[Federal Register Volume 62, Number 73 (Wednesday, April 16, 1997)]
[Proposed Rules]
[Pages 18678-18691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9422]



[[Page 18677]]

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Part II





Department of Agriculture





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7 CFR Part 1703



Distance Learning and Telemedicine Loan and Grant Program; Proposed 
Rule

Federal Register / Vol. 62, No. 73 / Wednesday, April 16, 1997 / 
Proposed Rules

[[Page 18678]]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1703

RIN 0572-AB31


Distance Learning and Telemedicine Loan and Grant Program

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Utilities Service (RUS) is proposing to amend its 
regulation concerning the Distance Learning and Telemedicine Grant 
Program. This proposed rule will promulgate regulations for a new loan 
program that will provide both loans and grants for distance learning 
and telemedicine projects benefiting rural areas. The regulation is 
necessary to implement a new loan program mandated by the Federal 
Agriculture Improvement and Reform Act of 1996. The regulation will 
establish, among other things, RUS' policy, the method of selecting 
projects to receive loans and grants and allocating the available 
funds, and the requirements for submitting an application for financial 
assistance.

DATES: Written comments must be received by RUS or carry a postmark or 
equivalent not later than May 16, 1997.

ADDRESSES: Submit written comments to Robert Peters, Assistant 
Administrator, Telecommunications Program, Rural Utilities Service, 
1400 Independence Ave., SW, STOP 1590, Room 4056, South Building, 
Washington, DC 20250-1590. RUS requests a signed original and three 
copies of all comments (7 CFR part 1700). All comments received will be 
made available for public inspection at Room 4034, South Building, U.S. 
Department of Agriculture, Washington, DC, between 8:00 a.m. and 4:00 
p.m. (7 CFR part 1.27(b)).

FOR FURTHER INFORMATION CONTACT: Barbara L. Eddy, Deputy Assistant 
Administrator, Telecommunications Program, Rural Utilities Service, 
STOP 1590, Room 4056, South Building, U.S. Department of Agriculture, 
Washington, DC 20250-1590. Telephone number (202) 720-9554.

SUPPLEMENTARY INFORMATION:

Classification

    This proposed rule has been determined to be significant and was 
reviewed by the Office of Management and Budget (OMB) under Executive 
Order 12866.

Civil Justice Reform

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. RUS has determined that this proposed rule meets 
the applicable standards provided in Sec. 3. of the Executive Order.

Regulatory Flexibility Act Certification

    In accordance with the requirements of the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.), the following analysis of regulatory 
options that would minimize any significant impact on small businesses 
is provided. Title VII, section 704, of the Federal Agriculture 
Improvement and Reform Act of 1996 (FAIR Act) (Public Law 104-127) 
amended Chapter 1 of subtitle D of title XXIII of the Food, 
Agriculture, Conservation, and Trade Act of 1990 by authorizing the 
Secretary of Agriculture to make loans for distance learning and 
telemedicine services in rural areas. This proposed rule would amend 7 
CFR part 1703 to set forth the rules for this new loan program to be 
administered by the RUS. The objectives of the proposed rule are to 
encourage and improve telemedicine and distance learning services in 
rural areas through the use of telecommunications, computer networks, 
and related advanced technologies by students, teachers, medical 
professionals, and rural residents.
    The new RUS Distance Learning and Telemedicine loan program would 
assist in providing modern telecommunication interconnectivity to 
educational and medical facilities in rural America. Through 4 years of 
Distance Learning and Telemedicine grant program activity, 
approximately 704 rural schools, serving hundreds of thousands of rural 
students, will gain access to improved educational resources through 
the information superhighway by sharing limited teaching resources and 
gaining access to libraries, training centers, vocational schools, and 
other institutions located in metropolitan centers. For telemedicine, 
approximately 500 rural medical facilities will gain access to improved 
medical care through linkage with other rural hospitals and major urban 
medical centers for clinical interactive video consultation, distance 
training of rural health care providers, management and transport of 
patient information, and access to medical expertise or library 
resources.
    This proposed regulation would set forth the rules for the new loan 
program which would provide supplementary funding for distance learning 
and telemedicine services in rural areas. The proposed regulation would 
optimize the use of a limited source of grant and loan funding by 
setting forth certain criteria which enables the Agency to distribute 
the amount of funding available among the greatest number of applicants 
in an economical, efficient, and orderly manner. The regulatory 
alternative would be to not publish a regulation; however, the desired 
regulatory purposes, to improve the access of people residing in rural 
areas to improved educational, learning, training, and health care 
services and to achieve the maximum use of funds available, would not 
be achieved.
    Entities eligible for assistance under this proposed rule would be 
those entities that provide, or would provide, educational or health 
care services or the facilities needed to provide these services 
through the use of advanced telecommunications in rural areas. There is 
no good estimate, at this time, of the number of entities that would be 
affected by the proposed rule since the regulatory requirements would 
apply to only those entities which choose to apply for the financial 
assistance. However, RUS is estimating between 250 and 300 applications 
would be submitted annually under this program and of those applicants, 
between 30 and 50 grants and 100 and 120 loans or combination thereof 
would be awarded. RUS' existing Distance Learning and Telemedicine 
Grant Program, since its inception in 1993, has received nearly 900 
applications for grant funding.
    The various reporting and compliance requirements contained in this 
proposed rule for applicants are necessary to determine such factors 
as: eligibility; funding purposes; compliance with other Federal 
regulations; project costs and alternative funding sources; project 
feasibility; and need for educational and/or telemedicine services. 
Those reporting requirements imposed on recipients of financial 
assistance are necessary to ensure proper use of financing for approved 
purposes. Some of the required reporting documents include information 
generally maintained by certain types of entities (i.e., patients or 
students served, financial statements, contracts, audits, etc.). The 
information collected is in a format designed to minimize the paperwork 
burden on small businesses and other small entities. The information 
collected is the minimum needed by the Agency to approve financial 
assistance and monitor the grantee or borrower performance.
    The impact on small entities would be limited to the reporting and 
compliance regulations which were designed to minimize the burden in 
order to

[[Page 18679]]

encourage applicants. Even the compliance regulations are designed to 
only assure the Agency that the financial assistance was utilized for 
Act purposes and also are regulations for already imposed Government-
wide financial assistance of any kind.

Information Collection and Recordkeeping Requirements

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35, as amended) RUS is requesting comments on the information 
collection incorporated in this proposed rule.
    Comments on this information collection must be received by June 
16, 1997.
    Comments are invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (b) The accuracy of the agency's estimate of the burden of the 
proposed collection of information; (c) Ways to enhance the quality, 
utility and clarity of the information to be collected; and (d) Ways to 
minimize the burden of the collection of information on respondents, 
including through the use of automated collection techniques or other 
forms of information technology.
    For further information contact Jonathan Claffey, Acting Deputy 
Director, Advanced Telecommunications Services Staff, Rural Utilities 
Service. Telephone: (202) 720-0530. Fax: (202) 720-2734.
    Title: Distance Learning and Telemedicine Loan and Grant Program.
    OMB Number: 0572-0096.
    Type of Request: Revision of a previously approved information 
collection.
    Abstract: The RUS currently implements a program that provides 
grants to rural community facilities, such as schools, hospitals, and 
medical centers, to encourage, improve, and make affordable the use of 
advanced telecommunications and computer networks to provide 
educational and medical benefits to people living in rural areas and to 
improve rural access to reliable facsimile, document and data 
transmission, multi-frequency tone signaling services, 911 emergency 
service with automatic number identification, interactive audio and 
visual transmissions, voice mail services designed to record, store, 
and retrieve voice messages, and other advanced telecommunications 
services. RUS currently awards grants and is proposing to also award 
loan funds to projects that will improve the quality of life of people 
residing in rural areas by improving their access to improved 
educational, training, and medical services; and, their access to 
opportunities that rely on these advanced communication and information 
technologies to provide such services. For grants, RUS funds up to 70 
percent of any project selected, and requires at least a 30 percent 
matching contribution from the grant applicant. For applicants who 
voluntarily request loans, RUS proposes to fund up to 90 percent of any 
project selected, and requires at least a 10 percent matching 
contribution from the loan applicant.
    In order for the public to receive the benefits of the new loan 
program, they need to submit an application and the supporting 
information for RUS to determine if they meet the eligibility 
requirements. The Distance Learning and Telemedicine Loan and Grant 
Program regulations (7 CFR 1703, subpart D), establish the method of 
selecting projects to receive grants and loans, the method of 
allocating the available funds, the method of determining the 
beneficiaries of the program, and the requirements for the application 
to be submitted to RUS, the method of notifying potential applicants of 
maximum and minimum amounts of grant and loan funds that will be 
considered for a single application.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 2 hours per response.
    Respondents: Business or other for profit and non-profit 
institutions.
    Estimated Number of Respondents: 300.
    Estimated Number of Responses per Respondent: 29.
    Estimated Total Annual Burden on Respondents: 18,248.
    Copies of this information collection can be obtained from Dawn 
Wolfgang, Program Support and Regulatory Analysis, Rural Utilities 
Service. Telephone: (202) 720-0812.
    Send comments regarding this information collection requirement, to 
the Office of Information and Regulatory Affairs, Office of Management 
and Budget, ATTN: Desk Officer, USDA, Room 10102, New Executive Office 
Building, Washington, DC 20503, and to F. Lamont Heppe, Jr., Director, 
Program Support and Regulatory Analysis, Rural Utilities Service, 1400 
Independence Ave., SW., STOP 1522, Room 4034, South Building, 
Washington, DC 20250-1522.
    Comments are best assured of having full effect if OMB receives 
them within 30 days of publication in the Federal Register. All 
comments will become a matter of public record.

National Environmental Policy Act Certification

    RUS has determined that this proposed rule will not significantly 
affect the quality of the human environment as defined by the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.). Therefore, 
this action does not require an environmental impact statement or 
assessment.

