Federal Register / Vol. 72, No. 103 / Wednesday, May 30, 2007 / Rules and Regulations 29841 

DEPARTMENT OF AGRICULTURE 

Rural Utilities Service 

7 CFR Part 1703 

Rural Business-Cooperative Service 

Rural Utilities Service 

7 CFR Part 4280 

RIN 0570–AA19 

Rural Economic Development Loan 

and Grant Programs 

AGENCIES: Rural Business-Cooperative 

Service and Rural Utilities Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: This action modifies the 

regulations for the Rural Economic 

Development Loan and Grant Programs. 

This revised regulation is written in a 

format that is simpler in design and 

should improve ease of use by the 

public and program beneficiaries. 

EFFECTIVE DATE: June 29, 2007. 

FOR FURTHER INFORMATION CONTACT: Jody 

Raskind, Director, Specialty Lenders 

Division, Rural Business-Cooperative 

Service, U.S. Department of Agriculture, 

STOP 3225, 1400 Independence Ave., 

SW., Washington, DC 20250–3225, 

Telephone (202) 720–1400. 

SUPPLEMENTARY INFORMATION: 

Classification 

This final rule has been determined to 

be significant and has been reviewed by 

the Office of Management and Budget 

(OMB) under Executive Order 12866. 

Programs Affected 

The Catalog of Federal Domestic 

Assistance number for the programs 

impacted by this action is 10.854, Rural 

Economic Development Loans and Grants. 

Intergovernmental Review 

Rural Economic Development Loans 

and Grants are subject to the provisions 

of Executive Order 12372, which 

requires intergovernmental consultation 

with State and local officials. RBS has 

conducted intergovernmental 

consultation in the manner delineated 

in RD Instruction 1940–J, 

‘‘Intergovernmental Review of Farmers 

Home Administration Programs and 

Activities,’’ and in 7 CFR part 3015, 

subpart V. 

Civil Justice Reform 

This final 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 this rule; 

and (3) administrative proceedings in 

accordance with the regulations of the 

Department of Agriculture National 

Appeals Division (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, 42 

U.S.C. 4321–4374, 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 RBS 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 UMRA. 

Regulatory Flexibility Act 

In compliance with the Regulatory 

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

Agency has determined that this action 

would not have a significant economic 

impact on a substantial number of small 

entities. This regulation only impacts 

those who choose to participate in the 

loan or grant program. Small entity 

applicants will not be impacted to a 

greater extent than large entity 

applicants. 

Executive Order 13132 

It has been determined under 

Executive Order 13132, Federalism, that 

this rule does not have sufficient 

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 

The information collection and 

recordkeeping requirements contained 

in this regulation have been approved 

by the Office of Management and 

Budget (OMB) under the provisions of 

44 U.S.C. chapter 35 and were assigned 

OMB control number 0570–0035, in 

accordance with the Paperwork 

Reduction Act of 1995. Under the 

Paperwork Reduction Act of 1995, no 

person is required to respond to a 

collection of information unless it 

displays a valid OMB control number. 

The revisions in this rulemaking, for 7 

CFR part 4280, required an amendment 

to the burden package and this 

modification has been approved by 

OMB. 

E-Government Act Compliance 

The Rural Business-Cooperative 

Service 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. 

Background 

The proposed rule for the Rural 

Economic Development Loan and Grant 

(REDLG) programs was published on 

December 15, 1999, in the Federal 

Register, in Vol. 64, No. 240, pages 

69937–69946, as 7 CFR part 4280. The 

proposed rule was originally structured 

in a format consisting of questions and 

answers. To provide for an easier 

understanding of these programs, 

inasmuch as it includes the 

participation of three distinct parties 

(the Federal Government, the 

intermediary, and the third-party 

ultimate recipient), this final rule has 

been restructured in the standardized 

format utilized by the Agency in its 

other regulations. Consequently, several 

section numbers and headings of the 

final rule have been modified due to the 

change in format. 

The existing regulations for the 

REDLG programs are found at 7 CFR 

part 1703, subpart B, and will be 


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29842 Federal Register / Vol. 72, No. 103 / Wednesday, May 30, 2007 / Rules and Regulations 

removed from Part 1703 upon 

publication of this final rule. 

The REDLG programs were originally 

implemented in 1989 as part of the rural 

economic development program of the 

Rural Electrification Administration, 

predecessor to the Rural Utilities 

Service (RUS). As a result of the United 

States Department of Agriculture 

reorganization, responsibility for these 

programs was transferred to Business 

Programs under the Rural BusinessCooperative Service (RBS), which 

provides financing for rural areas. These 

programs are administered at the State 

level through the Department of 

Agriculture’s Rural Development State 

Offices. 

Since its inception in 1989, these 

programs have had a substantial impact 

on economic development in rural 

areas. As of September 30, 2005, the 

REDLG programs have provided $217.5 

million in loans and $92.7 million in 

grants, leveraged over $2.5 billion, and 

directly created an estimated 35,000 

new jobs for rural areas. 

Under these programs, loans or grants 

are provided to eligible electric and 

telecommunications utilities. The 

purpose of the programs is to encourage 

these utilities to promote rural 

economic development and job creation 

projects. The utility, previously referred 

to as the ‘‘RUS Borrower’’ now referred 

to as the ‘‘intermediary’’ can receive 

loans to help finance projects such as 

business start-up costs, business 

expansion, community development, 

and business incubator projects. The 

intermediary must use program loan 

funds to make a pass-through loan to an 

ultimate recipient such as a business. 

The intermediary is responsible for fully 

repaying its loan to the Government 

even if the ultimate recipient does not 

repay its loan. 

The intermediary must use program 

grant funds, along with its required 

contribution, to create a revolving loan 

fund that the intermediary utility will 

operate and administer. Loans to the 

ultimate recipient are made from the 

revolving loan fund for a variety of 

projects. 

Comments and Responses on the 

Proposed Rule 

A total of 22 organizations responded 

within the official 30-day comment 

period. In addition to the comments 

solicited from the general public 

through the rulemaking process, RBS 

held a public meeting on August 2, 

2000, to hear oral presentations on the 

proposed rule. Four public 

organizations made presentations. All 

comments, both written and oral, were 

considered and some revisions in the 

final rule are in response to those 

comments. Some of these revisions 

include clarifications to better explain 

the programs. The majority of the 

comments centered on the selection 

factors established in § 4280.42(b) for 

Agency use in evaluating and scoring 

the applications. Other comments 

pertained to the elimination of a 

previously eligible purpose and to 

supplemental funds use. The comments 

have been grouped into 8 categories and 

are discussed below based on the 

applicable section number of the final 

rule. 

Comment. Some comments indicated 

that intermediaries do not want their 

supplemental contribution applied to 

the same project as funded by the 

Agency grant, but wanted their 

contribution available to lend to a 

separate project. 

Response. The Agency is aware that 

intermediaries have experienced 

difficulty in full utilization of 

supplemental funds. RBS has 

considered these comments and has 

amended the final rule to give the 

intermediary the option to use its 

supplemental contribution for the same 

project the Agency is financing or to 

fund another eligible project. If the 

intermediary chooses to finance a 

separate eligible project, the matching 

funds must be used within 3 years from 

the date of the grant agreement or the 

grant will be terminated. Subsequent 

use of revolved funds will be managed 

in accordance with the Agency—

approved revolving loan fund plan and 

the interest rates on those loans will be 

at the discretion of the intermediary as 

shown in the plan, but not to exceed the 

prevailing prime rate. 

Comment. Some comments opposed 

the proposed exclusion of agricultural 

production as an eligible purpose. The 

commenting entities believe that 

agriculture is a vital business 

component of their state economy and 

providing for both value-added 

agriculture and priority markets for 

farmers is very important. 

Response. Historically, funding under 

the REDLG program has not been 

heavily applied for or utilized by 

agricultural production projects. The 

Agency has decided to allow 

agricultural production as an eligible 

purpose only where the project benefits 

farmer-owned cooperatives or a similar 

farmer-owned organization through 

which benefits are passed directly to the 

farmer members. 

Comment. Some comments stated that 

applications for advanced 

telecommunications or computer 

networks to facilitate medical, 

educational, or job training projects 

should not be eligible for priority points 

under two separate sections of the 

regulation, that is, § 4280.42(b)(1)(iii) 

and 4280.43(d). The comments stated 

that this type of project should be a 

priority of the programs since one of the 

ways rural America can be more 

competitive is to have advanced 

telecommunications systems for health 

care, job training, and business use. 

