RD Instruction 1940-T

Table of Contents

Page 1

PART 1940 - GENERAL

Subpart T - System For Delivery of Certain Rural Development Programs

## TABLE OF CONTENTS

[Sec]{.underline}. [Page]{.underline}

1940.951 General. 1

1940.952 \[Reserved\] 1

1940.953 Definitions. 2

1940.954 State participation. 3

\(a\) Application. 3

\(b\) Selecting States. 4

\(c\) Notification of selection. 5

\(d\) Determining State eligibility. 5

\(e\) Eligibility requirements. 5

1940.955 Distribution of program funds to designated States. 6

1940.956 State rural economic development review panel. 6

\(a\) General. 6

\(b\) Duties and responsibilities. 7

\(c\) Membership. 11

\(d\) Failure to appoint panel members. 14

\(e\) Panel vacancies. 14

\(f\) Chairperson and vice chairperson. 14

\(g\) Compensation to panel members. 14

\(h\) Rules governing panel meetings. 14

\(i\) Federal Advisory Committee Act. 15

\(j\) Liability of members. 15

1940.957 State coordinator. 15

1940.958 Designated agency. 15

1940.959 Area plan. 15

1940.960 Federal employee panel members. 17

1940.961 Allocation of appropriated funds. 18

\(a\) Initial allocation. 18

\(b\) Reserve. 18

\(c\) Pooling. 18

\(d\) Request for funds. 19

1940.962 Authority to transfer direct loan amounts. 19

\(a\) Transfer of funds. 19

\(b\) Limitation on amounts transferred. 19

\(c\) National Office concurrence. 19

RD Instruction 1940-T

Table of Contents

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[Sec]{.underline}. [Page]{.underline}

1940.963 Authority to transfer guaranteed loan amounts. 20

\(a\) Transfer of funds. 20

\(b\) Limitation on amounts transferred. 20

\(c\) National Office concurrence. 20

1940.964 \[Reserved\] 20

1940.965 Processing project preapplications/applications. 20

\(a\) Preapplications/applications. 20

\(b\) Rural Development review. 20

\(c\) Applicant notification. 21

\(d\) Information to State coordinator. 21

\(e\) Rural Development review of priority funding list. 21

\(f\) Obligation of funds. 21

1940.966 - 1940.967 \[Reserved\] 22

1940.968 Rural Economic Development Review Panel Grant. 22

\(a\) General. 22

\(b\) Objective. 22

\(c\) Authorities, delegations, and redelegations. 22

\(d\) Joint funds. 22

\(e\) Eligibility. 22

\(f\) Purpose. 22

\(g\) Limitations. 23

\(h\) Other considerations. 23

\(i\) Application processing. 24

\(j\) Grant approval, obligation of funds, and

grant closing. 25

\(k\) Fund disbursement. 26

\(l\) Title. 26

\(m\) Costs. 26

\(n\) Budget changes. 26

\(o\) Programmatic changes. 26

\(p\) Financial reporting. 27

\(q\) Audit requirements. 27

\(r\) Grant cancellation. 27

\(s\) Grant servicing. 27

\(t\) Subsequent grants. 27

1940.969 Forms, exhibits, and subparts. 27

1940.970 \[Reserved\] 28

1940.971 Delegation of authority. 28

1940.972 - 1940.999 \[Reserved\] 28

1940.1000 OMB control number. 28

Exhibit A - Requirements for Administration of Rural Economic

Development Review Panel Grants (Panel Grants)

## o0o 

RD Instruction 1940-T

Part 1940 - GENERAL

Subpart T - System For Delivery of Certain Rural Development Programs

§1940.951 General.

This subpart sets forth Rural Development policies and procedures for
the delivery of certain rural development programs under a rural
economic development review panel established in eligible States
authorized under Sections 365, 366, 367, and 368 of the Consolidated
Farm and Rural Development Act (7 U.S.C. 1921 et. seq.), as amended.

\(a\) If a State desires to participate in this pilot program, the
Governor of the State may submit an application to the Under Secretary
for Small Community and Rural Development, U.S. Department of
Agriculture, Room 219-A, Administration Building, Washington, DC 20250
in accordance with §1940.954 of this subpart.

\(b\) The Under Secretary shall designate not more than five States in
which to make rural economic development review panels applicable during
any established time period for the purpose of reviewing and ranking
applications submitted for funding under certain rural development
programs. The following time periods have been established for
participation in this pilot program:

First period - Balance of fiscal year (FY) 1992 to\
September 30, 1993;

Second period - October 1, 1993 to September 30, 1994;

Third period - October 1, 1994 to September 30, 1995; and

Fourth period - October 1, 1995 to September 30, 1996.

The State will be bound by the provisions of this pilot program only
during the established time period(s) for which the State is designated.
If a designated State does not remain an eligible State during the
established time period(s) for which the State was designated, the State
will not be eligible to participate in this program and cannot revert to
the old ranking and applicant selection process.

\(c\) Assistance under each designated rural development program shall
be provided to eligible designated States for qualified projects in
accordance with this subpart.

\(d\) Federal statutes provide for extending Rural Development
financially supported programs without regard to race, color, religion,
sex, national origin, marital status, age, familial status, or
physical/mental handicap (provided the participant possesses the
capacity to enter into legal contracts.)

§1940.952 \[Reserved\]

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DISTRIBUTION: WSDC Loan and Grant Making

General

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§1940.953 [Definitions]{.underline}.

For the purpose of this subpart:

[Administrator]{.underline}. The Administrator of Rural Development.

[Area plan]{.underline}. The long-range development plan developed for a
local or regional area in a State.

[Designated agency]{.underline}. An agency selected by the Governor of
the State to provide the panel and the State coordinator with support
for the daily operation of the panel.

[Designated State]{.underline}. A State selected by the Under Secretary,
in accordance with §1940.954 of this subpart, to participate in this
program.

[Designated rural development program]{.underline}. A program carried
out under Sections 304(b), 306(a), or subsections (a) through (f) and
(h) of Section 310B of the Consolidated Farm and Rural Development Act\
(7 U.S.C. 1926(a)), as amended, or under Section 1323 of the Food
Security Act of 1985, for which funds are available at any time during
the FY under such section, including, but not limited to, the following:

\(1\) Water and Waste Disposal Insured or Guaranteed Loans;

\(2\) Development Grants for Community Domestic Water and Waste Disposal
Systems;

\(3\) Technical Assistance and Training Grants;

\(4\) Emergency Community Water Assistance Grants;

\(5\) Community Facilities Insured and Guaranteed Loans;

\(6\) Business and Industry Guaranteed Loans;

\(7\) Industrial Development Grants;

\(8\) Intermediary Relending Program;

\(9\) Drought and Disaster Relief Guaranteed Loans;

\(10\) Disaster Assistance for Rural Business Enterprises;

\(11\) Nonprofit National Rural Development and Finance Corporations.

[Eligible State]{.underline}. With respect to a FY, a State that has
been determined eligible in accordance with §1940.954 (e) of this
subpart.

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§1940.953 (Con.) RD Instruction 1940-T

[Nondesignated State]{.underline}. A State that has not been selected to
participate in this pilot program.

[Qualified project]{.underline}. Any project:

\(1\) For which the designated agency has identified alternative
Federal, State, local or private sources of assistance and has
identified related activities in the State; and

\(2\) To which the Administrator is required to provide assistance.

[State]{.underline}. Any of the fifty States.

[State coordinator]{.underline}. The officer or employee of the State
appointed by the Governor to carry out the activities described in
§1940.957 of this subpart.

[State Director]{.underline}. The head of Rural Development at the local
level charged with administering designated rural development programs.

[State rural economic development review panel or
\"panel\"]{.underline}. An advisory panel that meets the requirements of
§1940.956 of this subpart.

