61198 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

DEPARTMENT OF AGRICULTURE 

Rural Utilities Service 

Rural Business-Cooperative Service 

Rural Housing Service 

7 CFR Parts 1703, 1780, 3570, 4280, 

4284, and 5002 

RIN 0570–AA68 

Rural Development Grants 

AGENCIES: Rural Business-Cooperative 

Service, Rural Housing Service, and 

Rural Utilities Service, USDA. 

ACTION: Proposed rule. 

SUMMARY: Rural Development, a mission 

area within the U.S. Department of 

Agriculture, is proposing a unified grant 

platform for enhanced delivery of eight 

existing Rural Development grant 

programs—Community Facility; 

Distance Learning and Telemedicine; 

Economic Impact Initiatives; Renewable 

Energy Systems and Energy Efficiency 

Improvement Projects; Rural 

Cooperative Development; Tribal 

College; Value-Added Producer; and 

Water and Waste Disposal Facilities. 

This proposed rule would eliminate or 

revise the grant regulations for the eight 

existing programs and consolidate them 

under a new, single regulation. 

DATES: Comments on the proposed rule 

must be received on or before December 

15, 2008. The comment period for the 

information collection under the 

Paperwork Reduction Act of 1995 

continues through December 15, 2008. 

ADDRESSES: You may submit comments 

to this rule by any of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Submit 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 

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: Mr. 

Michael Foore, Rural Development, 

Business and Cooperative Programs, 

U.S. Department of Agriculture, 1400 

Independence Avenue, SW., Stop 3201, 

Washington, DC 20250–3201; e-mail: 

Michael.Foore@wdc.usda.gov; telephone 

(202) 690–4730. 

SUPPLEMENTARY INFORMATION: 

Executive Order 12866 

This proposed rule has been reviewed 

under Executive Order (EO) 12866 and 

has been determined to be 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 qualitative 

benefit-cost analysis to fulfill the 

requirements of Executive Order 12866. 

The Agency has identified potential 

benefits to the prospective grantee and 

to the Agency. These benefits are 

associated with the increase in program 

transparency, Administrative flexibility, 

and increased efficiency in delivering 

the programs. While unable to quantify 

any costs or benefits associated with 

this rulemaking, the agency believes 

that the overall effect of the rule may be 

beneficial. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act 1995 (UMRA) of Public Law 

104–4 establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on State, local, 

and tribal governments and the private 

sector. Under section 202 of the UMRA, 

Rural Development generally must 

prepare a written statement, including a 

cost-benefit analysis, for proposed and 

final rules with ‘‘Federal mandates’’ that 

may result in expenditures to State, 

local, or tribal governments, in the 

aggregate, or to the private sector of 

$100 million or more in any one year. 

When such a statement is needed for a 

rule, section 205 of UMRA generally 

requires Rural Development to identify 

and consider a reasonable number of 

regulatory alternatives and adopt the 

least costly, more cost-effective, or least 

burdensome alternative that achieves 

the objectives of the rule. 

This 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. 

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. Grant applications will be 

reviewed individually to determine 

compliance with NEPA. 

Executive Order 12988, Civil Justice 

Reform 

This proposed rule has been reviewed 

under Executive Order 12988, Civil 

Justice Reform. In accordance with this 

rule: (1) All State and local laws and 

regulations that are in conflict with this 

rule will be preempted; (2) no 

retroactive effect will be given this rule; 

and (3) administrative proceedings in 

accordance with the regulations of the 

Department of Agriculture’s National 

Appeals Division (7 CFR part 11) must 

be exhausted before bringing suit in 

court challenging action taken under 

this rule unless those regulations 

specifically allow bringing suit at an 

earlier time. 

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. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601–602) (RFA) 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 unless the agency certifies 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61199 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. 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. Rural 

Development made this determination 

based on the fact that this regulation 

only impacts those who choose to 

participate in the program. Small entity 

applicants will not be affected to a 

greater extent than large entity 

applicants. 

Executive Order 12372, 

Intergovernmental Review of Federal 

Programs 

Rural Development grants are subject 

to the Provisions of Executive Order 

12372, which require intergovernmental 

consultation with State and local 

officials. Rural Development will 

conduct intergovernmental consultation 

in the manner delineated in 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. 

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. 

Programs Affected 

The Catalog of Federal Domestic 

Assistance Program numbers assigned to 

this program are 10.766, Community 

Facilities Loans and Grants; 10.855, 

Distance Learning and Telemedicine 

Loans and Grants; 10.766, Economic 

Impact Initiatives Grants; 10.775, 

Renewable Energy Systems and Energy 

Efficiency Improvements Program; 

10.771, Rural Cooperative Development 

Grants; 10.352, Value-Added Producer 

Grants; and 10.760, Water and Waste 

Disposal Loans and Grants (Section 

306a); and 10.221, Tribal College 

Educational Equity Grants. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995, Rural 

Development will seek OMB approval of 

the reporting and recordkeeping 

requirements contained in this proposed 

rule and hereby opens a 60-day public 

comment period. 

Title: Rural Development Grants. 

Type of Request: New collection. 

Abstract: Rural Development is 

implementing a new consolidated grant 

platform. The new grant platform would 

combine the following existing grant 

regulations into a consolidate rule: (1) 

The Community Facility Program, (2) 

the Distance Learning and Telemedicine 

Program; (3) the Economic Impact 

Initiatives Program; (4) the Rural 

Cooperative Development Program, (5) 

the Tribal College Grant Program, (6) the 

Value-Added Producer Program, (7) the 

Water and Waste Disposal Facilities 

Program, and (8) the Renewable Energy 

Systems and Energy Efficiency 

Improvement Program (now known as 

the Rural Energy for America program). 

These programs provide grants for a 

variety of projects intended to assist and 

improve rural America. 

The information required under the 

proposed rule is similar to much of the 

information currently being required 

under the separate regulations. Under 

these separate regulations, the current 

information being collected is approved 

under OMB control numbers as follows: 

0570–0006 (Rural Cooperative 

Development Grants). 

0570–0039 (Value-Added Producer 

Grants). 

0570–0050 (Renewable Energy 

Systems and Energy . Efficiency 

Improvement Grants). 

0572–0096 (Distance Learning and 

Telemedicine). 

0572–0121 (Water and Waste Loan and 

Grant Program). 

0575–0173 (Community Facilities 

Grants). 

The proposed rule creates a single set 

of common forms that applicants can 

use across all eight programs, thereby 

creating efficiencies in reporting. 

The collection of information is vital 

to Rural Development to make wise 

decisions regarding the eligibility of 

projects and applicants in order to 

ensure compliance with the regulations 

and to ensure that the funds obtained 

from the Government are used 

appropriately (i.e., being used for the 

purposes for which the grant funds were 

awarded). In sum, this collection of 

information is necessary in order to 

implement the consolidated grant 

regulation being proposed. 

The following estimates are based on 

the average over the first three years the 

program is in place. 

Estimate of Burden: Public reporting 

burden for this collection of information 

is estimated to average 4.8 hours per 

response. 

Respondents: Rural developers, 

farmers and ranchers, rural businesses, 

public bodies, local governments, 

institutions of higher learning, hospitals 

and medical facilities, Indian tribes, 

agricultural producers groups, farmer 

and rancher cooperatives, independent 

producers, majority controlled 

producer-based businesses, private 

corporations, non-profit organizations, 

rural electric cooperatives, public power 

entities, faith-based organizations, and 

incorporated organizations and 

partnerships. 

Estimated Number of Respondents: 

2.045. 

Estimated Number of Responses per 

Respondent: 4.8. 

Estimated Number of Responses: 

24,650. 

Estimated Total Annual Burden 

(hours) on Respondents: 118,802. 

Copies of this information collection 

may be obtained from 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 or by 

calling (202) 692–0043. 

Comments 

Comments are invited on: (a) Whether 

the proposed collection of information 

is necessary for the proper performance 

of the functions of Rural Development, 

including whether the information will 

have practical utility; (b) the accuracy of 

the new Rural Development estimate of 

the burden of the proposed collection of 

information, including the validity of 

the methodology and assumptions used; 

(c) ways to enhance the quality, utility, 

and clarity of the information to be 

collected; and (d) ways to minimize the 

burden of the collection of information 

on those who are to respond, including 

through the use of appropriate 

automated, electronic, mechanical, or 

other technological collection 

techniques or other forms of information 

technology. Comments may be sent to 

Cheryl Thompson, Regulations and 

Paperwork Management Branch, U.S. 

Department of Agriculture, Rural 

Development, STOP 0742, 1400 

Independence Ave., SW., Washington, 

DC 20250. All responses to this 

proposed rule will be summarized and 


sroberts on PROD1PC70 with PROPOSALS
61200 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

included in the request for OMB 

approval. All comments will also 

become a matter of public record. 

E-Government Act Compliance 

Rural Development is committed to 

complying with the E-Government Act, 

to promote the use of the Internet and 

other information technologies to 

provide increased opportunities for 

citizen access to Government 

information and services, and for other 

purposes. 

I. Background 

Rural Development proposes a unified 

platform for delivery of eight existing 

Rural Development grant programs— 

Community Facility; Distance Learning 

and Telemedicine; Economic Impact 

Initiatives; Renewable Energy Systems 

and Energy Efficiency Improvement 

Projects (now known as the Rural 

Energy for America program); Rural 

Cooperative Development; Value-Added 

Producer; Water and Waste Disposal 

Facilities; and Tribal College. These 

programs are administered by the Rural 

Housing Service (Community Facilities, 

Economic Impact Initiatives, Tribal 

Grants), Rural Utilities Service (Distance 

Learning and Telemedicine, Water and 

Waste Disposal Facilities), and Rural 

Business-Cooperative Service (Rural 

Cooperative Development, Value-Added 

Producer, Rural Energy for America). 

Collectively, Rural Development’s 

programs work together to assist in 

building and maintaining entire, 

sustainable rural communities. 

For the reasons cited below, the 

Agency is proposing to incorporate eight 

of its 39 existing grant programs into 

this proposed new platform. 

First. In selecting grant programs for 

inclusion in the proposed consolidated 

grant program, the Agency’s two 

principal priorities are to include (1) 

grant programs associated with 

programs being included in the 

consolidated guaranteed loan rule and 

(2) grant programs that are 

representative of both State-allocated 

grant programs and nationally-competed 

grant programs, which are the two main 

types of grant programs administered by 

Rural Development. 

As such, three of the seven grant 

programs are being proposed for 

inclusion because their guaranteed loan 

programs are being included in the 

Agency’s new guaranteed loan program 

consolidating four of the Agency’s 

guaranteed loan programs. These three 

programs are: Community Facilities, 

Water and Waste Disposal, and Rural 

Energy for America. 

The Community Facilities and Water 

and Waste Disposal grant programs are 

both State-allocated grant programs, 

while the Rural Energy for America 

grant program is a nationally-competed 

grant program. To ‘‘round these out,’’ 

the Agency is proposing to add three 

additional nationally-competed grant 

programs—Rural Cooperative 

Development grants, Value-Added 

Producer grants, and Distance Learning 

and Telemedicine grants. 

The Agency is proposing to include 

the Economic Impact Initiative grant 

program because it is administered 

under the same regulation as 

Community Facilities. 

Second. The Agency is proposing to 

include Tribal College grants. As 

mentioned elsewhere in this preamble, 

the Tribal College grants program is 

neither a State-allocated or nationallycompeted grant program. However, it 

does rely on portions of the Community 

Facilities grant program for its 

administration requirements. Because 

the proposed rule would eliminate the 

Community Facilities grant rule once 

the proposed rule is finalized, the Tribal 

College grant program would no longer 

have a grant regulation for its 

administration. Thus, the Agency was 

faced with two options—incorporate the 

Tribal College grant program into the 

proposed rule or develop a new 

regulation specific to Tribal College 

grants. The Agency believes that it 

makes more sense to include Tribal 

College grants in the new rule, then to 

develop a completely separate 

regulation for that one specific grant 

program. 

As noted later in this preamble, the 

Agency is seeking specific comment on 

the grant programs being proposed for 

inclusion in the consolidated grant rule. 

Please see section II.C of this preamble. 

The purpose of this proposed rule is 

to initiate the process of developing a 

single regulation covering all grant 

programs of the Rural Development 

Mission Area. Given the logistical and 

administrative challenges for the 

Agency and the stakeholders associated 

with such a consolidation, the Agency 

has decided to conduct this effort in 

stages. The proposed rule represents the 

first stage of this process. In this 

proposed rule stage the Agency selected 

grant programs to be included that: (1) 

Represented a cross section of the 

Agency’s grant programs to ensure that 

the single regulatory platform being 

developed would be flexible enough the 

accommodate all of the Agency’s grant 

programs; (2) corresponded to the loan 

guarantee programs that are covered by 

the regulatory consolidation taking 

place with respect to the Agency’s loan 

guarantee programs (see 7 FR 52618, 

September 14, 2007); and (3) allowed 

whole regulatory parts of the current 

program regulations to be deleted. 

After the Agency has the opportunity 

to determine the success of this initial 

phase of this regulatory consolidation 

effort, the Agency will decide whether 

it would be appropriate to continue to 

the next phase of incorporating 

additional grant programs into this 

regulatory platform and the schedule for 

the next phase. A key assumption the 

Agency has made in deciding to initiate 

the process of consolidating these 

regulations is that the platform is 

flexible enough to accommodate all of 

the various grant programs of the Rural 

Development Mission Area. Therefore, 

the Agency’s decision to move forward 

to the next phase of this effort and to 

add the regulations of new grant 

programs to this platform will hinge on 

the degree the rulemaking process of 

this proposed rule either supports or 

challenges this assumption. 

Under the unified grant platform, 

Rural Development will simplify, 

improve, and enhance the delivery of 

these grant programs across their service 

areas. The remainder of this section 

describes Rural Development’s mission, 

the eight grant programs being aligned 

under the new platform, why the new 

platform is being proposed, and how the 

new platform will work. 

A. Rural Development’s Mission 

By statutory authority, Rural 

Development is the leading Federal 

advocate for rural America, 

administering a multitude of programs, 

ranging from housing and community 

facilities to infrastructure and business 

development. Its mission is to increase 

economic opportunity and improve the 

quality of life in rural communities by 

providing the leadership, infrastructure, 

venture capital, and technical support 

that enables rural communities to 

prosper and supports them in the 

dynamic global environment defined by 

the Internet revolution, and the rise of 

new technologies, products, and 

markets. 

To achieve its mission, Rural 

Development provides financial support 

(including direct loans, grants, and loan 

guarantees) and technical assistance to 

help enhance the quality of life and 

provide the foundation for economic 

development in rural areas. To improve 

the delivery of this financial support for 

all of its programs and thereby enhance 

its mission, Rural Development in 

February 2006 initiated the Delivery 

Enhancement Task Force (DET). The 

DET is working to develop consolidated 

program delivery platforms. 

This proposed rulemaking presents 

the Agency’s proposed consolidated 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61201 

grant platform. The Agency has already 

published a proposed rule in support of 

its unified guaranteed loan platform, 

which was published in the Federal 

Register on September 14, 2007 (72 FR 

52618). 

B. Current Grant Programs 

The following paragraphs describe 

briefly the scope of each of the current 

programs with regard to eligible projects 

and applicants. 

Community Facilities Grant Program. 

The Community Facilities grant 

program provides grants to develop 

essential community facilities in rural 

areas. However, eligible utility-type 

service facilities, such as 

telecommunications and hydroelectric, 

that serve both rural and non-rural areas 

can be located in either rural or nonrural areas. Grant funds may be used to 

construct, enlarge, or improve 

community facilities for health care, 

public safety, and public services. This 

can include costs to acquire land 

needed for a facility, pay necessary 

professional fees, and purchase 

equipment required for its operation. 

Eligible applicants for community 

facilities grants are public bodies, such 

as municipalities, counties, districts 

authorities, or other political 

subdivisions of a State; non-profit 

corporations and associations, and 

Federally-recognized tribes. Further, 

applicants must have the legal authority 

to own, construct, operate, and maintain 

the proposed facility. 

The amount of grant assistance 

provided under this program must be 

the minimum amount sufficient for 

feasibility which will provide for 

facility operation and maintenance, 

reasonable reserves, and debt 

repayment. As statutorily required, 

grants may be made up to 75 percent of 

the cost of developing essentially 

community facilities. Recently, these 

grants have averaged $29,916, which is 

approximately 7 percent of the average 

costs of the projects that the grants are 

funding. 

Economic Impact Initiatives Grant 

Program. This program is administered 

under the same regulations as the 

Community Facilities grant program, 

but provides grants to rural 

communities with extreme 

unemployment and severe economic 

depression. In addition, the essential 

community facility must be located in a 

rural community where the ‘‘not 

employed rate’’ is greater than the 

percentage specified in section 

306(a)(20) of the Consolidated Farm and 

Rural Development Act (7 U.S.C. 

1926(a)(20)(B)). (The ‘‘not employed 

rate’’ is the percentage of individuals 

over the age of 18 who reside within the 

community and who are ready, willing, 

and able to be employed but are unable 

to find employment, as determined by 

the department of labor of the State in 

which is the community is located.) 

Notwithstanding the above, eligible 

applicants are otherwise the same as 

under the Community Facilities grant 

program. Eligible projects are also the 

same as under the Community Facilities 

grant program. 

Under this program, the minimum 

grant amount awarded is that amount 

needed to achieve financial feasibility 

for the project. Recently, these grants 

have averaged $42,890, which is 

approximately 19 percent of the average 

costs of the projects that the grants are 

funding. 

Tribal College Grant Program. The 

Tribal College grant program is designed 

to enhance educational opportunities at 

the Tribal colleges and universities 

designated as the 1994 Land-Grant 

Institutions (1994 Institutions) by 

strengthening their educational 

programs. The program provides 

funding for essential community 

facilities and equipment for the Tribal 

colleges and universities. 

To be eligible to receive a grant under 

this program, the applicant must be one 

of the Tribal colleges or universities 

designated as the 1994 Institutions. 

Grant funds are disbursed in an attempt 

to provide an equal distribution of funds 

to each of the 1994 Institutions when 

possible. Recently, these grants have 

averaged $572,837, which is 

approximately 32 percent of the average 

costs of the projects that the grants are 

funding. 

Distance Learning and Telemedicine 

Grant Program. The purpose of the 

Distance Learning and Telemedicine 

(DLT) Loan and Grant program is to 

encourage and improve telemedicine 

services and distance learning services 

in rural areas through the use of 

telecommunications, computer 

networks, and related advanced 

technologies by students, teachers, 

medical professionals, and rural 

residents. 

To be eligible to receive a grant under 

this program, the applicant must be 

legally organized as an incorporated 

organization or partnership, an Indian 

tribe or tribal organization, as defined in 

25 U.S.C. 450b (b) and (c), a state or 

local unit of government, a consortium, 

as defined in § 1703.102, or other legal 

entity, including a private corporation 

organized on a for profit or not-for profit 

basis. In addition, each applicant must 

provide written evidence of its legal 

capacity to contract with the Agency to 

obtain the grant, loan and grant 

combination, or the loan, and comply 

with all applicable requirements. If a 

consortium lacks the legal capacity to 

contract, each individual entity must 

contract with the Agency in its own 

behalf. 

As implemented by the program 

office, an applicant is responsible for 

providing at least 15 percent of the grant 

amount requested and the minimum 

amount of a grant under this program is 

$50,000. Recently, these grants have 

averaged $294,950, which is 

approximately 60 percent of the average 

costs of the projects that the grants are 

funding. 

Renewable Energy Systems and 

Energy Efficiency Improvement Grant 

Program. The current Renewable Energy 

Systems and Energy Efficiency 

Improvement grant program provides 

grants for the purchase and installation 

of renewable energy systems and energy 

efficiency improvements. Eligible 

applicants are farmers, ranchers, and 

rural small businesses who can 

demonstrate financial need, as 

determined by the Agency. 

The amount of the grant made 

available to an eligible project cannot 

exceed 25 percent of total eligible 

project costs, as required by the 

authorizing statute. Currently, the 

program office sets the minimum 

amount of a grant at $2,500 and the 

maximum amount at $500,000 for 

renewable energy systems and $2,500 

and $250,000, respectively, for energy 

efficiency improvement projects. Unlike 

the 25 percent limitation, these 

minimum and maximum grant amounts 

are not statutorily specified, but are set 

by the Agency in implementing the 

program. Recently, these grants have 

averaged $35,703, which is 

approximately 17 percent of the average 

costs of the projects that the grants are 

funding. 

Rural Cooperative Development Grant 

Program. The Rural Cooperative 

Development grant program provides 

grants for the development or 

continuation of the cooperative 

development center concept. Grant 

funds and matching funds may be used 

for, but are not limited to, providing the 

following to individuals, cooperatives, 

small businesses and other similar 

entities in rural areas served by the 

Center: 

• Applied research, feasibility, 

environmental and other studies that 

may be useful for the purpose of 

cooperative development. 

• Collection, interpretation and 

dissemination of principles, facts, 

technical knowledge, or other 

information for the purpose of 

cooperative development. 


sroberts on PROD1PC70 with PROPOSALS
61202 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

• Providing training and instruction 

for the purpose of cooperative 

development. 

• Providing loans and grants for the 

purpose of cooperative development in 

accordance with the annual Notice of 

Solicitation of Applications and 

applicable regulations. 

• Providing technical assistance, 

research services and advisory services 

for the purpose of cooperative 

development. 

Applicants eligible for rural 

cooperative development grants are 

non-profit organizations and 

institutions, including institutions of 

higher education. Public bodies are not 

eligible to receive grants. 

Under the current Rural Cooperative 

Development grant regulation, grant 

funds may be used to pay up to 75 

percent (95 percent where the grantee is 

a 1994 Institution) of the cost of 

establishing and operating centers for 

rural cooperative development. 

Applicants must verify in their 

application that all matching funds are 

available for the time period of the 

grant. Recently, these grants have 

averaged $189,000, which is 

approximately 58 percent of the average 

costs of the projects that the grants are 

funding. 