They believe, however, that there are 

other infrastructure and business 

assistance needs that must also be met. 

Response. RBS agrees that advanced 

telecommunications and computer 

network projects should be a priority. 

To address this, RBS had initially added 

five points to those projects in addition 

to those added under 

§ 4280.42(b)(1)(iii). RBS now agrees that 

there are other program priorities that 

must be met and Advanced 

Telecommunications and computer 

network projects should not receive two 

sets of priority points. Accordingly, 

§ 4280.43(d) will be removed. 

Comment. Some comments stated that 

using a selection factor that measures 

job creation per $100,000 of project 

costs is too limiting. Another comment 

supported the existing regulation that 

awards points for job creation under a 

subjective factor. 

Response. RBS disagrees that a 

measure of jobs per $100,000 is too 

limiting. We agree that a broader 

approach to job creation is helpful. 

Therefore, we have maintained the 

selection factor of jobs per $100,000, but 

have expanded the definitions to 

include ‘‘direct’’, ‘‘indirect’’, ‘‘fulltime’’, ‘‘part-time’’, and ‘‘seasonal’’ jobs 

as well as a formula for determining 

full-time job equivalents. These 

definitions clarify formulaic 

requirements for correct calculation of 

program job creation statistics in 

accordance with Agency requirements. 

To calculate full-time equivalent jobs, 

two part-time jobs are counted as one 

full-time job or three seasonal jobs as 

one full-time job. If the total number of 

part-time and seasonal jobs adds up to 

a fraction, round up to the next whole 

number after combining same. 

Comment. Some comments supported 

the proposed elimination of the rural 

restrictions pointing out the positive 

regional aspects that projects in larger 

communities have over the rural 

economy. Other comments urged the 

Agency to retain these restrictions, 

pointing out that the Agency should 

give priority to very rural locations. 

Response. The Agency has revised its 

definition of rural to allow projects to be 

funded in areas with a population of 

50,000 or less which is the statutory 

limit. However, the Agency will retain 


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its historical practice to allow priority 

points to projects in rural areas with a 

population of less than 2,500. 

Comment. The majority of comments 

opposed awarding points based on the 

award being an initial one for the 

intermediary or the county rather than 

focusing funding on the best possible 

projects. 

Response. RBS has taken into 

consideration the fact that the majority 

of intermediaries that are active 

participants in the REDLG project are 

concentrated in a few states and these 

intermediaries have received the highest 

number of REDLG awards. The 

intermediaries in these states have 

access to affiliated economic 

development organizations that assist 

the intermediaries in seeking 

prospective business clients, providing 

technical assistance in promoting rural 

development, and in packaging 

applications. Not all intermediaries 

throughout the country have such 

technical expertise available. This 

discourages their participation in the 

REDLG program. To ensure that the 

greatest number of intermediaries has 

access to the benefits of the program, 

RBS will award priority points if the 

application is a first-time award for a 

new intermediary or if it is an award to 

an existing intermediary that will fund 

a project in a county not previously 

served. 

Comment. Some comments stated that 

the requirement for a financial plan that 

covers the term of the loan was 

excessive. 

Response. RBS has changed this 

section to require a 3-year financial plan 

from the ultimate recipient. 

Comment. One comment stated that 

the selection of awards should be based 

on points, regardless of the number of 

previous awards given to the 

intermediary in a fiscal year. 

Response. To ensure that the greatest 

numbers of intermediaries have access 

to the benefits of the programs, the 

Agency will retain the proposed 

provision that the Agency may limit an 

intermediary to one selected grant 

application and two selected loan 

applications in a fiscal year, depending 

upon availability of funds. 

Other Clarifications to Final Rule 

Section 4280.2: the reference to 

‘‘loan’’ was changed to ‘‘REDG ZeroInterest Loan’’ and ‘‘REDL Zero-Interest 

Loan’’ to better reflect that REDLG 

encompasses two separate and distinct 

programs; the definition for ‘‘project’’

was revised to add ‘‘ultimate recipient 

activity’’ for clarification purposes; the 

nomenclature ‘‘RUS Borrower’’ was 

eliminated replaced with 

‘‘intermediary.’’ A definition was 

provided for ‘‘intermediary’’ to meet the 

requirements of the programs. The 

definition indicates that RUS remains 

the final determinant of an 

intermediary’s eligibility for 

participation in the programs; a 

definition of ‘‘rural area’’ was added; 

and the definition for an ‘‘ultimate 

recipient’’ was revised to list all eligible 

entities. 

Sections 4280.3 and 4280.15(a), are 

revised to clarify the definition of ‘‘startup venture costs.’’

Section 4280.15(g), clarifies that zerointerest loans are allowable for REDG 

projects in accordance with § 4280.21. 

Section 4280.17, clarifies that 

payments on zero-interest loans are due 

in monthly installments; and provides 

guidance regarding disposition of partial 

loan payments made by ultimate 

recipients. 

Sections 4280.19 and 4280.50, state 

that administration and termination of 

grants will be subject, where applicable, 

to 7 CFR parts 3015 and 3019. 

Section 4280.21, a reference to 

Federally-recognized Indian tribes was 

inserted to clarify the definition of 

eligible ultimate recipients in 

connection with § 4280.3. 

Section 4280.23:, clarifies the 

intended use of the Intermediary’s 

contribution to the revolving loan fund 

and the reasons that will result in 

termination of the fund. 

Provisions previously stated under 

Section 4280.24 have been combined 

with Section 4280.23 to maintain 

consistency in subject matter. The 

nomenclature ‘‘Non-Federal Funds’’ has 

been changed to ‘‘Revolved Funds’’ for 

clarification of the true nature of the 

funding. Section 4280.24 now clarifies 

‘‘Revolved Funds.’’

Section 4280.27, clarifies that 

program funds cannot be used to 

refinance existing indebtedness of the 

ultimate recipient project; and cites 

those instances where program funds 

may be eligible for agricultural 

production purposes. 

Section 4280.29, reflects that either 

the intermediary or the ultimate 

recipient may provide the 20 percent 

supplemental financing required for the 

Ultimate Recipient Project. 

Section 4280.36: clarifies Equal 

Employment Opportunity, 

nondiscrimination and civil rights 

requirements; clarifies that loans made 

from the revolving loan fund, when 

funds are derived from repayments or 

interest earnings, and not directly from 

the Government, are not subject to the 

Agency’s environmental clearance 

process; clarifies the need to comply 

with flood hazard insurance 

requirements; and provides audit 

requirements for assistance under this 

program. 

Section 4280.42(b)(5), the economic 

factor used has been changed to per 

capita personal income rather than 

median household income. Per capita 

personal income is a more appropriate 

indicator of current wages and 

economic wealth of the county where 

the project is located and has 

historically been used in the REDLG 

programs. 

List of Subjects 

7 CFR Part 1703 

Community development, Grant 

programs—housing and community 

development, loan programs—housing 

and community development, Reporting 

and recordkeeping requirements, Rural 

areas. 

7 CFR Part 4280 

Business and industry, Community 

development, Economic development, 

Grant programs—housing and 

community development, loan 

programs—housing and community 

programs, Reporting and recordkeeping 

requirements, Rural areas. 

■ Therefore, chapters XVII and XLII, 

title 7, Code of Federal Regulations, are 

amended as follows: 

CHAPTER XVII—RURAL UTILITIES 

SERVICE, DEPARTMENT OF 

AGRICULTURE 

PART 1703—RURAL DEVELOPMENT 

■ 1. The authority citation for part 1703 

continues to read as follows: 

Authority: 7 U.S.C. 901, et seq. and 950aaa, 

et seq. 

Subpart B—[Removed] 

■ 2. Subpart B of part 1703 is removed 

and reserved. 

CHAPTER XLII—RURAL BUSINESS—

COOPERATIVE SERVICE AND RURAL 

UTILITIES SERVICE, DEPARTMENT OF 

AGRICULTURE 

PART 4280—LOANS AND GRANTS 

■ 3. Subpart A (§§ 4280.1 through 

4280.100), is added to part 4280 to read 

as follows: 

Subpart A—Rural Economic 

Development Loan and Grant 

Programs 

Sec. 