[Under Secretary]{.underline}. In the U. S. Department of Agriculture,
the Under Secretary for Small Community and Rural Development.

§1940.954 [State participation]{.underline}.

\(a\) [Application]{.underline}. If a State desires to participate in
this pilot program, the Governor may submit an original and one copy of
Standard Form (SF) 424.1, \"Application for Federal Assistance (For
Non-construction),\" to the Under Secretary. The five States designated
by the Under Secretary to participate in the first established time
period will be selected from among applications received not later than
60 calendar days from the effective date of this subpart. If a
designated State desires to participate in additional time periods,
applications are not required to be resubmitted; however, the Governor
must notify the Under Secretary, in writing, no later than July 31 of
each FY, and the State must submit evidence of eligibility requirements
each FY in accordance with §1940.954 (e)(2) of this subpart. Beginning
in FY 1993, applications must be submitted to the Under Secretary no
later than July 31 if a State desires to be selected to fill vacancies
that occur when designated States do not roll over into another
established time period. States should include the following information
with SF 424.1:

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§1940.954 (a) (Con.)

\(1\) A narrative signed by the Governor including reasons for State
participation in this program and reasons why a project review and
ranking process by a State panel will improve the economic and social
conditions of rural areas in the State. The narrative will also include
the time period(s) for which the State wishes to participate.

\(2\) A proposal outlining the method for meeting all the following
eligibility requirements and the timeframes established for meeting each
requirement:

\(i\) Establishing a rural economic development review panel in
accordance with §1940.956 of this subpart. When established, the name,
title, and address of each proposed member should be included and the
chairperson and vice chairperson should be identified.

\(ii\) Governor\'s proposed designation of a State agency to support the
State coordinator and the panel. The name, address, and telephone number
of the proposed agency\'s contact person should be included.

\(iii\) Governor\'s proposed selection of a State coordinator in
accordance with §1940.957 of this subpart, including the title, address,
and telephone number.

\(iv\) Development of area development plans for all areas of the State
that are eligible to receive assistance from designated rural
development programs.

\(v\) The review and evaluation of area development plans by the panel
in accordance with §1940.956 of this subpart.

\(vi\) Development of written policy and criteria used by the panel to
review and evaluate area plans in accordance with §1940.956 of this
subpart.

\(vii\) Development of written policy and criteria the panel will use to
evaluate and rank applications in accordance with §1940.956 of this
subpart.

\(3\) Preparation of a proposed budget that includes 3 years projections
of income and expenses associated with panel operations. If funds from
other sources are anticipated, sources and amounts should be identified.

\(4\) Development of a financial management system that will provide for
effective control and accountability of all funds and assets associated
with the panel.

## 4 

§1940.954 (a) (Con.) RD Instruction 1940-T

\(5\) A schedule to coordinate the submission, review, and ranking
process of preapplications/applications in accordance with §1940.956 (a)
of this subpart.

\(6\) Other information provided by the State in support of its
application.

\(b\) [Selecting States]{.underline}. The Under Secretary will review
the application and other information submitted by the State and
designate not more than five States to participate during any
established time period.

\(c\) [Notification of selection]{.underline}.

\(1\) The Under Secretary will notify the Governor of each State whether
or not the State has been selected for further consideration in this
program. If a State has been selected, the notification will include the
additional information that the Governor must submit to the Under
Secretary in order for the State to meet eligibility requirements in
accordance with paragraph (d) of this section.

\(2\) A copy of the notification to the Governor will be submitted to
the Administrator along with a copy of the State\'s application and
other material submitted in support of the application.

\(d\) [Determining State eligibility]{.underline}.

\(1\) The Governor will provide the Under Secretary with evidence that
the State has complied with the eligibility requirements of paragraph
(a)(2) of this section not later than September 1, 1992, for the first
established time period and not later than September 1 for each of the
remaining established time periods.

\(2\) The Under Secretary will review the material submitted by the
Governor in sufficient detail to determine if a State has complied with
all eligibility requirements of this subpart. The panel will not begin
reviewing and ranking applications until the Governor has been notified
in writing by the Under Secretary that the State has been determined
eligible and is designated to participate in this program. A copy of the
notification will be sent to the Administrator. The Under Secretary\'s
decision is not appealable.

\(e\) [Eligibility requirements]{.underline}.

\(1\) With respect to this subpart, the Under Secretary may determine a
State to be an eligible State provided all of the following apply not
later than October 1 of each FY:

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§1940.954 (e)(1) (Con.)

\(i\) The State has established a rural economic development review
panel that meets the requirements of §1940.956 of this subpart;

\(ii\) The Governor has appointed an officer or employee of the State
government to serve as State coordinator to carry out the
responsibilities set forth in §1940.957 of this subpart; and

\(iii\) The Governor has designated an agency of the State government to
provide the panel and State coordinator with support for the daily
operation of the panel.

\(2\) If a State is determined eligible initially and desires to
participate in additional time periods established for this program, the
Governor will submit documents and information not later than September
1 of each subsequent FY in sufficient detail for the Under Secretary to
determine, prior to the beginning of the additional time period, that
the State is still in compliance with all eligibility requirements of
this subpart.

§1940.955 [Distribution of program funds to designated
States]{.underline}.

\(a\) States selected to participate in the first established time
period will receive funds from designated rural development programs
according to applicable program regulations until the end of FY 1992, if
necessary for States to have sufficient time to meet the eligibility
requirements of this subpart, and to be designated to participate in
this program. No funds will be administered under this subpart to an
ineligible State.

\(b\) If a State becomes an eligible State any time prior to the end of
FY 1992, any funds remaining unobligated from a State\'s FY 1992
allocation, may be administered under this subpart.

\(c\) Beginning in FY 1993 and for each established time period
thereafter, all designated rural development program funds received by a
designated State will be administered in accordance with §§1940.961
through 1940.965 of this subpart, provided the State is determined
eligible prior to the beginning of each FY in accordance with §1940.954
of this subpart. No assistance will be provided under any designated
rural development program in any designated State that is not an
eligible State.

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RD Instruction 1940-T

§1940.956 [State rural economic development review panel]{.underline}.

\(a\) [General]{.underline}. In order for a State to become or remain an
eligible State, the State must have a rural economic development panel
that meets all requirements of this subpart. Each designated State will
establish a schedule whereby the panel and Rural Development will
coordinate the submission, review, and ranking process of
preapplications/applications. The schedule will be submitted to the
Under Secretary for concurrence and should consider the following:

\(1\) Timeframes should assure that applications selected for funding
from the current FY\'s allocation of funds can be processed by Rural
Development and funds obligated prior to the July 15 pooling established
in §1940.961 (c) of this subpart;

\(2\) Initial submission of preapplications/applications from Rural
Development to the panel and any subsequent submissions during the first
year;

\(3\) How often during each FY thereafter should Rural Development
submit preapplications/applications to the panel for review and ranking;

\(4\) Number of working days needed by the panel to review and rank
preapplications/applications;

\(5\) Number of times during the FY the panel will submit a list of
ranked preapplications/applications to Rural Development for funding
consideration;

\(6\) Consider the matching of available loan and grant funds to assure
that all allocated funds will be used;

\(7\) How to consider ranked preapplications/applications at the end of
the FY that have not been funded; and

\(8\) How to consider requests for additional funds needed by an
applicant to complete a project that already has funds approved; i.e.,
construction bid cost overrun.

\(b\) [Duties and responsibilities]{.underline}. The panel is required
to advise the State Director on the desirability of funding applications
from funds available to the State from designated rural development
programs. In relation to this advice, the panel will have the following
duties and responsibilities:

\(1\) Establish policy and criteria to review and evaluate area plans
and to review and rank preapplications/applications.

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§1940.956 (b)(1) (Con.)