Value-added Producer Grant 

Program. The purpose of this program is 

to provide grants to enable producers to 

develop businesses that produce and 

market value-added agricultural 

products, including the development of 

strategies, creation of marketing 

opportunities, and development of 

business plans. The program 

distinguishes between planning grants 

and working capital grants. Grant funds 

for planning grants may be used for 

such purposes as, but not necessarily 

limited to: Obtaining legal advice and 

assistance; conducting a feasibility 

study; developing a business plan; and 

developing a marketing plan. Grant 

funds for working capital grant may be 

used for such purposes as, but not 

necessarily limited to: Designing or 

purchasing an accounting system, 

paying for salaries, utilities, and rental 

office space; and purchasing inventory, 

office equipment, and office supplies. 

Applicants eligible for grants under 

this program are independent 

producers, agricultural producer groups, 

farmer or rancher cooperatives, and 

majority-controlled producer-based 

business ventures. Except for 

independent producers, all other 

applicants must be entering an emerging 

market in order to be eligible. 

As required by its authorizing statute, 

grant funds may be used to pay up to 

50 percent of the costs for carrying out 

eligible projects. Recently, these grants 

have averaged $150,000, which is 

approximately 50 percent of the average 

costs of the projects that the grants are 

funding. 

Water and Waste Disposal Facilities 

Grant Program. The Water and Waste 

Disposal Facilities grant program 

provides grants to develop water and 

wastewater systems, including solid 

waste disposal and storm drainage, in 

rural areas and to cities and towns with 

a population of 10,000 or less. Example 

projects include construction of water 

lines, pumping stations, wells, storage 

tanks, and sewage treatment facilities. 

Eligible applicants for water and 

waste disposal facilities grants are 

public bodies, such as municipalities, 

counties, districts authorities, or other 

political subdivisions of a State, 

territory, or commonwealth; non-profit 

organizations, such as corporations and 

associations; Indian tribes on Federal 

and State reservations or other federallyrecognized Indian tribes. Further, 

applicants must have the legal authority 

to own, construct, operate, and maintain 

the proposed facility. 

As required by its authorizing statute, 

grant funds are limited to no more than 

75 percent of the Agency eligible project 

development costs. As implemented by 

the program office, grant funds are 

limited to: (1) No more than 75 percent 

of the Agency eligible project 

development costs when the median 

household income of the service area is 

below the higher of the poverty line or 

80 percent of the state non-metropolitan 

median income and the project is 

necessary to alleviate a health or 

sanitary problem and (2) no more than 

45 percent of the Agency eligible project 

development costs when the median 

household income of the service area 

exceeds 80 percent of the state nonmetropolitan median income but is not 

more than 100 percent of the statewide 

non-metropolitan median household 

income. Recently, these grants have 

averaged $663,190, which is 

approximately 20 percent of the average 

costs of the projects that the grants are 

funding. 

How the Current Programs Work 

The grant programs being included in 

today’s proposed rulemaking have many 

similarities, with a few major 

differences. A major difference between 

seven of the eight grant programs is 

whether the grant program is 

administered as a Nationally-competed 

grant program or a State-allocated grant 

program. The eighth grant program, 

Tribal College grants, is a program with 

a small statutorily defined set of 

beneficiaries. 

The following paragraphs provide an 

overview of how the Nationallycompeted and State-allocated grant 

programs are currently implemented. 

Nationally-competed grant programs. 

The following paragraphs describe how 

the Agency currently administers its 

nationally-competed grant programs, 

four of which are being consolidated 

under this proposed rule—Distance 

Learning and Telemedicine, Renewable 

Energy Systems and Energy Efficiency 

Improvement (now known as the Rural 

Energy for America Program), Rural 

Cooperative Development, and Valueadded Producer. 

As it currently administers its 

nationally-competed grant programs, the 

Agency typically publishes a Federal 

Register notice announcing that it is 

accepting applications for the program, 

either as a Notice of Solicitation of 

Application (NOSA) or a Notice of 

Funding Availability (NOFA). The 

primary purpose of this notice is to alert 

the public to the opening of a period 

during which the Agency will accept 

applications for the program. This 

creates a ‘‘window’’ for submitting 

applications. 

The amount and type of information 

contained in these NOSAs and NOFAs 

varies from program to program and 

may vary greatly year to year. Most 

notices include information on 

applicant and project eligibility, 

application submittal and content 

requirements, minimum and/or 

maximum grant amounts, and project 

priority categories and scoring. 

Under the current administration of 

the nationally-competed grant programs, 

applications are either submitted to a 

Rural Development State Office or to the 

Rural Development National Office, 

depending on the program, for review, 

evaluation, and scoring. For most of the 

nationally-competed grant programs, the 

applicant will receive a letter from the 

Agency acknowledging receipt and 

confirmation that a full application was 

received. If an incomplete application is 

received, the Agency notifies, for some 

nationally-competed grant programs, the 

applicant as to what information is 

missing and the applicant has a set 

period of time in which to provide the 

missing information. For other 

nationally-competed grant programs, 

however, if an incomplete application is 

received, the Agency does not go back 

to the applicant for the missing 

information. This is done because some 

nationally-competed grant programs 

receive a sufficient number of complete 

applications to use all of the funds in a 

fiscal year and, accordingly, the Agency 

does not pursue incomplete 

applications. If this is the situation, the 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61203 

NOSA or NOFA indicates this to the 

public. 

As noted above, the nationallycompeted grant programs provide a 

window for which applications are 

accepted. This results generally in a one 

time review and then scoring and 

ranking of applications. As currently 

implemented, the Agency reviews an 

application upon its receipt to 

determine whether the applicant and 

project are eligible for that program. If 

the Agency determines that the 

applicant and/or project are ineligible, 

the Agency notifies the applicant of 

such determination. Applications that 

are determined to be eligible are scored 

and ranked by National Office program 

staff. Depending on the nationallycompeted grant program, independent 

reviewers may be used to evaluate and 

score applications. In addition, the 

nationally-competed grant programs 

currently limit the Administrator’s 

discretionary points that can be 

included in the scoring of applications 

to 10 percent or less of the total 

potential points that an application can 

score. 

Based on this pool of applications, a 

nationally-competed grant program’s 

National Office selects applications for 

funding. Applicants that are not 

selected due to a low priority rating are 

notified. The Agency then proceeds to 

work with the applicants selected for 

funding in order to make awards by the 

end of the Federal fiscal year. 

In currently administering its 

nationally-competed grant programs, the 

Agency begins the process of obligating 

funds and making awards (disburse the 

grant) by sending the applicant a letter 

of conditions that must be agreed to 

before the Agency and the grantee enter 

into a binding agreement, such as a 

grant agreement. 

Once the Agency has initiated funds 

disbursement, it monitors the grantee to 

ensure conformance with the terms and 

conditions of the grant agreement. 

Depending on the nationally-competed 

grant program, the grantee is currently 

required to submit reports to the Agency 

during the grant period. Once the 

project has been completed, the Agency 

closes out the grant. If a grantee violates 

the terms and conditions of the grant 

agreement, the Agency takes appropriate 

steps, including, depending on the 

severity of the violation, the suspension 

or termination of the agreement. 

State-allocated grant programs. These 

paragraphs describe how the Agency 

currently administers its State-allocated 

grant programs, three which are being 

consolidated under this proposed rule— 

Community Facilities, Economic Impact 

Initiatives, and Water and Waste 

Disposal Facilities. In contrast to the 

Nationally-competed grant programs, 

the Agency typically does not publish 

Federal Register (FR) notices for its 

State-allocated programs, but instead 

relies on other methods for alerting the 

public to the programs and the 

submittal of applications. In addition, 

the Agency tends to accept applications 

for State-allocated grant programs at any 

point during the course of the year. 

Using Community Facilities (and the 

Economic Impact Initiatives) as an 

example of how the Agency currently 

implements a State-allocated grant 

program, applicants file a 

preapplication with requisite 

documentation and supporting 

information to the Rural Development 

field office. The Rural Development 

field office then reviews the package for 

completeness of the documentation and 

for applicant and project eligibility. If 

needed, the Rural Development field 

office will request the opinion of the 

Office of General Counsel on the 

applicant’s legal existence and authority 

to perform the proposed project. 

As currently being administered, the 

Rural Development field office submits 

a copy of the application package to the 

Rural Development State Office with a 

letter of recommendation. The Rural 

Development State Office reviews the 

package and notifies the Rural 

Development field office of its findings. 

If an application is determined to be 

ineligible, the Rural Development field 

office notifies the applicant, who has 

the right of appeal. 

If an application is determined to be 

eligible, the Rural Development field 

office provides the applicant with the 

necessary forms and instructions for 

filing a complete application. For 

example, the Community Facilities 

program requires Form SF 424, a 

preliminary architecture report, a 

financial feasibility report, and 

environmental information. If the 

project is small, the architectural and 

financial feasibility reports may not be 

required. 

If there is a concern (e.g., incomplete, 

not properly assembled) with the 

application, the Rural Development 

field office will notify the applicant as 

to what information is needed. If the 

applicant fails to submit a complete 

application by the date specified by the 

Rural Development State Office or in an 

otherwise timely manner, the Agency 

may discontinue processing the 

application. If the application is 

complete, the Agency will notify the 

applicant as to eligibility and 

anticipated availability of funds. 

Completed applications returned to 

the Rural Development field office are 

evaluated. The Rural Development field 

office reviews the application package 

for the amount of grant funds allowed 

and scores the application for selection 

priority. As currently implemented, 

applications may also receive 

discretionary points from the State 

Director. 

Generally, the Rural Development 

State Office authorizes grant assistance 

to those eligible applicants with the 

highest priority score. Other factors, 

however, may enter into selecting 

applications for funding including the 

amount of funding being requested 

relative to available funds and whether 

the application is for the continuation of 

a project. Applicants who are eligible 

for funding, but cannot be funded due 

to lack of Agency funds are advised by 

the State Office that grant assistance is 

not available. If, based upon the 

application, it appears that funds will be 

available for the project within a 

feasible period of time, the Agency 

notifies the applicant that the 

application will be retained until 

funding becomes available. If, based 

upon the application, it is not likely that 

the project will be funded in the near 

future, the Agency returns the 

application to the applicant at the end 

of the fiscal year. 

As for nationally-competed grant 

programs, the process the Agency 

currently uses to obligate funds and 

make awards (disburse the grant) for 

State-allocated grant programs begins 

with the Agency sending the applicant 

a letter of conditions that must be 

agreed to before the Agency and the 

grantee enter into a binding agreement, 

such as a grant agreement. 

Once funds have been disbursed, the 

Agency monitors the grantee to ensure 

conformance with the terms and 

conditions of the grant agreement. 

Depending on the State-allocated grant 

program, the grantee is currently 

required to submit reports to the Agency 

during the grant period. Once the 

project has been completed, the Agency 

closes out the grant. If a grantee violates 

the terms and conditions of the grant 

agreement, the Agency takes appropriate 

steps, including, depending on the 

severity of the violation, the suspension 

or termination of the agreement. 

C. Goals of the New Platform 

The grant programs that are being 

combined under the proposed new 

platform were developed separately, 

and are administered independently of 

each other. The platform being proposed 

seeks to achieve the following 

objectives: 

• Reduce the burden to applicants; 


sroberts on PROD1PC70 with PROPOSALS
61204 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

• Increase the efficiency in delivering 

grant programs; and 

• Improve the Agency’s program 

monitoring and reporting capabilities. 

Reduce the burden to applicants. The 

new platform can potentially reduce the 

burden to applicants in several ways. 

First. When applicants seek grants 

under more than one of the programs, 

they are required to learn how to fill out 

multiple forms. This is inefficient and 

costly to the applicants and makes the 

programs less attractive to the 

applicants. By combining common 

elements into a single subpart, the new 

platform can reduce the burden to 

applicants applying to multiple grant 

programs covered in this regulation. 

Second. Many grant programs receive 

applications from applicants or projects 

that are ineligible. In some cases, the 

applicant spends a significant amount of 

resources in putting together such 

applications. To help reduce the 

number of such applications, the new 

platform incorporates a voluntary 

preapplication process that applicants 

can use to help assess whether they and 

their projects are eligible. By getting an 

early assessment of eligibility, the 

Agency believes that fewer ‘‘noneligible’’ applications will be submitted, 

thereby saving the applicant expenses in 

assembling and submitting a complete 

application. 

Third. Under the new platform, 

applicants would be allowed to submit 

applications, including preapplications, 

to any Rural Development office or online through grants.gov. Allowing 

applicants to submit applications to any 

Rural Development office, including 

Rural Development field offices, 

provides applicants with additional 

submittal options than under the 

current programs, which specify 

locations where applications are to be 

submitted. For some applicants, the 

ability to submit applications to their 

local Rural Development field office 

will be more convenient. In addition, to 

the extent that this platform can 

leverage and further promote the 

utilization of field offices, it will serve 

to improve communication between the 

Agency and the applicants. 

Increase efficiency in delivering grant 

programs. There are several ways in 

which the new platform will help the 

Agency improve the efficiency in 

delivering the grant programs. 

First. The new platform would 

improve the work flow for the National 

and State Rural Development office 

personnel. The current delivery 

platform creates significant processing 

peaks and valleys in the delivery of the 

grant programs. The new platform seeks 

to ‘‘smooth out’’ these peaks and valleys 

through an open application period. 

This will also allow the Agency to better 

manage staffing requirements and 

provide administrative consistency 

among the various grant programs. 

Second. The new platform improves 

program delivery efficiency by 

‘‘separating’’ the application process 

from the funding process. Currently, 

consideration of grants waits until funds 

are made available through the 

appropriations process. This creates 

uncertainty in work flow and, at times, 

compresses the effort and resources 

required to review applications and 

make decisions into a very short 

timeframe. 

The new platform incorporates two 

different application submittal schemes. 

Under the first scheme, applications are 

accepted at any time. Under the second 

scheme, applications are submitted once 

each year. These processes will occur 

regardless of when funds are available 

and under what mechanism they are 

made available. By separating the 

application submittal and review 

process from funding availability, the 

Agency is creating a process that will 

allow both applicants and Agency staff 

to better manage their resources. 

Third. The new platform would 

streamline the Agency’s efforts in 

administering the grant programs. 

Maintaining separate sets of basic 

requirements creates complexity in 

administrative activities. For example, 

with each program administered under 

separate regulations, any change to basic 

requirements calls for multiple 

concurrences. Similarly, adding a new 

program requires the addition of a new 

set of basic requirements as these are 

not currently shared. The proposed 

combined platform will streamline basic 

grant requirements, allowing all the 

grant programs included in this 

regulation to reach a uniform 

functionality of process. 

Further, when new programs are 

implemented under the current delivery 

platform, a new regulation is developed 

that, in many respects, addresses or 

adopts many of the same requirements. 

Time and effort are wasted in 

readdressing issues during the 

development of new program 

regulations leading to inefficient 

rulemaking and a delay in program 

implementation. The structure of the 

new platform provides for the addition 

of other Agency, or newly authorized, 

grant programs as needed without the 

addition of new sets of basic 

requirements. The common elements 

(proposed subpart A) of the proposed 

rule are intended to remain unchanged, 

while additional programs would be 

added to proposed subpart B. 

Fourth. Having a common rule for 

multiple programs will be easier to 

administer, improve communication of 

basic program characteristics, and 

reduce confusion among both staff and 

the public. A common regulation will 

reduce the staff time, effort, and training 

necessary for issuing grants. Efficiencies 

will be realized as common program 

elements facilitate consolidation of 

information technology platforms and 

systems’ maintenance cost. Internal 

management controls will improve with 

standardized servicing and oversight. 

Uniform processes will facilitate 

electronic commerce between Rural 

Development and its customers. 

Improve the Agency’s program 

monitoring and reporting capabilities. 

Building on the efficiency 

improvements under a common grants 

platform, monitoring and reporting 

program performance of grant recipients 

will be conducted in conformance with 

uniform standards. With standardized 

servicing and oversight, Agency staff 

will be better able to monitor grant 

recipients to the extent necessary to 

ensure that facilities are functioning in 

accordance with project performance 

goals. 

Through the grantee’s uniform 

standard semiannual performance 

reporting and a final performance 

report, the Agency will be able to 

compare actual accomplishments 

against the objectives and benchmarks 

stated in the project’s performance plan. 

To account for the diversity in grant 

programs, additional grantee 

performance data may be needed for a 

thorough evaluation. Any special 

reporting requirements not specified in 

the rule or subsequent notices will be 

established in the Agency’s letter of 

conditions provided to the grantee. 

Project monitoring and report data 

will be captured and retained through 

the Agency’s management information 

systems and data warehouse. Drawing 

on standardized collected data, the 

Agency will be able to generate more 

comprehensive program performance 

reports both within a program and 

comparisons across several programs. 

This will be especially useful where 

programs with common or 

complementary performance measures 

may have a compounded impact on a 

community’s social and economic 

development. 

D. The New Platform 

By way of this rule, the Agency is 

initiating the process of developing a 

single regulation covering all 39 grant 

programs of the Rural Development 

Mission Area. For the grant programs 

listed in this regulation, the proposed 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61205 

new platform simplifies, improves, and 

enhances the delivery of the grant 

programs. By applying the requirements 

shared among the eight grant programs 

included in this rule while maintaining 

required programmatic differences, this 

new structure will streamline the 

promulgation of regulations for new 

grant programs. 

As noted earlier, the Agency is 

proposing to include eight grant 

programs within this proposed rule. 

Under the new platform, the common 

features of the programs are 

incorporated into a single subpart 

(subpart A), with program-specific 

features provided in a separate subpart 

(subpart B). While key features (e.g., 

applicant and project eligibility, 

funding) of the existing programs 

remain under the new platform, key 

differences can be found in applying for 

a grant, in the process in which 

applications are submitted, evaluated, 

and selected for funding, and in the 

manner in which notifications will be 

used to provide information to the 

public on the grant programs. 

The following paragraphs address the 

new platform by examining the 

proposed delivery mechanisms, 

beginning with a discussion on the use 

of notifications under the new platform 

and concluding with grant close-out. 

Figure 1 illustrates the overall 

application process for grant programs 

with an application deadline. Figure 2 

illustrates the overall application 

process for grant programs with an open 

application period. 

BILLING CODE 3410–XY–P 


sroberts on PROD1PC70 with PROPOSALS
61206 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 


sroberts on PROD1PC70 with PROPOSALSEP15OC08.004</GPH>
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61207 

BILLING CODE 3410–XY–C 


sroberts on PROD1PC70 with PROPOSALSEP15OC08.005</GPH>
61208 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

1. Notifications. Under the new 

platform, the Agency will use 

notifications to provide information on 

program funding and on programmatic 

changes relevant to applications and to 

program administration. The primary 

notification method used to disseminate 

this information depends on whether 

the program is a Nationally-competed 

grant program or a State-allocated grant 

program. In addition, the timing of 

when the Agency issues a notification 

depends on the type of information the 

notification contains. 

Funding. The Agency will issue 

notifications identifying the level of 

funds are available for each program 

and their minimum and maximum grant 

amounts. 

The Agency may elect to provide 

additional funding information in these 

notifications. Such information may 

include, but would not be limited to: 

• Type of award; 

• Fiscal year funds; 

• Approximate total funding; 

• Approximate number of awards; 

• Approximate average award; 

• Floor of award range; 

• Ceiling of award range; 

• Budget period length; and 

• Project period length. 

For Nationally-competed grant 

programs, the primary notification 

method that the Agency will use will be 

a Federal Register notice. One or more 

notices may be necessary to do this. For 

State-allocated grant programs, the 

primary notification method will be 

through a link found on Rural 

Development’s Web site http:// 

www.rurdev.usda.gov. Funding 

information for both types of grant 

programs would also be available at any 

Rural Development office. The Agency 

will provide funding information on 

each program every fiscal year. 

Programmatic changes. The Agency 

will also issue notifications that identify 

changes to a program that would affect 

the applicant or the applicant’s 

application. These circumstances are 

discussed below. 

• Administrator and State Director 

priority categories. Subpart A provides 

lists of Administrator and State Director 

priority categories. Administrator 

priority categories apply to both Stateallocated grant programs and nationallycompeted grant programs, while State 

Director priority categories apply only 

to State-allocated grant programs. 

Individual programs may elect to use 

any or all of the priority categories 

identified in subpart A in scoring 

applications, but would not be able to 

add to these lists (unless done through 

a change to the rule). Subpart B 

specifies the specific sets of 

Administrator and State Director 

priority categories that each program 

can use each year to score applications. 

If a program office determines that a 

different set of priority categories (but 

still within the priority categories 

identified in subpart A) will be 

applicable for a given fiscal year, the 

Agency will issue a notification to 

announce the priority categories that 

will be used in scoring applications for 

that fiscal year. 

• Administrator and State Director 

points. Subpart B identifies how points 

will be allocated for both Administrator 

and State Director priority categories for 

each of the grant programs. If a program 

office determines that a different 

allocation of these points is appropriate, 

whether or not in conjunction with a 

change in priority categories, then that 

program office would issue a 

notification, as applicable, to indicate 

the point allocation to be used in that 

fiscal year. 

• Additional reports. A program 

office may determine that additional 

reports on project performance that are 

generally applicable across projects 

within the program are necessary in 

addition to those required under the 

proposed rule. In such instances, the 

Agency would issue a notification to the 

public. 

• Ranking dates. A program office 

may elect to change one (or more) of the 

ranking dates specified in subpart B of 

the proposed rule. For example, a 

program office that has a specified 

ranking date (July 15) may determine 

that it is necessary to move the ranking 

date to earlier in the year because the 

program office has determined that 

additional time may be needed to rank 

the applications in order to ensure 

sufficient time to obligate funds. In such 

instances, the Agency would issue a 

notification to the public. 

• Application deadline. For those 

programs with a specified application 

deadline, a program office may elect to 

change the application deadline date 

specified in subpart B of the proposed 

rule. For example, a program office that 

has a specified application deadline 

(March 1) may determine that it is 

necessary to move the application 

deadline to earlier in the year in order 

to better manage Agency resources and 

program funds. In such instances, the 

Agency would issue a notification to the 

public. 

For changes in Administrator and 

State Director priority categories and/or 

points, the program office would issue 

the notification(s) at least 30 days prior 

to the first ranking date in the upcoming 

fiscal year or the application deadline, 

as applicable, to allow sufficient time 

for applicants to finish their 

applications. If multiple program offices 

seek to make these types of changes, the 

Agency may issue, where feasible, a 

single notification covering all of the 

affected programs rather than individual 

notifications for each of the affected 

programs. For other programmatic 

changes, the Agency would issue 

notifications on an as needed basis. 

