This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

29920 

Vol. 75, No. 103 

Friday, May 28, 2010 

DEPARTMENT OF AGRICULTURE 

Rural Business-Cooperative Service 

7 CFR Parts 1951 and 4284 

RIN 0570–AA79 

Value-Added Producer Grant Program 

AGENCY: Rural Business-Cooperative 

Service, USDA. 

ACTION: Proposed rule. 

SUMMARY: The Food, Conservation, and 

Energy Act of 2008 (the Act), amends 

section 231 of the Agricultural Risk 

Protection Act of 2000, which 

established the Value-Added Producer 

Grant Program. This program will be 

administered by the Rural BusinessCooperative Service. Under the 

proposed program, grants will be made 

to help eligible producers of agricultural 

commodities enter into or expand valueadded activities including the 

development of feasibility studies, 

business plans, and marketing 

strategies. The program will also 

provide working capital for expenses 

such as implementing an existing viable 

marketing strategy. The Agency 

proposes to implement the program to 

meet the goals and requirements of the 

Act. 

The Agency is also proposing an 

amendment to existing regulations that 

would allow the delegation of the postaward servicing of the proposed 

program to USDA State Office 

personnel. Please note that this 

amendment would only affect the postaward servicing of the grant and would 

not affect the process for awarding 

grants, which would still occur at the 

National office. 

DATES: Comments on the proposed rule 

must be received on or before June 28, 

2010 to be assured of consideration. A 

30-day comment period is provided for 

interested persons to comment on the 

regulatory provisions of this proposed 

rule. The Agency has determined that a 

30-day comment period, rather than the 

traditional 60 day comment period, is 

appropriate in order to provide a 

sufficient amount of time to comment 

while ensuring program performance 

during the current fiscal year. This 

action will also provide applicants more 

time to develop quality applications for 

the program with minimal disruptions 

in ongoing farming activities. 

The comment period for the 

information collection under the 

Paperwork Reduction Act of 1995 

continues through July 27, 2010. 

ADDRESSES: You may submit comments 

to this proposed rule by any of the 

following methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

instructions for submitting comments 

electronically. 

• Mail: Submit your written 

comments via the U.S. Postal Service to 

the Branch Chief, Regulations and 

Paperwork Management Branch, U.S. 

Department of Agriculture, Stop 0742, 

1400 Independence Avenue, SW., 

Washington, DC 20250–0742. 

• Hand Delivery/Courier: Submit 

your written comments via Federal 

Express mail, or other courier service 

requiring a street address, to the Branch 

Chief, Regulations and Paperwork 

Management Branch, U.S. Department 

of Agriculture, 300 7th Street, SW., 7th 

Floor, Washington, DC 20024. 

All written comments will be 

available for public inspection during 

regular work hours at the 300 7th Street, 

SW, 7th Floor address listed above. 

FOR FURTHER INFORMATION CONTACT: 

Andrew Jermolowicz USDA, Rural 

Development, Rural BusinessCooperative Service, Room 4016, South 

Agriculture Building, Stop 3250, 1400 

Independence Avenue, SW., 

Washington, DC 20250–3250, 

Telephone: (202) 720–7558, E-mail 

CPGrants@wdc.usda.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Statutory Authority 

Section 231 of the Agriculture Risk 

Protection Act of 2000 (Pub. L. 106–224) 

as amended by section 6202 of the Food, 

Conservation, and Energy Act of 2008 

(Pub. L. 110–246) (see 7 U.S.C. 1621 

note) authorizes the establishment of the 

Value-Added Agricultural Product 

Market Development grants, also known 

as Value-Added Producer Grants. The 

Secretary of Agriculture has delegated 

the program’s administration to USDA 

Rural Development Cooperative 

Programs. 

B. Nature of the Program 

This subpart contains the provisions 

and procedures by which the Agency 

will administer the Value-Added 

Producer Grant (VAPG) Program. The 

primary objective of this grant program 

is to help Independent Producers of 

Agricultural Commodities, Agriculture 

Producer Groups, Farmer and Rancher 

Cooperatives, and Majority-Controlled 

Producer-Based Business Ventures 

develop strategies to create marketing 

opportunities and to help develop 

Business Plans for viable marketing 

opportunities regarding production of 

bio-based products from agricultural 

commodities. As with all value-added 

efforts, generating new products, 

creating expanded marketing 

opportunities, and increasing producer 

income are the end goal. 

Eligible applicants are independent 

agricultural producers, farmer and 

rancher cooperatives, agricultural 

producer groups, and majoritycontrolled producer-based business 

ventures. 

Grant funds cannot be used for 

planning, repairing, rehabilitating, 

acquiring, or constructing a building or 

facility (including a processing facility). 

They also cannot be used to purchase, 

rent, or install fixed equipment. 

This program requires matching funds 

equal to or greater than the amount of 

grant funds requested. The Act provides 

for both mandatory and discretionary 

funding for the program, as may be 

appropriated. During subsequent years, 

additional funding may be appropriated. 

The number of grants awarded will vary 

from year to year, based on availability 

of funds and the quality of applications. 

The maximum grant amount that may 

be awarded is $500,000. However, the 

Agency may reduce that amount 

depending on the total funds 

appropriated for the program in a given 

fiscal year. This policy allows more 

grants to be awarded under reduced 

funding. 

The Agency notes, pursuant to general 

Federal directives providing guidance 

on grant usage, that the 100 percent 

matching funds requirement described 

in the Agricultural Risk Protection Act 

of 2000 may include payment for the 

time of the applicant/producer or the 

applicant/producer’s family members 

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Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Proposed Rules 29921 

only for the production of the business 

and marketing plans. Please contact the 

state office for further information. 

II. Request for Public Comments on 

Specific Aspects of the Proposed 

Program 

The Agency is interested in receiving 

comments on all aspects of the proposed 

rule. Areas in which the Agency is 

seeking specific comments are 

identified below. All comments should 

be submitted as indicated in the 

ADDRESSES section of this preamble. 

a. Medium-sized farm. As proposed, 

medium-sized farm is defined as ‘‘A 

farm or ranch that has averaged between 

$250,001 and $700,000 in annual gross 

sales of agricultural products in the 

previous three years.’’ The Agency is 

specifically requesting comment on 

whether it is more appropriate to use 

$500,000 as the upper limit in this 

definition. Please be sure to provide 

rationale for your position. 

b. Branding activities. The Agency is 

proposing to allow branding, packaging, 

or other product differentiation 

activities that are not more than 25 

percent of the total project cost of a 

value-added project for products 

otherwise eligible in one of the five 

value-added methodologies specified in 

paragraphs (1)(i) through (v) of the 

definition of value-added agricultural 

product to be eligible. The Agency is 

seeking specific comment on the 

proposed 25 percent limit. If you believe 

a different limit is more appropriate, 

please identify your suggested limit and 

provide your rationale to support your 

suggestion. 

III. Discussion of the Proposed Rule 

The following paragraphs present a 

discussion of provisions of each section 

of the proposed rule in the order that 

they appear. 

A. Purpose (§ 4284.901) 

This section implements the valueadded agricultural product market 

development grant program 

administered by the Rural BusinessCooperative Service whereby grants are 

made to enable producers to develop 

businesses that produce and market 

value-added agricultural products. 

B. Definitions (§ 4284.902) 

This section presents program specific 

definitions which are included to more 

clearly implement the program. 

C. Review or Appeal Rights (§ 4284.903) 

This section addresses how a person 

may seek a review of an Agency 

decision or file an appeal. 

D. Exception Authority (§ 4284.904) 

This section explains the 

Administrator’s authority to make 

exceptions to regulatory requirements or 

provisions and specifically excludes 

permission to make exceptions for: 

• Applicant eligibility 

• Project eligibility 

The Agency believes that applicant 

and project eligibility criteria must be 

maintained at all times in order to be 

consistent with statutory authority. 

E. Nondiscrimination and Compliance 

With Other Federal Laws (§ 4284.905) 

This section explains that applicants 

must comply with all applicable Federal 

laws. Additionally, this section explains 

how an applicant that believes it has 

been discriminated against as a result of 

applying for funds under this program 

can file a Civil Rights complaint with 

the USDA Office of Adjudication and 

Compliance. 

F. State Laws, Local Laws, Regulatory 

Commission Regulations (§ 4284.906) 

This section addresses how conflicts 

between this subpart and State or local 

laws, or regulatory commission 

regulations will be resolved. 

G. Environmental Requirements 

(§ 4284.907) 

This section addresses the 

relationship between grants awarded 

under this subpart and the 

environmental requirements of subpart 

G of 7 CFR part 1940. 

H. Incorporation by Reference 

(§ 4284.908) 

This section identifies the various 

regulations that are incorporated by 

reference in this subpart. 

I. Forms, Regulations, and Instructions 

(§ 4284.909) 

This section identifies how forms, 

regulations, instructions and other 

materials related to programs may be 

obtained. 

J. Notifications (§ 4284.915) 

This section describes the methods 

the Agency will use in making 

notifications regarding funding and 

programmatic changes. 

K. Applicant Eligibility (§ 4284.920) 

This section describes the 

requirements an applicant must meet to 

be eligible for a grant under this subpart, 

including, but not limited to, such areas 

as citizenship, legal authority, and 

multiple grants. An applicant must 

demonstrate that they meet all 

definition requirements for one of the 

following applicant types: 

• An independent producer; 

• An agricultural producer group; 

• A farmer or rancher cooperative; or 

• A majority-controlled producerbased business venture. 

L. Ineligible Applicants (§ 4284.921) 

This section describes those 

conditions under which an applicant 

will be considered ineligible to 

participate in this program. 

M. Project Eligibility (§ 4284.922) 

The eligibility requirements 

applicable to this subpart are described 

in this section. For a product to be 

eligible it must meet the definition of a 

value-added agricultural product. The 

applicant must also demonstrate that, as 

a result of the project, the customer base 

for the agricultural commodity or 

product is expanded, and that a greater 

portion of the revenue derived from the 

marketing or processing of the valueadded product is available to the 

agricultural producer of the commodity 

or product. 

