This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

19807 

Vol. 72, No. 76 

Friday, April 20, 2007 

DEPARTMENT OF AGRICULTURE 

Rural Housing Service 

Rural Business-Cooperative Service 

Rural Utilities Service 

Farm Service Agency 

7 CFR Parts 1942 and 4284 

RIN 0570–AA28 

Rural Business Enterprise Grant 

Program 

AGENCY: Rural Business-Cooperative 

Service, USDA. 

ACTION: Proposed rule. 

SUMMARY: The Rural BusinessCooperative Service (RBS), an agency 

within the United States Department of 

Agriculture (USDA), Rural Development 

proposes to implement 7 CFR part 4284, 

subpart B in order to have an allinclusive processing and servicing 

regulation. USDA Rural Development 

intends to provide a more user-friendly 

regulation that will be a better resource 

for public understanding and 

improvement in program 

administration. 

DATES: Written comments on this 

proposed rule must be received on or 

before June 19, 2007 to be assured of 

consideration. The comment period for 

the information collection under the 

Paperwork Reduction Act of 1995 

continues through June 19, 2007. 

ADDRESSES: You may submit comments 

to this rule by any of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow 

instructions for submitting comments. 

• Mail: Submit written comments via 

the U.S. Postal Service to the Branch 

Chief, Regulations and Paperwork 

Management Branch, Rural 

Development U.S. Department of 

Agriculture, STOP 0742, 1400 

Independence Avenue, SW., 

Washington, DC 20250–0742. 

• Hand Delivery/Courier: Submit 

written comments via Federal Express 

mail or another courier service requiring 

a street address to the Branch Chief, 

Regulations and Paperwork 

Management Branch, Attention: Cheryl 

Thompson, Rural Development, U.S. 

Department of Agriculture, 300 7th 

Street, SW., 7th Floor, Washington, DC 

20024. 

All written comments will be 

available for public inspection during 

regular work hours at the 300 7th Street, 

SW., 7th Floor, address listed above. 

FOR FURTHER INFORMATION CONTACT: 

Cindy Mason, Loan Specialist, Business 

Programs, USDA Rural Development 

(U.S. Department of Agriculture) STOP 

3225, 1400 Independence Ave., SW., 

Washington, DC 20250, Telephone (202) 

690–1433. The TDD number is (800) 

795–3272 or (202) 720–6382. 

SUPPLEMENTARY INFORMATION: 

Classification 

This rule has been determined to be 

non-significant under Executive Order 

12866 and has, therefore, not been 

reviewed by the Office of Management 

and Budget (OMB). 

Programs Affected 

The Catalog of Federal Domestic 

Assistance number for the program 

impacted by this action is 10.769, Rural 

Business Enterprise Grants. 

Intergovernmental Review 

The Rural Business Enterprise Grant 

(RBEG) Program is subject to the 

provisions of Executive Order 12372, 

which requires intergovernmental 

consultation with State and local 

officials. USDA Rural Development will 

conduct intergovernmental consultation 

in the manner delineated in RD 

Instruction 1940–J, ‘‘Intergovernmental 

Review of Rural Development Programs 

and Activities,’’ and 7 CFR part 3015, 

subpart V. 

Regulatory Flexibility Act 

In compliance with the Regulatory 

Flexibility Act (5 U.S.C. 601–602), the 

undersigned has determined and 

certified by signature of this document 

that this rule will not have a significant 

economic impact on a substantial 

number of small entities. New 

provisions included in this rule will not 

impact a substantial number of small 

entities to a greater extent than large 

entities. Therefore, a regulatory 

flexibility analysis was not performed. 

Civil Justice Reform 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. In accordance with this rule: (1) 

All State and local laws and regulations 

that are in conflict with this rule will be 

preempted, (2) no retroactive effect will 

be given to this rule, and (3) 

administrative proceedings in 

accordance with 7 CFR part 11 must be 

exhausted before bringing suit in court 

challenging action taken under this rule, 

unless those regulations specifically 

allow bringing suit at an earlier time. 

Environmental Impact Statement 

This document has been reviewed in 

accordance with 7 CFR part 1940, 

subpart G, ‘‘Environmental Program.’’ 

RBS has determined that this action 

does not constitute a major Federal 

action significantly affecting the quality 

of the human environment, and, in 

accordance with the National 

Environmental Policy Act of 1969, Pub. 

L. 91–190, an Environmental Impact 

Statement is not required. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), Pub. L. 

104–4, establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on State, local, 

and tribal governments and the private 

sector. Under section 202 of the UMRA, 

RBS must prepare a written statement, 

including a cost-benefit analysis, for 

proposed and final rules with ‘‘Federal 

mandates’’ that may result in 

expenditures to State, local or tribal 

governments, in the aggregate, or to the 

private sector of $100 million or more 

in any 1 year. When such a statement 

is needed for a rule, section 205 of 

UMRA generally requires USDA Rural 

Development to identify and consider a 

reasonable number of regulatory 

alternatives and adopt the least costly, 

more cost-effective, or least burdensome 

alternative that achieves the objectives 

of the rule. 

This rule contains no Federal 

mandates (under the regulatory 

provisions of title II of the UMRA) for 

State, local, and tribal governments or 

the private sector. Thus, this rule is not 

subject to the requirements of sections 

202 and 205 of the UMRA. 


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19808 Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Proposed Rules 

Federalism 

It has been determined under 

Executive Order 13132, Federalism, that 

this rule does not have sufficient 

federalism implications to warrant the 

preparation of a Federalism Assessment. 

The provisions contained in this rule 

will not have a substantial direct effect 

on States or their political subdivisions 

or on the distribution of power and 

responsibilities among the various 

levels of government. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995, USDA Rural 

Development will seek OMB approval of 

the reporting and recordkeeping 

requirements contained in this proposed 

rule. 

E-Government Act Compliance 

USDA Rural Development is 

committed to complying with the E–

Government Act, 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. For information 

pertinent to E–GOV compliance related 

to this proposed rule, please contact 

Jeanette Waters on (202) 720–4059. 

Title: Rural Business Enterprise Grant 

Program. 

Type of Request: New collection. 

Abstract: The Rural Business 

Enterprise Grant (RBEG) Program is 

authorized under section 310B(c) of the 

Consolidated Farm and Rural 

Development Act, as amended. The 

purpose of the program is to finance or 

facilitate the development of small and 

emerging private business enterprises; 

to create, expand or operate rural 

distance learning networks or programs 

that provide educational or job training 

instruction related to the potential 

employment or job advancement of 

adult students; and to provide technical 

assistance and training to rural 

communities for the purpose of 

improving passenger transportation 

services or facilities. An additional 

purpose authorized under section 

310B(f) of the Consolidated Farm and 

Rural Development Act is for statewide 

broadcasting systems that provide 

information on agriculture and other 

issues of importance to farmers and 

other rural residents. USDA Rural 

Development intends to incorporate all 

of the authorized purposes discussed 

above into one program regulation, 7 

CFR part 4284, subpart B. This subpart 

contains various requirements for 

information from grantees, and some 

requirements may cause the grantees to 

require information from other parties. 

The information requested is vital for 

USDA Rural Development to be able to 

process applications in a responsible 

manner, make prudent program 

decisions, and effectively monitor the 

grantees’ activities to protect the 

Government’s financial interest and 

ensure that funds obtained from the 

Government are used appropriately. 

This collection of information is 

necessary in order to implement 7 CFR 

part 4284, subpart B. 

Estimate of Burden: Public reporting 

burden for this collection of information 

is estimated to average 7 hours per 

response. 

Respondents: Nonprofits and public 

bodies. 

Estimated Number of Respondents: 

700. 

Estimated Number of Responses per 

Respondent: 12. 

Estimated Number of Responses: 

8,160. 

Estimated Total Annual Burden on 

Respondents: 53,435. 

Copies of this information collection 

can be obtained from Cheryl Thompson, 

Regulations and Paperwork 

Management Branch, at (202) 692–0043. 

Comments 

Comments are invited on: (a) Whether 

the proposed collection of information 

is necessary for the proper performance 

of the functions of USDA Rural 

Development, including whether the 

information will have practical utility; 

(b) the accuracy of the USDA Rural 

Development estimate of the burden of 

the proposed collection of information, 

including the validity of the 

methodology and assumptions used; (c) 

ways to enhance the quality, utility, and 

clarity of the information to be 

collected; and (d) ways to minimize the 

burden of the collection of information 

on those who are to respond, including 

through the use of appropriate 

automated, electronic, mechanical, or 

other technological collection 

techniques or other forms of information 

technology. Comments may be sent to 

Cheryl Thompson, Regulations and 

Paperwork Management Branch, U.S. 

Department of Agriculture, Rural 

Development, STOP 0742, 1400 

Independence Ave., SW., Washington, 

DC 20250. All responses to this notice 

will be summarized and included in the 

request for OMB approval. All 

comments will also become a matter of 

public record. 