\(i\) [Area plan]{.underline}. The panel will develop a written policy
and criteria to use when evaluating area plans. The criteria to be used
when evaluating area plans will assure that the plan includes, as a
minimum, the technical information included in §1940.959 of this
subpart. The criteria will be in sufficient detail for the panel to
determine that the plan is technically and economically adequate,
feasible, and likely to succeed in meeting the stated goals of the plan.
The panel will give weight to area-wide or regional plans and comments
submitted by intergovernmental development councils or similar
organizations made up of local elected officials charged with the
responsibility for rural area or regional development. A copy of the
policy and evaluating criteria will be provided to Rural Development.

\(ii\) [Applications]{.underline}. The panel will annually review the
policy and criteria used by the panel to evaluate and rank
preapplications/applications in accordance with this subpart. The panel
will assure that the policy and criteria are consistent with current
rural development needs, and that the public has an opportunity to
provide input during the development of the initial policy and criteria.
The Governor will provide a copy of the initial policy and criteria
established by the panel when submitting evidence of eligibility in
accordance with §1940.954 of this subpart. Annually, thereafter, and not
later than September 1 of each FY, the State coordinator will send the
Under Secretary evidence that the panel has reviewed the established
policy and criteria. The State coordinator will also send the Under
Secretary a copy of all revisions.

\(A\) The policy and criteria used to rank applications for business
related projects will include the following, which are not necessarily
in rank order:

([1]{.underline}) The extent to which a project will stimulate rural
development by creating new jobs of a permanent nature or retaining
existing jobs by enabling new small businesses to be started, or
existing businesses to be expanded by local or regional area residents
who own and operate the businesses.

([2]{.underline}) The extent to which a project will contribute to the
enhancement and the diversification of the local or regional area
economy.

## 8 

§1940.956 (b)(1)(ii)(A) (Con.) RD Instruction 1940-T

([3]{.underline}) The extent to which a project will generate or retain
jobs for local or regional area residents.

([4]{.underline}) The extent to which a project will be carried out by
persons with sufficient management capabilities.

([5]{.underline}) The extent to which a project is likely to become
successful.

([6]{.underline}) The extent to which a project will assist a local or
regional area overcome severe economic distress.

([7]{.underline}) The distribution of assistance to projects in as many
areas as possible in the State with sensitivity to geographic
distribution.

([8]{.underline}) The technical aspects of the project.

([9]{.underline}) The market potential and marketing arrangement for the
projects.

([10]{.underline}) The potential of such project to promote the growth
of a rural community by improving the ability of the community to
increase the number of persons residing in the community and by
improving the quality of life for these persons.

\(B\) The policy and criteria used to rank preapplications/applications
for infrastructure and all other community facility-type projects will
include the following which are not necessarily in rank order:

([1]{.underline}) The extent to which the project will have the
potential to promote the growth of a rural community by improving the
quality of life for local or regional residents.

([2]{.underline}) The extent to which the project will affect the health
and safety of local or regional area residents.

([3]{.underline}) The extent to which the project will improve or
enhance cultural activities, public service, education, or
transportation.

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§1940.956 (b)(1)(ii)(B) (Con.)

([4]{.underline}) The extent to which the project will affect business
productivity and efficiency.

([5]{.underline}) The extent to which the project will enhance
commercial business activity.

([6]{.underline}) The extent to which the project will address a severe
loss or lack of water quality or quantity.

([7]{.underline}) The extent to which the project will correct a waste
collection or disposal problem.

([8]{.underline}) The extent to which the project will bring a community
into compliance with Federal or State water or waste water standards.

([9]{.underline}) The extent to which the project will consolidate water
and waste systems and utilize management efficiencies in the new system.

\(2\) [Review and evaluate area plans]{.underline}. Each area plan
submitted for a local or regional area will be reviewed and evaluated by
the panel. After an area plan has been reviewed and evaluated in
accordance with established policy and criteria:

\(i\) The panel will accept any area plan that meets established
criteria unless the plan is incompatible with any other area plan for
that area that has been accepted by the panel; or

\(ii\) The panel will return any area plan that is technically or
economically inadequate, not feasible, is unlikely to be successful, or
is not compatible with other panel-accepted area plans for that area.
When an area plan is returned, the panel will include an explanation of
the reasons for the return and suggest alternative proposals.

\(iii\) The State coordinator will notify the State Director, in
writing, of the panel\'s decision on each area plan reviewed.

\(3\) [Review and rank preapplications/applications]{.underline}. The
panel will review, rank, and transmit a ranked list of
preapplications/applications according to the schedule prepared in
accordance with paragraph (a) of this section, and the following:

## 10

§1940.956 (b)(3) (Con.) RD Instruction 1940-T

\(i\) [Review preapplications/applications]{.underline}. The panel will
review each preapplication/application for assistance to determine if
the project to be carried out is compatible with the area plan in which
the project described in the preapplication/application is proposed, and
either:

\(A\) Accept any preapplication/application determined to be compatible
with such area plan; or

\(B\) Return to the State Director any preapplication/application
determined not to be compatible with such area plan. The panel will
notify the applicant when preapplications/applications are returned to
the State Director.

\(ii\) [Rank preapplications/applications]{.underline}. The panel will
rank only those preapplications/applications that have been accepted in
accordance with paragraph (b)(3)(i)(A) of this section. The panel will
consider the sources of assistance and related activities in the State
identified by the designated agency. Applications will be ranked in
accordance with the written policy and criteria established in
accordance with paragraph (b)(1)(ii) of this section and the following:

\(A\) Priority ranking for projects addressing health emergencies. In
addition to the criteria established in paragraphs (b)(1)(ii) of this
section, preapplications/applications for projects designed to address a
health emergency declared so by the appropriate Federal or State agency,
will be given priority by the panel.

\(B\) Priority based on need. If two or more
preapplications/applications ranked in accordance with this subpart are
determined to have comparable strengths in their feasibility and
potential for growth, the panel will give priority to the applications
for projects with the greatest need.

\(C\) If additional ranking criteria for use by a panel are required in
any designated rural development program regulation, the panel will give
consideration to the criteria when ranking preapplications/applications
submitted under that program.

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§1940.956 (b)(3) (Con.)

\(iii\) [Transmit list of ranked
preapplications/applications]{.underline}. After the
preapplications/applications have been ranked, the panel will submit a
list of all preapplications/applications received to the State
coordinator. The list will clearly indicate each
preapplication/application accepted for funding and will list
preapplications/applications in the order established for funding
according to priority ranking by the panel. The list will not include a
preapplication/application that is to be returned to the applicant in
accordance with paragraph (b)(3)(i)(B) of this section. The State
coordinator will send a copy of the list to the State Director for
further processing of the preapplication/application in accordance with
§1940.965 of this subpart. Once the panel has ranked and submitted the
list to Rural Development and the State Director has selected a
preapplication/application for funding, the preapplication/application
selected will not be replaced with a preapplication/application received
at a later date that may have a higher ranking.

\(4\) [Public availability of list]{.underline}. If requested, the State
coordinator will make the list of ranked preapplications/applications
available to the public and will include a brief explanation and
justification of why the project preapplications/applications received
their priority ranking.

\(c\) [Membership]{.underline}.