Other aspects of project eligibility 

discussed in this section include, but 

are not limited to, availability of 

matching funds, submittal of various 

items such as work plans, budgets, 

feasibility studies, and business plans, 

and how applications that include 

branding and packaging will be 

handled. 

N. Eligible Uses of Grant Funds 

(§ 4284.923) 

The section identifies the eligible uses 

of grant and matching funds for both 

planning funds and working capital 

funds, and requires that grant and 

matching funds meet the same use 

restrictions, including being used to 

fund only the costs for approved 

purposes. 

O. Ineligible Uses of Grant and 

Matching Funds (§ 4284.924) 

This section describes those activities 

for which Agency funds under this 

subpart may not be used. Ineligible uses 

include expenses related to payment for 

preparation of the grant application and 

any activities prohibited by 7 CFR parts 

3015 and 3019, 2 CFR part 230, and 48 

CFR part 31. Expenses related to the 

production of any agricultural 

commodity or product, including seed, 

rootstock, labor for harvesting the crop, 

and delivery of the commodity to a 

processing facility are not eligible. Any 

costs of the project incurred prior to the 

date of grant approval, including legal 

or other expenses needed to incorporate 

or organize a business, are ineligible. 

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29922 Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Proposed Rules 

P. Funding Limitations (§ 4284.925) 

This section describes the maximum 

grant fund amount that a grant recipient 

can receive ($500,000) and several grant 

terms, including, but not limited to, the 

portion of total project eligible costs that 

grant funds can be used to pay (up to 

50%) and the term of a grant (not to 

exceed 3 years). 

Q. Preliminary Review (§ 4284.930) 

This section encourages applicants to 

contact their State Office before they 

submit their applications. 

R. Application Package (§ 4284.931) 

The application forms, content, 

evaluation criteria, verifications and 

certifications required in the application 

package are detailed in this section. 

S. Siplified Application (§ 4284.932) 

This section addresses simplified 

applications, which are applicable to 

applicants requesting less than $50,000. 

T. Filing Instructions (§ 4284.933) 

This section provides the instructions 

for filing an application with the 

Agency. Completed applications must 

be received on or before March 15 of 

each year to be considered for funding 

that fiscal year. Late and/or incomplete 

applications will not be considered. 

Included in this section is information 

on where to submit and the format 

required for submission. 

U. Processing Applications (§ 4284.940) 

This section explains the process by 

which the Agency will conduct an 

application review to determine if the 

application is complete and meets 

program requirements. After review, the 

Agency will notify applicants in writing 

of their findings. Applicants determined 

to be ineligible may revise and resubmit 

their applications to the Agency on or 

before the application deadline. 

V. Application Withdrawal (§ 4284.941) 

This section describes the process 

whereby an applicant must notify the 

Agency in writing of its intention to 

withdraw its application for assistance. 

W. Scoring Applications (§ 4284.942) 

This section describes the process and 

criteria the Agency will use to score 

applications. The Agency will only 

score applications for which it has 

determined that the applicant and 

project are eligible and that the 

application is complete and sufficiently 

responsive to program requirements. 

Each such application the Agency 

receives on or before the application 

deadline in a fiscal year will be scored 

in the fiscal year in which it was 

received. Applications will be scored 

based on the information provided and/ 

or referenced in the scoring section of 

the application at the time the applicant 

submits the application to the Agency. 

The maximum number of points that 

may be awarded to an application is 

100, based on the criteria specified in 

this section. 

X. Award Process (§ 4284.950) 

This section describes the process by 

which the Agency will select 

applications for funding. Funding will 

be based on the score an application has 

received compared to the scores of other 

applications. Higher scoring 

applications will receive first 

consideration for funding. The Agency 

will notify in writing applicants whose 

applications have been selected for 

funding as well as inform those who did 

not receive funding, including a brief 

explanation as to why. 

Y. Grant Agreement (§ 4284.951) 

This section describes the conditions 

under which the grant will be made to 

the applicant. Each grantee will be 

required to meet all terms and 

conditions of the award within 90 days 

of receiving the Letter of Conditions, 

unless otherwise specified by the 

Agency at the time of the award. 

Z. Monitoring and Reporting Program 

Performance (§ 4284.960) 

The required monitoring and 

reporting activities are described in this 

section. Requirements include 

semiannual performance reports which 

must be submitted to the Agency within 

30 days following March 31 and 

September 30. Failure to submit timely 

performance reports may result in the 

Agency withholding grant funds. 

AA. Grant Servicing (§ 4284.961) 

This section states that all grants 

awarded under this subpart will be 

serviced pursuant to 7 CFR part 1951, 

subparts E and O, and in Departmental 

Regulations. Note that as a separate 

action being proposed today, the 

Agency is proposing an amendment to 

§ 1951.215 of subpart E. Paragraph (b)(2) 

in that section currently states that ‘‘All 

other grants will be serviced in 

accordance with the Grant Agreement 

and this subpart. Prior approval of the 

Administrator is required except for 

actions covered in the preceding 

paragraph.’’ The Agency is proposing to 

amend this paragraph by deleting the 

second sentence. This proposed 

amendment would facilitate the 

delegation of the servicing of the 

proposed program, and other grant 

programs that use part 1951 as their 

servicing regulation, to USDA State 

Office personnel. As noted earlier, the 

awarding of grants will occur at the 

National office. 

BB. Transfer of Obligations (§ 4284.962) 

This section explains those 

circumstances under which an 

obligation of funds established for an 

applicant may be transferred to a 

different (substituted) applicant. 

CC. Grant Close out and Related 

Activities (§ 4284.963) 

This section addresses the 

requirements for conducting grant close 

out and other related activities. 

IV. Administrative Requirements 

A. Executive Order 12866 

This proposed rule has been reviewed 

under Executive Order (EO) 12866 and 

has been determined not significant by 

the Office of Management and Budget. 

The EO defines a ‘‘significant regulatory 

action’’ as one that is likely to result in 

a rule that may: (1) Have an annual 

effect on the economy of $100 million 

or more or adversely affect, in a material 

way, the economy, a sector of the 

economy, productivity, competition, 

jobs, the environment, public health or 

safety, or State, local, or tribal 

governments or communities; (2) create 

a serious inconsistency or otherwise 

interfere with an action taken or 

planned by another agency; (3) 

materially alter the budgetary impact of 

entitlements, grants, user fees, or loan 

programs or the rights and obligations of 

recipients thereof; or (4) raise novel 

legal or policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in this EO. 

The Agency conducted a cost-benefit 

analysis to fulfill the requirements of 

Executive Order 12866. The Agency has 

identified potential benefits to 

prospective program participants and 

the Agency that are associated with 

improving the availability of funds to 

help producers (farmers) expand their 

customer base for the products or 

commodities that they produce. This 

results in a greater portion of the 

revenues derived from the value-added 

activity being made available to the 

producer of the product. These benefits 

are important to the success of 

individual producers, farmer or rancher 

cooperatives, agriculture producer 

groups, and majority-controlled 

producer based business ventures. 

B. Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), Public 

Law 104–4, establishes requirements for 

Federal agencies to assess the effects of 

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their regulatory actions on State, local, 

and tribal governments and the private 

sector. Under section 202 of the UMRA, 

Rural Development must prepare, to the 

extent practicable, a written statement, 

including a cost-benefit analysis, for 

proposed and final rules with ‘‘Federal 

mandates’’ that may result in 

expenditures to State, local, or tribal 

governments, in the aggregate, or to the 

private sector, of $100 million or more 

in any one year. With certain 

exceptions, section 205 of UMRA 

requires Rural Development to identify 

and consider a reasonable number of 

regulatory alternatives and adopt the 

least costly, most cost-effective, or least 

burdensome alternative that achieves 

the objectives of the rule. 

This proposed rule contains no 

Federal mandates (under the regulatory 

provisions of Title II of the UMRA) for 

State, local, and tribal governments or 

the private sector. Thus, this rule is not 

subject to the requirements of sections 

202 and 205 of the UMRA. 

C. Environmental Impact Statement 

This document has been reviewed in 

accordance with 7 CFR part 1940, 

subpart G, ‘‘Environmental Program.’’ 

Rural Development has determined that 

this action does not constitute a major 

Federal action significantly affecting the 

quality of the human environment and, 

in accordance with the National 

Environmental Policy Act (NEPA) of 

1969, 42 U.S.C. 4321 et seq., an 

Environmental Impact Statement is not 

required. 

D. Executive Order 12988, Civil Justice 

Reform 

This rule has been reviewed in 

accordance with Executive Order 12988, 

Civil Justice Reform. Except where 

specified, all State and local laws and 

regulations that are in direct conflict 

with this rule will be preempted. 

Federal funds carry Federal 

requirements. No person is required to 

apply for funding under this program, 

but if they do apply and are selected for 

funding, they must comply with the 

requirements applicable to the Federal 

program funds. This rule is not 

retroactive. It will not affect agreements 

entered into prior to the effective date 

of the rule. Before any judicial action 

may be brought regarding the provisions 

of this rule, the administrative appeal 

provisions of 7 CFR parts 11 and 780 

must be exhausted. 

E. Executive Order 13132, Federalism 

It has been determined, under 

Executive Order 13132, Federalism, that 

this proposed rule does not have 

sufficient Federalism implications to 

warrant the preparation of a Federalism 

Assessment. The provisions contained 

in the proposed rule will not have a 

substantial direct effect on States or 

their political subdivisions or on the 

distribution of power and 

responsibilities among the various 

government levels. 

F. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601–602) generally requires an 

agency to prepare a regulatory flexibility 

analysis of any rule subject to notice 

and comment rulemaking requirements 

under the Administrative Procedure Act 

or any other statute. If an agency 

certifies that the rule will not have a 

significant economic impact on a 

substantial number of small entities, 

this analysis is not required. Small 

entities include small businesses, small 

organizations, and small governmental 

jurisdictions. 

In compliance with the RFA, Rural 

Development has determined that this 

action will not have a significant 

economic impact on a substantial 

number of small entities for the reasons 

discussed below. While, the majority of 

producers of agricultural commodities 

expected to participate in this Program 

will be small businesses, the average 

cost to participants is estimated to be 

approximately 20 percent of the total 

mandatory funding available to the 

program in fiscal years 2009 through 

2012. Further, this regulation only 

affects producers that choose to 

participate in the program. Lastly, small 

entity applicants will not be affected to 

a greater extent than large entity 

applicants. 

G. Executive Order 12372, 

Intergovernmental Review of Federal 

Programs 

This program is subject to Executive 

Order 12372, which requires 

intergovernmental consultation with 

State and local officials. 

Intergovernmental consultation will 

occur for the assistance to producers of 

agricultural commodities in accordance 

with the process and procedures 

outlined in 7 CFR part 3015, subpart V. 

Rural Development will conduct 

intergovernmental consultation using 

RD Instruction 1940–J, 

‘‘Intergovernmental Review of Rural 

Development Programs and Activities,’’ 

available in any Rural Development 

office, on the Internet at http:// 

www.rurdev.usda.gov/regs, and in 7 

CFR part 3015, subpart V. Note that not 

all States have chosen to participate in 

the intergovernmental review process. A 

list of participating States is available at 

the following Web site: http:// 

www.whitehouse.gov/omb/grants/ 

spoc.html. 

H. Executive Order 13175, Consultation 

and Coordination With Indian Tribal 

Governments 

This executive order imposes 

requirements on Rural Development in 

the development of regulatory policies 

that have tribal implications or preempt 

tribal laws. Rural Development has 

determined that the proposed rule does 

not have a substantial direct effect on 

one or more Indian tribe(s) or on either 

the relationship or the distribution of 

powers and responsibilities between the 

Federal Government and the Indian 

tribes. Thus, the proposed rule is not 

subject to the requirements of Executive 

Order 13175. 

I. Programs Affected 

Catalog of Federal Domestic 

Assistance (CFDA) Number: This 

program is listed in the Catalog of 

Federal Domestic Assistance under 

Number 10.352. 

J. Paperwork Reduction Act 

The collection of information 

requirements contained in this proposed 

rule have been submitted to the Office 

of Management and Budget (OMB) for 

clearance. In accordance with the 

Paperwork Reduction Act of 1995, 

USDA Rural Development will seek 

standard OMB approval of the reporting 

requirements contained in this proposed 

rule and hereby opens a 60-day public 

comment period. 

Title: Value-Added Producer Grant 

Program. 

Type of Request: New Collection. 

Abstract: The collection of 

information is vital to Rural 

Development to make decisions 

regarding the eligibility of grant 

recipients in order to ensure compliance 

with the regulations and to ensure that 

the funds obtained from the 

Government are being used for the 

purposes for which they were awarded. 

Entities seeking funding under this 

program will have to submit 

applications that include information on 

the entity’s eligibility, information on 

each of the evaluation criteria, 

certification of matching funds, 

verification of cost-share matching 

funds, business plan, and feasibility 

study. This information will be used to 

determine applicant eligibility and to 

ensure that funds are used for 

authorized purposes. 

Once an entity has been approved and 

their application accepted for funding, 

the entity would be required to sign a 

Letter of Conditions and a grant 

agreement. The grant agreement outlines 

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29924 Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Proposed Rules 

the approved use of funds and actions, 

as well as the restrictions and applicable 

laws and regulations that apply to the 

award. Grantees must maintain a 

financial system and, in accordance 

with Departmental regulations, property 

and procurement standards. Grantees 

must submit semi-annual financial 

performance reports that include a 

comparison of accomplishments with 

the objectives stated in the application 

and a final performance report. Finally, 

grantees must provide copies of 

supporting documentation and/or 

project deliverables for completed tasks 

(e.g., feasibility studies, business plans, 

marketing plans, success stories, best 

practices). 

The following estimates are based on 

the anticipated average over the first 

three years the program is in place: 

Estimate of Burden: Public reporting 

for this collection of information is 

estimated to average 34.1 hours per 

response. 

Respondents: Producers of 

agricultural commodities. 

Estimated Number of Respondents: 

535. 

Estimated Number of Responses per 

Respondent: 3.3. 

Estimated Number of Responses: 

1,783. 

Estimated Total Annual Burden 

(hours) on Respondents: 60,724. 

Copies of this information collection 

can be obtained from Cheryl Thompson, 

Regulations and Paperwork 

Management Branch at (202) 692–0043. 

Comments 

Comments are invited regarding: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of Rural 

Development, including whether the 

information will have practical utility; 

(b) the accuracy of Rural Development’s 

estimate of the burden of the proposed 

collection of information including the 

validity of the methodology and 

assumptions used; (c) ways to enhance 

the quality, utility and clarity of the 

information to be collected; and (d) 

ways to minimize the burden of the 

collection of information on those who 

are to respond, including through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology. 

Comments may be sent to Cheryl 

Thompson, Regulations and Paperwork 

Management Branch, Support Services 

Division, U.S. Department of 

Agriculture, Rural Development, Stop 

0742, 1400 Independence Ave., SW., 

Washington, DC 20250–0742. All 

responses to this proposed rule will be 

summarized and included in the request 

for OMB approval. All comments will 

also become a matter of public record. 

K. E-Government Act Compliance 

USDA is committed to complying 

with the E-Government Act of 2002 

(Pub. L. 107–347, December 17, 2002), 

to promote the use of the Internet and 

other information technologies to 

provide increased opportunities for 

citizen access to government 

information and services, and for other 

purposes. 

List of Subjects in 7 CFR Parts 1951 and 

4284 

Agricultural commodities, 

agricultural products, grant programs, 

rural areas, rural development, valueadded activities. 

For the reasons set forth in the 

preamble, parts 1951 and 4284 of title 

7 of the Code of Federal Regulations is 

proposed to be amended as follows: 

PART 1951—SERVICING AND 

COLLECTIONS 

1. The authority citation for part 1951 

continues to read as follows: 

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

Note; 7 U.S.C. 1989; 31 U.S.C. 3716; 42 

U.S.C. 1480. 

Subpart E—Servicing of Community 

and Direct Business Programs Loans 

and Grants 

2. Section 1951.215 is amended by 

revising paragraph (b)(2) to read as 

follows: 

§ 1951.215 Grants. 

* * * * * 

(b) * * * 

(2) All other grants will be serviced in 

accordance with the Grant Agreement 

and this subpart. 

PART 4284—GRANTS 

3. The authority citation for part 4284 

continues to read as follows: 

Authority: 5 U.S.C. 301 and 7 U.S.C. 1989 

4. Part 4284 is amended by revising 

subpart J to read as follows: 

Subpart J—Value-Added Producer Grant 

Program 

Section A—General 

Sec. 

4284.901 Purpose. 

4284.902 Definitions. 

4284.903 Review or appeal rights. 

4284.904 Exception authority. 

4284.905 Nondiscrimination and 

compliance with other Federal laws. 

4284.906 State laws, local laws, regulatory 

commission regulations. 

4284.907 Environmental requirements. 

4284.908 Incorporation by reference. 

4284.909 Forms, regulations, and 

instructions. 

4284.910—4284.914 [Reserved] 

Section B—Funding and Programmatic 

Change Notifications 

4284.915 Notifications. 

4284.916—4284.919 [Reserved] 

Section C—Eligibility 

4284.920 Applicant eligibility. 

4284.921 Ineligible applicants. 

4284.922 Project eligibility. 

4284.923 Eligible uses of grant funds. 

4284.924 Ineligible uses of grant and 

matching funds. 

4284.925 Funding limitations. 

4284.926—4284.929 [Reserved] 

Section D—Applying for a Grant 

4284.930 Preliminary review. 

4284.931 Applications. 

4284.932 Simplified applications. 

4284.933 Filing instructions. 

4284.934—4284.939 [Reserved] 

Section E—Processing and Scoring 

Applications 

4284.940 Processing applications. 

4284.941 Application withdrawal. 

4284.942 Scoring applications. 

4284.943—4284.949 [Reserved] 

Section F—Grant Awards and Agreement 

4284.950 Award process. 

4284.951 Grant agreement. 

4284.952—4284.959 [Reserved] 

Section G—Post Award Activities and 

Requirements 

4284.960 Monitoring and reporting program 

performance. 

4284.961 Grant servicing. 

4284.962 Transfer of obligations. 

4284.963 Grant close out and related 

activities. 

4284.964—4284.999 [Reserved] 

Section A—General 

§ 4284.901 Purpose. 

This subpart implements the valueadded agricultural product market 

development grant program (ValueAdded Producer Grants) administered 

by the Rural Business-Cooperative 

Service whereby grants are made to 

enable producers to develop businesses 

that produce and market value-added 

agricultural products. 

§ 4284.902 Definitions. 

Administrator. The Administrator of 

the Rural Business-Cooperative Service 

or designees or successors. 

Agency. The Rural Business– 

Cooperative Service or successor for the 

programs it administers. 

Agricultural commodity. An 

unprocessed product of farms, ranches, 

nurseries, and forests and natural and 

man-made bodies of water to which the 

producer has legal access. Agricultural 

commodities include any product 

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cultivated, raised, or harvested by the 

producer. Agricultural commodities do 

not include horses or other animals 

raised or sold as pets, such as cats, dogs, 

and ferrets. 

Agricultural producer. An individual 

or entity directly engaged in the 

production of an agricultural 

commodity that is the subject of the 

value-added project. 