Background 

The current 7 CFR part 1942, subpart 

G, has recently been updated with a 

rural area definition change made by 

section 6020 of the Farm Security and 

Rural Investment Act of 2002; however, 

the regulation has not been completely 

reissued since 1992. USDA Rural 

Development consistently reissues 

administrative notices year after year to 

our field offices regarding clarifications 

and policies on our program. This 

guidance should officially be made part 

of the regulation through the Federal 

government regulatory review process 

and allow the public the opportunity to 

make comments on the policy decisions. 

7 CFR part 1942, subpart G, along with 

Attachment 1, is currently used to 

administer the program and at times can 

be difficult to follow. USDA Rural 

Development hopes to provide a more 

user-friendly regulation with the 

implementation of 7 CFR part 4284, 

subpart B. The existing regulation for 

the Rural Business Enterprise Grants 

and Television Demonstration Grants 

founds in 7 CFR part 1942, subpart G, 

will be removed upon publication of the 

final rule. 

List of Subjects 

7 CFR Part 1942 

Business and industry, Grant 

programs—Housing and community 

development, Industrial park, Rural 

areas. 

7 CFR Part 4284 

Business and industry, Economic 

development, Grant programs—Housing 

and community development, Rural 

areas. 

Therefore, chapters XVIII and XLII, 

title 7, of the Code of Federal 

Regulations are proposed to be amended 

as follows: 

CHAPTER XVIII—RURAL HOUSING 

SERVICE, RURAL BUSINESSCOOPERATIVE SERVICE, RURAL UTILITIES 

SERVICE, AND FARM SERVICE AGENCY, 

DEPARTMENT OF AGRICULTURE 

PART 1942—ASSOCIATIONS 

1. The authority citation for part 1942 

continues to read as follows: 

Authority: 5 U.S.C. 301, 7 U.S.C. 1932, 7 

U.S.C. 1989, and 16 U.S.C. 1005. 

Subpart G [Removed and Reserved] 

2. Subpart G of part 1942 is removed 

and reserved. 

CHAPTER XLII—RURAL BUSINESSCOOPERATIVE SERVICE AND RURAL 

UTILITIES SERVICE, DEPARTMENT OF 

AGRICULTURE 

PART 4284—GRANTS 

3. The authority citation for part 4284 

is revised to read as follows: 


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Authority: 5 U.S.C. 301, 7 U.S.C. 1932, 7 

U.S.C. 1989, and 16 U.S.C. 1005. 

4. Subpart B is added to part 4284 to 

read as follows: 

Subpart B—Rural Business Enterprise 

Grant Program 

Sec. 

4284.101 Purpose. 

4284.102 Policy. 

4284.103 Definitions. 

4284.104 Exception authority. 

4284.105 [Reserved] 

4284.106 Applicant eligibility 

requirements. 

4284.107–4284.108 [Reserved] 

4284.109 Eligible purposes. 

4284.110 Ineligible purposes. 

4284.111–4284.112 [Reserved] 

4284.113 Project eligibility. 

4284.114–4284.115 [Reserved] 

4284.116 Small business eligibility 

certification. 

4284.117 Small business eligibility 

exception. 

4284.118 Private tribally-owned business. 

4284.119–4284.120 [Reserved] 

4284.121 Grant ownership. 

4284.122 Leveraging. 

4284.123–4284.124 [Reserved] 

4284.125 Preapplication. 

4284.126 Preapplication contents. 

4284.127 Scope of work requirements. 

4284.128 Other narrative information. 

4284.129–4284.130 [Reserved] 

4284.131 Program income. 

4284.132 Indirect cost rate. 

4284.133–4284.134 [Reserved] 

4284.135 Civil rights requirements. 

4284.136 Environmental review. 

4284.137–4284.138 [Reserved] 

4284.139 Project selection criteria. 

4284.140–4284.141 [Reserved] 

4284.142 Application. 

4284.143 Application contents. 

4284.144 Revolving loan fund work plan 

requirements. 

4284.145–4284.148 [Reserved] 

4284.149 Application selection. 

4284.150–4284.151 [Reserved] 

4284.152 Letter of Conditions. 

4284.153 Grant Agreement. 

4284.154–4284.155 [Reserved] 

4284.156 Time frame for use of grant funds. 

4284.157 Financial management system. 

4284.158 Grant disbursement. 

4284.159–4284.160 [Reserved] 

4284.161 Insurance requirements. 

4284.162–4284.163 [Reserved] 

4284.164 Changes in scope of work, work 

plan or budget. 

4284.165–4284.166 [Reserved] 

4284.167 Reporting requirements. 

4284.168–4284.169 [Reserved] 

4284.170 Site visits. 

4284.171–4284.172 [Reserved] 

4284.173 Record retention. 

4284.174–4284.177 [Reserved] 

4284.178 Disposition of real property, 

equipment, and supplies. 

4284.179–4284.180 [Reserved] 

4284.181 Construction requirements. 

4284.182–4284.183 [Reserved] 

4284.184 Clarification of revolving loan 

fund operation. 

4284.185–4284.188 [Reserved] 

4284.189 Grant termination. 

4284.190 Transfer and assumption. 

4284.191–4284.193 [Reserved] 

4284.194 Appeal rights. 

4284.195–4284.200 [Reserved] 

Subpart B—Rural Business Enterprise 

Grant Program 

§ 4284.101 Purpose. 

This subpart outlines policies and 

procedures for administering the Rural 

Business Enterprise Grant (RBEG) 

Program. The purpose of this program is 

to provide grants to stimulate economic 

activity and employment in rural areas 

by: 

(a) Financing and facilitating 

development of small and emerging 

private business enterprises; 

(b) Creating, expanding, and operating 

rural distance learning networks or rural 

learning programs that provide 

educational or job training instruction 

related to the potential employment or 

job advancement of adult (as defined 

per State law) students; 

(c) Providing technical assistance and 

training to rural communities for the 

purpose of improving passenger 

transportation services or facilities; and 

(d) Financing statewide broadcasting 

systems that provide information on 

agriculture and other issues of 

importance to farmers and other rural 

residents. 

§ 4284.102 Policy. 

(a) The RBEG Program will be 

administered under this subpart; 

however, the requirements of 7 CFR 

parts 3015, 3016, 3017, 3018, 3019, and 

3052 also govern the United States 

Department of Agriculture (USDA) grant 

programs. USDA Rural Development 

has attempted to address these 

requirements in this subpart. 

Nevertheless, any conflicts between 

those parts and this subpart will be 

resolved in favor of the applicable 7 

CFR parts of 3015, 3016, 3017, 3018, 

3019, and 3052. 

(b) Grants will not be awarded under 

this program unless all eligibility 

requirements are met in accordance 

with this subpart. 

(c) Any processing or servicing 

activity conducted pursuant to this 

subpart involving authorized assistance 

to USDA Rural Development employees, 

members of their families, close 

relatives, or business or close personal 

associates is subject to the provisions of 

RD Instruction 1900-D. Applicants will 

be required to identify any relationship 

or association with a USDA Rural 

Development employee. 

(d) Grantees and USDA Rural 

Development program administrators 

will be held accountable for following 

the procedures provided in this subpart. 

§ 4284.103 Definitions. 

The following definitions pertain to 

this subpart: 

Agriculture production. The 

cultivation, production, growing, 

raising, feeding, housing, breeding, 

hatching, or managing of crops, plants, 

animals or birds, either for fiber, food 

for human consumption or livestock 

feed. 

Cognizant agency. The Federal agency 

that has the largest dollar value of 

awards with a grantee and the one 

responsible for negotiating and 

approving indirect cost rates for that 

grantee. 

Conflict of interest. When the 

grantee’s immediate family, employees, 

or board of directors including their 

immediate families have a legal or 

personal financial interest in the 

recipient(s) receiving the benefits or 

services of the grant. 

Corporation. A body of persons 

granted a charter legally by a state 

government or Federally recognized 

Indian tribe recognizing it as a separate 

entity having its own rights, privileges, 

and liabilities distinct from its members. 

Cost of goods sold. The amount 

determined by subtracting the value of 

the ending merchandise inventory from 

the sum of the beginning merchandise 

inventory and the net purchase for the 

fiscal period. 

Grant closeout. When all required 

work is completed, administrative 

actions relating to the completion of 

work and expenditures of funds have 

been accomplished, and USDA Rural 

Development accepts final expenditure 

information. 

Grant period. The period of time to 

complete a project and receive grant 

funds as reimbursement for allowable 

expenses. 

Gross profit. Net sales minus cost of 

goods sold. 

Indirect cost rate. A percentage of an 

organization’s total indirect costs to its 

direct cost base. 

Long-term. The period of time covered 

by the three most recent decennial 

censuses of the United States to the 

present. 

Net sales. Gross sales less discounts, 

allowances and returns. 

Non-metropolitan median household 

income. Median household income of 

the state’s non-metropolitan counties 

and portions of metropolitan counties 

outside of cities, towns, and places of 

50,000 or more population. 

Predominantly rural coverage area. 

The area covered by the signal of a 

statewide, private, nonprofit public 


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television system that is more than 50 

percent of the rural (as defined in this 

section) population according to the 

latest decennial census of the United 

States. 

Private business. A business owned 

and controlled either by individuals or 

by a nonpublic entity, which is legally 

organized under State law or under the 

laws or codes of a Federally recognized 

Indian tribe. 

