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[Federal Register Volume 89, Number 220 (Thursday, November 14, 2024)]
[Rules and Regulations]
[Pages 89917-89922]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26201]

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Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

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Federal Register / Vol. 89, No. 220 / Thursday, November 14, 2024 / 
Rules and Regulations

[[Page 89917]]

DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

7 CFR Part 4284

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

Modernizing Grant Program Regulation

AGENCY: Rural Business-Cooperative Service, USDA.

ACTION: Final rule; confirmation and response to comments.

-----------------------------------------------------------------------

SUMMARY: The Rural Business-Cooperative Service (RBCS or the Agency), 
an agency of the Rural Development (RD) mission area within the U.S. 
Department of Agriculture (USDA), published a final rule with comment 
in the Federal Register on September 16, 2024, to implement the 
provisions of the Agriculture Improvement Act of 2018 related to the 
Value-Added Producer Grant (VAPG) Program and the Agriculture 
Innovation Center (AIC) Program and to modernize the Rural Cooperative 
Development Grant Program (RCDG). These changes will also help simplify 
and streamline RD program delivery. Through this action, RBCS is 
confirming the final rule as it was published and providing responses 
to the public comments that were received.

DATES: The final rule published September 16, 2024, at 89 FR 75762, and 
is confirmed and effective November 15, 2024.

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

SUPPLEMENTARY INFORMATION: RD is a mission area within USDA comprised 
of RBCS, the Rural Utilities Service and the Rural Housing Service. 
RD's mission is to increase economic opportunity and improve the 
quality of life for all rural Americans. RD meets its mission by 
providing loans, grants, loan guarantees, and technical assistance 
through a multitude of programs aimed at creating and improving 
businesses, housing and infrastructure throughout rural America.
    The final rule that published September 16, 2024 (89 FR 75762), 
included a 30-day comment period that ended October 16, 2024. The 
changes implemented the mandatory provisions outlined in sections 7608 
and 10102 of the Agriculture Improvement Act of 2018 (Pub. L. 115-334) 
and updated and reorganized subparts F, J and K. In addition, language 
in subpart J was updated to incorporate a new application intake system 
that was developed and will streamline the application process for 
VAPG. With the changes, each subpart is a standalone set of definitions 
and requirements for each individual grant program.
    The Agency received detailed comments from 19 respondents 
consisting of nonprofit cooperative development centers, individuals, 
and current and past awardees of RBCS grant programs. The majority of 
the respondents felt the changes were positive and would provide 
clarity for the applicants, but several did identify areas where 
additional changes may be needed. The Agency reviewed the comments, 
categorized them as general or by section of the final rule, and 
provided an Agency response below. The Agency has decided to proceed 
with implementation of the final rule without further amendments.

General--Program Accessibility

    Comments: Three respondents stated that accessibility for Federal 
programs should be improved for small businesses and nonprofits. One 
identified the audit requirement, stating that requiring an audit 
limits these organizations from applying because they cannot afford an 
audit. Another identified a lack of inclusivity for small and micro-
sized agricultural businesses and nonprofit organizations led by Afro-
American, Native, and transplanted American communities in the Northern 
Mariana Islands. A third identified matching funds requirements as a 
concern.
    Agency Response: The Agency agrees. The Agency is aware that 
accessing Federal programs is difficult for smaller organizations and 
strives to limit program requirements to those that are required by 
applicable laws and regulations. Neither the RCDG program nor the VAPG 
program have audit requirements beyond the ones required by 2 CFR part 
200. The AIC program does have an audit requirement for all applicants. 
However, it must be noted that small businesses are not eligible 
applicants for the program. It is imperative that applicants who are 
considered for funding have the financial capability to administer up 
to a $1.5 million project. Thus, reviewing the audit for certain 
financial standards is a critical part of the review process to ensure 
that the Agency selects applicants who have the financial resources to 
carry out the authorized work for the program. The Agency recognizes 
the need to be inclusive of all people and ensure equitable access to 
funding opportunities and services. Priority is given to distressed and 
disadvantaged communities and also to historically underserved 
agricultural producers. With regard to matching funds, all three 
programs have statutory requirements that are implemented through this 
regulation.