Agricultural producer group. A 

membership organization that 

represents independent producers and 

whose mission includes working on 

behalf of independent producers and 

the majority of whose membership and 

board of directors is comprised of 

independent producers. 

Agricultural product. Plant and 

animal products and their by-products 

to include crops (including farming); 

livestock (including ranching); forestry 

products; hydroponics; nursery stock; 

aquaculture; and fish and seafood 

products. 

Anticipated award date. A date when 

the Agency expects to announce 

applications selected to receive grant 

funding. 

Beginning farmer or rancher. This 

term has the meaning given it in section 

343(a) of the Consolidated Farm and 

Rural Development Act (7 U.S.C. 

1991(a)) and is an entity in which none 

of the individual owners have operated 

a farm or a ranch for more than 10 years. 

For the purposes of this subpart, a 

Beginning Farmer or Rancher must 

currently own and produce the 

agricultural commodity to which value 

will be added. 

Business plan. A formal statement of 

a set of business goals, the reasons why 

they are believed attainable, and the 

plan for reaching those goals, including 

pro forma financial statements 

appropriate to the term and scope of the 

project and sufficient to evidence the 

viability of the venture. It may also 

contain background information about 

the organization or team attempting to 

reach those goals. 

Conflict of interest. A situation in 

which a person or entity has competing 

professional or personal interests that 

make it difficult for the person or 

business to act impartially. An example 

is a grant recipient or an employee of a 

recipient that conducts or significantly 

participates in conducting a feasibility 

study for the recipient. 

Day. Calendar day, unless otherwise 

stated. 

Departmental regulations. The 

regulations of the Department of 

Agriculture’s Office of Chief Financial 

Officer (or successor office) as codified 

in 7 CFR parts 3000 through 3099, 

including, but not necessarily limited 

to, 7 CFR parts 3015 through 3019, 7 

CFR part 3021, and 7 CFR part 3052, 

and successor regulations to these parts. 

Emerging market. A new or 

developing product that is new to the 

applicant or the applicant’s product. 

Family Farm. The term has the 

meaning given it in section 761.2 of title 

7, Code of Federal Regulations (as in 

effect on December 30, 2007), in effect 

that, a Family Farm produces 

agricultural commodities for sale in 

sufficient quantity to be recognized as a 

farm and not a rural residence, owners 

are primarily responsible for daily 

physical labor and management, hired 

help only supplements family labor, and 

owners are related by blood or marriage 

or are immediate family. 

Farm or ranch. Any place from which 

$1,000 or more of agricultural products 

were raised and sold or would have 

been raised and sold during the 

previous year, but for an event beyond 

the control of the farmer or rancher. 

Farmer or rancher cooperative. A 

business owned and controlled by 

agricultural producers that is 

incorporated, or otherwise identified by 

the state in which it operates, as a 

cooperatively operated business. 

Feasibility study. An analysis by a 

qualified consultant of the economic, 

market, technical, financial, and 

management capabilities of a proposed 

project or business in terms of the 

project’s expectation for success. 

Financial feasibility. The ability of a 

project or business to achieve the 

income, credit, and cash flows to 

financially sustain a venture over the 

long term. 

Fiscal year. The Federal government’s 

fiscal year. 

Immediate family. Individuals who 

are closely related by blood, marriage, or 

adoption, or live within the same 

household, such as a spouse, domestic 

partner, parent, child, brother, sister, 

aunt, uncle, grandparent, grandchild, 

niece, or nephew. 

Independent producers. 

(1) Individual agricultural producers 

or entities that are solely owned or 

controlled by agricultural producers. 

Independent producers must produce 

and own a majority of the agricultural 

commodity to which value is being 

added and that is the subject of the 

project proposal. Independent 

producers must maintain ownership of 

the agricultural commodity or product 

from its raw state through the 

production of the value-added product. 

Producers who produce the agricultural 

commodity under contract for another 

entity, but do not own the product 

produced are not considered 

independent producers. Entities that 

contract out the production of an 

agricultural commodity are not 

considered independent producers. 

(2) A steering committee composed of 

specifically identified agricultural 

producers in the process of organizing 

an eligible entity to operate a valueadded venture that will be owned or 

controlled by those specifically 

identified agricultural producers 

supplying the agricultural product to 

the market. The steering committee 

must have formed the eligible entity by 

the time of award. 

Local or regional supply network. An 

interconnected group of entities through 

which agricultural based products move 

from production through consumption 

in a local or regional area of the United 

States. Examples of participants in a 

supply network may include 

agricultural producers, processors, 

distributors, wholesalers, retailers, 

consumers, and entities that organize or 

provide technical assistance for 

development of such networks. 

Locally-produced agricultural food 

product. Any agricultural food product 

that is raised, produced, and distributed 

in: 

(1) The locality or region in which the 

final product is marketed, so that the 

total distance that the product is 

transported is less than 400 miles from 

the origin of the product; or 

(2) The State in which the product is 

produced. 

Majority-controlled producer-based 

business venture. An entity (except 

farmer or rancher cooperatives) in 

which more than 50 percent of the 

financial ownership and voting control 

is held by independent producers. 

Marketing plan. A plan for the project 

conducted by a qualified consultant that 

identifies a market window, potential 

buyers, a description of the distribution 

system and possible promotional 

campaigns. 

Matching funds. A cost-sharing 

contribution to the project via 

confirmed cash or funding 

commitments from eligible sources 

without a conflict of interest, that are 

used for eligible project purposes during 

the grant period. Eligible matching 

funds include confirmed applicant cash, 

loan or line of credit, non-Federal grant 

sources (unless otherwise provided by 

law), and third-party cash or eligible 

third-party in-kind contributions. 

Matching funds must be at least equal 

to the grant amount, and combined 

grant and matching funds must equal 

100 percent of the total project costs. All 

eligible cash and third-party in-kind 

matching funds contributions must be 

spent on eligible expenses during the 

grant period, and are subject to the same 

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use restrictions as grant funds. Matching 

funds must be spent at a rate equal to 

or greater than the rate at which grant 

funds are expended, and if matching 

funds are proposed in an amount 

exceeding the grant amount, those 

matching funds must be spent at a 

proportional rate equaling the match-togrant ratio identified in the budget. 

Expected program income may not be 

used to fulfill the matching funds 

requirement at time of application. 

Further, funds used for an ineligible 

purpose, contributions donated outside 

the proposed grant period, and in-kind 

contributions that are invalid, overvalued or include potential for a conflict 

of interest are not acceptable matching 

funds. All matching funds must be 

verified by authentic documentation 

from the source as part of the 

application. 

Medium-sized farm. A farm or ranch 

that has averaged between $250,001 and 

$700,000 in annual gross sales of 

agricultural products in the previous 

three years. 

Mid-tier value chain. Local and 

regional supply networks that link 

independent producers with businesses 

and cooperatives that market valueadded agricultural products in a manner 

that: 

(1) Targets and strengthens the 

profitability and competitiveness of 

small and medium-sized farms and 

ranches that are structured as a family 

farm; and 

(2) Obtains agreement from an eligible 

agricultural producer group, farmer or 

rancher cooperative, or majoritycontrolled producer-based business 

venture that is engaged in the value 

chain on a marketing strategy. 

(3) For mid-tier value chain projects 

the Agency recognizes that, in a supply 

chain network, a variety of raw 

agricultural commodity and valueadded product ownership and transfer 

arrangements may be necessary. 

Consequently, applicant ownership of 

the raw agricultural commodity and 

value-added product from raw through 

value-added is not necessarily required, 

as long as the mid-tier value chain 

proposal can demonstrate an increase in 

customer base and an increase in 

revenue returns to the applicant 

producers supplying the majority of the 

raw agricultural commodity for the 

project. 

Planning grant. A grant to facilitate 

the development of a defined program 

of economic planning activities to 

determine the viability of a potential 

value-added venture, and specifically 

for the purpose of paying for a qualified 

(third-party) consultant to conduct and 

develop a feasibility study, business 

plan, and/or marketing plan associated 

with the processing and/or marketing of 

a value-added agricultural product. 

Product segregation. Separating an 

agricultural commodity or product on 

the same farm from other varieties of the 

same commodity or product on the 

same farm during production and 

harvesting, with assurance of continued 

separation from similar products during 

processing and marketing in a manner 

that results in the enhancement of the 

value of the separated commodity or 

product. 

Pro forma financial statement. A 

financial statement that projects the 

future financial position of a company. 

The statement is part of the business 

plan and includes an explanation of all 

assumptions, such as input prices, 

finished product prices, and other 

economic factors used to generate the 

financial statements. The statement 

must include projections in the form of 

cash flow statements, income 

statements, and balance sheets. 

Project. All activities to be funded by 

grant and matching funds. 

Qualified consultant. An 

independent, third-party possessing the 

knowledge, expertise, and experience to 

perform the specific task required in an 

efficient, effective, and authoritative 

manner. 

Rural Development. A mission area of 

the Under Secretary for Rural 

Development within the U.S. 

Department of Agriculture (USDA), 

which includes Rural Housing Service, 

Rural Utilities Service, and Rural 

Business-Cooperative Service and their 

successors. 

Rural or rural area. Any area of a 

State not in a city or town that has a 

population of more than 50,000 

inhabitants, according to the latest 

decennial census of the United States, 

and the contiguous and adjacent 

urbanized area, and any area that has 

been determined to be ‘‘rural in 

character’’ by the Under Secretary for 

Rural Development, or as otherwise 

identified in this definition. In 

determining which census blocks in an 

urbanized area are not in a rural area, 

the Agency will exclude any cluster of 

census blocks that would otherwise be 

considered not in a Rural Area only 

because the cluster is adjacent to not 

more than two census blocks that are 

otherwise considered not in a rural area 

under this definition. 

(1) For the purposes of this definition, 

cities and towns are incorporated 

population centers with definite 

boundaries, local self government, and 

legal powers set forth in a charter 

granted by the State. 