Private nonprofit corporation. A 

corporation created for private purposes 

including Federal Credit Unions if 

properly organized as a private 

nonprofit corporation (not controlled or 

associated with government interest) 

that does not distribute any part of its 

income to its members and has a 

501(c)(3) Internal Revenue Service taxexempt revenue code. 

Program income. Gross income 

earned by the grantee directly generated 

by the grant-supported activity or 

earned as a result of the grant award 

during the grant period. 

Project. The real property, equipment, 

supplies, revolving loan fund, technical 

assistance or any other assistance 

funded under this program. 

Public body. A state; county; city; 

township; and incorporated towns and 

villages, boroughs, authorities, districts; 

and Federally recognized Indian tribes. 

Qualified national nonprofit 

organization. A corporation created for 

private purposes (not controlled or 

associated with government interest) 

that does not distribute any part of its 

income to its members and has a 

501(c)(3) Internal Revenue Service taxexempt revenue code. The corporation 

must also operate in a Multi-state area. 

Revolved funds. The portion of the 

revolving loan fund that is not 

composed of USDA Rural Development 

grant funds including principal and 

interest payments and fees collected on 

loans made from the revolving loan 

fund. Revolved funds shall not be 

considered Federal funds. 

Revolving loan fund. A fund created 

with grant funds under this program 

and/or funds from other sources used to 

make loans to small businesses for 

economic development and job creation 

purposes that uses the loan repayments 

to make additional loans in accordance 

with the approved work plan. 

Rural and rural area. Any area other 

than a city or town that has a population 

of greater than 50,000 inhabitants and 

the urbanized area contiguous and 

adjacent to such a city or town 

according to the latest decennial census 

of the United States. 

Rural Development. For purposes of 

this regulation, the Rural BusinessCooperative Service (RBS), an Agency of 

the United States Department of 

Agriculture, or a successor Agency, will 

be referred to as USDA Rural 

Development. 

Rural distance learning networks. A 

telecommunication link between 

instructors and adult students. 

Rural distance learning programs. A 

system or means of providing education 

or job training instruction relating to 

potential employment or job 

advancement of adult students. 

Small and emerging private business 

enterprise. Any private business that 

will employ 50 or fewer new employees 

and has less than $1 million in 

projected gross profit (per generally 

accepted accounting principles). Small 

and emerging private business 

enterprise is referred to as ‘‘small 

business’’ in this subpart. 

State. Any of the 50 States, the 

District of Columbia, the 

Commonwealth of Puerto Rico, the 

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. 

Statewide. Having a coverage area of 

not less than 90 percent of the 

population of a State and not less than 

80 percent of the rural land area of the 

State. 

Technical assistance. Providing 

support by analyzing, evaluating, or 

training to solve a problem. USDA Rural 

Development will determine whether a 

specific activity qualifies as technical 

assistance. 

Third-party, in-kind contributions. 

The value of non-cash contributions 

provided by non-Federal third parties. 

Third-party, in-kind contributions may 

be in the form of real property, 

equipment, supplies and other 

expendable property. The value of the 

goods and services must directly benefit 

and be specifically identifiable to the 

project. 

Total project cost. The sum of all costs 

associated with a completed, 

operational project. 

§ 4284.104 Exception authority. 

The Administrator may, in individual 

cases, make an exception to any 

requirement or provision of this subpart 

that is not inconsistent with the 

authorizing statute or any applicable 

law if the Administrator determines that 

requirement or provision would 

adversely affect the government’s 

interest. 

§ 4284.105 [Reserved] 

§ 4284.106 Applicant eligibility 

requirements. 

The applicant eligibility requirements 

will be listed by type of grant followed 

by other requirements that must be met 

by the applicant for eligibility unless 

otherwise noted. 

(a) Project grant (other than 

paragraphs (b) or (c) of this section). 

Applicants must be a public body or a 

private, nonprofit corporation. 

(b) Passenger transportation technical 

assistance grant. Applicants must be a 

qualified national nonprofit 

organization with experience in 

providing technical assistance and 

training to rural communities for the 

purpose of improving passenger 

transportation service or facilities. 

(c) Television demonstration grant. 

Applicants must be a statewide, private, 

nonprofit public television system 

(licensed by the Federal 

Communications Commission under its 

non-commercial classification), whose 

coverage area is predominantly rural, for 

the purpose of demonstrating the 

effectiveness of such systems in 

providing information on agriculture 

and other issues of importance to 

farmers and other rural residents. The 

National Public Broadcasting System 

makes the determination of eligibility 

for statewide and predominantly rural 

coverage area as defined in this subpart. 

(d) Other applicant eligibility 

requirements. Applicants must also 

meet the following requirements to be 

eligible for assistance. A certification 

must be signed stating that the applicant 

has: 

(1) The legal authority to carry out the 

purpose(s) of the proposed project; 

(2) No delinquent debt to the Federal 

Government or any outstanding Federal 

judgments; 

(3) At least 3 years experience as an 

organization in the proposed type of 

project. The only exception is if the 

project is for a revolving loan fund and 

a third-party with the required 

experience will be hired to do the credit 

and financial analysis. The applicant 

may certify if this is the case; 

(4) No conflict of interest in the 

proposed project; 

(5) Ownership and control of the 

proposed project; and 

(6) 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 (applies only if the 

applicant is a private nonprofit). 


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§§ 4284.107–4284.108 [Reserved] 

§ 4284.109 Eligible purposes. 

Grant funds may be used to do the 

following; however, if the grant is to 

benefit a small business by using 

purposes defined in paragraphs (a) 

through (c) of this section, the small 

business must lease any real property or 

equipment from the applicant at rates 

that would ensure sustainability of the 

project (i.e., the grantee’s cost of 

operating the facility including 

insurance premiums): 

(a) Purchase and develop land, 

easements, and right-of-ways; 

(b) Construct or improve buildings; 

plants; access streets and roads; parking 

areas; utilities; and pollution control 

and abatement facilities; 

(c) Purchase of machinery and 

equipment; 

(d) Provide technical assistance or 

training; 

(e) Create, expand, and operate rural 

distance learning networks or rural 

learning programs that provide 

educational instruction or job training 

instruction related to potential 

employment or job advancement of 

adult (as defined per State law) 

students. Paragraphs (a) through (d) of 

this section may be utilized for this 

purpose; 

(f) Establish or recapitalize a revolving 

loan fund; 

(g) Pay for reasonable fees and charges 

for professional services necessary for 

the planning and development of a 

construction project; 

(h) Pay off an interim financing loan 

incurred in connection with a 

construction project when a 

preapplication is received by USDA 

Rural Development before construction 

is started; 

(i) Pay for on-site technical assistance 

and training to local and regional 

governments, public transit agencies, 

and related nonprofit and for-profit 

organizations in rural areas, the 

development of training materials, and 

the provision of necessary training 

assistance to local officials and agencies 

in rural areas for the purpose of 

improving passenger transportation 

services or facilities; and 

(j) Pay for capital equipment 

expenditures, start-up and program 

costs, and other costs necessary to the 

operation of television demonstration 

programs. 

§ 4284.110 Ineligible purposes. 

Grant funds may not be used for the 

following: 

(a) Costs incurred on the project 

before receipt of the completed 

preapplication by USDA Rural 

Development unless it is for 

professional services necessary for the 

planning and development of a 

construction project; 

(b) Agriculture production; 

(c) Residential housing; 

(d) Any illegal or gambling activities; 

(e) Lending and investment 

institutions and insurance companies; 

(f) Charitable institutions and 

fraternal organizations; 

(g) Duplicating current services or 

replacing or substituting support 

previously provided beyond a 2-year 

period of time; 

(h) Paying the costs of preparing the 

preapplication or application package 

for funding under this program; 

(i) Technical assistance which 

duplicates assistance provided by the 

Forest Service to implement an action 

plan under the National ForestDependent Rural Communities 

Economic Diversification Act; 

(j) Making loans from a revolving loan 

fund that do not have reasonable rates 

and terms as compared to what is 

charged in the area where the project is 

located; 

(k) Transferring jobs from one area to 

another or increasing the production of 

goods when there is not sufficient 

demand or the availability of services or 

facilities; 

(l) Funding part of a project that is 

dependent on other funding unless 

there is a firm commitment in writing of 

other funding to ensure completion of 

the project; 

(m) Projects where USDA Rural 

Development determines that 

construction was initiated to avoid 

Federal environmental compliance 

requirements; 

(n) Financial assistance requests in 

excess of $500,000; 

(o) Passing grant funds directly to a 

third-party recipient; 

(p) Using technical assistance to pay 

for operating expenses of a small 

business. 

(q) Operating expenses of an eligible 

applicant unless it is for television 

demonstration projects or the salaries 

and expenses related to employees who 

directly perform technical assistance to 

small businesses, adult students or 

passenger transportation projects; 

(r) Fund political activities; and 

(s) Paying for construction or 

improvement projects when the 

applicant is leasing the real property 

where the construction or improvement 

will occur. 

§§ 4284.111–4284.112 [Reserved] 

§ 4284.113 Project eligibility. 