Program Affected

    The program described by this proposed rule is listed in the 
Catalog of Federal Domestic Assistance programs under number 10.855, 
Distance Learning and Telemedicine Loan and Grant Program. This catalog 
is available on a subscription basis from the Superintendent of 
Documents, the United States Government Printing Office, Washington, DC 
20402.

Intergovernmental Review

    This program is subject to the provisions of Executive Order 12372 
that requires intergovernmental consultation with State and local 
officials.

Unfunded Mandate

    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the Unfunded Mandate Reform Act) for State, 
local, and tribal governments or the private sector. Thus today's rule 
is not subject to the requirements of sections 202 and 205 of the 
Unfunded Mandate Reform Act.

Background

    Title 7, CFR part 1703, subpart D, was originally published in the 
Federal Register February 26, 1993, (58 FR 11507), and became effective 
March 29, 1993. The Agriculture Improvement and Reform Act of 1996 
(FAIR Act) modified the Distance Learning and Telemedicine (DLT) grant 
program by creating a loan component. The regulation was modified and 
published as a final rule in the Federal Register on June 27, 1996, (61 
FR 33622), to incorporate the changes to the grant program mandated by 
the FAIR Act, excluding those provisions for administering a loan 
program since funds appropriated in fiscal year 1996 could only be used 
for grants. This proposed rule, while based in part on the existing 
rule, will (1) establish criteria for loan and grant eligibility, (2) 
simplify the determination for the comparative rurality calculation, 
and (3) place

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greater emphasis on the need for distance learning or telemedicine 
services in the scoring criteria.

Criteria for Loan and Grant Eligibility

    The Administrator determines the portion of the financial 
assistance provided to a recipient that consists of grants and the 
portion that consists of cost of money loans so as to result in the 
maximum feasible repayment to the government of the financial 
assistance, based on the recipient's ability to repay and the full 
utilization of the funds available.
    RUS proposes to use the National School Lunch Program (NSLP) to 
assist in determining the mix of grants, loans, and loan-grant 
combinations for applicants requesting financial assistance. The extent 
of participation by residents of an area in the NSLP is a widely 
accepted measure of the relative well-being of the area. RUS believes 
that using NSLP ratings in the allocation of grant and loan funds 
furthers the FAIR Act's purpose of providing modern DLT services in the 
most needy parts of rural America. A high rate of eligibility for 
school lunch assistance indicates a low relative income in the area and 
less ability to repay loans. Grants will be made available to only 
those otherwise eligible applicants determined by the Administrator, 
after review of the financial information furnished by the applicant, 
to have the least ability to repay the full amount of the assistance.
    RUS is proposing to use a subjective method to score, up to 45 
points, documentation submitted to support ``the need for services and 
benefits derived from services'' [see 1703.117(b)(1)]. RUS believes 
that the need for services and the benefits derived from the services 
should be a critical factor in determining which application will be 
successful in obtaining financial assistance. RUS could not determine 
an objective method to use in scoring this particular criterion due to 
the nature of some of the benefits to be derived that are priceless, 
such as lives saved, students attending higher education institutions, 
etc. RUS would like to receive suggestions from commentors on any 
objective method that could be used or indications from commentors that 
the subjective method is acceptable.
    The 1995 statistics for the NSLP indicate that the percentages to 
be used to establish eligibility for loans and grants will result in 
financial assistance in the form of loans for approximately 75 percent 
of qualifying applications. However, before an applicant may be awarded 
a loan, the applicant must be able to show that the loan will be repaid 
within the repayment period and at the interest rate under which 
financial assistance is offered. In addition, this proposed rule allows 
for third party guarantees as evidence of an applicant's ability to 
repay a loan. RUS believes that the use of third party secured loan 
guarantees will provide adequate loan security and will increase the 
number of successful applications for the loan program.

Rurality Calculation

    The rurality calculation used in the existing regulation was based 
on a scale which looked at the characteristics of an entire county 
instead of the sites in which financial assistance being requested was 
to be used. This methodology placed certain areas with ``rural'' 
characteristics, yet located in semi-urban counties, at a disadvantage. 
The proposed methodology will address this situation by being more 
``site'' specific when determining rural needs and characteristics. For 
purposes of this determination, an area shall be considered rural if it 
is included within the boundaries of any incorporated or unincorporated 
city, village, or borough having a population not in excess of 10,000 
inhabitants.

Need for Services

    More emphasis has been placed on the need for services and benefits 
derived from those services in the scoring criteria in this proposed 
rule versus the existing rule. In seeking support for this criterion, 
applicants may submit documentation explaining (1) the economic, 
education or health care challenges facing the community, (2) proposed 
plans to address those challenges, and (3) how financial assistance 
will help and how the project could not be accomplished without RUS 
funding. This scoring criterion seeks to measure the true ``outcomes'' 
of a proposed project and its derived benefits and therefore RUS 
believes it merits increased scoring value. The points available for 
this scoring criterion have been increased to represent 26 percent of 
the total possible points available for any project.

List of Subjects in 7 CFR Part 1703

    Community development, Grant programs--education, Grant programs--
health care, Grant programs--housing and community development, Loan 
programs--education, Loan programs--health care, Loan programs--housing 
and community development, Reporting and recordkeeping requirements, 
Rural areas.

    For the reasons set forth in the preamble, chapter XVII of title 7 
of the Code of Federal Regulations is proposed to be amended as 
follows:

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., Pub. L. 103-
354, 108 Stat 3178 (7 U.S.C. 6941 et seq.).

    2. Subpart D of part 1703 is revised to read as follows:

Subpart D--Distance Learning and Telemedicine Loan and Grant Program

Sec.
1703.100  Purpose.
1703.101  Policy.
1703.102  Definitions.
1703.103  Applicant eligibility and allocation of funds.
1703.104  Allowable grant and loan funding percentage.
1703.105  Grant and loan purposes.
1703.106  In-kind matching provisions.
1703.107  Ineligible loan and grant purposes.
1703.108  Maximum and minimum sizes of a grant and a loan.
1703.109  The funding application.
1703.110  Conflict of interest.
1708.111  [Reserved]
1703.112  Determination of types of funding.
1703.113  Application filing dates, location, processing, and public 
notification.
1703.114-1703.116  [Reserved]
1703.117  Criteria for scoring applications.
1703.118  Other application selection provisions.
1703.119  Appeal provisions.
1703.120--1703.121  [Reserved]
1703.122  Further processing of selected applications.
1703.123--1703.125  [Reserved]
1703.126  Disbursement of loan and grant funds.
1703.127  Reporting and oversight requirements.
1703.128  Audit requirements.
1703.129  Repayment of loans.
1703.130--1703.134  [Reserved]
1703.135  Grant and loan administration.
1703.136  Changes in project objectives or scope.
1703.137  Grant and loan termination provisions.
1703.138--1703.139  [Reserved]
1703.140  Expedited telecommunications loans.

Appendix A to Subpart D of Part 1703--Environmental Questionnaire

Subpart D--Distance Learning and Telemedicine Loan and Grant 
Program


Sec. 1703.100  Purpose.

    The purpose of this subpart is to encourage and improve 
telemedicine services and distance learning services in rural areas 
through the use of telecommunications, computer networks, and related 
advanced

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technologies by students, teachers, medical professionals, and rural 
residents.


Sec. 1703.101  Policy.

    (a) RUS recognizes that the transmission of information is vital to 
the economic development, education, and health of rural Americans. To 
further this objective, RUS will award loans and grants under this 
subpart to distance learning and telemedicine projects that will 
improve the access of people residing in rural areas to improved 
educational, learning, training, and health care services. Unless a 
distinction is made in the various sections of this subpart, all 
aspects of this subpart will apply to all funding requests.
    (b) In providing assistance under this subpart, RUS will give 
priority to rural areas that it believes have the greatest need of 
distance learning and telemedicine services. RUS believes that 
generally the need is greatest in economically challenged areas and 
those requiring high costs to serve. This program is consistent with 
provisions of the 1996 Telecommunications Act (Public Law 104-104, 110 
Stat. 56) that designates telecommunications service discounts for 
schools, libraries, and rural health care providers providing benefits 
to rural end-users. RUS will take into consideration the community's 
involvement in the project and the applicant's ability to leverage 
grant funds based on its access to capital.
    (c) RUS believes that the residents of rural areas and their local 
institutions which serve them can best determine what are the most 
appropriate communications or information systems for use in their 
respective communities. Therefore, in administering this subpart, RUS 
will not favor or mandate the use of one particular technology over 
another.
    (d) All rural institutions are encouraged to cooperate with each 
other and with applicants and end users in promoting the program being 
implemented under this subpart.
    (e) RUS staff will make diligent efforts to inform potential 
applicants in rural areas of the program being implemented under this 
subpart.
    (f) Financial assistance under this subpart will consist of grants 
or cost of money loans, or both. The Administrator shall determine the 
portion of the financial assistance provided to a recipient that 
consists of grants and the portion that consists of cost of money loans 
so as to result in the maximum feasible repayment to the Federal 
Government of the financial assistance, based on the ability of the 
recipient to repay and with the full utilization of funds made 
available to carry out this subpart.
    (g) The Administrator may provide a cost of money loan to entities 
using telemedicine and distance learning services, and, to entities 
providing or proposing to provide telemedicine service or distance 
learning service to other persons at rates calculated to ensure that 
the benefit of the financial assistance is passed through to the other 
persons.
    (h) The Administrator may provide a cost of money loan under this 
subpart to a borrower of a telecommunications or electric loan under 
the Rural Electrification Act of 1936. A borrower receiving a cost of 
money loan under this subpart shall:
    (1) Make the funds provided available, under any terms it so 
chooses as long as the terms are no more stringent than the terms under 
which it received the funding, to entities that qualify as distance 
learning and/or telemedicine projects satisfying the requirements of 
this subpart.
    (2) Use the funds provided to acquire, install, improve, or extend 
a system referred to in this subpart.