General--Local Agriculture Market Program (LAMP) Report to Congress

    Comment: One respondent noted that while VAPG awards reach all 
states, very few awards reached the following states: Wyoming, Utah, 
Arizona, Nevada, North Dakota, Louisiana, Arkansas, Alabama, and 
Mississippi. To strengthen program implementation, the commenter 
suggested that the annual LAMP Report to Congress include additional 
factors such as the number of applications being received from these 
underrepresented states, what type of projects are being funded in 
those states, the agricultural products created, and the proportion of 
awards by priority categories within individual states.
    Agency Response: The Agency will collaborate with the Agriculture 
Marketing Service to assess the information that will appear in future 
LAMP reports to Congress.

Sec. 4284.501 Purpose

    Comment: One respondent states that Sec.  4284.501 mentions that 
grants are made to non-profit institutions, then Sec.  4284.503 defines 
institutions as a college. The respondent continues by stating it is 
vital that private, non-profit charitable organizations be explicitly

[[Page 89918]]

eligible for the grants and would like for the Agency to clarify the 
eligibility of 501(c)(3) charitable non-profits.
    Agency Response: In Sec.  4284.503 Definitions, the final rule 
defines a Nonprofit Institution as ``any organization or institution, 
including an accredited Institution of Higher Education, no part of the 
net earnings of which inures, or may lawfully inure, to the benefit of 
any private shareholder or individual.'' A 501(c)(3) charitable non-
profit would be included in this definition. In addition, RCDG 
applicants must have a mission that is in line with the purpose of the 
program and provide targeted support for the startup, expansion, and 
operational improvement of Cooperatively and Mutually Owned Businesses 
in Rural Areas.

Sec. 4284.503 Definitions

    Comment: One respondent recommended that the Agency include the 
International Cooperative Alliance (ICA)'s Statement on Cooperative 
Identity in its processes and written materials.
    Agency Response: The Agency acknowledges that many cooperatives in 
the United States look to the Alliance's Statement of Cooperative 
Identity for guidance; however, the Agency will be using a definition 
of Cooperative based on legal concepts recognized in the United States.
    Comment: One respondent stated that the definition for Cooperative 
Development fails to include many of the essential business development 
activities, such as business plans, feasibility analysis, and financial 
analysis that are critical in cooperative development. The respondent 
recommends adding these activities to the definition of Cooperative 
Development.
    Agency Response: Cooperative Development is a subset of the defined 
term Technical Assistance which incorporates the activities of 
assessment and analysis through Feasibility Studies and Business Plans, 
customized training, written information, in person or virtual 
exchanges, web-based curricula, and webinars.
    Comment: One respondent requested that the Agency amend the 
definition of Mutually Owned Business to include the following: ``This 
section allows for cooperatively governed businesses that may not 
distribute patronage.'' The respondent believes this will explicitly 
recognize childcare and housing cooperatives (that provide a service at 
cost and use cost savings instead of patronage), as well as purchasing 
cooperatives that may include not-for-profit members such as school 
districts.
    Agency Response: The Agency understands that some cooperatives like 
childcare and housing cooperatives operate at cost and may not 
distribute patronage, but that members benefit in proportion to their 
use of the cooperative business. Mutually Owned Businesses and 
Cooperatives that operate at cost are Cooperatives as defined in the 
regulation. Therefore, no change will be made to the definition of 
Mutually Owned Business.
    Comment: Two respondents stated that including a separate 
definition for Mutually Owned Business was unnecessary and creates 
confusion. One goes on to state that ``Mutually Owned Business'' means 
a business not incorporated under a Cooperative statute but operating 
as a Cooperative. Cooperative operation of the business is reflected in 
the articles and bylaws.'' The respondent believes this substantially 
undercuts the clarity of the Rule's definition of Cooperative by 
creating a seemingly different model and referring to corporate entity 
enabling laws. The respondent states that Congress did not intend to 
create two different categories of enterprise for RCDG purposes and 
thinks that cooperatively and mutually owned businesses are a single 
concept, not two different categories.
    Agency Response: The definition of Mutually Owned Business adopts 
the definition of Cooperative by reference. The Agency provided a 
separate definition for Mutually Owned Business to clarify that a 
Mutually Owned Business that operates on a Cooperative basis meets the 
definition of a Cooperative for the purposes of the authorizing 
statute. Consequently. there is no adverse impact to Mutually Owned 
Businesses with respect to eligibility or merit-based evaluation for 
the RCDG program.
    Comment: Six respondents noted that the final rule does not define 
``Underserved and Economically Distressed'' but will be defined in the 
annual notification for the RCDG program. The concern is that this will 
lead to annual inconsistencies with how these areas are determined, 
create confusion among applicants, and inefficiencies in planning work. 
The respondents recommend defining the term in the final rule. Two 
respondents also noted that cooperative developers frequently work with 
economically distressed populations in regions that may not carry that 
label and would like for there to be flexibility for applicants to 
describe and justify ways in which they serve economically distressed 
populations.
    Agency Response: Defining ``Underserved and Economically 
Distressed'' in the annual notification instead of the final rule will 
allow the Agency to give attention to the priorities of the 
administration, while also receiving consistent data and maintaining 
equity among applicants in the program competition.