\(1\) [Voting members]{.underline}. The panel will be composed of not
more than 16 voting members who are representatives of rural areas. The
16 voting members will include the following:

\(i\) One of whom is the Governor of the State or the person designated
by the Governor to serve on the panel, on behalf of the Governor, for
that year;

\(ii\) One of whom is the director of the State agency responsible for
economic and community development or the person designated by the
director to serve on the panel, on behalf of the director, for that
year;

\(iii\) One of whom is appointed by a statewide association of banking
organizations;

\(iv\) One of whom is appointed by a statewide association of
investor-owned utilities;

\(v\) One of whom is appointed by a statewide association of rural
telephone cooperatives;

## 12 

§1940.956 (c)(1) (Con.) RD Instruction 1940-T

\(vi\) One of whom is appointed by a statewide association of
noncooperative telephone companies;

\(vii\) One of whom is appointed by a statewide association of rural
electric cooperatives;

\(viii\) One of whom is appointed by a statewide association of health
care organizations;

\(ix\) One of whom is appointed by a statewide association of existing
local government-based planning and development organizations;

\(x\) One of whom is appointed by the Governor of the State from either
a statewide rural development organization or a statewide association of
publicly-owned electric utilities, neither of which is described in any
of paragraphs (c)(1) (iii) through (ix);

\(xi\) One of whom is appointed by a statewide association of counties;

\(xii\) One of whom is appointed by a statewide association of towns and
townships, or by a statewide association of municipal leagues, as
determined by the Governor;

\(xiii\) One of whom is appointed by a statewide association of rural
water districts;

\(xiv\) The State director of the Federal small business development
center or, if there is no small business development center in place
with respect to the State, the director of the State office of the Small
Business Administration;

\(xv\) The State representative of the Economic Development
Administration of the Department of Commerce; and

\(xvi\) One of whom is appointed by the State Director from among the
officers and employees of Rural Development.

\(2\) [Nonvoting members]{.underline}. The panel will have not more than
four nonvoting members who will serve in an advisory capacity and who
are representatives of rural areas. The four nonvoting members will be
appointed by the Governor and include:

\(i\) One from names submitted by the dean or the equivalent official of
each school or college of business, from colleges and universities in
the State;

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§1940.956 (c)(2) (Con.)

\(ii\) One from names submitted by the dean or the equivalent official
of each school or college of engineering, from colleges and universities
in the State;

\(iii\) One from names submitted by the dean or the equivalent official,
of each school or college of agriculture, from colleges and universities
in the State; and

\(iv\) The director of the State agency responsible for extension
services in the State.

\(3\) [Qualifications of panel members appointed by the
Governor]{.underline}. Each individual appointed to the panel by the
Governor will be specially qualified to serve on the panel by virtue of
the individual\'s technical expertise in business and community
development.

\(4\) [Notification of selection]{.underline}. Each statewide
organization that selects an individual to represent the organization on
the panel must notify the Governor of the selection.

\(5\) [Appointment of members representative of statewide organization
in certain cases]{.underline}.

\(i\) If there is no statewide association or organization of the
entities described in paragraph (c)(1) of this section, the Governor of
the State will appoint an individual to fill the position or positions,
as the case may be, from among nominations submitted by local groups of
such entities.

\(ii\) If a State has more than one of any of the statewide associations
or organizations of the entities described in paragraph (c)(1) of this
section, the Governor will select one of the like organizations to name
a member to serve during no more than one established time period.
Thereafter, the Governor will rotate selection from among the remaining
like organizations to name a member.

\(d\) [Failure to appoint panel members]{.underline}. The failure of the
Governor, a Federal agency, or an association or organization described
in paragraph (c) of this section, to appoint a member to the panel as
required under this subpart, shall not prevent a State from being
determined an eligible State.

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RD Instruction 1940-T

§1940.956 (Con.)

\(e\) [Panel vacancies]{.underline}. A vacancy on the panel will be
filled in the manner in which the original appointment was made.
Vacancies should be filled prior to the third panel meeting held after
the vacancy occurred. The State coordinator will notify the State
Director, in writing, when the vacancy is filled or if the vacancy will
not be filled.

\(f\) [Chairperson and vice chairperson]{.underline}. The panel will
select two members of the panel who are not officers or employees of the
United States to serve as the chairperson and vice chairperson of the
panel. The term shall be for 1 year.

\(g\) [Compensation to panel members]{.underline}.

\(1\) [Federal members]{.underline}. Except as provi2ded in §1940.960 of
this subpart, each member of the panel who is an officer or employee of
the Federal Government may not receive any compensation or benefits by
reason of service on the panel, in addition to that which is received
for performance of such officer or employee\'s regular employment.

\(2\) [NonFederal members]{.underline}. Each nonfederal member may be
compensated by the State and/or from grant funds established in
§1940.968 of this subpart.

\(h\) [Rules governing panel meetings]{.underline}.

\(1\) [Quorum]{.underline}. A majority of voting members of the panel
will constitute a quorum for the purpose of conducting business of the
panel.

\(2\) [Frequency of meetings]{.underline}. The panel will meet not less
frequently than quarterly. Frequency of meetings should be often enough
to assure that applications are reviewed and ranked for funding in a
timely manner.

\(3\) [First meeting]{.underline}. The State coordinator will schedule
the first panel meeting and will notify all panel members of the
location, date, and time at least seven days prior to the meeting.
Subsequent meetings will be scheduled by vote of the panel.

\(4\) [Records of meetings]{.underline}. The panel will keep records of
the minutes of the meetings, deliberations, and evaluations of the panel
in sufficient detail to enable the panel to provide interested agencies
or persons the reasons for its actions.

## 15

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RD Instruction 1940-T

§1940.956 (Con.)

\(i\) [Federal Advisory Committee Act]{.underline}. The Federal Advisory
Committee Act shall not apply to any State rural economic development
review panel.

\(j\) [Liability of members]{.underline}. The members of a State rural
economic development review panel shall not be liable to any person with
respect to any determination made by the panel.

§1940.957 [State coordinator]{.underline}.

The Governor will appoint an officer or employee of State government as
State coordinator in order for a State to become and remain an eligible
State under this subpart. The State coordinator will have the following
duties and responsibilities:

\(a\) Manage, operate, and carry out the instructions of the panel;

\(b\) Serve as liaison between the panel and the Federal and State
agencies involved in rural development;

\(c\) Coordinate the efforts of interested rural residents with the
panel and ensure that all rural residents in the State are informed
about the manner in which assistance under designated rural development
programs is provided to the State pursuant to this subpart, and if
requested, provide information to State residents; and

\(d\) Coordinate panel activities with Rural Development.

§1940.958 [Designated agency]{.underline}.

The Governor will appoint a State agency to provide the panel and the
State coordinator with support for the daily operation of the panel. In
addition to providing support, the designated agency is responsible for
identifying:

\(a\) Alternative sources of financial assistance for project
preapplications/applications reviewed and ranked by the panel, and

\(b\) Related activities within the State.

§1940.959 [Area plan]{.underline}.

Each area plan submitted to the panel for review in accordance with
§1940.956 of this subpart shall identify the geographic boundaries of
the area and shall include the following information:

\(a\) An overall development plan for the area with goals, including
business development and infrastructure development goals, and time
lines based on a realistic assessment of the area, including, but not
limited to, the following:

16

RD Instruction 1940-T

§1940.959 (a) (Con.)

\(1\) The number and types of businesses in the area that are growing or
declining;

\(2\) A list of the types of businesses that the area could potentially
support;

\(3\) The outstanding need for water and waste disposal and other public
services or facilities in the area;

\(4\) The realistic possibilities for industrial recruitment in the
area;

\(5\) The potential for development of tourism in the area;

\(6\) The potential to generate employment in the area through creation
of small businesses and the expansion of existing businesses; and

\(7\) The potential to produce value-added agricultural products in the
area.

\(b\) An inventory and assessment of the human resources of the area,
including, but not limited to, the following:

\(1\) A current list of organizations in the area and their special
interests;

\(2\) The current level of participation of area residents in rural
development activities and the level of participation required for
successful implementation of the plan;

\(3\) The availability of general and specialized job training in the
area and the extent to which the training needs of the area are not
being met;

\(4\) A list of area residents with special skills which could be useful
in developing and implementing the plan; and

\(5\) An analysis of the human needs of the area, the resources in the
area available to meet those needs, and the manner in which the plan, if
implemented, would increase the resources available to meet those needs.

\(c\) The current degree of intergovernmental cooperation in the area
and the degree of such cooperation needed for the successful
implementation of the plan.