Sec. 1703.102  Definitions.

    Act means the Rural Electrification Act of 1936, as amended (7 
U.S.C. 901 et seq.).
    Administrator means the Administrator of the Rural Utilities 
Service or his or her designee.
    Applicant means an eligible organization which applies for funding 
under this subpart.
    Champion community means any community or area so designated under 
the proper procedures.
    Completed application means an application that includes all those 
items specified in Sec. 1703.109 in form and substance satisfactory to 
the Administrator.
    Comprehensive rural telecommunications plan means the plan 
submitted by an applicant in accordance with Sec. 1703.109(a).
    Computer networks means computer hardware and software, terminals, 
signal conversion equipment including both modulators and demodulators, 
or related devices, used to communicate with other computers to process 
and exchange data through a telecommunication network in which signals 
are generated, modified, or prepared for transmission, or received, via 
telecommunications terminal equipment and telecommunications 
transmission facilities.
    Consortium means a combination or group of eligible entities formed 
to undertake the purposes for which the distance learning and 
telemedicine funding is provided. Each consortium shall be composed of 
a minimum of two eligible entities that meet the requirements of 
Sec. 1703.103.
    Construct means to acquire, construct, extend, improve, or install 
a facility or system.
    Cost of money loan. The term cost of money loan means a loan made 
under Title XXIII bearing interest at a rate equal to the then current 
cost of money to the Federal Government, at the time the feasibility 
study is completed, for loans of similar maturity not to exceed 10 
years.
    Data terminal equipment means equipment that converts user 
information into data signals for transmission, or reconverts the 
received data signals into user information, and is normally found on 
the terminal of a circuit and on the premises of the end user.
    Distance learning means a telecommunications link to an end user 
through the use of eligible equipment to:
    (1) Provide educational programs, instruction, or information 
originating in one area, whether rural or not, to students and/or 
teachers who are located in rural areas; or
    (2) Connect teachers and/or students, located in one rural area 
with teachers and/or students that are located in a different rural 
area.
    DLT borrower means an entity that has outstanding loans under the 
provisions of Title XXIII.
    Economic useful life as applied to facilities financed under Title 
XXIII means the number of years resulting from dividing 100 percent by 
the depreciation rate (expressed as a percent) based on Internal 
Revenue Service depreciation rules or recognized telecommunications 
industry guidelines.
    Eligible equipment means computer hardware and software, audio and 
visual equipment, computer network components, telecommunications 
terminal equipment, telecommunications transmission facilities, data 
terminal equipment, inside wiring, interactive video equipment, or 
other facilities that would further telemedicine services or distance 
learning services. Land, buildings, or building construction are not 
considered eligible equipment (see Sec. 1703.107(a)(10)).
    Eligible organization means an incorporated entity that meets the 
requirements of Sec. 1703.103.
    Empowerment Zone and Enterprise Community (EZ/EC) means any 
community whose designation as such

[[Page 18682]]

pursuant to 26 U.S.C. 1391 et seq. is in effect at the time RUS agrees 
to provide financial assistance.
    End user means either or both of the following:
    (1) Rural elementary or secondary schools or other educational 
institutions, such as institutions of higher education, vocational and 
adult training and education centers, libraries, and teacher training 
centers, and students, teachers and instructors using such rural 
educational facilities, that participate in a rural distance learning 
telecommunications program through a project funded under this subpart;
    (2) Rural hospitals, primary care centers or facilities, such as 
medical centers and clinics, and physicians and staff using such rural 
medical facilities, that participate in a rural telemedicine program 
through a project funded under this subpart.
    End user site means a facility that is part of a network or 
telecommunications system that is utilized by end users.
    Financial assistance shall consist of grants, cost of money loans, 
or both, made under Title XXIII.
    Grant documents means the letter of agreement, including any 
amendments and supplements thereto, between RUS and the grant 
recipient.
    Grantee means a recipient of a grant from RUS to carry out the 
purposes of Title XXIII.
    Hub means control center of a network or telecommunications system.
    Instructional programming means educational material, including 
computer software, which would be used for educational purposes in 
connection with eligible equipment but does not include salaries, 
benefits, and overhead of medical or educational personnel.
    Interactive video equipment means equipment used to produce and 
prepare for transmission audio and visual signals from at least two 
distant locations such that individuals at such locations can orally 
and visually communicate with each other. Such equipment includes 
monitors, other display devices, cameras or other recording devices, 
audio pickup devices, and other related equipment.
    Letter of agreement means a legal document executed by RUS and the 
grantee that contains specific terms, conditions, requirements, and 
understandings applicable to a particular grant.
    Loan documents mean the loan agreement, note, and security 
agreement, including any amendments and supplements thereto, between 
RUS and the DLT or Telecommunications/Electric borrower.
    Local exchange carrier means a commercial, cooperative or mutual-
type association, or public body that is engaged in the provision of 
telephone exchange service or exchange access.
    Matching funds means the applicant's funding contribution for 
allowable purposes.
    National School Lunch Program (NSLP) means the federally assisted 
meal program established under the National School Lunch Act of 1946 
(42 U.S.C. 1751).
    Project means an undertaking to provide or improve distance 
learning or telemedicine by using financial assistance from RUS under 
this subpart.
    Project service area means the area in which at least 90 percent of 
the persons to be served by the project are likely to reside.
    Rural community facilities means facilities such as schools, 
libraries, learning centers, training facilities, hospitals, medical 
centers, or similar facilities, primarily used by residents of rural 
areas, that will use a telecommunications, computer network, or related 
advanced technology system to provide educational and/or health care 
benefits primarily to residents of rural areas.
    RUS means the Rural Utilities Service, an agency of the United 
States Department of Agriculture formerly known as REA. See 7 CFR 
1700.1.
    Scope of work means a detailed plan of work that has been approved 
by the Administrator to be performed by the applicant using funding 
provided under this subpart.
    Secretary means the Secretary of Agriculture.
    Technical assistance means:
    (1) Assistance in learning to operate equipment or systems; and
    (2) Studies, analyses, designs, reports, manuals, guides, 
literature, or other forms of creating, acquiring, and/or disseminating 
information.
    Telecommunications carrier means any provider of telecommunications 
services.
    Telecommunications/Electric borrower means an entity that has 
outstanding electric or telephone RUS and/or Rural Telephone Bank loans 
or loan guarantees under the provisions of the Act.
    Telecommunications terminal equipment means the assembly of 
telecommunications equipment at the end of a circuit or path of a 
signal, including but not limited to over the air broadcast, satellite, 
and microwave, normally located on the premises of the end user, that 
interfaces with telecommunications transmission facilities, and that is 
used to modify, convert, encode, or otherwise prepare signals to be 
transmitted via such telecommunications facilities, or that is used to 
modify, reconvert, or carry signals received from such facilities, the 
purpose of which is to accomplish the goal for which the circuit or 
signal was established.
    Telecommunications transmission facilities means facilities that 
transmit, receive, or carry data between the telecommunications 
terminal equipment at each end of the telecommunications circuit or 
path. Such facilities include microwave antennae, relay stations and 
towers, other telecommunications antennae, fiber-optic cables and 
repeaters, coaxial cables, communication satellite ground station 
complexes, copper cable electronic equipment associated with 
telecommunications transmissions, and similar items.
    Telemedicine means a telecommunications link to an end user through 
the use of eligible equipment which electronically links medical 
professionals at separate sites in order to exchange health care 
information in audio, video, graphic, or other format for the purpose 
of providing improved health care services primarily to residents of 
rural areas.
    Title XXIII means subtitle D, chapter 1, of the Rural Economic 
Development Act of 1990 (7 U.S.C. 950aaa through 950aaa-4).


Sec. 1703.103  Applicant eligibility and allocation of funds.

    (a) To be eligible to receive funding under this subpart, the 
applicant must be organized in one of the following corporate 
structures:
    (1) An incorporated organization, partnership, Indian tribe and 
tribal organization as defined in 25 U.S.C. 450b (b) and (c), or other 
legal entity, including a municipal corporation or a private 
corporation organized on a for-profit or not-for-profit basis, which 
operates, or will operate, a school, college, university, learning 
center, training facility, or other educational institution, including 
a regional educational laboratory, library, hospital, medical center, 
medical clinic or any rural community facility. A state government, 
other than a state government entity that operates a rural community 
facility, is not considered an eligible applicant; or
    (2) A consortium, as defined in Sec. 1703.102. A consortium which 
includes a state government entity is only eligible if the state 
government entity operates a rural community facility; or

[[Page 18683]]

    (3) An incorporated organization, partnership, Indian tribe and 
tribal organization as defined in 25 U.S.C. 450b (b) and (c), or other 
legal entity which is providing or proposes to provide telemedicine 
service or distance learning service to other legal entities or 
consortia at rates calculated to ensure that the economic value and 
other benefits of the distance learning or telemedicine grant is passed 
through to such other legal entities or consortia.
    (b) At least one of the entities in a partnership or consortium 
must be eligible individually, and the partnership or consortium must 
provide written evidence of its legal capacity to contract with RUS. If 
a partnership or consortium lacks the capacity to contract, each 
individual entity must contract with RUS on its own behalf.
    (c) A borrower of an electric or telecommunications loan under the 
Rural Electrification Act of 1936 is eligible for a cost of money loan 
only.
    (d) All applicants for financial assistance, with the exception of 
applicants requesting a loan and having the minimum required score, 
will be ranked by the type of application (health care or educational) 
and total points scored. Grant funds available for medical and 
educational applicants will be allocated based on the total number of 
medical and educational applications scoring in the top 50 percent of 
all applications received. Applications will be ranked only in one 
category based on the predominant use of the project.