4280.1 Purpose. 

4280.2 Policy. 

4280.3 Definitions. 

4280.4–4280.12 [Reserved] 

4280.13 Applicant eligibility. 


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29844 Federal Register / Vol. 72, No. 103 / Wednesday, May 30, 2007 / Rules and Regulations 

4280.14 [Reserved] 

4280.15 Ultimate Recipient Projects eligible 

for Rural Economic Development Loan 

funding. 

4280.16 REDL and REDG Loan terms. 

4280.17 Additional REDL terms. 

4280.18 [Reserved] 

4280.19 REDG Grants. 

4280.20 [Reserved] 

4280.21. Eligible REDG initial Ultimate 

Recipients and Projects. 

4280.22 [Reserved] 

4280.23 Requirements for lending from 

Revolving Loan Fund. 

4280.24 Revolved funds. 

4280.25 Revolving Loan Fund Plan. 

4280.26 Administration and operation of 

the Revolving Loan Fund. 

4280.27 Ineligible purposes. 

4280.28 [Reserved] 

4280.29 Supplemental financing required 

for the Ultimate Recipient Project. 

4280.30 Restrictions on the use of REDL or 

REDG funds. 

4280.31–4280.35 [Reserved] 

4280.36 Other laws that contain compliance 

requirements for these Programs. 

4280.37 Application forms and filing dates. 

4280.38 Maximum amount of loans and 

Grants. 

4280.39 Contents of an application. 

4280.40 [Reserved] 

4280.41 Environmental review of the 

application. 

4280.42 Application evaluation and 

selection. 

4280.43 Discretionary points. 

4280.44 Limitation on the number of loans 

or Grants to an Intermediary. 

4280.45–4280.46 [Reserved] 

4280.47 Non-selection of applications. 

4280.48 Post-selection period. 

4280.49 [Reserved] 

4280.50 Disbursement of Zero-Interest Loan 

funds. 

4280.51–4280.52 [Reserved] 

4280.53 Loan payments. 

4280.54 Construction procurement 

requirements. 

4280.55 Monitoring responsibilities. 

4280.56 Submission of reports and audits. 

4280.57–4280.61 [Reserved] 

4280.62 Appeals. 

4280.63 Exception authority. 

4280.64–4280.99 [Reserved] 

4280.100 OMB control number. 

Authority: 5 U.S.C. 301: 7 U.S.C. 940c. 

Subpart A—Rural Economic 

Development Loan and Grant 

Programs 

§ 4280.1 Purpose. 

The Rural Economic Development 

Loan (REDL) and Grant (REDG) 

Programs provide financing to eligible 

Rural Utilities Service (RUS) electric or 

telecommunications borrowers 

(Intermediaries) to promote rural 

economic development and job creation 

projects. 

§ 4280.2 Policy. 

(a) REDL Program. REDL Zero-Interest 

Loans are made to Intermediaries, to 

relend, at a zero-interest rate, to 

Ultimate Recipients. Ultimate 

Recipients are responsible for 

repayment to the Intermediary. The 

Intermediary must transmit Ultimate 

Recipient loan repayments to Rural 

Development. 

(b) REDG Program. Grants are made to 

Intermediaries to establish Revolving 

Loan Funds. REDG Zero-Interest Loans 

are made by the Intermediary from the 

Revolving Loan Fund to Ultimate 

Recipients for the purpose of financing 

specific, approved Projects. Ultimate 

Recipients are responsible for 

repayment to the Intermediary. The 

Ultimate Recipient’s loan repayments 

are to be retained in the Revolving Loan 

Fund, which is maintained by the 

Intermediary, to finance other rural 

economic development Projects. Only 

the initial loan made by the 

Intermediary from the Revolving Loan 

Fund has to be at zero interest. 

§ 4280.3 Definitions. 

The following definitions are 

applicable to this subpart: 

Advanced Telecommunications. 

Using communications equipment for 

purposes, such as the simultaneous 

transmission of images and voice or the 

electronic transmission of data between 

multiple sites that do not consist 

primarily of providing local exchange 

voice or other routine communications. 

Agricultural Production. The 

cultivation, production, growing, 

raising, feeding, housing, breeding, 

hatching, or managing of crops, plants, 

animals, fish, or birds, either for fiber, 

food for human consumption, or 

livestock feed. 

Business Incubator. A facility in 

which small businesses can share 

premises, support staff, computers, 

software or hardware, 

telecommunications terminal 

equipment, machinery, janitorial 

services, utilities, or other overhead 

expenses, and where such businesses 

can receive Technical Assistance, 

financial advice, business planning 

services or other support. 

Community Facilities Project. An 

eligible community facility under the 

Community Facility Direct or 

Guaranteed programs. 

Cushion of Credit. The amount 

contributed by the Intermediary 

pursuant to 7 U.S.C. 940c. 

Direct Job. A job that is created or 

saved by an Ultimate Recipient 

employer as a result of funding received 

from these Programs. 

Established Operation. An entity that 

has engaged in the nature of the Project 

for more than one year. 

Full-Time Job. A job for which a 

worker is scheduled to work 35 hours 

per week, or more, on a regular basis. 

Grant. For the REDG Program only; a 

transfer of monies other than a loan, 

from Rural Development to an 

Intermediary for specific use in funding 

a Revolving Loan Fund from which 

loans are made to Ultimate Recipients. 

Grant funds must be repaid by the 

Intermediary to Rural Development in 

the event the Fund is unused for more 

than one year, misused, no longer 

needed for its intended purposes, or the 

Grant is terminated. 

Independent Provider. An entity or 

individual, other than the Intermediary 

or the Ultimate Recipient that is not 

owned by a subsidiary or an affiliate of 

the Intermediary or Ultimate Recipient 

or would otherwise have an interest in 

the Intermediary or Ultimate Recipient 

that would be a conflict of interest or 

have the appearance of a conflict of 

interest. 

Indirect Job. A job that is created or 

saved as a result of a funded Project, but 

is not with the Ultimate Recipient. 

Infrastructure. Facilities required to 

support private sector economic activity 

such as: Highways, streets, roads, and 

bridges; public transit; water supply; 

wastewater treatment; water resources; 

solid waste; and hazardous waste 

services. 

Intermediary. An entity that is 

identified by RUS as an eligible 

borrower under the Rural Electrification 

Act and obtains a REDG Grant or a 

REDL Loan. 

Part-Time Job. A job for which a 

worker is scheduled to work less than 

35 hours per week, on a regular basis. 

Programs. The Rural Economic 

Development Loan (REDL) and the 

Rural Economic Development Grant 

(REDG) Programs. 

Project. The facility, equipment, or 

activity of the Ultimate Recipient that is 

funded under one of the Programs. 

REDG. The Rural Economic 

Development Grant Program. 

REDL. The Rural Economic 

Development Loan Program. 

Revolving Loan Fund (or Fund). A 

revolving loan fund that is created with 

Grant funds and the Intermediary’s 

supplemental contribution under the 

REDG Program that makes loans and 

uses the loan repayments and interest 

earnings to make subsequent loans until 

the Fund is terminated. 

Revolving Loan Fund Plan. A plan 

developed by the Intermediary and 

approved by Rural Development that 

governs the use of the Revolving Loan 

Fund. The plan must at least include a 

detailed explanation of the 

Intermediary’s Fund administration 


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policies and procedures and planned 

Fund use after the funds in the 

Revolving Loan Fund have revolved. 

Fund administration policies and 

procedures must at least include 

information regarding the review and 

approval of loans from the Fund. 

Rural Area. This information will be 

taken from the most recent census data. 

Any area other than: 

(1) A city or town that has a 

population of greater than 50,000 

inhabitants; and 

(2) The urbanized area contiguous and 

adjacent to such a city or town. 

Rural Business-Cooperative Service 

(RBS). The Rural Business-Cooperative 

Service, an agency within the Rural 

Development mission area of the USDA. 

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 Rural Development. 

Rural Utilities Service (RUS). The 

Rural Utilities Service, an Agency 

within the Rural Development mission 

area of the USDA. 

Seasonal Job. A job whether PartTime or Full-Time that begins and ends 

in accordance with a specified time 

period of less than a year and generally 

within a range less than four months. 

Start-Up Venture(s). An entity that 

has engaged in the nature of the Project 

for less than one year. An entity that has 

operated in excess of one year, but 

which is about to enter into a new line 

of business, would be considered a 

Start-Up Venture. 

