent on the office space a business occupies, 
salaries, depreciation, marketing and advertising, and other basic 
overhead items.
    Period of Performance has the meaning located at 2 CFR 200.1.
    Project means all of the eligible activities to be funded by the 
grant and Matching Funds under this subpart.
    Project Cost has the meaning located at 2 CFR 200.1.
    Public Body means 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.
    Real Property has the meaning located at 2 CFR 200.1.
    Recipient has the meaning located at 2 CFR 200.1.
    Research and Development (R&D) has the meaning located at 2 CFR 
200.1.
    Rural and Rural Area means any area of a State not in a city or 
town that has a population of more than 50,000 inhabitants, according 
to the latest decennial census of the United States, or in the urban 
area contiguous and adjacent to a city or town that has a population of 
more than 50,000 inhabitants, and any area that has been determined to 
be ``rural in character'' by the Under Secretary for Rural Development 
(RD), or as otherwise identified in this definition as follows:
    (1) An area that is attached to the urban area of a city or town 
with more than 50,000 inhabitants by a contiguous area of urbanized 
census blocks that is not more than two (2) census blocks wide. 
Applicants from such an area should work with their RD State office to 
request a determination of whether their project is located in a Rural 
Area under this provision.
    (2) For the purposes of this definition, cities and towns are 
incorporated population centers with definite boundaries, local self-
government, and legal powers set forth in a charter granted by the 
State.
    (3) For the purposes of this definition, populations of individuals 
incarcerated on a long-term or regional basis shall not be included in 
determining whether an area is ``rural'' or a ``rural area''.
    (4) For the purposes of this definition, the first 1,500 
individuals who reside in housing located on a military base shall not 
be included in determining whether an area is ``rural'' or a ``rural 
area''.
    (5) For the Commonwealth of Puerto Rico, the island is considered 
Rural and eligible for Business Programs assistance, except for the San 
Juan Census Designated Place (CDP) and any other CDP with greater than 
50,000 inhabitants. CDPs with greater than 50,000 inhabitants, other 
than the San Juan CDP, may be determined to be eligible if they are 
``not urban in character.''
    (6) For the State of Hawaii, all areas within the State are 
considered Rural and eligible for Business Programs assistance, except 
for the Honolulu CDP within the County of Honolulu.
    (7) For the purpose of defining a Rural Area in the Republic of 
Palau, the Federated States of Micronesia, and the Republic of the 
Marshall Islands, the Agency shall determine what constitutes Rural and 
Rural Area based on available population data.
    (8) The determination that an area is ``rural in character'' will 
be made by the Under Secretary of RD. The process to request a 
determination under this provision is outlined in paragraph (8)(ii) of 
this definition.
    (i) The determination that an area is ``rural in character'' under 
this definition will apply to areas that are within:
    (A) An urban area that has two points on its boundary that are at 
least 40 miles apart, which is not contiguous or adjacent to a city or 
town that has a population of greater than 150,000 inhabitants or the 
urban area of such a city or town; or
    (B) An urban area contiguous and adjacent to a city or town of 
greater than 50,000 inhabitants that is within one-quarter mile of a 
Rural Area.
    (ii) Units of local government may petition the Under Secretary of 
RD for a ``rural in character'' designation by submitting a petition to 
both the appropriate RD State Director and the Administrator on behalf 
of the Under

[[Page 75773]]

Secretary. The petition shall document how the area meets the 
requirements of paragraph (8)(i)(A) or (B) of this definition and 
discuss why the petitioner believes the area is ``rural in character,'' 
including, but not limited to, the area's population density, 
demographics, and topography and how the local economy is tied to a 
rural economic base. Upon receiving a petition, the Under Secretary 
will consult with the applicable Governor or leader in a similar 
position and request comments to be submitted within five (5) business 
days, unless such comments were submitted with the petition. The Under 
Secretary will release to the public a notice of a petition filed by a 
unit of local government not later than 30 days after receipt of the 
petition by way of publication in a local newspaper and posting on the 
Agency's website, and the Under Secretary will make a determination not 
less than 15 days, but no more than 60 days, after the release of the 
notice. Upon a negative determination, the Under Secretary will provide 
to the petitioner an opportunity to appeal a determination to the Under 
Secretary, and the petitioner will have 10 business days to appeal the 
determination and provide further information for consideration.
    Rural Development (RD) refers to a mission area within the USDA 
which includes RBCS, the Rural Housing Service, and the Rural Utilities 
Service, and their successors.
    State means any of the 50 States of the United States, the District 
of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands 
of the United States, Guam, American Samoa, the Commonwealth of the 
Northern Mariana Islands, the Republic of Palau, the Federated States 
of Micronesia, and the Republic of the Marshall Islands.
    State Office refers to USDA RD offices located in each State.
    Subaward has the meaning located at 2 CFR 200.1.
    Technical Assistance means the process of providing targeted 
support for the startup, expansion, and operational improvement of 
Cooperatively and Mutually Owned Businesses typically delivered via 
multiple contacts over a period of time. It includes the transfer of 
skills and knowledge through research and collection of information to 
provide guidance and advice; assessment and analysis through 
Feasibility Studies and Business Plans, customized training, written 
information, in person or virtual exchanges, web-based curricula, and 
webinars.
    Underserved and Economically Distressed has the meaning located in 
the annual notification issued on the program website.
    Value-Added means the incremental profit earned from each 
transaction or step in processing after deducting processing costs, 
depreciation, and other relevant expenses. Each stage of processing or 
ownership transfer typically adds value to a good, product, or service.


Sec.  4284.504  Exception authority.

    The Administrator of the Agency may, on a case-by-case basis, grant 
an exception to any non-statutory requirement or provision of this 
subpart provided that such exception is in the best financial interests 
of the Federal Government. Exercise of this authority cannot be in 
conflict with applicable laws.


Sec.  4284.505  [Reserved]


Sec.  4284.506  Conflict of interest.

    No conflict of interest or appearance of conflict of interest will 
be allowed.
    (a) Description. A conflict of interest occurs in a situation in 
which a person or entity has a competing, or the appearance of a 
competing, personal, professional, or financial interest that makes it 
difficult for the person or entity to act impartially. For purposes of 
this subpart, interactions among the following individuals constitute a 
conflict of interest or appearance of a conflict of interest:
    (1) Applicant Board, employees, consultants, and contractors.
    (2) Recipient Board, employees, consultants, and contractors.
    (3) Center Board, employees, consultants, and contractors.
    (4) Subrecipients and their employees, consultants, and 
contractors.
    (5) Immediate family members of those listed in paragraphs (a)(1) 
through (4) of this section.
    (b) Written disclosure. Recipients must comply with 2 CFR 400.2(b), 
which requires written disclosure of any potential conflicts of 
interest and maintaining written standards of conduct covering 
conflicts of interest and governing the performance of its employees in 
the selection, award, and administration of Federal Awards.
    (c) Assistance to employees, relatives, and associates. The Agency 
will process any requests for assistance under this subpart in 
accordance with 7 CFR part 1900, subpart D.
    (d) Member/delegate clause. No member of or delegate to Congress 
shall receive any share or part of this grant or any benefit that may 
arise therefrom; but this provision shall not be construed to bar, as a 
contractor under the grant, a publicly held corporation whose ownership 
might include a member of Congress.


Sec.  4284.507  [Reserved]


Sec.  4284.508  Compliance with other laws and regulations.

    The Agency, Applicants, and Recipients must comply with all 
applicable laws and regulations. An effort has been made to identify 
the most-commonly cited laws and regulations and to reference them as 
follows:
    (a) Federal laws. Federal laws are codified in the United States 
Code (U.S.C.). A selection of laws is identified as follows:
    (1) Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.).
    (2) Consumer Credit Protection Act (15 U.S.C. 1601 et seq.).
    (3) Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et 
seq.).
    (4) The Civil Rights Act of 1964, Title VI (42 U.S.C. 2000d et 
seq.).
    (5) The Rehabilitation Act of 1973, Section 504 (29 U.S.C. 794).
    (b) Federal regulations. Federal regulations are codified in the 
Code of Federal Regulations (CFR). In particular, 2 CFR parts 1 through 
200 address items such as universal identifiers, reporting Subaward and 
executive compensation, debarment and suspension, drug-free workplaces, 
administrative requirements, cost principles, and audit requirements. 
We particularly encourage Applicants and Recipients to become familiar 
with 2 CFR part 200 in its entirety.
    (c) Departmental regulations. Departmental regulations are those 
regulations that are specific to awards made through the USDA. They are 
codified in the CFR. A selection of applicable regulations is 
identified as follows:.
    (1) 2 CFR parts 400 through 499. These parts include USDA's 
adoption of Federal administrative requirements and cost principles. 
They also include regulations on debarment and suspension, lobbying, 
drug-free workplaces, and research awards.
    (2) 7 CFR part 11. This part includes USDA's procedures for 
administrative appeals, as handled by its National Appeals Division.
    (3) 7 CFR part 15. This part includes USDA's procedures for 
compliance with nondiscrimination laws and regulations.
    (d) Agency regulations. Agency regulations are those regulations 
that are specific to awards made through the Agency and they may also 
be specific to

[[Page 75774]]

a program. They are codified in the CFR. A selection of those 
regulations is as follows:
    (1) 7 CFR part 1900. This part covers delegations of authority, 
Adverse Decisions and administrative appeals, applicability of Federal 
law, and processing and servicing grant awards.
    (2) 7 CFR part 1901, subpart E. This subpart covers civil rights 
compliance requirements.
    (3) 7 CFR part 1951. This part covers servicing grant awards, 
including unauthorized assistance.
    (4) 7 CFR part 1970. This part covers environmental policies and 
considerations.
    (e) Access to laws and regulations. (1) Laws may be accessed 
through the U.S.C. At the time this subpart was published, the U.S.C. 
may be accessed electronically at this website: https://uscode.house.gov/.
    (2) Regulations may be accessed through the CFR. At the time this 
subpart was published, the CFR may be accessed electronically at this 
website: https://www.ecfr.gov/.


Sec. Sec.  4284.509-4284.519  [Reserved]


Sec.  4284.520  Applicant eligibility.

    (a) Eligible Applicants. Applicants are eligible for assistance 
through this program if they meet the following requirements:
    (1) Applicant type. A Nonprofit Institution.
    (2) Applicant location. Applicant must be located in a State.
    (3) Unique entity identifier (UEI). Applicants must have a UEI and 
active registration through the System for Award Management (SAM) at 
SAM.gov unless exempt under 2 CFR 25.110.
    (4) Multiple grant eligibility. An Applicant may submit only one 
application in response to a solicitation. All applications submitted, 
regardless of the Applicant entity name, that include the same 
Executive Director, employees, Board, advisory boards or committees of 
an existing Center or a majority thereof will be determined ineligible 
for funding.
    (b) Ineligible Applicants. Applicants are ineligible for assistance 
through this program if one or more of the following occurs:
    (1) The Applicant is an individual, for-profit entity, or Public 
Body.
    (2) The Applicant is debarred or suspended or is otherwise excluded 
from, or ineligible for participation in Federal assistance programs 
under Executive Order 12549, ``Debarment and Suspension.'' See 2 CFR 
part 417 for more information.
    (3) The Applicant has an outstanding judgment obtained against the 
organization by the United States in a Federal Court (other than United 
States Tax Court).
    (4) The Applicant is delinquent on the payment of Federal income 
taxes.
    (5) The Applicant is delinquent on Federal debt.
    (6) The Applicant has been convicted of a felony criminal violation 
under any Federal law within the past 24 months.
    (7) The Applicant has unpaid Federal tax liability that has been 
assessed, for which all judicial and administrative remedies have been 
exhausted or lapsed, and that is not being paid in a timely manner 
pursuant to an agreement with the authority responsible for collecting 
the tax liability.
    (8) The Applicant has an award through this program that is not 
scheduled to end until after September 30 (for awards that began the 
preceding October 1) of the current Federal fiscal year, or December 31 
(for awards that began the preceding January 1) of the current calendar 
year.


Sec.  4284.521  [Reserved]


Sec.  4284.522  Project eligibility.

    (a) Eligible Projects. Eligible Projects must meet all of the 
following requirements. Failure to meet one or more of these 
requirements means that the application will not be considered for 
funding.
    (1) Rurality. All Project activities must serve individuals, 
Cooperatively and Mutually Owned Businesses, small businesses, or other 
similar entities in Rural Areas.
    (2) Project focus. The Project must focus on establishing or 
operating a Center with the goals of creating jobs in Rural Areas 
through the development of new Rural Cooperatives, Value-Added 
processing, and Rural businesses.
    (3) Amount requested. The amount requested must not exceed any 
maximum amounts specified in the annual notification issued on the 
program website.
    (4) Matching Funds. Matching Funds may be provided in cash by the 
Applicant, or cash or in-kind by a third party and are required for 25 
percent (or 5 percent if a 1994 Institution) of the Project Cost. For 
example, if an Applicant requests an award amount of $150,000, the 
Matching Funds contribution must be $50,000, and the overall Project 
Cost is $200,000.
    (i) Matching Funds. (A) Must be spent on eligible expenses.
    (B) Must be from non-Federal sources unless authorized to be used 
as Matching Funds by the legislation authorizing the Federal source of 
funding.
    (C) Must be spent in advance or as a pro-rata portion of grant 
funds being spent.
    (ii) In-kind contributions. (A) Cannot include over-valued, in-kind 
contributions.
    (B) You must be able to document and verify the number of hours 
worked and the value associated with any in-kind contribution being 
used to meet a Matching Funds requirement.
    (C) In-kind contributions provided by individuals, businesses, or 
Cooperatives which are being assisted by the Center cannot be provided 
for the direct benefit of their own Projects as USDA RD considers this 
to be a conflict of interest.
    (5) Use of funds. The Project must use grant and Matching Funds for 
allowable purposes. See Sec.  4284.525.
    (6) Period of Performance. The Period of Performance cannot exceed 
one (1) year. The grant period should begin no earlier than October 1 
(the beginning of the Federal fiscal year) and no later than January 1 
(the beginning of the calendar year).
    (b) Ineligible Projects. Projects are ineligible for assistance 
through this program if the application:
    (1) Requests more than the maximum grant amount;
    (2) Focuses assistance on one Cooperatively or Mutually Owned 
Business;
    (3) Includes a conflict of interest (see Sec.  4284.506) where the 
expenses associated with the conflict of interest exceed 10 percent of 
the Project Cost. If the costs associated with the conflict of interest 
are 10 percent or less, the process in paragraph (b)(4) of this section 
will be followed;
    (4) Includes unallowable costs (see Sec.  4284.525) totaling more 
than 10 percent of Project Costs. If the application includes 10 
percent or less of Project Costs in unallowable costs, and the 
application is otherwise eligible and selected for funding, those 
unallowable costs must be removed. If time permits, the Agency may 
allow those unallowable costs to be replaced with allowable costs. 
Otherwise, the amount of the Award will be reduced accordingly. If we 
cannot determine the percentage of unallowable costs, your application 
will not be considered for funding.


Sec. Sec.  4284.523-4284.524  [Reserved]


Sec.  4284.525  Use of grant and Matching Funds.

    (a) Allowable uses of grant and Matching Funds. The following types 
of activities and expenses are allowable:
    (1) Costs associated with establishing or operating a Center, 
including legal

[[Page 75775]]

services, accounting services, clerical assistance, technical services, 
office supplies, hiring employees, monitoring contracts, professional 
development for staff, attending conferences that would advance 
Cooperative Development and its practice, and Board travel;
    (2) Technical Assistance including Cooperative Development as 
defined in Sec.  4284.503;
    (3) Costs for coordination of services and sharing of information 
among the Centers; and
    (4) Providing loans and/or grants as Subawards per 2 CFR part 200 
for Technical Assistance including Cooperative Development.
    (b) Unallowable uses of grant and Matching Funds. No funds under 
this subpart shall be used to:
    (1) Pay for the preparation of the grant application;
    (2) Pay any costs of the Project incurred prior to the date of 
grant approval;
    (3) Pay expenses not directly related to the funded Project;
    (4) Pay for Board/advisory council member's time;
    (5) Pay for the Operating Costs of any entity receiving assistance 
from the Recipient;
    (6) Fund R&D
    (7) Duplicate activities paid for by another Federal grant program 
or activities charged to a previous RCDG Project;
    (8) Pay for assistance to any private business enterprise which 
does not have at least 51 percent ownership by those who are either 
citizens of the United States or reside in the United States after 
being legally admitted for permanent residence;
    (9) Pay for any goods or services from a person or entity who has a 
conflict of interest with the Recipient;
    (10) Pay any judgment or debt owed to the United States;
    (11) Purchase or make improvements to Real Property;
    (12) Plan, develop, repair, rehabilitate, acquire, or construct a 
building or facility;
    (13) Purchase, lease purchase, or install Equipment;
    (14) Purchase or pay for the repair of vehicles; or
    (15) Fund activities considered unallowable by the applicable cost 
principles, mostly of which are included in 2 CFR part 200, subpart E, 
or successor regulation.


Sec. Sec.  4284.526-4284.529  [Reserved]


Sec.  4284.530  Notifications.

    The Agency will issue any program notifications on the program 
website.
    (a) Amount of funding available. The Agency will publish the amount 
of funding available for awards during each Fiscal Year within 30 
calendar days of notification from OMB of the amount available.
    (b) Underserved and Economically Distressed Areas. The Agency will 
publish the source for identifying Underserved and Economically 
Distressed areas no later than the date the application period opens.
    (c) Additional merit evaluation criteria. The Agency may establish 
additional merit evaluation criteria to meet the Department's or 
Agency's key priorities, goals, and objectives. Any such criteria will 
be published no later than the date the application period opens.
    (d) Other. The Agency will publish any other additional 
requirements or programmatic changes no later than the date the 
application period opens.


Sec.  4284.531  Application requirements.