(2) For the Commonwealth of Puerto 

Rico, the island is considered rural and 

eligible for Business Programs 

assistance, except for the San Juan 

Census Designated Place (CDP) and any 

other CDP with greater than 50,000 

inhabitants. CDPs with greater than 

50,000 inhabitants, other than the San 

Juan CDP, may be determined to be 

eligible if they are ‘‘not urban in 

character.’’ Any such requests must be 

forwarded to the National Office, 

Business and Industry Division, with 

supporting documentation as to why the 

area is ‘‘not urban in character’’ for 

review, analysis, and decision by the 

Rural Development Under Secretary. 

(3) For the State of Hawaii, all areas 

within the State are considered rural 

and eligible for Business Programs 

assistance, except for the Honolulu CDP 

within the County of Honolulu. 

(4) For the purpose of defining a rural 

area in the Republic of Palau, the 

Federated States of Micronesia, and the 

Republic of the Marshall Islands, the 

Agency shall determine what 

constitutes rural and rural area based on 

available population data. 

(5) The determination that an area is 

‘‘rural in character’’ under this definition 

will be to areas that are within: 

(i) An urbanized area that has two 

points on its boundary that are at least 

40 miles apart, which is not contiguous 

or adjacent to a city or town that has a 

population of greater than 150,000 

inhabitants or the urbanized area of 

such a city town; or 

(ii) An urbanized area contiguous and 

adjacent to a city or town of greater than 

50,000 population that is within onequarter mile of a rural area. 

Small farm. A farm or ranch that has 

averaged $250,000 or less in annual 

gross sales of agricultural products in 

the previous three years. 

Socially disadvantaged farmer or 

rancher. This term has the meaning 

given it in section 355(e) of the 

Consolidated Farm and Rural 

Development Act (7 U.S.C. 2003(e)). A 

farmer or rancher who is a member of 

a ‘‘socially disadvantaged group.’’ In this 

definition, the term farmer or rancher 

means a person that is engaged in 

farming or ranching or an entity solely 

owned by individuals who are engaged 

in farming or ranching. A socially 

disadvantaged group means a group 

whose members have been subjected to 

racial, ethnic, or gender prejudice 

because of their identity as members of 

a group without regard to their 

individual qualities. In the event that 

there are multiple farmer or rancher 

owners of the applicant organization, 

the Agency requires that at least 51 

percent of the ownership be held by 

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members of a socially disadvantaged 

group. 

State. Any of the 50 States of the 

United States, the Commonwealth of 

Puerto Rico, the U.S. Virgin Islands, 

Guam, American Samoa, the 

Commonwealth of the Northern Mariana 

Islands, the Republic of Palau, the 

Federated States of Micronesia, and the 

Republic of the Marshall Islands. 

State director. The term ‘‘State 

Director’’ means, with respect to a State, 

the Director of the Rural Development 

State Office. 

State office. USDA Rural 

Development offices located in each 

state. 

Total project cost. The sum of all 

grant and matching funds in the project 

budget that reflects the eligible project 

tasks associated with the work plan. 

Value-added agricultural product. 

Any agricultural commodity or product 

that meets the requirements specified in 

paragraphs (1) and (2) of this definition. 

(1) The agricultural commodity or 

product must meet one of the following 

five value-added methodologies: 

(i) Has undergone a change in 

physical state; 

(ii) Was produced in a manner that 

enhances the value of the agricultural 

commodity or product; 

(iii) Is physically segregated in a 

manner that results in the enhancement 

of the value of the agricultural 

commodity or product; 

(iv) Is a source of farm- or ranch-based 

renewable energy, including E–85 fuel; 

or 

(v) Is aggregated and marketed as a 

locally-produced agricultural food 

product. 

(2) As a result of the change in 

physical state or the manner in which 

the agricultural commodity or product 

was produced, marketed, or segregated: 

(i) The customer base for the 

agricultural commodity or product is 

expanded and 

(ii) A greater portion of the revenue 

derived from the marketing, processing, 

or physical segregation of the 

agricultural commodity or product is 

available to the producer of the 

commodity or product. 

Venture. The business, including the 

project and other related activities. 

Working capital grant. A grant to 

provide funds to operate a value-added 

project, specifically to pay the eligible 

project expenses related to the 

processing and/or marketing of the 

value-added product that are eligible 

uses of grant funds. 

§ 4284.903 Review or appeal rights. 

A person may seek a review of an 

Agency decision under this subpart 

from the appropriate Agency official 

that oversees the program in question or 

appeal to the National Appeals Division 

in accordance with 7 CFR part 11. 

§ 4284.904 Exception authority. 

Except as specified in paragraphs (a) 

and (b) of this section, the 

Administrator may make exceptions to 

any requirement or provision of this 

subpart, if such exception is necessary 

to implement the intent of the 

authorizing statute in a time of national 

emergency or in accordance with a 

Presidentially-declared disaster, or, on a 

case-by-case basis, when such an 

exception is in the best financial 

interests of the Federal Government and 

is otherwise not in conflict with 

applicable laws. 

(a) Applicant eligibility. No exception 

to applicant eligibility can be made. 

(b) Project eligibility. No exception to 

project eligibility can be made. 

§ 4284.905 Nondiscrimination and 

compliance with other Federal laws. 

(a) Other Federal laws. Applicants 

must comply with other applicable 

Federal laws, including the Equal 

Employment Opportunities Act of 1972, 

the Americans with Disabilities Act, the 

Equal Credit Opportunity Act, Title VI 

of the Civil Rights Act of 1964, Section 

504 of the Rehabilitation Act of 1973, 

the Age Discrimination Act of 1975, and 

7 CFR part 1901–E. 

(b) Nondiscrimination. The U.S. 

Department of Agriculture (USDA) 

prohibits discrimination in all its 

programs and activities on the basis of 

race, color, national origin, age, 

disability, and where applicable, sex, 

marital status, familial status, parental 

status, religion, sexual orientation, 

genetic information, political beliefs, 

reprisal, or because all or part of an 

individual’s income is derived from any 

public assistance program. (Not all 

prohibited bases apply to all programs.) 

Persons with disabilities who require 

alternative means for communication of 

program information (Braille, large 

print, audiotape, etc.) should contact 

USDA’s TARGET Center at (202) 720– 

2600 (voice and TDD). Any applicant 

that believes it has been discriminated 

against as a result of applying for funds 

under this program should contact: 

USDA, Director, Office of Adjudication 

and Compliance, 1400 Independence 

Avenue, SW., Washington, DC 20250– 

9410, or call (800) 795–3272 (voice) or 

(202) 720–6382 (TDD) for information 

and instructions regarding the filing of 

a Civil Rights complaint. USDA is an 

equal opportunity provider, employer, 

and lender. 

(c) Civil rights compliance. Recipients 

of grants must comply with Title VI of 

the Civil Rights Act of 1964, Section 504 

of the Rehabilitation Act of 1973. This 

includes collection and maintenance of 

data on the basis of race, sex and 

national origin of the recipient’s 

membership/ownership and employees. 

These data must be available to conduct 

compliance reviews in accordance with 

7 CFR part 1901, subpart E. For grants 

initial compliance review will be 

conducted after Form RD 400–4, 

‘‘Assurance Agreement,’’ is signed and 

one subsequent compliance review after 

the last disbursement of grant funds 

have been made, and the facility or 

programs been in full operations for 90 

days. 

(d) Executive Order 12898. When a 

project is proposed and financial 

assistance is requested, the Agency will 

conduct a Civil Rights Impact Analysis 

(CRIA) with regards to environmental 

justice. The CRIA must be conducted 

and the analysis documented utilizing 

Form RD 2006–38, ‘‘Civil Right Impact 

Analysis Certification.’’ This 

certification must be done prior to grant 

approval, obligation of funds, or other 

commitments of Agency resources, 

including issuance of a Letter of 

Conditions, whichever occurs first. 

§ 4284.906 State laws, local laws, 

regulatory commission regulations. 

If there are conflicts between this 

subpart and State or local laws or 

regulatory commission regulations, the 

provisions of this subpart will control. 

§ 4284.907 Environmental requirements. 

All grants awarded under this subpart 

are subject to the environmental 

requirements in subpart G of 7 CFR part 

1940 or successor regulations. 

Applications for planning grants are 

generally excluded from the 

environmental review process by 

§ 1940.333 of this title. Applicants for 

working capital grants must submit 

Form 1940–22, Categorical Exclusion 

Checklist. 

§ 4284.908 Incorporation by reference. 

(a) Departmental regulations. Unless 

specifically stated, this subpart 

incorporates by reference the 

regulations of the Department of 

Agriculture’s Office of Chief Financial 

Officer (or successor office) as codified 

in 7 CFR parts 3000 through 3099, 

including, but not necessarily limited 

to, 7 CFR parts 3015 through 3019, 7 

CFR part 3021, and 7 CFR part 3052, 

and successor regulations to these parts. 

(b) Cost principles. This subpart 

incorporates by reference the cost 

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principles found in 2 CFR part 230 and 

in 48 CFR part 31.2. 

(c) Definitions. If a term is defined 

differently in the Departmental 

Regulations, 2 CFR 230, or 48 CRF 31.2 

and in this subpart, such term shall 

have the meaning as found in this 

subpart. 

§ 4284.909 Forms, regulations, and 

instructions. 

Copies of all forms, regulations, 

instructions, and other materials related 

to the program referenced in this 

subpart may be obtained through the 

Agency. 

§§ 4284.910–4284.914 [Reserved] 

Section B—Funding and Programmatic 

Change Notifications 

§ 4284.915 Notifications. 

In implementing this subpart, the 

Agency will issue notifications 

addressing funding and programmatic 

changes, as specified in paragraphs (a) 

and (b) of this section, respectively. The 

methods that the Agency will use in 

making these notifications is specified 

in paragraph (c) of this section, and the 

timing of these notifications is specified 

in paragraph (d) of this section. 