The applicant must provide 

supporting documentation to illustrate 

the project: 

(a) Has a demonstrated need; 

(b) Is economically feasible to ensure 

sustainability beyond grant assistance 

unless the project is for a feasibility 

study; 

(c) Is located in a rural area; 

(d) Will benefit small business or 

provide job placement or advancement 

for adult students as the end result of 

the project unless the project is for 

passenger transportation or television 

demonstration grants; and 

(e) Is measurable to document 

performance outcomes and demonstrate 

results of the program. 

§§ 4284.114–4284.115 [Reserved] 

§ 4284.116 Small business eligibility 

certification. 

Any small business receiving 

assistance under this program must be 

a separate, private business and cannot 

be the grantee or any affiliate thereof. 

Each small business must sign a 

certification stating they: 

(a) Meet the small and emerging 

private business enterprise definition 

contained in § 4284.103 of this subpart; 

(b) Are located in a rural area as 

defined in § 4284.103 of this subpart; 

(c) Have no delinquent debt to the 

Federal Government or any outstanding 

Federal judgments; 

(d) Have no conflict of interest in the 

proposed project; 

(e) 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. 

§ 4284.117 Small business eligibility 

exception. 

If the small business is a nonprofit 

entity or other tax-exempt organization 

(as defined by the Internal Revenue 

Service revenue codes) located in a city, 

town or unincorporated area with a 

population of 5,000 or less and has a 

principal office on land of an existing or 

former Native American reservation, the 

small business does not need to meet 

the small business definition contained 

in § 4284.103 of this subpart. However, 

the small business receiving assistance 

must sign a certification stating they 

meet the requirements of paragraphs (b) 

through (e) defined in § 4284.116. 

§ 4284.118 Private tribally-owned 

business. 

For a tribally-owned business to be 

considered a private business, it must be 


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held through a separate entity, such as 

a tribal corporation. The corporation 

may be owned by the tribe and 

distribute profits to the tribe. However, 

the governing board must be 

independent from the tribal government 

and elected or appointed for a specific 

time period. Board members must not 

be subject to removal without cause by 

the tribal government. A majority of the 

board members must not now or in the 

future, as long as they are board 

members, be members of the tribal 

council or other governing board of the 

tribe. Tribally-owned small businesses 

will be required to sign a small business 

certification in accordance with either 

§ 4284.116 or § 4284.117. 

§§ 4284.119–4284.120 [Reserved] 

§ 4284.121 Grant ownership. 

The grantee must have ownership and 

control of the project until transfer, 

disposition, or termination of the project 

occurs. 

(a) The grantee must retain ownership 

of any real property that will be 

purchased or improved with grant 

funds. In the case of installation or 

improvements to utilities or streets, the 

grantee does not have to own the land, 

utility, or street that is improved in the 

public right of way, but must retain 

ownership of the land surrounding the 

improvements. 

(b) The grantee must retain ownership 

of any equipment or supplies acquired 

with grant funds. 

(c) The grantee must establish a 

separate bank account for a revolving 

loan fund, secure the account by signing 

a control agreement (available from any 

USDA Rural Development State Office) 

and direct and manage the fund. 

(d) The grantee must oversee and 

control technical assistance, passenger 

transportation and television 

demonstration projects until the grants 

are closed out. 

§ 4284.122 Leveraging. 

Supplemental funding at a minimum 

of 20 percent of the total project cost 

must be included in the project. 

Supplemental funds may be from cash 

injection by the applicant, financial 

institutions, state or local governmental 

sources, or third-party, in-kind 

contributions. Third-party, in-kind 

contributions will be limited to 10 

percent of supplemental funding and 

USDA Rural Development will advise if 

the third-party, in-kind contributions 

are acceptable. Applicants may not use 

third-party, in-kind contributions for 

revolving loan fund projects. Other 

Federal grant awards cannot be used to 

meet the 20 percent leveraging match. 

§§ 4284.123–4284.124 [Reserved] 

§ 4284.125 Preapplication. 

A preapplication is required to 

establish communication between the 

potential applicant and USDA Rural 

Development, determine the potential 

applicant’s eligibility, and identify 

projects which have little or no chance 

for funding before applicants incur 

significant costs. 

§ 4284.126 Preapplication contents. 

A complete preapplication must be 

submitted to the USDA Rural 

Development State Office where the 

project is located. Multi-state projects 

must be submitted to the USDA Rural 

Development State Office where the 

applicant is headquartered. A complete 

preapplication must include: 

(a) An SF–424, ‘‘Application for 

Federal Assistance,’’ including the 

appropriate non-construction (SF–424A 

and SF–424B) or construction (SF–424C 

and SF–424D) budget and assurance 

forms, and a Dun and Bradstreet 

Universal Numbering System (DUNS) 

number handwritten or typed on the 

SF–424; 

(b) Intergovernmental review 

comments from the State Single Point of 

Contact, or evidence that the State has 

elected not to review the program under 

Executive Order 12372. Applicants can 

obtain the necessary state clearinghouse 

contacts from the USDA Rural 

Development State Office where the 

project is located; 

(c) Evidence of legal existence 

including a copy of the articles of 

incorporation, by-laws, and certificate of 

good standing or incorporation; 

(d) Form RD 1940–20, ‘‘Request for 

Environmental Information,’’ unless the 

project is considered a categorical 

exclusion in accordance with 7 CFR part 

1940, subpart G. Applicants can verify 

if their project is a categorical exclusion 

with the USDA Rural Development 

State Office where the project is located; 

(e) A signed applicant eligibility 

certification; 

(f) A copy of the most recent year-end 

financial statements that should include 

a balance sheet and income statement 

prepared in accordance with generally 

accepted accounting principles; 

(g) A preliminary architectural or 

engineering report for construction 

projects that includes a description of 

the facility; including size, location, 

related facilities, schematic cost 

estimate, and schematic plans; and 

(h) A scope of work. 

§ 4284.127 Scope of work requirements. 

The scope of work is a detailed 

written narrative identifying the aspects 

of a proposed project. It must be 

completed for all projects and contain 

the following: 

(a) Specific purposes, objectives, and 

need for grant funds including 

identification of the proposed project in 

a local or regional plan; 

(b) Timeframes to complete the 

proposed project; 

(c) Names and responsibilities of key 

personnel who will carry out the 

objectives of the proposed project; 

(d) Experience specifically related to 

the type of project proposed; 

(e) Availability of other funds and 

sources; 

(f) Number and type of small 

businesses to be assisted as a result of 

the grant including number of jobs 

created and/or saved and other 

anticipated goals and/or benefits of the 

proposed project, if applicable. This 

should be based on letters of interest or 

commitments; 

(g) Number of adult students to be 

assisted as a result of the grant and other 

anticipated goals and/or benefits of the 

proposed project when the grant is for 

a rural distance learning network or 

rural learning program, if applicable. 

This should be based on letters of 

interest or commitments; and 

(h) Anticipated goals and/or benefits 

for passenger transportation or 

television demonstration projects as a 

result of the grant, if applicable. 

§ 4284.128 Other narrative information. 

The following narrative information 

should be addressed in your 

preapplication to assist USDA Rural 

Development in assigning points under 

the scoring criteria. You may address it 

in the scope of work or in a separate 

document. 

(a) Documented statistical information 

on population, unemployment rate, and 

median household income for the area 

to be served by the proposed project; 

(b) Documented information on 

sudden and severe economic dislocation 

produced by such factors as the 

departure or downsizing of a major 

employer, or natural disaster, if 

applicable; and 

(c) Documented statistical information 

on long-term decline in population, if 

applicable. 

§§ 4284.129–4284.130 [Reserved] 

§ 4284.131 Program income. 

Program income must be addressed in 

the SF–424 and the respective budget 

forms. Any program income earned 

during the grant period may be retained 

by the grantee to further the objectives 

and goals of the project. 


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§ 4284.132 Indirect cost rate. 

The maximum indirect cost rate 

USDA Rural Development will pay is 25 

percent of the grant request unless the 

grantee already has a negotiated 

agreement with its cognizant agency. A 

copy of the negotiated agreement must 

be provided with the preapplication. 

§§ 4284.133–4284.134 [Reserved] 

§ 4284.135 Civil rights requirements. 

(a) All grants made under this subpart 

are subject to Title VI of the Civil Rights 

Act of 1964, Title IX of the Education 

Amendments of 1972, Section 504 of the 

Rehabilitation Act of 1973, the Age 

Discrimination Act of 1975, and part 

1901, subpart E of this title. 

(b) USDA Rural Development will 

inform grantees of their civil rights 

requirements in accordance with 

paragraph (a) of this section. Grantees 

may be required to collect certain 

information on their project or program 

to ensure that they are serving the 

public without discrimination. 

§ 4284.136 Environmental review. 

(a) All grants under this subpart are 

subject to the environmental 

requirements of 7 CFR part 1940, 

subpart G before any application is 

approved. The grantee must not take 

any actions that would have an adverse 

impact on the environment or limit the 

range of alternatives USDA Rural 

Development considers during the 

environmental review. If USDA Rural 

Development finds evidence that 

construction was initiated to avoid 

compliance requirements, the 

preapplication will not be considered 

for assistance. Any mitigation measures 

will be included in the Letter of 

Conditions or other grant approval 

document. The grantee is responsible 

for communicating the mitigation 

measures to the project designers for 

inclusion in the project construction 

documents. 