    All applications must include the following:
    (a) Application forms. The following forms must be completed, 
signed, and submitted as part of the application. Any additional forms 
that may be required will be published in the applicable annual 
notification.
    (1) SF-424, ``Application for Federal Assistance.''
    (2) SF-424 A, ``Budget Information--Non-Construction Programs.''
    (b) Proposal. Each proposal must contain the following items. 
Additional items may be requested and will be published in the 
applicable annual notification.
    (1) Title page.
    (2) Table of contents.
    (3) A summary of the proposal should briefly describe the Center, 
the goals of the Project, and the amount requested.
    (4) Applicants must discuss how the following are met:
    (i) Eligibility requirements in Sec.  4284.520; including how they 
identify as an Institution of Higher Education or Nonprofit 
Institution.
    (ii) Project eligibility requirements in Sec.  4284.522; and
    (iii) Eligible use of grant and Matching Funds requirements in 
Sec.  4284.525.
    (5) The proposal narrative should address how the Center will 
improve the economic conditions of Rural Areas by providing Technical 
Assistance including Cooperative Development. In particular, the 
Applicant must:
    (i) Substantiate that the Center will use RCDG funds to serve Rural 
Areas in the United States as defined in Sec.  4284.503.
    (ii) Provide a description of the contributions that this Project 
is likely to make that will improve the economic conditions of the 
Rural Areas served by the Center.
    (iii) Discuss how 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, Tribal Governments, and State and 
local governments.
    (iv) Discuss how the Center intends to take all practicable steps 
to develop continuing sources of financial support for the Center, 
particularly from sources in the private sector. Applicants should 
indicate what financial support has been received in the past three (3) 
years from private sources and share plans of how the Applicant intends 
to secure long term sustainability of the Center.
    (v) Merit evaluation criteria must be addressed in narrative form 
by the Applicant.
    (A) Experience. Describe the Center's experience in Technical 
Assistance including Cooperative Development. Include the Center's role 
and accomplished outcomes for each organization assisted. Described 
experience must be within the last three (3) years. Centers that are 
not yet established should discuss the expertise and track record of 
Key Personnel expected to perform activities related to the Project. 
Provide the following for each organization assisted:
    (1) Name of organization;
    (2) Organization's complete address;
    (3) Indicate whether the service location is Rural;
    (4) Indicate whether the organization is Cooperatively or Mutually 
owned;
    (5) Discussion on the Applicant's role(s) in providing Technical 
Assistance, including Cooperative Development;
    (6) Date(s) of service;
    (7) Indicate if a Cooperatively or Mutually Owned Business was 
established as a result of the Cooperative Development services 
provided;
    (8) Date the Cooperatively or Mutually Owned Business was 
established;
    (9) Indicate whether the Cooperatively or Mutually Owned Business 
is active or inactive;
    (10) Discussion on any New Cooperative Approach used; and
    (11) Discussion on the outcomes of the assistance, including but 
not limited to, the retention of Cooperatively or Mutually Owned 
Businesses, jobs created and/or saved, or other economic conditions 
(e.g., number of housing units, number of childcare spaces, etc.).
    (B) Work plan and budget. All tasks in the work plan and budget 
must be for

[[Page 75776]]

allowable uses of funds. For each task, the following must be provided:
    (1) A detailed narrative description, for each of the Technical 
Assistance, Cooperative Development, and Networking tasks as well as 
any Subawards for loans and/or grants. Applicants must identify project 
partners for Networking tasks;
    (2) A detailed breakdown of all estimated Project Costs including 
Operating Costs, with grant and Matching Funds identified separately;
    (3) Key Personnel that will be responsible for overseeing and/or 
conducting each task;
    (4) A specific timeframe corresponding to the actual time each task 
is estimated to be completed; and
    (5) Zip code for each of the organizations being assisted who are 
located in Underserved and Economically Distressed areas.
    (C) Qualifications of Key Personnel. Key Personnel are expected to 
be qualified, committed, and available during the Period of 
Performance. The following must be provided for each Key Personnel 
identified in the work plan and budget.
    (1) Name of Key Personnel;
    (2) A summary of formal training and/or skills and years of 
experience directly related to the task(s) to be performed as outlined 
in the work plan and budget; and
    (3) For Key Personnel to be hired, list the necessary 
qualifications needed to complete Project task(s).
    (D) Verification of Matching Funds. Applicants must provide 
authentic documentation from the source(s) of Matching Funds to confirm 
the eligibility and availability of both cash and in-kind contributions 
that meet the Matching Funds requirements as defined in Sec. Sec.  
4284.503 and 4284.522. If selected for funding, Matching Funds will be 
reverified before a Financial Assistance Agreement is executed.
    (vi) Applicants must certify that Matching Funds will be spent at 
the same time grant funds are anticipated to be spent and that 
expenditures of Matching Funds shall be pro-rated or spent in advance 
of grant funding, such that for every dollar of the grant funds 
requested, at least 25 cents (5 cents for 1994 Institutions) of 
Matching Funds will be expended.
    (vii) To measure the success of the Project in a quantitative way, 
Applicants must have baseline and target performance metrics and will 
have a baseline metric of zero. Applicants must provide a target metric 
for each of the following performance metrics:
    (A) Number of Rural groups assisted.
    (B) Number of Cooperatives assisted.
    (1) Number of jobs created/saved.
    (2) Number of jobs created/saved in Underserved and Economically 
Distressed areas.
    (C) Number of Mutually Owned Businesses (LLC/LLP) assisted.
    (1) Number of jobs created/saved.
    (2) Number of jobs created/saved in Underserved and Economically 
Distressed areas.
    (D) Number of other businesses assisted.
    (1) Number of jobs created/saved.
    (2) Number of jobs created/saved in Underserved and Economically 
Distressed areas.
    (E) Number of Business Plans developed.
    (F) Number of Cooperatives incorporated.
    (G) Number of Feasibility Studies completed.
    (H) Number of workshops/seminars conducted.
    (I) Number of conferences held.
    (1) Number of conferences conducted with other Centers.
    (2) Number of conferences conducted with other organizations.
    (J) If working with housing, number of housing units created/saved.
    (K) For consumer co-ops (grocery, retail) number of people with 
access to goods or services.
    (L) Financial loss avoided as a result of `no-go' decision in the 
Cooperative Development process.
    (M) Any additional performance measures as outlined in your 
Financial Assistance Agreement, or specified in the annual 
notification.
    (1) It is permissible to have a zero in a performance metric. Jobs 
created targets must be calculated based upon actual jobs to be created 
by the Center because of RCDG funding or actual jobs to be created by 
Cooperatively or Mutually Owned Businesses as a result of the 
assistance from the Center. Jobs saved targets must be calculated only 
on actual jobs that would have been lost if the Center did not receive 
RCDG funding or actual jobs that would have been lost without 
assistance from the Center.
    (2) Additional performance metrics can be suggested, for example; 
where jobs created or jobs saved may not be a relevant indicator (e.g., 
housing). These additional criteria must be specific and measurable 
performance metrics to be included in a Federal Financial Assistance 
Agreement.


Sec.  4284.532  [Reserved]


Sec.  4284.533  Submission requirements.

    Unless otherwise specified in an annual notification issued under 
Sec.  4284.530, the following requirements apply to all applications.
    (a) Submission period. The application period opens on March 1 and 
closes 11:59 p.m. Eastern time, on June 1. Applicants are encouraged to 
submit their applications well in advance of the closing date to ensure 
timely receipt by the Agency.
    (b) Submission process. The annual notification will be published 
on the OMB-designated governmentwide website and will provide 
instructions on how and where to submit completed applications for RCDG 
funding. All items required for the application must be submitted in a 
single application package. Revisions or additional information will 
not be accepted after the application period closes. Incomplete 
applications will be rejected and not considered for funding.


Sec. Sec.  4284.534-4284.539  [Reserved]


Sec.  4284.540  Application processing.

    The following information describes the way the Agency will process 
applications, including the evaluation of eligibility, risk, and merit.
    (a) Eligibility evaluation. The Agency will review all applications 
to determine if they are eligible for assistance based on the 
requirements in this subpart and other applicable Federal laws and 
regulations. In particular, the Agency will check the OMB designated 
repository of government information and, applicants that are excluded 
from Federal funding will be determined ineligible (see 2 CFR 200.206 
for more information). An application must include all application 
requirements identified in Sec.  4284.531, or the Agency will determine 
that it is ineligible for assistance.
    (b) Risk evaluation. The Agency will review those applications that 
are determined to be eligible for the program.
    (1) Typically, the Agency will not determine that an application is 
ineligible for funding based on the results of the risk evaluation, 
unless the Agency cannot find a way to reasonably mitigate the risk 
posed by making an award.
    (2) If risk evaluation findings identify significant shortcomings 
in the Applicant's ability to manage Federal funds, the Agency may 
determine that the application is ineligible for funding.
    (3) The Agency will determine if the Applicant has satisfactory 
performance for all Federal Awards received in the last five (5) years, 
based upon review of deficiencies reported in the Federal Awardee 
Performance and Integrity Information System, or its successor

[[Page 75777]]

system, the Do Not Pay system, or its successor system, and the 
Agency's own internal financial and record-keeping systems and files. 
Satisfactory performance includes timely submission of required reports 
and documents, timely completion of tasks, and proper use of funds, 
including achieving the level of funds approved and committed for 
Underserved and Economically Distressed areas.
    (c) Merit evaluation (Up to 100 total points). The Agency will 
conduct a merit evaluation for those applications that are determined 
to be eligible for the program. The merit evaluation will be conducted 
by a panel of USDA employees who will convene to reach a consensus on 
the merit of each eligible application. The merit evaluation will be 
based on the following criteria:
    (1) Experience (Up to 30 points). The Agency will evaluate the 
Applicant's demonstrated experience in Technical Assistance including 
Cooperative Development; and effectiveness in accomplishing effective 
outcomes through the development of Cooperatively and Mutually Owned 
Businesses. Points will be awarded based on the following:
    (i) Up to 5 points for track record in providing Technical 
Assistance to promote and assist the development of Cooperatively and 
Mutually Owned Businesses.
    (ii) Up to 5 points for ability to facilitate Cooperative 
Development that results in the establishment of Cooperatively and 
Mutually Owned Businesses in Rural Areas.
    (iii) Up to 5 points for ability to facilitate the establishment of 
New Cooperative Approaches in Rural Areas.
    (iv) Up to 5 points for the ability to assist in the retention of 
businesses in Rural Areas.
    (v) Up to 5 points for ability to create and/or save jobs that 
improve economic conditions of Rural Areas.
    (vi) Up to 5 points for ability to improve other economic 
conditions in Rural Areas.
    (2) Work plan and budget (Up to 45 points). The Agency will 
evaluate the Applicant's work plan and budget on its ability to provide 
a clear, logical, realistic and efficient use of grant and Matching 
Funds; level of commitment to Underserved and Economically Distressed 
areas; and Networking with States, Centers and other organizations 
engaged in Economic Development efforts in Rural Areas. Points will be 
awarded based on the following:
    (i) Work plan and budget detail. Up to 30 points will be awarded as 
follows:
    (A) 0 points will be awarded if the application does not address 
paragraphs (c)(2)(i)(B) through (E) of this section.
    (B) Up to 10 points will be awarded if the application provides a 
detailed narrative description for each of the specific tasks to be 
completed.
    (C) Up to 10 points will be awarded if the application provides a 
detailed breakdown of all estimated Project Costs, including Operating 
Costs, for each task with grant and Matching Funds identified 
separately.
    (D) Up to 5 points will be awarded if the application identifies 
the Key Personnel associated with each task.
    (E) Up to 5 points will be awarded if the application provides 
specific timeframes for each task.
    (ii) Underserved and Economically Distressed. Up to 15 points will 
be awarded to Applicants whose work plans and budgets demonstrate their 
commitment to Underserved and Economically Distressed area(s) as 
defined in the annual notification.
    (A) 0 points will be awarded if the application does not identify 
tasks and a budget commitment to Underserved and Economically 
Distressed area(s).
    (B) Up to 5 points will be awarded if the Applicant identifies the 
Underserved and Economically Distressed area(s) within their service 
area.
    (C) Up to 10 points will be awarded if the Applicant's budget 
commitment (grant and Matching Funds) to Underserved and Economically 
Distressed areas is:
    (1) Less than 5 percent budget commitment = 2 points.
    (2) 5 percent or greater but less than 10 percent budget commitment 
= 4 points.
    (3) 10 percent or greater but less than 25 percent budget 
commitment = 6 points.
    (4) 25 percent or greater but less than 50 percent budget 
commitment = 8 points.
    (5) 50 percent or more budget commitment = 10 points.
    (3) Networking. Up to 10 points will be awarded to Applicants who 
demonstrate a commitment to Networking and plan to develop multi-
organizational and multi-State Cooperative Development approaches.
    (i) Up to 5 points will be awarded if the Applicant describes how 
it intends to create and share best practices and transferrable 
strategies with other Centers or organizations engaged in Economic 
Development.
    (ii) Up to 5 points will be awarded if the Applicant describes how 
it will develop joint Technical Assistance, including Cooperative 
Development, projects and mentor/mentee relationships with other 
Centers and other organizations engaged in Economic Development.
    (4) Qualifications of Key Personnel (Up to 10 points). The Agency 
will evaluate if the Key Personnel listed in the work plan and budget 
are qualified for their related task(s). Points will be awarded as 
follows:
    (i) 0 points will be awarded if the Applicant does not identify 
formal training, skills, and years of experience for any Key Personnel.
    (ii) 1 to 5 points will be awarded if the Applicant details the 
formal training, skills, and years of experience of some, but not all 
of the Key Personnel.
    (iii) 6 to 10 points will be awarded if the Applicant details the 
formal training, skills, and years of experience of all Key Personnel.
    (5) Matching Funds commitment (5 points). Applicants must meet the 
Matching Funds requirement to be considered for points. Applicants who 
meet the 25 percent (5 percent for 1994 Institutions) Matching Funds 
requirement will receive 5 points.


Sec.  4284.541  Application withdrawal.

    During the period between the submission of the application and 
award approval, the Applicant must notify the Agency if the Project is 
no longer viable, or the Applicant is no longer requesting financial 
assistance for the Project. When the Applicant notifies the Agency, the 
application will be withdrawn from consideration for funding.


Sec. Sec.  4284.542-4284.549  [Reserved]


Sec.  4284.550  Award selection.

    Applications will be selected for further processing and 
consideration of an award after the merit evaluation process is 
completed for all eligible applications. Applications will be ranked 
solely based on the points awarded, and they will be funded in rank 
order until available funds are expended. If there is a tie, the 
Administrator of the Agency will use discretion to break the tie to 
improve the geographic diversity of Recipients and/or prioritize 
Projects that advance the Department or Agency's key priorities, goals, 
and objectives. If an application cannot be fully funded, the Agency 
may offer partial funding to the extent funds are available. If an 
application is ranked and not funded, it will not be carried forward 
into the next funding competition.

[[Page 75778]]

Sec.  4284.551  Notification of successful Applicants.

    (a) The Agency will notify the Applicants whose applications can be 
funded using available funds with a Letter of Conditions. The Letter of 
Conditions will provide the conditions under which an award can be 
approved as well as a copy of the term of the award.
    (b) Applicants receiving a Letter of Conditions will have 60 
calendar days to meet the conditions of the award. Some awards may be 
subject to additional conditions, depending on the nature of the 
Project and the Agency's determination of risk. The following 
additional forms must be completed by all successful Applicants:
    (1) Form RD 1942-46, ``Letter of Intent to Meet Conditions.''
    (2) Form RD 1940-1, ``Request for Obligation of Funds.''
    (3) Form RD 400-4, ``Assurance Agreement.''
    (4) SF-LLL, ``Disclosure of Lobbying Activities,'' for entities 
that engage in lobbying activities.
    (5) Form RD 4280-2, ``Rural Business-Cooperative Service Financial 
Assistance Agreement.''


Sec.  4284.552  Notification of unsuccessful Applicants.

    Applicants whose applications are ineligible for financial 
assistance or did not score high enough to be funded will be notified 
as soon as is practicable. The notification will be in writing using an 
Adverse Decision Letter. This letter will outline the reason(s) for the 
Agency's decision and any dispute resolution alternatives available to 
the Applicant.


Sec.  4284.553  Award approval.

    Applicants whose applications are eligible for financial assistance 
and that score high enough to be funded will have their awards approved 
by the Agency once the Applicant has met all of the conditions of the 
award. The approval will be conveyed through the execution of Form RD 
4280-2, which is the Financial Assistance Agreement, and provides all 
terms of the award. Once the award has been approved, the Recipient may 
begin work on the Project and incur costs.


Sec.  4284.554  Multi-year award.

    The Agency may provide a multi-year funding opportunity to previous 
Recipients. If the Agency provides a multi-year funding opportunity, 
the application requirements and award process will be included in the 
annual notification.


Sec. Sec.  4284.555-4284.559  [Reserved]


Sec.  4284.560  Reporting requirements.

    Recipients are required to submit financial reports and performance 
reports on a semi-annual basis. A final financial report and 
performance report must also be submitted within 120 days after the 
expiration or termination of the grant.
    (a) Failure to submit either a financial report or a performance 
report within the specified timeframes may result in the Agency 
withholding grant funds.
    (b) Recipients must complete the Project in accordance with the 
terms and conditions specified in the approved work plan and budget, 
the Financial Assistance Agreement, and the Letter of Conditions.
    (c) Recipients must expend funds only for eligible purposes and 
will be monitored by the Agency for compliance. Recipients must 
maintain a financial management system and maintain compliance with 
Federal Cost Principles in accordance with 2 CFR parts 200 through 299.
    (1) Reporting format and timing. All performance reports must 
include a discussion on the performance metrics discussed in the 
application to determine whether the primary goals and objectives 
proposed in the approved work plan and budget were accomplished during 
the reporting period. Formatting of financial reports and performance 
reports, as well as timing for submission of these reports can be found 
in the Financial Assistance Agreement.
    (2) Project outcome performance report. Once the Project is 
complete, the Recipient must provide the Agency with two annual outcome 
performance reports. Formatting and submission requirements for this 
report are included in the Financial Assistance Agreement.


Sec.  4284.561  Monitoring awards.