(a) Funding and simplified 

applications. The Agency will issue 

notifications concerning: 

(1) The funding level and the 

minimum and maximum grant amount 

and any additional funding information 

as determined by the Agency; and 

(2) The contents of simplified 

applications, as provided for in 

§ 4284.932. 

(b) Programmatic changes. The 

Agency will issue notifications of the 

programmatic changes specified in 

paragraphs (b)(1) through (4) of this 

section. 

(1) The set of Administrator priority 

categories or their point allocation, if 

the provisions specified in 

§ 4284.942(b)(6) are not to be used for 

awarding Administrator points. 

Administrator priorities that the 

program may consider are: 

(i) Unserved or underserved areas. 

(ii) Geographic diversity. 

(iii) Emergency conditions. 

(iv) To more effectively accomplish 

the mission area’s plans, goals, and 

objectives. 

(v) Public health and safety. 

(2) Additional reports that are 

generally applicable across projects 

within a program associated with the 

monitoring of and reporting on project 

performance. 

(3) Any information specified in 

§ 4284.933. 

(4) Preliminary review information. 

(c) Notification methods. The Agency 

will issue the information specified in 

paragraphs (a) and (b) in one or more 

Federal Register notices. In addition, all 

information will be available at any 

Rural Development office. 

(d) Timing. The Agency will make the 

information specified in paragraphs (a) 

and (b) of this section available as 

specified in paragraphs (d)(1) through 

(3) of this section. 

(1) The Agency will make the 

information specified in paragraph (a) of 

this section available each fiscal year. 

(2) The Agency will make the 

information specified in paragraphs 

(b)(1) of this section available at least 60 

days prior to the application deadline, 

as applicable. 

(3) The Agency will make the 

information specified in paragraphs 

(b)(2) through (4) of this section 

available on an as needed basis. 

§§ 4284.916–4284.919 [Reserved] 

Section C—Eligibility 

§ 4284.920 Applicant eligibility. 

To be eligible for a grant under this 

subpart, an applicant must demonstrate 

that they meet the requirements 

specified in paragraphs (a) through (d) 

of this section, as applicable, and are 

subject to the limitations specified in 

paragraphs (e) and (f) of this section. 

(a) Type of applicant. The applicant 

must demonstrate that they meet all 

definition requirements for one of the 

following applicant types: 

(1) An independent producer; 

(2) An agricultural producer group; 

(3) A farmer or rancher cooperative; or 

(4) A majority-controlled producerbased business venture. 

(b) Emerging market. An applicant 

that is an agricultural producer group, a 

farmer or rancher cooperative, or a 

majority-controlled producer-based 

business venture must demonstrate that 

they are entering into an emerging 

market as a result of the proposed 

project. 

(c) Citizenship. 

(1) Individual applicants must 

demonstrate that they: 

(i) Are citizens or nationals of the 

United States (U.S.), the Republic of 

Palau, the Federated States of 

Micronesia, the Republic of the 

Marshall Islands, or American Samoa, 

or 

(ii) Reside in the U.S. after legal 

admittance for permanent residence. 

(2) Entities other than individuals 

must demonstrate that they are at least 

51 percent owned by individuals who 

are either citizens as identified under 

paragraph (c)(1)(i) of this section or 

legally admitted permanent residents 

residing in the U.S. This paragraph is 

not applicable if the entity is owned 

solely by members of one immediate 

family. In such instance, if at least one 

of the immediate family members is a 

citizen or national, as defined in 

paragraph (c)(1) of this section, then the 

entity is eligible. 

(d) Legal authority and responsibility. 

Each applicant must demonstrate that 

they have, or can obtain, the legal 

authority necessary to carry out the 

purpose of the grant. 

(e) Multiple grant eligibility. An 

applicant may submit only one 

application in response to this notice, 

and must direct that it compete in either 

the general funds competition or in one 

of the reserved funds competitions. 

Separate entities with identical or 

greater than 75 percent common 

ownership may only submit one 

application for one entity per year. 

Applicants who have already received a 

planning grant for the proposed project 

cannot receive another planning grant 

for the same project. Applicants who 

have already received a working capital 

grant for the proposed project cannot 

receive any additional grants for that 

project. 

(f) Active VAPG grant. If an applicant 

has an active value-added grant at the 

time of a subsequent application, the 

current grant must be closed out within 

90 days of the annual NOFA. 

§ 4284.921 Ineligible applicants. 

(a) Consistent with the Departmental 

regulations, an applicant is ineligible if 

the applicant is debarred or suspended 

or is otherwise excluded from or 

ineligible for participation in Federal 

assistance programs under Executive 

Order 12549, ‘‘Debarment and 

Suspension.’’ 

(b) An applicant will be considered 

ineligible for a grant due to an 

outstanding judgment obtained by the 

U.S. in a Federal Court (other than U.S. 

Tax Court), is delinquent on the 

payment of Federal income taxes, or is 

delinquent on Federal debt. 

§ 4284.922 Project eligibility. 

To be eligible for a VAPG grant, the 

application must demonstrate that the 

project meets the requirements specified 

in paragraphs (a) through (d) of this 

section, as applicable. 

(a) Product eligibility. Each product 

that is the subject of the proposed 

project must meet the definition of a 

value-added agricultural product, 

including a demonstration that: 

(1) The value-added product results 

from one of the value-added 

methodologies identified in paragraphs 

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(1)(i) through (v) of the definition of 

value-added agricultural product; 

(2) As a result of the project, the 

customer base for the agricultural 

commodity or product is expanded; and 

(3) As a result of the project, a greater 

portion of the revenue derived from the 

marketing or processing of the valueadded product is available to the 

agricultural producer of the commodity 

or product. 

(b) Purpose eligibility. 

(1) The grant funds requested must 

not exceed the amount specified 

annually for planning and working 

capital grant requests. 

(2) The matching funds required for 

the project budget must be available 

during the project period and verified in 

the application. 

(3) The proposed project must be 

limited to eligible planning or working 

capital activities as defined at 

§ 4284.923, as applicable, with eligible 

tasks directly related to the processing 

and/or marketing of the subject valueadded product. 

(4) The project work plan and budget 

must: 

(i) Present a detailed breakdown of all 

estimated costs associated with the 

eligible planning or working capital 

activities related to the processing 

and/or marketing of the value-added 

product and allocate those costs among 

the listed tasks; 

(ii) Identify the sources and uses of 

grant and matching funds for all tasks 

specified in the budget; and 

(iii) Present a project budget period of 

not longer than 36 months, scaled to 

complexity, and concluding not later 

than 3 years after the proposed start 

date. 

(5) Working capital applications must 

include a feasibility study and business 

plan completed specifically for the 

proposed value-added project by a 

qualified consultant. The Agency must 

concur in the acceptability or adequacy 

of the feasibility study and business 

plan for eligibility purposes. 

(6) If the applicant is an agricultural 

producer group, a farmer or rancher 

cooperative, or a majority-controlled 

producer-based business venture, the 

applicant must demonstrate that it is 

entering an emerging market. 

(7) All applicants for working capital 

must either be currently marketing each 

value-added agricultural product that is 

the subject of the grant application, or 

be ready to implement the working 

capital activities in accord with the 

budget and work plan timeline 

proposed. 

(c) Branding activities. Applications 

that propose only branding, packaging, 

or other similar means of product 

differentiation are not eligible under 

this subpart. However, applications that 

propose branding, packaging, or other 

product differentiation activities that are 

no more than 25 percent of total project 

costs of a value-added project for 

products otherwise eligible in one of the 

five value-added methodologies 

specified in paragraphs (1)(i) through (v) 

of the definition of value-added 

agricultural product are eligible. 

(d) Reserved funds eligibility. In 

addition to the requirements specified 

in paragraphs (a) through (c) of this 

section, the requirements specified in 

paragraphs (d)(1) and (2) of this section 

must be met, as applicable. All eligible, 

but unfunded reserved funds 

applications will be eligible to compete 

for general funds in that same fiscal 

year, as funding levels permit. 

(1) If the applicant is applying for 

beginning farmer or rancher, or sociallydisadvantaged farmer or rancher 

reserved funds, the applicant must 

provide documentation demonstrating 

that the applicant meets one of these 

definitions. 

(2) If the applicant is applying for 

mid-tier value chain reserved funds, the 

application must: 

(i) Demonstrate that the project 

proposes development of a local or 

regional supply network of an 

interconnected group of entities through 

which agricultural products move from 

production through consumption in a 

local or regional area of the United 

States, including a description of the 

network, its component members, and 

its purpose; 

(ii) Describe at least two alliances, 

linkages or partnerships within the 

value chain that link independent 

producers with businesses and 

cooperatives that market value-added 

agricultural products in a manner that 

benefits small or medium-sized farms 

and ranches that are structured as a 

family farm, including the names of the 

parties and the nature of their 

collaboration; 

(iii) Demonstrate how the project, due 

to the manner in which the value-added 

product is marketed, will increase the 

profitability and competitiveness of at 

least two eligible small or medium-sized 

farms or ranches that are structured as 

a family farm; 

(iv) Document that the eligible 

agricultural producer group/ 

cooperative/majority-controlled 

producer-based business venture 

applicant organization has obtained at 

least one agreement with another 

member of the supply network that is 

engaged in the value chain on a 

marketing strategy; or that the eligible 

independent producer applicant has 

obtained at least one agreement from an 

eligible agricultural producer group/ 

cooperative/majority-controlled 

producer-based business venture 

engaged in the value-chain on a 

marketing strategy; 

(v) Demonstrate that the applicant 

organization currently owns and 

produces more than 50 percent of the 

raw agricultural commodity that will be 

used for the value-added product that is 

the subject of the proposal; and 

(vi) Demonstrate that the project will 

result in an increase in customer base 

and an increase in revenue returns to 

the applicant producers supplying the 

majority of the raw agricultural 

commodity for the project. 