Finally, a program’s eligibility 

requirements may change or the Agency 

may determine that certain types of 

projects are no longer eligible for grants 

or certain ineligible projects may 

become eligible. Such instances would 

require the Agency to change to the 

regulation. In order to help ensure the 

public is aware of such changes, the 

Agency may include such information 

in the programmatic change 

notifications discussed above. 

Administrator approval. Under the 

new platform, State Directors would 

propose to the Administrator each year 

the minimum and maximum grant 

amounts for each State-allocated grant 

program included in this part. Upon 

approval from the Administrator, the 

Agency would then notify the public of 

the minimum and maximum grant 

amounts approved by the 

Administrator. Similarly, each State 

Director may propose to the 

Administrator changes in State Director 

priority categories and associated points 

for State-allocated grant programs 

included in this part. Upon approval 

from the Administrator, the Agency 

would then notify the public of the 

priority categories and associated points 

approved by the Administrator for each 

affected State-allocated program. 

2. Acceptance of Applications. As 

noted above, Nationally-competed grant 

programs establish defined ‘‘windows’’ 

for when applications can be submitted 

and both types of programs (Nationallycompeted and State-allocated) 

frequently specify the Rural 

Development office (field, State, 

National) to which applications are to 

be submitted. Under the new platform, 

the Agency is proposing to implement 

two application submittal schemes, 

depending on the needs of the 

individual program: 

• An open application period; and 

• A specified application deadline. 

Under the open application period 

scheme, the Agency would accept 

applications at any time during the year. 

By accepting applications at any time, 

there would no longer be any ‘‘window’’ 

for when to submit an application. This 

feature eliminates the need for the 

public to wait on the Agency to publish 

Federal Register notices, or use other 

methods, to solicit applications. It is 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61209 

important to note, however, that the 

Agency will still undertake activities to 

promote the various grant programs. 

The second scheme (a specified 

application deadline) is similar to 

current Nationally-competed grant 

programs, but the date for application 

submittal would be fixed in the 

regulation in subpart B. By providing a 

date, the public will not have to wait for 

the Agency to publish a notice 

identifying when applications are due. 

This will allow applicants to plan for 

the preparation of their applications 

with certainty. 

By accepting applications at any Rural 

Development office under either 

scheme, the Agency is seeking to make 

it more convenient for applicants to 

submit their applications. To the extent 

that this facilitates interaction between 

Rural Development staff and the 

applicants, the Agency expects better 

communication will occur. The Agency 

will implement internal procedures to 

ensure all applications are delivered to 

the appropriate Agency program office. 

3. Eligibility. Under the current 

programs, Rural Development offices 

(National and State offices, as 

appropriate) determine both applicant 

and project eligibility based on the 

individual grant program’s 

requirements. As described below, the 

proposed rule continues this 

determination process mainly 

unchanged. 

Applicant eligibility is based on the 

applicant meeting the common 

requirements, which are citizenship and 

legal authority and responsibility, and 

program-specific criteria, which are 

contained in proposed subpart B. The 

proposed rule also identifies applicants 

who would be categorically ineligible. 

In terms of eligible and ineligible 

applicants, little has changed under the 

new platform compared to the current 

programs. In addition, these criteria 

cannot be voided under the exception 

authority provided in the proposed rule. 

Project eligibility is based on the 

proposed project meeting criteria found 

in Subparts A and B, as applicable. 

Subpart A requires each project to meet 

the following criteria, as applicable and 

unless otherwise modified by a specific 

provision in subpart B for a program: 

• Being primarily for the benefit of a 

rural area; 

• For those projects and purposes that 

acquire or improve real or personal 

property, the applicant must be the 

owner of the property or have leasehold 

interest acceptable to the Agency in the 

property and control the revenues and 

expenses of the project, including 

operation and maintenance; and 

• For projects and purposes that are 

determined by a service area, on the 

boundaries of the proposed service area 

meeting a non-discrimination criterion. 

Projects that do not meet the 

applicable proposed criteria (as found in 

Subparts A and B, as applicable) would 

be ineligible under the new platform. In 

addition, these criteria (as found in 

subpart A and as may be modified in 

subpart B) cannot be voided under the 

exception authority provided in the 

proposed rule. 

The applicable program-specific 

project eligibility requirements, which 

are located in subpart B, remain 

essentially unchanged for those of the 

current programs. Some differences are 

being proposed and these are discussed 

in section II of this preamble. 

In addition to identifying eligible 

projects, the proposed rule identifies 

specific projects and purposes that are 

ineligible under all circumstances from 

receiving a grant. The Agency 

assembled this list from the list of 

ineligible projects and purposes 

identified in the regulations and 

associated program notices for the 

programs being included in the 

proposed rule. In addition, the Agency 

added the following projects and 

purposes as ineligible: 

• Investment or arbitrage, or 

speculative real estate investment; 

• Prostitution or projects generating 

income from activities of a prurient 

sexual nature; 

• Any project eligible for Rural Rental 

Housing and Rural Cooperative Housing 

loans under sections 515, 521, and 538 

of the Housing Act of 1949, as amended; 

• Any project generating income from 

the sale of illegal drugs, drug 

paraphernalia, or any other illegal 

product or activity; 

• Any project located in a special 

flood or mudslide hazard area as 

designated by the Federal Emergency 

Management Agency in a community 

that is not participating in the National 

Flood Insurance Program unless the 

project is an integral part of a 

community’s flood control plan; and 

• Any other similar project or 

purpose that the Agency determines is 

ineligible for funding under this part 

and publishes in a Federal Register 

notice. 

4. Applying for a Grant. All applicants 

would be required to submit an 

application. For some applicants (i.e., a 

government that is proposing a project 

that is for construction, land 

acquisition, or land development and 

that would require more than $100,000 

of Federal funding), a preapplication 

would be required (as is currently the 

situation). For all other applicants, 

however, the submittal of a 

preapplication would be optional. The 

following paragraphs discuss briefly 

preapplications and applications. 

Preapplications. The primary purpose 

of the preapplication is for the Agency 

to make an assessment as to both 

applicant eligibility and project 

eligibility. In addition, use of 

preapplications facilitates early 

communication between the Agency 

and the applicant. By reviewing 

preapplications, the Agency reduces the 

time and effort spent by applicants in 

preparing full applications where the 

applicant and/or project are clearly not 

eligible. 

Applications. Because of the varying 

nature of the projects that are associated 

with the grant programs, the Agency has 

determined that the information to be 

included in a grant application should 

be program specific, as it is currently. 

The contents of grant applications will 

be made available to applicants through 

any Rural Development office, the 

Agency’s Web site, or National 

Headquarters. The information 

associated with a grant application will 

not be significantly different than 

currently required under the current 

programs. 

However, an applicant would be 

allowed to submit an application 

(including preapplications) to any Rural 

Development office. Under the current 

programs, applications are submitted to 

specified locations. As noted earlier, the 

Agency is proposing this change to 

make it more convenient for applicants 

to submit their applications and to 

foster communication between Rural 

Development staff and applicants. 

Rather than identifying the specific 

documents that must accompany each 

application for each program in the 

regulation, the Agency would provide 

all the necessary forms and instructions 

in program-specific application 

packages. This proposed process is 

similar to the current process for several 

existing grant programs, but represents 

a change for those Nationally-competed 

programs where the regulations and/or 

Federal Register notice identify 

specifically what is required in each 

application under each of those 

programs. The Agency believes that 

implementing the proposed process for 

all grant programs affected by this rule 

will provide administrative flexibility to 

each program as well as consistency in 

implementation. 

5. Processing Applications. The 

Agency would review each application 

for the determination of applicant and 

project eligibility and the likelihood of 

the project’s feasibility. It is at this stage 

of the process that the Agency would 


sroberts on PROD1PC70 with PROPOSALS
61210 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

make the formal determination of 

eligibility, unless it has already been 

made. 

In order to determine eligibility, the 

application must contain sufficient and 

necessary information to allow the 

Agency to make the eligibility 

determination. The Agency will also 

review the application for assessing 

whether or not the project is likely to be 

feasible. To further process an 

application for a project or purpose that 

is likely to be unfeasible would be an 

inefficient use of Agency resources. At 

the same time, the amount of 

information that is needed to make this 

assessment varies between programs 

because of the differing complexity of 

projects and purposes. The information 

provided to the applicant for 

preparation of an application will assist 

the applicant in identifying the amount 

of information necessary to allow the 

Agency to make this feasibility 

assessment. 

When reviewing an application for 

applicant and project eligibility, if the 

Agency finds that there is insufficient 

information, including for example if a 

form has not been signed, to make an 

eligibility determination, the Agency 

will notify the applicant. Once an 

eligibility determination has been made, 

the Agency will notify the applicant. If 

the Agency determines that either the 

applicant or the project is ineligible, the 

applicant would have the right to appeal 

the decision to the National Appeals 

Division (NAD). The steps associated 

with eligibility under the new platform 

are essentially the same as under the 

current programs. 

Similarly, if the Agency makes an 

assessment that a project is not likely to 

be feasible, the Agency will notify the 

applicant of its concerns. The applicant 

will then have the opportunity to 

address those concerns before the 

Agency continues processing the 

application. 

For programs with open application 

periods, an application that is revised 

and resubmitted to the Agency will be 

processed at the next applicable ranking 

date for that program. For example, if a 

revised application is received on 

January 15, the Agency will consider it 

at the March 15 ranking date, which is 

the next applicable ranking date. For 

grant programs with a specified 

application deadline, each revised grant 

application will be processed by the 

Agency if it is received on or before the 

application deadline for that grant 

program. If such revised applications 

are not received by the specified 

application deadline for the grant 

program, the Agency will not process 

the application. 

6. Scoring Applications. For those 

applications for which the applicant 

and project are eligible and the project 

is feasible (or is likely to be feasible), the 

Agency will continue processing the 

application by scoring it. The Agency 

will score applications on the basis of 

the information provided when the 

Agency receives the application. Thus, 

it is the responsibility of the applicant 

to provide all information necessary at 

the time of application for the Agency 

to score the application. 

The Agency will score each 

application using a set of programspecific priority categories, a set of State 

Director priority categories, and a set of 

Administrator priority categories and 

their associated points that are specific 

to each grant program. State Director 

priority categories and points are only 

applicable to State-allocated grant 

programs. In addition, Administrator 

priority categories and points may be 

applied to State-allocated grant 

applications only when applications are 

submitted for the national pool of funds. 

These sets of priority categories are 

identified in subpart B of the proposed 

rule. As noted earlier (Section I. D. 1.), 

the Agency may use a revised set of 

Administrator and State Director 

priority categories and point allocations 

through the issuance of a notification. 

Priority Categories. As noted above, 

the Agency is distinguishing between 

program-specific priority categories and 

Administrator and State Director 

priority categories. Program-specific 

priority categories are those priority 

categories that the Agency must use in 

scoring each application for that grant 

program. In contrast, Administrator and 

State Director priority categories are not 

mandatory; that is, the Administrator 

and State Director are not obligated to 

use their specified priority categories in 

scoring applications. If the 

Administrator or State Director elects 

not to use their priority categories, then 

neither can affect the scoring of an 

application. 

The specification of priority 

categories for the Administrator and the 

State Directors is a major difference 

from the current process. Currently, the 

Administrator and State Directors have 

significant discretion to reflect their 

priorities. In contrast, the proposed rule 

eliminates this discretionary aspect by 

specifying the sets of Administrator and 

State Director priority categories for 

each program that will be considered 

each year. This change provides the 

public with a much greater 

understanding of how their applications 

can be evaluated by the Administrator 

and the State Directors. Furthermore, 

these priority categories would be used 

each year, unless otherwise specified in 

a notification issued under proposed 

§ 5002.15. Note that program-specific 

priority categories can only change, 

however, if the Agency subsequently 

revises subpart B of the regulation. 

Points. Currently, the total available 

points vary considerably between grant 

programs. The Agency is proposing to 

standardize the total points (to 100) that 

can be awarded to an application under 

any of the grant programs. 

Standardizing point totals is intended to 

help the Agency administer the grant 

programs. 

One difference from the current 

programs is the proposed Administrator 

and State Director points that could be 

awarded to an application. Except for 

the Community Facilities grant program, 

as discussed in the following paragraph, 

both State Director points and 

Administrator points would be each 

limited to 10 points (10 percent of the 

total potential points) and can only be 

awarded for the specific set of priority 

categories in effect for that program. In 

other words, the Administrator or State 

Director could not use discretionary 

categories to establish specific earmarks. 

Note that only State-allocated grant 

programs would be allowed to award 

points for State Director priority 

categories. 

For the Community Facilities grant 

program, the Agency is proposing to 

limit Administrator points to 20 points 

(20 percent of the total potential points). 

The Community Facilities grant 

program applies to projects that are 

‘‘essential community facilities.’’ The 

types of projects that may qualify as 

essential community facilities are very 

broad, much broader than any of the 

other grant programs being included in 

the new platform. This diversity of 

community facility projects presents 

unique challenges for meeting the 

overall goals of the program. The 

Agency believes, regarding these broad 

based programs, that it is appropriate to 

provide greater flexibility in order to 

meet the goals and objectives of the 

program. Therefore, the Administrator 

would be allowed to award up to 20 

points for community facilities 

applications. As noted earlier, 

Administrator points may be applied to 

State-allocated programs only when the 

National Office makes the determination 

of which grant applications to fund from 

the national pool of funds. 

As with the sets of Administrator and 

State Director priority categories, the 

procedures used for awarding 

Administrator and State Director points 

each year would be as specified in 

subpart B, unless a notification is issued 

as specified in proposed § 5002.15. The 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61211 

maximum number of points that the 

Administrator and the State Director can 

award, however, can only be changed 

through a revision to the regulation. 

Changes in Administrator and State 

Director priority categories and points. 

As noted earlier in this preamble, if 

there is a change in Administrator or 

State Director priority categories and/or 

point allocation to be considered for a 

particular year, the proposed rule allows 

the Administrator or State Director to 

change the priority categories and/or 

point allocation (but not the 

Administrator’s or State Director’s point 

total) contained in the rule by issuing an 

appropriate notification in a timely 

fashion. To illustrate the award of 

Administrator and State Director 

priority categories and points under the 

new platform, consider the following 

examples. 

Examples. These examples are for 

State Director priority categories for 

community facility grants, which allow 

the State Director to award up to 10 

points to an individual application. 

These examples are also illustrative of 

the award of State Director priority 

categories and points for other 

programs. 

• Example 1. The Agency does not 

issue a notification for an upcoming 

fiscal year and an application meets 

each of the 10 priority categories listed 

in subpart A of § 5002.42(b)(2). In this 

situation, the scoring procedure 

specified in subpart B for community 

facility grants (§ 5002.101(f)(3)) would 

be used to score the application for 

awarding State Director points. The 

Agency determines that the application 

can be awarded full points for all 10 

priority categories. This would total 100 

points. However, because the rule limits 

the total number of State Director points 

to 10 points for any one application, this 

application would receive 10 State 

Director points. 

• Example 2. The Agency issues a 

notification indicating that only four of 

the 10 State Director priority categories 

in subpart A will receive consideration. 

In this case, the notification also 

identifies the specific points to be 

awarded to the four priority categories, 

such that the total points to be awarded 

do not exceed 10 points. For example, 

Priority Category 6—up to 3 points; 

Priority Category 7—up to 3 points; 

Priority Category 8—up to 2 points; and 

Priority Category 9—up to 2 points. 

Note that in this example the point 

distribution totals 10. In evaluating this 

application, the Agency determines that 

the application should be awarded full 

points for Priority Categories 6, 7, and 

8, but only one point for Priority 

Category 9. The application would, 

therefore, receive nine (9) State Director 

points. 

7. Award process for applications. 

The Agency is establishing a consistent 

process for selecting applications for 

funding. The two main areas of the 

proposed award process are: 

• Ranking of applications; and 

• Selection of applications for 

funding. 

In addition, the proposed rule 

addresses the disposition of 

applications not selected for funding. 

Ranking of applications. For those 

grant programs that have an open 

application period, which would 

receive applications on a continuous 

basis, the Agency is establishing a 

process for ranking applications that 

sufficiently demonstrates competition 

for grant funds. To accomplish this, the 

Agency is proposing that all scored 

applications for a program be ranked by 

the Agency four times per year. The four 

proposed ranking dates are, in order of 

occurrence during the fiscal year, 

December 15, March 15, July 15, and 

August 15. If any of these dates fall on 

a weekend or a Federally-observed 

holiday, the affected ranking date would 

move to the next Federal business day. 

Further, as noted earlier in this 

preamble, a program may change one or 

more ranking dates in a fiscal year if it 

publishes a notification as specified in 

proposed § 5002.15. 

The first three ranking dates were 

selected to provide an even spacing of 

ranking dates to help even out the work 

flow. The first date was selected with 

enough time after the beginning of the 

fiscal year and after the publication of 

any applicable notification for the 

upcoming fiscal year to allow applicants 

to prepare and submit an application to 

be considered during the first ranking 

period. The last date, August 15, was 

included because some programs need 

to obligate funds prior to the end of the 

fiscal year and this date provides 

sufficient lead time to accommodate 

such obligations. While only a month 

after the July 15 date, the Agency is 

including it because it provides 

additional time for applicants to submit 

applications for consideration during 

the current fiscal year. 

Applications submitted after August 

15 of a given fiscal year, however, will 

not be ranked until December 15 of the 

following fiscal year. In this situation, 

the Agency will retain these 

applications through the next ranking 

date (i.e., through December 15 of the 

following fiscal year). Such applications 

would be evaluated and scored based on 

that program’s priority categories for the 

following fiscal year. Therefore, if a 

program’s Administrator and/or State 

Director priority categories selected to 

score applications were to change 

between the current fiscal year and the 

next, applicants should consider 

whether their retained applications 

need to be resubmitted in order to better 

address the change in the program’s 

selected Administrator and/or State 

Director priority categories. 

It is important to note that the ranking 

dates for programs with an open 

application period are not the same as 

application deadlines. Under the new 

platform, applicants can submit 

applications for such programs at any 

time. Once the application is 

determined to be eligible, the Agency 

will rank the application on or after the 

next ranking date. Consider the 

following examples for grant programs 

with an open application period. 

Example 1. Applicant A submits an 

application to the Agency on November 

1, 2008. The Agency determines that the 

application is eligible for further 

processing on November 30, 2008. The 

Agency will rank the application on or 

after December 15, 2008. 

Example 2. Applicant B submits an 

application to the Agency on December 

16, 2008. The Agency determines that 

the application eligible for further 

processing on January 5, 2009. The 

Agency will rank the application on or 

after March 15, 2009. 

Example 3. Applicant C submits an 

application to the Agency on August 17, 

2009. The Agency determines that the 

application is eligible for further 

processing on September 23, 2009. The 

Agency will rank the application on or 

after December 15, 2009. 

Example 4. Applicant D submits an 

application to the Agency on November 

15, 2009. The Agency determines that 

the application is eligible on December 

20, 2009, after the December 15 ranking 

date has passed. The Agency will rank 

Applicant D’s application at the next 

scheduled ranking date after December 

15, which would be, in this example, on 

or after March 15, 2010. 

For grant programs that have a 

specified application deadline, such as 

the Distance Learning and Telemedicine 

grant program, either a single ranking 

date—July 15—or two ranking dates— 

March 15 and July 15—is being 

proposed, depending on the needs of 

the specific program. The July 15 date 

was selected to ensure sufficient time 

for the Agency to obligate funds to those 

applications selected for funding. As 

noted earlier in this preamble, a 

program office may determine that it is 

necessary to move the application 

deadline to earlier in the year in order 

to better manage Agency resources and 

program funds. In such instances, the 


sroberts on PROD1PC70 with PROPOSALS
61212 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

Agency would provide notification to 

the public. 

Whether for a grant program with an 

open application period or for a grant 

program with a specified application 

deadline, applications that are ranked in 

a given fiscal year will be considered for 

selection for funding or for potential 

funding, as applicable, during that fiscal 

year. For grant programs with an open 

application period, this means that 

applications received early in the fiscal 

year will have a longer timeframe to be 

considered for selection for potential 

funding than those received later in the 

fiscal year. 

Selection of applications for funding 

or potential funding. For all grant 

programs, the Agency will create, on or 

after each ranking date, a priority list of 

ranked applications from which to 

select applications for consideration for 

(potential) funding. In considering 

which applications to select for 

(potential) funding, the Agency will 

consider three basic criteria, which are 

discussed below, and any programspecific criteria, as specified in subpart 

B. For each application that is selected 

for (potential) funding, the Agency will 

so notify the applicant. 

As noted in the previous paragraph, 

the Agency will consider three basic 

criteria selecting applications for 

(potential) funding. These criteria are: 

(1) Ranking, (2) availability of funds, 

and (3) other funding sources. 

• Ranking. This refers to an 

application’s place on the program’s 

priority list, which is based on the score 

each application receives. Higher 

scoring applications would receive first 

consideration for (potential) funding. 

However, as discussed below for the 

two other basic criteria and as may be 

specified in subpart B for a specific 

program, a lower scoring application 

may be selected for (potential) funding 

ahead of a higher scoring application. 

For example, if there is insufficient 

funding for the higher scoring project, 

the Agency may pass over that project 

to fund a lower scoring project in order 

to fully expend the budget authority. 

• Availability of funds. This refers to 

the size of the grant request relative to 

the program funds that remain available 

to the program during the fiscal year. In 

order for the Agency to better manage 

the availability of program funds, the 

Agency could select, under the new 

platform, a lower scoring application 

before an eligible, higher-scoring 

application when the higher scoring 

application: 

• Would require grant assistance in 

an amount greater than the funds 

remaining in a particular funding 

period, 

• Would require more than 25 

percent of a State’s allocated funds, or 

• Would require more than 25 

percent of a Nationally-competed grant 

program’s funds. 

In these situations, the Agency would 

notify the applicant associated with the 

higher scoring application and provide 

the applicant an opportunity to revise 

the amount of funds being requested in 

their application, provided the reduced 

funding request does not change the 

project’s purposes and financial 

feasibility. The applicant would then be 

able to resubmit the application before 

the Agency selects the next highest 

scoring application for funding. 