    Awards will be monitored by Agency personnel in accordance with 
applicable laws, regulations, and policies (see Sec.  4284.508 for more 
information). The Agency will designate a contact person for each 
award. The Agency may terminate or suspend the award for lack of 
adequate or timely progress, reporting, documentation, or for failure 
to comply with Agency requirements.


Sec. Sec.  4284.562-4284.599  [Reserved]


Sec.  4284.600  OMB control number.

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

0
4. Revise subpart J to read as follows:

Subpart J--Value-Added Producer Grant Program

Sec.
4284.901 Purpose.
4284.902 Organization of subpart.
4284.903 Definitions.
4284.904 Exception authority.
4284.905 [Reserved]
4284.906 Conflict of interest.
4284.907 [Reserved]
4284.908 Compliance with other laws and regulations.
4284.909-4284.915 [Reserved]
4284.916 Reserved funds.
4284.917-4284.919 [Reserved]
4284.920 Eligible Applicants.
4284.921 Ineligible Applicants.
4284.922 Project eligibility.
4284.923 Reserved funds eligibility.
4284.924 Priority points eligibility.
4284.925 Allowable uses of grant and Matching Funds.
4284.926 Unallowable uses of grant and Matching Funds.
4284.927 [Reserved]
4284.928 Funding limitations.
4284.929 [Reserved]
4284.930 Notifications.
4284.931 Application requirements.
4284.932 Simplified application.
4284.933 Submission requirements.
4284.934-4284.939 [Reserved]
4284.940 Application processing.
4284.941 Application withdrawal.
4284.942-4284.949 [Reserved]
4284.950 Award selection.
4284.951 Notification of successful Applicants.
4284.952 Notification of unsuccessful Applicants.
4284.953-4284.959 [Reserved]
4284.960 Reporting requirements.
4284.961 Grant monitoring.
4284.962 Transfer of obligations.
4284.963-4284.999 [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 (VAPG)) that 
provides grants to support Agricultural Producers' for-profit 
businesses that produce and market Value-Added Agricultural Products.


Sec.  4284.902  Organization of subpart.

    The information in this subpart is organized into six main topics:
    (a) General information. Sections 4284.901 through 4284.919 discuss 
the purpose of the program, definitions, exception authority, conflict 
of interest, compliance with other laws and regulations, and reserved 
funds.
    (b) Eligibility information. Sections 4284.920 through 4284.929 
discuss the eligibility requirements for the program.

[[Page 75779]]

The sections include information on Applicant eligibility, Project 
eligibility, reserved funds eligibility, priority points eligibility, 
and the use of funds.
    (c) Application requirements information. Sections 4284.930 through 
4284.939 discuss the requirements for submitting an application. The 
sections include information on what forms and other information are 
required for a complete application as well as the format of the 
application, the application deadline, and how to submit the 
application.
    (d) Application processing information. Sections 4284.940 through 
4284.949 discuss how the Agency will process applications. The sections 
include information on how applications will be reviewed for 
eligibility, how applications will be evaluated for merit, and how an 
Applicant can withdraw an application from consideration.
    (e) Award information. Sections 4284.950 through 4284.959 discuss 
how the Agency will make awards. The sections include information about 
how applications will be selected for funding, how Applicants will be 
notified whether their applications have been selected for funding, how 
Applicants can resolve disputes regarding funding selections, and the 
requirements for an Applicant to accept an award and be approved as a 
recipient of an award.
    (f) Post-award information. Sections 4284.960 through 4284.962 
discuss the reporting requirements for recipients after an award is 
approved as well as monitoring procedures that the Agency will use.
    (g) Other. (1) Sections 4284.963 through 4284.999 are reserved.
    (2) Section 4284.1000 includes the Office of Management and Budget 
(OMB) control number for reporting and recordkeeping requirements under 
this subpart.


Sec.  4284.903  Definitions.

    These are the definitions for terms used in this subpart. 
Additional defined terms used in this subpart may be found in the 
applicable laws and regulations cited in Sec.  4284.908, in particular 
2 CFR part 200. If a term is defined differently in an applicable 
regulation and in this subpart, such term shall have the meaning as 
found in this subpart.
    Agency means the Rural Business-Cooperative Service (RBCS or the 
Agency), an agency of the United States Department of Agriculture (USDA 
or the Department), or a successor agency.
    Agricultural Commodity means an unprocessed product of Farms, 
Ranches, nurseries, and forests and natural and man-made bodies of 
water, that the Agricultural Producer has cultivated, raised, or 
harvested with legal access rights. Agricultural Commodities include 
plant and animal products and their by-products, such as crops, 
forestry products, hydroponics, nursery stock, aquaculture, meat, on-
Farm generated manure, and fish and seafood products. Agricultural 
Commodities do not include animals raised or sold as pets, such as 
cats, dogs, and ferrets.
    Agricultural Food Product refers to raw, cooked, or processed 
edible substances, beverages, or ingredients intended for human 
consumption.
    Agricultural Producer, Independent Producer or Producer means a 
for-profit agricultural business, or entity that is 100 percent owned 
and controlled by an individual, entity or Family Farm that produces an 
Agricultural Commodity through participation in the day-to-day labor, 
management, and field operations; or that has the legal right to 
harvest an Agricultural Commodity that is the subject of the VAPG 
Project.
    Agricultural Producer Group means a non-profit membership 
organization that represents Agricultural Producers and whose mission 
includes working on behalf of Agricultural Producers and more than 50 
percent of whose membership and board of directors is comprised of 
Agricultural Producers.
    Applicant means the legal entity and/or owner(s) of the legal 
entity (regardless of ownership percentage), submitting an application 
to participate in the competition for program funding.
    Beginning Farmer or Rancher means an Agricultural Producer (other 
than a Harvester) that has operated a Farm or Ranch for no more than 10 
years or an eligible Applicant entity that has an ownership or 
membership of more than 50 percent farmers or ranchers each of whom 
have operated a Farm or Ranch for no more than 10 years.
    Business Plan means a formal statement of a set of business goals, 
the reasons why they are believed attainable, and the plan for reaching 
those goals, including Pro Forma Financial Statements appropriate to 
the term and scope of the Project and sufficient to evidence the 
viability of the Project. It may also contain background information 
about the organization or team attempting to reach those goals.
    Change in Physical State means an irreversible processing activity 
that alters the Agricultural Commodity into a substantially different, 
marketable Value-Added Agricultural Product. This processing activity 
must be something other than a post-harvest process that primarily acts 
to preserve the commodity for later sale.
    Emerging Market means a developing, geographic or demographic 
market that has been supplied by the Applicant or the Applicant's 
product for two (2) years or less.
    Equipment has the meaning located at 2 CFR 200.1.
    Family Farm means a Farm or Ranch whose owner(s) are primarily 
responsible for daily physical labor, business and/or strategic 
management; whose hired help only supplements family labor; and whose 
owners are related by blood or marriage or are Immediate Family.
    Farm or Ranch means any place from which $1,000 or more of 
Agricultural Commodities were raised and sold or would have been raised 
and sold during the previous year, but for an event beyond the control 
of the farmer or rancher.
    Farm- or Ranch-Based Renewable Energy means renewable energy 
generated by use of an Agricultural Commodity on a Farm or Ranch, owned 
or leased by an Agricultural Producer, which provides the Agricultural 
Producer with an expanded customer base and increased revenues.
    Farmer or Rancher Cooperative means a business owned and controlled 
by Agricultural Producers that is incorporated, or otherwise identified 
by the State in which it operates, as a cooperatively operated 
business. The Agricultural Producers, on whose behalf the value-added 
work will be done, must be identified by name or class.
    Feasibility Study means a comprehensive analysis of the economic, 
market, technical, financial, and management capabilities of a Project 
or business in terms of the Project's expectation for success.
    Fiscal Year means the Federal Government's fiscal year, October 1 
of a given year through September 30 of the succeeding year.
    Food Safety refers to conditions and practices that preserve the 
quality of food to prevent contamination and food-borne illnesses.
    Harvester means an Agricultural Producer that can document legal 
rights to access and harvest the Agricultural Commodity that will be 
used for the Value-Added Agricultural Product. This does not include 
harvesting rights for cultivated commodities. Individuals and entities 
that merely glean, gather, or collect residual commodities that result 
from an initial harvesting or production of a primary Agricultural 
Commodity are not considered Harvesters and are not eligible for this 
program.
    Independent Producer has the same meaning as Agricultural Producer 
in this section.

[[Page 75780]]

    Immediate Family means individuals who are closely related by 
blood, marriage, or adoption, or live within the same household, such 
as a spouse, domestic partner, parent, child, brother, sister, aunt, 
uncle, grandparent, grandchild, niece, or nephew.
    Key Personnel means the owners, employees, new hires, consultants, 
and/or contractors who will be overseeing and/or completing the tasks 
in the work plan.
    Letter of Conditions means the letter that the Agency issues to an 
entity whose application is selected for funding. The letter outlines 
all of the conditions of the award that must be met before the award 
can be approved. Other agencies may call this letter an Award Letter or 
Award Notice.
    Local or Regional Supply Network means an interconnected group of 
individuals and/or entities through which agricultural based products 
move from production through consumption in a local or regional area of 
a State.
    Locally-Produced Agricultural Food Product refers to raw, cooked, 
or processed edible substances, beverages, or ingredients intended for 
human consumption that are raised, produced, and distributed in:
    (1) The locality or region in which the final product is marketed, 
so that the total distance that the product is transported is less than 
400 miles from the origin of the product; or
    (2) The State in which the product is produced.
    Majority-Controlled Producer-Based Business Venture refers to a 
venture greater than 50 percent of the ownership and control of which 
is held by--
    (1) One or more Producers (Agricultural Producers); or
    (2) One or more entities, 100 percent of the ownership and control 
of which is held by one or more Producers (Agricultural Producers). The 
term `entity' means--
    (i) A partnership;
    (ii) A limited liability corporation;
    (iii) A limited liability partnership; or
    (iv) A corporation.
    Market Expansion means a Project in which the Agricultural Producer 
Applicant seeks to expand the market either geographically or 
demographically for an existing Value-Added Agricultural Product 
produced and marketed by the Applicant for at least two (2) years at 
the time of the application through sales to demonstrably new markets 
or new customers in existing markets.
    Marketing Plan means a plan for the Project that identifies a 
market window, potential buyers, a description of the distribution 
system and possible promotional campaigns.
    Matching Funds means a cost-sharing contribution to the Project 
that is at least equal to the grant amount. Combined grant and Matching 
Funds equal 100 percent of the Project Costs.
    Medium-Sized Farm or Ranch means a Farm or Ranch that is structured 
as a Family Farm that has averaged $500,001 to $1,000,000 in annual 
gross sales of Agricultural Commodities in the previous three (3) 
years.
    Mid-Tier Value Chain refers to local and regional supply networks 
that link Agricultural Producers with businesses, cooperatives, or 
consumers that market Value-Added Agricultural Products in a manner 
that:
    (1) Targets and strengthens the profitability and competitiveness 
of Small- and Medium-Sized Farms or Ranches that are structured as a 
Family Farm; and
    (2) Obtains agreement from an eligible Agricultural Producer Group, 
Farmer or Rancher Cooperative, or Majority-Controlled Producer-Based 
Business Venture that is engaged in the value chain on a marketing 
strategy.
    Period of Performance has the meaning located at 2 CFR 200.1.
    Physical Segregation means separating an Agricultural Commodity or 
product on the same Farm from other varieties of the same commodity or 
product on the same Farm during production and harvesting, with 
assurance of continued separation from similar commodities during 
processing and marketing in a manner that results in the enhancement of 
the value of the separated commodity or product.
    Planning Grant means a grant to facilitate the development of a 
defined program of economic planning activities to determine the 
viability of a potential value-added Project, and specifically for the 
purpose of paying for conducting and developing a Feasibility Study, 
Business Plan, and/or Marketing Plan associated with the processing 
and/or marketing of a Value-Added Agricultural Product.
    Produced in a Manner that Enhances the Value of the Agricultural 
Commodity refers to the use of a recognizably coherent set of 
agricultural production practices in the growing or raising of the 
Agricultural Commodity, such that a differentiated market identity is 
created for the resulting product.
    Producer has the same meaning as Agricultural Producer in this 
section.
    Pro forma Financial Statement means a financial statement that 
projects the future financial position of a company. The statement is 
part of the Business Plan and includes an explanation of all 
assumptions, such as input prices, finished product prices, and other 
economic factors used to generate the financial statements. The 
statement must include projections for a minimum of three (3) years in 
the form of cash flow statements, income statements, and balance 
sheets.
    Program Income has the meaning located at 2 CFR 200.1.
    Project means all of the eligible activities to be funded by the 
grant and Matching Funds.
    Project Cost has the meaning located at 2 CFR 200.1.
    Qualified Consultant means a third-party, without a conflict of 
interest, possessing the knowledge, expertise, and experience to 
perform the specific task required in an efficient, effective, and 
authoritative manner.
    Recipient has the meaning located at 2 CFR 200.1.
    Rural Development (RD) means a mission area within USDA, which 
includes the Rural Housing Service, Rural Utilities Service, and RBCS.
    Small-Sized Farm or Ranch means a Farm or Ranch that is structured 
as a Family Farm that has averaged $500,000 or less in annual gross 
sales of Agricultural Commodities in the previous three (3) years.
    Socially-Disadvantaged Farmer or Rancher means a farmer or rancher 
who is a member of a Socially-Disadvantaged Group.
    Socially-Disadvantaged Group means a group whose members have been 
subjected to racial, ethnic, or gender prejudice because of their 
identity as members of a group without regard to their individual 
qualities.
    State means any of the 50 States of the United States, the District 
of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, 
Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, 
the Republic of Palau, the Federated States of Micronesia, and the 
Republic of the Marshall Islands.
    Steering Committee means an unincorporated group comprised wholly 
of specifically identified Agricultural Producers in the process of 
organizing one of the program eligible Applicant types.
    TTB Permit means a permit issued by the Alcohol and Tobacco Tax and 
Trade Bureau (TTB), U.S. Department of the Treasury, granting approval 
to operate a TTB-regulated alcohol business.
    Value-Added Agricultural Product means any Agricultural Commodity 
produced in a State that:
    (1) Meets one of the following methodologies:

[[Page 75781]]

    (i) Has undergone a Change in Physical State;
    (ii) Is Produced in a Manner that Enhances the Value of the 
Agricultural Commodity;
    (iii) Is Physically Segregated in a manner that results in the 
enhancement of the value of the Agricultural Commodity;
    (iv) Is a source of Farm- or Ranch-Based Renewable Energy, 
including E-85 fuel; or
    (v) Is aggregated and marketed as a Locally Produced Agricultural 
Food Product; and
    (2) As a result of the Change in Physical State or the manner in 
which the Agricultural Commodity was produced, marketed, or segregated:
    (i) The customer base for the Agricultural Commodity is expanded; 
and
    (ii) A greater portion of the revenue derived from the marketing, 
processing, or Physical Segregation of the Agricultural Commodity is 
available to the Producer of the commodity.
    Veteran Farmer or Rancher means a farmer or rancher who has served 
in the Armed Forces, as defined in 7 U.S.C. 2279, and who either has 
not operated a Farm or Ranch or has operated a Farm or Ranch for not 
more than 10 years; or is a Veteran who first obtained status as a 
veteran during the most recent 10-year period.
    Working Capital Grant means a grant to provide funds to operate a 
value-added Project, specifically to pay the eligible Project expenses 
related to the processing and/or marketing of the Value-Added 
Agricultural Product.


Sec.  4284.904  Exception authority.

    Except as specified in paragraphs (a) and (b) of this section, the 
Administrator of the Agency may, on a case-by-case basis, grant an 
exception to any requirement or provision of this subpart provided that 
such an exception is in the best financial interests of the Federal 
Government. Exercise of this authority cannot be in conflict with 
applicable law.
    (a) Applicant eligibility. No exception to Applicant eligibility 
can be made.
    (b) Project eligibility. No exception to Project eligibility can be 
made.


Sec.  4284.905  [Reserved]


Sec.  4284.906  Conflict of interest.

    No conflict of interest or appearance of a conflict of interest 
will be allowed.
    (a) Description. A conflict of interest occurs in a situation in 
which a person or entity has competing personal, professional, or 
financial interests that make it difficult for the person or entity to 
act impartially. For the purposes of this subpart, relationships that 
can involve a conflict of interest include, but are not limited to:
    (1) Recipient owners, employees, officers, agents, consultants, and 
contractors.
    (2) Immediate family members of those listed in paragraph (a)(1) of 
this section.
    (b) Written disclosure. Recipients must comply with 2 CFR 400.2(b), 
which includes providing written disclosure of any potential conflicts 
of interest and maintaining written standards of conduct covering 
conflicts of interest and governing the performance of its employees in 
the selection, award, and administration of Federal Awards.
    (c) Assistance to employees, relatives, and associates. The Agency 
will process any requests for assistance under this subpart in 
accordance with 7 CFR part 1900, subpart D.
    (d) Member/delegate clause. No member of or delegate to Congress 
shall receive any share or part of this grant or any benefit that may 
arise therefrom. But, this provision shall not be construed to bar, as 
a contractor under the Federal award, a publicly held corporation whose 
ownership might include a member of Congress.


Sec.  4284.907  [Reserved]


Sec.  4284.908  Compliance with other laws and regulations.