Sec. 4284.522 Project Eligibility

    Comment: Two respondents state that the Agency is placing more 
value on new cooperatives being developed relative to helping existing 
cooperatives to thrive. One noted that projects are required to focus 
on the development of new rural cooperatives and is concerned that 
assistance to existing cooperatives was left out. The respondent 
reasons that assistance to existing cooperatives for improvement or 
expansion can often lead to creation of new jobs and improved economic 
activity and would like for the Agency to consider adding the phrase 
``or existing cooperatives'' to the develop new cooperatives 
requirement.
    Agency Response: The Agency disagrees. Section 4284.522(a)(2) 
requires applicants to focus on establishing or operating a Center with 
the goals of creating jobs in Rural Areas through the development of 
new Rural Cooperatives, Value-Added processing, and Rural businesses. 
The Agency agrees that establishing a Center involves the development 
of a new cooperative, however, operating a Center includes providing 
assistance to existing cooperatives. Providing assistance to existing 
cooperatives is already an eligible project focus so adding the 
requested phrase to the final rule is unnecessary.

Sec. 4284.531 Application Requirements

    Comment: Seven respondents addressed the performance metrics 
included in the final rule. All were in favor of the Agency continuing 
to use the previously required metrics or allowing applicants to create 
their own metrics that are specific to the needs and service demands of 
their respective state and region. One respondent suggested ``removing 
(L) Financial loss avoided as a result of a `no-go' decision in the 
Cooperative Development Process.'' They questioned the basis of this 
calculation and stated that it would not be something that would be 
planned at the time of application and may occur at various stages of 
the process.
    Agency Response: While the Agency has outlined a set of performance

[[Page 89919]]