§ 4284.923 Eligible uses of grant and 

matching funds. 

Grant and cost-share matching funds 

have the same use restrictions and must 

be used to fund only the costs for 

approved purposes as defined in 

paragraphs (a) and (b) of this section. 

(a) Planning funds may be used to pay 

for a qualified consultant to conduct 

and develop a feasibility study, business 

plan, and/or marketing plan associated 

with the processing and/or marketing of 

a value-added agricultural product. 

Planning funds may not be used for 

applicant participation in feasibility 

studies. In-kind contribution of 

matching funds to cover applicant 

participation in development of 

business plans and/or marketing plans 

is allowed to the extent that the value 

of such work can be appropriately 

valued. Funds may not be used to 

evaluate the agricultural production of 

the commodity itself, other than to 

determine the project’s input costs 

related to the feasibility of processing 

and marketing the value-added product. 

(b) Working capital funds may be 

used to pay the project’s operational 

costs directly related to the processing 

and/or marketing of the value-added 

product. Examples of eligible working 

capital expenses include designing or 

purchasing a financial accounting 

system for the project, paying salaries of 

employees without ownership interest 

to process and/or market and deliver the 

value-added product to consumers, 

paying for inventory supply costs 

necessary to produce the value-added 

product from the agricultural 

commodity or product, and paying for a 

marketing campaign for the value-added 

product. 

§ 4284.924 Ineligible uses of grant and 

matching funds. 

Grant funds awarded under this 

subpart may not be used to: 

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(a) Plan, repair, rehabilitate, acquire, 

or construct a building or facility 

(including a processing facility); 

(b) Purchase, lease purchase, or install 

fixed equipment, including processing 

equipment; 

(c) Purchase or repair vehicles, 

including boats; 

(d) Pay for the preparation of the grant 

application; 

(e) Pay expenses not directly related 

to the funded project; 

(f) Fund research and development; 

(g) Fund political or lobbying 

activities; 

(h) Fund any activities prohibited by 

7 CFR parts 3015 and 3019, 2 CFR part 

230, and 48 CFR part 31.2. 

(i) Fund architectural or engineering 

design work; 

(j) Fund expenses related to the 

production of any agricultural 

commodity or product, including seed, 

rootstock, labor for harvesting the crop, 

and delivery of the commodity to a 

processing facility; 

(k) Conduct activities on behalf of 

anyone other than a specifically 

identified independent producer or 

group of independent producers. The 

Agency considers conducting industrylevel feasibility studies or business 

plans, that are also known as feasibility 

study templates or guides or business 

plan templates or guides, to be ineligible 

because the assistance is not provided to 

a specific group of Independent 

Producers; 

(l) Duplicate current services or 

replace or substitute support previously 

provided; 

(m) Pay any costs of the project 

incurred prior to the date of grant 

approval, including legal or other 

expenses needed to incorporate or 

organize a business; 

(n) Pay for assistance to any business 

that does not meet the requirements of 

§ 4284.920(c); 

(o) Pay any judgment or debt owed to 

the United States; 

(p) Pay for any goods or services 

provided by a person or entity that has 

a conflict of interest or an appearance of 

a conflict of interest. Also, note that inkind matching funds may not be 

provided by a person or entity that has 

a conflict of interest or an appearance of 

a conflict of interest; 

(q) Purchase land; or 

(r) Pay for costs associated with illegal 

activities. 

§ 4284.925 Funding limitations. 

(a) Grant funds may be used to pay up 

to 50 percent of the total eligible project 

costs, subject to the limitations 

established for maximum total grant 

amount. 

(b) The maximum total grant amount 

provided to a grantee in any one year 

shall not exceed the amount announced 

in an annual notice issued pursuant to 

§ 4284.915, but in no event may the total 

amount of grant funds provided to a 

grant recipient exceed $500,000. 

(c) A grant under this subsection shall 

have a term that does not exceed 3 

years. Grant project periods should be 

scaled to the complexity of the 

objectives for the project. The Agency 

may extend the term of the grant period, 

not to exceed the 3-year maximum. 

(d) The aggregate amount of awards to 

majority controlled producer-based 

businesses may not exceed 10 percent of 

the total funds obligated under this 

subpart during any fiscal year. 

(e) Not more than 5 percent of funds 

appropriated each year may be used to 

fund the Agricultural Marketing 

Resource Center, to support electronic 

capabilities to provide information 

regarding research, business, legal, 

financial, or logistical assistance to 

independent producers and processors. 

(f) Each fiscal year, the following 

amounts of reserved funds will be made 

available: 

(1) 10 percent to fund projects that 

benefit beginning farmers or ranchers, or 

socially-disadvantaged farmers or 

ranchers; and 

(2) 10 percent to fund projects that 

propose development of mid-tier value 

chains. 

(3) Funds not obligated by June 30 of 

each fiscal year shall be available to the 

general fund for the program. 

§§ 4284.926–4284.929 [Reserved] 

Section D—Applying for a Grant 

§ 4284.930 Preliminary review. 

The Agency encourages applicants to 

contact their State Office well in 

advance of the application submission 

deadline, to ask questions and to 

discuss project eligibility potential. At 

its option, the Agency may establish a 

preliminary review deadline so that it 

may informally assess the eligibility of 

the application and its completeness. 

The result of the preliminary review is 

not binding on the Agency. To 

implement this section, the Agency will 

issue a notification addressing this issue 

in accordance with § 4284.915. 

§ 4284.931 Application package. 

All applicants are required to submit 

an application package that is 

comprised of the elements in this 

section. 

(a) Application forms. The following 

application forms (or their successor 

forms) must be completed when 

applying for a grant under this subpart. 

(1) Form SF–424, ‘‘Application for 

Federal Assistance.’’ 

(2) Form SF–424A, ‘‘Budget 

Information-Non-Construction 

Programs.’’ 

(3) Form SF–424B, ‘‘Assurances— 

Non-Construction Programs.’’ 

(4) Form RD 400–4, ‘‘Assurance 

Agreement.’’ 

(5) Form RD 400–1, ‘‘Equal 

Opportunity Agreement.’’ 

(6) All applicants are required to have 

a DUNS number (including individuals 

and sole proprietorships). 

(b) Application content. The 

following content items must be 

completed when applying for a grant 

under this subpart: 

(1) Eligibility discussion. Using the 

format prescribed by the application 

package, the applicant must describe in 

detail how the: 

(i) Applicant (§§ 4284.920 and 921) 

and project eligibility (§ 4284.922) 

requirements are met; 

(ii) Eligible use of grant and matching 

funds (§§ 4284.923 and 924) 

requirements are met; and 

(iii) Funding limitation (§ 4284.925) 

requirements are met. 

(2) Evaluation criteria. Using the 

format prescribed by the application 

package, the applicant must address 

each evaluation criterion identified 

below. 

(i) Performance evaluation criteria. 

Applicants for planning grants must 

suggest at least one criterion by which 

their performance under a grant could 

be evaluated. Applicants for working 

capital grants must identify the 

projected increase in customer base, 

revenue accruing to independent 

producers, and number of jobs 

attributed to the project. Working 

capital projects with significant 

renewable energy components must also 

identify the projected increase in 

capacity per unit of measure annually 

attributed to the project. Performance 

criteria will be incorporated into the 

applicant’s semi-annual and final 

reporting requirements if selected for 

award. 

(ii) Proposal evaluation criteria. 

Applicants must address each proposal 

evaluation criterion identified in 

§ 4284.942 in narrative form, in the 

application package. 

(3) Certification of matching funds. 

Using the format prescribed by the 

application package, applicants must 

certify that: 

(i) Cost-share matching funds will be 

spent in advance of grant funding, such 

that for every dollar of grant funds 

disbursed, not less than an equal 

amount of matching funds will have 

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been expended prior to submitting the 

request for reimbursement; and 

(ii) If matching funds are proposed in 

an amount exceeding the grant amount, 

those matching funds must be spent at 

a proportional rate equal to the matchto-grant ratio identified in the proposed 

budget. 

(4) Verification of cost-share matching 

funds. Using the format prescribed by 

the application package, the applicant 

must provide authentic documentation 

from the source to confirm the eligibility 

and availability of both cash and in-kind 

contributions that meet the following 

requirements: 

(i) Matching funds are subject to the 

same use restrictions as grant funds, and 

must be spent on eligible project 

expenses during the grant project 

period. 

(ii) Matching funds must be from 

eligible sources without a conflict of 

interest and without the appearance of 

a conflict of interest. 

(iii) Matching funds must be at least 

equal to the amount of grant funds 

requested, and combined grant and 

matching funds must equal 100 percent 

of the total eligible project costs. 

(iv) Unless provided by other 

authorizing legislation, other Federal 

grant funds cannot be used as matching 

funds. 

(v) Matching funds must be provided 

in the form of confirmed applicant cash, 

loan, or line of credit; or confirmed 

third-party cash or eligible third-party 

in-kind contribution. 

(vi) Examples of ineligible matching 

funds include funds used for an 

ineligible purpose, contributions 

donated outside the proposed grant 

period, third-party in-kind contributions 

that are over-valued, expected program 

income at time of application, or 

instances where the potential for a 

conflict of interest exists, including 

applicant in-kind contributions in 

§ 4284.923(a). 

(5) Business plan. As part of the 

application package, applicants for 

working capital grants must provide a 

copy of the business plan that was 

completed for the proposed project. The 

Agency must concur in the acceptability 

or adequacy of the business plan. 

(6) Feasibility study. As part of the 

application package, applicants for 

working capital grants must provide a 

copy of the third-party feasibility study 

that was completed for the proposed 

project. The Agency must concur in the 

acceptability or adequacy of the 

feasibility study. 

§ 4284.932 Simplified application. 