The Agency is proposing the 25 

percent threshold for nationallycompeted grant programs based on 

current practice in the Agency’s water 

and waste disposal grant program. The 

Agency is willing to consider a different 

threshold. The Agency is concerned that 

too low of a threshold might create a 

situation, especially in smaller 

nationally-competed grant programs, 

where this provision could be used to 

override the selection of applications 

based on their scores. The Agency is 

also concerned that too high of a 

threshold might not be effective at 

limiting applications that commit too 

high a percentage of a fiscal year’s 

available funding for a particular 

program. As stated later in this 

preamble, the Agency is requesting 

comment on this threshold level. 

• Availability of other funding 

sources. This refers to whether Rural 

Development loans and other, non-Rural 

Development funding sources should be 

available to an applicant. If an applicant 

with a higher scoring application can 

accomplish the project using Rural 

Development loans or other non-Rural 

Development funding sources, the 

Agency may consider the next highest 

scoring application ahead of the higher 

scoring application. 

Disposition of applications not 

selected for potential funding—grant 

programs with an open application 

period. There are four scenarios in 

which a ranked application may not 

receive funding: 

• Application selected for potential 

funding, but not funded due to the 

Agency’s lack of funds; 

• Application selected for potential 

funding, but not funded due to missing 

information; 

• Application not selected for 

potential funding due to its ranking and 

the available level of funds to the 

Agency; and 

• Application not selected for 

potential funding due to very low 

ranking. 

As summarized in Table 1 and 

described in the following paragraph, 

the process for handling these four 

situations would be slightly different. 

BILLING CODE 3410–XY–P 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61213 

BILLING CODE 3410–XY–C 


sroberts on PROD1PC70 with PROPOSALSEP15OC08.006</GPH>
61214 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

An application that is selected for 

potential funding, but is not funded due 

to the Agency’s lack of funds, will be 

carried forward in the fiscal year in 

which it was selected for potential 

funding until either it is funded or the 

end of the fiscal year in which it was 

selected, whichever occurs first. If the 

selected application is not funded by 

the end of the fiscal year in which it was 

selected for potential funding, the 

Agency will carry the application 

forward into the next fiscal year unless 

the applicant requests in writing the 

Agency to withdraw the application 

from further consideration. Unless there 

is a change to the regulation or 

authorizing statute that would affect this 

process, a selected application that is 

carried forward into the next fiscal year 

would not be subject to re-evaluation or 

re-scoring, even if the priority categories 

applicable to that application change for 

the next fiscal year, because it has 

already been completed. However, the 

application may be required to be 

updated if information in it becomes 

outdated. 

If a ranked application has been 

selected for potential funding, but has 

not been funded because additional 

information is needed, the Agency will 

notify the applicant as to what 

information is needed, including a 

timeframe for the applicant to provide 

the information. If the applicant does 

not provide the information within the 

specified timeframe, the Agency will 

remove the application from further 

processing. 

If a ranked application has not been 

selected for potential funding because of 

its ranking and the available level of 

funds to the Agency, it will be included 

in the set of applications considered in 

each subsequent ranking date in the 

fiscal year in which it was ranked until 

it is either selected for potential 

funding, funded, or the end of the fiscal 

year in which the application was 

ranked is reached, whichever occurs 

first. The Agency will retain the 

application for consideration in the next 

fiscal year. All such retained 

applications must be updated by the 

applicant as required by the Agency 

(e.g., financial conditions, change in 

supporting documentation 

requirements). In this instance and in 

addition to satisfying Agency 

requirements, the applicant is afforded 

the opportunity to otherwise revise the 

application. The application will then 

be re-evaluated and re-scored along with 

new applications received for 

consideration for funding in the next 

fiscal year. 

If a ranked application has not been 

selected for potential funding because it 

is determined by the Agency to be noncompetitive due to its very low score by 

the end of the fiscal year in which it was 

scored, the Agency will remove the 

application from further consideration 

and will notify the applicant that the 

Agency is no longer considering the 

application. 

Disposition of applications not 

selected for funding—grant programs 

with an application deadline. All 

ranked applications that are not funded 

in the fiscal year in which they were 

submitted will not be carried forward 

into the next fiscal year. The Agency 

will so notify the applicant in writing. 

If an application has been selected for 

funding, but has not been funded 

because additional information is 

needed, the Agency will notify the 

applicant as to what information is 

needed, including a timeframe for the 

applicant to provide the information. If 

the applicant does not provide the 

information within the specified 

timeframe, the Agency will remove the 

application for further consideration 

and will so notify the applicant. In this 

situation, the application is also not 

carried forward into the next fiscal year. 

8. Grant agreement and conditions. 

This section of the new platform 

addresses the mechanism the Agency 

will use an Agency-approved grant 

agreement to make awards to those 

applicants selected for funding. This 

section also identifies additional 

conditions that must be met by grantees 

both prior to the award being made and 

after the award is made. In general, the 

proposed requirements are the same as 

those for the grant programs currently in 

place. The proposed rule, though, 

provides a consistent structure for the 

administration of all of the grant 

programs covered by the proposed rule. 

9. Post-award activities and 

requirements. As for grant agreements 

and conditions, the proposed rule 

generally adopts current practices and 

provides a consistent structure for all of 

the grant programs covered by the 

proposed rule. 

10. Grant close out and related 

activities. As for the previous two 

sections, the requirements in this 

section generally adopt current practices 

and provide a consistent structure for all 

of the grant programs covered by the 

proposed rule. 

II. Discussion of Proposed Rule 

In this section, the proposed rule is 

further described. First, an overall 

organization of the proposed rule is 

presented, followed by a section-bysection discussion of each part. Please 

note that the discussion in this section 

applies in its entirety to seven of the 

eight grant programs being included; it 

does not apply in its entirety to Tribal 

College grants. The provisions discussed 

in this section that apply to Tribal 

College grants are contained in 

proposed §§ 5002.1 through 5002.14 and 

in proposed §§ 5002.60 through 

5002.80. The discussions in this section 

on eligibility, applying for a grant, 

processing applications, application 

scoring, and award process do not apply 

to Tribal College grants. A discussion of 

these aspects of the proposed rule for 

Tribal College grants is presented in 

section II.B. 

A. Overall Organization of the Rule 

The proposed rule is divided into two 

main parts, subparts A and B. Subpart 

A, contains the provisions that apply to 

all of the grant programs, except for 

Tribal College grants as described in the 

previous paragraph, covered by the 

proposed rule. In addition, subpart A 

contains provisions applicable to 

cooperative agreements. These subpart 

A provisions would not become 

effective until cooperative agreements 

are provided and published in subpart 

B to this part. 

Subpart B, contains the provisions 

specific to the grant programs covered 

by the proposed rule. The Agency is not 

proposing to include cooperative 

agreements in subpart B at this time, but 

may consider adding cooperative 

agreements to subpart B at a future date. 

Subpart A. Subpart A is divided into 

nine major elements. The first element, 

General Provisions, covers general 

provisions associated with this part, and 

addresses the purpose of this part 

(§ 5002.1), the definitions and 

abbreviations used in this part 

(§ 5002.2), appeal rights (§ 5002.3), 

exception authority (§ 5002.4), 

compliance with other Federal laws 

(§ 5002.5) and with State and local laws 

(§ 5002.6), environmental requirements 

(§ 5002.7), and forms, regulations, and 

instructions (§ 5002.8). 

The second element, Funding and 

Programmatic Change Notifications, 

covers funding and programmatic 

change notifications (§ 5002.15). 

The third element, Eligibility, covers 

the basic eligibility requirements for 

eligible applicants (§ 5002.20), ineligible 

applicants (§ 5002.21), eligible projects 

and purposes (§ 5002.22), and ineligible 

projects and purposes (§ 5002.23). 

The fourth element, Applying for a 

Grant, covers the basic requirements 

associated with applying for a grant 

(§ 5002.30), including preapplications 

(§ 5002.31) and applications (§ 5002.32). 

The fifth element, Processing and 

Scoring Applications, addresses the 

steps that the Agency will use in 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61215 

processing and scoring applications. 

The steps associated with processing 

applications (§ 5002.40) cover initial 

review of applications by the Agency, 

notifications to the applicants, 

resubmittal of applications by 

applicants, and applications that are 

subsequently found to be ineligible. 

This element also addresses the 

processes for dealing with application 

withdrawal (§ 5002.41) and the scoring 

of applications (§ 5002.42), including 

the priority categories that the 

Administrator and the State Directors 

may use in scoring applications. 

Specific priority categories and points to 

be used are found in subpart B for each 

individual program. 

The sixth element, Awarding Grants, 

covers the award process (§ 5002.50). In 

this element, the process that the 

Agency will use in ranking and 

selecting applications for funding is 

presented. In addition, this element 

covers processes associated with 

applications that are not selected and 

those that are selected, but do not 

receive funding. 

The seventh element, Grant 

Agreements and Conditions, addresses 

the grant agreement and conditions for 

applications that are funded. This 

element covers actions that must occur 

prior to grant closing or start of 

construction (§ 5002.60), the process 

used in making the grant agreement 

(§ 5002.61), and the use of remaining 

funds (§ 5002.62). 

The eighth element, Post Award 

Activities and Requirements, addresses 

activities and requirements once an 

award has been made. This element 

covers the following areas: 

• Monitoring and reporting program 

performance (§ 5002.70); 

• Programmatic changes and budget 

revisions (§ 5002.71); and 

• Transfer of obligations (§ 5002.72). 

The ninth element, Grant Close Out 

and Related Activities, covers grant 

close out, non-compliance, and 

termination (§ 5002.80). 

Subpart B. This subpart addresses 

provisions that are specific to the 

individual programs as follows: 

• Provisions specific to the 

Community Facilities grant program are 

in found in § 5002.101; 

• Provisions specific to the Rural 

Energy for America grant program are 

found in § 5002.102; 

• Provisions specific to the Rural 

Cooperative Development grant program 

are found in § 5002.103; 

• Provisions specific to the Distance 

Learning and Telemedicine grant 

program are found in § 5002.104; 

• Provisions specific to the ValueAdded Producer grant program are 

found in § 5002.105; 

• Provisions specific to the Water and 

Waste Disposal Facilities grant program 

are found in § 5002.106; 

• Provisions specific to the Economic 

Impact Initiatives grant program are 

found in § 5002.107; and 

• Provisions specific to the Tribal 

College grant program are found in 

§ 5002.108. 

The intent of subpart B is to identify 

all of the provisions specific to each of 

the eight programs. In this way, each 

program maintains its integrity under 

the new platform. Within subpart B, 

each program specific provisions are 

related back, where applicable, to a 

corresponding section in subpart A. For 

example, each section has subsections 

that address applicant and project 

eligibility. In addition, some programspecific requirements in subpart B 

supersede specific subpart A 

requirements. For example, there is a 

subpart B provision for value-added 

producer grants that indicates that the 

subpart A requirement for the project to 

primarily serve a rural area does not 

apply to value-added producer grants. 

B. Discussion of Sections 

Purpose and Scope (§ 5002.1) 

This section defines the purpose, 

scope, and applicability of this part 

(§ 5002.1(a), (b), and (c)), respectively. 

This rule applies to ‘‘grant only’’ 

applications and not to loan grant 

applications (§ 5002.1(c)(1)). A loan and 

grant combination application is one in 

which an entity is seeking both a loan 

and a grant in order to fund its project. 

This part would apply only to ‘‘grant 

only’’ applications, unless another 7 

CFR part incorporates provisions from 

the proposed rule. If an applicant is 

seeking a grant as part of a ‘‘grant and 

loan’’ application, this part would not 

apply to the grant portion of the grant 

and loan application, unless another 7 

CFR part incorporates provisions from 

the proposed rule. 

This section also includes the 

incorporation by reference (§ 5002.1(d)) 

of all of 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. These parts are referred to 

in the preamble and the rule as the 

‘‘Departmental regulations,’’ and 

constitute the existing Department’s 

regulations affecting all grant programs. 

Note that this phrase is not used in all 

sections of the rule. The absence of this 

phrase from a section of the rule does 

not mean that the Departmental 

regulations do not apply to that section. 

Definitions and Abbreviations (§ 5002.2) 

This section presents the definitions 

and abbreviations used in this part, 

including terms that may be specific to 

one of the eight programs found in 

subpart B. It also incorporates by 

reference terms used in the 

Departmental regulations. 

The proposed rule contains fewer 

definitions than found in the existing 

regulations, primarily because the 

deleted terms are not used. Some 

definitions have been added or revised. 

The proposed rule includes a 

definition for ‘‘poverty line.’’ Poverty 

line is used determining project 

eligibility under the Community 

Facilities program. The Agency 

determines the poverty line in a manner 

consistent with criteria established by 

the Department of Health and Human 

Services (DHHS) and the Department of 

Housing and Urban Development. 

Current poverty line information 

published by DHHS, however, does not 

cover Puerto Rico, the Western Pacific 

Islands, and the Virgin Islands. As it is 

possible for the Community Facilities 

grant program to award grants to 

applications from these locations, the 

Agency has established poverty lines for 

these locations, based on the level of 

income. 

Appeal Rights (§ 5002.3) 

As currently provided, this paragraph 

provides the legal basis for a person to 

file an appeal of an adverse decision 

made by the Agency in implementing 

the proposed program. When the 

Agency makes an adverse decision, a 

person may file an appeal to the 

National Appeals Division in 

accordance with 7 CFR part 11. 

Exception Authority (§ 5002.4) 

This section identifies the situations 

under which the Administrator may 

make exceptions to the requirements 

contained in the regulation. 

Unlike the current regulations, the 

proposed rule identifies three 

exceptions to this Exception Authority, 

where the Administrator would not be 

allowed to make exceptions. These three 

exceptions are: 

• Applicant eligibility; 

• Project eligibility; and 

• Rural area definition. 

The Agency believes that applicant 

and project eligibility criteria must be 

maintained at all times in order to be 

consistent with statutory authority. 


sroberts on PROD1PC70 with PROPOSALS
61216 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

Compliance With Other Federal Laws 

(§ 5002.5) 

This section states that applicants 

must comply with other applicable 

Federal laws including, but not limited 

to, Equal Employment Opportunities, 

Americans with Disabilities Act, Equal 

Credit Opportunity Act, Fair Housing 

Act, and the Civil Rights Act of 1964. 

State Laws, Local Laws, and Regulatory 

Commission Regulations (§ 5002.6) 

This section states that the provisions 

of this part will be controlling in all 

cases where there are conflicts between 

the provisions of this part and State or 

local laws or regulatory commissions 

regulations. 

Environmental Requirements (§ 5002.7) 

The applicant would be required to 

comply with Agency environmental 

requirements as found under subpart G 

of either 7 CFR part 1940 (for Rural 

Housing, Business-Cooperative, and 

Utilities Services) or 7 CFR part 1794 

(for Rural Utilities Services), as 

appropriate. These requirements are 

consistent with those under the eight 

current programs. 

In addition, the applicant must not 

take any action or incur any obligation 

with respect to the proposed project that 

would either limit the range of 

alternatives to be considered during the 

Agency’s environmental review process 

or which would have an adverse effect 

on the environment. If such actions or 

obligations have been incurred that 

would limit the range of alternatives, 

the project will be ineligible for a grant 

under this part. 

Forms, Regulations, and Instructions 

(§ 5002.8) 

This section states that all forms, 

regulations, instructions, and other 

materials necessary to submit 

applications for each of the grant 

programs included in this part may be 

obtained through the Agency. This 

material, including application 

packages, will be available from Agency 

offices, including but not limited to 

Rural Development State Offices, and 

the Agency’s Web site. 

Funding and Programmatic Change 

Notifications 

This part of the proposed rule 

identifies the types of information to be 

included in the notifications, the 

methods that the Agency will use to 

disseminate this information, and when 

the notifications will be made. 

Notifications (§ 5002.15) 

This section identifies the types of 

information the Agency will include in 

the notifications, which includes the 

level of available funds, the minimum 

and maximum grant amounts, and 

various programmatic changes (e.g., 

changes in Administrator and State 

Director priority categories and points, 

changes in ranking dates, changes in 

application deadlines for those 

programs with specified application 

deadlines). The primary notification 

methods that the Agency will use to 

make this information are Federal 

Register notices for Nationallycompeted grant programs and Rural 

Development’s Web site for Stateallocated grant programs. All 

information contained in these 

notifications would also be available at 

any Rural Development office. 

Notifications involving funding will 

be made each fiscal year for each grant 

program. Notifications involving 

changes in Administrator and State 

Director priority categories and points 

will be made at least 30 days prior to the 

first ranking date in the year or the 

application deadline, as applicable. 

Notifications involving all other 

programmatic changes will be made on 

an as needed basis. 

Eligibility 

This section covers requirements 

associated with both applicant and 

project eligibility and is divided into 

four sections, which are described 

below. In order for a project to be 

considered for a grant, both the 

applicant and the project must be 

determined by the Agency to be eligible. 

Applicant Eligibility (§ 5002.20) 

This section identifies the 

requirements for applicant eligibility. 

For an applicant to be eligible for a grant 

under this part, the applicant must meet 

the criteria in this section and the 

applicant eligibility criteria in subpart B 

for the applicable grant program. The 

program-specific applicant eligibility 

requirements found in subpart B for the 

program under which their project falls 

are discussed later in this preamble 

when the individual programs are 

presented. 

This section identifies two common 

applicant eligibility requirements that 

all applicants must meet. These two 

criteria address citizenship 

(§ 5002.20(a)) and legal authority and 

responsibility (§ 5002.20(b)). 

To be eligible, an applicant must 

either (1) be a citizen 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 (2) reside in the 

U.S. after legal admittance for 

permanent residence. If the applicant is 

an entity other than an individual, the 

applicant must be at least 51 percent 

owned by persons who are either 

citizens of one of the countries 

identified above or legally admitted 

permanent residents residing in the U.S. 

In addition, the applicant must have, 

or be able to obtain, the legal authority 

to carry out the purposes of the grant. 

Ineligible Applicants (§ 5002.21) 

This section identifies criteria that 

would make an applicant ineligible for 

a grant under this part. An applicant 

would be ineligible if the applicant (1) 

Is debarred, suspended, or otherwise 

excluded from or ineligible for 

participation in Federal assistance 

programs under Executive Order 12549, 

(2) has an outstanding judgment 

obtained by the U.S. in a Federal Court 

(other than U.S. Tax Court), (3) is 

delinquent on the payment of Federal 

income taxes, or (4) is delinquent on 

Federal debt. These conditions are 

generally consistent with those found in 

the current programs. 

Project Eligibility (§ 5002.22) 

This section identifies three criteria 

required for a project to be eligible to 

receive a grant under this part. To be 

eligible, a project must meet the criteria 

in this section that are applicable to the 

project, unless otherwise specified in 

subpart B for a specific program. For 

most programs, additional project 

eligibility criteria are found in subpart 

B for specific programs. Thus, for a 

project to be eligible for a grant under 

this part, the project must meet both the 

applicable criteria in this section (unless 

otherwise specified in subpart B) and 

the criteria in subpart B for the 

applicable grant program. 

A grant application for a project that 

meets its applicable project eligibility 

criteria as specified in subparts A and 

B will not automatically receive grant 

funding. However, a project that fails to 

meet any one of its applicable project 

eligibility criteria would be 

automatically ineligible for 

consideration for a grant, regardless of 

the other attributes of the project. 

Primarily serve a rural area. The first 

criterion (§ 5002.22(a)), which applies to 

all projects and purposes, except those 

under the Value-Added Producer grant 

program (§ 5002.105) and the Rural 

Energy for America grant program 

(§ 5002.102), addresses the purpose of 

the project—the project must primarily 

serve a rural area. This criterion is 

generally consistent with what the 

current programs require, but, unless 

otherwise specified in subpart B, does 

not require the project to be physically 

located within a rural area. 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61217 

For both the Value-Added Producer 

grant program and the Rural Energy for 

America grant program, the rule would 

require all projects to be located in a 

rural area. For the Rural Energy for 

America grant program, the Agency is 

proposing to continue the current 

requirement that the project must be 

located in a rural area. For the ValueAdded Producer grant program, 

however, this is a new requirement from 

the current program. 

Ownership and control requirement. 

The second criterion (§ 5002.22(b)) 

applies only to those projects and 

purposes that acquire or improve real or 

personal property, unless otherwise 

specified in subpart B. This criterion 

requires the applicant to be the owner 

of the property or have leasehold 

interest acceptable to the Agency in the 

project and control the revenues and 

expenses of the project, including 

operation and maintenance. 

Service area selection. The third 

criterion (§ 5002.22(c)) applies only to 

those projects and purposes that are 

determined by a service area. This 

criterion specifies that the proposed 

service area of the project must be 

chosen in a way that no user or area is 

excluded because of race, color, 

religion, sex, marital status, age, 

disability, or national origin. This 

criterion, where applicable, is the same 

as found under the current regulations 

of the Community Facilities and the 

Water and Waste Disposal Facilities 

grant programs. 

To reiterate, a project or purpose must 

meet each one of the project eligibility 

criteria applicable to it in order to be 

eligible for a grant. Meeting only some 

of the criteria is insufficient to be 

eligible. These criteria cannot be waived 

under the Exception Authority 

(§ 5002.4). 

Ineligible Projects and Purposes 

(§ 5002.23) 

This section identifies projects and 

purposes that are ineligible for grants 

under this part regardless of whether the 

project meets the conditions specified in 

subpart B and § 5002.22. These projects 

represent primarily an aggregation of 

projects and purposes already 

prohibited under the programs being 

included in today’s proposed 

rulemaking. The Agency added to this 

aggregation a number of additional 

projects and purposes as ineligible, 

which are identified earlier in this 

preamble. 

As also noted earlier in this preamble, 

the Agency will provide a notification 

as needed to identify additional projects 

or purposes that the Agency has 

determined are ineligible for grants 

under this part. 

Applying for a Grant 

Applying for a Grant (§ 5002.30) 

This section discusses the submittal 

of preapplications and applications 

when applying for a grant. For most 

applicants, submitting a preapplication 

is optional, but is required by the 

Departmental regulation incorporated 

herein for certain government 

applicants based on criteria contained 

in the Departmental regulations. This 

section also points out that the 

submission of a preapplication, or the 

lack thereof, does not affect in any way 

the evaluation and scoring of the 

subsequent application, and applicants 

who submit a preapplication do not 

receive any priority for funding. 