State. Any of the 50 States, the 

District of Columbia, the 

Commonwealth of Puerto Rico, the 

United States Virgin Islands, Guam, 

American Samoa, the Commonwealth of 

the Northern Marianas Islands, the 

Republic of Palau, the Federated States 

of Micronesia, and the Republic of the 

Marshall Islands. 

Technical Assistance. Managerial, 

financial and operational analysis and 

consultation by Independent Providers 

to assist Project owners in identifying 

and evaluating problems or potential 

problems and to provide training that 

enables Project owners to successfully 

implement, manage, operate and 

maintain viable Projects. 

Ultimate Recipient. An entity or 

individual that receives a loan from an 

Intermediary. The Ultimate Recipient 

may be a for profit or not-for-profit 

entity such as, but not limited to, a sole 

proprietorship, a corporation, a 

cooperative, a partnership, or a Limited 

Liability Company. The Ultimate 

Recipient may also be a public body, 

such as, but not limited to, a political 

subdivision of a State or locality, or a 

Federally-recognized Indian tribe. 

Uniform Act. The Uniform Relocation 

Assistance and Real Property 

Acquisition Act of 1970 (42 U.S.C. 

4601–4655). 

USDA. The United States Department 

of Agriculture. 

Zero-Interest Loan. A loan made by 

the Intermediary to the Ultimate 

Recipient with no interest and which 

will be repaid to the Intermediary by the 

Ultimate Recipient. 

§§ 4280.4–4280.12 [Reserved] 

§ 4280.13 Applicant eligibility. 

Applicants that are not delinquent on 

any Federal debt or otherwise 

disqualified from participation in these 

Programs are eligible to apply. An 

applicant must be eligible under 7 

U.S.C. 940c. 

§ 4280.14 [Reserved] 

§ 4280.15 Ultimate Recipient Projects 

eligible for Rural Economic Development 

Loan funding. 

An Intermediary may receive REDL 

funds only when it has a pre-approved 

Ultimate Recipient and Project that have 

an immediate need for the Zero-Interest 

Loan. REDL funds may only be used by 

the Intermediary to make a Zero-Interest 

Loan to the Ultimate Recipient to 

finance financially viable economic 

development or job creation Projects in 

a Rural Area. Funds may only be used 

to provide the following assistance: 

(a) Start-Up Venture costs, including, 

but not limited to financing fixed assets 

such as real estate, buildings (new or 

existing), equipment, or working capital; 

(b) Business expansion; 

(c) Business Incubators; 

(d) Technical Assistance; 

(e) Project feasibility studies; 

(f) Advanced Telecommunications 

services and computer networks for 

medical, educational, and job training 

services; 

(g) Other Projects eligible under 

§ 4280.21; or 

(h) Community Facilities Projects. 

§ 4280.16 REDL and REDG Loan terms. 

REDL and REDG loans made by the 

Intermediary are governed by the 

following terms: 

(a) The maximum term of a loan is 10 

years, including any principal 

deferment period. The Intermediary 

may choose a shorter term if desired. 

(b) Deferments on Zero-Interest Loans 

will automatically be granted by Rural 

Development upon request of the 

Intermediary as follows: 

(1) A deferral for up to 1 year for 

Projects involving an Established 

Operation; or 

(2) A deferral for up to 2 years for 

Projects involving a Start-Up venture or 

a Community Facilities Project whether 

or not such Project also receives funding 

under USDA Community Facilities 

funding programs. 

(c) The Intermediary must provide the 

Ultimate Recipient with the same loan 

terms as the Intermediary receives from 

Rural Development. 

(d) The Intermediary is solely 

responsible for the financial approval of 

Fund loans and all other Fund decisions 

and actions. 

§ 4280.17 Additional REDL terms. 

(a) The Intermediary is responsible for 

fully repaying the Zero-Interest Loan to 

RBS even if the Ultimate Recipient does 

not repay the Intermediary. 

(b) The Intermediary is responsible for 

remitting any partial or full payment to 

RBS at the time the Ultimate Recipient 

pays the Intermediary. 

(c) Unless deferred pursuant to 

§ 4280.16(b) of this subpart, loan 

payments to Rural Development under 

the REDL Program are due monthly. 

(d) If the Intermediary does not have 

an outstanding loan with RUS, the 

Intermediary must immediately provide, 

as security for any REDL loan it 

receives, a Rural Development-approved 

irrevocable letter of credit that remains 

in effect until the loan is repaid. 

§ 4280.18 [Reserved] 

§ 4280.19 REDG Grants. 

Intermediaries receiving Grants must 

partially finance a Revolving Loan Fund 

that the Intermediary will operate and 

administer, by providing supplemental 

funds of at least 20 percent of the Grant. 

Grants are subject to 7 CFR parts 3015, 

3019, and 3052, as applicable. 

§ 4280.20 [Reserved] 

§ 4280.21 Eligible REDG Ultimate 

Recipients and Projects. 

The Intermediary may only make 

loans from the Revolving Loan Fund to 

entities located in a Rural area of a 

State. Eligible entities are as follows: 

(a) Non-profit entities, public bodies, 

or Federally-recognized Indian tribes 

Ultimate Recipients for: 

(1) Community development or 

Community Facility Projects that: 

(i) will create or save employment; 

and 

(ii) are open to and serve all Rural 

residents, and are owned by the 

Ultimate Recipient; 

(2) Business Incubators; 

(3) Facilities and equipment to 

provide education and training to 

residents of Rural Areas that will 

facilitate economic development; 


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(4) Facilities and equipment to 

provide medical care to residents of 

Rural Areas. Equipment and facilities 

may be funded to enable eligible entities 

to provide medical training and related 

professional health care skills to rural 

health care providers; 

(5) Projects that utilize Advanced 

Telecommunications or computer 

networks to facilitate medical or 

educational services or job training; or 

(6) Project feasibility studies and 

Technical Assistance. A qualified 

Independent Provider must perform 

feasibility studies or Technical 

Assistance. 

(b) For-profit Ultimate Recipients for 

Projects under paragraphs (a)(3), (4), (5), 

or (6) of this section. 

§ 4280.22 [Reserved] 

§ 4280.23 Requirements for lending from 

Revolving Loan Fund. 

(a) Supplemental contribution. The 

Intermediary must establish a Revolving 

Loan Fund and contribute an amount 

equal to at least 20 percent of the Grant. 

The supplemental contribution must 

come from Intermediary’s funds which 

may not be from other Federal Grants, 

unless permitted by law. 

(b) Use of supplemental contribution. 

The Intermediary’s contribution will 

only be used to make REDG loans and 

not other investment purposes. The 

Intermediary’s contribution must 

remain a permanent part of the 

Revolving Loan Fund until the Fund is 

terminated. 

(c) REDG Zero-Interest Loan 

Requirements. The Fund is made up of 

Rural Development and Intermediary 

contributions and must be loaned in 

accordance with one of the following 2 

options: 

(1) The contribution may be used to 

fund the same Project that Rural 

Development is funding. The interest 

rate on that portion of the financing 

using Rural Development funds will be 

at zero percent. The interest rate on that 

portion of the financing using the 

Intermediary’s contribution may be 

greater than zero percent but must be 

less than, or equal to, the prevailing 

prime rate. Using this option, loan 

security and recovery of loan losses 

must provide for the pro rata recovery 

and distribution between the 

Intermediary and Rural Development 

based on the respective amounts of each 

contribution to the total loan amount for 

the Project. 

(2) The Intermediary’s contribution 

may be used to fund Projects separate 

from the Project financed with Rural 

Development funds, provided that the 

Project is eligible in accordance with 

§ 4280.21. 

(3) Whether the Intermediary chooses 

the option under paragraph (c)(1) or 

paragraph (c)(2) of this section, its 

contribution must be used to fund an 

eligible Project within 3 years from the 

date of the Grant agreement. If the 

Intermediary fails to use its contribution 

within this 3-year period, Rural 

Development will terminate the Grant. 

(d) Intermediary’s supplemental 

funds. Once revolved, monies from the 

Fund may be loaned at an interest rate 

called for in the Revolving Loan Fund 

Plan, not to exceed the prevailing prime 

rate. 

(e) Eligible purposes only. Until the 

total amount in the Fund has been 

loaned, all loans must be made for 

eligible purposes as stated in § 4280.21. 

After the Fund has been loaned, in 

accordance with § 4280.21 of this 

subpart, the Intermediary shall make 

loans to finance rural economic 

development purposes in accordance 

with the Revolving Loan Fund Plan. All 

loan repayments, including interest 

earned, must be deposited into the 

Fund. 