    The Agency, Applicants, and recipients must comply with all 
applicable laws and regulations. An effort has been made to identify 
the most-commonly cited laws and regulations and reference them as 
follows:
    (a) Federal laws. Federal laws are codified in the United States 
Code (U.S.C.). A selection of applicable laws is identified as follows:
    (1) Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et 
seq.);
    (2) The Civil Rights Act of 1964, Title VI (42 U.S.C. 2000d et 
seq.); and
    (3) The Rehabilitation Act of 1973, Section 504 (29 U.S.C. 794).
    (b) Federal regulations. Federal regulations are codified in the 
Code of Federal Regulations (CFR). A selection of applicable 
regulations is identified as follows:
    (1) 2 CFR parts 1 through 200. These parts address items such as 
universal identifiers, reporting subaward and executive compensation, 
debarment and suspension, drug-free workplaces, administrative 
requirements, cost principles, and audit requirements. We particularly 
encourage Applicants and Recipients to become familiar with 2 CFR part 
200 in its entirety.
    (2) 27 CFR part 1. This part is applicable to Applicants that will 
produce and market value-added products in the industries of wine, 
beer, distilled spirits or other alcoholic merchandise.
    (c) Departmental regulations. Departmental regulations are those 
regulations that are specific to awards made through USDA. They are 
codified in the CFR. A selection of applicable regulations is 
identified as follows:
    (1) 2 CFR parts 400 through 499. These parts include USDA's 
adoption of Federal administrative requirements and cost principles. 
They also include regulations on debarment and suspension, lobbying, 
drug-free workplaces, and research awards.
    (2) 7 CFR part 11. This part includes USDA's procedures for 
administrative appeals, as handled by its National Appeals Division.
    (3) 7 CFR part 15d. This part includes USDA's procedures for 
compliance with nondiscrimination laws and regulations. The Agency will 
not discriminate against Applicants on the basis of race, color, 
religion, national origin, sex, marital status, disability, or age 
(provided that the Applicant has the capacity to contract); because all 
or part of the Applicant's income derives from any public assistance 
program; or because the Applicant has in good faith exercised any right 
under the Consumer Credit Protection Act, 15 U.S.C. 1601 et seq.
    (d) Agency regulations. Agency regulations are those regulations 
that are specific to awards made through the Agency and they may also 
be specific to a program. They are codified in the CFR. A selection of 
applicable regulations is identified as follows:
    (1) 7 CFR part 1900. This part covers delegations of authority, 
adverse decisions and administrative appeals, applicability of Federal 
law, and processing and servicing grant awards.
    (2) 7 CFR part 1901, subpart E. This subpart covers civil rights 
compliance requirements.
    (3) 7 CFR part 1951. This part covers servicing grant awards, 
including unauthorized assistance.
    (4) 7 CFR part 1970. This part covers environmental policies and 
procedures.
    (5) 7 CFR part 990. This part applies to Applicants who are 
proposing to produce, procure, supply or market any component of the 
hemp plant or hemp related by-products. Applicable Food and Drug 
Administration and Drug Enforcement Administration regulatory 
requirements must also be met.

[[Page 75782]]

    (e) Access to laws and regulations. (1) Laws may be accessed 
through the U.S.C. At the time this subpart was published, the U.S.C. 
may be accessed electronically at this website: https://uscode.house.gov/.
    (2) Regulations may be accessed through the CFR. At the time this 
subpart was published, the CFR may be accessed electronically at this 
website: https://www.ecfr.gov/.


Sec. Sec.  4284.909-4284.915  [Reserved]


Sec.  4284.916  Reserved funds.

    (a) The following reserved funds will be made available each Fiscal 
Year:
    (1) 10 percent of total program funding to fund Projects that 
benefit Beginning Farmers or Ranchers or Socially-Disadvantaged Farmers 
or Ranchers; and
    (2) 10 percent of total program funding to fund Projects where a 
majority of the requested grant amount goes to improving Food Safety 
for the purpose of enhancing market access; and
    (3) 10 percent of total program funding to fund Projects that 
propose development of Mid-Tier Value Chains.
    (b) Reserved funds not obligated by September 30 of each Fiscal 
Year shall be available to the Secretary in the next Fiscal Year to 
make grants under this subpart to eligible Applicants in the general 
funds competition.


Sec. Sec.  4284.917-4284.919  [Reserved]


Sec.  4284.920  Eligible Applicants.

    Applicants are eligible for assistance through this program if all 
of the following requirements are met:
    (a) System for Award Management (SAM) registration, General 
Certifications and Representations and unique entity identifier (UEI). 
At the time of application, each Applicant must have an active 
registration in SAM before submitting its application in accordance 
with 2 CFR part 25. This registration must remain current, accurate and 
complete at all times during which the Applicant has an active Federal 
award or an application under consideration. The Applicant must also 
obtain a UEI through SAM.gov.
    (b) Legal authority. Applicants must certify that they have the 
legal authority to carry out the purpose of the grant, and/or their 
business is in good standing in the State where it is incorporated and/
or in the State that is the primary location of an applicant's business 
operations for the VAPG Project.
    (c) Applicant type. The Applicant meets the definition for one of 
the following Applicant types--Agricultural Producer, Agricultural 
Producer Group, Farmer or Rancher Cooperative, or Majority-Controlled 
Producer-Based Business Venture.
    (1) Agricultural Producer. An Applicant applying as an Agricultural 
Producer must identify each owner member by name or class, provide the 
percentage of ownership of each owner member, and discuss how each 
owner member meets the definition of Agricultural Producer.
    (i) A Steering Committee must apply as an Agricultural Producer and 
discuss how it intends to form a program-eligible legal entity prior to 
execution of the Financial Assistance Agreement by the Agency.
    (ii) A Harvester must apply as an Agricultural Producer and 
document its legal right to access and harvest the Agricultural 
Commodity that will be used for the Value-Added Agricultural Product.
    (2) Agricultural Producer Group. An Applicant applying as an 
Agricultural Producer Group must identify each Agricultural Producer 
member by name or class, provide the percentage of ownership of each 
member, discuss how each member meets the definition of Agricultural 
Producer, and discuss how the Applicant meets the definition of 
Agricultural Producer Group.
    (3) Farmer or Rancher Cooperative. An Applicant applying as a 
Farmer or Rancher Cooperative must discuss how they meet the definition 
of Farmer or Rancher Cooperative.
    (4) Majority-Controlled Producer-Based Business Venture. An 
Applicant applying as a Majority-Controlled Producer-Based Business 
Venture must discuss how it meets the definition of Majority-Controlled 
Producer-Based Business Venture.
    (d) Ownership and control. (1) For the Project, the Applicant must 
produce and own more than 50 percent of the Agricultural Commodity to 
which value will be added. Agricultural Producers must maintain 
ownership of the Agricultural Commodity or product from its raw state 
through the production and marketing of the Value-Added Agricultural 
Product. All Applicants applying for Working Capital Grant funds must 
document the quantity of each Agricultural Commodity that will be used 
for the Value-Added Agricultural Product, expressed in an appropriate 
unit of measure (pounds, tons, bushels, etc.) to demonstrate the scale 
of the Applicant's Project. This quantification must include an 
estimated total quantity of each Agricultural Commodity needed for the 
Project, the quantity that will be provided (produced and owned) by the 
Agricultural Producers of the Applicant organization, and the quantity 
that will be purchased or donated from third-party sources.
    (2) Applicants who produce the Agricultural Commodity under 
contract for another entity, but do not own the Agricultural Commodity 
or Value-Added Agricultural Product produced, are not considered 
Agricultural Producers. Entities that contract out the production of an 
Agricultural Commodity are not considered Agricultural Producers. 
Agricultural Producer entities must confirm their owner members as 
eligible and must identify them by name or class.
    (3) The Agency will determine the Agricultural Producer status of 
Tribes or Tribal entities without regard to ownership of the commodity 
to which value will be added so long as the Tribal member participant, 
Tribal entity and/or Tribe own and control more than 50 percent of the 
Agricultural Commodity necessary for the Project.
    (e) Emerging Market. An Applicant that is an Agricultural Producer 
Group, a Farmer or Rancher Cooperative, or a Majority-Controlled 
Producer-Based Business Venture must demonstrate that it is entering 
into an Emerging Market as a result of the Project. An Agricultural 
Producer Applicant type that has produced and marketed the Value-Added 
Agricultural Product for less than two (2) years must also demonstrate 
that it is entering an Emerging Market.
    (f) Citizenship. An Applicant must certify that it is more than 50 
percent owned by individuals who are either a citizen or national of a 
State or reside in the United States after legal admittance for 
permanent residence.
    (g) Multiple grants. An Applicant must submit only one application 
in response to a solicitation and may have only one active VAPG award 
at any given time unless the Applicant is also applying as a member of 
a Farmer or Rancher Cooperative or an Agricultural Producer Group. In 
addition, the following restrictions apply:
    (1) Applicants who have already received a Planning Grant for the 
Project cannot receive another Planning Grant for the same Project; and
    (2) Applicants who have already received a Working Capital Grant 
for the Project cannot receive any additional grants for that Project.
    (h) Current VAPG award. If an Applicant has a current VAPG award at 
the time of subsequent competition, the Applicant must exhaust all VAPG 
award funds and submit final financial and performance reports to the 
Agency by

[[Page 75783]]

the application submission deadline for the subsequent VAPG 
competition. If VAPG award funds will not be spent by the subsequent 
VAPG application submission deadline, the Applicant must request a 
cancellation of the current VAPG award prior to the subsequent 
application submission deadline.


Sec.  4284.921  Ineligible Applicants.

    Applicants are ineligible for assistance through this program if 
one or more of the following has occurred:
    (a) The Applicant is debarred or suspended or is otherwise excluded 
from, or ineligible for participation in, Federal assistance programs 
under Executive Order 12549, ``Debarment and Suspension.''
    (b) An outstanding judgement has been obtained against the 
Applicant by the United States in a Federal court (other than U.S. Tax 
Court).
    (c) The Applicant is delinquent on the payment of Federal income 
taxes or is delinquent on Federal debt.
    (d) The Applicant has been convicted of a felony criminal violation 
under any Federal law within the past 24 months.
    (e) The Applicant has unpaid Federal tax liability that has been 
assessed, for which all judicial and administrative remedies have been 
exhausted or have lapsed, and that is not being paid in a timely manner 
pursuant to an agreement with the authority responsible for collecting 
the tax liability.
    (f) The Applicant submits multiple applications from separate 
entities, owners, and/or owner(s) of the legal entity (regardless of 
ownership percentage), or from a parent, subsidiary or affiliated 
organization (with ``affiliation'' defined by the Small Business 
Administration regulation 13 CFR 121.103, or successor regulation) 
during the same grant cycle. This is not applicable to Applicants who 
are also applying as a member of a Farmer or Rancher Cooperative or an 
Agricultural Producer Group.


Sec.  4284.922  Project eligibility.

    Eligible Projects must meet all of the following requirements. 
Failure to meet one or more of these requirements means that the 
application will not be eligible for funding.
    (a) Project focus. The Project must focus on allowable Planning or 
Working Capital Grant activities as described at Sec.  4284.925, as 
applicable, with eligible tasks directly related to the processing and/
or marketing of the subject Value-Added Agricultural Product.
    (b) Project type. The Project must fit one of the following 
purposes:
    (1) Emerging Market Project as defined in Sec.  4284.903.
    (2) Market Expansion Project as defined in Sec.  4284.903.
    (3) Food Safety Project as defined in Sec.  4284.903.
    (c) Product(s). Each product that is the subject of the Project 
must meet the definition of a Value-Added Agricultural Product. The 
Applicant must be currently producing the Agricultural Commodity for 
each Value-Added Agricultural Product that is the subject of the 
Project. All Applicants seeking Working Capital Grant funds must also 
be marketing the subject Value-Added Agricultural Product(s) or ready 
to implement the Working Capital Grant activities in accord with the 
budget and work plan timeline.
    (d) Amount requested. The amount requested must not exceed any 
maximum amounts specified in the annual notification issued on the 
program website, per Sec.  4284.930.
    (e) Period of Performance. The Period of Performance cannot exceed 
three (3) years.
    (f) Matching Funds. Matching Funds must come from eligible sources 
without a real or apparent conflict of interest and be used for 
eligible Project expenses during the Period of Performance. Matching 
Funds must be confirmed and provided in the form of:
    (1) Applicant or third-party cash;
    (2) Applicant loan, or line of credit;
    (3) Non-Federal grant sources (unless otherwise provided by law); 
or
    (4) Applicant, family member, or third-party in-kind contribution.
    (i) In-kind contributions must be appropriately valued with an 
adequate explanation of the basis for the valuation (e.g., reference 
comparable market values, salary and wage data, expertise or experience 
of the contributor, per unit costs, industry norms).
    (ii) Applicant in-kind contributions may include the value of the 
Agricultural Commodity inventory to be used in the Project and can be 
used to satisfy up to 100 percent of the Matching Funds requirement. 
Third-party in-kind contributions of the Agricultural Commodity 
inventory to be used in the Project can be used to satisfy up to 49 
percent of the Matching Funds requirement.
    (iii) Applicant in-kind contributions may also include Applicant or 
family time spent on eligible tasks; however, the valuation cannot 
exceed 50 percent of the Matching Funds required for the Project. Final 
valuation for Applicant or family member in-kind contributions is at 
the discretion of the Agency.


Sec.  4284.923  Reserved funds eligibility.

    Applicants must meet the applicable requirements in this section to 
compete for reserved funds.
    (a) Beginning Farmer or Rancher. Applicants must demonstrate that 
they meet the definition of a Beginning Farmer or Rancher. The 
Applicant must self-certify that more than 50 percent of its owners are 
a Beginning Farmer or Rancher.
    (b) Socially-Disadvantaged Farmer or Rancher. Applicants must 
demonstrate that an individual or individuals that qualify as a 
Socially-Disadvantaged Farmer or Rancher own more than 50 percent of 
the Applicant Farm or Ranch organization. Applicants must provide a 
self-certification from the individual owner(s) indicating they are a 
member of a Socially-Disadvantaged Group.
    (c) Food Safety. If the Applicant is applying for Food Safety 
reserved funds, the Applicant must describe the need or requirement for 
training, certifications, and/or supplies and equipment. This reserve 
is for Applicants where more than 50 percent of the Project Cost is for 
post-harvest Food Safety purposes related to the processing and/or 
marketing of a Value-Added Agricultural Product.
    (d) Mid-Tier Value Chain. The Applicant must:
    (1) Provide documentation demonstrating that the Project meets the 
definition of Mid-Tier Value Chain;
    (2) Demonstrate that the Project proposes development of a Local or 
Regional Supply Network of an interconnected group of entities 
(including nonprofit organizations, as appropriate) through which 
Agricultural Commodities and Value-Added Agricultural Products move 
from production through consumption in a local or regional area of a 
State, including a description of the network, its component members, 
either by name or by class, and its purpose. Applicant ownership of the 
Agricultural Commodity and Value-Added Agricultural Product from raw 
through value-added stages is not necessarily required;
    (3) Describe at least two alliances, linkages, or partnerships 
within the value chain that link Agricultural Producers with 
businesses, cooperatives, or consumers that market value-added 
Agricultural Commodities or Value-Added Agricultural Products in a 
manner that benefits Small- or Medium-Sized Farms and Ranches that are 
structured as a Family Farm, including the names of the parties and the 
nature of their collaboration;
    (4) Demonstrate how the Project, due to the manner in which the 
Value-

[[Page 75784]]

Added Agricultural Product is marketed, will increase the profitability 
and competitiveness of at least two eligible, Small- or Medium-Sized 
Farms or Ranches that are structured as a Family Farm, including a 
description of the two Farms or Ranches confirming they meet the Family 
Farm definition;
    (5) Document that the eligible Agricultural Producer Group/Farmer 
or Rancher Cooperative/Majority-Controlled Producer-Based Business 
Venture Applicant organization has obtained at least one agreement with 
another member of the supply network that is engaged in the value chain 
on a marketing strategy; or that the eligible Agricultural Producer 
Applicant has obtained at least one agreement from an eligible 
Agricultural Producer Group/Farmer or Rancher Cooperative/Majority-
Controlled Producer-Based Business Venture engaged in the value-chain 
on a marketing strategy;
    (i) For Planning Grants, agreements may include letters of 
commitment or intent to partner on marketing, distribution or 
processing; and should include the names of the parties with a 
description of the nature of their collaboration. For Working Capital 
Grants, demonstration of the actual existence of the executed 
agreements is required; and
    (ii) Agricultural Producer Applicants must provide documentation to 
confirm that the non-Applicant Agricultural Producer Group/Farmer or 
Rancher Cooperative/majority-controlled partnering entity meets program 
eligibility definitions, except that, in this context, the partnering 
entity does not need to supply any of the Agricultural Commodity for 
the Project;
    (6) Demonstrate that the members of the Applicant organization that 
are benefiting from the Project currently own and produce more than 50 
percent of the Agricultural Commodity that will be used for the Value-
Added Agricultural Product that is the subject of the Project; and
    (7) Demonstrate that the Project will result in an increase in 
customer base and an increase in revenue returns to the Applicant 
Producers supplying more than 50 percent of the Agricultural Commodity 
for the Project.


Sec.  4284.924  Priority points eligibility.