Sec. 1703.104  Allowable grant and loan funding percentage.

    (a) Financial assistance, except as noted in paragraph (b) of this 
section, may be used by eligible organizations for distance learning 
and telemedicine projects to finance up to 70 percent of the cost of 
allowable purposes outlined in Sec. 1703.105 provided that no financial 
assistance may exceed the maximum grant or loan amount for the year in 
which the grant or loan is made.
    (b) Cost of Money Loans requested by an applicant may be used by 
eligible organizations for distance learning and telemedicine projects 
to finance up to 90 percent of the cost of allowable loan purposes 
outlined in Sec. 1703.105, provided that no loan may exceed the maximum 
loan amount for the year in which the loan is made. Financial 
assistance applications that do not request a loan and qualify for a 
loan or combination loan and grant will be funded up to 70 percent of 
the cost of allowable purposes.


Sec. 1703.105  Grant and loan purposes.

    (a) Grants and loans shall be limited to costs associated with the 
initial capital assets associated with the project. Grant and loan 
funds as set out in the last sentence of this section shall not exceed 
twenty percent (20 percent) of the requested financial assistance. The 
following are allowable grant and loan purposes:
    (a) Acquiring, by lease or purchase, eligible equipment as defined 
in Sec. 1703.102;
    (b) Acquiring instructional programming; and
    (c) Providing technical assistance and instruction for using 
eligible equipment, including any related software; developing 
instructional programming; providing engineering or environmental 
studies relating to the establishment or expansion of the phase of the 
project that is being financed with the financial assistance.


Sec. 1703.106  In-kind matching provisions.

    (a) In-kind matching, the applicant's minimum funding contribution 
(specified in Sec. 1703.104) for allowable purposes, is generally 
required in the form of cash. However, in-kind contributions for the 
purposes listed in Sec. 1703.105 may be substituted for cash.
    (b) In-kind items listed in Sec. 1703.105 must be non-depreciated 
or new assets with established monetary value. Manufacturers or service 
providers discounts are not considered in-kind matching.
    (c) Funding may be provided for end user sites. Funding may also be 
provided for hubs located in rural or non-rural areas, if they are 
necessary to provide distance learning and/or telemedicine services to 
rural residents at end user sites.


Sec. 1703.107  Ineligible loan and grant purposes.

    (a) Without limitation, funding under this subpart will not be 
provided:
    (1) To cover the costs of installing or constructing 
telecommunications transmission facilities, except as provided in 
paragraph (c) of this section;
    (2) To pay for medical equipment except medical equipment primarily 
used for encoding and decoding data, such as images, for transmission 
over a telecommunications or computer network;
    (3) To pay salaries, wages, or employee benefits to medical or 
educational personnel;
    (4) To pay for the salaries or administrative expenses of the 
applicant or the project;
    (5) To purchase equipment that will be owned by the local exchange 
carrier or another telecommunications service provider;
    (6) To duplicate facilities providing distance learning or 
telemedicine services in place or to reimburse the applicant or others 
for costs incurred prior to RUS' receipt of the completed application;
    (7) To pay costs of preparing the application package for funding 
under this program;
    (8) For projects whose sole objective is to provide links between 
teachers and students or medical professionals who are located at the 
same facility;
    (9) For site development and the destruction or alteration of 
buildings;
    (10) For the purchase of land, buildings, or building construction;
    (11) For projects located in areas covered by the Coastal Barrier 
Resources Act (16 U.S.C. 3501 et seq.);
    (12) For any purpose that the Administrator has not specifically 
approved; or
    (13) Except for leases provided in Sec. 1703.105, to pay the cost 
of recurring or operating expenses for the project.
    (b) Except as otherwise provided in Sec. 1703.140, funds shall not 
be used to finance a project in part when success of the project is 
dependent upon the receipt of additional funding under this subpart D 
or is dependent upon the receipt of other funding that is not assured.
    (c) Loans can be used to cover the costs of telecommunications 
transmission facilities if no telecommunications carrier will install 
such facilities under the Act or through other financing procedures 
within a reasonable time period and at a cost to the applicant that 
does not jeopardize the feasibility of the project, as determined by 
the Administrator.


Sec. 1703.108  Maximum and minimum sizes of a grant and a loan.

    Applications for grants and loans to be considered under this 
subpart will be subject to limitations on the proposed amount of 
funding. The Administrator may establish the maximum amount of 
financial assistance to be made available to an individual recipient 
for each fiscal year under this subpart, by publishing notice of the 
maximum amount in the Federal Register not more than 45 days after 
funds are made available for the fiscal year to carry out this subpart. 
The minimum size of a grant and/or loan is $50,000.


Sec. 1703.109  The funding application.

    The following items comprise the required material that must be 
submitted to RUS in support of the funding request:

[[Page 18684]]

    (a) Proposed scope of work of the project. The proposed scope of 
work of the project which includes, at a minimum:
    (1) The specific activities to be performed under the project;
    (2) Who will carry out the activities;
    (3) The time-frames for accomplishing the project objectives and 
activities; and
    (4) A budget for capital expenditures reflecting the line item 
costs for both the grant and/or loan funds and other sources of funds 
for the project.
    (b) Executive summary for the project. The applicant must provide 
RUS a general project overview, verification of compliance with the 
general requirements of this subpart, and documentation of eligibility. 
The executive summary shall contain the following 9 categories:
    (1) A description of why the project is needed.
    (2) An explanation of how the applicant will address the need cited 
in paragraph (b)(1) of this section, why the applicant requires 
financial assistance and types of educational and/or medical services 
to be offered by the project, and the benefits to the rural residents.
    (3) A description of the applicant, documenting eligibility with 
Sec. 1703.103.
    (4) An explanation of the total cost of the project including a 
breakdown of the RUS funding required and the source of funding for the 
remainder of the project.
    (5) A statement that the project is either a distance learning or 
telemedicine facility as defined in Sec. 1703.102. If the project 
provides both distance learning and telemedicine services, the 
applicant must identify the predominant use of the system.
    (6) A general overview of the telecommunications system to be 
developed, including the types of equipment, technologies, and 
facilities used.
    (7) A description of the participating hubs and end user sites and 
the number of rural residents which will be served by the proposed 
project at each end user site.
    (8) The applicant must certify that facilities using financial 
assistance do not duplicate adequate established telemedicine services 
or distance learning services. RUS will make the final determination 
whether or not financial assistance requested by an applicant will 
duplicate such adequate established services.
    (9) A listing of the location of each end user site [city, town, 
village, borough or rural area plus the state] discussing how the 
appropriate National School Lunch Program eligibility percentage was 
determined in accordance with Sec. 1703.112. These percentages may be 
obtained from the State or local organization that administers the 
program and must be certified by that organization as being correct.
    (c) Financial Information. The applicant must provide financial 
information to support the need for the funding requested for the 
project. It must show its financial capacity to carry out the proposed 
work, and show project feasibility. For educational institutions 
participating in a project application (including all members of a 
consortium), the financial data must reflect revenue and expense 
reports and balance sheet reports, reflecting net worth, for the most 
recent annual reporting period preceding the date of the application. 
For medical institutions participating in a project application 
(including all members of a consortium), the financial data must 
include income statement and balance sheet reports, reflecting net 
worth, for the most recent completed fiscal year preceding the date of 
the application. When the applicant is a partnership, company, 
corporation or other entity, current balance sheets, reflecting net 
worth, are needed from each of the entities that has at least a 20 
percent interest in such partnership, company, corporation or other 
entity. When the applicant is a consortium, a current balance sheet, 
reflecting net worth, is needed from each member of the consortium and 
from each of the entities that has at least a 20 percent interest in 
such member of the consortium.
    (1) Applicants must include sufficient pro-forma financial data 
which adequately reflects the financial capability of project 
participants and the project as a whole to continue a sustainable 
project for a minimum of 10 years after completion of the project. This 
documentation should include sources of sufficient income or revenues 
to pay operating expenses including telecommunications access and/or 
toll charges, system maintenance, salaries, training, and any other 
general operating expenses, and provide for replacement of depreciable 
items.
    (2) For applicants requesting a loan and applicants who qualify for 
a loan or a combination loan/grant in accordance with Sec. 1703.112, 
the documentation must demonstrate the ability to repay the loan. RUS 
will consider a secured loan guarantee by a third party as evidence of 
the ability of the applicant to repay a loan.
    (3) For each hub and end user site, the applicant must identify and 
provide reasonable evidence of each source of revenue. If the 
projection relies on cost sharing arrangements among hub and end user 
sites, the applicant must provide evidence of agreements made among 
project participants.
    (4) For applicants eligible under Sec. 1703.103(a)(3), an 
explanation of the economic analysis justifying the rate structure to 
ensure that the benefit, including cost saving, of the financial 
assistance is passed through to the other persons receiving 
telemedicine or distance learning services.
    (5) For RUS telecommunications and electric borrowers applying for 
a cost of money loan, the only financial information required in 
support of that application is the respective most recent Annual Report 
to RUS (i.e. RUS Form 479, Form 7, or Form 12).
    (d) A statement of experience. The applicant must provide a written 
narrative (not exceeding three single spaced pages) describing its 
demonstrated capability and experience, if any, in operating an 
educational or health care endeavor and any project similar to the 
proposed project. Experience in a similar project is desirable but not 
required.
    (e) Funding commitment from other sources. The applicant must 
provide evidence, in form and substance satisfactory to the 
Administrator, that all funds in addition to funds provided under this 
subpart are committed and will be used for the proposed project.
    (f) Telecommunications System Plan. A Telecommunications System 
Plan, consisting of the following, is required. The items in paragraphs 
(f)(4) and (5) of this section are needed only when the applicant is 
requesting loan funds for telecommunications transmission facilities:
    (1) The capabilities of the telecommunications terminal equipment, 
including a description of the specific equipment which will be used to 
deliver the proposed service. The applicant must document discussions 
with various technical sources which could include consultants, 
engineers, product vendors, or internal technical experts, provide 
detailed cost estimates for operating and maintaining the end user 
equipment and provide evidence that alternative equipment and 
technologies were evaluated.
    (2) A listing of the proposed purchases or leases of 
telecommunications terminal equipment, telecommunications transmission 
facilities, data terminal equipment, interactive video equipment, 
computer hardware and software systems, and components that process 
data for transmission via telecommunications, computer network 
components, communication satellite