This section also contains 

requirements for the filing of 

preapplications and applications, 

including: 

• When they are to be submitted; 

• Where to submit them; and 

• Their format. 

Lastly, this section addresses 

incomplete applications. The Agency 

will reject incomplete applications. If 

the Agency receives an incomplete 

application, the Agency will notify the 

applicant of the elements that made the 

application incomplete. The Agency 

points out that applicants need to 

consider that applications must be 

submitted sufficiently ahead of the 

applicable application deadline to allow 

for Agency review, notification to the 

applicant of missing elements, and 

resubmittal of the application before the 

applicable application deadline. If a 

resubmitted application is received by 

the applicable application deadline, the 

Agency will reconsider the application. 

Preapplications (§ 5002.31) 

This section presents the 

requirements associated for submitting 

preapplications, and applies to both 

Nationally-competed grants and to 

State-allocated grants. Submittal of a 

preapplication or, in lieu of a 

preapplication, a written request for an 

eligibility determination, is optional 

unless otherwise required under the 

Departmental regulations (as defined in 

§ 5002.2). In addition, all applicants 

(governmental and non-governmental) 

must comply with the provisions of the 

Departmental regulations when 

submitting a preapplication. 

This section also points out that, 

unless the preapplication is required by 

department regulations, the Agency’s 

assessment of applicant and project 

eligibility based on a preapplication is 

advisory in nature and does not 

constitute a formal determination by the 

Agency of either applicant or project 

eligibility. The formal determination of 

eligibility would be made once the 

application is received. If the 

preapplication is submitted because it is 

required by the Departmental 

regulations, the Agency will assess it in 

accordance with the Departmental 

regulations. 

Applications (§ 5002.32) 

This section identifies the application 

forms required for grant applications 

under this part and states that the 

Agency will make available to the 

public program-specific application 

packages, which will include the 

necessary forms and instructions for 

filing an application for the specific 

grant program. For some programs, 

additional application requirements are 

being proposed. These are found in 

subpart B and are discussed later in this 

preamble. 

Finally, all applications must be 

consistent with Departmental 

regulations and must be submitted with 

the appropriate standard form (i.e., 

forms in the SF 424 series). 

Processing Applications 

Processing Applications (§ 5002.40) 

This section identifies the process 

that the Agency will use to review and 

process applications including the 

initial review of application, 

notification to the applicants of the 

Agency’s review results, the resubmittal 

of applications, and subsequent 

ineligibility determinations. The 

processing of applications was 

discussed earlier in the preamble (see 

Section D, Item 5). 

Application Withdrawal (§ 5002.41) 

This section outlines actions to be 

performed by the applicant and the 

Agency if, during the period between 

the submission of an application and 

the execution of documents, the project 

is no longer viable or the applicant no 

longer is requesting financial assistance 

for the project. Upon such notification 

by the applicant, the Agency will either 

withdraw the application or, if it has 

already been selected for funding, 

rescind the selection of the application. 

Application Scoring 

Scoring Applications (§ 5002.42) 

This section identifies the process 

that the Agency will use to score 

applications. As noted earlier in this 

preamble, the Agency will only score 

applications for which it has 

determined that both the applicant and 


sroberts on PROD1PC70 with PROPOSALS
61218 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

project are eligible and the project is 

feasible or is likely to be feasible. 

As provided under § 5002.42(a), for 

grant programs with an open 

application period, all such applications 

received in a Federal fiscal year will be 

scored in the fiscal year in which it was 

submitted unless it is received after the 

last ranking date of the fiscal year for 

that program. Unless a program issues a 

notification indicating otherwise, this 

would be August 15. If the application 

is received after the last ranking date of 

the fiscal year, the Agency will score the 

application no later than the first 

ranking date of the next fiscal year. 

Such applications will be scored against 

the priority categories and their point 

values effective for the next fiscal year. 

For grant programs with a specified 

application deadline, each such 

application received will be scored in 

the year it was received unless it is 

received after the applicable application 

deadline. Any application received after 

the application deadline for that 

program will not be considered by the 

Agency. 

As stated in § 5002.42(b), the Agency 

will score applications for each grant 

program based on the priority categories 

and their associated points using the 

procedures specified in subpart B. This 

paragraph also states that the Agency 

will score applications based on the 

information supplied by the applicant at 

the time the applicant submits the 

application to the Agency. 

Paragraphs (b)(1) and (2) of this 

section present, respectively, the 

inclusive list of Administrator and State 

Director priority categories that each 

grant program may consider when 

awarding points for these priority 

categories. The specific set of priority 

categories that each program will 

consider in scoring applications, and 

the points that can be awarded for these 

priority categories, are found in subpart 

B for each grant program. 

Awarding Grants 

Award Process (§ 5002.50) 

This section describes the award 

process that will be used in selecting 

application for (potential) funding. 

As stated in § 5002.50(a), the Agency 

will rank all scored applications for 

each program on or after each ranking 

date for that program to create a priority 

list of all scored applications for 

consideration for (potential) funding. 

(Note that the ranking dates for each 

program are found in subpart B.) If the 

ranking date falls on a weekend or a 

Federally-observed holiday, the next 

Federal business day will become the 

applicable ranking date. Finally, 

applications that are ranked in a given 

Federal fiscal year will be considered 

for selection for funding for the fiscal 

year in which the application was 

ranked. 

Paragraph (b) of this section describes 

the process the Agency will use in 

selecting applications for funding or for 

potential funding. From a program’s 

priority list, the Agency will select 

applications for funding using criteria 

specified in § 5002.50(b)(1)(i) through 

(iii) (which were discussed earlier in 

this preamble in Section D, Item 7) and 

any additional program-specific criteria 

found in subpart B for the grant 

program. Selection of applications for 

funding will also be conducted in a 

manner consistent with the 

Departmental regulations. For each 

application selected for (potential) 

funding, the Agency will notify the 

applicant in writing. 

Paragraph (c) of this section identifies 

the process the Agency will use for 

applications that are selected for 

(potential) funding, but are not funded. 

This process was described earlier in 

this preamble in Section D, Item 7. 

Lastly, § 5002.50(d) addresses the 

process the Agency will use if a State or 

local government raises objections to a 

proposed project under the 

intergovernmental review process and 

the objections are not resolved within 

90 days of the Agency’s selection of the 

application. 

Grant Agreements and Conditions 

This section addresses the grant 

agreement and conditions that 

recipients (and subrecipients) of grants 

are required to satisfy in order to receive 

the grant funds and to be complied with 

once the grant agreement has been 

signed and funds awarded. 

Actions Prior to Grant Closing or Start 

of Construction, Whichever Occurs First 

(§ 5002.60) 

This section addresses three areas— 

excess grant funds (§ 5002.60(a)), 

evidence and disbursement of other 

funds (§ 5002.60(b), and the acquisition 

of land, easements, water rights, and 

existing facilities (§ 5002.60(c)). The 

proposed requirements in this section 

are consistent with existing program 

implementation. 

As stated in § 5002.60(a), which 

addresses excess grant funds, the 

Agency will reassess the applicant’s 

funding needs whenever there is a 

significant reduction in project cost or a 

change in project scope. This paragraph 

identifies the factors and procedures 

that the Agency will use in making this 

reassessment and any attending 

decreases in funding needs. The Agency 

will deobligate any obligated grant 

funds not needed to complete the 

project. 

Under § 5002.60(b), which addresses 

evidence of and disbursement of other 

funds, applicants expecting funds from 

other sources for use in completing 

projects being partially financed with 

Agency funds would be required to 

present evidence of the commitment of 

these funds from such other sources. An 

agreement should be reached with all 

funding sources on how funds are to be 

disbursed before the start of 

construction. 

Lastly, under § 5002.60(c), which 

addresses acquisition of land, 

easements, water rights, and existing 

facilities, applicants would be 

responsible for acquiring all property 

rights necessary for the project and 

determining that prices paid are 

reasonable and fair. The Agency may 

require an appraisal by an independent 

appraiser or Agency employee. 

Requirements are specified for rights-ofway and easements (§ 5002.60(c)(1)), for 

title for land and for existing facilities 

(§ 5002.60(c)(2)), for water rights, and 

for lease agreements (§ 5002.60(c)(3)). 

Grant Agreement (§ 5002.61) 

The section identifies the documents 

and steps that the Agency will use to 

enter into a grant agreement with the 

applicant. 

Section 5002.61(a) states that the 

Agency will notify each applicant 

whose application has been selected for 

funding using a letter of conditions. The 

letter of conditions will set out the 

conditions under which the grant will 

be made. After reviewing the conditions 

and requirements set forth in the letter 

of conditions, if the applicant agrees 

with those conditions, the applicant 

would be required to acknowledge, in 

writing, acceptance of the conditions. If, 

however, the applicant believes that 

certain conditions cannot be met, the 

applicant may propose alternate 

conditions to the Agency. The Agency 

must concur with any changes proposed 

to the letter of conditions by the 

applicant before the application will be 

further processed. 

As provided under § 5002.61(b), the 

Agency will execute grant awards 

through the issuance of an Agencyapproved grant agreement between the 

Agency and the grantee. In addition, 

other documents as identified by the 

Agency will be executed. The Agency 

notes that it will not advance any grant 

funds to the grantee until this agreement 

is signed by the grantee. 

As provided under § 5002.61(c), the 

Agency will execute cooperative 

agreements through the issuance of an 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61219 

Agency-approved cooperative 

agreement, or similar Agency-approved 

document, between the Agency and the 

recipient of the cooperative agreement. 

In addition, other documents as 

identified by the Agency will be 

executed. Finally, this paragraph states 

that there will be significant Agency 

involvement in cooperative agreements. 

Lastly, § 5002.61(d) states that the 

Agency will disburse grant funds 

according to the letter of conditions or 

the grant agreement, as applicable. 

Use of Remaining Funds (§ 5002.62) 

This section provides requirements on 

the handling of funds that remain after 

all costs incident to the basic project 

have been paid or provided for as 

follows: 

• Remaining funds are not to include 

grantee contributions (§ 5002.62(a)). 

• Remaining funds may be refunded 

to each source in direct proportion to 

the amounts obtained from each source 

(§ 5002.62(b)). 

• Remaining funds may be used for 

eligible grant purposes, provided the 

use will not result in major changes to 

the project, the purpose of the grant 

remains the same, and the project 

remains within its original scope 

(§ 5002.62(c)). 

Under § 5002.62(d), grant funds not 

expended after being used for eligible 

grant purposes will be canceled. Before 

the Agency cancels these unexpended 

grant funds, the Agency will provide 

written notification to the grantee of the 

Agency’s intent to cancel the remaining 

funds. 

Post Award Activities and Requirements 

Monitoring and Reporting Program 

Performance (§ 5002.70) 

In § 5002.70(a), the Agency will 

monitor grantees to the extent necessary 

to ensure that facilities are constructed 

in accordance with Agency-approved 

plans and specifications and to ensure 

that funds are expended for approved 

purposes. 

Section 5002.70(b) would require 

grantees to submit performance reports 

on a semiannual basis, unless otherwise 

specified in subpart B, and a final 

performance report. The semiannual 

performance reports are to include a 

comparison of accomplishments with 

the objectives stated in the application. 

The grantee would also be required to 

submit additional reports that may be 

specified in the grant agreement, in a 

notification issued under § 5002.15, or 

as specified in subpart B. 

Finally, the Agency is reserving the 

right to collect additional project and/or 

performance data for projects that have 

received grant funds. 

Programmatic Changes and Budget 

Revisions (§ 5002.71) 

In addition to the requirements 

specified in the Departmental 

regulations, this section would allow 

the Agency, at its sole discretion, to 

require an applicant to submit a new 

application if there is a change to the 

scope of the project whose application 

has been selected. If a new application 

is submitted, it would be re-ranked in 

accordance with this part. 

Transfer of Obligations (§ 5002.72) 

This section addresses the conditions 

under which an obligation of funds 

established for an applicant can be 

transferred to a different (substituted) 

applicant. The two conditions are: 

• The substituted applicant is 

eligible, has a close and genuine 

relationship with the original applicant, 

and has the authority to receive the 

assistance approved for the original 

applicant (§ 5002.72(a)); and 

• The need, purpose(s), and scope of 

the project for which the Agency funds 

will be used remain substantially 

unchanged (§ 5002.72(b)). 

Grant Close Out and Related Activities 

Grant Close Out and Related Activities 

(§ 5002.80) 

This section addresses grant close out 

for all grants awarded under this part. 

In addition to requiring compliance 

with the Departmental regulations, this 

section allows the Agency to suspend or 

terminate a grant if the grantee fails to 

submit satisfactory reports on time 

under the provisions of § 5002.70(b). 

Subpart B—Program-Specific Provisions 

Subpart B presents the programspecific requirements for each of the 

programs covered by this subpart. 

Community Facilities (§ 5002.101) 

This section identifies programspecific requirements for community 

facility projects. The prospective grantee 

must comply both with subpart A 

provisions and the provisions in this 

section when seeking a community 

facilities grant. The program-specific 

provisions for community facility 

projects follow. 

Applicant Eligibility 

To be eligible for a community 

facilities grant, an applicant must not 

only meet the applicant eligibility 

criteria specified in subpart A, but also 

the applicant eligibility criteria 

specified in subpart B for this program. 

Specifically, the subpart B criteria 

(§ 5002.101(a)), which are the same as 

for the current program, are: 

• The applicant must be a public 

body, such as a municipality, county, 

district, authority, or other political 

subdivision of a State; a non-profit 

corporation or association; or a 

Federally recognized Indian tribe; and 

• The applicant must have significant 

ties with the local rural community. 

Such ties are necessary to ensure to the 

greatest extent possible that a facility 

under private control will carry out a 

public purpose and continue to 

primarily serve rural areas. 

The proposed rule identifies two 

conditions under which ties with the 

local rural community can be 

evidenced. These conditions, which are 

not exclusive, are: 

• Association with, or controlled by, 

a local public body or bodies or broadly 

based ownership and controlled by 

members of the community, and 

• Substantial public funding through 

taxes, revenue bonds, or other local 

government sources, or substantial 

voluntary community funding such as 

would be obtained through a 

community-wide funding campaign. 

These community tie provisions are 

the same as found in the current 

Community Facilities regulation. 

Project Eligibility 

To be eligible for community facilities 

grant funding, the project would have to 

meet the applicable project eligibility 

requirements specified in subpart A and 

be for an essential community facility 

(§ 5002.101(b)). Essential community 

facilities include, but are not limited to, 

fire, rescue, health and public safety 

facilities or equipment, 

telecommunications, supplemental and 

supporting structures for other rural 

electrification or telephone systems, the 

purchase of major equipment that in 

themselves provide an essential service 

to rural residents, and the purchase of 

facilities necessary to improve or 

prevent a loss of service. 

In addition, subpart B requires 

community facility projects to: 

• Be located in a rural area (except for 

eligible utility-type of facilities such as 

hydroelectric and telecommunication 

systems); 

• Meet certain median household 

income and population requirements for 

those to be served by the project; 

• Be based on satisfactory sources of 

revenue; 

• Have an applicant who is 

responsible for operating, maintaining, 

and managing the facility and providing 

for its continued availability and use at 

reasonable rates and terms; and 

• Be unable to finance the proposed 

project from their own resources or 


sroberts on PROD1PC70 with PROPOSALS
61220 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

through commercial credit at reasonable 

rates and terms. 

These conditions are the same as 

found in the current grant program for 

community facilities. 

Uses of Grant Funds 

Subpart B for community facilities 

grants identifies additional eligible and 

ineligible uses of grant funds 

((§ 5002.101(c) and (d), respectively). 

These uses are the same as found in the 

current implementation of the 

Community Facilities grant program, 

with the exception, as discussed below, 

of adding two additional eligible uses 

and identifying recreational facilities 

(except for community parks and 

community wellness centers) as an 

ineligible use. Eligible uses of grant 

funds (§ 5002.101(c)) include: 

• Construction, enlargement, 

extension, or otherwise improvement of 

essential community facilities providing 

essential service primarily to rural 

residents and rural businesses; 

• Construction or relocation of public 

buildings, roads, bridges, fences, or 

utilities and to make other public 

improvements necessary to the 

successful operation or protection of 

eligible facilities; 

• Relocation of private buildings, 

roads, bridges, fences, or utilities, and 

other private improvements necessary to 

the successful operation or protection of 

eligible facilities; 

• Facilities that have no more than 25 

percent of the floor space occupied by 

Federal Agencies, State Agencies, or 

other ineligible entities or purposes, 

when these entities enhance the primary 

purpose of the facility; and 

• Payment of certain expenses that 

are a necessary part of a project to 

finance eligible facilities. 

The proposed rule also adds the 

following eligible purpose: 

• Facilities that house State funded 

organizations that are typically housed 

in community funded facilities and 

offering services provided by an 

essential community facility. 

Examples of ineligible uses of grant 

funds, which are listed in § 5002.101(d), 

are: 

• Payment of initial operating 

expenses or annual recurring costs, 

including purchases or rentals that are 

generally considered to be operating and 

maintenance expenses (unless a 

Community Facilities loan is part of the 

funding package, in which case the 

grant would be part of a grant-loan 

combination and would not be subject 

to this proposed rule); 

• Construction or repair of electric 

generating plants, electric transmission 

lines, or gas distribution lines to provide 

services for commercial sale; 

• Refinancing of existing 

indebtedness; 

• Payment of interest; 

• Payment of any costs when the 

median household income of the 

population to be served is higher than 

specified percentages of the State nonmetropolitan median household 

income; 

• Recreational facilities, except for 

community parks and community 

wellness centers; and 

• Payment for any purposes restricted 

by the Community Facilities direct loan 

program (see 7 CFR 1942.17(d)(2)). 

One type of project that the Agency is 

adding to the list of ineligible projects 

under the Community Facilities grant 

program is recreational facilities, with 

two exceptions as discussed below. The 

Community Facilities grant program is, 

and has been, oversubscribed; that is, it 

receives more grant requests than it can 

fund. The Agency has found that the 

types of grant requests it receives are 

usually for projects that more directly 

address essential community needs, 

such as health and safety needs, than do 

most recreational facilities. Given this 

situation, it is highly unlikely that 

recreational facilities would be funded. 

Thus, the Agency is proposing to 

include recreational facilities, except as 

discussed below, in the list of ineligible 

projects. If the Agency does not 

explicitly exclude recreational facilities, 

except as indicated, applicants might be 

otherwise encouraged to submit 

applications with little chance of 

scoring high enough relative to other 

types of projects to be funded. 

As noted above, the Agency is 

proposing to allow grants to be used for 

two types of recreational facilities. 

These are community parks and 

community wellness centers. 

Community parks could include sport 

fields that would be used for citizenbased sports (e.g., youth soccer league 

fields, community softball fields), but 

would exclude professional and semiprofessional sports venues. Many 

communities have found that providing 

community parks and community 

wellness centers allow them to attract 

and, equally important, retain citizens. 

The Agency believes that these two 

types of recreational facilities provide 

an essential service to such 

communities and should be eligible for 

grants under the Community Facilities 

grant program. 

Finally, with regard to recreational 

facilities that would be excluded from 

the Community Facilities grant program, 

the Agency recognizes that conditions 

may change in the future such that the 

Agency would accept applications for 

other types of recreational facilities. If 

this occurs, the Agency would propose 

to allow specific types of recreational 

facilities, through a proposed 

rulemaking change, to apply for a 

Community Facilities grant. 

Funding Limitations and Matching 

Funds 

The proposed rule incorporates the 

current Community Facilities grant 

program’s maximum grant assistance 

and funding limitations 

(§ 5002.101(e)(1) and (e)(2), 

respectively). The proposed rule 

(§ 5002.101(e)(3)), consistent with the 

current program, allows funding of the 

balance of project costs to consist of 

other Community Facilities financial 

assistance, applicant contributions, and 

loans and grants from other sources. 

However, other Federal grant funds 

cannot be used as matching funds 

unless provide by other authorizing 

legislation. 

Scoring Applications 

The priority categories and points 

associated with those priority categories 

that would be used to score applications 

are identified in § 5002.101(f)(1) through 

(3), and are divided into programspecific priority categories and points, 

Administrator priority categories and 

points, and State Director priority 

categories and points. The maximum 

number of points an application can 

receive would be 100 points. 

The program-specific priority 

categories and points are in 

§ 5002.101(f)(1). These priority 

categories are the same as currently 

used in scoring community facilities 

grant applications, with two minor 

differences (i.e., the population levels 

for a couple of scoring criteria changed 

and under ‘‘Other priorities,’’ the 

proposed rule replaces conformance 

with State strategic plan with 

educational facility). The points 

associated with the priority categories, 

however, have been modified to total 70 

points. The relative point values were 

not changed between priority categories. 

The Administrator and State Director 

priority categories and points are 

identified in § 5002.101(f)(2) and (f)(3), 

respectively. With regard to 

Administrator priority categories and 

points, the Community Facilities grant 

program would allow the Administrator 

to award up to 20 points (compared to 

10 points for the other grant programs) 

to improve the geographic diversity of 

awardees in a fiscal year. The current 

Community Facilities grant program 

identifies additional Administrator 

priority categories, which are generally 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61221 

covered in subpart A of the proposed 

rule. 

With regard to State Director priority 

categories, the Community Facilities 

grant program would use the State 

Director priority categories identified in 

§ 5002.42(b)(2)(i) through (x) under 

subpart A and could award up to 10 

points for the State Director priority 

categories. The proposed State Director 

priority categories expand upon and 

repackage those found in the current 

regulation. 

Ranking Applications 

Unless otherwise specified in a 

notification, the Agency will rank grant 

applications under this program four 

times per year (§ 5002.101(g)). The 

proposed ranking dates are (in the order 

in which they occur each fiscal year): 

December 15, March 15, July 15, and 

August 15. 

Additional Criteria for Selecting 

Applications 

Consistent with Departmental 

regulations, § 5002.101(h) would allow 

the Agency to consider in selecting 

applications for funding whether an 

application is a subsequent request for 

a previously approved project. If the 

lower scoring application is for the 

continuation of an existing funded 

project, the Agency may give the lower 

scoring application consideration ahead 

of a higher scoring application. 