metrics to capture the intent of the program and to track the benefits 
and effects on rural communities, we want to emphasize that applicants 
may provide a ``null'' response to any of these metrics without 
penalty. The intent is that applicants respond to metrics that match 
the goals identified in the applicant's work plan and budget. 
Additionally, we encourage applicants to suggest additional metrics 
that they believe would enhance their proposals, as we are not scoring 
the required metrics in a way that would adversely affect their 
applications. The annual notification for the program will include this 
guidance.
    Comment: One respondent disagrees with the Agency's decision to 
require centers to describe their experience within the last three 
years. They noted that applicants are encouraged to highlight how they 
have helped develop sustainable businesses and provide economic 
development statistics, but it often takes cooperatives and small 
businesses more than three years to reach desired levels of performance 
and profitability. The respondent thinks the Agency should change the 
requirement back to experience within the last five years, as was 
required previously.
    Agency Response: The Agency recognizes that it often takes 
Cooperatives and Mutually Owned Businesses more than three years to 
reach desired levels of performance and profitability. A Center with 
three years of experience likely has clients in various stages of 
Cooperative Development. The three-year period allows the Cooperative 
Development Center to highlight its more recent experience.
    Comment: Four respondents noted that the final rule does not 
address scoring criteria for letters of support. Three of the 
respondents want the Agency to continue considering letters of support 
in the scoring process for RCDG. However, one respondent believes 
requiring applicants to obtain ten letters is excessive and takes time 
away from developing the application itself. If support letters remain 
a scoring criterion, they requested that the required number of support 
letters be reduced to five to ease the burden on applicants.
    Agency Response: The Agency understands the importance of 
demonstrating local collaboration. However, after careful 
consideration, the Agency decided to remove this requirement. The 
Agency's goal is to encourage applicants to provide a more 
comprehensive narrative, within the workplan and budget, that truly 
reflects their impact and partnerships, rather than relying on letters 
that may not offer substantive insights. The Agency believes this 
approach will lead to a clearer understanding of each Project's 
community engagement and potential benefits.
    Comment: One respondent believes that the Agency should continue 
requiring applicants to include their incorporation documentation in 
their RCDG application.
    Agency Response: In streamlining the regulation, the Agency 
determined it best for applicants to provide the incorporation 
information within the context of the application. The Agency is now 
requesting more specific information from the applicant about the 
Technical Assistance provided to the Cooperative and Mutually Owned 
Business that leads to incorporation in Sec.  4284.531(b)(5)(v)(A).
    Comment: One respondent questioned the need for a complete address 
in the Experience section of the application. They stated that when a 
cooperative developer is working with a new cooperative, there may or 
may not be a complete address available until the entity is 
incorporated and noted that previously they only needed to name the 
business or effort and a community.
    Agency Response: The Agency understands that there may not be a 
complete address available until an entity is incorporated. The annual 
notification for the program will include additional guidance on what 
location information should be submitted in your application for a new 
cooperative if a complete address is not available.
    Comment: One respondent stated that the final rule did not identify 
years of experience required in the Experience section and noted that 
five years of experience was previously required.
    Agency Response: The Agency disagrees. Section 4284.531(b)(5)(v)(A) 
identifies that experience described in the application must be within 
the last three (3) years.
    Comment: Two respondents are concerned that making New Cooperative 
Approach an application requirement could be confusing and 
counterproductive. One noted that while it is good to encourage 
innovation, competent and successful work should be properly valued. 
Even though new approaches may not occur every year, a Center may be 
doing very good work that should continue. The second stated that 
although encouraging innovation is important, requiring Centers to 
develop New Cooperative Approaches annually will be challenging and 
time consuming. The respondent believes it also distracts from the 
technical assistance delivery focus by requiring Centers to spend time 
conducting research and seeking projects that can fit into a new 
cooperative approach category instead of providing technical assistance 
to existing or newly forming cooperatives in need of services. The 
respondent goes on to state that existing proven approaches already 
meet the needs of most Center clients. They suggest providing more 
flexibility in this area, allowing Centers to focus on adapting and 
refining their existing approaches as needed.
    Agency Response: The application requirement of New Cooperative 
Approach as a scoring criterion is required in the authorizing statute 
for the program.

Sec. 4284.533 Submission Requirements

    Comment: Three respondents voiced their support of the application 
submission period included in the final rule. Two of the respondents 
also requested that the Agency consider staggering the deadlines for 
the RCDG and Socially Disadvantaged Groups Grant (SDGG) programs by two 
weeks to decrease the burden on centers applying for both programs.
    Agency Response: The Agency agrees and will work to ensure that 
sufficient time is allotted between the RCDG and SDGG programs' 
application windows.