(f) Termination for cause. Rural 

Development will terminate the Fund 

and require repayment of the Grant 

funds in accordance with 7 CFR parts 

3015 and 3019 if Rural Development 

determines that the Fund is not being 

operated according to the approved 

Revolving Loan Fund Plan, this subpart, 

or for other good cause determined by 

Rural Development, such as 

questionable prepayment of initial 

loans. 

(g) All REDG Loans must be made to 

Rural Ultimate Recipients. 

§ 4280.24 Revolved funds. 

Rural Development and the 

Intermediary’s supplemental funds will 

be considered revolved after they have 

been loaned to Ultimate Recipients and 

subsequently repaid. Loans made from 

revolved funds will not require prior 

approval of Rural Development for 

creditworthiness or environmental 

clearance purposes. All other Federal 

compliance requirements, including 

those in this subpart, remain in effect. 

§ 4280.25 Revolving Loan Fund Plan. 

Each REDG Intermediary must adopt 

a Rural Development-approved plan 

that specifies that: 

(a) The initial loan made from the 

Fund will be at zero percent interest and 

have a maximum term of 10 years; 

(b) Loans made from loan repayments 

may carry an interest rate less than, or 

equal to, the prevailing prime rate. The 

Intermediary determines repayment 

terms and security arrangements on 

these loans. 

(c) Loans made from repayments of 

REDG loans must be for eligible Program 

purposes; 

(d) The Intermediary is solely 

responsible for the financial approval of 

Fund loans and all other Fund decisions 

and actions; and 

(e) No changes will be made to a Rural 

Development-approved Revolving Loan 

Fund Plan without the prior written 

approval of Rural Development. 

§ 4280.26 Administration and operation of 

the Revolving Loan Fund. 

(a) The Intermediary will operate and 

administer the Revolving Loan Fund. 

The Intermediary may contract with a 

third party for administrative services 

regarding the Fund. However, the 

Intermediary must permanently retain 

all Project review, approval, and 

monitoring authority and responsibility. 

This authority and responsibility cannot 

be delegated to any other person or 

entity. 

(b) Up to 10 percent of Rural 

Development Grant funds may be 

applied toward operating expenses over 

the life of the Fund. Operating expenses 

include the costs of administering the 

Fund and Technical Assistance 

provided to Project owners by 

Independent Providers. 

(c) In cases where the Intermediary 

uses its supplemental contribution to 

the Revolving Loan Fund for a Project 

other than the Project that resulted in 

the Intermediary being awarded the 

Grant, the loan terms must not exceed 

10 years and the interest rate must be 

less than, or equal to, the prevailing 

prime rate. 

§ 4280.27 Ineligible purposes. 

Zero-Interest Loans may not be used: 

(a) For activities that would adversely 

affect the environment, or activities that 

limit the choice of reasonable 

alternatives prior to satisfying Rural 

Development environmental 

requirements; 

(b) To pay off or refinance any 

existing indebtedness or costs of the 

Project that were incurred prior to Rural 

Development receipt of the 

Intermediary’s completed application; 

(c) For any electric or 

telecommunications purpose or for the 

Intermediary’s electric or 

telecommunications operations, for 

affiliated operations of the Intermediary, 

or for the benefit of other Intermediaries 

or their affiliated operations, except 

those purposes contained in 

§ 4280.15(f); 

(d) To pay the salaries of any 

employee or owner of the Intermediary, 

its subsidiaries, or affiliates, except for 

salaries incurred in administering a 


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Revolving Loan Fund established under 

the REDG Program; 

(e) For community antenna or cable 

television systems or facilities; 

(f) For residential purposes such as 

residential dwellings and land sites; 

facilities to provide entertainment 

television; to transfer property between 

owners without making improvements 

that will promote or sustain economic 

development in Rural Areas; or for 

personal, non-business related vehicles; 

(g) Where there is directly or 

indirectly a conflict of interest or the 

appearance of a conflict of interest in 

the Project; for Intermediaries this 

would include a situation in which the 

Intermediary, its officers, managers, 

Board of Directors, employees, their 

spouses, children, or close relatives, 

have a financial or ownership interest in 

the Project being funded, including its 

construction or development; 

(h) For any purpose when receipt of 

loan funds is conditioned upon the 

requirement that the Ultimate Recipient 

acquire electric or telecommunications 

service from the Intermediary or its 

affiliates; 

(i) For any gambling activity; 

(j) For a Project that would result in 

the transfer of existing employment or 

business activity more than 25 miles 

from its existing location; 

(k) For proposed Projects located in 

areas covered by the Coastal Barrier 

Resources Act (16 U.S.C. 3501–3510); 

(l) For any illegal activity or any 

activity involving prostitution; 

(m) For Agricultural Production, 

except where the Project is a farmerowned cooperative or similar 

organization where the benefits of the 

Project are passed on to the farmerowners, and the Agricultural Production 

is part of an integrated business that 

processes the agricultural products, and 

the Agricultural Production portion of 

the loan will not exceed 50% of the loan 

amount; 

(n) For any pass-through Grant 

funding activity (a Grant by the 

Intermediary to the Ultimate Recipient); 

(o) Provision of only local exchange 

voice telephone service; or 

(p) for any other purpose announced 

in a notice by Rural Development. This 

will not affect Grants that have already 

been awarded. 

§ 4280.28 [Reserved] 

§ 4280.29 Supplemental financing required 

for the Ultimate Recipient Project. 

(a) For REDL loans, either the 

Ultimate Recipient or the Intermediary 

must provide supplemental funds for 

the Project equal to at least 20 percent 

of the loan to the Intermediary. For 

REDG grants, the Intermediary must 

provide supplemental funds, to 

capitalize the Revolving Loan Fund, 

equal to at least 20 percent of the Grant 

to the Intermediary. 

(b) Funds provided by the Ultimate 

Recipient must be: 

(1) Cash or its equivalent; 

(2) Provided after Rural Development 

receives the completed application; and 

(3) Disbursed for an eligible Project 

within a three year period that begins on 

the day the Intermediary signs the Grant 

agreement. 

(c) Satisfactory evidence of the 

Ultimate Recipient’s funds must be 

provided to Rural Development before it 

will advance any funds to the 

Intermediary. 

§ 4280.30 Restrictions on the use of REDL 

or REDG funds. 

(a) Conflict of interest. The 

Intermediary must not own or manage 

any Ultimate Recipient Project, unless 

the Project is acquired as a result of 

servicing a loan made from the 

Revolving Loan Fund. Conflicts of 

interest and all appearances of a conflict 

of interest are not permitted. 

(b) Fees. The Intermediary may charge 

reasonable loan servicing fees, which 

are limited to one percent per year of 

the principal amount outstanding on the 

loan; reasonable professional service 

fees that are customary for the service 

being provided and in accordance with 

any standard fee schedules that have 

been established for the service; and 

reasonable expenses the Intermediary 

has incurred from Independent 

Providers. 

(c) Interest earnings. Any interest 

earned by the Intermediary on advances 

of Rural Development REDG or REDL 

funds prior to the disbursement for the 

Project, must be returned to Rural 

Development. 

§§ 4280.31–4280.35 [Reserved] 

§ 4280.36 Other laws that contain 

compliance requirements for these 

Programs. 

(a) Equal employment opportunity. 

For all construction contracts and 

Grants in excess of $10,000, the 

contractor must comply with Executive 

Order 11246, as amended by Executive 

Order 11375, and as supplemented by 

applicable Department of Labor 

regulations (41 CFR part 60). The 

applicant is responsible for ensuring 

that the contractor complies with these 

requirements. 

(b) Equal opportunity and 

nondiscrimination. Rural Development 

will ensure that equal opportunity and 

nondiscriminatory requirements are met 

in accordance with the Equal Credit 

Opportunity Act and 7 CFR part 15d, 

conducted by USDA. Rural 

Development will not discriminate 

against applicants on the bases of race, 

color, religion, national origin, sex, 

marital status, or age (provided that the 

applicant has the capacity to contract); 

to the fact that all or part of the 

applicant’s income derives from public 

assistance program; or to the fact that 

the applicant has in good faith exercised 

any right under the Consumer Credit 

Protection Act. 