(b) USDA Rural Development will 

conduct an initial environmental review 

on revolving loan fund projects and a 

separate environmental review on each 

loan the grantee is proposing to provide 

funds for until all grant funds have been 

expended. However, if the grantee has 

one loan project committed to use the 

total amount of the grant, USDA Rural 

Development will only conduct an 

individual project review. 

(c) The grantee will be responsible for 

preparation of environmental reviews 

after they have lent out an amount equal 

to the grant award. Preparation will be 

accomplished using professional 

consultant services and the review 

document will conform to the 

requirements and formats of 7 CFR part 

1940, subpart G. 

§§ 4284.137–4284.138 [Reserved] 

§ 4284.139 Project selection criteria. 

USDA Rural Development will 

evaluate the preapplication and give it 

a priority score based on criteria in this 

section. This process will assist USDA 

Rural Development in prioritizing for 

funding approval. Any scoring criteria 

not addressed will automatically receive 

zero points. Applicants may average any 

figures that are based on the rural area 

to be served. All written commitment 

supporting documentation for priority 

points must be submitted to USDA 

Rural Development no later than the 

application stage. Points will be 

distributed as follows: 

(a) Population. Figures from the latest 

decennial census of the United States 

must be used to score population on the 

area to be served by the proposed 

project as follows: 

(1) The proposed project will be 

located in areas of under 5,000 

population—15 points; 

(2) The proposed project will be 

located in areas of between 5,000 and 

15,000 population—10 points; 

(3) The proposed project will be 

located in areas of between 15,001 and 

25,000 population—5 points. 

(b) Economic Conditions. Figures 

must be used for the area to be served 

by the proposed project as follows: 

(1) Unemployment rate. 

Unemployment figures must come from 

the most recent published 

unemployment data by the Bureau of 

Labor Statistics, U.S. Department of 

Labor or State Department of Labor 

Statistics. Projects serving all of a State’s 

rural area or Multi-State rural areas will 

compare State unemployment rates to 

the national unemployment rate. 

(i) The proposed project will be 

located in areas where the 

unemployment rate exceeds the State 

rate by 50 percent or more—20 points; 

(ii) The proposed project will be 

located in areas where the 

unemployment rate exceeds the State 

rate by 25 percent or more but less than 

50 percent—10 points; 

(iii) The proposed project will be 

located in areas where the 

unemployment rate exceeds the State 

rate by less than 25 percent—5 points. 

(2) Median household income. Income 

figures must come from the latest 

decennial census of the United States, 

updated according to changes in the 

consumer price index. The poverty line 

figure used must be as defined in 

section 673(2) of the Community 

Services Block Grant Act (42 U.S.C. 

9902 (2)) for a family of four for the 

State. Projects serving all of a State’s 

rural area or Multi-State rural areas will 

compare State non-metropolitan median 

household incomes to the national 

poverty line. 

(i) The proposed project will be 

located in areas where the median 

household income is less than poverty 

line—25 points; 

(ii) The proposed project will be 

located in areas where the median 

household income is more than the 

poverty line, but less than 85 percent of 

the State non-metropolitan median 

household income—15 points; 

(iii) The proposed project will be 

located in areas where the median 

household income is between 85 

percent and 100 percent of the State 

non-metropolitan median household 

income—10 points; 

(c) Supplemental funding. Written 

commitments from other financing 

sources must be provided with the 

application. Third-party, in-kind 

contributions will not be considered 

under this criterion only as part of the 

matching requirement. Points are 

awarded as follows: 

(1) The proposed project will have 

supplemental funding in an amount 

equal to or greater than 75 percent of 

total project cost—25 points; 

(2) The proposed project will have 

supplemental funding in an amount 

equal to or more than 50 percent, but 

less than 75 percent of total project 

cost—15 points; 

(3) The proposed project will have 

supplemental funding in an amount 

equal to or more than 25 percent, but 

less than 50 percent of total project 

cost—10 points. 

(4) The proposed project will have 

supplemental funding above 20 percent, 

but less than 25 percent of the total 

project cost—5 points. 

(d) Full-time direct jobs created or 

saved. Evidence of full-time direct jobs 

created or saved must be included in the 

application. Full-time direct jobs must 

be calculated based on the total project 

cost and scored as follows: 

(1) The proposed project will create or 

save one job per each $15,000 of the 

total project cost—10 points; 

(2) The proposed project will create or 

save one job per each $25,000 of the 

total project cost—5 points. 

(e) Fund utilization. Points will be 

awarded if the proposed project will 

utilize grant funds of $100,000 or less—

25 points; 

(f) Local or regional plans. The 

proposed project is identified in a local 

or regional economic development plan 

adopted by the area to be served by the 

project—5 points. A copy of the plan 


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must be included with the application 

to receive points. 

(g) Small business. The small business 

to be assisted is a nonprofit entity or 

other tax-exempt organization (as 

defined by the Internal Revenue Service 

revenue codes) located in a city, town 

or unincorporated area with a 

population of 5,000 or less and has a 

principal office on land of an existing or 

former Native American reservation—5 

points. Evidence of organization and 

location must be provided with the 

application. 

(h) Discretionary points. USDA Rural 

Development may assign up to 

additional 30 points for discretionary 

items if the proposed project is an initial 

grant. An initial grant means that this 

would be the first time grant funds are 

being requested for the proposed 

project. Subsequent grant requests are 

not eligible for discretionary points. 

Evidence must be provided in the 

application to receive points. In 

addition, discretionary points will be 

awarded in the following situations: 

(1) The proposed project is located in 

a Champion Community—5 points; 

(2) The area to be served by the 

proposed project has had a loss of a 

major employer or industry within the 

last 3 years—5 points; 

(3) The area to be served by the 

proposed project has had a Presidential 

or Secretarial natural disaster 

designation within the last 3 years—5 

points; 

(4) The area to be served by the 

proposed project has had a long-term 

decline in population—5 points; 

(5) This would be the applicant’s first 

grant award under the RBEG Program—

10 points; 

§§ 4284.140—4284.141 [Reserved] 

§ 4284.142 Application. 

USDA Rural Development will issue 

Form AD–622, ‘‘Notice of 

Preapplication Review Action,’’ or 

similar letter notifying the applicant 

that they are eligible to complete and 

submit an application or ineligible for 

assistance under this subpart due to 

legal existence or intended use of grant 

funds. 

§ 4284.143 Application Contents. 

A complete application will be 

submitted to the USDA Rural 

Development State Office and include 

the following: 

(a) An updated SF–424 signed by the 

applicant, if necessary; 

(b) Preliminary plans and 

specifications for construction projects; 

which will include a preliminary floor 

plan, site plan and elevations in 

sufficient detail for preparing an 

appraisal along with a preliminary 

estimate of construction costs; 

(c) Comments from the State 

Historical Preservation Office or the 

Tribal Historical Preservation Office for 

construction projects; 

(d) An independent third-party 

appraisal if the proposed project is to 

purchase real property; 

(e) A work plan if the proposed 

project is for a revolving loan fund; 

(f) Written commitments for 

supplemental funding; 

(g) Letters of interest or commitment 

from small businesses needing 

assistance, if applicable; 

(h) Small business certification, if 

applicable; 

(i) Letters of interest or commitment 

from local employers, schools, training 

facilities, etc. to show the need of 

employment or job advancement 

opportunities for adult students, if 

applicable; 

(j) A copy of the local or regional plan 

in which the proposed project is 

identified; 

(k) Form RD 400–1, ‘‘Equal 

Opportunity Agreement’’ if the 

proposed project includes construction; 

(l) Form RD 400–4, ‘‘Assurance 

Agreement’; 

(m) Form AD 1049, ‘‘Certification 

Regarding Drug-Free Workplace 

Requirements’’; 

(n) Form AD 1047, ‘‘Certification 

Regarding Debarment, Suspension, and 

Other Responsibility Matters—Primary 

Covered Transactions’’; 

(o) RD Instruction 1940–Q, Exhibit A–

1, ‘‘Certification for Contracts, Grants 

and Loans (Lobbying Activities)’’ if the 

grant request is over $100,000; and 

(p) SF–LLL, ‘‘Disclosure of Lobbying 

Activities,’’ if the grant is over $100,000 

and the applicant has made or has 

agreed to make any payments to 

influence a decision in connection with 

the specific project. 

§ 4284.144 Revolving loan fund work plan 

requirements. 

If the grant will be used to create or 

add to a revolving loan fund, the 

requirements of this section must be 

met. The revolving loan fund plan 

governs the operation of the fund and 

must have sufficient detail to provide 

USDA Rural Development with a 

complete understanding of what will be 

accomplished. It must contain the 

following: 

(a) Demonstrated need of the fund 

including identification of the proposed 

project in a local or regional plan and 

the accomplishments to be completed 

with the fund. This should include a list 

of eligible small businesses (based on 

letters of interest or commitments) that 

need loans with the anticipated amount 

needed, purpose, and number of jobs to 

be created and/or saved. 