\(d\) The ability and willingness of governments and citizens in the
area to become involved in developing and implementing the plan.

## 17

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RD Instruction 1940-T

§1940.959 (Con.)

\(e\) A description of how the governments in the area apply budget and
fiscal control processes to the plan. This process is directed toward
costs associated with carrying out the planned development. When plans
are developed, the financial condition of all areas covered under the
plan should be fully recognized and planned development should
realistically reflect the area\'s immediate and long-range financial
capabilities.

\(f\) The extent to which public services and facilities need to be
improved to achieve the economic development and quality of life goals
of the plan. At a minimum, the following items will be considered:

\(1\) Law enforcement;

\(2\) Fire protection;

\(3\) Water, sewer, and solid waste management;

\(4\) Education;

\(5\) Health care;

\(6\) Transportation;

\(7\) Housing;

\(8\) Communications; and

\(9\) The availability of and capability to generate electric power.

\(g\) Existing area or regional plans are acceptable provided the plan
includes statements that indicate the degree to which the plan has met
or is meeting all the requirements in paragraphs (a) through (f) of this
section.

§1940.960 [Federal employee panel members]{.underline}.

\(a\) The State Director will appoint one Rural Development employee to
serve as a voting member of the panel established in §1940.956 (c)(1) of
this subpart.

\(b\) The Administrator may appoint, temporarily and for specific
purposes, personnel from any department or agency of the Federal
Government as nonvoting panel members, with the consent of the head of
such department or agency, to provide official information to the panel.
The member(s) appointed shall have expertise to perform a duty described
in §1940.956 (b) of this subpart that is not available among panel
members.

## 18

RD Instruction 1940-T

§1940.960 (Con.)

\(c\) Federal panel members will be paid per diem or otherwise
reimbursed by the Federal Government for expenses incurred each day the
employee is engaged in the actual performance of a duty of the panel.
Reimbursement will be in accordance with Federal travel regulations.

§1940.961 [Allocation of appropriated funds]{.underline}.

\(a\) [Initial allocation]{.underline}.

\(1\) Each FY, from sums appropriated for direct loans, loan guarantees,
or grants for any designated rural development program, funds will be
allocated to designated States in accordance with Subpart L of Part
1940, Exhibit A, Attachment 4, of this chapter (available in any Rural
Development State or District Office).

\(2\) Each FY, and normally within 30 days after the date Rural
Development receives an appropriation of designated rural development
program funds, the Governor of each designated State will be notified of
the amounts allocated to the State under each designated program for
such FY. The Governor will also be notified of the total amounts
appropriated for the FY for each designated rural development program.

\(3\) The State Director will fund projects from a designated State\'s
allocation of funds, according to appropriate program regulations giving
great weight to the order in which the preapplications/applications for
projects are ranked and listed by the panel in accordance with §1940.956
(b)(3) of this subpart.

\(b\) [Reserve]{.underline}. A percentage of the National Office reserve
established in Subpart L of Part 1940 of this chapter will be used to
establish a reserve for designated States that is separate and apart
from that of nondesignated States. The percent reserved will be based
upon the same criteria used in Subpart L of Part 1940 of this chapter to
allocate program funds.

\(c\) [Pooling]{.underline}.

\(1\) On July 15 of each FY, and from time to time thereafter during the
FY, as determined appropriate, unobligated funds will be pooled from
among the designated States. Pooled funds will be made a part of the
reserve established for designated States and will revert to National
Office control.

\(2\) Funds pooled from designated States can be requested by designated
States, pursuant to subsection (d) of this section. The designated
States\' pool; however, will not be available to nondesignated States
until September 1 of each year.

## 19

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RD Instruction 1940-T

§1940.961 (Con.)

\(d\) Request for funds.

\(1\) Designated States may request designated States\' reserve funds,
and funds for other designated rural development programs controlled by
the National Office, as shown in Subpart L of Part 1940, Exhibit A,
Attachment 4, of this chapter, in accordance with applicable program
regulations.

\(2\) Designated States may request funds from the nondesignated reserve
account when:

\(i\) All allocated and reserve funds to designated States have been
used, or

\(ii\) Sufficient funds do not remain in any designated State allocation
and in the designated States\' reserve account to fund a project.

§1940.962 [Authority to transfer direct loan amounts]{.underline}.

\(a\) [Transfer of funds]{.underline}. If the amounts allocated to a
designated State for direct Water and Waste Disposal or Community
Facility loans for a FY are not sufficient to provide the full amount
requested for a project in accordance with this subpart, the State
Director may transfer part or all of the funds allocated to the State,
from one program to another, subject to paragraphs (b) and (c) of this
section.

\(b\) [Limitation on amounts transferred]{.underline}.

\(1\) Amounts transferred within a designated State. The amount of
direct loan funds transferred from a program under this section shall
not exceed the amount left unobligated after obligating the full amount
of assistance requested for each project that ranked higher in priority
on the panel\'s list.

\(2\) Amounts transferred on a National basis. The amount of direct loan
funds transferred in a FY, among the designated States, from a program
under this subpart (after accounting for any offsetting transfers into
such program) shall not exceed \$9 million, or an amount otherwise
authorized by law.

\(c\) [National Office concurrence]{.underline}. The State Director may
transfer direct loan funds authorized in this section, after requesting
and receiving concurrence from the National Office. If permitted by law,
the National Office will concur in requests on a first-come-first-served
basis.

## 20

RD Instruction 1940-T

§1940.963 [Authority to transfer guaranteed loan amounts]{.underline}.

\(a\) [Transfer of funds]{.underline}. If the amounts allocated to a
designated State for guaranteed Water and Waste Disposal, Community
Facility, or Business and Industry loans for a FY are not sufficient to
provide the full amount requested for a project in accordance with this
subpart, the State Director may transfer part or all of the funds
allocated to the State, from one program to another, subject to
paragraphs (b) and (c) of this section.

\(b\) [Limitation on amounts transferred]{.underline}. The amount of
guaranteed loan funds transferred from a program under this section
shall not exceed the amount left unobligated after obligating the full
amount of assistance requested for each project that ranked higher in
priority on the panel\'s list.

\(c\) [National Office concurrence]{.underline}. The State Director may
transfer guaranteed loan funds authorized in this section, after
requesting and receiving concurrence from the National Office. If
permitted by law, the National Office will concur in requests on a
first-come-first-served basis.

§1940.964 \[Reserved\]

§1940.965 [Processing project preapplications/applications]{.underline}.

Except for the project review and ranking process established in this
subpart, all requests for funds from designated rural development
programs will be processed, closed, and serviced according to applicable
Rural Development regulations, available in any Rural Development
office.

\(a\) [Preapplications/applications]{.underline}. All
preapplications/applications on hand that have not been selected for
further processing will be submitted initially to the panel for review
and ranking. Preapplications/applications on hand that had been selected
for further processing prior to the time a State was selected to
participate in this program may be funded by Rural Development without
review by the panel. Preapplications/applications selected for further
processing by Rural Development will not exceed the State\'s previous
year\'s funding level. The State Director will provide the State
coordinator a list of preapplications/applications that are in process
and will be considered for funding without review by the panel. This
list will be provided at the same time preapplications/applications are
initially submitted to the State coordinator in accordance with
paragraph (d) of this section.

\(b\) [Rural Development review]{.underline}.
Preapplications/applications will be reviewed in sufficient detail to
determine eligibility and, if applicable, determine if the applicant is
able to obtain credit from other sources at reasonable rates and terms.
Normally, within 45 days after receiving a complete
preapplication/application, Rural Development will notify the applicant
of the eligibility determination. A copy of all notifications will be
sent to the State coordinator.

## 21

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RD Instruction 1940-T

§1940.965 (Con.)