[[Page 18685]]

ground station equipment, or any other elements of the 
telecommunications system designed to further the purposes of this 
subpart, that the applicant intends to build or fund using RUS 
financial assistance.
    (3) A description of the consultations with the appropriate 
telecommunications carriers (including other interexchange carriers, 
cable television operators, enhanced service providers, providers of 
satellite services and telecommunications equipment manufacturers and 
distributors) and the anticipated role of such providers in the 
proposed telecommunications system.
    (4) Results of discussion with local exchange carriers serving the 
project area addressing concerns in Sec. 1703.107(c).
    (5) The capabilities of the telecommunications transmission 
facilities, including bandwidth, networking topology, switching, 
multiplexing, standards and protocols for intra-networking and open 
systems architecture (the ability to effectively communicate with other 
networks). In addition, the applicant must explain the manner in which 
the transmission facilities will deliver the proposed services. For 
example, for medical diagnostics, the applicant might indicate whether 
or not a guest or other diagnosticians can join the network from 
locations off the network. For educational services, indicate whether 
or not all hub and end-user sites are able to simultaneously hear in 
real-time and see each other or the instructional material in real-
time. The applicant must include detailed cost estimates for operating 
and maintaining the network, and include evidence that alternative 
delivery methods and systems were evaluated.
    (g) Proposed evaluation methodology. The applicant must provide a 
proposed method of evaluating the success of the project in meeting the 
objectives of the program as set forth in Sec. 1703.100 and 
Sec. 1703.101 and the proposed scope of work.
    (h) Compliance with other Federal statues and regulations. The 
applicant is required to submit evidence that it is in compliance with 
other Federal statues and regulations, as detailed in Sec. 1703.33 as 
follows:
    (1) Equal opportunity and nondiscrimination requirements;
    (2) Architectural barriers;
    (3) Flood hazard area precautions;
    (4) Uniform Relocation Assistance and Real Property Acquisition for 
Federal and Federally Assisted Programs;
    (5) Drug-free workplace;
    (6) ``Certification Regarding Debarment, Suspension and Other 
Responsibility Matters--Primary Covered Transaction'' (See 7 CFR 
3017.510);
    (7) Intergovernmental review of Federal programs if clearing 
house(s) exists for the state(s) in which project is located; and
    (8) Restrictions on lobbying. For an application for funding in 
excess of $100,000, a certification statement, ``Certification 
Regarding Lobbying'' is required. If the applicant is engaged in 
lobbying activities , the applicant must submit a completed disclosure 
form, ``Disclosure of Lobbying Activities'' (see 7 CFR part 3018).
    (i)(1) Environmental impact and historic preservation. The 
applicant must provide details of the project's impact on the 
environment and historic preservation. Grants and loans made under this 
part are subject to 7 CFR part 1794 which contains the policies and 
procedures of RUS for implementing a variety of Federal statues, 
regulations and executive orders generally pertaining to protection of 
the quality of the human environment that are listed in 7 CFR 1794.1. 
The application shall contain a separate section entitled 
``Environmental Impact of the Project.''
    (2) Environmental information. An ``Environmental Questionnaire,'' 
appendix A to this subpart, may be used by applicants to assist in 
complying with the requirements of this section. Copies of the 
Environmental Questionnaire are available from RUS.
    (j) A completed Standard Form 424, ``Application for Federal 
Assistance,'' along with a board of directors resolution authorizing 
the funding request.
    (k) Evidence of the applicant's legal existence and authority to 
enter into a grant and/or loan agreement with RUS and perform 
activities proposed under the grant or loan application.
    (l) Evidence that the applicant is not delinquent on any obligation 
owed to the Federal government (7 CFR parts 3015 and 3016).
    (m) Evidence that the applicant has consulted with the USDA State 
Director, Rural Development, concerning the availability of other 
sources of funding available at the state or local level.
    (n) Evidence from the USDA State Director, Rural Development, that 
the application conforms with the State strategic plan as prepared 
under section 381D of the Consolidated Farm and Rural Development Act 7 
U.S.C. 1921 et seq.). The applicant should indicate if such a plan does 
not exist.
    (o) A depreciation schedule covering all assets of the project. 
Those assets for which financial assistance is being requested should 
be clearly indicated.
    (p) Supplemental information. The applicant should provide any 
additional information it considers relevant to the project and likely 
to be helpful in determining the extent to which the proposed project 
would further the purposes of this subpart.
    (q) Additional information requested by RUS. The applicant must 
provide any additional information the Administrator may consider 
relevant to the application and necessary to adequately evaluate the 
application and make funding decisions. The Administrator may also 
request modifications or changes, including changes in the amount of 
funds requested, in any proposal described in an application submitted 
under this subpart.


Sec. 1703.110  Conflict of interest.

    At any time prior to the disbursement of a grant or loan awarded 
under this subpart, the Administrator may disqualify an otherwise 
eligible project whenever, in the judgment of the Administrator, the 
project would create a conflict of interest or the appearance of a 
conflict of interest. The Administrator will notify the applicant in 
writing of his/her intention to disqualify the project under this 
section and set forth the basis for his/her determination that a 
conflict of interest or appearance exists. Thereafter, the applicant 
will have 30 days from the date of such notice to file a written 
response with the Administrator. If the Administrator receives the 
applicant's response within the 30-day period, the Administrator will 
consider the information contained therein before making a final 
determination whether to disqualify the project. The Administrator will 
promptly notify the applicant of the final determination whether a 
conflict of interest or appearance of a conflict exists. If the 
determination is affirmative, the notice will also advise the applicant 
whether the project is disqualified or conditionally disqualified. If 
the project is conditionally disqualified, the notice will state under 
what circumstances the project may continue to be eligible for 
assistance under this subpart. The Administrator's decision under this 
section will be final.


Sec. 1703.111  [Reserved]


Sec. 1703.112  Determination of types of funding.

    (a) To maximize the use of available funding and to obtain the 
maximum repayment to the Federal Government, RUS will determine if an 
applicant will

[[Page 18686]]

be awarded a grant, loan or a combination of both loans and grants 
based upon the following:
    (1) The percentage of students eligible to participate in the 
National School Lunch Program in the areas where the end user sites 
comprising the project are located; and
    (2) The applicant's ability to pay for the project.
    (b) The methodology contained in this section will be used to 
evaluate the relative financial need of the applicant, community, and 
project. All applicants are required to provide the applicable 
percentage of students eligible to participate in the National School 
Lunch Program for each end user site which must be certified as being 
correct by the appropriate State or local organization administering 
the program. The type of financial assistance will be determined as 
follows:
    (1) If the end user site(s) for the project have, or are located in 
school districts which have, from 0-32 percent student eligibility in 
the National School Lunch Program, the project qualifies for a loan.
    (2) If the end user site(s) for the project have, or are located in 
school districts which have, from 33-60 percent student eligibility in 
the National School Lunch Program, the project qualifies for a loan and 
may be eligible for some grant funds.
    (3) If the end user site(s) for the project have, or are located in 
school districts which have, from 61-100 percent student eligibility in 
the National School Lunch Program, the project qualifies for a grant. 
The applicant may indicate its desire to be considered for a loan or a 
combination loan and grant if denied a grant provided the financial 
data required in Sec. 1703.109(c) indicates the ability to repay a 
loan. Grant applicants should indicate if they desire to be considered 
for a loan.
    (c) The following guidelines will be used to determine the 
applicable National School Lunch Program eligibility percent for a 
particular end user site:
    (1) Public schools or non profit private schools of high school 
grade or under will use the actual eligibility percentage for that 
particular school.
    (2) Schools and institutions of higher learning ineligible to 
participate in the National School Lunch Program and non-school end 
user sites (medical facilities, libraries, etc.) will use the 
eligibility percentage of all students in the school district where the 
end user will be located.
    (d) If all the end user sites in a proposed network or system fall 
within the same percentile category, the project will be eligible for 
the type of financial assistance set forth in paragraph (b) of this 
section.
    (e) If end user sites fall within different percentile categories 
the eligibility percentages associated with each end user site will be 
averaged to determine the percentile category and type of financial 
assistance the applicant is eligible for. For purposes of averaging, if 
a hub is also utilized as an end user site, the hub will be considered 
as an end user site.
    (f) For those applicants which qualify for a combination loan/
grant, the Administrator will determine the amount of grant funding the 
applicant will receive, if any, based upon analysis of the financial 
condition of the applicant as reflected by the information submitted 
under Sec. 1703.109(c). The minimum amount of grant funding will be 
$5,000.
    (g) RUS will submit a letter to those applicants being offered 
financial assistance in the form of a loan, or a combination of a loan 
and grant, outlining terms and conditions of such assistance. The 
applicant will have 15 days from the date of the letter to accept the 
terms and conditions in the letter. If the applicant fails to respond 
within this time the Administrator may withdraw the offer of financial 
assistance and the applicant will have no right to appeal the 
withdrawal.


Sec. 1703.113  Application filing dates, location, processing, and 
public notification.