(b) Experience of the organization in 

operating a revolving loan fund; 

(c) Marketing and outreach plan with 

specific timeframes to complete the 

proposed accomplishments of the fund; 

(d) Key personnel involved in the 

operation of the fund and their specific 

responsibilities; 

(e) Availability of other funds and 

their sources; 

(f) Service area where the loans will 

be offered; 

(g) Eligibility criteria, loan purposes, 

and loan limits of the fund; 

(h) Proposed fees, loan interest rate, 

and loan terms and how they are 

determined. These charges should be 

sufficient to support the operating 

expenses of the fund; 

(i) Proposed collateral requirements; 

(j) Application review and loan 

committee approval process; 

(k) A copy of your application that 

must include, at a minimum, a space for 

the name and address of the loan 

recipient; loan purpose; interest rate and 

terms; location, nature, and scope of the 

project being financed; other funding 

included in the project; type and lien 

priority of collateral; and jobs to be 

created and/or saved. 

(l) Process to be followed if a loan 

applicant is rejected; 

(m) Monitoring system for 

distribution of approved funds and loan 

recipient accomplishments; 

(n) Monitoring system for financial 

and activity reports; and 

(o) Any other information pertinent to 

the revolving loan fund. 

§§ 4284.145–4284.148 [Reserved] 

§ 4284.149 Application selection. 

(a) Pending the availability of 

sufficient funds, USDA Rural 

Development State Offices receive an 

allocation of funds under this subpart 

each fiscal year. State Offices use the 

scoring criteria as defined in § 4284.139 

to select the highest-ranking 

applications until the state allocation 

has been depleted. State Offices set 

internal cut-off dates for receipt of 

preapplications and attempt to make the 

information public knowledge. 

However, it is recommended that 

applicants contact the State Office to 

find out the specific amounts available 

and funding deadlines for this program. 

Applicants will receive a Letter of 

Conditions for grant approval and 

instructions from the State Office if the 

application is selected for funding. 

(b) The National Office generally 

holds a minimal amount of appropriated 


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funds for a national reserve competition 

each fiscal year. State Offices that have 

depleted the state allocation are eligible 

to submit applications to the National 

Office for competition. Starting with the 

highest-ranking application received 

nationwide, the highest-ranking 

application per state is selected until the 

reserve is exhausted. This ensures 

USDA Rural Development is 

distributing funds on a geographical 

basis. If a tie exists in the competition, 

projects are selected based on viability 

of the projects in accordance with the 

funds available. State Offices will 

submit applications to the National 

Office for reserve competition. 

Applicants will receive a Letter of 

Conditions and instructions for grant 

approval from the USDA Rural 

Development State Office if the 

application is selected for funding. 

§§ 4284.150–4284.151 [Reserved] 

§ 4284.152 Letter of Conditions. 

The Letter of Conditions establishes 

conditions that must be understood and 

agreed to by the applicant before any 

obligation of funds can occur. The 

applicant must sign a Form RD 1942–46, 

‘‘Letter of Intent to Meet Conditions,’’

and a Form RD 1940–1, ‘‘Request for 

Obligation of Funds,’’ if they wish to 

accept the conditions of the grant. These 

forms will be enclosed with the Letter 

of Conditions. The grant will be 

obligated when the USDA Rural 

Development State Office receives an 

executed Letter of Intent and Request for 

Obligation of Funds from the applicant. 

§ 4284.153 Grant Agreement. 

The applicant will also be required to 

sign a Form RD 4284–1, ‘‘Grant 

Agreement,’’ which is a contract 

between the grantee and USDA Rural 

Development for receipt of grant funds 

under the RBEG Program. The Grant 

Agreement will also be enclosed with 

the Letter of Conditions and must be 

signed and returned to the USDA Rural 

Development State Office before any 

grant funds can be disbursed. 

§§ 4284.154–4284.155 [Reserved] 

§ 4284.156 Timeframe for use of grant 

funds. 

The grant period will be established 

in your Letter of Conditions for a 12- 

month timeframe unless USDA Rural 

Development approves the scope of 

work or work plan for a longer period 

of time. 

§ 4284.157 Financial management system. 

The grantee will provide for a 

financial management system, which 

will include: 

(a) Accurate, current, and complete 

disclosure of the financial result of each 

grant. 

(b) Records that identify adequately 

the source and application of funds for 

grant-supporting activities, together 

with documentation to support the 

records. These records shall contain 

information pertaining to grant awards, 

authorizations, obligations, unobligated 

balances, assets, outlays, income and 

interest. 

(c) Effective control over and 

accountability for all funds, property 

and other assets. Grantee shall 

adequately safeguard all such assets and 

assure that funds are used solely for 

authorized purposes. 

§ 4284.158 Grant disbursement. 

Grant funds are disbursed on a 

reimbursement basis except if they are 

for revolving loan funds. Grant 

disbursement for revolving loan funds 

will be advanced. The financial 

management system of the grantee must 

provide for effective control and 

accountability of all funds. Grant funds 

may be requested as follows: 

(a) Reimbursement requests. An SF–

270, ‘‘Request for Advance or 

Reimbursement,’’ may be submitted to 

USDA Rural Development once every 30 

days for reimbursement on allowable 

grant expenses. A pro rata portion of 

supplemental funds must be included in 

the request. An SF–271, ‘‘Outlay Report 

and Request for Reimbursement for 

Construction Programs,’’ or similar form 

may be submitted to USDA Rural 

Development once every 30 days on 

construction projects. 

(b) Advance requests. An SF–270 may 

be submitted once every 30 days for an 

advance of funds. A pro rata portion of 

supplemental funds must be included in 

the request for an advance. Before any 

grant funds can be advanced, the 

grantee must submit information on 

each loan that they are proposing to 

make for review and concurrence by 

USDA Rural Development. The specific 

information required is defined in 

§ 4284.184. Grantees must remit any 

interest earned on advanced grant 

funds. Interest should be forwarded to 

USDA Rural Development on a 

quarterly basis. 

§§ 4284.159–4284.160 [Reserved] 

§ 4284.161 Insurance requirements. 

(a) Fidelity bond coverage will be 

required on grantees that are nonprofit 

organizations. Coverage may be 

provided either for all individual 

positions or persons, or through blanket 

coverage that provides protection for all 

appropriate employees and officials. 

The amount of coverage will be at least 

equal to the maximum amount of 

monies that the grantee will have on 

hand at any one time. The grantee must 

renew fidelity bond coverage on a yearly 

basis if they are operating a revolving 

loan fund. There are no fidelity bond 

coverage requirements for a public 

body. 

(b) Hazard insurance will be 

maintained by grantees whose project 

involves purchase or improvements to 

real property or purchase of machinery 

or equipment. In the case of a revolving 

loan fund, the loan recipient will be 

required to maintain hazard insurance 

with a standard mortgagee clause 

naming the grantee as beneficiary as 

long as a lien exists. The grantee’s 

interest in the insurance will be 

assigned to USDA Rural Development, 

upon USDA Rural Development’s 

request, in the event of termination of 

the revolving loan fund. The amount of 

coverage should be at least the lesser of 

the depreciated replacement value of 

the property being insured or the 

amount of the grant or loan. Hazard 

insurance includes fire, windstorm, 

lightning, hail, business interruption, 

explosion, riot, civil commotion, 

vehicle, marine, smoke, builder’s risk, 

public liability, property damage, and 

any other hazard insurance that may be 

required to protect the property being 

insured or the grantee’s security. 

(c) Worker’s compensation insurance 

will be required on the grantee and any 

recipient who receives a loan from a 

revolving loan fund in accordance with 

State law. 

(d) Flood insurance will be required 

on grantees and loan recipients if their 

project is located in a special flood or 

mudslide hazard area. 

§§ 4284.162–4284.163 [Reserved] 

§ 4284.164 Changes in scope of work, 

work plan or budget. 

(a) Prior approval must be obtained 

from USDA Rural Development for any 

of the following changes to the 

approved project: 

(1) Project scope or objectives; 

(2) Need to extend the period of 

availability of funds; 

(3) Change in key personnel as 

specified in the application; 

(b) Prior approval must be obtained 

from USDA Rural Development for any 

of the following budget revisions: 

(1) Transfer of amounts budgeted for 

indirect costs to absorb increases in 

direct costs, or vice versa; 

(2) Transfer of amounts previously 

budgeted for training allowances to 

other categories of expense; 


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(3) Costs that require prior approval in 

accordance with the applicable OMB 

cost principles circulars; or 

(4) Need for additional funds. 

(c) Prior approval must be obtained 

from USDA Rural Development on 

projects that have both construction and 

nonconstruction activities before 

making any fund or budget transfer from 

the nonconstruction or construction 

budgets or vice versa. 

(d) Prior approvals will not be valid 

unless they are in writing and approved 

by USDA Rural Development. Failure to 

obtain prior approval of changes to the 

approved project or budget may result 

in suspension or termination of grant 

funds. 

§§ 4284.165–4284.166 [Reserved] 

§ 4284.167 Reporting requirements. 

(a) Project performance reports. 