(c) Civil rights compliance. Recipients 

of Grants must comply with the 

Americans with Disabilities Act of 1990, 

Title VI of the Civil Rights Act of 1964, 

and Section 504 of the Rehabilitation 

Act of 1973. This includes collection 

and maintenance of data on the race, 

sex, and national origin of the 

recipient’s membership/ownership and 

employees. These data must be available 

to conduct compliance reviews in 

accordance with 7 CFR part 1901 

subpart E, § 1901.204. Initial 

compliance reviews will be conducted 

with the Intermediary when Form RD 

400–4, ‘‘Assurance Agreement,’’ is 

signed. For each loan or Grant an 

Intermediary receives, a new Form RD 

400–4 must be completed. Each 

Ultimate Recipient must go through the 

same pre-award compliance review 

process and must also sign Form RD 

400–4. For loans and Grants, a preaward review is required before loan or 

Grant approval or any disbursement of 

funds. For Intermediaries, a post-award 

compliance review is required 90 days 

after closing the loan or Grant. This 

review is not required for Ultimate 

Recipients. Subsequent compliance 

reviews will be conducted 3 years from 

the date the post-award compliance 

review is completed for Intermediaries 

and 3 years from the date the pre-award 

compliance review is completed for 

Ultimate Recipients. Where Grant funds 

are used for a Revolving Loan Fund, 

compliance reviews are required for the 

Intermediaries for as long as the Fund 

is in operation. For Ultimate Recipients, 

compliance reviews are conducted until 

the loan is repaid to the Fund. 

(d) Architectural barriers. All 

facilities financed with Zero-Interest 

Loans that are open to the public or in 

which persons may be employed or 

reside must be designed, constructed, or 

altered to be readily accessible to and 

usable by disabled persons. Standards 

for these facilities must comply with the 

Architectural Barriers Act of 1968 (42 

U.S.C. 4151–4157) and the ‘‘Uniform 

Federal Accessibility Standards’’, (41 

CFR part 101–19.6, Appendix A). 

(e) Uniform relocation assistance. 

Relocations in connection with these 


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29848 Federal Register / Vol. 72, No. 103 / Wednesday, May 30, 2007 / Rules and Regulations 

Programs are subject to 49 CFR part 24 

as referenced by 7 CFR part 21 except 

that the provisions in title III of the 

Uniform Act do not apply to these 

Programs. 

(f) Drug-free workplace. Grants made 

under these Programs are subject to the 

requirements contained in 7 CFR part 

3021 which implements the Drug-Free 

Workplace Act of 1988 (41 U.S.C. 701–

706). An Intermediary requesting a 

REDG Grant will be required to certify 

that it will establish and make a good 

faith effort to maintain a drug-free 

workplace program. 

(g) Debarment and suspension. The 

requirements of 7 CFR part 3017 are 

applicable to these Programs. 

(h) Intergovernmental review of 

Federal programs. These Programs are 

subject to the requirements of Executive 

Order 12372 (3 CFR 1982 Comp., p. 197) 

and 7 CFR part 3015, subpart V which 

implements Executive Order 12372. 

Proposed Projects are subject to the 

State and local government review 

process contained in 7 CFR part 3015. 

(i) Restrictions on lobbying. The 

restrictions and requirements imposed 

by 31 U.S.C. 1352, and 7 CFR part 3018, 

are applicable to these Programs. 

(j) Earthquake hazards. These 

Programs are subject to the seismic 

requirements of the Earthquake Hazards 

Reduction Act of 1977 (42 U.S.C. 7701–

7706). 

(k) Environmental requirements. The 

requirements of 7 CFR part 1940, 

subpart G, are applicable to these 

Programs and to the loans made from 

the Revolving Loan Fund using Rural 

Development funds. Financial 

assistance from the Revolving Loan 

Fund, when funds are derived from 

repayments by third parties, is not 

considered Federal assistance for 

purposes of meeting the compliance 

requirements of 7 CFR part 1940, 

subpart G. 

(l) Affirmative fair housing. If 

applicable, the Intermediary will be 

required to comply with the Affirmative 

Fair Housing Act (42 U.S.C. 3601–3631). 

(m) Flood hazard insurance. These 

Programs are subject to the National 

Flood Insurance Act of 1968 and the 

Flood Disaster Protection Act of 1973, as 

amended by 42 U.S.C. 4001–4129. 

(n) Audits. These Programs are subject 

to 7 CFR part 3052. 

§ 4280.37 Application forms and filing 

dates. 

(a) The Intermediary may obtain 

forms that supplement the written 

narrative sections of its application from 

the Rural Development State Office for 

the State where the Intermediary is 

located. 

(b) An original copy only of the 

application is to be filed with the Rural 

Development State Office. No other 

copies are required. 

§ 4280.38 Maximum amount of loans or 

Grants. 

During any given fiscal year, Rural 

Development will publish an 

announcement of available loan and 

Grant funds and will indicate the 

maximum loan and Grant amounts for 

which an Intermediary or prospective 

Intermediary may apply. This 

announcement will also include contact 

information and application deadlines. 

All pending applications on file at RBS, 

including both loan and Grant 

applications, from the same 

Intermediary or prospective 

Intermediary for the same Project will 

be considered to be one application in 

determining that the maximum size of 

the application is in accordance with 

this section. 

§ 4280.39 Contents of an application. 

An application for a loan or a Grant 

must contain the following: 

(a) Required forms and certifications: 

(1) Standard Form 424, ‘‘Application 

for Federal Assistance,’’ signed by an 

authorized representative of the 

Intermediary. 

(2) A Resolution of the Board of 

Directors signed by the directors and 

certified by the Intermediary’s board 

secretary. The board resolution must 

indicate whether the Intermediary is 

requesting a loan or Grant, agree to the 

provisions of this subpart and the loan 

or Grant agreement including the 

Intermediary’s 20 percent Fund 

contribution, and state that the 

Intermediary has the legal authority to 

enter into a loan or Grant agreement 

under these Programs; 

(3) Form AD 1047, ‘‘Certification 

Regarding Debarment, Suspension, and 

other Responsibility Matters—Primary 

Covered Transactions,’’ and Form AD–

1048, ‘‘Certification Regarding 

Debarment, Suspension, Ineligibility 

and Voluntary Exclusion—Lower Tier 

Transactions.’’

(4) Assurance statement for the 

Uniform Act signed by the Ultimate 

Recipient. This statement provides 

Rural Development with the required 

assurance statement that any relocations 

of persons or acquisitions of real 

property, as part of completing the 

Ultimate Recipient Project, will be 

handled in accordance with this statute. 

(5) RD Instruction 1940–Q, Exhibit A–

1, applies if the loan is greater than 

$150,000 or the Grant is greater than 

$100,000; 

(6) SF LLL, ‘‘Disclosure of Lobbying 

Activities,’’ (if the Intermediary or the 

Ultimate Recipient engages in lobbying 

activities); 

(7) Form AD 1049, ‘‘Certification 

Regarding Drug-Free Workplace 

Requirements,’’ for Grants only; 

(8) Seismic certification if 

construction of a building is proposed. 

The Project owner certifies that any 

building constructed will comply with 

standards that reduce the damage 

caused by earthquakes; 

(9) Form RD 1940–20, ‘‘Request for 

Environmental Information’’; and 

(10) RUS Form 7, ‘‘Financial and 

Statistical Report’’ and RUS Form 7a 

‘‘Investments, Loan Guarantees, and 

Loans,’’ or similar information. 

(b) A written narrative section must 

be provided. This section consists of the 

following: 

(1) A Project description, including 

details of the work to be performed with 

Rural Development funds, and a 

business plan, including a discussion of 

management and prior experience of the 

Ultimate Recipient. 

(2) A discussion of how the Project 

meets each selection factor in 

§ 4280.42(b). 

(3) A Revolving Loan Fund Plan is 

required if the Intermediary is applying 

for a Grant to establish a Revolving Loan 

Fund. 

§ 4280.40 [Reserved] 

§ 4280.41 Environmental review of the 

application. 

(a) Rural Development will conduct a 

review for the potential of any 

environmental impacts resulting from 

the proposed Project identified in the 

application and inform the Intermediary 

of any additional information Rural 

Development needs and any subsequent 

environmental requirements necessary 

for Rural Development to make a 

finding. 

(b) Rural Development will conduct 

all necessary environmental reviews as 

prescribed in 7 CFR part 1940, subpart 

G. These reviews must be completed 

before the application can be considered 

for approval. 

§ 4280.42 Application evaluation and 

selection. 