Sec. 4284.540 Application Processing

    Comment: One respondent asked if the Agency plans to retain the use 
of qualitative evaluation criteria. They noted this as a specific 
evaluation criterion called out by the program in the past and found it 
to be an important component of RCDG application process.
    Agency Response: The Agency is no longer scoring on the applicant's 
use of qualitative evaluation. Instead, the Agency will be performing a 
qualitative evaluation on the performance of the program using the 
newly required post-award outcome reports.

Sec. 4284.554 Multi-Year Award

    Comment: Five respondents voiced their support of the RCDG program 
offering a multi-year funding opportunity to previous recipients. 
However, three of the respondents encouraged the Agency to only award 
multi-year grants if additional appropriations are received so that 
there is not a decrease in the number of award recipients. If multi-
year grants are implemented without a commensurate increase in 
appropriations, the three respondents suggested that they be awarded 
contingent upon future

[[Page 89920]]

appropriations. They believe this would maintain the improved 
efficiency and consistency of multi-year grants without jeopardizing 
the national impact of the program.
    Agency Response: The Agency agrees. The multi-year funding option 
will be contingent upon an increase in future appropriations.

Sec. 4284.560 Reporting Requirements

    Comment: Two respondents questioned the requirement to submit two 
annual outcome performance reports. One asked if the two reports 
referred to one financial report and one narrative report. The other 
asked if the two reports were requesting different metrics or longer-
term outcomes.
    Agency Response: The intent of the requirement pertains to 
submitting an annual outcome performance report for two years following 
the submission of the final report. The report's purpose is to assess 
the performance metrics outlined in your application and evaluate 
whether the primary goals and objectives of the approved work plan and 
budget were achieved. The final rule will be effective as written but 
the Agency will look to clarify this requirement in the annual notice 
and when future updates are made to the regulation.

Sec. 4284.916 Reserved Funds

    Comment: One respondent recommends that any reserved funds not 
obligated by September 30 of each Fiscal Year for Beginning Farmers or 
Ranchers, Socially-Disadvantaged Farmers or Ranchers, and food safety 
related projects to remain in those categories.
    Agency Response: The Agency disagrees. The VAPG statute allows for 
any funds in the Beginning Farmers or Ranchers, Socially-Disadvantaged 
Farmers or Ranchers, and Food Safety categories that are not obligated 
by September 30 of the Fiscal Year for which the funds were made 
available, to be available to the Agency to carry out any function of 
the program. Therefore, unobligated funds in those categories will be 
available in the general fund competition the subsequent program cycle.

Sec. 4284.925 Allowable Uses of Grant and Matching Funds

    Comment: One respondent stated that the final rule does not provide 
sufficient information on the types of allowable food safety related 
expenses and recommends making the following items allowable under the 
food safety project category:

 Easy-to-Clean Food Contact Surfaces to help prevent biological 
and physical contamination
 Portable Hand washing Stations to strengthen hygiene 
practices; plumbed dedicated handwashing sinks
 Small-scale box/produce washer (AZS brush washer) to 
effectively clean produce
 Salad spinner to ensure leafy greens are effectively washed, 
dried, and cooled in a way that prevents contamination
 Coolbot systems, or any type of refrigeration equipment or 
forced air cooler to ensure proper cooling of produce
 Cooler thermometer and monitoring to ensure proper cooling of 
produce
 Electrolux spin dryer to effectively clean produce
 On-site septic systems or alternative waste treatment systems 
to prevent contamination of product
 Equipment Calibration Services to ensure equipment is 
maintained and correctly calibrated to meet Current Good Manufacturing 
Practice guidelines
 Any other equipment that is required to access new markets 
through a federal, state or local food safety law or a third-party 
audit
 Water treatment systems and monitoring equipment for post-
harvest/processing
 Labeling equipment (for lot codes/traceability)
 Traceability software--FSMA 204 compliance/food safety
 ATP meters for cleaning and sanitation validation
 Food safety recordkeeping software
 Cleaning and sanitizing equipment
 Refrigerated transportation (mobile coolers, refrigerated 
trucks/vans)