    Applicants that demonstrate eligibility may apply for priority 
points if their applications: propose Projects that contribute to 
increasing opportunities for Beginning Farmers or Ranchers, Socially-
Disadvantaged Farmers or Ranchers, Veteran Farmers or Ranchers, or 
operators of Small- or Medium-Sized Farms or Ranches that are 
structured as a Family Farm or propose Mid-Tier Value Chain Projects; 
or are a Farmer or Rancher Cooperative. A Harvester is eligible for 
priority points only if the Harvester is proposing a Mid-Tier Value 
Chain Project.
    (a) Applicants seeking priority points as Beginning Farmers or 
Ranchers or as Socially Disadvantaged Farmers or Ranchers must provide 
certifications specified in Sec.  4284.923(a) or (b), as applicable.
    (b) Applicants seeking priority points as Veteran Farmers or 
Ranchers must provide a self-certification that they meet the 
definition of a Veteran Farmer or Rancher.
    (c) Applicants seeking priority points as operators of Small- or 
Medium-Sized Farms or Ranches that are structured as a Family Farm must 
provide a self- certification that they meet the definition of a Small- 
or Medium-Sized Farm or Ranch that is structured as a Family Farm; that 
the owners meet the definition of Immediate Family and are primarily 
responsible for the daily physical labor and management of the Farm or 
Ranch with hired help merely supplementing the family labor.
    (d) Applicants seeking priority points for Mid-Tier Value Chain 
Projects must be one of the four eligible Applicant types and provide 
the documentation specified in Sec.  4284.923(d)(1) through (7), 
demonstrating that the Project meets the Mid-Tier Value Chain 
definition.
    (e) Applicants seeking priority points for a Farmer or Rancher 
Cooperative must:
    (1) Demonstrate that it is a business owned and controlled by 
Agricultural Producers that is legally incorporated as a cooperative; 
or that it is a business owned and controlled by Agricultural Producers 
that is not legally incorporated as a cooperative, but is identified by 
the State in which it operates as a cooperatively operated business;
    (2) Identify by name or class, and confirm that the Agricultural 
Producers on whose behalf the value-added work will be done meet the 
definition requirements for an Agricultural Producer, including that 
each member is an individual Agricultural Producer, or an entity that 
is solely owned and controlled by Agricultural Producers, that 
substantially participates in the production of more than 50 percent of 
the Agricultural Commodity to which value will be added; and
    (3) Provide a self-certification statement that the entity is owned 
and controlled by Agricultural Producers that are incorporated, or 
otherwise identified by the State in which they operate, as a 
cooperatively owned business(es); that the owner(s)/member(s) 
substantially participate in the production of more than 50 percent of 
the Agricultural Commodity to which value will be added; is in ``good 
standing'' as a cooperatively operated business in the State of 
incorporation or operations, as applicable.
    (f) Applicants applying as Agricultural Producer Groups, Farmer or 
Rancher Cooperatives, or Majority-Controlled Producer-Based Business 
Ventures (group Applicants) may request additional priority points for 
Projects that ``best contribute to creating or increasing marketing 
opportunities'' for operators of Small- and Medium-Sized Farms and 
Ranches that are structured as Family Farms, Beginning Farmers and 
Ranchers, Socially-Disadvantaged Farmers and Ranchers, and Veteran 
Farmers and Ranchers. See Sec.  4284.940(c)(6) for instructions and 
documentation requirements for group Applicants to apply for these 
additional priority points.


Sec.  4284.925  Allowable uses of grant and Matching Funds.

    (a) Planning grants. Funds may only be used to pay a Qualified 
Consultant to conduct and develop a Feasibility Study, Business Plan, 
and/or Marketing Plan associated with the post-harvest processing and/
or marketing of a Value-Added Agricultural Product.
    (b) Working capital grants. Funds may be used to pay the Project's 
eligible post-harvest operational costs directly related to the 
processing and/or marketing of the Value-Added Agricultural Product. 
Examples of eligible working capital expenses include purchasing a 
financial accounting system for the Project; paying salaries of 
employees (excluding owners and Immediate Family) to process and/or 
market and deliver the Value-Added Agricultural Product to consumers; 
paying for additional Agricultural Commodity inventory (less than 50 
percent of the amount required for the Project) from an unaffiliated 
third party, necessary to produce the Value-Added Agricultural Product; 
paying for a marketing campaign for the Value-Added Agricultural 
Product; paying costs incurred in obtaining post-harvest Food Safety 
certification; and using up to $6,500 of the amount of a grant to 
purchase or upgrade post-harvest Equipment to improve Food Safety.


Sec.  4284.926  Unallowable uses of grant and Matching Funds

    (a) Unallowable uses of grant and Matching Funds awarded under this 
subpart include, but are not limited to:

[[Page 75785]]

    (1) Support costs for services or goods going to or coming from a 
person or entity with a real or apparent conflict of interest, such as 
paying the salary of an Immediate Family member of a Recipient owner, 
employee, officer, or Agency, except as specifically noted for in-kind 
Matching Funds in Sec.  4284.922;
    (2) Pay costs for scenarios with noncompetitive trade practices;
    (3) Plan, repair, rehabilitate, acquire, or construct a building or 
facility (including a processing facility);
    (4) Purchase, lease purchase, or install fixed Equipment, including 
processing Equipment, except as specifically noted in Sec.  
4284.925(b);
    (5) Purchase or repair vehicles, including boats;
    (6) Pay for the preparation of the grant application;
    (7) Pay expenses not directly related to the funded Project for the 
processing and marketing of the Value-Added Agricultural Product;
    (8) Fund research and development;
    (9) Fund any activities prohibited by 2 CFR parts 200 through 400, 
and 48 CFR part 31, subpart 31.2;
    (10) Fund architectural or engineering design work;
    (11) Fund expenses related to the production of any Agricultural 
Commodity or product, including, but not limited to production 
planning, purchase of seed or rootstock or other production inputs, 
labor for cultivation or harvesting crops, labor for repotting and/or 
maintenance of live plants, and delivery of Agricultural Commodity to a 
processing facility;
    (12) Conduct activities on behalf of anyone other than a 
specifically identified Agricultural Producer or group of Agricultural 
Producers, as identified by name or class. The Agency considers 
conducting industry-level Feasibility Studies or Business Plans, that 
are also known as Feasibility Study templates or guides or Business 
Plan templates or guides, to be ineligible because the assistance is 
not provided to a specific group of Agricultural Producers;
    (13) Duplicate activities charged to another Federal award or 
previous VAPG Planning or Working Capital Grant Project by an 
Applicant;
    (14) Pay any costs of the Project incurred prior to the date of 
grant approval, including legal or other expenses needed to incorporate 
or organize a business;
    (15) Pay any judgment or debt owed to the United States;
    (16) Purchase or improve real property;
    (17) Pay for costs associated with illegal activities;
    (18) Purchase the Agricultural Commodity to which value will be 
added from the Applicant entity; Applicant-owned or related entity, or 
members of the Applicant entity;
    (19) Use Planning Grant funds to evaluate the agricultural 
production of the commodity itself, or compensate Applicants or family 
members for participation in Feasibility Studies; or
    (20) Indirect Costs.
    (b) Applications that propose unallowable costs in excess of 10 
percent of Project Costs will be deemed ineligible to compete for 
funds. Applicants who submit applications containing ineligible 
expenses totaling less than 10 percent of Project Costs must remove 
those expenses from the Project budget or replace with eligible 
expenses, if selected for an award.


Sec.  4284.927  [Reserved]


Sec.  4284.928  Funding limitations.

    (a) Grant funds may be used to pay up to 50 percent of the Project 
Costs, subject to the limitations established for the maximum total 
grant amount.
    (b) The maximum grant amount provided to a Recipient in any one (1) 
year shall not exceed the amount announced in an annual notification 
issued on the program website pursuant to Sec.  4284.930, but in no 
event may the total amount of grant funds provided to a grant Recipient 
exceed $500,000.
    (c) The aggregate amount of awards to Majority-Controlled Producer-
Based Business Ventures may not exceed 10 percent of the total funds 
obligated under this subpart during any Fiscal Year.
    (d) Not more than 2.5 percent of funds appropriated each year may 
be used to fund the Agricultural Marketing Resource Center, to support 
electronic capabilities to provide information regarding research, 
business, legal, financial, or logistical assistance to Agricultural 
Producers and processors.


Sec.  4284.929  [Reserved]


Sec.  4284.930  Notifications.

    The Agency will issue any public notifications on the program 
website.
    (a) Amount of funding available. The Agency will publish the amount 
of funding available for awards during each Fiscal Year within 30 
calendar days of notification from OMB of the amount available.
    (b) Administrator/State Director points. The Agency will publish 
the priority categories to be used for awarding Administrator or State 
Director points no later than the date the application period opens. 
Priority categories may include any of the following:
    (1) Unserved or underserved areas;
    (2) Geographic diversity;
    (3) Emergency conditions; or
    (4) Priority Department and mission area priorities, goals, and 
objectives.
    (c) Other. The Agency will publish any other additional 
requirements or programmatic changes no later than the date the 
application period opens.


Sec.  4284.931  Application requirements.

    All applications must include the following items:
    (a) Application forms. The application must include the following 
forms (or their successor) and any additional forms listed in the 
annual notification for the program.
    (1) SF-424, ``Application for Federal Assistance.'' This form must 
be filled out completely and signed by an authorized representative of 
the Applicant organization.
    (2) SF-424A, ``Budget Information-Non-Construction Programs.'' This 
form must be filled out completely.
    (b) Executive summary. Applications must include a one-page 
executive summary containing the legal name of the Applicant entity, 
application type (Planning or Working Capital Grant), Applicant type, 
amount of grant request, a Project summary, whether a simplified 
application is being submitted, and must explicitly state whether 
reserved funds are being requested.
    (c) Eligibility discussion. The Applicant must discuss how:
    (1) Applicant eligibility requirements in Sec.  4284.920 are met;
    (2) Project eligibility requirements in Sec.  4284.922 are met; and
    (3) Allowable use of grant and Matching Funds requirements in Sec.  
4284.925 are met.
    (d) Proposal evaluation criteria. Applicants for both Planning and 
Working Capital Grants must address each proposal evaluation criterion 
identified in Sec.  4284.940 in narrative form.
    (e) Certification of Matching Funds. Applicants must certify that:
    (1) Matching Funds will be spent in advance of grant funding, such 
that for every dollar of grant funds disbursed, not less than an equal 
amount of Matching Funds will have been expended prior to submitting 
the request for reimbursement; and
    (2) If Matching Funds are proposed in an amount exceeding the grant 
amount, those Matching Funds must be spent at a proportional rate equal 
to the match-to-grant ratio identified in the budget.
    (f) Reserved funds/priority points documentation. Applicants must

[[Page 75786]]

identify their priority category, as applicable, and provide the 
required supporting documentation indicated in Sec. Sec.  4284.923 and 
4284.924 for that category to demonstrate eligibility.
    (g) Business Plan. For Working Capital Grant applications, 
Applicants must provide a copy of the Business Plan that was completed 
for the value-added Project, except as provided for in Sec.  4284.932. 
The Agency must concur in the acceptability or adequacy of the Business 
Plan.
    (h) Feasibility Study. Applicants for Working Capital Grants must 
provide a copy of a Feasibility Study prepared by a Qualified 
Consultant that was completed for the value-added Project, except as 
provided for at Sec.  4284.932. The name and credentials of the 
Qualified Consultant must be provided along with the date the 
Feasibility Study was completed. The Feasibility Study must demonstrate 
a viable Project with a likelihood of success and be a thorough 
assessment of the practicality of the Project. The thorough assessment 
must include an analysis of the proposed Project that discusses its 
strengths and weaknesses, potential opportunities and threats, and 
resources required to carry it out. The Agency must concur in the 
acceptability or adequacy of the Feasibility Study and whether the 
Qualified Consultant who prepared the Feasibility Study possesses the 
necessary knowledge, expertise, and experience.
    (i) Customer Base and Revenue Increase Metrics. Applicants must 
include a discussion on how their Project will result in an expanded 
market to new customers and increased revenue to the Agricultural 
Producer Applicant. Working Capital Grant Applicants must also provide 
estimates for increases in customer base and revenue returns and must 
include a description of the direct or indirect producer or food 
business benefits intended by the eligible entity to result from the 
proposed Project within a reasonable period of time after the receipt 
of a grant.


Sec.  4284.932  Simplified application.

    Applicants that will submit an application where paragraphs (a), 
(b), and/or (c) of this section apply may submit a simplified 
application, which means submission of a Feasibility Study or Business 
Plan for the Project is not required. The waiver of the requirement to 
submit a Feasibility Study and Business Plan does not change the 
proposal evaluation or scoring criteria that pertain to issues that 
might be supported by a Feasibility Study or Business Plan, so 
Applicants are encouraged to thoroughly document applications with 
their Project plans and expectations for success. All other eligibility 
requirements remain the same.
    (a) Working Capital Grant request of less than $50,000. Applicants 
requesting less than $50,000 may submit a Market Expansion or Emerging 
Market simplified application. These types of applications must provide 
adequate documentation to demonstrate the expected increases in 
customer base and revenues resulting from the Project that will benefit 
the Applicant(s) supplying more than 50 percent of the Agricultural 
Commodity for the Project.
    (b) Market Expansion request of $50,000 or more. Agricultural 
Producers who can demonstrate that their Project meets the definition 
of Market Expansion, may submit a simplified application. Applicants 
must submit a Marketing Plan with their simplified application. 
However, a Business Plan may be submitted in lieu of a Marketing Plan. 
Agricultural Producer Group, Farmer or Rancher Cooperative, and 
Majority-Controlled Producer-Based Business Venture applicant types are 
not eligible for Market Expansion Projects.
    (c) Food Safety. Applicants that will submit an application where 
more than 50 percent of the Project Costs will be used for post-harvest 
Food Safety purposes related to the processing and/or marketing of a 
Value-Added Agricultural Product may submit a simplified application.


Sec.  4284.933  Submission requirements.

    Unless otherwise specified in a notification issued under Sec.  
4284.930, the following requirements apply to all applications.
    (a) Submission period. (1) The application period opens November 1. 
Applications received prior to the opening date in a given Fiscal Year 
will automatically be considered ineligible and will not be evaluated 
further.
    (2) The application period closes on February 15. Applications 
received after the closing date will not be considered for funding. 
Thus, applicants are encouraged to submit their applications well in 
advance of the closing date to ensure timely receipt by the Agency. 
Revisions or additional information will not be accepted after the 
application period closes on February 15.
    (b) Submission process. All items required for the application must 
be submitted in a single application. No attachments other than the 
required items will be considered. Incomplete applications will 
automatically be considered ineligible and will not be evaluated 
further. The annual notification for the program will be published on 
the OMB-designated governmentwide website and will provide instructions 
on how and where to submit completed applications for VAPG funding.


Sec. Sec.  4284.934-4284.939  [Reserved]


Sec.  4284.940  Application processing.

    (a) Eligibility evaluation. The Agency will review all applications 
to determine if they are eligible for assistance based on the 
requirements in this subpart and other applicable Federal laws and 
regulations. An application must include all application requirements 
identified in Sec.  4284.931, or the Agency will determine that it is 
not eligible for assistance.
    (b) Risk evaluation. (1) The Agency will review those applications 
that are determined to be eligible for the program for risk based on 
the following information. Typically, the Agency will not determine 
that an application is ineligible for funding based on the results of 
the risk evaluation, unless the Agency cannot find a way to reasonably 
mitigate the risk posed by making an award. However, if risk evaluation 
findings identify significant shortcomings in the Applicant's ability 
to manage Federal funds, the Agency may determine that the application 
is not eligible for funding.
    (2) The Agency will determine if the Applicant has satisfactory 
performance for all Federal awards received in the last five (5) years, 
based upon review of deficiencies reported in the Federal Awardee 
Performance and Integrity Information System, or its successor system, 
the Do Not Pay system, or its successor system, and the Agency's own 
internal financial and record-keeping systems and files. Satisfactory 
performance includes timely submission of required reports and 
documents, timely completion of tasks, and proper use of funds.
    (c) Merit evaluation. The Agency will conduct a merit evaluation 
for those applications that are determined to be eligible for the 
program. The maximum number of points that will be awarded to an 
application is 100 points. The Agency's annual notification will 
provide additional instructions to assist Applicants when responding to 
the criteria in paragraphs (c)(1) through (7) of this section. The 
merit evaluation will be based on the following criteria, but may be 
amended at the Agency's discretion:
    (1) Nature of the proposed venture (0 to 30 points). Applicants 
must describe the technological feasibility, operational

[[Page 75787]]

efficiency, and profitability and economic sustainability of the 
Project. Applications that demonstrate a high likelihood of success in 
these areas will receive higher points. In response to this criterion, 
Working Capital Grant Applicants must provide accurate and factual 
information for the Project that demonstrates a viable Project ready to 
be implemented upon award. Planning Grant Applicants only need to 
discuss anticipated needs and expected outcomes for the Project.
    (i) Technological feasibility should include discussion of the 
value-added process; the Applicant's expectations for sufficient 
Agricultural Commodity as well as the value to be added to the 
Agricultural Commodity through the value-added process; potential 
markets and distribution channels; Applicant's experience in marketing 
the proposed or similar product; and any other relevant information 
that supports the feasibility of the Project.
    (ii) Operational efficiency should include discussion of the cost 
of inputs; cost of processing commodity; sufficient labor and 
expertise; use of own facility, shared space, or contracted processing; 
adequate processing equipment; and logistics for storage, distribution, 
transportation, and/or shipping of the Value-Added Agricultural 
Product. Applicants should also address any anticipated challenges or 
risks associated with the Project.
    (iii) Profitability and economic sustainability should include 
discussion of the market expansion strategy and break-even point 
analysis completed for the Project. Include a summary of historical 
financial and pro forma financial projections, as applicable, to 
support the viability of the Project. Other relevant sources such as a 
Business Plan or Feasibility Study may be cross-referenced.
    (2) Qualifications of Key Personnel (0 to 20 points). Applicants 
must provide the qualifications and expertise of all identified Key 
Personnel. If staff or consultants have not been hired at the time of 
application, Applicants must provide specific descriptions of the 
qualifications required for the positions to be filled. Applications 
that demonstrate Key Personnel with strong credentials will receive 
higher points.
    (3) Work plan and budget (0 to 20 points). Applicants must submit a 
comprehensive work plan and budget. Applications that provide a clear, 
comprehensive work plan detailing all Project goals, tasks, timelines, 
costs, and Key Personnel in a logical and realistic manner 
demonstrating a high likelihood of success will receive higher points. 
The Project work plan and budget must demonstrate eligible sources and 
allowable uses of funds and must:
    (i) Present a detailed narrative description of the eligible 
activities and tasks related to the processing and/or marketing of the 
Value-Added Agricultural Product along with a detailed breakdown of all 
estimated costs allocated to those activities and tasks;
    (ii) Identify the Key Personnel that will be responsible for 
overseeing and/or completing the activities or tasks and provide 
reasonable and specific timeframes for completion of the activities and 
tasks;
    (iii) Identify the sources and uses of grant and Matching Funds for 
all activities and tasks specified in the budget; and indicate that 
Matching Funds will be spent at a rate equal to or in advance of grant 
funds; and
    (iv) Identify the basis of the valuation of the grant and Matching 
Funds for all activities and tasks specified in the budget.
    (4) Matching Funds commitment (up to 5 points). Applications that 
demonstrate financial commitment in the form of cash matching 
contributions will receive more points. Applications with a higher 
percentage of cash match will receive more points.
    (5) Prior VAPG assistance (up to 5 points). The Applicant must 
disclose the number of prior VAPG awards they have received. Applicants 
that have not received a VAPG award will receive more points.
    (6) Priority points (0 to 10 points). Priority points may be 
awarded in both the general funds and the reserved funds competitions. 
Points will be awarded as follows:
    (i) 5 priority points will be awarded if the Applicant meets the 
requirements for one of the following categories and provides the 
documentation described in Sec. Sec.  4284.923 and 4284.924, as 
applicable: Beginning Farmer or Rancher, Socially-Disadvantaged Farmer 
or Rancher, Veteran Farmer or Rancher, or operator of a Small- or 
Medium-Sized Farm or Ranch that is structured as a Family Farm, Farmer 
or Rancher Cooperative, or are proposing a Mid-Tier Value Chain 
Project. Applicants will not be awarded more than five (5) points even 
if they qualify for more than one of the priority categories.
    (ii) 5 additional priority points will be awarded if the Applicant 
is an Agricultural Producer Group, Farmer or Rancher Cooperative, or 
Majority-Controlled Producer-Based Business Venture whose Project 
``best contributes to creating or increasing marketing opportunities'' 
for operators of Small- and Medium-Sized Farms or Ranches that are 
structured as Family Farms, Beginning Farmers or Ranchers, Socially-
Disadvantaged Farmers or Ranchers, or Veteran Farmers or Ranchers.
    (7) Administrator/State Director priority categories (0 to 10 
points). Unless otherwise specified in a notification issued under 
Sec.  4284.930, the Administrator of the Agency or State Director has 
discretion to award up to 10 points to an application to improve the 
geographic diversity of recipients in a Fiscal Year, fund unserved or 
underserved areas, assist areas experiencing emergency conditions, or 
prioritize Projects that advance the Department or Agency's key 
priorities, goals, and objectives. In the event of a national 
competition, the Administrator will award points and for a State-
allocated competition, the State Director will award points.