However, if the request for additional 

grant funds is due to cost overruns, the 

Agency will give consideration to the 

lower scoring application only if the 

cost overrun is due to certain causes. 

Specifically, the cost overruns must be 

due to either high bids or unexpected 

construction problems neither of which 

can be reduced by negotiations, 

redesign, use of bid alternatives, 

rebidding, or other means. However, if 

the cost overrun exceeds 20 percent of 

the development cost at time of grant 

approval or if the scope of the original 

purpose has changed, the Agency would 

not use this criterion as a factor in 

choosing a lower scoring application 

over a higher scoring application. Such 

an application could still be selected for 

funding, but it would need to compete 

based on its ranking and other award 

criteria. 

Public Information Process 

This section (§ 5002.101(i)) would 

require all grants awarded under this 

section to comply with the public 

information process specified for 

community facilities direct loan 

program (see 7 CFR part 1942.17(j)(9)), 

as is currently required for community 

facilities grants. This public information 

process, in part, requires the applicant 

to inform the general public regarding 

the development of any proposed 

project. 

Rural Energy for America (§ 5002.102) 

This section identifies programspecific requirements for renewable 

energy system or energy efficiency 

improvement projects. The prospective 

grantee must comply both with subpart 

A provisions and the provisions in this 

section when seeking a Rural Energy for 

America grant. The program-specific 

provisions for renewable energy systems 

and energy efficiency improvement 

projects follow. 

Applicant Eligibility 

To be eligible for a Rural Energy for 

America grant, an applicant must not 

only meet the applicant eligibility 

criteria specified in subpart A of the 

proposed rule, but also the applicant 

eligibility criteria specified in subpart B 

for this program. Specifically, the 

subpart B criteria (§ 5002.102(a)) require 

the applicant to be an agricultural 

producer or rural small business. This 

requirement is the same as in the 

current program for renewable energy 

systems and energy efficiency 

improvement grants. However, unlike 

the current program, the applicant 

would no longer be required to 

demonstrate financial need to be 

considered an eligible applicant. This 

change was made as a result of the 2008 

Farm Bill. As noted below, the Agency, 

however, is incorporating financial need 

as a scoring criterion. 

Project Eligibility 

To be eligible for a Rural Energy for 

America grant, a project would have to 

meet the applicable project eligibility 

requirements in subpart A and subpart 

B requirements (§ 5002.102(b)). Subpart 

B identifies two general types of 

projects—(1) those for renewable energy 

systems and energy efficiency 

improvements (§ 5002.102(b)(1)) and (2) 

those for feasibility studies 

(§ 5002.102(b)(2)). 

Under § 5002.102(b)(1), the project 

must: 

• Be for the purchase, installation, 

expansion, and/or other energy-related 

improvement of a renewable energy 

system or to make energy efficiency 

improvements; 

• Be located in a rural area; 

• Be for technology that is replicable 

and either pre-commercial or 

commercially available; and 

• Have technical merit as determined 

by the Agency. If the Agency determines 

that the project is without technical 

merit, the project would be ineligible for 

a grant. 

Under § 5002.102(b)(2), feasibility 

studies are eligible projects provided 

they are for a project that meets the 

criteria specified in § 5002.102(b)(1). 

The project eligibility provisions in 

§ 5002.102(b)(1), and those in subpart A 

for project eligibility, are found in the 

current regulations for this program. 

The project eligibility provisions in 

§ 5002.102(b)(2) are being included in 

response to section 9007 of the 2008 

Farm Bill. 

Additional Preapplication and 

Application Requirements 

In addition to the preapplication and 

application requirements specified in 

subpart A, subpart B for this program 

contains program-specific provisions for 

the submittal of preapplications and 

applications (§ 5002.102(c)). If an 

applicant elects to submit a 

preapplication, it must be received by 

the Agency on or before January 15 to 

be considered for funding by the Agency 

for that fiscal year. 

For applications, the proposed rule 

would require applications to be 

received by the Agency on or before 

June 15 each year to be considered for 

funding for that fiscal year. Applications 

received by the Agency after June 15 

would not receive consideration for 

funding for that fiscal year. 

The proposed rule also allows for the 

submittal of lower documentation 

applications (referred to as ‘‘simplified 

applications’’ under the current 

program) for renewable energy systems 

and energy efficiency improvement 

projects. The proposed rule contains 

criteria to determine if an applicant is 

eligible to submit a lower 

documentation application. These 

criteria are: 

• Total eligible project costs are 

$200,000 or less; and 

• The proposed project uses either 

commercially available renewable 

energy systems or energy efficiency 

improvements. 

In addition, the applicant would be 

required to agree to grant 

reimbursement after the project is 

completed. Project completion would be 

demonstrated when the applicant has 

provided a written final project 

development, testing, and performance 

report acceptable to the Agency. 

The proposed criteria for submitting a 

lower documentation application are 

consistent with the current program. 

The current regulation, however, has 

additional criteria (e.g., addressing 

project construction, timeframe for 

project completion, and interim 

financing) that the Agency is not 


sroberts on PROD1PC70 with PROPOSALS
61222 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

including in this proposed rule. Such 

information would still be considered 

by the Agency in evaluating grant 

applications, but would use the 

application package for this program to 

ensure such information was included 

in the application. 

As under the current program, it is the 

Agency’s intent to allow lower 

documentation applications to exclude 

certain financial information and the 

business-level study for renewable 

energy systems from the application. In 

addition, the technical reports 

associated with lower documentation 

applications can be less detailed than 

other applications submitted under this 

program. For example, the technical 

reports for lower documentation 

applications are not required to provide 

authoritative evidence that project 

service providers have the necessary 

professional credentials or relevant 

experience to perform the required 

services. Instead, such technical reports 

are to list all key service providers. 

Eligible Project Costs 

Subpart B for Rural Energy for 

America grants identifies eligible project 

costs (§ 5002.102(d)(1) through (9)). 

These eligible project costs are the same 

as allowed under the current grant 

program for these types of projects. 

The proposed rule would allow 

eligible project costs in mixed business 

and residential projects under certain 

circumstances. Eligible project costs 

would apply to a mixed business and 

residential renewable energy system or 

energy efficiency improvement project if 

the applicant is an agricultural 

producer. However, if the mixed 

business and residential project is from 

an applicant who is a rural small 

business, the proposed rule would allow 

these eligible project costs to apply to 

the applicant’s project only if the 

residential portion of the project is less 

than 25 percent of the square footage of 

the entire project. 

Funding Limitations, Matching Funds, 

Availability of Other Funding, and 

Grant-Loan Guarantee Combinations 

The proposed funding limitation 

provisions (§ 5002.102(e)(1)), which are 

the same as in the current Renewable 

Energy Systems and Energy Efficiency 

Improvement regulation, would limit: 

• The amount of grant assistance to 

an eligible project under this program to 

25 percent of total eligible project costs, 

which are identified in § 5002.102(e); 

and 

• The maximum amount of grant 

assistance to one individual or entity to 

no more than $750,000 in any one 

Federal fiscal year. 

In meeting the applicant share of costs 

(§ 5002.102(e)(2)), other Federal grant 

funds and applicant in-kind 

contributions would not be allowed. 

Third-party, in-kind contributions, 

however, would be allowed, provided 

they do not exceed 10 percent of the 

matching fund requirement. Passive 

investor contributions would be 

acceptable. 

Finally, the Agency seeks to leverage 

the amount of funds available to 

grantees by requiring certain applicants 

seeking grants of over $50,000 to seek 

loan guarantees before being considered 

for grant funds (§ 5002.102(e)(3)). In 

addition, the 2008 Farm Bill encourages 

the Agency to fund smaller grant 

requests. The Agency, therefore, is 

proposing provisions to make the 

program more available to those seeking 

smaller grants. 

Specifically, if the size of the grant 

amount being requested in the 

application is $50,000 or less, the 

Agency will consider funding the 

application on its own merit, without 

consideration of other sources of 

funding. However, if the size of the 

grant amount being requested in the 

application is more than $50,000, the 

Agency will consider funding the 

application only to the extent that: 

1. The applicant cannot obtain a loan 

guaranteed by the Agency for any 

portion of the project; or 

2. The amount being requested in the 

grant application is necessary for the 

bank to make a guaranteed loan to the 

applicant. 

If neither of the two situations 

described above exist, then the Agency 

will not consider the application under 

this rule. 

As noted in this preamble, the 

proposed rule is specific to ‘‘grant only’’ 

projects. However, there is an associated 

issue with projects seeking a grant-loan 

guarantee combination under this 

program. In fiscal year 2008, the Agency 

began funding the grant portion of a 

grant-loan guarantee combination from 

the monies administratively allocated 

for loan guarantees. The Agency intends 

to continue this practice subject to 

future appropriations. 

Grant Award Amount 

As under the current grant program, 

the Agency will take into account 

certain criteria when determining the 

amount of a grant to be awarded 

(§ 5002.102(f)). The eight criteria being 

proposed are: 

• The type of renewable energy 

system to be purchased; 

• The estimated quantity of energy to 

be generated by the renewable energy 

system; 

• The expected environmental 

benefits of the renewable energy system; 

• The extent to which the renewable 

energy system will be replicable; 

• The amount of energy savings 

expected to be derived from the activity, 

as demonstrated by an energy audit 

comparable to an energy audit under 7 

U.S.C. 8105; 

• The estimated length of time it 

would take for the energy savings 

generated by the activity to equal the 

cost of the activity; 

• The expected energy efficiency of 

the renewable energy system; and 

• The amount of energy output per 

amount of grant award. 

Six of these eight criteria are in the 

current regulation. The seventh 

criterion, expected energy efficiency of 

the renewable energy system, is 

required under section 9007 of the 

Food, Conservation, and Energy Act of 

2008 (2008 Farm Bill). The eighth 

criterion, energy output per amount of 

grant award, is being proposed as part 

of the results on an Office of Inspector 

General audit that recommended 

considering such a criterion for this 

program. 

Scoring Applications 

The priority categories and points 

associated with those priority categories 

that would be used to score applications 

are identified in § 5002.102(g)(1) and 

(g)(2), and are divided into programspecific priority categories and points 

and Administrator priority categories 

and points. The maximum number of 

points an application can receive would 

be 100 points. 

The program-specific priority 

categories and points are in 

§ 5002.102(g)(1). With two exceptions, 

these priority categories are the same as 

currently used in scoring renewable 

energy systems and energy efficiency 

improvement grant applications. One 

exception is the award of points for 

‘‘hybrid technology’’ projects (i.e., a 

combination of two or more renewable 

energy technologies incorporated into a 

single project), which replaces the 

‘‘previous grantee/borrowers’’ priority 

category. The other exception is the 

award of points for demonstrated 

financial need. Demonstrated financial 

need is being proposed as a scoring 

criterion because it is no longer an 

eligibility criterion and the Agency has 

determined that an applicant’s financial 

need is an appropriate criterion for 

receiving a grant under this program. 

The points associated with the 

priority categories, however, have been 

modified to total 90 points. The relative 

point values between priority categories 

have been modified slightly, with the 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61223 

largest change associated with 

environmental benefits. 

The Administrator priority categories 

and points are identified in 

§ 5002.102(g)(2). The current program 

regulation does not address 

Administrator priority categories. The 

Rural Energy for America grant program 

would allow the Administrator to award 

an application up to 10 points in the 

following priority categories: 

• Unserved or underserved areas; 

• Geographic diversity; 

• Emergency conditions; 

• Public health and safety; and 

• Presidential initiatives. 

Ranking Applications 

Unless otherwise specified in a 

notification, the Agency will rank grant 

applications under this program twice 

each year, on or after March 15 and on 

or after July 15 (§ 5002.102(h)). 

Rural Cooperative Development Grants 

(§ 5002.103) 

This section identifies programspecific requirements for rural 

cooperative development projects. The 

prospective grantee must comply both 

with subpart A provisions and the 

provisions in this section when seeking 

a rural cooperative development grant. 

The program-specific provisions for 

rural cooperative development projects 

follow. 

Definition 

The proposed rule provides a specific 

definition (§ 5002.103(a)) for the word 

‘‘Center,’’ because this term has a 

unique meaning when used in the 

context of rural cooperative grants. 

Applicant Eligibility 

To be eligible for a rural development 

cooperative grant, an applicant must not 

only meet the applicant eligibility 

criteria specified in subpart A of the 

proposed rule, but also the applicant 

eligibility criterion specified in subpart 

B for this program. Specifically, this 

subpart B criterion (§ 5002.103(b)), 

which is the same as in the current 

Rural Cooperative Development grant 

regulation, requires that the applicant to 

be a non-profit organization or 

institution, including an accredited 

institution of higher education. Public 

bodies would not be eligible to receive 

grants under this section. 

Project Eligibility 

To be eligible for a rural cooperative 

development grant, a project would 

have to meet the applicable project 

eligibility requirements in subpart A 

and the following subpart B 

requirements (§ 5002.103(c)): 

• Applications that focus on only one 

cooperative will not be considered for 

funding; 

• Except for 1994 Institutions, the 

applicant must provide 25 percent of 

total project cost; and 

• Applications that provide for the 

sharing of information among centers 

will not be considered for funding if 

more than 10 percent of the funding 

request is for the provision of sharing of 

information among centers. 

The first and third project eligibility 

criteria are consistent with the current 

implementation of this program. The 

second criterion is being added as a 

result of the 2008 Farm Bill. 

The Agency notes that it is proposing 

to include specifically in the regulation 

the ‘‘sharing of information among 

centers’’ as an eligible project purpose 

(§ 5002.103(c)(3)), but to limit the 

amount of funds that can be awarded to 

this purpose. The Agency is proposing 

to include sharing of information as an 

eligible project purpose because such 

sharing can assist other centers with 

proven strategies in cooperative 

development that could possibly be 

transferred to other areas of the nation. 

However, the goal of the Rural 

Community Development grant program 

is to facilitate the creation of jobs in 

rural areas through development of new 

rural cooperative, value added 

processing, and rural businesses. With a 

historically-limited funded program, the 

sharing of information among centers is 

not necessarily the highest priority for 

funding at the current time. Therefore, 

the Agency is proposing the 10 percent 

limit on the amount of grant funds that 

can be awarded to this purpose. 

Additional Application Requirements 

In addition to the application 

requirements specified in subpart A, 

subpart B for this program 

(§ 5002.103(d)) would require the 

applicant to include in the application 

a plan for the establishment and 

operation by the institution of a center 

or centers for cooperative development. 

This plan, which is required under the 

current regulations for rural cooperative 

development grants, must contain 

specific elements, which are statutorily 

required (§ 5002.103(d)(1) through (5)). 

Uses of Grant Funds 

Subpart B for rural cooperative 

development grants identifies eligible 

and ineligible uses of grant funds 

(§ 5002.103(e) and (f), respectively). 

These uses are generally consistent with 

those allowed under the current grant 

program (7 CFR 4284, subpart A) for 

these types of projects. 

Grant Agreement and Conditions 

Under paragraph § 5002.103(g), three 

conditions would affect the term of the 

grant agreement. The first two of the 

conditions (§ 5002.103(g)(1) and (2)) are 

required under section 6013 of the 2008 

Farm Bill, while the third condition 

(§ 5002.103(g)(3)) is part of the current 

implementation of this program. These 

three conditions are: 

• A grant awarded to a center that has 

received no prior funding under this 

section shall be made for a period of one 

year; 

• If the Agency determines that it is 

in the best interest of the program, 

grants will be awarded for a period of 

more than one year, but not more than 

three years, to a center that has 

successfully met the parameters 

described in § 5002.103(i)(1)(i) through 

(v), as determined by the Agency; and 

• The Agency will not approve 

requests to extend the grant period for 

more than 12 months. 

Funding Limitations and Matching 

Funds 

Under paragraph § 5002.103(h)(1), the 

maximum amount of a grant awarded 

under this section for 1994 Institutions 

would be no more than 95 percent of the 

total cost of the Center. The Agency 

would be prohibited from requiring a 

match of more than 5 percent of the 

total cost of the Center. This is 

consistent with current program 

requirements. 

Paragraph § 5002.103(h)(2) addresses 

requirements associated with matching 

funds. The proposed matching fund 

requirements are the same as under the 

current program and address, in general, 

the form of the matching funds, the 

acceptable sources for matching funds, 

and the use of the matching funds. 

Scoring Applications 

The priority categories and points 

associated with those priority categories 

that would be used to score applications 

are identified in proposed 

§ 5002.103(i)(1) and (i)(2), and are 

divided into program-specific priority 

categories and points and Administrator 

priority categories and points. The 

maximum number of points an 

application can receive would be 100 

points. 

The program-specific priority 

categories and points are in 

§ 5002.103(i)(1). These priority 

categories are similar to those currently 

used in scoring rural community 

development grant applications, with 

some modification as required under 

section 6013 of the 2008 Farm Bill. 

Specifically, the priority categories of 


sroberts on PROD1PC70 with PROPOSALS
61224 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

‘‘linkages’’ and ‘‘matching funds’’ have 

been removed, and a priority category 

for ‘‘networking and regional focus’’ has 

been added. In addition, the points 

associated with the priority categories 

have been modified to total 90 points. 

The relative point values were not 

changed between priority categories. 

The Administrator priority categories 

and points are identified in 

§ 5002.103(i)(2). The Administrator may 

award an application up to 10 points to 

improve the geographic diversity of 

awardees in a fiscal year. 

Ranking Applications 

Unless otherwise specified in a 

notification, the Agency will rank grant 

applications under this program once 

each year, on or after July 15 

(§ 5002.103(j)). 

Additional Criteria for Selecting 

Applications for Funding 

If two projects obtain the same score, 

the Agency will select the project whose 

score for the five criteria identified in 

the authorizing statute for this program 

(§ 5002.103(i)(1)(i) through (v)) is higher 

(§ 5002.103(k)). 

Distance Learning and Telemedicine 

Grants (§ 5002.104) 

This section identifies programspecific requirements for distance 

learning and telemedicine projects. The 

prospective grantee must comply both 

with subpart A provisions and the 

provisions in this section when seeking 

a distance learning and telemedicine 

grant. The program-specific provisions 

for distance learning and telemedicine 

projects follow. 

Definition 

The proposed rule provides a specific 

definition (§ 5002.104(a)) for the term 

‘‘Telecommunications or electric 

borrower,’’ because this term has a 

unique meaning when used in the 

context of the Distance Learning and 

Telemedicine grant program. 

Applicant Eligibility 

To be eligible for a distance learning 

or telemedicine grant, an applicant must 

not only meet the applicant eligibility 

criteria specified in subpart A of the 

proposed rule, but also the applicant 

eligibility criteria specified in subpart B 

for this program. Specifically, these 

subpart B criteria (§ 5002.104(b)), which 

are in the current Distance Learning and 

Telemedicine grant regulation, require 

that: 

• The applicant be legally organized 

as an incorporated organization or 

partnership; be an Indian tribe or tribal 

organization, as defined in 25 U.S.C. 

450b (b) and (c); be a state or local unit 

of government or a consortium; or be an 

other legal entity, including a private 

corporation organized on a for profit or 

not-for profit basis; and 

• The applicant have the legal 

capacity to contract with the Agency to 

obtain the grant, and comply with all 

applicable requirements. If a consortium 

lacks the legal capacity to contract, each 

individual entity must contract with the 

Agency on its own behalf. 

Individuals would not be eligible for 

grants under this program directly. 

Further, entities that are electric or 

telecommunication borrowers under the 

Rural Electrification Act of 1936 would 

not be eligible for grants under this 

program provided, however, that such 

borrowers are eligible for funding under 

the Distance Learning Telemedicine 

Combination Loan and Grant Program 

(7 CFR 1703, subpart D) and the 

Distance Learning Telemedicine Loan 

Program 

(7 CFR 1703, subpart G). These 

eligibility requirements and conditions 

are in the current Distance Learning and 

Telemedicine grant program. 

Project Eligibility 

To be eligible for a grant under this 

program, a project would have to meet 

the applicable project eligibility 

requirements in subpart A and the 

following subpart B program-specific 

requirements (§ 5002.104(c)): 

• The project must deliver distance 

learning or telemedicine services to 

entities that operate a rural community 

facility, including libraries, or to 

residents of rural areas at rates 

calculated to ensure that the benefit of 

the financial assistance is passed 

through to such entities or to residents 

of rural areas; and 

• DLT end-user sites must be located 

in one of the four rural areas identified 

in § 5002.104(h)(1)(ii)(A), although the 

DLT hub site may be located in either 

a rural or non-rural area. DLT end-user 

facilities not within one of these four 

defined rural areas are not eligible for 

grant funding under this section. 

The first of these two criteria is in the 

current Distance Learning and 

Telemedicine grant regulation. The 

second criterion, however, is new, as 

discussed in the following paragraph. 

Under the current DLT regulation, 

each application must apply certain 

population criteria to each of its enduser sites, and hubs that are also 

proposed as end-user sites, in order to 

determine a rurality score. The rurality 

score is the average of all end-user sites’ 

rurality scores. For the project to be 

eligible, the average score of the end 

user sites must meet a specified 

minimum threshold score. Under the 

current scheme for determining the 

project’s eligibility, non-rural end user 

sites are eligible as long as the minimum 

rurality score is met. This was not a 

desired outcome by the Agency. 

Therefore, all end user sites in each 

application would be required to be in 

a rural area in order to be eligible, and, 

thus, the current minimum rurality 

score criterion is unnecessary. 

Additional Preapplication and 

Application Requirements 

In addition to the preapplication and 

application requirements specified in 

subpart A, subpart B for this program 

contains program-specific provisions for 

preapplications and applications 

(§ 5002.104(d)). 

If an applicant submits a 

preapplication (either as required or 

voluntarily), the proposed rule would 

require the preapplication to be received 

on or before January 1 each year in order 

to be considered for funding in that 

fiscal year. If the Agency receives a 

preapplication after January 1, it will 

not consider the preapplication. 

For applications, the proposed rule 

would require an original and two 

copies of the application to be 

submitted. In addition, all applications 

must be received on or before March 31 

of each year to be considered for 

funding for that fiscal year. If the 

Agency receives the application after 

March 31, it will not be considered for 

funding. Lastly, the applicant must 

include with the application evidence 

from the Agency State Director, Rural 

Development that the application 

conforms with the State strategic plan as 

prepared under section 381D of the 

Consolidated Farm and Rural 

Development Act (7 U.S.C. 1921 et seq.). 