    The respondent goes on to state that expenses related to food 
safety certification, such as GAP certification or pre-harvest food 
safety certification, should be considered allowable as long as they 
are a part of a larger project scope that is integral to their 
marketing of a value-added product. They believe the following 
certifications should be allowable:

 Training fees (e.g., PCQI training)
 Process validation costs for products--not really 
certification but not equipment
 Post-harvest HGAP audit fees
 Food safety consultant fees--assist with HACCP plans, post-
harvest food safety plans, GMP implementation.

    Agency Response: Food safety related expenses associated with the 
post-harvest processing and/or marketing of a value-added product are 
eligible for the program. However, expenses that are unallowable as 
defined in Sec.  4284.926 of the program regulation will not be 
allowed. Examples of eligible food safety related expenses will be 
included in the application material for the program as well as on a 
fact sheet published on the USDA VAPG website.

Sec. 4284.931 Application Requirements

    Comment: One respondent believes that requiring both a feasibility 
study and business plan for VAPG applications is excessive for most 
producers. The commenter stated that requiring only a business plan 
would be sufficient for most applicants. Their second suggestion 
includes allowing applicants to submit either a feasibility study or a 
business plan, providing flexibility for producers to choose the 
appropriate option for their project.
    Agency Response: The Agency disagrees. Applicants requesting 
Emerging Market grants for products they have marketed for two years or 
less face unknown challenges and obstacles moving a Project forward. A 
Business Plan will assist with establishing a set of business goals for 
the Project along with reasons why they are obtainable. The Business 
Plan will also address the Pro Forma financial goals of the Project. A 
Feasibility Study is a comprehensive analysis of the economic, market, 
technical, financial, and management capabilities of a Project or 
business in terms of the Project's expectation for success. This would 
include looking at the Business Plan to ensure there is a reasonable 
expectation of success. Because of this, the Agency believes both a 
Feasibility Study and Business Plan are necessary.
    Comment: One respondent stated that the final rule clarifies that 
applicant in-kind contributions can fulfill 100 percent of matching 
fund requirements but is concerned that the requirement that matching 
funds be spent in advance of grant funding may act as a project 
barrier, since some in-kind match of the producer will come later in 
the cycle of the project. They reason that applicants should be able to 
request reimbursement for approved project costs before the spend-down 
of their match contribution as to not impede the implementation of the 
project. The commenter recommends creating an advance payment option, 
modeled off options offered in the Natural Resources Conservation 
Service's Environmental Quality Incentives Program. This would allow 
beginning farmers or ranchers, socially disadvantaged farmers and 
ranchers, and veteran farmers to be

[[Page 89921]]

eligible to receive a portion of the award up front.
    Agency Response: Program regulations require that funds be matched 
at a rate equal to or in advance of grant funds. The VAPG program has 
historically been a reimbursement-based program. The Agency believes 
that advanced payments would not be appropriate for the program and 
could lead to matching requirements not being met. This could result in 
a recipient being required to repay advanced funds to the Agency. 
Please note that applicant in-kind contributions of applicant or family 
members' time being spent on the project is restricted to 50 percent of 
the Matching Funds amount. Applicant third-party contributions of the 
Agricultural Commodity inventory to be used in the Project can be used 
to satisfy up to 49 percent of the Matching Funds requirement.