Sec.  4284.941  Application withdrawal.

    During the period between the submission of the application and 
award approval, the Applicant must notify the Agency if the Project is 
no longer viable or the Applicant is no longer requesting financial 
assistance for the Project. When the Applicant notifies the Agency, the 
application will be withdrawn from consideration for funding.


Sec. Sec.  4284.942-4284.949  [Reserved]


Sec.  4284.950  Award selection.

    (a) Applications will be selected for further processing and 
consideration of an award after the merit evaluation process is 
completed for all eligible applications. Each eligible application will 
be scored on criteria 1 through 6 as detailed in the annual 
notification. The scores will be ranked highest to lowest and this will 
comprise the initial application ranking. Applications will be ranked 
solely on the points awarded by the reviewers, unless there is a tie. 
In that case, the Administrator of the Agency (or State Director) will 
break the tie at his or her discretion based on evaluation criterion 7.
    (b) Applications for reserved funds will be funded in rank order 
until funds are depleted. Unfunded reserve applications will then 
compete for general funds where applications will be funded in rank 
order until available funds are expended or the minimum score for 
funding of 50 points is reached. Funding for Majority Controlled 
Producer-Based Business Ventures is limited to 10 percent of total 
grant funds expected to be obligated each funding cycle. These 
applications

[[Page 75788]]

will be funded in rank order until the funding limitation has been 
reached.
    (c) If an application cannot be fully funded, the Agency will offer 
partial funding to the extent funds are available. If the Applicant 
offered partial funding does not accept, the Agency will offer the 
funding to the next highest-ranked Applicant until an Applicant is 
found that accepts the funding or no additional eligible Applicants 
exist. If an application is ranked and not funded, it will not be 
carried forward into the next Fiscal Year competition.


Sec.  4284.951  Notification of successful Applicants.

    (a) The Agency will notify the Applicants whose applications can be 
funded with a Letter of Conditions. The Letter of Conditions will 
provide the conditions under which an award can be approved as well as 
a copy of the term of the award. Applicants receiving a Letter of 
Conditions will have up to 90 calendar days to meet the conditions of 
the award. If the Applicant agrees with the conditions, the Applicant 
must complete an applicable Form RD 1942-46, Letter of Intent to Meet 
Conditions. If the Applicant believes that certain conditions cannot be 
met, the Applicant may propose alternate conditions to the Agency. The 
Agency must concur with any proposed changes to the Letter of 
Conditions by the Applicant before the application will be processed 
further. If the Agency agrees to any proposed changes, the Agency will 
issue a revised or amended Letter of Conditions that defines the final 
conditions under which the grant will be made. However, if an Applicant 
does not meet the conditions, the Agency will discontinue processing 
the application.
    (b) All successful Applicants must complete the following 
additional forms and provide the following additional documentation:
    (1) Form RD 1942-46, ``Letter of Intent to Meet Conditions.'' 
Completion of this form confirms the Applicant's commitment to meeting 
the conditions of the award.
    (2 Form RD 400-4, ``Assurance Agreement.'' Completion of this form 
confirms the Applicant's commitment to complying with Federal laws and 
policies regarding prohibition of discrimination.
    (3) Form SF-LLL, ``Disclosure of Lobbying Activities.'' Completion 
of this form is only required for those entities that engage in 
lobbying activities.
    (4) Form RD 4280-2, ``Rural Business-Cooperative Service Financial 
Assistance Agreement.'' This form must be filled out completely and 
signed by an authorized representative of the Applicant organization 
and an authorized representative from the Agency for the grant award to 
be considered a valid agreement between the parties.
    (5) Performance evaluation criteria. The overall goal of this 
program and the Projects it supports is to create and serve new 
markets, with a resulting increase in jobs, customer base and revenues 
returning to the Producer. Specific information must be provided about 
plans to track and evaluate progress toward these outcomes as a way for 
the Agency to determine whether or not the primary program goals and 
Project goals included in the work plan are likely to be accomplished 
during the Period of Performance as specified in Sec.  4284.960.
    (6) Verification of Matching Funds. Provide authentic documentation 
from the source to confirm the eligibility and availability of both 
cash and in-kind contributions that meet the requirements for Matching 
Funds in Sec.  4284.922.
    (7) Valid permit/license. If the Project will produce and market a 
Value-Added Agricultural Product in the industries of wine, beer, 
distilled spirits or other alcoholic merchandise, a valid TTB Permit 
must be provided. If the Project will market a Value-Added Agricultural 
Product made from hemp, a copy of a valid producer license issued by a 
State, Tribe, or USDA must be provided, as applicable in accordance 
with 7 CFR part 990. If the Applicant applied as a Harvester, the 
Applicant must provide executed copies of contracts, licensing or 
equivalent documentation establishing ``legal rights'' to access and 
harvest the subject Agricultural Commodity.
    (8) Organizational documents. Provide a copy of Applicant's 
organizational documents that demonstrate legal authority and good 
standing such as by-laws, articles of incorporation or organization, 
and Letter or Certificate of Good Standing from your Secretary of State 
or equivalent agency. Sole Proprietors must submit a copy of their IRS 
tax forms showing farm income.


Sec.  4284.952  Notification of unsuccessful Applicants.

    Applicants whose applications are not eligible for financial 
assistance or did not score high enough to be funded will be notified. 
The notification will be in writing using an adverse decision letter. 
This letter will outline the reason(s) for the Agency's decision and 
provide dispute resolution alternatives.


Sec. Sec.  4284.953-4284.959  [Reserved]


Sec.  4284.960  Reporting requirements.

    Recipients are required to submit financial reports and performance 
reports on a semiannual basis. Semiannual periods end on March 31st and 
September 30th. Reports are due 30 calendar days after the end of the 
semiannual period. A final financial report and performance report must 
also be submitted within 120 days after the expiration or termination 
of the grant. Failure to submit a performance report within the 
specified timeframes may result in the Agency withholding grant funds.
    (a) Financial reports. Form SF-425, ``Federal Financial Report,'' 
must be used for financial reporting. Financial reports must also 
include evidence of receipt of Matching Funds. Recipients must complete 
the Project per the terms and conditions specified in the approved work 
plan and budget, the Financial Assistance Agreement, and Letter of 
Conditions. Recipients will expend funds only for eligible purposes and 
will be monitored by the Agency for compliance. Recipients must 
maintain a financial management system and property and procurement 
standards in accordance with 2 CFR parts 400 through 499.
    (b) Performance reports. All performance reports must include a 
discussion on the performance benchmarks suggested in the application 
to determine whether the primary goals and objectives proposed in the 
approved work plan and budget were accomplished during the reporting 
period. In the section of the report that compares actual 
accomplishments to the objectives for that reporting period, objectives 
should be reported by specific task breakdown as described in the 
approved work plan and budget.
    (1) For Working Capital Grant Projects, final performance reports 
must include the following metrics:
    (i) Expansion of customer base as a result of the Project;
    (ii) Increased revenue returned to the Producer as a result of the 
Project; and
    (iii) Jobs created or saved as a result of the Project.
    (2) For all Projects, we may request additional information, 
including but not limited to, the following:
    (i) Information that will enable evaluation of the economic impact 
of program awards, such as:
    (A) Business starts and clients served; and
    (B) Data associated with Producer market expansion, new market 
penetration, and changes in customer base or revenues.

[[Page 75789]]

    (ii) Information that would promote greater understanding of the 
key determinants of the success of individual Projects or inform 
program administration and evaluation, such as:
    (A) The Producer's experience related to financial management, 
budgeting, and running a business enterprise;
    (B) The nature of, and advantages or disadvantages of, supply chain 
arrangements or equitable distribution of rewards and responsibilities 
for Mid-Tier Value Chain Projects; and
    (C) Recommendations from Beginning Farmers or Ranchers, Socially-
Disadvantaged Farmers or Ranchers, and/or Veteran Farmers or Ranchers.
    (iii) Information that would inform or enable the aggregation of 
data for program administration or evaluation purposes.
    (3) If any special conditions have been placed on the use of award 
funds, compliance with those conditions must be discussed in each 
performance report.


Sec.  4284.961  Grant monitoring.

    Awards will be monitored by Agency personnel in accordance with 
applicable laws, regulations, and policies (see Sec.  4284.908 for more 
information). The Agency may terminate or suspend the award for lack of 
adequate or timely progress, reporting, documentation, or for failure 
to comply with Agency requirements.


Sec.  4284.962  Transfer of obligations.

    At the discretion of the Agency and on a case-by-case basis, an 
obligation of funds established for an Applicant may be transferred to 
a different (substituted) Applicant provided:
    (a) The substituted Applicant:
    (1) Is eligible;
    (2) Has a close and genuine relationship with the original 
Applicant; and
    (3) Has the authority to receive the assistance approved for the 
original Applicant.
    (b) The Project continues to meet all product, purpose, and 
reserved funds eligibility requirements so that the need, purpose(s), 
and scope of the Project for which the Agency funds will be used remain 
substantially unchanged.


Sec. Sec.  4284.963-4284.999  [Reserved]


Sec.  4284.1000  OMB control number.

    The reporting and recordkeeping requirements contained in this 
subpart have been approved by the OMB and have been assigned OMB 
control number 0570-0064 in accordance with the Paperwork Reduction Act 
of 1995.

0
5. Revise subpart K to read as follows:

Subpart K--Agriculture Innovation Center Demonstration Program

Sec.

General Information

4284.1001 Purpose.
4284.1002 Organization of subpart.
4284.1003 Definitions.
4284.1004 Exception authority.
4284.1005 [Reserved]
4284.1006 Conflict of interest.
4284.1007 [Reserved]
4284.1008 Compliance with other laws and regulations.
4284.1009-4284.1019 [Reserved]

Eligibility Information

4284.1020 Applicant eligibility.
4284.1021 Ultimate beneficiary eligibility.
4284.1022 Project eligibility.
4284.1023-4284.1024 [Reserved]
4284.1025 Use of funds.
4284.1026-4284.1029 [Reserved]
4284.1030 Notifications.

Application Requirements

4284.1031 Application requirements.
4284.1032 [Reserved]
4284.1033 Submission requirements.
4284.1034-4284.1039 [Reserved]

Application Processing

4284.1040 Application processing.
4284.1041 Application withdrawal.
4284.1042-4284.1049 [Reserved]

Award

4284.1050 Award selection.
4284.1051 Notification of successful Applicants.
4284.1052 Notification of unsuccessful Applicants.
4284.1053 Award approval.
4284.1054-4284.1059 [Reserved]

Post-Award

4284.1060 Reporting requirements.
4284.1061 Monitoring awards.

Other

4284.1062-4284.1099 [Reserved]
4284.1100 OMB control number.

General Information


Sec.  4284.1001  Purpose.

    This subpart implements the Agriculture Innovation Center 
Demonstration (AIC) program. Through the AIC program, the Agency makes 
grants to Centers that provide Producer Services to Agricultural 
Producers seeking to develop and market Value-Added Agricultural 
Products.


Sec.  4284.1002  Organization of subpart.

    The information in this subpart is organized into seven main 
topics:
    (a) General information. Sections 4284.1001 through 4284.1019 
discuss the purpose of the program, definitions, exception authority, 
conflict of interest, and compliance with other laws and regulations.
    (b) Eligibility information. Sections 4284.1020 through 4284.1029 
discuss the eligibility requirements for the program. These sections 
include information on applicant eligibility, project eligibility, and 
the use of funds. See Sec.  4284.1022 for information about the award 
amounts, Period of Performance, and Matching Funds requirements.
    (c) Application requirements information. Sections 4284.1030 
through 4284.1039 discuss the requirements for submitting an 
application. These sections include information on what forms and other 
information are required for a complete application as well as the 
format of the application, the application deadline, and how to submit 
the application.
    (d) Application processing information. Sections 4284.1040 through 
4284.1049 discuss how the Agency will process applications. These 
sections include information on how applications will be reviewed for 
eligibility, how applications will be evaluated for merit, and how an 
applicant can withdraw an application from consideration.
    (e) Award information. Sections 4284.1050 through 4284.1059 discuss 
how the Agency will make awards. These sections include information 
about how applications will be selected for funding, how applicants 
will be notified whether their applications have been selected for 
funding, how applicants can resolve disputes regarding funding 
selections, and the requirements for an applicant to accept an award 
and be approved as a Recipient of an award.
    (f) Post-award information. Sections 4284.1060 through 4284.1061 
discuss the reporting requirements for Recipients after an award is 
approved as well as monitoring procedures that the Agency will use.
    (g) Other. (1) Sections 4284.1062 through 4284.1099 are reserved.
    (2) Section 4284.1100 includes the Office of Management and Budget 
(OMB) control number for reporting and recordkeeping requirements under 
this subpart.


Sec.  4284.1003  Definitions.

    These are the definitions for terms used in this subpart. 
Additional terms used in this subpart are found in the applicable laws 
and regulations, in particular 2 CFR part 200 and 7 CFR part 11.
    Adverse Decision has the meaning located at 7 CFR 11.1.
    Adverse Decision Letter means a letter issued by the Agency to the 
Applicant

[[Page 75790]]

or Recipient that explains the Adverse Decision.
    Agency means the Rural Business-Cooperative Service (RBCS or the 
Agency), an agency of the United States Department of Agriculture 
(USDA), or a successor agency.
    Agricultural Commodity has the meaning located at Sec.  4284.903.
    Agricultural Commodity Organization means an organization that 
exclusively represents a single Agricultural Commodity or group of 
similar commodities either on behalf of the commodity itself or on 
behalf of the Agricultural Producers who grow or raise it. The 
representation can be at a local, State, regional, or national level. 
Examples are Agricultural Commodity Marketing Boards established by 
States, a national association representing corn growers, and a 
regional association representing fruit and vegetable growers.
    Agricultural Food Product has the meaning located at Sec.  
4284.903.
    Agricultural Producer has the meaning located at Sec.  4284.903.
    Applicant means the entity that is applying for funding through the 
AIC program.
    Board of Directors means the group of individuals who govern the 
Center.
    Business Plan has the meaning located at Sec.  4284.903.
    Center means the Agriculture Innovation Center to be established 
and operated by a Recipient of the AIC program. It must be governed by 
a Qualified Board of Directors.
    Change in Physical State has the meaning located at Sec.  4284.903.
    Commercial Organization means any business that sells goods or 
services for the purpose of making a profit.
    Equipment has the meaning located at 2 CFR 200.1.
    Family Farm has the meaning located at Sec.  4284.903.
    Farm or Ranch has the meaning located at Sec.  4284.903.
    Farm- or Ranch-Based Renewable Energy has the meaning located at 
Sec.  4284.903.
    Feasibility Study has the meaning located at Sec.  4284.903.
    Federal Award has the meaning located at 2 CFR 200.1.
    Financial Assistance Agreement means Form RD 4280-2 and any 
attachments, as executed by RBCS and the Recipient.
    General Agricultural Organization means an organization that 
represents agriculture in general, without restriction to any specific 
group, commodity, or sector. The sole purpose of the organization must 
be representing agriculture through policymaking, education, and/or 
marketing. The organization must represent Agricultural Producers, 
although it may represent processors and other stakeholders as well. 
The representation can occur at the State, regional, or national level. 
Examples include organizations that represent farmers and ranchers and 
organizations that represent organic or sustainable farming. Note that 
credit organizations are not included in this definition.
    Harvester has the meaning located at Sec.  4284.903.
    Indian Tribe has the meaning located at 2 CFR 200.1.
    Indirect Costs has the meaning located at 2 CFR 200.1.
    Institutions of Higher Education has the meaning located at 2 CFR 
200.1.
    Key Personnel means the employees and/or contractors of the Center 
who provide Producer Services. It also includes the Project Director.
    Letter of Conditions means the letter that the Agency issues to an 
entity whose application is selected for funding. The letter outlines 
all the conditions of the award that must be met before the award can 
be approved. Other agencies may call this letter an award letter or 
award notice.
    Local Government has the meaning located at 2 CFR 200.1.
    Local Agricultural Producer means an Agricultural Producer located 
within 400 miles of the Center or in the same State.
    Locally-Produced Agricultural Food Product has the meaning located 
at Sec.  4284.903.
    Matching Funds has the meaning located at 2 CFR 200.1.
    Nonprofit Organization has the meaning located at 2 CFR 200.1.
    Period of Performance has the meaning located at 2 CFR 200.1.
    Physical Segregation has the meaning located at Sec.  4284.903.
    Produced in a Manner That Enhances the Value of the Agricultural 
Commodity has the meaning located at Sec.  4284.903.
    Producer Services means services provided by the Centers to 
Agricultural Producers seeking to develop and market Value-Added 
Agricultural Products. The services provided must directly assist the 
Agricultural Producer with the process of developing and/or marketing a 
Value-Added Agricultural Product. The services include the following:
    (1) Business development services, such as Feasibility Studies, 
Business Plans, and other types of technical assistance that supports 
business development.
    (2) Market development services, such as marketing plans, branding, 
and customer identification.
    (3) Organizational assistance, such as legal and technical advisory 
services related to the development, expansion, or operation of a 
business.
    (4) Financial advisory services related to the development, 
expansion, or operation of a business, such as assistance with 
obtaining credit for operating costs, training on using financial 
management software, and guidance on use of cash flow.
    (5) Process development services, such as the following:
    (i) Engineering services, including scale-up of production systems 
(not to include cost of renovating or constructing a facility or 
system);
    (ii) Scale production assessments, which are studies that analyze 
processing facilities to determine the size that optimizes construction 
and other cost efficiencies associated with manufacturing or processing 
a Value-Added Agricultural Product;
    (iii) Systems development; and
    (iv) Other technical assistance and applied research related to 
development, implementation, improvement and operations of processes 
and systems to develop and market a Value-Added Agricultural Product.
    (6) Product development, such as idea generation, concept testing, 
feasibility and cost analysis, product taste-testing, demographic and 
other types of consumer analysis, production analysis, recipe 
development, evaluation of packaging and labeling options, and brand 
development for a Value-Added Agricultural Product.
    (7) Value chain coordination, or directly working with an 
Agricultural Producer to connect that producer to a distribution 
system, processing facility, or commercial kitchen.
    (8) Grants to Agricultural Producers for the services in paragraphs 
(1) through (7) of this definition, where the individual award does not 
exceed $5,000 and the aggregate amount of grants made by the Center 
does not exceed $50,000. Note that these grants are considered pass-
through awards. Therefore, Centers and subrecipients must comply with 
all Federal and programmatic requirements for pass-through entities and 
awards, as described in 2 CFR part 200. Additionally, subrecipients of 
these grants must be eligible to receive a Federal Award, use grant and 
Matching Funds for allowable costs, provide at least one-third of the 
Project Cost in Matching Funds, and meet all other