Grantees shall constantly monitor 

performance to ensure time schedules 

and other performance objectives are 

being achieved. A project performance 

report is not required for construction 

projects. On-site technical inspections 

and certified percentage-of-completion 

data will serve as the performance 

monitoring system for construction 

projects. This will be done in 

accordance with RD Instruction 1942–A, 

§ 1942.18. A project performance report 

is required for all non-construction 

projects on a quarterly basis. The report 

is due 30 days after the end of the 

quarter. The final report can serve as the 

last quarterly report. The report should 

include the following: 

(1) A comparison of actual 

accomplishments to the objectives 

established for that period; 

(2) Reasons why established goals 

were not met; 

(3) Any significant developments that 

would have an adverse or favorable 

affect on the overall project objectives. 

This notification must include a 

statement of the action taken or 

contemplated, and any assistance 

needed to resolve the situation; 

(4) Objectives and timetables for the 

next reporting period; and 

(5) Additional information on the 

final report as follows: 

(i) Actual accomplishments as a result 

of the grant, i.e. number of jobs created, 

saved, and number of businesses 

assisted or other performance goals 

established in the scope of work. 

(ii) What have been the most 

challenging or unexpected aspects of 

this program? 

(iii) What advice would the grantee 

give to other organizations planning a 

similar program? These should include 

strengths and limitations of the 

program. If the grantee had the 

opportunity, what would they have 

done differently? 

(iv) If an innovative approach was 

used successfully, the grantee should 

describe its program in detail so that 

other organizations might consider 

replication in their areas. 

(b) Financial reports. The following 

financial reports will be required and 

are available in any USDA Rural 

Development State Office: 

(1) All projects. An SF 269 or 269A, 

‘‘Financial Status Report,’’ is required 

for all nonconstruction and construction 

projects on a quarterly basis. The report 

is due 30 days after the end of the 

quarter. SF 269A may be used by the 

grantee if there is no program income 

being generated in the project. 

(2) Additional revolving loan fund 

reports. Grantees will also be required to 

submit a Form RD 1951–4, ‘‘Reporting 

of IRP/RDLF Lending Activity,’’ report 

on a quarterly basis until all of the grant 

funds have been loaned out to small 

businesses. The report is due 30 days 

after the end of the quarter. Thereafter, 

reports will be required semiannually 

30 days after the end of the period. 

(c) Audits. Grantees must provide an 

annual audit in accordance with 7 CFR 

part 3052. USDA Rural Development 

will inform the grantee of its auditing 

requirements. 

§§ 4284.168–4284.169 [Reserved] 

§ 4284.170 Site visits. 

(a) The grantee is responsible for 

managing the day-to-day operations of 

the project to ensure time schedules are 

met and that performance goals are 

achieved. However, USDA Rural 

Development will make site visits, as 

necessary, to assure compliance with 

applicable Federal requirements. After 

all grant funds have been disbursed for 

revolving loan fund, capital 

improvements or equipment purchase 

projects, a site visit will occur every 3 

years until the project is transferred, 

terminated, disposed of, or has met its 

useful life term in accordance with the 

Grant Agreement. 

(b) During the site visit the USDA 

Rural Development representative will 

perform and document due diligence if 

actual or potential site contamination by 

hazardous materials or petroleum 

products is observed on the site or 

adjacent sites. Due diligence 

documentation is necessary to assure 

USDA Rural Development maintains 

lender liability protection under the 

Comprehensive Environmental 

Response, Conservation and Liability 

Act (CERCLA). 

(c) Site visits can include a civil rights 

compliance review; a physical inventory 

of any property purchased or improved 

with grant funds or equipment 

purchased with grant funds; a revolving 

loan fund review to ensure the fund is 

still operating in accordance with the 

work plan, if applicable; and other 

reviews as needed to ensure the project 

is in compliance with the Letter of 

Conditions and Grant Agreement. 

§§ 4284.171–4284.172 [Reserved] 

§ 4284.173 Record retention. 

USDA Rural Development must have 

access to grantees records including 

financial, supporting documents, 

statistical or other records pertinent to 

the grant. Records must be retained for 

3 years after the date of the final grant 

disbursement unless there is: 

(a) Any litigation, claim, negotiation, 

audit or other action involving the 

records that have been started before the 

expiration date of the 3-year period. The 

records must be retained until 

completion of the action and resolution 

of all issues that arise from it or until 

the end of the regular 3-year period, 

whichever is later. 

(b) Real property; equipment; and 

revolving loan fund project records. 

Records must be retained until transfer, 

termination, disposition, or replacement 

occurs or the useful life term has 

expired in accordance with the grant 

agreement. The 3-year retention period 

would start the date of transfer, 

termination, disposition, replacement or 

the date the useful life term has expired. 

(c) Indirect cost rate proposals, cost 

allocation plans, etc. Records must be 

retained for 3 years from the date the 

proposal is submitted for negotiation. If 

the proposal is not required to be 

submitted for negotiation, then the 3- 

year retention period starts the end of 

the fiscal year covered by the proposal. 

§§ 4284.174–4284.177 [Reserved] 

§ 4284.178 Disposition of real property, 

equipment, and supplies. 

(a) If grant funds are used to acquire 

or improve real property, and if the 

property is sold or is no longer needed 

for any reason, USDA Rural 

Development will have an interest in 

the current fair market value of the 

property in proportion to its 

participation in the project. Installation 

or improvements to utilities or streets in 

the public right of way is considered 

improving the surrounding property or 

land owned by the grantee. USDA Rural 

Development also has the right to the 

current fair market value of that 

property in proportion to its 

participation in the project if that 

property is sold or not used for its 

originally approved purpose. The 


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grantee may be required to file a Notice 

of Interest when grants funds are used 

to purchase or improve real property 

unless it is prohibited by State law. 

(b) If grant funds are used to purchase 

equipment and the equipment is no 

longer needed for any reason, the 

grantee may retain, sell or otherwise 

dispose of the equipment with no 

further obligation to USDA Rural 

Development if the current fair market 

value of the equipment (per unit) is less 

than $5,000. However, if the current fair 

market value (per unit) is $5,000 or 

more USDA Rural Development has the 

right to an amount calculated by 

multiplying the current fair market 

value (per unit) if it is retained or 

proceeds from the sale if sold by the 

Federal share of the equipment. 

(c) If the grant funds are used to 

purchase supplies and the grant is 

closed out, the grantee may keep unused 

supplies if the total aggregate fair market 

value of the supplies was less than 

$5,000. Otherwise, the grantee will 

compensate USDA Rural Development 

the current fair market value of the 

unused supplies to its participation. 

§§ 4284.179–4284.180 [Reserved] 

§ 4284.181 Construction requirements. 

Section 1942.18 of this title will be 

followed in the planning and 

performance of construction projects. 

§§ 4284.182–4284.183 [Reserved] 

§ 4284.184 Clarification of revolving loan 

fund operation. 

The following paragraphs will 

provide clarification on operating 

revolving loan funds under this subpart: 

(a) A revolving loan fund must be 

operated on a long-standing basis and 

not duplicate services provided by an 

existing loan fund serving the same 

geographic area. It should not be 

established to assist one small business 

with a short-term working capital need 

and never have another loan made from 

it to assist other small businesses. 

(b) A third-party with required 

experience can be hired to do the credit 

and financial analysis, but the grantee is 

still responsible for approving loans and 

managing the fund. USDA Rural 

Development will review and concur in 

any service agreement when this is the 

case before the grant is approved. 

(c) Grantees are required to deposit 

grant funds and the 20 percent matching 

funds into a separate FDIC insured 

account. A control agreement will be 

executed to allow USDA Rural 

Development a security interest in the 

revolving loan fund deposit account as 

well as access to account information. 

The control agreement will also ensure 

that the deposit account/revolving loan 

fund will not be closed without prior 

approval of USDA Rural Development. 

(d) Loans made from the revolving 

loan fund must be for purposes in 

accordance with the revolving loan fund 

work plan. However, the loan purposes 

are limited to the eligible purposes 

defined in paragraphs (a) through (c) of 

§ 4284.109, working capital and debt 

refinancing. 

(e) Loans made from the revolving 

loan fund must be economically feasible 

to ensure sustainability of the revolving 

loan fund. 

(f) The receivables created by making 

loans from the fund, the grantee’s 

security interest in collateral pledged by 

small businesses, collections on the 

receivables, interest, fees, and any other 

income from the operation of the 

revolving loan fund are considered to be 

part of the revolving loan fund. 

(g) All debt instruments and collateral 

documents used by the grantee in 

connection with making loans from the 

fund must be assignable. Security for a 

loan from the revolving loan fund to a 

third party will be negotiated between 

the grantee and the third party within 

the policies established in the work 

plan. 

(h) USDA Rural Development will 

review and concur in each loan the 

grantee is proposing to make until all of 

the grant funds are expended. 

Eligibility, environmental concerns, and 

other issues necessary to ensure 

sustainability of the fund will be 

reviewed. The following will be 

required for each loan: 

(1) A copy of the application; 

(2) Loan Committee recommendation 

or write-up; 

(3) Intergovernmental comments; 

(4) Small business certification; 

(5) Form RD 1940–20; 

(6) Form AD 1048, ‘‘Certification of 

Debarment, Suspension, Ineligibility 

and Voluntary Exclusion—Lower Tier 

Covered Transactions;’’ and 

(7) Form RD 400–4. 