Sec. 4284.933 Submission Requirements

    Comment: One respondent voiced their support of the application 
submission period included in the final rule and noted a set 
application period will result in higher quality applications. Another 
voiced concern about the submission period for the program. The 
respondent stated that the submission period is problematic because 
producers are being asked to establish a budget for items and services 
that will not be purchased before October 1, a full 7\1/2\ months after 
submission of the application, and the likelihood of service providers 
holding to pricing for that long is unlikely. Also, producers will just 
be coming off the busiest months of the year (June to October) and 
typically schedule time off over the holidays so they will have to 
scramble to complete the application by February 15. The respondent 
recommends an application submission period of January 15 to April 15, 
or something close to those dates. They believe this will put the 
application period in the slowest months of the year for most 
agricultural producers and allow them to put together a budget with 
price quotes closer to the time that funds would be spent.
    Agency Response: When determining the timing of the application 
period for VAPG, the Agency considered multiple factors including the 
impact of the timing on the applicant pool, input from stakeholders, 
and the resources of the Agency. The Agency believes that the selected 
application submission period balances these factors by setting the 
deadline for the applications during what is typically a less busy time 
for Agricultural Producers while also allowing approximately 3.5 months 
for application completion.
    Comment: One respondent is concerned that making the application 
online-only may discourage some rural applicants from applying. The 
respondent noted that rural areas throughout the United States struggle 
with broadband access and often lack the infrastructure needed to 
provide consistent, quality internet coverage. They request that paper 
applications still be available and considered equally against 
electronic applications.
    Agency Response: The program regulation does not address the format 
of applications; instead, the application submission process, including 
where to submit an application and the format of the application will 
be described in the annual notification for the program. The Agency is 
currently investing significant resources into developing an accessible 
application process and commits to considering applicant and Agency 
resources when setting up the submission process each year.

Sec. 4284.940 Application Processing

    Comment: Two respondents recommend that no preferential treatment 
be given to applicants that provide documentation of cash match, versus 
in-kind matching contributions.
    Agency Response: The Agency believes that it has provided 
additional flexibility with the allowance of in-kind matching funds 
contributions from applicants to recognize the value of applicant-
provided labor and commodities. However, cash contributions are 
considered to be a stronger contribution than in-kind because of the 
financial investment and frequently contribute to more successful 
project outcomes. It is important to note that applications are not 
selected for funding based solely on the type of match contributed.
    Comment: One respondent stated that food safety applications should 
be reviewed by a separate panel that has familiarity with the food 
safety landscape. They suggested that prioritization in the selection 
of reviewers be oriented towards food safety extension educators and 
processing educators, nonprofit technical assistance providers, and 
producers who have a variety of production profiles as regards crop 
diversity.
    Agency Response: Each eligible application will be scored in 
accordance with Sec.  4284.940(c) by independent reviewers and USDA RD 
staff as described in the annual notification. The annual notification 
will include relevant education and experience requirements for 
independent reviewers to ensure they are qualified to review VAPG 
applications, including those in the food safety category.

Sec. 4284.1003 Definitions

    Comment: One respondent expressed concerns about the updated 
definition of Agricultural Producer. Their concerns focused on the 
percentage of ownership of the agricultural commodity and the 
percentage of the agricultural commodity that an agricultural producer 
can purchase. They felt that these percentages may be limiting. The 
respondent also felt that the definition doesn't necessarily need to be 
aligned with the VAPG program.
    Agency Response: The Agency disagrees. The Agency believes that the 
AIC program and the VAPG program need to use consistent definitions 
wherever possible. The AIC program receives a portion of the funds 
appropriated for the VAPG program and is one of three programs designed 
to support value-added agriculture in a specific way. Allowing 
assistance to go to organizations that have minority ownership from 
agricultural producers or to agricultural producers who are buying the 
majority of the agricultural commodity needed for the value-added 
agricultural product dilutes the effect of the program for agricultural 
producers, who are the legally-mandated beneficiary.
    Comment: One respondent stated that the program should explicitly 
reference aquaculture.
    Agency Response: The Agency agrees. The Agency believes that the 
explicit reference to aquaculture in the definition of Agricultural 
Commodity in the final rule is sufficient.
    Comment: One respondent stated that including the following terms 
in the definition of Producer Services adds clarity: applied research, 
product taste-testing, and recipe development.
    Agency Response: The Agency agrees. The Agency expects the changes 
made, in the final rule, to the definition of Producer Services will 
provide clarity to applicants and recipients.
    Comment: One respondent stated that the two changes mandated by the 
2018 Farm Bill to the requirements for the Center's Board of Directors 
(BOD) are beneficial for their Center. The two changes are to allow a 
State Legislator to provide representation on the BOD in lieu of a 
representative from the State Department of Agriculture and to allow 
representation from any four Agricultural Commodity Organizations 
instead of only from the four highest-grossing commodities in the 
State.