[[Page 75791]]

Federal and program requirements for the AIC program.
    Program Income has the meaning located at 2 CFR 200.1.
    Project Cost has the meaning located at 2 CFR 200.1.
    Qualified Board of Directors means a Board of Directors that 
includes, but is not limited to, representatives from each of the 
groups identified in paragraphs (1) through (3) of this definition. It 
should be noted that no representative may represent more than one 
group or organization and Board of Director representatives must not 
have any conflicts of interest. See Sec.  4284.1006 for additional 
information on conflicts of interest.
    (1) Two General Agricultural Organizations with the greatest number 
of members in the State in which the Center is located;
    (2) The department of agriculture, or similar State department or 
agency, or a State legislator, of the State in which the Center is 
located; and
    (3) Four Agricultural Commodity Organizations representing 
different Agricultural Commodities produced in the State in which the 
Center is located.
    Real Property has the meaning located at 2 CFR 200.1.
    Recipient has the meaning located at 2 CFR 200.1.
    State has the meaning located at 2 CFR 200.1.
    State Office means the USDA Rural Development (RD) offices located 
in each State.
    Third-Party In-Kind Contributions has the meaning located at 2 CFR 
200.1.
    Underserved and Economically Distressed Area means an area so 
designated on the program website.
    Value-Added Agricultural Product has the meaning located at Sec.  
4284.903.


Sec.  4284.1004  Exception authority.

    The Administrator of the Agency may, on a case-by-case basis, 
approve an exception to any requirement or provision of this subpart 
provided that such an exception is in the best financial interests of 
the Federal Government. Exercise of this authority cannot conflict with 
applicable laws.


Sec.  4284.1005  [Reserved]


Sec.  4284.1006  Conflict of interest.

    No conflict of interest or appearance of a conflict of interest 
will be allowed.
    (a) Description. A conflict of interest occurs in a situation in 
which a person or entity has competing personal, professional, or 
financial interests that make it difficult for the person or entity to 
act impartially. For the purposes of this subpart, relationships that 
can include conflict of interest include, but are not limited to:
    (1) Parent, Applicant, or Recipient Board of Directors, employees, 
consultants, and contractors.
    (2) Center Board of Directors, employees, consultants, and 
contractors.
    (3) Subrecipients and their employees, consultants, and 
contractors.
    (4) Immediate family members of those listed in paragraphs (a)(1) 
through (3) of this section.
    (b) State Departments of Agriculture. A conflict of interest does 
not include the situation when the State's Secretary of Agriculture or 
an employee of the State's Department of Agriculture, or similar 
agency, acts as a member of the Center's board of directors because 
this representation is a requirement for the program.
    (c) Written disclosure. Recipients must comply with 2 CFR 400.2(b), 
which includes providing written disclosure to the Agency of any 
potential conflicts of interest and maintaining written standards of 
conduct covering conflicts of interest and governing the performance of 
its employees in the selection, award, and administration of Federal 
Awards.
    (d) Assistance to employees, relatives, and associates. The Agency 
will process any requests for assistance under this subpart in 
accordance with 7 CFR part 1900, subpart D.
    (e) Member/delegate clause. No member of or delegate to Congress 
shall receive any share or part of this grant or any benefit that may 
arise therefrom; provided, however, that this provision shall not be 
construed to bar, as a contractor under the Federal Award, a publicly 
held corporation whose ownership might include a member of Congress.


Sec.  4284.1007  [Reserved]


Sec.  4284.1008  Compliance with other laws and regulations.

    The Agency, Applicants, and Recipients must comply with all 
applicable laws and regulations. An effort has been made to identify 
the most-commonly cited laws and regulations and reference them as 
follows:
    (a) Federal laws. Federal laws are codified in the United States 
Code (U.S.C.). A selection of laws applicable to this program is 
identified as follows:
    (1) Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.).
    (2) Consumer Credit Protection Act (15 U.S.C. 1601 et seq.).
    (3) Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et 
seq.).
    (4) The Civil Rights Act of 1964, Title VI (42 U.S.C. 2000d et 
seq.).
    (5) The Rehabilitation Act of 1973, Section 504 (29 U.S.C. 794).
    (b) Federal regulations. Federal regulations are codified in the 
Code of Federal Regulations (CFR). In particular, 2 CFR parts 1 through 
200 are applicable to all Federal grant programs. These parts address 
items such as universal entity identifiers, reporting subaward and 
executive compensation, debarment and suspension, drug-free workplaces, 
administrative requirements, cost principles, and audit requirements. 
We particularly advise Applicants and Recipients to become familiar 
with 2 CFR part 200 in its entirety.
    (c) Departmental regulations. Departmental regulations are those 
regulations that are specific to awards made through USDA. They are 
codified in the CFR. A selection of applicable regulations is 
identified as follows:
    (1) 2 CFR parts 400 through 499. These parts include USDA's 
adoption of Federal administrative requirements and cost principles. 
They also include regulations on debarment and suspension, lobbying, 
drug-free workplaces, and research awards.
    (2) 7 CFR part 11. This part includes USDA's procedures for 
administrative appeals, as handled by its National Appeals Division.
    (3) 7 CFR part 15. This part includes USDA's procedures for 
compliance with nondiscrimination laws and regulations.
    (d) Agency regulations. Agency regulations are those regulations 
that are specific to awards made through the Agency and they may also 
be specific to a program. They are codified in the CFR. A selection of 
those regulations is as follows:
    (1) 7 CFR part 1900. This part covers delegations of authority, 
Adverse Decisions and administrative appeals, applicability of Federal 
law, and processing and servicing grant awards.
    (2) 7 CFR part 1901, subpart E. This subpart covers civil rights 
compliance requirements.
    (3) 7 CFR part 1951. This part covers servicing grant awards, 
including unauthorized assistance.
    (4) 7 CFR part 1970. This part covers environmental policies and 
considerations.
    (e) Access to laws and regulations. (1) Laws may be accessed 
through the U.S.C. At the time this subpart was published, the U.S.C. 
may be accessed electronically at this website: https://uscode.house.gov/.
    (2) Regulations may be accessed through the CFR. At the time this 
subpart was published, the CFR may be accessed electronically at this 
website: https://www.ecfr.gov/.

[[Page 75792]]

Sec. Sec.  4284.1009-4284.1019  [Reserved]

Eligibility Information


Sec.  4284.1020  Applicant eligibility.

    Applicants must meet certain requirements to be eligible for 
funding through this program. Those requirements are described as 
follows:
    (a) Eligible entities. Entities are eligible for assistance through 
this program if all the following requirements are met:
    (1) System for Award Management (SAM) registration and unique 
entity identifier (UEI). Entities must have an active registration in 
SAM. This registration must remain current, accurate, and complete at 
the time of application, while the application is under consideration 
for funding, and while a Recipient has an active Federal Award. This 
registration includes obtaining a UEI, or its successor, through 
SAM.gov.
    (2) Entity type. The entity is organized or incorporated in a 
State, and it is one of the following types of organizations: 
Commercial Organization, Indian Tribe, Institution of Higher Education, 
Local Government, Nonprofit Organization, or State government. A 
consortium is also eligible to apply, but it must select a single 
organization to represent the consortium as the Applicant. Only the 
Applicant organization must meet the eligibility requirements.
    (3) Board of Directors. The entity proposes to create or to 
continue to operate a Center that is governed by a Qualified Board of 
Directors.
    (4) Experience/capability to provide services. The entity 
demonstrates that it has provided at least three (3) years of Producer 
Services prior to application or that it has the capability to provide 
Producer Services by hiring at least two Key Personnel who have at 
least three (3) years of experience providing Producer Services.
    (5) Financial capability. The entity has the financial capability 
for the proposed project. In particular, the following must be true:
    (i) The most recent independent audit confirms that the entity has 
a current ratio of at least 1:1 at the end of the fiscal year; and
    (ii) The most recent independent audit confirms that the entity has 
sufficient cash on hand at the end of the fiscal year to cover at least 
three months of expenses for the proposed project.
    (b) Ineligible entities. Entities are ineligible for assistance 
from this program if any of the following occurs:
    (1) An outstanding judgment has been obtained against the entity by 
the United States in a Federal Court (other than in the United States 
Tax Court). The entity is ineligible for assistance until the judgment 
is paid in full or otherwise satisfied. Funds from this program may not 
be used to satisfy the judgment.
    (2) The entity is delinquent on the payment of Federal income 
taxes.
    (3) The entity is delinquent on Federal debt.
    (4) The entity is debarred or suspended or is otherwise excluded 
from or ineligible for participation in Federal assistance programs 
under Executive Order 12549, ``Debarment and Suspension.'' (See 2 CFR 
part 417 for more information.)
    (5) The entity has been convicted of a felony criminal violation 
under any Federal law within the past 24 months.
    (6) The entity has any unpaid Federal tax liability that has been 
assessed, for which all judicial and administrative remedies have been 
exhausted or have lapsed, and that is not being paid in a timely manner 
pursuant to an agreement with the authority responsible for collecting 
the tax liability, unless a Federal agency has considered suspension or 
debarment of the organization and has made a determination that this 
further action is not necessary to protect the interests of the 
Government.
    (7) The entity is an individual.
    (8) The entity has an award through this program that is not 
scheduled to end until after September 30 of the year in which the 
application is submitted.


Sec.  4284.1021  Ultimate beneficiary eligibility.

    Centers must provide Producer Services only to Agricultural 
Producers. The Agricultural Producers may purchase or intend to 
purchase up to 49 percent of the primary Agricultural Commodity needed 
for the Value-Added Agricultural Product that is being developed and/or 
marketed. Note that the primary Agricultural Commodity is considered 
the commodity for which the greatest volume is required to produce the 
Value-Added Agricultural Product. The Agricultural Producers must 
maintain ownership of the primary Agricultural Commodity from 
production through the sale of the Value-Added Agricultural Product. 
See Sec.  4284.1003 for the definitions of Agricultural Commodity, 
Agricultural Producer, and Value-Added Agricultural Product.


Sec.  4284.1022  Project eligibility.

    Projects must meet certain requirements to be eligible for funding 
through this program. Those requirements are as follows:
    (a) Eligible projects. Eligible projects must meet all of the 
following requirements. Failure to meet one or more of these 
requirements will render the application ineligible for funding.
    (1) Project purpose. The sole purpose of the project must be to 
increase and improve the ability of Agricultural Producers to market 
Value-Added Agricultural Products, with at least one goal related to 
increasing and improving the ability of Local Agricultural Producers to 
market Value-Added Agricultural Products
    (2) Amount requested. The minimum amount requested for an award 
must be $600,000 and the maximum amount that can be requested is 
$1,000,000.
    (3) Matching Funds. Matching Funds are required for at least one-
third of the Project Cost. For example, if the Project Cost is 
$1,500,000, Matching Funds must be at least $500,000. Matching Funds 
must be from non-Federal sources (unless otherwise provided by statute) 
and may be provided in cash by the applicant or by a third party or in-
kind by a third party. They must be available for use during the Period 
of Performance, and they must be used for allowable expenses. 
Applicants may not use unrecovered Indirect Costs as Matching Funds.
    (4) Allowable use of funds. The project must use award and Matching 
Funds for allowable purposes. See Sec.  4284.1025 for additional 
information.
    (5) Agricultural support. The project has the support of at least 
three organizations whose primary mission is to support agriculture in 
the State in which the Center is located.
    (6) Period of Performance. The Period of Performance must be three 
(3) years. The Period of Performance must start within 90 days of award 
approval, unless otherwise authorized by the Agency.
    (7) Contracts with other Centers. Contracts and/or subawards with 
other Centers funded through this program must be limited to 10 percent 
or less of total Project Costs.
    (b) Ineligible projects. Projects are ineligible for assistance 
through this program if the application:
    (1) Includes a conflict of interest (see Sec.  4284.1006 for more 
information), where the expenses associated with the conflict of 
interest exceed 10 percent of the Project Cost. If the costs associated 
with the conflict of interest are 10 percent or less, the process in 
paragraph (b)(5) of this section will be followed.
    (2) Requests less than the minimum or more than the maximum grant 
amount.
    (3) Focuses assistance on only one Agricultural Producer or 
business.

[[Page 75793]]

    (4) Earns revenue from processing or selling a product as part of 
the project. Centers may charge fees for services provided, but they 
cannot earn revenue from processing a product or from sales associated 
with a product they helped develop.
    (5) Includes unallowable costs totaling more than 10 percent of 
Project Costs. If the application includes 10 percent or less of 
Project Costs in unallowable costs, and the application is otherwise 
eligible and selected for funding, those unallowable costs must be 
removed. If time permits, the Agency may allow those unallowable costs 
to be replaced with allowable costs. Otherwise, the amount of the Award 
will be reduced accordingly. If we cannot determine the percentage of 
unallowable costs, your application will not be considered for funding.


Sec. Sec.  4284.1023-4284.1024  [Reserved]


Sec.  4284.1025  Use of funds.

    Allowable and unallowable uses of funds are described as follows:
    (a) Allowable uses of funds. The following types of activities and 
expenses are allowable:
    (1) Producer Services as defined in Sec.  4284.1003.
    (2) Costs associated with establishing and operating a Center, 
including legal services, accounting services, clerical assistance, 
technical services, office supplies, hiring employees, monitoring 
contracts, professional development for staff, attending conferences 
related to value-added agriculture and marketing food products, and 
Board of Directors travel.
    (3) Additional information on allowability of costs can be found at 
2 CFR part 200, subpart E, for all organization types.
    (b) Unallowable uses of funds. The following types of activities 
and expenses are unallowable:
    (1) Provide services to entities other than Agricultural Producers.
    (2) Fund manufacturing or processing expenses, including test, 
trial, or initial production runs.
    (3) Pay for interns or internships.
    (4) Provide tuition remission or other financial support to 
students at any level of education.
    (5) Provide participant support costs outside of the grants to 
Agricultural Producers.
    (6) Fund any direct expenses for the production of any Agricultural 
Commodity or product to which value will be added, including seed, 
rootstock, labor for harvesting the crop, and delivery of the commodity 
to a processing facility; to include the purchase of an Agricultural 
Commodity.
    (7) Plan, fund architectural work, repair, rehabilitate, acquire, 
or construct a building or facility, including a processing facility.
    (8) Purchase Real Property.
    (9) Purchase, rent, or install Equipment.
    (10) Purchase or repair vehicles, including boats.
    (11) Pay for the preparation of the grant application.
    (12) Pay expenses not directly related to the funded project.
    (13) Pay for any goods or services from a person or entity who has 
a conflict of interest with the Recipient (see Sec.  4284.1006).
    (14) Duplicate activities paid for by another Federal grant 
program.
    (15) Pay costs of the project incurred prior to the date of award 
approval, unless authorized by the Agency at the time of award 
approval.
    (16) Pay for assistance to any private business enterprise that 
does not have at least 51 percent ownership by those who are either 
citizens of the United States or reside in the United States after 
being legally admitted for permanent residence.
    (17) Pay any judgment or debt owed to the United States.
    (18) Fund any activities considered unallowable by the applicable 
cost principles, most of which are included in 2 CFR part 200, subpart 
E.


Sec. Sec.  4284.1026-4284.1029  [Reserved]


Sec.  4284.1030  Notifications.

    The Agency will issue any program notifications identified in 
paragraphs (a) through (c) of this section on the program website. An 
annual notification will also be published on the OMB-designated 
governmentwide website.
    (a) Amount of funding available. The Agency will publish the amount 
of funding available for awards during each fiscal year within 30 
calendar days of receiving notification from OMB of the amount of 
funding available.
    (b) Priority points. The Agency will publish the priorities 
applicable to the program no later than the application period opening 
date each year. Points will be awarded in accordance with Sec.  
4284.1040(d).
    (c) Other. The Agency will publish any other additional 
requirements or programmatic changes no later than the date the 
application period opens.