(i) USDA Rural Development loan 

review and concurrence will not be 

necessary once the grantee lends out an 

amount equal to the grant. However, the 

grantee must continue to operate the 

revolving loan fund in accordance with 

the work plan, collect civil rights data 

and obtain all required items defined in 

paragraphs (h)(1) through (7) of this 

section for each loan made thereafter. 

USDA Rural Development will conduct 

a site visit at least every 3 years to 

ensure the grantee is complying with all 

Federal requirements and administering 

the fund in accordance with the work 

plan. 

(j) Grantees may use principal and 

interest payments plus fee income 

received from their borrowers (revolved 

funds) for debt service, administrative 

expenses, or making additional loans. 

(k) A reasonable amount of revolved 

funds should be used to create a reserve 

for bad debts. USDA Rural Development 

recommends a reserve for bad debts of 

6 percent of outstanding loans, which 

can be accumulated over 3 years and 

should be maintained from then on. 

(l) Grantees may also use up to a 

maximum of 20 percent of interest and 

fee income per fiscal year for the 

administrative costs associated with 

operating the revolving loan fund. 

(m) Failure, inability or unwillingness 

of the grantee to carry out or comply 

with the work plan, grant agreement or 

any applicable Federal or State law is 

cause for termination. If the grant is 

terminated, USDA Rural Development 

takes control of the deposit account in 

which the fund is located, the pending 

note receivables and any security 

interest pledged on the pending note 

receivables. 

§§ 4284.185–4284.188 [Reserved] 

§ 4284.189 Grant termination. 

The grant award can be terminated in 

the following situations: 

(a) Termination for cause. If the 

grantee fails to comply with the 

conditions of the Letter of Conditions or 

the Grant Agreement, USDA Rural 

Development can terminate the grant. 

USDA Rural Development will notify 

the grantee in writing of the decision to 

terminate, including the reasons and the 

effective date of the grant termination. 

(b) Termination by mutual agreement. 

The grantee must provide written 

notification to USDA Rural 

Development explaining the reasons 

why they wish to terminate the grant 

and the proposed effective date. If 

USDA Rural Development mutually 

agrees that the continuation of the 

project would not produce beneficial 

results the grant can be terminated. 

(c) Deobligation of grant funds. USDA 

Rural Development will automatically 

deobligate grant funds if a project is not 

completed within 3 years from the date 

of obligation. 

§ 4284.190 Transfer and assumptions. 

USDA Rural Development will not 

approve any transfer and assumptions 

on grants awarded under this subpart. 

§§ 4284.191–4284.193 [Reserved] 

§ 4284.194 Appeal rights. 

The applicant or grantee may have 

review or appeal rights on adverse 

decisions made by USDA Rural 


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19818 Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Proposed Rules 

Development. Written instructions will 

be provided to the applicant or grantee 

by USDA Rural Development when 

review or appeal rights are applicable in 

accordance with 7 CFR part 11. 

§§ 4284.195–4284.200 [Reserved] 

Dated: March 29, 2007. 

Thomas C. Dorr, 

Under Secretary, Rural Development. 

[FR Doc. 07–1922 Filed 4–19–07; 8:45 am] 

BILLING CODE 3410–XY–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2007–27926; Directorate 

Identifier 2006–NM–050–AD] 

RIN 2120–AA64 

Airworthiness Directives; Airbus Model 

A300 Airplanes; and Airbus Model 

A300 B4–600, B4–600R, and F4–600R 

Series Airplanes, and Model C4–605R 

Variant F Airplanes (Collectively Called 

A300–600 Series Airplanes) 

AGENCY: Federal Aviation 

Administration (FAA), Department of 

Transportation (DOT). 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: The FAA proposes to 

supersede an existing airworthiness 

directive (AD) that applies to all Airbus 

Model A300 B2 and B4 series airplanes; 

and Model A300 B4–600, B4–600R, and 

F4–600R (collectively called A300–600) 

series airplanes. The existing AD 

currently requires repetitive inspections 

to detect cracking of the upper radius of 

the forward fitting of frame 47, and 

repair if necessary. This proposed AD 

would reduce inspection thresholds and 

repetitive intervals, and add related 

investigative and corrective actions. 

This proposed AD also would provide 

an optional terminating action for the 

repetitive inspections only for airplanes 

with cracking that is within certain 

limits. This proposed AD results from 

reports of additional cracking in 

airplanes that were inspected in 

accordance with the existing AD. We are 

proposing this AD to detect and correct 

fatigue cracking of the left and right 

upper radius at frame 47, which could 

propagate and result in reduced 

structural integrity of the airplane. 

DATES: We must receive comments on 

this proposed AD by May 21, 2007. 

ADDRESSES: Use one of the following 

addresses to submit comments on this 

proposed AD. 

• DOT Docket Web site: Go to 

http://dms.dot.gov and follow the 

instructions for sending your comments 

electronically. 

• Government-wide rulemaking Web 

site: Go to http://www.regulations.gov 

and follow the instructions for sending 

your comments electronically. 

• Mail: Docket Management Facility; 

U.S. Department of Transportation, 400 

Seventh Street, SW., Nassif Building, 

Room PL–401, Washington, DC 20590. 

• Fax: (202) 493–2251. 

• Hand Delivery: Room PL–401 on 

the plaza level of the Nassif Building, 

400 Seventh Street, SW., Washington, 

DC, between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

Contact Airbus, 1 Rond Point Maurice 

Bellonte, 31707 Blagnac Cedex, France, 

for service information identified in this 

proposed AD. 

FOR FURTHER INFORMATION CONTACT: 

Thomas Stafford, Aerospace Engineer, 

International Branch, ANM–116, 

Transport Airplane Directorate, FAA, 

1601 Lind Avenue, SW., Renton, 

Washington 98057–3356; telephone 

(425) 227–1622; fax (425) 227–1149. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

We invite you to submit any relevant 

written data, views, or arguments 

regarding this proposed AD. Send your 

comments to an address listed in the 

ADDRESSES section. Include the docket 

number ‘‘Docket No. FAA–2007–27926; 

Directorate Identifier 2006–NM–050–

AD’’ at the beginning of your comments. 

We specifically invite comments on the 

overall regulatory, economic, 

environmental, and energy aspects of 

the proposed AD. We will consider all 

comments received by the closing date 

and may amend the proposed AD in 

light of those comments. 

We will post all comments we 

receive, without change, to http:// 

dms.dot.gov, including any personal 

information you provide. We will also 

post a report summarizing each 

substantive verbal contact with FAA 

personnel concerning this proposed AD. 

Using the search function of that Web 

site, anyone can find and read the 

comments in any of our dockets, 

including the name of the individual 

who sent the comment (or signed the 

comment on behalf of an association, 

business, labor union, etc.). You may 

review the DOT’s complete Privacy Act 

Statement in the Federal Register 

published on April 11, 2000 (65 FR 

19477–78), or you may visit http:// 

dms.dot.gov. 

Examining the Docket 

You may examine the AD docket on 

the Internet at http://dms.dot.gov, or in 

person at the Docket Management 

Facility office between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. The Docket 

Management Facility office (telephone 

(800) 647–5227) is located on the plaza 

level of the Nassif Building at the DOT 

street address stated in the ADDRESSES

section. Comments will be available in 

the AD docket shortly after the Docket 

Management System receives them. 

Discussion 

On March 18, 2003, we issued AD 

2003–06–04, amendment 39–13091 (68 

FR 14894, March 27, 2003), for all 

Airbus Model A300 B2 and B4 series 

airplanes, and Model A300 B4–600, B4–

600R, and F4–600R (collectively called 

A300–600) series airplanes. That AD 

requires repetitive inspections to detect 

cracking of the upper radius of the 

forward fitting of frame 47, and repair 

if necessary. That AD resulted from 

issuance of mandatory continuing 

airworthiness information by a civil 

airworthiness authority. We issued that 

AD to detect and correct such fatigue 

cracking, which could result in 

propagation of the cracking to the rear 

fitting and reduced structural integrity 

of fuselage frame 47. 

Actions Since Existing AD Was Issued 

Since we issued AD 2003–06–04, 

cracks were found on the left and right 

upper radius at frame 47 at 48,000 

simulated flights, and at 18,000 total 

flights on an in-service airplane. Inservice experience up to 2001 showed 

there was no propagation of cracking 

between 30 millimeters (mm) and 40 

mm in size. In mid-2001, a crack of 110 

mm in size was found on a scrapped 

Model A300 B4–200 airplane with 

23,700 total flights. Further sampling 

inspections revealed two Model A300 

airplanes with cracks greater in size 

than the defined limit of 50 mm. Based 

on these last investigation results, 

Airbus established a revised inspection 

program that: 

• Redefines the threshold and 

repetitive interval values; and 

• Introduces corrective measures in 

the event of abnormal load events (e.g., 

hard landing and flight with 

turbulence). Definitions of abnormal 

load events are in the applicable 

airplane maintenance manual. 

Relevant Service Information 

Airbus has issued the service 

bulletins described in the following 

table. 


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