[[Page 89922]]

    Agency Response: The Agency agrees. The Agency supports these 
changes as allowing additional flexibility for Centers to meet the 
requirements for the BOD.

Sec. 4284.1020 Applicant Eligibility

    Comment: One respondent stated that additional space should be 
created for community colleges to administer AIC awards.
    Agency Response: The Agency disagrees. There is no provision in the 
authorizing statute to give preference or additional accommodation to 
community colleges. These community colleges are eligible to apply as 
long as they meet the requirements identified in the regulation.

Sec. 4284.1021 Ultimate Beneficiary Eligibility

    Comment: One respondent stated that the program should allow 
Centers to provide producer services to all value-added producers and 
processors regardless of ownership structure and percentage of 
ownership of the agricultural commodity.
    Agency Response: The Agency disagrees. First, the authorizing 
statute for the program restricts Center assistance to only 
agricultural producers. Second, the program supports the same 
objectives that the VAPG program does, which are to help agricultural 
producers increase their revenue and customer base for the value-added 
agricultural products they make from the agricultural commodities that 
they grow or raise. Allowing assistance to go to organizations that 
have minority ownership from agricultural producers or to agricultural 
producers who are buying the majority of the agricultural commodity 
needed for the value-added agricultural product dilutes the effect of 
the program for agricultural producers, who are the legally-mandated 
beneficiary.

Sec. 4284.1022 Project Eligibility

    Comment: One respondent stated that the changes to establish a 
minimum award amount, a period of performance, and limitations on 
contracts with other Centers adds greater clarity for applicants and 
that the minimum and maximum award amounts are appropriate for three-
year periods of performance.
    Agency Response: The Agency agrees. The Agency supports adding 
clarity for applicants and establishing appropriate award amounts.

Sec. 4284.1031 Application Requirements

    Comment: One respondent stated that the change to streamline the 
requirements for an application from a narrative format to a form 
should make applying to the program clearer and less burdensome.
    Agency Response: The Agency agrees. Two primary goals of this 
rulemaking effort were to clarify requirements and make the application 
process less burdensome for applicants.

Sec. 4284.1040 Application Processing

    Comment: One respondent stated that reducing duplication in the 
merit evaluation criteria is helpful to applicants.
    Agency Response: The Agency agrees. The Agency believes that 
reducing duplication will streamline the application and merit 
evaluation process.

Sec. 4284.1051 Notification of Successful Applicants

    Comment: One respondent stated that moving the burden for some 
requirements, such as the verification of matching funds and 
demonstrating that the Center has a qualified BOD, from the application 
phase to the award phase will significantly reduce the burden for all 
applicants and especially for successful applicants.
    Agency Response: The Agency agrees. The Agency believes that moving 
this burden will streamline the application process for all applicants. 
However, it notes that the requirements still exist at the time of 
application; only the need to verify or demonstrate that the applicant 
meets the requirement has shifted from the application to the award 
phase.
    No change to the rulemaking is necessary at this time. The Agency 
appreciates the comments received. The Agency confirms the final rule 
without change.

Kathryn E. Dirksen Londrigan,
Administrator, Rural Business-Cooperative Service, USDA Rural 
Development.
[FR Doc. 2024-26201 Filed 11-13-24; 8:45 am]
BILLING CODE 3410-XY-P
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