\(c\) [Applicant notification]{.underline}. The notification to eligible
applicants will contain the following statements:

\"Your application has been submitted to the State coordinator for
review and ranking by the State rural economic development review panel.
If you have questions regarding this review process, you should contact
the State coordinator. The address and telephone number are: (insert).

\"You will be notified at a later date of the decision reached by the
panel and whether or not you can proceed with the proposed project.

\"You are advised against incurring obligations which cannot be
fulfilled without Rural Development funds.\"

These statements should be included in notifications to applicants with
preapplications/applications on hand that had not been selected for
further processing prior to the time a State was selected to participate
in this program.

\(d\) [Information to State coordinator]{.underline}. Rural Development
will forward a copy of the preapplication/application and other
information received from the applicant to the State coordinator
according to a schedule prepared in accordance with §1940.956 (a) of
this subpart. The State coordinator will be advised that no further
action will be taken on preapplications/applications until they have
been reviewed and ranked by the panel, and a priority funding list has
been received from the State. Applications forwarded to the State
coordinator will be reviewed and ranked for funding in accordance with
§1940.956 of this subpart.

\(e\) [The Rural Development review of priority funding
list]{.underline}. Rural Development will review the list of ranked
applications received from the State coordinator and determine if
projects meet the requirements of the designated rural development
program under which the applicant seeks assistance. Any project that
does not meet program regulations will be removed from the list.
Applicants will be notified of the decision reached by the panel and
whether or not the applicant should proceed with the project. Rural
Development will provide a copy of all notifications to the State
coordinator. The decisions of the panel are not appealable.

\(f\) [Obligation of funds]{.underline}. Rural Development will provide
funds for projects whose application remains on the list, subject to
available funds. Consideration will be given to the order in which the
applications were ranked and prioritized by the panel. If Rural
Development proposes to provide assistance to any project without
providing assistance to all projects ranked higher in priority by the
panel than the project to be funded, 10 days prior to requesting an
obligation of funds, the State Director will submit a report stating
reasons for funding such lower ranked project to the following:

## 22

RD Instruction 1940-T

§1940.965 (f) (Con.)

\(1\) [Panel]{.underline}.

\(2\) [National Office]{.underline}. The National Office will submit a
copy of the notification to:

\(i\) Committee on Agriculture of the House of Representatives,
Washington, DC.

\(ii\) Committee on Agriculture, Nutrition, and Forestry of the Senate,
Washington, DC.

§§1940.966 - 1940.967 \[Reserved\]

§1940.968 [Rural Economic Development Review Panel Grant (Panel
Grant)]{.underline}.

\(a\) [General]{.underline}. Panel Grants awarded will be made from
amounts appropriated for grants under any provision of Section 306(a) of
the CONACT \[7 U.S.C. 1926(a)\], not to exceed \$100,000 annually to
each eligible State. This section outlines Rural Development\'s policies
and authorizations and sets forth procedures for making grants to
designated States for administrative costs associated with a State rural
economic development review panel.

\(b\) [Objective]{.underline}. The objective of the Panel Grant program
is to make grant funds available annually to each designated State to
use for administrative costs associated with the State rural economic
development review panels meeting requirements of §1940.956 of this
subpart.

\(c\) [Authorities, delegations, and redelegations]{.underline}. The
State Director is responsible for implementing the authorities in this
section and to issue State supplements redelegating these authorities to
appropriate Rural Development employees. Grant approval authorities are
contained in Subpart A of Part 1901 of this chapter.

\(d\) [Joint funds]{.underline}. Rural Development grant funds may be
used jointly with funds furnished by the grantee or grants from other
sources.

\(e\) [Eligibility]{.underline}. A State designated by the Under
Secretary to participate in this program is eligible to receive not more
than \$100,000 annually under this section. A State must become and
remain an eligible State in order to receive funds under this section.

\(f\) [Purpose]{.underline}. Panel Grant funds may be used to pay for
reasonable administrative costs associated with the panel, including,
but not limited to, the following:

\(1\) Travel and lodging expenses;

\(2\) Salaries for State coordinator and support staff;

## 23

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RD Instruction 1940-T

§1940.968 (f) (Con.)

\(3\) Reasonable fees and charges for professional services necessary
for establishing or organizing the panel. Services must be provided by
individuals licensed in accordance with appropriate State accreditation
associations;

\(4\) Office supplies, and

\(5\) Other costs that may be necessary for panel operations.

\(g\) [Limitations]{.underline}.

Grant funds will not be used to:

\(1\) Pay costs incurred prior to the effective date of the grant
authorized under this subpart;

\(2\) Recruit preapplications/applications for any designated rural
development loan or grant program or any loan or grant program;

\(3\) Duplicate activities associated with normal execution of any panel
member\'s occupation.

\(4\) Fund political activities;

\(5\) Pay costs associated with preparing area development plans;

\(6\) Pay for capital assets; purchase real estate, equipment or
vehicles; rent, improve, or renovate office space; or repair and
maintain State or privately owned property;

\(7\) Pay salaries to panel members; or

\(8\) Pay per diem or otherwise reimburse panel members unless distance
traveled exceeds 50 miles.

\(h\) [Other considerations]{.underline}.

\(1\) [Equal opportunity requirements]{.underline}. Grants made under
this subpart are subject to Title VI of the Civil Rights Act of 1964 as
outlined in Subpart E of Part 1901 of this chapter.

\(2\) [Environmental requirements]{.underline}. The policies and
regulations contained in Subpart G of Part 1940 of this chapter apply to
grants made under this subpart.

\(3\) [Management assistance]{.underline}. Grantees will be provided
management assistance as necessary to assure that grant funds are used
for eligible purposes for the successful operation of the panel. Grants
made under this subpart will be administered under and are subject to
the U.S. Department of Agriculture regulations, 7 CFR, Parts 3016 and
3017, as appropriate.

## 24 

RD Instruction 1940-T

§1940.968 (h) (Con.)

\(4\) [Drug-free work place]{.underline}. The State must provide for a
drug-free workplace in accordance with the requirements of RD
Instruction 1940-M (available in any Rural Development office). Just
prior to grant approval, the State must prepare and sign Form AD-1049,
\"Certification Regarding Drug-Free Workplace Requirements (Grants)
Alternative I - For Grantees Other Than Individuals.\"

\(i\) [Application processing]{.underline}.

\(1\) The State Director shall assist the State in application assembly
and processing. Processing requirements should be discussed during an
application conference.

\(2\) After the Governor has been notified that the State has been
designated to participate in this program and the State has met all
eligibility requirements of this subpart, the State may file an original
and one copy of SF 424.1 with the State Director. The following
information will be included with the application:

\(i\) State\'s financial or in-kind resources, if applicable, that will
maximize the use of Panel Grant funds;

\(ii\) Proposed budget. The financial budget that is part of SF 424.1
may be used, if sufficient, for all panel income and expense categories;

\(iii\) Estimated breakdown of costs, including costs to be funded by
the grantee or from other sources;

\(iv\) Financial management system in place or proposed. The system will
account for grant funds in accordance with State laws and procedures for
expending and accounting for its own funds. Fiscal control and
accounting procedures of the State must be sufficient to permit
preparation of reports required by Federal regulations and permit the
tracing of funds to a level of expenditures adequate to establish that
grant funds are used solely for authorized purposes;

\(v\) Method to evaluate panel activities and determine if objectives
are met;

\(vi\) Proposed Scope-of-Work detailing activities associated with the
panel and time frames for completion of each task, and

\(vii\) Other information that may be needed by Rural Development to
make a grant award determination.

## 25

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RD Instruction 1940-T

§1940.968 (i) (Con.)