    (a) Applications for funding under this subpart shall be submitted 
to the Administrator, Rural Utilities Service, U.S. Department of 
Agriculture, 1400 Independence Avenue, SW., STOP 1590, Washington, DC 
20250-1590. Applications should be marked ``Attention: Assistant 
Administrator, Telecommunications Program''.
    (b) Applications for loans can be submitted at any time. RUS will 
review each application for completeness in accordance with 
Sec. 1703.109, and notify the applicant, within 15 working days of the 
receipt of the application, of the results of this review, citing any 
information which is incomplete. To be considered for loan funds during 
the fiscal year (FY) that the application is submitted, the applicant 
must submit any information needed to complete the application by June 
30. If this review concludes that a loan is feasible and the 
application receives the required minimum number of points as 
determined using the scoring criteria in Sec. 1703.117, the 
Administrator will immediately process the application. The minimum 
number of points required for a loan application to be immediately 
processed will be published in the Federal Register each fiscal year.
    (c) Applications requesting grant funds must be submitted to RUS to 
arrive not later than May 31, 1997, if the applications are to be 
considered during FY 1997. Beyond FY 1997, all applications requesting 
grant funds must be submitted to RUS to arrive not later than April 30 
if the applications are to be considered during the fiscal year the 
application is submitted. It is suggested that applications be 
submitted prior to the above deadline to ensure they can be reviewed 
and considered complete by the deadline. RUS will review each 
application for completeness in accordance with Sec. 1703.109, and 
notify the applicant, within 15 working days of the receipt of the 
application, of the results of this review, citing any information 
which is incomplete. To be considered for grant funds, the applicant 
must submit the information to complete the application by May 31 in FY 
97 and April 30 beyond FY 97. If the applicant fails to submit such 
information by the appropriate deadline, the application will be 
considered during the next fiscal year.
    (d) The Administrator will publish, at the end of each fiscal year, 
a notice in the Federal Register of all completed applications 
receiving funding under this subpart. The Administrator will also make 
those applications available for public inspection at the U.S. 
Department of Agriculture, 1400 and Independence Avenue, SW., 
Washington, DC. For purposes of this paragraph, applications include 
any information not protected by the Privacy Act of 1974, 5 U.S.C. 
552a, and any other information that has not been designated as 
proprietary information by the applicant.
    (e) All applicants must submit an original and two copies of a 
completed application. A grant applicant must also submit a copy of the 
application to the State government point of contact, if one has been 
designated for the state, at the same time it submits an application to 
RUS. All applications must include the information described in 
Sec. 1703.109.


Secs. 1703.114-1703.116  [Reserved]


Sec. 1703.117  Criteria for scoring applications.

    (a) Criteria. The criteria in this section will be used by the 
Administrator to score applications that have been determined to be in 
compliance with the requirements of this subpart.

[[Page 18687]]

Applicants shall address the following criteria:
    (1) The need for services and benefits derived from services;
    (2) The comparative rurality of the proposed project service area;
    (3) The ability to leverage resources;
    (4) Innovativeness of design;
    (5) Connectivity with outside networks;
    (6) The cost effectiveness of the design;
    (7) Project participation in EZ/EC (Empowerment Zone and Enterprise 
Communities); and
    (8) Project participation in Champion communities.
    (b) Scoring criteria--(1) The need for services and benefits 
derived from services. (i) This criterion will be used by the 
Administrator to score applications based on the documentation 
submitted in the support of the funding application that reflects the 
need for services and benefits derived from the services proposed by 
the project. Up to 45 points can be assigned to this criterion.
    (ii) The Administrator will consider the extent of the applicant's 
documentation explaining the economic, education or health care 
challenges facing the community; the applicants proposed plan to 
address these challenges; how the financial assistance can help; and 
why the applicant cannot complete the project without a loan or grant. 
The Administrator will also consider any support by recognized experts 
in the related educational or health care field, any documentation 
substantiating the educational and/or health care underserved nature of 
the applicant's proposed service area, and any justification for 
specific educational and/or medical services which are needed and will 
provide direct benefits to rural residents. Some examples of benefits 
to be provided by the project include, but are not limited to:
    (A) Improved education opportunities for a specified number of 
students;
    (B) Travel time and money saved by telemedicine diagnosis;
    (C) Number of doctors retained in rural areas;
    (D) Number of additional students electing to attend higher 
education institutions;
    (E) Lives saved due to prompt medical diagnosis and treatment;
    (F) New education courses offered, including college level courses;
    (G) Expanded use of educational facilities such as night training;
    (H) Number of patients receiving telemedicine diagnosis;
    (I) Provision of training, information resources, library assets, 
adult education, lifetime learning, community use of technology, jobs, 
connection to region, nation, and world.
    (iii) That rural residents, and other beneficiaries, desire the 
educational and/or medical services to be provided by the project (a 
strong indication of need is the willingness of local end users or 
institutions to pay, to the extent possible, for proposed services).
    (iv) The project's development and support based on input from the 
local residents and institutions.
    (v) The extent to which the application is consistent with the 
State strategic plan prepared by the Rural Development State Director 
of the United States Department of Agriculture.
    (2) The comparative rurality of the proposed project service area. 
(i) The methodology contained in this section is used to evaluate the 
relative rurality (i.e. population) of service areas for various 
projects. Under this system, the end user sites and hubs (as defined in 
Sec. 1703.102) contained within the proposed project service area are 
identified. Then, those locations are given a score according to the 
population of the area where the end user sites are located. Up to 35 
points can be assigned to this criterion.
    (ii) The following definitions are used in the evaluation of 
rurality:
    (A) Exceptionally Rural Area means any area of the United States 
not included within the boundaries of any incorporated or 
unincorporated city, village, or borough having a population in excess 
of 5,000 inhabitants.
    (B) Rural Area means any area of the United States included within 
the boundaries of any incorporated or unincorporated city, village, or 
borough having a population over 5,000 and not in excess of 10,000 
inhabitants.
    (C) Urban Area means any area of the United States included within 
the boundaries of any incorporated or unincorporated city, village, or 
borough having a population in excess of 10,000 inhabitants.
    (iii) The applicant will receive points as follows:
    (A) There are a total of 35 possible points for this criterion. The 
maximum number of points each end user site can receive is determined 
by dividing the total possible points for this criterion, 35, by the 
total number of end user sites. If a hub is utilized as an end user 
site, the hub will be considered as an end user site.
    (B) If the end user site is located in an Exceptionally Rural Area, 
it will receive the maximum number of points each end user site. If the 
end user site is located in a Mid-Rural Area, it will receive 50 
percent of the maximum number of points each end user site. If the end 
user site is located in an Urban Area, it will receive 0 percent of the 
maximum number of points each end user of the applicant can receive.
    (C) The total points for each end user site will be added to reach 
a final point total for the project.
    (D) An application must receive a minimum of 18 points under this 
criterion to be eligible for any financial assistance.
    (3) The ability to leverage resources. (i) This section is used to 
evaluate the ability of the applicant to contribute financially to the 
project and to secure other non-Federal sources of funding. 
Documentation submitted in the support of the funding application 
should reflect any additional financial support for the project from 
non-Federal sources above the applicant's required percent matching of 
the RUS financial assistance as set forth in Sec. 1703.104. The 
applicant must include evidence from authorized representatives of the 
sources that the funds are available and will be used for the proposed 
project--up to 35 points.
    (ii) The applicant will receive points as follows:
    (A) Matching for allowable financial assistance purposes greater 
than 30 percent, but less than or equal to 50 percent of the RUS 
financial assistance--10 points.
    (B) Matching for allowable financial assistance purposes greater 
than 50 percent, but less than or equal to 100 percent of the RUS 
financial assistance--20 points.
    (C) Matching for allowable financial assistance purposes greater 
than 100 percent, but less than or equal to 150 percent of the RUS 
financial assistance--25 points.
    (D) Matching for allowable financial assistance purposes greater 
than 150 percent, but less than or equal to 200 percent of the RUS 
financial assistance --30 points.
    (E) Matching for allowable financial assistance purposes greater 
than 200 percent of the RUS financial assistance--35 points.
    (4) Innovativeness of project. This criterion will be used by the 
Administrator to score applications based on the documentation 
submitted in the support of the funding application that reflects the 
innovative nature of the project. The applicant should explain the 
extent to which, if any, the project is an innovative approach to 
either delivering or using telecommunications to address the needs of 
the community, and how the project differs in approach from the

[[Page 18688]]

typical educational or health care application of technology. Up to 20 
points can be assigned to this criterion.
    (5) Connectivity with outside networks. (i) This criterion will be 
used by the Administrator to score applications based on the 
documentation submitted in support of the funding application that 
reflects the extent to which the proposed project can be connected to 
other educational and/or health care networks. Up to 20 points can be 
assigned to this criterion.
    (ii) Consideration will be given to the extent that the proposed 
project will interconnect with other existing networks at the regional, 
statewide, national or international levels. RUS believes that to the 
extent possible, educational and health care networks should be 
designed to connect to the widest practicable number of other networks 
that expand the capabilities of the proposed project, thereby affording 
rural residents opportunities that may not be available at the local 
level. The ability to connect to the internet alone can not be used as 
the sole basis to fulfill this criteria.
    (iii) Consideration will also be given to the extent that 
facilities constructed with federal financial assistance, particularly 
financial assistance under this chapter provided to entities other than 
the applicant, will be utilized to extend or enhance the benefits of 
the proposed project.
    (6) Cost effective design. (i) This criterion will be used by the 
Administrator to score applications based on the documentation 
submitted in the support of the funding application that reflects the 
cost efficiency of the project design. Up to 15 points can be assigned 
to this criterion.
    (ii) Consideration will be given to the extent that the proposed 
technology or technologies for delivering the proposed educational and/
or health care services for the project service area are the most cost 
effective for the project proposed. The application must contain 
information necessary for the Administrator to use accepted analytical 
and financial methodologies to determine whether the applicant is 
proposing the most cost-effective option. The Administrator will 
consider the applicant's documentation comparing various systems and 
technologies, whether the applicant's system is the most cost-effective 
system, and whether buying or leasing specific equipment is more cost 
effective. Points will be deducted from the scores of the applications 
that fail to utilize existing telecommunications facilities that could 
provide the transmission path for the needed services.
    (7) Project participation in EZ/ECs. This criterion will be used by 
the Administrator to score applications based on the documentation 
submitted in support of the funding application that reflects the 
designation of Empowerment Zones and Enterprise Communities (EZ/EC) 
included as beneficiaries of the proposed project. Ten (10) points will 
be assigned if at least one end user site is located in an EZ/EC.
    (8) Project participation in Champion communities. This criterion 
will be used by the Administrator to score applications based on the 
documentation submitted in support of the funding application that 
reflects the designation of Champion communities included as 
beneficiaries of the proposed project. Five (5) points will be assigned 
if at least one end user site is located in a Champion community.