If a State strategic plan does not exist, 

the applicant should so indicate in its 

application. 

Uses of Grant Funds 

Subpart B for this program identifies 

additional eligible and ineligible uses of 

grant funds (§ 5002.104(e) and (f), 

respectively). These uses are the same as 

found in the current program for these 

types of projects. 

Funding Considerations and Matching 

Funds 

Consistent with the implementation 

of the current program, § 5002.104(g)(1) 

limits the amount of funds (to 10 

percent) that can be used when an 

application includes any of the three 

purposes identified in § 5002.104(e)(3), 

(e)(4), or (e)(5). This limit applies 

whether the application contains one, 

two, or all three of these eligible uses. 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61225 

The provisions for matching funds 

(§ 5002.104(g)(2)) are consistent with the 

current Distance Learning and 

Telemedicine grant regulation. 

Applicants would be required to 

provide at least 15 percent of the grant 

amount requested (i.e., grant funds can 

be used to pay up to 85 percent of the 

cost of the project). Matching funds 

must generally be in the form of cash. 

In-kind contributions may be 

substituted for cash if they are used 

solely for the purposes specified in 

§ 5002.104(e). Additional in-kind 

contribution requirements are specified 

in § 5002.104(g)(2)(ii) through (iv). 

Lastly, any financial assistance from 

Federal sources would not be 

considered as matching contributions 

for this program unless there is a 

Federal statutory exception specifically 

authorizing the Federal financial 

assistance to be considered as a 

matching contribution, and that 

exception is documented in the 

application. 

Scoring Applications 

The priority categories and points 

associated with those priority categories 

that would be used to score applications 

are identified in § 5002.104(h)(1) and 

(2), and are divided into programspecific priority categories and points 

and Administrator priority categories 

and points. The maximum number of 

points an application can receive would 

be 100 points. 

The program-specific priority 

categories and points are in 

§ 5002.104(h)(1). While covering the 

same areas as the program-specific 

priority categories used in grant 

applications under the current program, 

the proposed rule greatly consolidates 

the scoring into three priority categories, 

which are: 

• Critical need for the project; 

• Comparative population sparsity of 

the service area; and 

• The economic need of the 

applicant’s service area. 

The points associated with these 

priority categories have been modified 

to total 90 points, with points being 

assigned as 35 for critical need, 30 for 

population sparsity, and 25 for 

economic need of the applicant’s service 

area. 

Under the current program, the 

Administrator may select a lower 

scoring application for funding in order 

to improve geographic diversity without 

including Administrator points in the 

application’s scoring. Under the 

proposed rule, the Agency would retain 

the ability of the Administrator to 

consider geographic diversity in 

selecting applications for funding, but 

would require the actual awarding of 

points to applications. As provided for 

in § 5002.104(h)(2), the Distance 

Learning and Telemedicine grant 

program would allow the Administrator 

to award an application up to 10 points 

to improve the geographic diversity of 

awardees in a fiscal year. 

Ranking Applications 

Unless otherwise specified in a 

notification, the Agency will rank grant 

applications under this program once 

each year, on or after July 15 

(§ 5002.104(i)). 

Value-Added Producer Grants 

(§ 5002.105) 

This section identifies programspecific requirements for value-added 

producer projects. The prospective 

grantee must comply both with subpart 

A provisions and the provisions in this 

section when seeking a value-added 

producer grant. The program-specific 

provisions for value-added producer 

projects follow. 

Definitions 

Several terms are being defined in 

§ 5002.105(a) because the terms have a 

unique meaning when used in the 

context of the Value-added producer 

grant program. The terms being defined 

are: ‘‘agricultural producer,’’ ‘‘beginning 

farmer or rancher,’’ ‘‘family farm,’’ 

‘‘special purpose equipment,’’ and 

‘‘socially disadvantaged farmer or 

rancher.’’ 

Applicant Eligibility 

To be eligible for a value-added 

producer grant, an applicant must not 

only meet the applicant eligibility 

criteria specified in subpart A of the 

proposed rule, but also the applicant 

eligibility criteria specified in subpart B 

for this program. Specifically, the 

subpart B criteria (§ 5002.105(b)), which 

are in the current Value-Added 

Producer grant regulation, require that: 

• The applicant be an independent 

producer, an agricultural producer 

group, a farmer or rancher cooperative, 

or a majority-controlled, producer-based 

business; and 

• If the applicant is a farmer or 

rancher cooperative, an agriculture 

producer group, or a majority-controlled 

producer-based business venture, the 

applicant must be entering into an 

emerging market as a result of the 

proposed project. This requirement does 

not apply to an independent producer 

because the authorizing statute does not 

require it. 

Examples of agricultural producers 

include: A logger who has a majority 

interest in the logs harvested that are 

then converted to boards, a fisherman 

that has a majority interest in the fish 

caught that are then smoked, a wild 

herb gatherer that has a majority interest 

in the gathered herbs that are then 

converted into essential oils, a cattle 

feeder that has a majority interest in the 

cattle that are fed, slaughtered and sold 

as boxed beef, and a corn grower that 

has a majority interest in the corn 

produced that is then converted into 

corn meal. 

Venture Eligibility 

To be eligible for a value-added 

producer grant, a venture would have to 

meet the eligibility requirements found 

in § 5002.105(c) in subpart B, which 

requires the venture to evidence a high 

likelihood of creating value-added for 

an agricultural product by meeting at 

least one of the following categories: (1) 

A change in its physical state, (2) 

differentiated production or marketing, 

as demonstrated in a business plan, or 

(3) product segregation. The project 

eligibility requirements in § 5002.22 in 

subpart A would not apply in 

determining venture eligibility. 

Other program-specific considerations 

that the Agency will use in determining 

whether an application for a venture 

under this program will be considered 

are: 

• The venture must be located in a 

rural area; 

• Working capital grants must have a 

feasibility study and business plan 

completed specifically for the proposed 

venture before the application is 

submitted. The feasibility study and 

business plan must be submitted when 

requested by the Agency during 

application processing; 

• Applicants who have already 

received a planning grant for the 

proposed venture would be ineligible to 

receive another planning grant for the 

same venture. Applicants who have 

already received a working capital grant 

for a venture would be ineligible to 

receive any additional grants for that 

venture; 

• No venture may be the subject of 

more than one planning grant or more 

than one working capital grant under 

this section. The same venture may, 

however, be awarded one planning 

grant and subsequently apply for and 

receive a working capital grant; 

• Not more than one venture per 

funding cycle per applicant may receive 

grant funding under this program; and 

• If the agricultural product is a 

value-added product, agricultural 

producers must have a majority 

ownership interest in the agricultural 

product to which value-added is to 

accrue. 


sroberts on PROD1PC70 with PROPOSALS
61226 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

These requirements and 

considerations are currently being used 

in implementing the Value-Added 

Producer grant program. 

Uses of Grant Funds 

Subpart B for value-added producer 

grants identifies additional eligible and 

ineligible uses of grant funds 

(§ 5002.105(d) and (e), respectively). 

The eligible uses, which depend on 

whether the grant is a planning grant or 

a working capital grant, and ineligible 

uses, which are the same for both types 

of grants, are general consistent with the 

current grant program for these projects 

(7 CFR 4284, subparts A and J). 

Additional Preapplication and 

Application Requirements 

In addition to the preapplication and 

application requirements specified in 

subpart A, subpart B for this program 

contains program-specific provisions for 

preapplications and applications 

(§ 5002.105(f)). 

For preapplications, if submitted, they 

must be received by the Agency on or 

before January 15 each year to be 

considered for funding in that fiscal 

year. If the Agency receives a 

preapplication after January 15, it will 

not consider the preapplication. In 

addition, all preapplications must be 

submitted to the program’s National 

Office. 

For applications, all applications 

must be received by the Agency on or 

before March 1 of each year to be 

considered for funding for that fiscal 

year. If the Agency receives the 

application after March 1, it will not be 

considered for funding. The proposed 

rule also contains program-specific 

application requirements for business 

plans and feasibility studies. Business 

plans must include at least three years 

of pro forma financial statements. 

Feasibility studies should show how the 

venture would operate under a set of 

assumptions, the technology used, the 

qualifications of the management team, 

and the financial aspects of the venture. 

Lastly, in response to section 6013 of 

the 2008 Farm Bill, applicants with 

ventures requesting less than $50,000 

would be allowed to submit 

applications with less documentation 

(referred to as ‘‘simplified 

applications’’). 

Grant Agreement and Conditions 

As required by the 2008 Farm Bill, the 

length of grant agreements made under 

this section would not be allowed to not 

exceed three years (§ 5002.105(g)). 

Funding Limitation and Matching 

Funds 

Consistent with the current ValueAdded Producer grant regulation, grant 

funds can be used to pay up to 50 

percent of the cost of the venture and 

the aggregate amount of awards to 

majority controlled producer-based 

business ventures may not exceed ten 

percent of the total funds obligated 

under this program during any fiscal 

year (§ 5002.105(h)(1)). The proposed 

rule would also limit the total amount 

of grant funds awarded to a recipient in 

any one year to $500,000. 

The provisions for matching funds 

(§ 5002.105(h)(2)) are also consistent 

with those being used for the current 

Value-Added Producer grant program. 

Specifically, 

• Applicants must verify in their 

applications that matching funds are 

available for the time period of the 

grant; 

• Matching funds must be at least 

equal to the amount of grant funds 

requested; 

• Unless provided by other 

authorizing legislation, other Federal 

grant funds cannot be used as matching 

funds; 

• Matching funds must be spent at a 

rate equal to or greater than the rate at 

which grant funds are expended; and 

• Matching funds must be provided 

by either the applicant or by a third 

party in the form of cash or in-kind 

contributions. 

Scoring Applications 

The priority categories and points 

associated with those priority categories 

that would be used to score applications 

are identified in § 5002.105(i), and are 

divided into program-specific priority 

categories and points and Administrator 

priority categories and points. The 

maximum number of points an 

application can receive would be 100 

points. 

The program-specific priority 

categories and points are in 

§ 5002.105(i)(1). While covering the 

same areas as these priority categories 

used in grant applications under the 

current program, the proposed rule 

greatly consolidates the scoring into 

four priority categories, and adds a fifth 

category (type of applicant), in response 

to section 6202 of the 2008 Farm Bill. 

These priority categories, which apply 

to both planning grants and working 

capital grants, are: 

• Nature of the proposed venture; 

• Personnel qualifications; 

• Commitments and support; 

• Work plan/budget; and 

• Type of applicant. 

The points associated with these 

priority categories have been modified 

to total 90 points, with up to 25 points 

available for the first two criteria (nature 

of the proposed venture and personnel 

qualifications) and up to 20 points 

available for the last two criteria 

(commitments and support and work 

plan/budget). 

The Administrator priority categories 

and points are identified in 

§ 5002.105(i)(2). The Value-Added 

Producer grant program would allow the 

Administrator to award an application 

up to 10 points to improve the 

geographic diversity of awardees in a 

fiscal year. 

Ranking Applications 

Unless otherwise specified in a 

notification, the Agency will rank grant 

applications under this program once 

each year, on or after July 15 

(§ 5002.105(j)). 

Water and Waste Disposal Facilities 

(§ 5002.106) 

This section identifies program 

specific requirements for water and 

waste disposal facilities projects. The 

prospective grantee must comply both 

with subpart A provisions and the 

provisions in this section when seeking 

a water or waste disposal facilities grant. 

The program-specific provisions for 

water and waste disposal facilities 

projects follow. 

General 

Consistent with the current Water and 

Waste Disposal Facilities grant 

regulations, § 5002.106(a) discusses the 

Agency’s general expectations of the 

experience and expertise of all 

applicants for water and waste disposal 

facilities projects. 

Applicant Eligibility 

To be eligible for a water and waste 

disposal facilities grant, a prospective 

grantee must not only meet the 

eligibility criteria specified in subpart A 

of the proposed rule, but also the 

applicant eligibility criterion specified 

in subpart B for this program. This 

program-specific criterion 

(§ 5002.106(b)) requires the applicant to 

be one of the following: 

• A public body, such as a 

municipality, county, district, authority, 

or other political subdivision of a State 

located in a rural area; 

• An organization operated on a notfor-profit basis, such as an association, 

cooperative, or private corporation. The 

organization must be an association 

controlled by a local public body or 

bodies, or have a broadly based 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61227 

ownership by or membership of people 

of the local community; or 

• An Indian tribe on a Federal or 

State reservation or any other Federallyrecognized Indian tribe. 

This criterion is found in the current 

Water and Waste Disposal Facilities 

grant program. 

Project Eligibility 

To be eligible for a water and waste 

disposal facilities grant, the project 

would have to meet the applicable 

project eligibility requirements specified 

in subpart A and program-specific 

project eligibility criteria found in 

subpart B for this program. The project 

eligibility criteria in subpart B require, 

in summary (§ 5002.105(c)(1) through 

(6)), that the project: 

• Serve a rural area that, if such 

project is completed, is not likely to 

decline in population below that for 

which the project was designed; 

• Be designed and constructed so that 

adequate capacity will or can be made 

available to serve the present population 

of the area to the extent feasible and to 

serve the reasonably foreseeable growth 

needs of the area to the extent 

practicable; 

• Must be necessary for orderly 

community development and consistent 

with a current comprehensive 

community water, waste disposal, or 

other current development plan for the 

rural area; 

• Must be based on taxes, 

assessments, income, fees, or other 

satisfactory sources of revenues in an 

amount sufficient to provide for facility 

operation and maintenance, reasonable 

reserves, and debt payment; 

• Must be for public use and installed 

so as to serve any potential user within 

the service area who desires service and 

can be feasibly and legally served; and 

• Be unable to finance the proposed 

project from their own resources or 

through commercial credit at reasonable 

rates and terms. 

These criteria are the same as found 

in the current Water and Waste Disposal 

Facilities grant program. 

Notice of Intent To Apply for Grant 

Consistent with its statutory authority 

and the current program, subpart B for 

this program (§ 5002.106(d)) would 

require an applicant to provide public 

notice of its intent to apply for a grant 

under this program at not more than 60 

days before the applicant files its 

application with the Agency. 

Uses of Grant Funds 

Subpart B for water and waste 

disposal facilities grants identifies 

additional eligible and ineligible uses of 

grant funds (§ 5002.106(e) and (f), 

respectively). The proposed eligible and 

ineligible uses in the current grant 

program for these types of projects. 

Funding Considerations and Matching 

Funds 

Proposed subpart B identifies 

additional funding considerations that 

the Agency will use in determining 

whether or not to fund an application. 

These considerations, which are found 

in § 5002.106(g)(1) and are consistent 

with the current provisions for grants 

for this program, are, in summary: 

• If the grant results in an annual 

equivalent dwelling unit (EDU) cost that 

is not comparable with similar systems, 

the Agency will determine a grant 

amount based on achieving EDU costs 

that are not below similar system user 

costs; 

• The amount of grant needed to 

achieve a reasonable wholesale user cost 

if the applicant provides wholesale sales 

or services on a contract basis to another 

system or entity; and 

• The amount necessary to reduce 

delivery cost to a reasonable level when 

the annual cost for delivery of service is 

subsidized. 

The provisions for matching funds 

(§ 5002.106(g)(2)) are consistent with the 

current Water and Waste Disposal 

Facilities grant regulation—either 75 

percent or 45 percent, depending on the 

median household income of the service 

area relative to the poverty line or state 

nonmetropolitan median income. 

Scoring Applications 

The priority categories and points 

associated with those priority categories 

that would be used to score applications 

are identified in § 5002.106(h)(1) 

through (3), and are divided into 

program-specific priority categories and 

points, Administrator priority categories 

and points, and State Director priority 

categories and points. The maximum 

number of points an application can 

receive would be 100 points. 

The program-specific priority 

categories and points are in 

§ 5002.106(h)(1). These priority 

categories are the same as currently 

used in scoring water and waste 

disposal facilities grant applications. 

The points associated with the priority 

categories, however, have been modified 

to total 80 points. The relative point 

values were not changed between 

priority categories. 

The Administrator and State Director 

priority categories and points are 

identified in § 5002.106(h)(2) and (h)(3), 

respectively. With regard to 

Administrator priority categories and 

points, the Water and Waste Disposal 

Facilities grant program would allow 

the Administrator to award up to 10 

points based on grant size and to 

improve the geographic diversity of 

awardees in a fiscal year. No more than 

10 Administrator points would be 

awarded to an application. 

With regard to State Director priority 

categories, the Water and Waste 

Disposal Facilities grant program would 

use the State Director priority categories 

identified in subpart A 

(§ 5002.42(b)(2)(i) through (x)) plus two 

additional priority categories. These two 

priority categories are: 

• Arsenic (as specified in a 

memorandum of understanding with the 

USEPA); and 

• Areas located within 100 miles of 

New York City’s ‘‘ground zero’’ as the 

result of the September 11, 2001, 

attacks. 

Each application under this program 

is eligible for up to 10 points for the 

State Director priority categories. 

Ranking Applications 

Unless otherwise specified in a 

notification, the Agency will rank grant 

applications under this program four 

times per year (§ 5002.106(i)). The 

proposed ranking dates are (in the order 

in which they occur each fiscal year): 

December 15, March 15, July 15, and 

August 15. 

Selecting Applications for Funding— 

Continuing Projects 

Consistent with Departmental 

regulations, the Agency will, in 

selecting applications for funding, 

consider whether an application is for a 

project that has previously received 

grant funding from the Agency 

(§ 5002.106(j)). In this situation, the 

Agency may give a lower scoring 

application consideration ahead of a 

higher scoring application if the lower 

scoring application is for the 

continuation of an existing funded 

project. However, if the request for 

additional grant funds is due to cost 

overruns, the Agency will give 

consideration to the lower scoring 

application only if the cost overrun is 

due to certain causes. Specifically, the 

cost overruns must be due to either high 

bids or unexpected construction 

problems neither of which can be 

reduced by negotiations, redesign, use 

of bid alternatives, rebidding, or other 

means. However, if the cost overrun 

exceeds 20 percent of the development 

cost at time of grant approval or if the 

scope of the original purpose has 

changed, the Agency would not use this 

criterion as a factor in choosing a lower 

scoring application over a higher 

scoring application. Such an application 


sroberts on PROD1PC70 with PROPOSALS
61228 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

could still be selected for funding, but 

it would need to compete based on its 

ranking and other award criteria. 

User Charges 

Consistent with the current program, 

§ 5002.106(k) identifies expectations for 

user charges. Specifically, user charges 

should be reasonable and produce 

enough revenue to provide for all costs 

of the facility after the project is 

complete. In addition, the planned 

revenue should be sufficient to provide 

for all debt service, debt reserve, 

operation and maintenance, and, if 

appropriate, additional revenue for 

facility replacement of short-lived assets 

without building a substantial surplus. 

Professional Services and Contracts 

Related to the Facility 

Consistent with the current program, 

§ 5002.106(l) identifies specific 

requirements for the Water and Waste 

Disposal Facilities grant program related 

to professional services and contracts 

for these types of projects. Areas 

specifically covered, which are part of 

the current grant program for water and 

waster disposal projects, are: 

• Fees provided in contracts and 

agreements; 

• Engineering and architectural 

services; 

• Other professional services; and 

• Contracts for other services. 

User Estimates 

Consistent with the current Water and 

Waste Disposal Facilities grant program, 

§ 5002.106(m) would require applicants 

who are dependent on users’ fees for 

operation and maintenance expenses to 

base their income forecast on realistic 

base estimates. If users are not currently 

receiving service, the number of 

maximum users should not be used in 

making this estimate and the amount of 

cash contributions required must be set 

by the applicant and concurred with by 

the Agency. For most applicants, an 

enforceable user agreement with a 

penalty clause would be required. All 

applicants would be required to provide 

a positive program to encourage 

connection by all users as soon as 

service is available. 

Water Rights 

Consistent with the current program, 

§ 5002.106(n) would require the 

applicant to provide the Agency with, as 

applicable: 

• A statement by the applicant’s 

attorney regarding the nature of the 

water rights owned or to be acquired by 

the applicant (such as conveyance of 

title, appropriation and decree, 

application and permit, public notice 

and appropriation and use) and 

• A copy of a contract with another 

company or municipality to supply 

water; or stock certificates in another 

company which represents the right to 

receive water. 

Economic Impact Initiatives Grants 

(§ 5002.107) 

The Economic Impact Initiatives grant 

program is currently being administered 

under the Community Facilities grant 

program. The Agency is proposing to 

continue the current relationship of the 

Economic Impact Initiative grant 

program with the Community Facilities 

grant program. Except for changes that 

would occur under subpart A of the 

proposed rule, the Agency is not 

proposing any changes to the 

requirements specific to the Economic 

Impact Initiatives grant program. 

Tribal College Grants (§ 5002.108) 

As noted earlier, the Tribal College 

grant program is distinctly different 

than the other existing grant programs 

in that it is a very small grant program 

with a small, statutorily defined set of 

eligible applicants. Certain provisions in 

subpart A would apply to this program 

and certain provisions would not. The 

provisions that would apply are 

contained in §§ 5002.1 through 5002.14 

and §§ 5002.60 through 5002.80. These 

provisions generally deal with general 

requirements of the grant programs and 

with provisions affecting the actual 

award of the grants (grant agreement) 

through grant close-out. 

The provisions in subpart A that do 

not apply to Tribal College grants 

generally address program notifications, 

preapplications and applications, 

applicant eligibility, and processing, 

scoring, ranking, and selecting 

applications for funding. These aspects 

are found in the subpart B programspecific provisions for Tribal College 

grants in § 5002.108. 

Program Notification 

Consistent with current program 

implementation, the Agency will issue a 

notice each year to the eligible Tribal 

colleges and universities, identifying the 

maximum grant size and the date that 

preapplications are due (§ 5002.108(a)). 

Applicant Eligibility 

To be eligible for a Tribal College 

grant, the applicant must be one of the 

tribal colleges or universities that are 

identified as 1994 Institutions 

(§ 5002.108(b)). 

Project Eligibility 

Grant funds can only be used to 

develop facilities provided by the Tribal 

college or university (§ 5002.108(c)). 