\(3\) The applicable provisions of §1942.5 of Subpart A of Part 1942 of
this chapter relating to preparation of loan dockets will be followed in
preparing grant dockets. The docket will include at least the following:

\(i\) Form RD 400-4, \"Assurance Agreement;\"

\(ii\) Scope-of-work prepared by the applicant and approved by Rural
Development;

\(iii\) Form RD 1940-1, \"Request for Obligation of Funds,\" with
Exhibit A of this subpart, and

\(iv\) Certification regarding a drug-free workplace in accordance with
RD Instruction 1940-M (available in any Rural Development office).

\(j\) [Grant approval, obligation of funds, and grant
closing]{.underline}.

\(1\) The State Director will review the application and other documents
to determine whether the proposal complies with this subpart.

\(2\) Exhibit A of this subpart (available from any Rural Development
State Office), shall be attached to and become a permanent part of Form
RD 1940-1 and the following paragraphs will appear in the comment
section of that form:

\"The Grantee understands the requirements for receipt of funds under
the Panel Grant program. The Grantee assures and certifies that it is in
compliance with all applicable laws, regulations, Executive Orders, and
other generally applicable requirements, including those set out in RD 7
CFR, Part 1940, Subpart T, and 7 CFR, Parts 3016 and 3017, including
revisions through \_\_\_\_\_ (date of grant approval). The Grantee
further agrees to use grant funds for the purposes outlined in the
Scope-of-Work approved by Rural Development. Exhibit A is incorporated
as a part hereof.\"

\(3\) Grants will be approved and obligated in accordance with the
applicable parts of §1942.5 (d) of Subpart A of Part 1942 of this
chapter.

\(4\) An executed copy of the Scope-of-Work will be sent to the State
coordinator on the obligation date, along with a copy of Form RD 1940-1
and the required exhibit. Rural Development will retain the original of
Form RD 1940-1 and the exhibit.

\(5\) Grants will be closed in accordance with the applicable parts of
Subpart A of Part 1942 of this chapter, including §1942.7. The grant is
considered closed on the obligation date.

## 26

##  

RD Instruction 1940-T

§1940.968 (j) (Con.)

\(6\) A copy of Form RD 1940-1, with the required exhibit, and the
Scope-of-Work will be submitted to the National Office when funds are
obligated.

\(7\) If the grant is not approved, the State coordinator will be
notified in writing of the reason(s) for rejection. The notification
will state that a review of the decision by Rural Development may be
requested by the State under Subpart B of Part 1900 of this chapter.

\(k\) [Fund disbursement]{.underline}. Grant funds will be disbursed on
a reimbursement basis. Requests for funds should not exceed one advance
every 30 days. The financial management system of the State shall
provide for effective control and accountability of all funds, property,
and assets.

\(1\) SF 270, \"Request for Advance or Reimbursement,\" will be
completed by the State coordinator and submitted to the State Director
not more frequently than monthly.

\(2\) Upon receipt of a properly completed SF 270, the State Director
will request funds through the Automated Discrepancy Processing System.
Ordinarily, payment will be made within 30 days after receipt of a
properly prepared request for reimbursement.

\(3\) States are encouraged to use minority banks (a bank which is owned
by at least 50 percent minority group members) for the deposit and
disbursement of funds. A list of minority owned banks can be obtained
from the Office of Minority Business Enterprises, Department of
Commerce, Washington, DC 20230.

\(l\) [Title]{.underline}. Title to supplies acquired under this grant
will vest, upon acquisition, in the State. If there is a residual
inventory of unused supplies exceeding \$5,000 in total aggregate fair
market value upon termination or completion of the grant awarded, and if
the supplies are not needed for any other federally sponsored programs,
the State shall compensate Rural Development for its share.

\(m\) [Costs]{.underline}. Costs incurred under this grant program are
subject to cost principles established in Office of Management and
Budget Circular A-87.

\(n\) [Budget changes]{.underline}. Rebudgeting within the approved
direct cost categories to meet unanticipated requirements which do not
exceed 10 percent of the current total approved budget shall be
permitted. The State shall obtain prior approval from the State Director
for any revisions which result in the need for additional funding.

## 27

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RD Instruction 1940-T

§1940.968 (Con.)

\(o\) [Programmatic changes]{.underline}. The State shall obtain prior
written approval from the State Director for any change to the scope or
objectives for which the grant was approved or for contracting out or
otherwise obtaining services of a third party to perform activities
which are central to the purposes of the grant. Failure to obtain prior
approval of changes to the scope can result in suspension or termination
of grant funds.

\(p\) [Financial reporting]{.underline}. SF 269, \"Financial Status
Report,\" and a Project Performance Report are required on a quarterly
basis. The reports will be submitted to the State Director not later
than 30 days after the end of each quarter. A final SF 269 and Project
Performance Report shall be due 90 days after the expiration or
termination of grant support. The final report may serve as the last
quarterly report. The State coordinator will constantly monitor
performance to ensure that time schedules are met, projected work by
time periods is accomplished, and other performance objectives are
achieved. Program outlays and income will be reported on an accrual
basis. Project Performance Reports shall include, but not be limited to,
the following:

\(1\) A comparison of actual accomplishments to the objectives
established for that period;

\(2\) Reasons why established objectives were not met;

\(3\) Problems, delays, or adverse conditions which will affect the
ability to meet the objectives of the grant during established time
periods. This disclosure must include a statement of the action taken or
planned to resolve the situation; and

\(4\) Objectives and timetable established for the next reporting
period.

\(q\) [Audit requirements]{.underline}. Audit reports will be prepared
and submitted in accordance with §1942.17 (q)(4) of Subpart A of Part
1942 of this chapter. The audit requirements only apply to the year(s)
in which grant funds are received. Audits must be prepared in accordance
with generally accepted government auditing standards using publication,
\"Standards for Audits of Governmental Organizations, Programs,
Activities and Functions.\"

\(r\) [Grant cancellation]{.underline}. Grants which have been approved
and funds obligated may be cancelled by the grant approval official in
accordance with §1942.12 of Subpart A of Part 1942 of this chapter. The
State Director will notify the State coordinator that the grant has been
cancelled.

\(s\) [Grant servicing]{.underline}. Grants will be serviced in
accordance with Subparts E and O of Part 1951 of this chapter.

## 28

RD Instruction 1940-T

§1940.968 (Con.)

\(t\) [Subsequent grants]{.underline}. Subsequent grants will be
processed in accordance with the requirements of this subpart for each
additional time period a State is designated to participate in this
program.

§1940.969 [Forms, exhibits, and subparts]{.underline}.

Forms, exhibits, and subparts of this chapter (all available in any
Rural Development office) referenced in this subpart, are for use in
establishing a State economic development review panel and for
administering the Panel Grant program associated with the panel.

§1940.970 \[Reserved\]

§1940.971 [Delegation of authority]{.underline}.

The authority authorized to the State Director in this subpart may be
redelegated.

§§1940.972 - 1940.999 \[Reserved\]

§1940.1000 [OMB control number]{.underline}.

The collection of information requirements contained in this regulation
has been approved by the Office of Management and Budget and assigned
OMB control number 0575-0145. Public reporting burden for this
collection of information is estimated to vary from 30 minutes to 48
hours per response with an average of 4 hours per response, including
the time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and reviewing
the collection of information. Send comments regarding this burden
estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to Department of
Agriculture, Clearance Officer, OIRM, Room 404-W, Washington, DC 20250;
and to the Office of Information and Regulatory Affairs, Office of
Management and Budget, Washington, DC 20503.

Attachment: Exhibit A

## oOo

## 29

(05-06-92) SPECIAL PN

RD Instruction 1940-T

Exhibit A

Page 1

## REQUIREMENTS FOR ADMINISTRATION OF RURAL ECONOMIC 

## DEVELOPMENT REVIEW PANEL GRANTS (PANEL GRANTS)

## Attachment to Form RD 1940-1

## \"Request for Obligation of Funds\"

[Introduction]{.underline}.