(a) Rural Development will evaluate 

the application and score it based on the 

selection factors in this section. All 

applications will be ranked on a 

nationwide basis, based on the total 

points scored. 

(b) The application will be evaluated 

and scored using the information 

provided in accordance with 

§ 4280.39(b)(2) of this subpart. 

(1) Nature of the Project. Rural 

Development will award up to 60 points 

based on whether the Project: 


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(i) Is a for-profit business, Business 

Incubator, industrial building or park, or 

an infrastructure connection project 

(such as streets or utilities)—20 points; 

(ii) Provides Technical Assistance to 

rural businesses or rural residents, or 

educates or provides medical care to 

rural residents—20 points; 

(iii) Will enhance rural economic 

development by providing Advanced 

Telecommunications services and 

computer networks for medical, 

educational, and job training services. 

This review will be based on the 

application’s telecommunications 

design—20 points. 

(2) Number of direct full-time 

equivalent jobs created or saved within 

a 3-year period. To calculate full-time 

equivalent Direct-Jobs, count two parttime jobs as one full-time job or three 

part-time or seasonal jobs as one fulltime job. If the total numbers of parttime and seasonal jobs add up to a 

fraction, round up to the next whole 

number after combining same. IndirectJobs or non-Rural jobs cannot be used 

for this calculation. 

If the number of Rural full-time equivalent direct-jobs jobs created or saved per $100,000 of total, Project cost is: 

Then Rural 

Development 

will award: 

(i) Greater than five ............................................................................................................................................................................... 25 points. 

(ii) From one to five ............................................................................................................................................................................... 15 points. 

(3) Supplemental funds for the 

Project. Points will be based on a 

calculation of the amount of 

supplemental funds to be provided to 

the Project. All supplemental funds 

used in the following calculation must 

be disbursed to the Project between the 

date of Rural Development receipt of the 

application and 1 year after the first 

advance of funds by Rural Development: 

If supplemental funds as a percentage of the Rural Development loan or grant to be provided to the Project are: 

Then Rural 

Development 

will award: 

(i) Greater than 200% ........................................................................................................................................................................... 20 points. 

(ii) From 100% to 200% ........................................................................................................................................................................ 10 points. 

(iii) From 50% to less than 100% ......................................................................................................................................................... 5 points. 

(4) Unemployment rate for the 

county(ies) where the Project is 

physically located. Rural Development 

will compare the current unemployment 

rate(s) in the county(ies) to the State and 

national unemployment rates, and, if 

applicable, award points under the 

following categories, whichever is 

greater: 

If the unemployment rate(s) in the county(ies) where the Project will be located: 

Then Rural 

Development 

will award: 

(i) Exceeds the national unemployment rate by 30% or more ............................................................................................................. 15 points. 

(ii) Is greater than the national unemployment rate, but exceeds it by less than 30% ....................................................................... 5 points. 

(iii) Exceeds the State unemployment rate by 30% or more ............................................................................................................... 10 points. 

(iv) Is greater than the State unemployment rate but exceeds it by less than 30% ............................................................................ 5 points. 

(5) Per capita personal income for the 

county(ies) where the Project is 

physically located. Rural Development 

will compare the per capita personal 

income in the county(ies) where the 

Project will be located to the national 

and State per capita personal income 

levels, and, if applicable, award points 

under the following categories, 

whichever is greater: 

If the per capita personal income level in the county(ies) is: 

Then Rural 

Development 

will award: 

(i) Less than or equal to 90% of the national level .............................................................................................................................. 15 points. 

(ii) Between 90 and 100% of the national level .................................................................................................................................... 5 points. 

(iii) Less than or equal to 90% of the State level ................................................................................................................................. 10 points. 

(iv) Between 90 and 100% of the State level ....................................................................................................................................... 5 points. 

(6) Rural Area location. (i) If the 

Project is physically located in an 

incorporated city or town or equivalent 

having a population of 1,249 or less, or 

if it is physically located in an 

unincorporated area, Rural 

Development will award 20 points. 

(ii) If the Project is physically located 

in an incorporated area having a 

population of 1,250 to 2500, Rural 

Development will award 10 points. 

(7) Decline in population for the 

county where the Project is physically 

located. If there has been a decline in 

population in the county where the 

Project will be located over the time 

period covered by the two most recent 

decennial censuses of the United States 

to the present, Rural Development will 

award 10 points. 

(8) Cushion of Credit Payments. Rural 

Development will determine the level of 

Cushion of Credit Payments on deposit 

by the Intermediary, as follows: 


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29850 Federal Register / Vol. 72, No. 103 / Wednesday, May 30, 2007 / Rules and Regulations 

If the Intermediary’s Cushion of Credit account level is: 

Then Rural 

Development 

will award: 

(i) In excess of $300,000, or a dollar amount in excess of 3 percent of the Intermediary’s total assets, whichever is less .............. 15 points. 

(ii) Within the range of $100,000 to $299,999.99, or a dollar amount that is within the range of one percent to 2.99 percent of

Intermediary’s total assets, whichever is less.

10 points. 

(iii) Within the range of $10,000 to $99,999.99, or a dollar amount that is within the range of 0.5 percent to .99 percent of 

Intermediary’s total assets, whichever is less.

5 points. 

(9) Initial loan and Grant. If the loan 

or Grant application will result in the 

first award to an Intermediary under 

these Programs, Rural Development will 

award 10 points. 

(10) County participation. If the 

Project will be the first REDLG Project 

financed in a county Rural Development 

will award 10 points. 

(11) The business plan for the 

Applicant’s Ultimate Recipient will be 

evaluated by Rural Development and 

must include: 

(i) A description of the business or 

Project plans, its management, and, if 

applicable, its products and operating 

plans. (The business plan evaluated by 

Rural Development for Advanced 

Telecommunications will be its 

telecommunications and engineering 

design)—up to 15 points; and 

(ii) An appropriate financial plan, 

including actual balance sheets and 

income statements covering the most 

recent 3-year period (for applicants who 

have been in business this long), and 

projected balance sheets, income 

statements, and cash flow statements for 

the ensuing 3-year period, supported by 

assumptions showing the basis for the 

projections—up to 20 points. 

§ 4280.43 Discretionary points. 

The RBS Administrator has the 

discretion to designate up to 25 points 

(no more than 5 points for each of the 

following elements) based on whether 

the Project: 

(a) Is located in a Rural Empowerment 

Zone, Rural Economic Area Partnership 

Zone, Rural Enterprise Community, or 

Champion Community; 

(b) Is located in a county that has 

experienced the loss, removal, or 

closing of a major source or sources of 

employment in the last 3 years which 

causes an increase of 2 percentage 

points or more in the county’s most 

recent unemployment rate compared 

with the same period immediately 

before the dislocation; 

(c) Is located in a county that has 

experienced chronic or long-term 

economic deterioration; 

(d) Is located in a county that was 

designated a disaster area by the 

President of the United States that 

significantly affected rural economic 

development and job creation. The 

county must have been designated 

within 3 years prior to filing of the 

completed application with Rural 

Development; or 

(e) Is consistent with the Rural 

Development State Office’s approved 

strategic plan and mission area 

objectives and is identified as a priority 

area for assistance in the States’ plan. 

§ 4280.44 Limitation on number of loans or 

Grants to an Intermediary. 

Depending on the amount of funds 

available, Rural Development may 

publish an announcement limiting an 

Intermediary to one selected Grant 

application and two selected loan 

applications in a fiscal year. 

§§ 4280.45–4280.46 [Reserved] 

§ 4280.47 Non-selection of applications. 

Provided the application 

requirements have not changed, an 

application not selected will be 

reconsidered in 3 subsequent funding 

competitions for a total of four funding 

competitions. If an application is 

withdrawn, it can be resubmitted and 

will be evaluated as a new application. 

§ 4280.48 Post selection period. 

Rural Development will notify the 

Intermediary in writing if the 

application is selected. The documents 

to be executed by the Intermediary will 

include: 

(a) For a loan: 

(1) A Letter of Conditions with 

Project-specific terms and conditions; 

(2) A loan agreement with general 

terms and conditions; 

(3) A note covering the repayment 

terms of the loan; and 

(4) A legal opinion concerning the 

authority of the Intermediary to engage 

in the Project. 