Sec. 1703.118  Other application selection provisions.

    (a) Selection. Applications will be selected for funding based on 
scores, availability of funds, and the provisions of this section. The 
Administrator will make determinations regarding the reasonableness of 
all numbers; dollar levels; rates; the nature and design of the 
project; cost; location; and other characteristics of the application 
and the proposed project to determine the number of points assigned to 
a grant application for all selection criteria. Joint applications 
submitted by multiple applicants as set forth in Sec. 1703.113 will be 
rated as a single application.
    (b) Regardless of the number of points an application receives in 
accordance with Sec. 1703.117 or the feasibility of the proposed 
project, the Administrator may, based on a review of the applications 
in accordance with the requirements of this subpart:
    (1) Limit the number of applications selected for projects located 
in any one state during a fiscal year;
    (2) Limit the number of selected applications for a particular 
project;
    (3) Select an application receiving fewer points than another 
higher scoring application if there are insufficient funds during a 
particular funding period to select the higher scoring application; 
provided, however, the Administrator may ask the applicant of the 
higher scoring application if it desires to reduce the amount of its 
application to the amount of funds available if, notwithstanding the 
lower grant amount, the Administrator determines the project is 
financially feasible in accordance with Sec. 1703.109(d)(1) at the 
lower amount;
    (4) Award a grant to an applicant whose application carries out the 
priorities listed in the scoring criteria in such a way to make the 
application unique; or
    (5) Award a grant to an applicant which would normally qualify for 
other financial assistance, if the project achieves one or more of the 
following:
    (i) Utilizes cutting edge technology to provide a solution to a 
unique problem;
    (ii) Provides services otherwise not possible in an extremely 
isolated geographic area; or
    (iii) Provides inordinate quantifiable benefit to rural communities 
relative to the amount of financial assistance requested.
    (c) The Administrator will not approve an application if the 
Administrator determines that:
    (1) The applicant's proposal does not indicate financial 
feasibility or is not sustainable in accordance with the requirements 
of Sec. 1703.109(d)(1);
    (2) The applicant's proposal indicates technical flaws, which, in 
the opinion of the Administrator, would prevent successful 
implementation, operation, or sustainability of the proposed project; 
or
    (3) Any other aspect of the applicant's proposal fails to 
adequately address any requirements of this subpart or contains 
inadequacies which would, in the opinion of the Administrator, 
undermine the ability of the project to meet the general purpose of 
this subpart or comply with policies of the Distance Learning and 
Telemedicine Loan and Grant Program set forth in Sec. 1703.101.
    (d) The Administrator may reduce the amount of the applicant's 
grant award based on insufficient program funding for the fiscal year 
in which the project is reviewed, and/or offer the applicant loan funds 
in addition to the grant funds, if the Administrator determines that, 
notwithstanding a lower grant award, the project will show financial 
feasibility in accordance with Sec. 1703.109(d)(1), and continues to 
meet all other provisions of this subpart. RUS will discuss its 
findings informally with the applicant and make every effort to reach a 
mutually acceptable agreement with the applicant. Any discussions with 
the applicant and agreements made with regard to a reduced grant amount 
will be confirmed in writing, and these actions shall be deemed to have 
met the notification requirements set forth in paragraph (e) of this 
section.
    (e) The Administrator will provide the applicant an explanation of 
any determinations made with regard to paragraphs (c)(1) through (c)(3) 
of this section prior to making final project funding selections for 
the year. The

[[Page 18689]]

applicant will be provided 15 days from the date of the Administrator's 
letter to respond, provide clarification, or make any adjustments or 
corrections to the project. If, in the opinion of the Administrator, 
the applicant fails to adequately respond to any determinations or 
other findings made by the Administrator, the project will not be 
funded, and the applicant will be notified of this determination. If 
the applicant does not agree with this finding an appeal may be filed 
in accordance with Sec. 1703.119.


Sec. 1703.119  Appeal provisions.

    All qualifying applications under this subpart will be scored based 
on criteria in section Sec. 1703.117. A determination will be made by 
the Administrator based on the highest ranking applications and the 
amount of funds available for grants and loans. All applicants will be 
notified in writing of the score each application receives, and 
included in this notification will be a tentative minimum required 
score to receive financial assistance. If the score received by the 
applicant could result in the denial of its application, or if its 
score, while apparently sufficient to qualify for financial assistance, 
may be surpassed by the score awarded to a competing application after 
appeal, the applicant may appeal its numerical scoring. Any appeal must 
be based on inaccurate scoring of the application by RUS and no new 
information or data that was not included in the original application 
will be considered. The appeal must be made in writing within 10 days 
after the applicant is notified of the scoring results. Appeals shall 
be submitted to the Administrator, Rural Utilities Service, U.S. 
Department of Agriculture, 1400 Independence Ave., SW, STOP 1590, 
Washington, DC 20250-1590. Thereafter, the Administrator will review 
the original scoring to determine whether to sustain, reverse or modify 
the original scoring determination. Final determinations will be made 
after consideration of all appeals. The Administrator's determination 
will be final. A copy of the Administrator's decision will be furnished 
promptly to the applicant. An appeal based solely upon the type of 
financial assistance the applicant qualifies for will not be 
considered.


Secs. 1703.120-1703.121  [Reserved]


Sec. 1703.122  Further processing of selected applications.

    (a) During the period between the submission of the application and 
the execution of implementing documents, the applicant must inform the 
Administrator if the project is no longer viable or the applicant no 
longer desires financial assistance for the project. If the applicant 
so informs the Administrator, the selection will be rescinded and 
written notice to that effect shall be sent promptly to the applicant.
    (b) If an application has been selected and the nature of the 
project changes, the applicant may be required to submit a new 
application to the Administrator for consideration depending on the 
degree of change. A new application will be subject to review in 
accordance with this subpart. The selection may not be transferred to 
another project.
    (c) If state or local governments raise objections to a proposed 
project under the intergovernmental review process that are not 
resolved within 3 months of the Administrator's selection of the 
application, the Administrator may rescind the selection and written 
notice to that effect will be sent promptly to the applicant.
    (d) Recipients of financial assistance will be required to submit 
RUS Form 479-A, ``Distance Learning and Telemedicine Technical 
Questionnaire.''
    (e) After an applicant selected for financial assistance has 
submitted such additional information, if any, the Administrator 
determines is necessary for completing the financial assistance 
documents, the Administrator will send the documents to the applicant 
to execute and return to RUS.
    (1) The financial assistance documents will include a letter of 
agreement for grants; loan documents, including third party guarantees, 
for loans; or any other legal documents the Administrator deems 
appropriate, including suggested forms of certifications and legal 
opinions.
    (2) The letter of agreement and the loan documents will contain, 
among other things, conditions on the release or advance of funds and 
include at a minimum, a project description, approved purposes, the 
maximum amount of the funding, supplemental funds, required of the 
project and certain agreements or commitments the applicant may have 
proposed in its application. In addition, the loan documents will 
contain covenants and conditions the Administrator deems necessary or 
desirable to provide assurance that the loan will be repaid and the 
purposes of the loan will be accomplished.
    (3) The recipient of a loan will be required to execute a security 
instrument in form and substance satisfactory to the Administrator.
    (4) DLT borrowers must, before receiving any advances of loan 
funds, provide security that is adequate, in the opinion of the 
Administrator, to assure repayment, within the time agreed, of all 
loans to the borrower under Title XXIII. This assurance will generally 
be provided by a first lien upon all of the borrower's assets or such 
portion thereof as shall be satisfactory to the Administrator. The 
Administrator may consider the projected revenues from the facilities 
subject to the lien.
    (5) Security may also be provided by third-party guarantees, 
letters of credit, pledges of revenue or other forms of security 
satisfactory to the Administrator.
    (6) The mortgage, deed of trust, security agreement and other loan 
documents required by the Administrator in connection with loans under 
Title XXIII shall contain such pledges, covenants, and other provisions 
as may, in the opinion of the Administrator, be necessary or desirable 
to secure repayment of the loan.
    (7) If the facilities financed do not constitute a complete 
operating system, the DLT borrower shall provide evidence 
demonstrating, to the Administrator's satisfaction, that the borrower 
has sufficient contractual or other arrangements to assure that the 
facilities financed will provide adequate and efficient service.
    (f) Until the letter of agreement or loan documents have been 
executed and delivered by RUS and by the applicant, the Administrator 
reserves the right to require any changes in the project or legal 
documents covering the project to protect the integrity of the program 
and the interests of the United States Government.
    (g) If the applicant fails to submit, within 120 calendar days from 
the date of the Administrator's selection of an application, all of the 
information that the Administrator determines to be necessary to 
prepare legal documents and satisfy other requirements of this subpart, 
the Administrator may rescind the selection of the application and 
written notice of such rescission will be sent promptly to the 
applicant.


Secs. 1703.123-1703.125  [Reserved]


Sec. 1703.126  Disbursement of loan and grant funds.