Applicants requesting less than 

$50,000 will be allowed to submit a 

simplified application, the contents of 

which will be announced in an annual 

notice issued pursuant to § 4284.915. 

§ 4284.933 Filing instructions. 

Unless otherwise specified in a 

notification issued under § 4284.915, 

the requirements specified in 

paragraphs (a) through (e) of this section 

apply to all applications. 

(a) When to submit. Complete 

applications must be received by the 

Agency on or before March 15 of each 

year to be considered for funding for 

that fiscal year. Applications received 

by the Agency after March 15 will not 

be considered. 

(b) Incomplete applications. 

Incomplete applications will be 

rejected. Applicants will be informed of 

the elements that made the application 

incomplete. If a resubmitted application 

is received by the applicable application 

deadline, the Agency will reconsider the 

application. 

(c) Where to submit. All applications 

must be submitted to the State Office of 

Rural Development in the State where 

the project primarily takes place, or online through grants.gov. 

(d) Format. Applications may be 

submitted as hard copy, or 

electronically via grants.gov. If 

submitted as hard copy, only one 

original copy should be submitted. 

(e) Other forms and instructions. 

Upon request, the Agency will make 

available to the public the necessary 

forms and instructions for filing 

applications. These forms and 

instructions may be obtained from any 

State Office of Rural Development, or 

the Agency’s Value-Added Producer 

Grant program Web site—http:// 

www.rurdev.usda.gov/rbs/coops/ 

vadg.htm. 

§§ 4284.934–4284.939 [Reserved] 

Section E—Processing and Scoring 

Applications 

§ 4284.940 Processing applications. 

(a) Initial review. Upon receipt of an 

application on or before the application 

submission deadline for each fiscal year, 

the Agency will conduct a review to 

determine if the applicant and project 

are eligible, and if the application is 

complete and sufficiently responsive to 

program requirements. 

(b) Notifications. After the review in 

paragraph (a) of this section has been 

conducted, the Agency will notify the 

applicant in writing of the Agency’s 

findings. If the Agency has determined 

that either the applicant or project is 

ineligible or that the application is not 

complete to allow evaluation of the 

application or sufficiently responsive to 

program requirements, it will include in 

the notification the reason(s) for its 

determination(s). 

(c) Resubmittal by applicants. 

Applicants may submit revised 

applications to the Agency in response 

to the notification received under 

paragraph (b) of this section. If a revised 

grant application is received on or 

before the application deadline, it will 

be processed by the Agency. If such 

revised applications are not received by 

the specified application deadline, the 

Agency will not process the application 

and will inform the applicant that their 

application was not reviewed due to 

tardiness. 

(d) Subsequent ineligibility 

determinations. If at any time an 

application is determined to be 

ineligible, the Agency will notify the 

applicant in writing of its 

determination. 

§ 4284.941 Application withdrawal. 

During the period between the 

submission of an application and the 

execution of award documents, the 

applicant must notify the Agency in 

writing if the project is no longer viable 

or the applicant no longer is requesting 

financial assistance for the project. 

When the applicant so notifies the 

Agency, the selection will be rescinded 

or the application withdrawn. 

§ 4284.942 Proposal evaluation criteria 

and scoring applications. 

(a) General. The Agency will only 

score applications for which it has 

determined that the applicant and 

project are eligible, the application is 

complete and sufficiently responsive to 

program requirements, and the project is 

likely feasible. Any applicant whose 

application will not be reviewed 

because the Agency has determined it 

fails to meet the preceding criteria will 

be notified of appeal rights pursuant to 

§ 4284.903. Each such application the 

Agency receives on or before the 

application deadline in a fiscal year will 

be scored in the fiscal year in which it 

was received. Each application will be 

scored based on the information 

provided and/or referenced in the 

scoring section of the application at the 

time the applicant submits the 

application to the Agency. 

(b) Scoring applications. The 

maximum number of points that will be 

awarded to an application is 100, plus 

an additional 10 points if the project is 

located in a rural area. The criteria 

specified in paragraphs (b)(1) through 

(7) of this section will be used to score 

each application. The Agency will 

specify how points are awarded for each 

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criterion in a Notice published each 

fiscal year. 

(1) Nature of the proposed project 

(maximum 25 points). 

(2) Personnel qualifications 

(maximum 20 points). 

(3) Commitments and support 

(maximum 10 points). 

(4) Work plan/budget (maximum 20 

points). 

(5) Type of applicant (maximum 15 

points). 

(6) Administrator priority categories 

and points (maximum 10 points). 

(7) Rural or rural area location (10 

points may be awarded). 

§§ 4284.943–4284.949 [Reserved] 

Section F—Grant Awards and 

Agreement 

§ 4284.950 Award process. 

(a) Selection of applications for 

funding and for potential funding. The 

Agency will select and rank 

applications for funding based on the 

score an application has received in 

response to the proposal evaluation 

criteria, compared to the scores of other 

value-added applications received in 

the same fiscal year. Higher scoring 

applications will receive first 

consideration for funding. The Agency 

will notify applicants, in writing, 

whether or not they have been selected 

for funding. For those applicants not 

selected for funding, the Agency will 

provide a brief explanation for why they 

were not selected. 

(b) Ranked applications not funded. A 

ranked application that is not funded in 

the fiscal year in which it was submitted 

will not be carried forward into the next 

fiscal year. The Agency will notify the 

applicant in writing. 

(c) Intergovernmental review. If State 

or local governments raise objections to 

a proposed project under the 

intergovernmental review process that 

are not resolved within 90 days of the 

Agency’s award announcement date, the 

Agency will rescind the award and will 

provide the applicant with a written 

notice to that effect. The Agency, in its 

sole discretion, may extend the 90-day 

period if it appears resolution is 

imminent. 

§ 4284.951 Grant agreement. 

(a) Letter of conditions. When a grant 

is obligated subject to conditions 

established by the Agency, the Agency 

will notify, in writing, each applicant 

whose application has been selected for 

funding using a Letter of Conditions, 

which defines the conditions under 

which the grant will be made. If the 

applicant agrees with the conditions, 

the applicant must complete, sign, and 

return the Agency’s ‘‘Letter of Intent to 

Meet Conditions.’’ If the applicant 

believes that certain conditions cannot 

be met, the applicant may propose 

alternate conditions to the Agency. The 

Agency must concur with any proposed 

changes to the Letter of Conditions by 

the applicant before the application will 

be further processed. If the Agency 

agrees to any proposed changes, the 

Agency will issue a revised or amended 

Letter of Conditions that defines the 

final conditions under which the grant 

will be made. 

(b) Grant agreement and conditions. 

Each grantee will be required to meet all 

terms and conditions of the award 

within 90 days of receiving a Letter of 

Conditions unless otherwise specified 

by the Agency at the time of award. 

Each grantee will also be required to 

sign a grant agreement that outlines the 

approved use of funds and actions 

under the award, as well as the 

restrictions and applicable laws and 

regulations that pertain to the award. 

(c) Grant disbursements. Grant 

disbursement will be made in 

accordance with the Letter of 

Conditions, and/or the grant agreement, 

as applicable. Adequate supporting 

documentation is required for all 

disbursements. 

§§ 4284.952–4284.959 [Reserved] 

Section G—Post Award Activities and 

Requirements 

§ 4284.960 Monitoring and reporting 

program performance. 

The requirements specified in this 

section shall apply to grants made under 

this subpart. 

(a) Grantees are responsible to expend 

funds only for eligible purposes and 

will be monitored by Agency staff for 

compliance. Grantees must maintain a 

financial management system, and 

property and procurement standards in 

accordance with Departmental 

Regulations. 

(b) Grantees must submit prescribed 

narrative and financial performance 

reports that include a comparison of 

accomplishments with the objectives 

stated in the application. The Agency 

will prescribe both the narrative and 

financial report formats in the grant 

agreement. 

(1) Semi-annual performance reports 

shall be submitted within 30 days 

following March 31 and September 30 

each fiscal year. A final performance 

report shall be submitted to the Agency 

within 90 days of project completion. 

Failure to submit a performance report 

within the specified timeframes may 

result in the Agency withholding grant 

funds. 

(2) Additional reports shall be 

submitted as specified in the grant 

agreement or Letter of Conditions, or as 

otherwise provided in a notification 

issued under § 4284.915. 

(3) Copies of supporting 

documentation and/or project 

deliverables for completed tasks must be 

provided to the Agency in a timely 

manner in accord with the development 

or completion of materials and in 

conjunction with the budget and project 

timeline. Examples include, but are not 

limited to, a feasibility study, marketing 

plan, business plan, success story, or 

best practice. 

(4) The Agency may request any 

additional project and/or performance 

data for the project for which grant 

funds have been received. 

§ 4284.961 Grant servicing. 

All grants awarded under this subpart 

shall be serviced in accordance with 7 

CFR part 1951, subparts E and O, and 

the Departmental Regulations. 

§ 4284.962 Transfer of obligations. 

An obligation of funds established for 

an applicant may be transferred to a 

different (substituted) applicant 

provided: 

(a) The substituted applicant: 

(1) Is eligible; 

(2) Has a close and genuine 

relationship with the original applicant; 

and 

(3) Has the authority to receive the 

assistance approved for the original 

applicant; and 

(b) The need, purpose(s), and scope of 

the project for which the Agency funds 

will be used remain substantially 

unchanged. 

§ 4284.963 Grant close out and related 

activities. 

In addition to the requirements 

specified in the Departmental 

regulations, failure to submit 

satisfactory reports on time under the 

provisions of § 4284.970(b) may result 

in the suspension or termination of a 

grant. 

§§ 4284.964–4284.999 [Reserved] 

Dated: May 21, 2010. 

Pandor H. Hadjy, 

Acting Administrator, Rural BusinessCooperative Service. 

[FR Doc. 2010–12731 Filed 5–27–10; 8:45 am] 

BILLING CODE 3410–XY–P 

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