(b) For a Grant: 

(1) A Letter of Conditions with 

Project-specific terms and conditions; 

(2) A Grant agreement with general 

terms and conditions; and 

(3) A legal opinion concerning the 

authority of the Intermediary to 

participate in the Revolving Loan Fund 

and to engage in the Project. 

§ 4280.49 [Reserved] 

§ 4280.50 Disbursement of Zero-Interest 

Loan funds. 

(a) For a REDL loan, Rural 

Development will disburse Zero-Interest 

Loan funds to the Intermediary in 

accordance with the terms of the 

executed loan agreement. All loan funds 

will be disbursed either as an advance 

to the Intermediary, in multiple 

advances, or as a reimbursement for 

eligible project costs, once the 

Intermediary has complied with Rural 

Development requirements. 

(b) The Intermediary must provide to 

the Ultimate Recipient all loan funds 

that the Intermediary receives from 

Rural Development within one year of 

receiving them. If the Intermediary does 

not re-lend Rural Development funds 

within one year, the loan funds, and all 

interest earned on the loan funds, must 

be returned to the Agency. 

(c) For a REDG loan, Rural 

Development will disburse Grant funds 

to the Intermediary in accordance with 

7 CFR parts 3015 and 3019, as 

applicable. Specifically, Rural 

Development will disburse the Grant 

funds in advance if the following 

requirements are met: 

(1) The Intermediary has established 

written procedures that will minimize 

the time elapsing between the transfer of 

funds from Rural Development and their 

disbursement to the Ultimate Recipient; 

(2) The management system of the 

Intermediary meets the requirements of 

7 CFR parts 3015 and 3019, as 

applicable; 

(3) All necessary supplemental funds 

for the Project have been obligated or 

committed to the Revolving Loan Fund; 

and 

(4) The requests for cash advances 

made by the Intermediary are limited to 

the minimum amounts needed and 

timed to be in accordance with the 

actual immediate cash needs of the 

Ultimate Recipient for carrying out the 

Project. 

§§ 4280.51–4280.52 [Reserved] 

§ 4280.53 Loan payments. 

The Intermediary must make all REDL 

payments to Rural Development by 


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Federal Register / Vol. 72, No. 103 / Wednesday, May 30, 2007 / Rules and Regulations 29851 

electronic funds transfer or other means 

as specified in the loan documents. 

§ 4280.54 Construction procurement 

requirements. 

Construction, including bidding and 

awarding of contracts, must be 

conducted in a manner that provides 

maximum open and free competition. 

§ 4280.55 Monitoring responsibilities. 

(a) The Intermediary must monitor the 

Project to ensure that: 

(1) Funds are used only for the 

approved purposes as specified in the 

legal documents; 

(2) Disbursements and expenditures 

of funds are properly supported with 

certifications, invoices, contracts, bills 

of sale, or other forms of evidence, 

which are maintained on the premises 

of the Intermediary; 

(3) Project time schedules are being 

met, projected work by time periods is 

being accomplished, and other 

performance objectives are being 

achieved; and 

(4) The Project is in compliance with 

all applicable regulations. 

(b) Rural Development may inspect 

and copy records and documents that 

pertain to the Project. The Intermediary 

must retain these records for the term of 

the Project loan plus 2 years. In 

addition, Rural Development may also 

perform Project site visits and reviews 

of the use of loan or Grant proceeds. 

(c) Rural Development will review 

and monitor Grants in accordance with 

7 CFR parts 3015, 3017, 3018, 3019, 

3021, and 3052. 

§ 4280.56 Submission of reports and 

audits. 

(a) In addition to any reports required 

by 7 CFR parts 3015 and 3019, the 

Intermediary must submit the following 

monitoring reports to Rural 

Development: 

(1) Loan. The Intermediary must 

submit Form RD 4280–1 ‘‘Survey of 

Recipients of Rural Economic 

Development Loan and Grant Program’’

to Rural Development on an annual 

basis until it no longer owes money to 

USDA under the REDLG Program. 

(2) Grant (Revolving Loan Fund). The 

Intermediary must submit the Form RD 

4280–1 to Rural Development on an 

annual basis until all projects financed 

with Rural Development Grant proceeds 

have been repaid or are otherwise 

retired, whichever occurs last. 

Thereafter, on a triennial basis until the 

fund is terminated, the Intermediary 

will submit to Rural Development the 

Form RD 4280–1, reporting on the 

activity of all loans made from the 

Revolving Loan Fund. 

(b) If the Intermediary does not have 

an existing loan with RUS, the 

Intermediary will submit a copy of its 

annual audit to Rural Development 

within 90 days of its completion. All 

REDL audits must be conducted in 

accordance with Generally Accepted 

Government Auditing Standards or 

Generally Accepted Accounting 

Principles and REDG audits in 

accordance with 7 CFR part 3052. 

(c) Rural Development may require 

Ultimate Recipients that receive loans 

financed with Grant funds provided 

under the REDG Program to submit 

annual audits to comply with Federal 

audit regulations. In accordance with 7 

CFR part 3052, Ultimate Recipients that 

are nonprofit entities, or a State or local 

government, may be required to submit 

an audit subject to the threshold 

established in OMB Circular No. A–133. 

§§ 4280.57–4280.61 [Reserved] 

§ 4280.62 Appeals. 

An Intermediary may appeal any 

appealable adverse decision made by 

Rural Development that affects the 

Intermediary in accordance with 7 CFR 

part 11. 

§ 4280.63 Exception authority. 

Except as specified in paragraphs (a) 

through (c) of this section, the RBS 

Administrator may, on a case-by-case 

basis, make exceptions to any 

requirement or provision of this subpart, 

if such exception is necessary to 

implement the intent of the authorizing 

statute in a time of national emergency 

or in accordance with a Presidentiallydeclared disaster, or when such an 

exception is in the best interests of the 

Federal Government and is otherwise 

not in conflict with applicable law. 

(a) Applicant eligibility. No exception 

to applicant eligibility can be made. 

(b) Project eligibility. No exception to 

project eligibility can be made. 

(c) Rural area definition. No 

exception to the definition of rural area, 

as defined, can be made. 

§§ 4280.64–4280.99 [Reserved] 

§ 4280.100 OMB control number. 

The information collection 

requirements contained in this 

regulation have been approved by the 

Office of Management and Budget 

(OMB) and have been assigned OMB 

control number 0575–0035. A person is 

not required to respond to this 

collection of information unless it 

displays a currently valid OMB control 

number. 

Dated: May 17, 2007. 

Douglas L. Faulkner, 

Deputy Under Secretary, Rural Development. 

[FR Doc. 07–2636 Filed 5–29–07; 8:45 am] 

BILLING CODE 3410–XY–U 

DEPARTMENT OF HOMELAND 

SECURITY 

8 CFR Part 103 

[Docket No. USCIS–2006–0044; CIS No. 

2393–06] 

RIN 1615–AB53 

Adjustment of the Immigration and 

Naturalization Benefit Application and 

Petition Fee Schedule 

AGENCY: United States Citizenship and 

Immigration Services, DHS. 

ACTION: Final rule. 

SUMMARY: This rule adjusts the fee 

schedule for U.S. Citizenship and 

Immigration Services (USCIS) 

immigration and naturalization benefit 

applications and petitions, including 

nonimmigrant applications and visa 

petitions. These fees fund the cost of 

processing applications and petitions 

for immigration benefits and services, 

and USCIS’ associated operating costs. 

USCIS is revising these fees because the 

current fee schedule does not 

adequately reflect current USCIS 

processes or recover the full costs of 

services provided by USCIS. Without an 

immediate adjustment of the fee 

schedule, USCIS cannot provide 

adequate capacity to process all 

applications and petitions in a timely 

and efficient manner. In addition, the 

revised fees will eliminate USCIS’

dependency on revenue from interim 

benefits, temporary programs, and 

premium processing fees. This rule also 

merges fees for certain applications and 

petitions so applicants and petitioners 

will only have to pay a single fee. In 

addition, the rule expands the classes of 

aliens that will be exempt from paying 

filing fees for certain immigration 

benefits, and modifies the criteria for 

waiving the filing fee due to an 

individual’s inability to pay. Based on 

comments received by USCIS during the 

public comment period, this rule 

changes the fees for adjustment of status 

applications, and the fee waiver and 

exemption eligibility criteria for several 

immigration benefits. This final rule 

will provide sufficient funding for 

USCIS to meet national security, 

customer service, and processing time 

goals, and to sustain and improve 

service delivery. 


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