    (a) For financial assistance of $100,000 or greater, prior to the 
disbursement of funds, the recipient, if it is not a unit of 
government, will provide evidence of fidelity bond coverage as required 
by 7 CFR 3015.17.
    (b) Financial assistance will be disbursed to recipients on a 
reimbursement basis, or with unpaid invoices for the eligible purposes 
set

[[Page 18690]]

forth in this subpart, by the following process:
    (1) An SF 270, ``Request for Advance or Reimbursement,'' will be 
completed by the recipient and submitted to RUS not more frequently 
than once a month;
    (2) After receipt of a properly completed SF 270, RUS will review 
for accuracy and if the form is satisfactory will schedule payment. 
Payment will ordinarily be made within 30 days; and
    (3) For financial assistance approved during and subsequent to FY 
1997, funds will be advanced in accordance to 7 CFR 1744.69.
    (c) The recipient's share in the cost of the project will be 
disbursed in advance of financial assistance, or if the recipient 
agrees, on a pro rata distribution basis with financial assistance 
during the disbursement period. Recipient will not be permitted to 
provide its contribution at the end of the project.
    (d) Concurrent grant and loan funds will be disbursed on a pro rata 
distribution basis.


Sec. 1703.127  Reporting and oversight requirements.

    (a) A project performance activity report will be required of all 
recipients on an annual basis until the project is complete and the 
funds are disbursed by the applicant.
    (b) A final project performance report will be required. It must 
provide an evaluation of the success of the project in meeting the 
objectives of the program. The final report may serve as the last 
annual report.
    (c) RUS will monitor recipients as the Administrator determines 
necessary to assure that projects are completed in accordance with the 
approved scope of work and that funds are expended for approved 
purposes.
    (d) Recipients shall diligently monitor performance to ensure that 
time schedules are being met, projected work by time periods is being 
accomplished, and other performance objectives are being achieved. 
Recipients are to submit an original and one copy of all reports 
submitted to RUS. The project performance reports shall include, but 
not be limited to, the following:
    (1) A comparison of actual accomplishments to the objectives 
established for that period;
    (2) A description of any problems, delays, or adverse conditions 
which have occurred, or are anticipated, and which may affect the 
attainment of overall project objectives, prevent the meeting of time 
schedules or objectives, or preclude the attainment of particular 
project work elements during established time periods. This disclosure 
shall be accompanied by a statement of the action taken or planned to 
resolve the situation; and
    (3) Objectives and timetable established for the next reporting 
period.


Sec. 1703.128  Audit requirements.

    The grant and DLT borrower loan recipients will provide an audit 
report in accordance with 7 CFR part 3015, subpart I. For grant 
recipients the audit requirements only apply to the year(s) in which 
grant funds are expended. For DLT borrowers the audit requirements 
apply until the loan is repaid. Audits must be prepared in accordance 
with generally accepted government auditing standards (GAGAS) using 
publication, ``Standards for Audit of Governmental Organization, 
Programs, Activities and Functions.'' RUS Telecommunications/Electric 
borrowers receiving cost of money loans will be subject to the same 
audit requirements for these loans as are provided for in 7 CFR part 
1773.


1703.129  Repayment of loans.

    The term of cost of money loans will be based on the life of the 
facilities to be financed, not to exceed 10 years. If the recipient 
requests, a one year deferment of principal will be included. In 
special hardship cases, which the recipient must justify, the 
Administrator may approve a two year deferment of principal. Interest 
on the loan will be due and payable during the principal deferral 
period. RUS will establish uniform debt service payments based on the 
total amortization period.


Secs. 1703.130-1703.134  [Reserved]


Sec. 1703.135  Grant and loan administration.

    (a) The Administrator will review recipients as necessary to 
determine whether funds were expended for approved purposes. The 
recipient is responsible for ensuring that the project complies with 
all applicable regulations, and that the financial assistance is 
expended only for approved purposes. The recipient is responsible for 
ensuring that disbursements and expenditures of funds are properly 
supported by invoices, contracts, bills of sale, canceled checks, or 
other appropriate forms of evidence, and that such supporting material 
is provided to the Administrator, upon request, and is otherwise made 
available, at the recipient's premises, for review by the RUS 
representatives, the recipient's certified public accountant, the 
office of Inspector General, U. S. Department of Agriculture, the 
General Accounting Office and any other officials conducting an audit 
of the recipient's financial statements or records, and program 
performance for the funding awarded under this subpart. The recipient 
will be required to permit RUS to inspect and copy any records and 
documents that pertain to the project.
    (b) Grants provided under this program will be administered under, 
and are subject to 7 CFR parts 3015 through 3018, as appropriate. 7 CFR 
parts 3015 and 3016 subject grantees to a number of requirements which 
cover, among other things, financial reporting, accounting records, 
budget controls, record retention and audits, bonding and insurance, 
cash depositories for grant funds, grant related income, use and 
disposition of real property and/or equipment purchased with grant 
funds, procurement standards, allowable costs for grant related 
activities, and grant close-out procedures.


Sec. 1703.136  Changes in project objectives or scope.

    The recipient will obtain prior approval for any material change to 
the scope or objectives of the approved project, including changes to 
the scope of work or budget. Failure to obtain prior approval of 
changes can result in suspension or termination of funds.


Sec. 1703.137  Grant and loan termination provisions.

    (a) Termination for cause. The Administrator may terminate any 
financial assistance in whole, or in part, at any time before the date 
of completion of funding disbursement, whenever it is determined that 
the recipient has failed to comply with the conditions of the financial 
assistance. The Administrator will promptly notify the recipient in 
writing of the determination and the reasons for the termination, 
together with the effective date.
    (b) Termination for convenience. The Administrator or the recipient 
may terminate financial assistance in whole, or in part, when both 
parties agree that the continuation of the project would not produce 
beneficial results commensurate with further expenditure of funds. The 
two parties will agree upon termination conditions, including the 
effective date, and in the case of partial terminations, the portion to 
be terminated. The recipient will not incur new obligations for the 
terminated portion after the effective date, and will cancel as many 
outstanding obligations as possible. The Administrator will allow full 
credit to the applicant for the Federal share of the noncancelable 
obligations, properly incurred by the recipient prior to termination.

[[Page 18691]]

Secs. 1703.138-1703.139  [Reserved]


Sec. 1703.140  Expedited telecommunications loans.

    General. The Administrator will expedite consideration and 
determination of an application for a loan or a request for advance of 
funds submitted by an RUS telecommunications borrower that supports the 
project seeking financial assistance under this subpart. See 7 CFR part 
1737 for loans and 7 CFR part 1744 for advances under this section.

Appendix A to Subpart D of Part 1703--Environmental Questionnaire

    Note: It is extremely important to respond to all questions 
completely to ensure expeditious processing of the Distance Learning 
and Telemedicine application. The information herein is required by 
Federal law.

    Important: Any activity related to the project that may 
adversely affect the environment or limit the choice of reasonable 
development alternatives shall not be undertaken prior to the 
completion of Rural Utilities Service's environmental review 
process. 

Legal Name of

Applicant--------------------------------------------------------------

Signature

(Type/Sign/Date)-------------------------------------------------------

    The applicant's representative certifies, to the best of his/her 
knowledge and belief, that the information contained herein is 
accurate. Any false information may result in disqualification for 
consideration of the grant or rescission of the grant.
    I. Project Description--Detailing construction, including, but 
not limited to, internal modifications of existing structures, and/
or installation of telecommunications transmission facilities 
(defined in 7 CFR 1703.102), including satellite uplinks or 
downlinks, microwave transmission towers, and cabling.
    1. Describe the portion of the project, and site locations 
(including legal ownership of real property), involving internal 
modifications, or equipment additions to buildings or other 
structures (e.g., relocating interior walls or adding computer 
facilities) for each site.
    2. Describe the portion of the project, and site locations 
(including legal ownership or real property), involving construction 
of transmission facilities, including cabling, microwave towers, 
satellite dishes; or, disturbance of property of .99 acres or 
greater for each project site.
    3. Describe the nature of the proposed use of the facilities, 
and whether any hazardous materials, air emissions, wastewater 
discharge or solid waste will result.
    4. State whether or not any project site(s) contain or are near 
properties listed or eligible for listing in the National Register 
of Historic Places, and identify any historic properties (The 
applicant must supply evidence that the State Historic Preservation 
Officer (SHPO) has cleared development regarding any historical 
properties).
    5. Provide information whether or not any facility(ies) or 
site(s) are located in a 100-year floodplain. A National Flood 
Insurance Map should be included reflecting the location of the 
project site(s).
    II. For projects which involve construction of transmission 
facilities, including cabling, microwave towers, satellite dishes, 
or physical disturbance of real property of .99 acres or greater, 
the following information must be submitted (7 CFR 1703.109(i)(3)).
    1. A map (preferably a U.S. Geological Survey map) of the area 
for each site affected by construction (include as an attachment).
    2. A description of the amount of property to be cleared, 
excavated, fenced or otherwise disturbed by the project and a 
description of the current land use and zoning and any vegetation 
for each project site affected by construction.
    3. A description of buildings or other structures (i.e., 
transmission facilities), including dimensions, to be constructed or 
modified.
    4. A description of the presence of wetlands or existing 
agricultural operations and/or threatened or endangered species or 
critical habitats on or near the project site(s) affected by 
construction.
    5. Describe any actions taken to mitigate any environmental 
impacts resulting from the proposed project (use attachment if 
necessary).

    Note: The applicant may submit a copy of any environmental 
review, study, assessment, report or other document that has been 
prepared in connection with obtaining permits, approvals or other 
financing for the proposed project from State, local or other 
Federal bodies. Such material, to the extent relevant, may be used 
to meet the requirements herein.

    Dated: April 7, 1997.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 97-9422 Filed 4-15-97; 8:45 am]
BILLING CODE 3410-15-P