Application Requirements


Sec.  4284.1031  Application requirements.

    All applications must include the following items:
    (a) Form SF-424, ``Application for Federal Assistance.'' This form 
must be filled out completely and signed by an authorized 
representative of the Applicant organization.
    (b) Form RD 4284-1, ``Application for the Agriculture Innovation 
Center Program.'' This form must be filled out completely. Failure to 
complete any section on the form will result in the application being 
determined ineligible for funding.


Sec.  4284.1032  [Reserved]


Sec.  4284.1033  Submission requirements.

    The following information identifies when applications can be 
submitted, where applications must be submitted, and the format of 
applications.
    (a) Submission period. (1) The application period opens on November 
1. Applications received prior to the opening date in a given fiscal 
year will not be considered.
    (2) The application period closes at 11:59 p.m. Eastern time (ET) 
on January 31 of the following year. Applications received after the 
closing date will not be considered. This means that if the application 
is emailed prior to 11:59 p.m. ET on the closing date, but the Agency's 
system does not receive it until after the deadline, the application 
will not be considered for funding. Thus, applicants are encouraged to 
submit their applications well in advance of the closing date to ensure 
timely receipt by the Agency.
    (b) Submission address. Applications must be submitted 
electronically to the email address listed on the program website.
    (c) Submission format. All items required for the application must 
be submitted in a single application. No attachments other than the 
required items will be considered. Incomplete applications will be 
rejected.


Sec. Sec.  4284.1034-4284.1039  [Reserved]

Application Processing


Sec.  4284.1040  Application processing.

    The following information describes the way the Agency will process 
applications, including evaluating eligibility, risk, and merit.
    (a) Eligibility evaluation. The Agency will review all complete 
applications to determine if they are eligible for assistance based on 
the requirements in this subpart and other applicable Federal laws and 
regulations. In particular, the Agency will check the OMB-designated 
repository of government information, and Applicants that are excluded 
from Federal funding will be determined ineligible (see 2 CFR 200.206 
for more information). An application must

[[Page 75794]]

include all application requirements identified in Sec.  4284.1031, or 
the Agency will determine that it is ineligible for assistance.
    (b) Risk evaluation. The Agency will review those applications that 
are determined to be eligible for the program for risk based on 
financial risk and satisfactory past performance as described in 
paragraphs (b)(1) and (2) of this section. Typically, the Agency will 
not determine that an application is ineligible for funding based on 
the results of the risk evaluation, unless the Agency cannot find a way 
to reasonably mitigate the risk posed by making an award. For example, 
if an Applicant lacks appropriate internal controls, but has not 
experienced significant audit findings as a result, the Agency may 
choose to mitigate the lack of internal controls by requiring funds to 
be disbursed on a reimbursement basis until adequate internal controls 
are in place. However, if audit findings identify significant 
shortcomings in the Applicant's ability to manage Federal funds, the 
Agency may determine that the application is not eligible for funding.
    (1) Financial risk. The Agency will review the organization's most 
recent independent audit and financial statements, provided that the 
most recent audit and financial statements have been created during the 
previous year.
    (2) Satisfactory past performance. The entity has satisfactory 
performance for all Federal Awards received within the last five (5) 
years, based on a review of deficiencies reported by the Federal 
Awardee Performance and Integrity Information System, or its successor 
system, the Do Not Pay system, or its successor system, and the 
Agency's own internal financial and record-keeping systems and files. 
Satisfactory performance includes timely submission of required reports 
and documents, timely completion of tasks, and proper use of funds.
    (c) Merit evaluation. The Agency will conduct a merit evaluation 
for those applications that are determined to be eligible for the 
program. The merit evaluation will be conducted by a panel of USDA 
employees, who will convene to reach a consensus on the merit of each 
eligible application. The total points available are 90. The merit 
evaluation will be based on the following criteria:
    (1) Federal Award management (0 to 10 points). Applicants who have 
managed Federal Awards with the primary purpose of providing technical 
assistance with Periods of Performance that have start and end dates 
within the last five (5) years of the date of application will receive 
points as described in paragraphs (c)(1)(i) through (iii) of this 
section. Note that an award for which a performance deficiency is 
identified will not be scored. The Agency will use USASpending.gov, or 
its successor system, to verify the award information provided in the 
application. The Agency will also use SAM.gov, or its successor system, 
in addition to USDA internal systems to check for performance 
deficiencies. Examples of performance deficiencies are performance and/
or financial reports that are more than 90 calendar days overdue and 
failure to accomplish the approved scope of work.
    (i) Amount (0 to 3 points). Zero points will be awarded if no 
Federal Awards are identified. Applications that identify multiple 
Federal Awards for amounts greater than $600,000 will receive more 
points.
    (ii) Time period (0 to 3 points). Zero points will be awarded if no 
Federal Awards are identified. Applications that identify multiple 
Federal Awards for time periods of at least three (3) years will 
receive more points.
    (iii) Provision of technical assistance (0 to 4 points). Zero 
points will be awarded if no Federal Awards are identified. 
Applications that identify multiple Federal Awards in which the 
Applicant provided technical assistance will receive more points.
    (2) Qualifications of Key Personnel (0 to 20 points). Projects that 
have qualified Key Personnel will receive points as described in 
paragraphs (c)(2)(i) through (v) of this section. Only Key Personnel 
that are currently employed or on contract with the Center will be 
considered. Key Personnel are considered qualified if they have at 
least five (5) years of experience in providing at least one Producer 
Service that the Center proposes to offer in its application. The 
Agency will consider years of experience, the number of times a service 
has been provided, the number of services provided, the complexity of 
the role the person played in providing the service, and the outcomes 
of the services when awarding points for qualifications.
    (i) Zero Key Personnel (0 points). No qualified Key Personnel are 
identified.
    (ii) One Key Personnel (0 to 5 points). One qualified person is 
identified. Zero points will be awarded if the person identified is not 
qualified. One point will be awarded to applications that demonstrate 
the person meets the qualifications. Two to three points will be 
awarded to applications that demonstrate the person exceeds the 
qualifications. Four to five points will be awarded to applications 
that demonstrate the person has exceptional qualifications.
    (iii) Second Key Personnel (0 to 5 points). A second qualified 
person is identified. Zero points will be awarded if the person 
identified is not qualified. One point will be awarded to applications 
that demonstrate the person meets the qualifications. Two to three 
points will be awarded to applications that demonstrate the person 
exceeds the qualifications. Four to five points will be awarded to 
applications that demonstrate the person has exceptional 
qualifications.
    (iv) Third Key Personnel (0 to 5 points). A third qualified person 
is identified. Zero points will be awarded if the person identified is 
not qualified. One point will be awarded to applications that 
demonstrate the person meets the qualifications. Two to three points 
will be awarded to applications that demonstrate the person exceeds the 
qualifications. Four to five points will be awarded to applications 
that demonstrate the person has exceptional qualifications.
    (v) Fourth Key Personnel (0 to 5 points). A fourth qualified person 
is identified. Zero points will be awarded if the person identified is 
not qualified. One point will be awarded to applications that 
demonstrate the person meets the qualifications. Two to three points 
will be awarded to applications that demonstrate the person exceeds the 
qualifications. Four to five points will be awarded to applications 
that demonstrate the person has exceptional qualifications.
    (3) Outreach plan (0 to 20 points). Applications that have a well-
designed outreach plan will receive points as described in paragraphs 
(c)(3)(i) through (iii) of this section.
    (i) Goals (0 to 6 points). The goals are clear and include a way to 
measure the success of the project in a quantitative way, including the 
baseline of the metric, and a target for the metric. Zero points will 
be awarded if the application does not include at least one goal, 
performance measurement, baseline of the metric, and target for the 
metric. One or two points will be awarded if the application has at 
least one goal, one metric, the baseline of the metric, and a target 
for the metric. Three or four points will be awarded to applications 
that exceed this threshold. Five or six points will be awarded to 
applications that exceed the threshold and have exceptional goals, 
metrics, baselines, and targets.
    (ii) Identified need (0 to 8 points). The application identifies a 
clear need in the proposed service area that connects to

[[Page 75795]]

the goals of the project. Zero points will be awarded if the 
application does not identify a clear need in the proposed service area 
that connects to the goals of the project. One to five points will be 
awarded to applications that identify clear needs in the proposed 
service area that connect to the goals of the project. One or two 
additional points will be awarded to applications that describe how the 
need was identified. One additional point will be awarded to 
applications that describe an identified need in an Underserved and 
Economically Distressed Area.
    (iii) Customer identification (0 to 6 points). The application 
describes how the Center will identify customers for the Producer 
Services it proposes to provide. Zero points will be awarded if the 
application does not identify how the Center will identify its 
customers. One to five points will be awarded to applications that 
describe a basic plan for identifying customers. One additional point 
will be awarded to applications that describe a plan for identifying 
customers in an Underserved and Economically Distressed Area.
    (4) Coordination, collaboration, and partnerships (0 to 20 points). 
Coordination, collaboration, or a partnership exists if there is a 
formal arrangement between the Center and another organization to 
either provide one or more Producer Services or for the other 
organization to provide a different type of service that supports one 
or more project goals. (Note that a formal arrangement means a written 
agreement that is signed by both parties and includes a purpose 
statement.) One example is a Center that provides product development 
but does not have a commercial kitchen. The Center could coordinate 
with a commercial kitchen to work with producers on recipe development 
or consumer taste testing. Another example is providing a contribution 
to the project in the form of Matching Funds, where the contribution 
from a third party is Key Personnel or expert consulting services to 
provide Producer Services. Applicant organizations who demonstrate that 
they will coordinate, collaborate, or partner with other organizations 
for the proposed project will receive more points, based on the 
description as follows:
    (i) Coordination, collaboration, or partnership with one other 
organization (0 to 4 points). The Agency will evaluate the complexity 
of the relationship, the significance of the gap in the Center's 
services that the relationship fills, the quality of the services that 
the partner will provide, and the quantity of the services that the 
partner will provide.
    (ii) Coordination, collaboration, or partnership with a second 
organization (0 to 4 points). The Agency will evaluate the complexity 
of the relationship, the significance of the gap in the Center's 
services that the relationship fills, the quality of the services that 
the partner will provide, and the quantity of the services that the 
partner will provide.
    (iii) Coordination, collaboration, or partnership with a third 
organization (0 to 4 points). The Agency will evaluate the complexity 
of the relationship, the significance of the gap in the Center's 
services that the relationship fills, the quality of the services that 
the partner will provide, and the quantity of the services that the 
partner will provide.
    (iv) Coordination, collaboration, or partnership with a fourth 
organization (0 to 4 points). The Agency will evaluate the complexity 
of the relationship, the significance of the gap in the Center's 
services that the relationship fills, the quality of the services that 
the partner will provide, and the quantity of the services that the 
partner will provide.
    (v) Underserved and Economically Distressed Area (0 to 4 points). 
The Agency will award one point for each coordination, collaboration, 
or partnership that connects the project to an Underserved and 
Economically Distressed Area.
    (5) Scope of the project (0 to 20 points). The scope of the project 
will be evaluated based on the service area, the types of services 
offered, the uniqueness of the services offered, and the number of 
commodities assisted.
    (i) Service area (0 to 4 points). Projects that propose to provide 
Producer Services to a larger service area will receive more points, 
based on the following structure:
    (A) Few counties (0 points). Projects that propose to provide 
services to up to 10 percent of the counties in the State will receive 
0 points.
    (B) Some counties (1 point). Projects that propose to provide 
services to more than 10 percent and up to 25 percent of the counties 
in the State will receive 1 point.
    (C) Many counties (2 points). Projects that propose to provide 
services to more than 25 percent and up to 50 percent of the counties 
in the State will receive 2 points.
    (D) Majority of State (3 points). Projects that propose to provide 
services to more than 50 percent and less than 100 percent of the 
counties in the State will receive 3 points.
    (E) State-wide (4 points). Projects that propose to provide 
services to all counties in a State will receive 4 points.
    (ii) Types of services (0 to 8 points). Projects that offer a 
greater variety of Producer Services will receive more points. See 
Sec.  4284.1003 for the definition of Producer Services. Each category 
of Producer Service offered will receive one point. If no proposed 
services fit into one of the categories, zero points will be awarded. 
The categories are as follows:
    (A) Financial advisory services.
    (B) Organizational assistance.
    (C) Value chain coordination.
    (D) Process development.
    (E) Product development.
    (F) Business development services.
    (G) Marketing assistance.
    (H) Grants to Agricultural Producers.
    (iii) Number of commodities (0 to 3 points). Projects that have the 
capacity to provide services to support Value-Added Agricultural 
Products from multiple Agricultural Commodities in addition to the four 
represented on the Board of Directors of the Center will receive more 
points.
    (iv) Unique services (0 to 3 points). Projects that will contribute 
unique services in the proposed service area will receive more points. 
Unique means that the services are not already provided in the service 
area.
    (v) Physical location (0 to 2 points). Projects that will provide 
services at more than one physical location will receive more points.
    (d) Priority Points (0 to 10 points). Each year, RBCS will select 
up to two priorities from the current published priorities for the RD 
mission area that are applicable to the program. These priorities will 
be published on the program website and in the annual notice no later 
than the date that the application period is open. Projects will be 
awarded five points for each priority that they meet, based on the 
information provided in the application, for a maximum of ten points.


Sec.  4284.1041  Application withdrawal.

    During the period between the submission of the application and 
award approval, the Applicant must notify the Agency in writing if the 
project is no longer viable or if the Applicant is no longer requesting 
financial assistance for the project. When the Applicant notifies the 
Agency, the application will be withdrawn from consideration for 
funding.


Sec. Sec.  4284.1042-4284.1049  [Reserved]

Award


Sec.  4284.1050  Award selection.

    (a) The Agency will review applications to determine if they are

[[Page 75796]]

eligible for assistance based on requirements in this subpart, and 
other applicable Federal laws and regulations. If the Agency determines 
that your application meets the requirements, it will be scored by a 
panel of USDA employees in accordance with the merit evaluation 
criteria and point allocation specified in Sec.  4284.1040(c). The 
review panel will convene to reach a consensus on the scores for each 
of the eligible applications. Applications will be ranked solely based 
on the points awarded, and they will be funded in rank order until 
available funds are expended or a minimum score of 40 points is 
reached. If an application cannot be fully funded, the Agency may offer 
partial funding to the extent funds are available.
    (b) If an application is ranked and not funded, it will not be 
carried forward into the next funding competition.


Sec.  4284.1051  Notification of successful Applicants.

    (a) The Agency will notify the Applicants whose applications can be 
funded using available funds with a Letter of Conditions. The Letter of 
Conditions will provide the conditions under which an award can be 
approved as well as a copy of the terms of the award.
    (b) An Applicant receiving a Letter of Conditions will have 60 
calendar days to meet the conditions of the award. If the applicant 
does not meet the conditions, the Agency will discontinue processing 
the application and offer funding to another Applicant based on the 
ranking from the merit review panel if sufficient time exists for the 
application to be fully processed and an award approved by September 30 
of the current fiscal year. If sufficient time does not exist, the 
funds will not be awarded.
    (c) To view the standard conditions for all awards, please visit 
the program website.


Sec.  4284.1052  Notification of unsuccessful applicants.

    Applicants whose applications are not eligible for financial 
assistance or did not score high enough to be funded will be notified 
as soon as it is practicable. The notification will be in writing using 
an Adverse Decision Letter. This letter will outline the reason(s) for 
the Agency's decision and what dispute resolution alternatives the 
Applicant has. (See also 7 CFR part 11.)


Sec.  4284.1053  Award approval.

    The Agency will approve an award once the Applicant has met all the 
conditions of the award. The approval will be conveyed through the 
execution of Form RD 4280-2, which is the Financial Assistance 
Agreement, and provides all terms of the award. Once the award has been 
approved, the Recipient may begin work on the project and incur costs.


Sec. Sec.  4284.1054-4284.1059  [Reserved]

Post-Award


Sec.  4284.1060  Reporting requirements.

    Recipients are required to submit financial reports and performance 
reports based on the following requirements.
    (a) Financial reports. Financial reports are required on a semi-
annual basis and after the Period of Performance has ended.
    (1) Semi-annual report. Reporting periods are October 1 through 
March 31 and April 1 through September 30. Reports are due 30 calendar 
days after the reporting period ends. The report must include the 
submission of the SF-425, ``Federal Financial Report,'' and any 
additional information specified in the Financial Assistance Agreement.
    (2) Final report. The final financial report is due 120 calendar 
days after the reporting period ends. The report must include the 
submission of the SF-425, ``Federal Financial Report,'' and any 
additional information specified in the Financial Assistance Agreement.
    (b) Performance reports. Performance reports are required on a 
semi-annual basis and after the Period of Performance has ended.
    (1) Semi-annual reports. Reporting periods are October 1 through 
March 31 and April 1 through September 30. Reports are due 30 calendar 
days after the reporting period ends. The report must use the format 
specified in the Financial Assistance Agreement.
    (2) Final report. The final report is due 120 calendar days after 
the end of the Period of Performance. The report must use the format 
specified in the Financial Assistance Agreement.


Sec.  4284.1061  Monitoring awards.

    Awards will be monitored by Agency personnel in accordance with 
applicable laws, regulations, and policies (see Sec.  4284.1008 for 
more information). The Agency will designate a contact person for each 
award. The Agency may terminate or suspend the award for lack of 
adequate or timely progress, reporting, documentation, or for failure 
to comply with Agency requirements.

Other


Sec.  4284.1062-4284.1099  [Reserved]


Sec.  4284.1100  OMB control number.

    The reporting and recordkeeping requirements contained in this 
subpart have been approved by OMB and have been assigned OMB control 
number 0570-0045 in accordance with the Paperwork Reduction Act of 
1995.

Kathryn E. Dirksen Londrigan,
Administrator, Rural Business-Cooperative Service, USDA Rural 
Development.
[FR Doc. 2024-19804 Filed 9-13-24; 8:45 am]
BILLING CODE 3410-XY-P