This exhibit is a supplement to the information contained in RD
Instruction 1940-T and contains information regarding responsibilities
of the Grantee for receipt of monies under the Panel Grant program. This
exhibit shall become a permanent part of Form RD 1940-1, \"Request for
Obligation of Funds.\" The requirements set forth in this exhibit do not
supercede the requirements for receipt of Federal grant funds as stated
in Title 7, Parts 3016 and 3017 of the Code of Federal Regulations
(CFR); however, specific areas related to the Panel Grant program are
set forth below.

Panel Grants are awarded to defray administrative costs associated with
a State rural economic development review panel established in
accordance with RD Instruction 1940-T, §1940.956. In consideration of
said grant:

I. Grantor and Grantee agree:

A. This agreement shall be effective when Form RD 1940-1 has been
executed by both parties.

B. Information collected through this agreement is required to obtain a
Panel Grant and will be used to determine that grant funds are used for
authorized program purposes.

C. Grant funds will not be used to replace any financial support
previously provided for or assured from any other source. The general
level of expenditures by the Grantee for the benefit of the program
covered by this agreement shall be maintained and not reduced as a
result of the Federal share of funds received under this grant.

D. Grant funds will be disbursed on a reimbursement basis not to exceed
one advance every 30 days.

1\. Standard Form (SF) 270, \"Request for Advance or Reimbursement,\"
will be used to request reimbursement of costs incurred by the Grantee.

2\. Where the Grantee claims credit for contributions-in-kind to the
total cost of allowable expenses, the evaluation of these contributions
shall be subject to reevaluation by the Grantor at any time, and any
deficiency determined by the Grantor shall be compensated by
supplemental contributions by the Grantee as a condition for further
distribution by the Grantor. Specific procedures in 7 CFR Part 3016
establishing the value of in-kind contributions will govern the
evaluation.

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RD Instruction 1940-T

Exhibit A

Page 2

E. Funds budgeted for the period covered by this exhibit are:

Federal Contribution \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Grantee Contribution

Cash \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

In-kind \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Total \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

F. Grantees are permitted to rebudget within the approved direct cost
categories to meet unanticipated requirements which do not exceed 10
percent of the current total approved budget. Grantees shall obtain
prior approval of the Grantor for any revisions which result in the need
for additional funding.

G. Title to supplies acquired under this grant will vest, upon
acquisition in the Grantee. If there is a residual inventory of unused
supplies exceeding \$5,000 in total aggregate fair market value upon
termination or completion of the award, and if the supplies are not
needed for other federally sponsored programs, the Grantee shall
compensate the Grantor for its share.

H. Use of grant funds for travel determined necessary to the program may
be subject to the travel policies of the Grantee provided policies are
uniformly applied regardless of the source of funds in determining the
amounts and types of reimbursable travel expenses associated with panel
operations. If the Grantee does not have such specific policies
uniformly applied, the Federal Travel Regulations shall apply in
determining the amount charged to the grant. The limitations established
in RD Instruction 1940-T, §1940.968 (g) also apply.

I. To the following termination provisions:

1\. Termination or temporary suspension of payment for cause. The
Grantor may terminate any grant in whole, or in part, or temporarily
withhold payment, at any time before the date of completion, whenever it
is determined that the Grantee has failed to comply with the conditions
of the grant. The Grantor shall promptly notify the Grantee in writing
of the effects of suspension and/or reasons for the termination together
with the effective date.

2\. Termination for convenience. The Grantor or Grantee may terminate
grants in whole, or in part, when both parties agree that the
continuation of the program would not produce beneficial results
commensurate with the further expenditure of funds. The two parties
shall agree upon the termination

RD Instruction 1940-T

Exhibit A

Page 3

conditions, including the effective date, and in the case of partial
terminations, the portion to be terminated. The Grantee shall not incur
new obligations for the terminated portion after the effective date, and
shall cancel as many outstanding obligations as possible. The Grantor
shall allow full credit to the Grantee for the Federal share of the
noncancelable obligations, properly incurred by the Grantee prior to
termination.

II\. Grantee agrees to:

A. Manage the day-to-day operation of grant supported activities to
assure compliance with applicable Federal requirements and that
performance goals are achieved.

B. Complete program within the total sums available to it, including
said grant funds, in accordance with the approved Scope-of-Work and any
necessary modifications thereof prepared by Grantee and approved by
Grantor and in accordance with applicable Federal regulations.

C. Assure that the purposes and Scope-of-Work for which this grant is
made shall not duplicate programs for which monies have been received,
or committed, or are applied to from other sources, public or private.

D. Provide a financial management system which will account for grant
funds in accordance with State laws and procedures for expending and
accounting for its own funds. Fiscal control and accounting procedures
of the State must be sufficient to permit preparation of reports
required by Federal regulations and permit the tracing of funds to a
level of expenditures adequate to establish that grant funds are used
solely for authorized purposes.

E. Provide Grantor quarterly and annual financial and performance
reports in accordance with requirements set forth in RD Instruction
1940-T, §1940.968.

F. Provide a single audit prepared in accordance with OMB Circular

A-128. The audit will be in sufficient detail to allow the Grantor to
determine that funds have been used in accordance with the
Scope-of-Work, any applicable laws and regulations, and this exhibit.

G. Provide Grantor with such other reports as it may require and permit
inspection of its operations by a designated representative of the
Grantor.

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RD Instruction 1940-T

Exhibit A

Page 4

H. Retain financial and programmatic records, supporting documents,
statistical records for each funding period for 3 years after the
Grantee submits its last expenditure report, except that records will be
retained beyond the 3-year period if audit findings have not been
resolved.

I. Execute Form RD 400-1, \"Assurance Agreement,\" and any other
agreements required by Grantor to implement the civil rights
requirements.

J. Permit Grantor or the Comptroller General of the United States, or
any of their authorized representatives, the right of access to any
pertinent books, documents, papers, or other records of Grantee which
are pertinent to the grant in order to make audits, examinations,
excerpts, and transcripts. The rights of access shall last as long as
the records are retained.

K. Assure that no member of Congress shall be admitted to any share or
part of this grant or any benefit that may rise therefrom.

L. Make all nonconfidential information resulting from its activities
available to the general public on an equal basis.

M. Comply with property management standards established by 7 CFR Part
3016, Uniform Administrative Requirements, relating to supplies or other
expendable personal property.

N. Relinquish any and all copyrights and/or privileges to the materials
developed under this grant, such material being the sole property of the
Federal Government. In the event anything developed under this grant is
published in whole or, in part, the material shall contain notice and be
identified by language to the following effect: \"The material is the
result of tax-supported research and as such is not copyrightable. It
may be freely reprinted with the customary crediting of the source.\"

O. Abide by the policies promulgated in 7 CFR Part 3016, which provides
standards for use by Grantee in establishing procedures for the
procurement of supplies and other services with Federal grant funds.

P. Upon default under its representations or agreements set forth in
this exhibit, Grantee, at the option and demand of Grantor, will, to the
extent legally permissible, repay to Grantor forthwith the original
principal amount of the grant stated hereinabove, with interest equal to
the rate of interest paid on U. S. 26-week Treasury Bills adjusted
quarterly from the date of the default. The provisions of this exhibit
may be enforced by Grantor at its option and without regard to prior
waivers by it of previous defaults of Grantee, by judicial proceedings
to require specific performance of the terms of this exhibit or by such
other proceedings in law or equity, in either Federal or State courts as
may be deemed necessary by Grantor to assure compliance with the
provisions of this exhibit and the law and regulations under which this
grant is made.

RD Instruction 1940-T

Exhibit A

Page 5

Q. Liquidate all obligations incurred under this grant not later than 90
days after the end of the funding period to coincide with submission of
the annual Financial Status Report, unless a request to extend this
deadline is approved by the Grantor.

III\. This exhibit is subject to current Grantor regulations and any
future regulations not inconsistent with the express terms thereof.

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