Project eligibility requirements for 

Tribal College grants are the same as for 

the Community Facilities grant program, 

except that a Tribal College grant project 

does not need to demonstrate economic 

feasibility (§ 5002.101(b)(3)). 

Preapplications and Applications 

Both preapplications and applications 

would have dates by which each should 

be received by the Agency at the State 

Office in the State in which the Tribal 

college or university is located 

(§ 5002.108(d)). For preapplications, the 

submittal date will be identified in the 

annual notification the Agency sends to 

the Tribal colleges and universities. For 

applications, the proposed rule would 

establish March 31 as the application 

submittal date. The Agency will give 

priority to preapplications and 

applications that are received on or 

before their respective submittal dates 

over those preapplications and 

applications that are received after their 

respective submittal dates. 

The proposed rule also requires 

applicants submitting more than one 

application in a year to provide a 

priority listing for the grants it is 

seeking that year. 

Funding Limitations 

The maximum amount of a grant 

awarded under this section would be 

limited to no more than 95 percent of 

the total cost of the facility. Further, the 

Agency would be prohibited from 

requiring a match of more than 5 

percent of the total cost of the facility. 

(§ 5002.108(e)). These requirements are 

in response to section 6007 of the 2008 

Farm Bill and are different from the 

current program. 

Award Process 

In selecting applications for funding, 

the Agency will use a graduated scale, 

which is found in § 5002.101(e)(2). In 

addition, in selecting applications for 

funding (§ 5002.108(f)), the Agency may: 

• Choose to fund only one grant per 

round from a single applicant; 

• Reduce the grant amount for all 

applicants to a maximum level that will 

fund at least one application per Tribal 

college or university that applied during 

that round; and 

• Negotiate to increase the scope of 

Tribal College projects and grants if 

funds remain available after the grant 

selection round. 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61229 

III. Request for Comments 

The Agency is interested in receiving 

comments on all aspects of the proposed 

rule. In particular, the Agency is seeking 

comments in the areas listed below. All 

comments should be submitted as 

indicated in the ADDRESSES section of 

this preamble. 

A. Criteria for Determining Grant Award 

Amount for the Rural Energy for 

America Grant Program (§ 5002.102(f)) 

The Rural Energy for America 

program is an evolving area. Therefore, 

the Agency is seeking comment on 

whether there are any other criteria that 

the Agency should consider when 

awarding funding to grants under this 

program. Please be sure to provide 

sufficient detail on each criterion, how 

it would be measured, and any 

limitations in its applicability to the 

various technologies for which grants 

could be awarded under this program. 

B. Project Scoring Criteria for the Rural 

Energy for America Grant Program 

(§ 5002.102(g)(1)) 

In scoring applications under the 

Rural Energy for America grant program, 

the proposed rule would apply the same 

program-specific criteria to feasibility 

studies as to the actual renewable 

energy system project or the energy 

efficiency improvement project. Because 

the program-specific priority categories 

and points were developed under the 

current program for renewable energy 

systems and energy efficiency 

improvement projects, the Agency is 

seeking comment on whether these 

criteria are appropriate for scoring 

feasibility studies. The Agency is also 

seeking comment on alternative scoring 

criteria for feasibility studies if the ones 

in the proposed rule are not appropriate. 

Please be sure to be specific on what 

criteria you propose, how they would be 

applied, and your rationale. 

C. Minimum Funding Requirements for 

the Rural Energy for America Grant 

Program 

In the current Renewable Energy 

System and Energy Efficiency 

Improvement program, a minimum 

grant size of $1,500 is specified for 

energy efficiency improvement projects 

and $2,500 for renewable energy system 

projects. In this proposed rule, the 

Agency is not proposing a minimum 

grant size for this program. The Agency 

seeks comment on whether there should 

be a minimum grant size for either or 

both types of projects under this 

program and, if so, what that level 

should be and why. If the Agency 

decides to implement a minimum grant 

size for either type of project, the 

Agency wants to make sure that it is a 

‘‘meaningful’’ level; that is, that the 

minimum level is not so low that 

potential applicants would not consider 

applying for the grant. 

D. The Grant Programs Being Included 

in the Proposed Rule 

Earlier in this notice, the Agency 

provided an explanation as to how the 

eight grant programs were selected for 

inclusion in the proposed rule. The 

Agency is seeking comment on whether 

it is appropriate to include these 

specific grant programs and, if not, 

which of the grant programs should be 

removed and why. 

E. Grant Request Relative to Remaining 

Available Program Funds 

As proposed, the Agency would be 

able to select the next highest scoring 

application if the higher scoring 

application requests grant funds in 

excess of 25% of the remaining 

available funds for a nationally 

competed grant program. The Agency is 

seeking specific comment on whether 

the proposed threshold of 25% is 

appropriate and why or why not. The 

Agency is also seeking comment on 

alternative thresholds and on the 

applicability of such thresholds (i.e., 

should they be program-specific or 

applied to all nationally competed grant 

programs). Please be sure to provide the 

rationale for the suggested thresholds 

and their applicability. 

F. Minimum Score for Determining 

Applications To Be Eligible 

The Agency is seeking comment as to 

whether applications must obtain a 

minimum score in order to be 

considered eligible for funding and, if 

so, what that minimum score should be. 

At this stage, the Agency has considered 

a minimum score in the vicinity of 40 

points, but has decided at this point not 

to include a specific number in the 

proposed rule. By including such a 

minimum score, applicants would be 

given an understanding of how an 

application must score to receive 

consideration. However, the Agency is 

also concerned about the merits of 

establishing such a uniform score 

upfront without consideration of the 

availability of funds as well as the size 

and quality of the applicant pool. 

If the Agency were to establish a 

minimum score, the Agency would 

consider including a provision that 

would allow it to adjust the minimum 

score each year through the issuance of 

a notification (e.g., a Federal Register 

notice). 

List of Subjects 

7 CFR Part 1703 

Community development, Grant 

programs—education, Grant programs— 

health care, Grant programs—housing 

and community development, Reporting 

and recordkeeping requirements, Rural 

areas. 

7 CFR Part 1780 

Business and industry, Community 

development, Community facilities, 

Grant programs—housing and 

community development, Reporting and 

recordkeeping requirements, Rural 

areas, Waste treatment and disposal, 

Water supply, Watersheds. 

7 CFR Part 3570 

Accounting, Administrative practice 

and procedure, Conflicts of interests, 

Environmental impact statements, Fair 

housing, Grant programs—housing and 

community development, Loan 

programs—housing and community 

development, Rural areas, Subsidies. 

7 CFR Part 4280 

Rural development assistance, 

Economic development, Energy, Grant 

programs, Renewable energy systems, 

Energy efficiency improvements, Rural 

areas. 

7 CFR Part 4284 

Agricultural commodities, Agriculture 

innovation centers, Agricultural 

marketing research, Business and 

Industry, Grant programs—housing and 

community development, Rural areas, 

Rural development, Value-added. 

7 CFR Part 5002 

Accounting, Agriculture innovation 

centers, Community development, 

Economics, Energy efficiency 

improvements, Environmental impact 

statements, Renewable energy systems, 

Rural areas, Rural development, Valueadded, Waste treatment and disposal, 

Water supply. 

For the reasons set forth in the 

preamble, under the authority at 5 

U.S.C. 301 and 7 U.S.C. 1989, Chapters 

XVII, XXXV, and XLII of title 7 of the 

Code of Federal Regulations are 

proposed to be amended and Chapter L 

is proposed to be amended as follows: 

CHAPTER XVII—RURAL UTILITIES 

SERVICE, DEPARTMENT OF 

AGRICULTURE 

PART 1703—Rural Development 

1. The authority citation for part 1703 

continues to read as follows: 

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

et seq. 


sroberts on PROD1PC70 with PROPOSALS
61230 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

Subpart E of Part 1703 [Removed and 

reserved] 

2. Subpart E of part 1703 is removed 

and reserved. 

CHAPTER XVII—RURAL UTILITIES 

SERVICE, DEPARTMENT OF 

AGRICULTURE 

PART 1780—Rural Development 

3. The authority citation for part 1780 

continues to read as follows: 

Authority: U.S.C. 301; 7 U.S.C. 1989; 16 

U.S.C. 1005. 

Subpart A of Part 1780 [Amended] 

4. Section 1780.10 is amended by 

removing paragraph (b)(4) and revising 

paragraphs (b)(2) and (b)(3) to read as 

follows: 

§ 1780.10 Limitations. 

(a) * * * 

(b) * * * 

(1) * * * 

(2) Pay any costs of a project when the 

median household income of the service 

area is more than 100 percent of the 

nonmetropolitan median household 

income of the State; and 

(3) Pay project costs when other loan 

funding for the project is not at 

reasonable rates and terms. 

* * * * * 

CHAPTER XXXV—RURAL HOUSING 

SERVICE, DEPARTMENT OF 

AGRICULTURE 

PART 3570—Community Programs 

5. The authority citation for part 3570 

continues to read as follows: 

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

Subpart B of Part 3570 [Amended] 

6. Section 3570.51 is amended by 

adding paragraphs (a)(1) and (a)(2) to 

read as follows: 

§ 3570.51 General. 

(a) * * * 

(1) The provisions of 7 CFR part 3570, 

subpart B, do not apply to grants made 

under 7 CFR part 5002. 

(2) Grants made in combination with 

loans that are issued under either 7 CFR 

part 1942, subpart A or 7 CFR part 5001 

shall be subject to the requirements of 

7 CFR part 3570, subpart B. 

* * * * * 

CHAPTER XLII—RURAL BUSINESS— 

COOPERATIVE SERVICE AND RURAL 

UTILITIES SERVICE, DEPARTMENT OF 

AGRICULTURE 

PART 4280—LOANS AND GRANTS 

7. The authority citation for part 4280 

continues to read as follows: 

Authority: 7 U.S.C. 8106. 

Subpart B of Part 4280 [Amended] 

8. Section 4280.101 is amended by 

adding paragraphs (a)(1) and (a)(2) to 

read as follows: 

§ 4280.101 Purpose. 

(a) * * * 

(1) The provisions of 7 CFR part 4280 

,subpart A, do not apply to grants made 

under 7 CFR part 5002. 

(2) Grants made in combination with 

loans that are issued under 7 CFR part 

4280, subpart D, shall be subject to the 

requirements of 7 CFR part 4280, 

subpart A. 

* * * * * 

PART 4284—GRANTS 

9. The authority citation for part 4284 

continues to read as follows: 

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

Subpart F also issued under 7 U.S.C. 

1932(e). 

Subpart G also issued under 7 U.S.C. 

1926(a)(11). 

Subpart J also issued under 7 U.S.C. 

1621 note. 

Subpart K also issued under 7 U.S.C. 

1621 note. 

Subpart F of Part 4284 [Removed and 

Reserved] 

10. Subpart F of part 4284 is removed 

and reserved. 

Subpart J of Part 4284 [Removed and 

Reserved] 

11. Subpart J of part 4284 is removed 

and reserved. 

12. Chapter L consisting of parts 5000 

through 5099 is established and a new 

part 5002 is added to read as follows: 

CHAPTER L—RURAL DEVELOPMENT, 

DEPARTMENT OF AGRICULTURE 

PART 5002—GRANTS 

Subpart A—General Provisions 

Sec. 

5002.1 Purpose and scope. 

5002.2 Definitions and abbreviations. 

5002.3 Appeal rights. 

5002.4 Exception authority. 

5002.5 Compliance with other Federal laws. 

5002.6 State laws, local laws, and 

regulatory commission regulations. 

5002.7 Environmental requirements. 

5002.8 Forms, regulations, and instructions. 

5002.9—5002.14 [Reserved] 

Funding and Programmatic Change 

Notifications 

5002.15 Notifications. 

5002.16—5002.19 [Reserved] 

Eligibility 

5002.20 Applicant eligibility. 

5002.21 Ineligible applicants. 

5002.22 Project eligibility. 

5002.23 Ineligible projects and purposes. 

5002.24—5002.29 [Reserved] 

Applying for a Grant 

5002.30 Applying for a grant. 

5002.31 Preapplications. 

5002.32 Applications. 

5002.33—5002.39 [Reserved] 

Processing and Scoring Applications 

5002.40 Processing applications. 

5002.41 Application withdrawal. 

5002.42 Scoring applications. 

5002.43—5002.49 [Reserved] 

Awarding Grants 

5002.50 Award process. 

5002.51—5002.59 [Reserved] 

Grant Agreements and Conditions 

5002.60 Actions prior to grant closing or 

start of construction, whichever comes 

first. 

5002.61 Grant agreement. 

5002.62 Use of remaining funds. 

5002.63—5002.69 [Reserved] 

Post Award Activities and Requirements 

5002.70 Monitoring and reporting program 

performance. 

5002.71 Programmatic changes and budget 

revisions. 

5002.72 Transfer of obligations. 

5002.73—5002.79 [Reserved] 

Grant Close Out and Related Activities 

5002.80 Grant close out and related 

activities. 

5002.81—5002.100 [Reserved] 

Subpart B—Program Specific Provisions 

5002.101 Community Facilities. 

5002.102 Rural Energy for America Grants. 

5002.103 Rural Cooperative Development 

Grants. 

5002.104 Distance Learning and 

Telemedicine Grants. 

5002.105 Value-Added Producer Grants. 

5002.106 Water and Waste Disposal 

Facilities Grants. 

5002.107 Economic Impact Initiatives 

Grants. 

5002.108 Tribal College Grants. 

5002.109—5002.200 [Reserved] 

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

1926(a)(1); 7 U.S.C. 1932(a); 7 U.S.C. 8106. 

Subpart A—General Provisions 

§ 5002.1. Purpose and scope. 

(a) General. The purpose and scope of 

this part is to simplify, standardize, and 

improve the administration and 

implementation of grants and 

cooperative agreements made by Rural 

Development. This part applies to those 

grant and cooperative agreement 

programs specified in subpart B of this 

part. 

(b) Terminology applicable to subpart 

A. This subpart’s substantive rules are 

the same for grants and cooperative 

agreements. Therefore, certain 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61231 

simplified terminology is used in the 

text. Specifically in all portions of this 

subpart: 

(1) Each provision that applies to 

‘‘grants’’ also applies to ‘‘cooperative 

agreements,’’ even if the latter term does 

not appear in the provisions unless the 

context otherwise means specifically 

cooperative agreement. 

(2) Each provision that applies to 

‘‘applicants’’ for grants or ‘‘grantees’’ 

applies to ‘‘applicants’’ for cooperative 

agreements or ‘‘recipients of cooperative 

agreements,’’ even if the latter terms do 

not appear in the provision unless the 

context otherwise means specifically a 

cooperative agreement applicant or 

recipient. 

(3) The term ‘‘grantee’’ or ‘‘applicant’’ 

refers equally to recipients or applicants 

of grants and recipients or applicants of 

cooperative agreements. 

(4) The term ‘‘Agency’’ refers equally 

to a Rural Development agency that 

awards a grant and to one that awards 

a cooperative agreement. 

(5) The term ‘‘subgrant’’ refers equally 

to certain awards under grants and to 

the same kinds of awards under 

cooperative agreements. 

(c) Applicability. (1) ‘‘Grant only’’ 

applications. Unless otherwise specified 

in another part, the requirements of this 

part apply only to applicants submitting 

a ‘‘grant only’’ application. Any grant 

that is requested in combination with a 

loan (a loan and grant combination) will 

be determined based on the process 

associated with loan selection. 

(2) Tribal College Grants. Unless 

otherwise specified in § 5002.108, the 

provisions in § 5002.15 through 

§ 5002.59 do not apply to Tribal College 

grants. 

(d) Incorporation by reference. Unless 

specifically stated, this part 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. 

(e) Relationship between subpart A 

and subpart B requirements. All grant 

programs subject to this part are subject 

to the requirements and definitions 

specified in subpart A, unless there is a 

program specific provision or definition 

in subpart B that overrides the 

corresponding subpart A provision. 

Such a subpart B provision may modify 

the scope of or replace entirely the 

corresponding subpart A provision. 

§ 5002.2 Definitions and abbreviations. 

Each term used in this part shall have 

the meaning as found in the 

Departmental regulations and in this 

part. If a term is defined in this part and 

in the Departmental regulations, such 

term shall have the meaning as found in 

this part. If there is a conflict in how a 

term is defined in this part and in how 

it is defined in the Departmental 

regulations, it shall have the meaning as 

defined in this part. 

(a) Definitions. 

1994 Institution. A college identified 

as such for purposes of the Equity in 

Educational Land-Grant Status Act of 

1994 (7 U.S.C. 301 note). 

Administrator. Each of the 

Administrators of the Rural Utilities 

Service, the Rural Business-Cooperative 

Service, the Rural Housing Service or 

their respective designees or successors, 

as appropriate. 

Agency identified target areas. An 

identified area in the State strategic plan 

or other plans developed by the Rural 

Development State Director. 

Agency. The Rural Housing Service or 

successor for the programs it 

administers; the Rural Utilities Service 

or successor for the programs it 

administers; and the Rural Business– 

Cooperative Service or successor for the 

programs it administers. 

Agricultural commodity. An 

unprocessed product of farms, ranches, 

nurseries, and forests. Agricultural 

commodities include: Livestock, 

poultry, and fish; fruits and vegetables; 

grains, such as wheat, barley, oats, rye, 

triticale, rice, corn, and sorghum; 

legumes, such as field beans and peas; 

animal feed and forage crops; seed 

crops; fiber crops, such as cotton; oil 

crops, such as safflower, sunflower, 

corn, and cottonseed; trees grown for 

lumber and wood products; nursery 

stock grown commercially; Christmas 

trees; ornamentals and cut flowers; and 

turf grown commercially for sod. 

Agricultural commodities do not 

include horses or animals raised as pets, 

such as cats, dogs, and ferrets. 

Agricultural producer. An individual 

or entity directly engaged in the 

production of agricultural products, 

including crops (including farming); 

livestock (including ranching); forestry 

products; hydroponics; nursery stock; or 

aquaculture, whereby 50 percent or 

greater of their gross income is derived 

from the operations. 

Agricultural producer group. An 

organization that represents 

independent producers, whose mission 

includes working on behalf of 

independent producers and the majority 

of whose membership and board of 

directors are 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; fish and seafood products. 

Annual receipts. The total income or 

gross income (sole proprietorship) plus 

cost of goods sold. 

Biomass. Any organic material that is 

available on a renewable or recurring 

basis, including agricultural crops; trees 

grown for energy production; wood 

waste and wood residues; plants, 

including aquatic plants and grasses; 

fibers; animal waste and other waste 

materials; and fats, oils, and greases, 

including recycled fats, oils, and 

greases. It does not include paper that 

is commonly recycled or un-segregated 

solid waste. 

Commercially available. A system 

that has a proven operating history of 

viability of at least one year, specific to 

the proposed application. Such a system 

is based on established design, and 

installation procedures and practices. 

Professional service providers, trades, 

large construction equipment providers, 

and labor are familiar with installation 

procedures and practices. Proprietary 

and balance of system equipment and 

spare parts are readily available. Service 

is readily available to properly maintain 

and operate the system. An established 

warranty exists for parts, labor, and 

performance. 

Cooperative agreement. A legal 

instrument reflecting a relationship 

between the Agency and a State, a local 

government, or other recipient when: 

(i) The principal purpose of the 

relationship is to transfer a thing of 

value to the State, local government, or 

other recipient to carry out a public 

purpose of support or stimulation 

authorized by a law of the United States 

instead of acquiring (by purchase, lease, 

or barter) property or services for the 

direct benefit or use of the Agency; and 

(ii) Substantial involvement is 

expected between the Agency and the 

State, local government, or other 

recipient when carrying out the activity 

contemplated in this agreement. 

Cooperative development. The 

startup, expansion or operational 

improvement of a cooperative to 

promote development in rural areas of 

services and products, processes that 

can be used in the marketing of 

products, or enterprises that add value 

to farm products through processing or 

marketing activities. Development 

activities may include, but are not 

limited to, technical assistance, research 

services, educational services and 


sroberts on PROD1PC70 with PROPOSALS
61232 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

advisory services. Operational 

improvement includes making the 

cooperative more efficient or better 

managed. 

Data terminal equipment. Equipment 

that converts user information into data 

signals for transmission, or reconverts 

the received data signals into user 

information, and is normally found on 

the terminal of a circuit and on the 

premises of the DLT end user. 

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. 

Distance learning. A 

telecommunications link to a DLT end 

user through the use of eligible 

equipment to: 

(i) Provide educational programs, 

instruction, or information originating 

in one area, whether rural or not, to 

students and teachers who are located 

in a rural area; or 

(ii) Connect teachers and students, 

located in one area, whether rural or 

not, with teachers and students that are 

located in a rural area. 

DLT end user. One or more of the 

following: 

(i) Rural elementary, secondary 

schools, and other educational 

institutions, such as institutions of 

higher education, vocational and adult 

training and education centers, libraries, 

and teacher training centers, and 

students, teachers and instructors using 

such rural educational facilities, that 

participate in a rural distance learning 

telecommunications program through a 

project funded under this subpart; 

(ii) Rural hospitals, primary care 

centers or facilities, such as medical 

centers, nursing homes, and clinics, and 

physicians and staff using such rural 

medical facilities, that participate in a 

rural telemedicine program through a 

project funded under this subpart; or 

(iii) Other rural community facilities, 

institutions, or entities that receive 

distance learning or telemedicine 

services. 

DLT end-user site. A facility that is 

part of a network or telecommunications 

system that is utilized by DLT end 

users. 

Eligible project costs. The total project 

costs that are eligible to be paid with 

program funds. 

Emerging market. A new or 

developing market. 

Energy assessment. An assessment 

conducted by an experienced energy 

assessor, certified energy manager or 

professional engineer assessing energy 

cost and efficiency by analyzing energy 

bills and briefly surveying the target 

building, machinery, or system. The 

assessment identifies and provides a 

savings and cost analysis of low-cost/ 

no-cost measures. The assessment will 

estimate the overall costs and expected 

energy savings from these 

improvements, and dollars saved per 

year. The assessment will estimate 

weighted-average payback period in 

years. 

Energy audit. An audit conducted by 

a certified energy manager or 

professional engineer that focuses on 

potential capital-intensive projects and 

involves detailed gathering of field data 

and engineering analysis. The audit will 

provide detailed project costs and 

savings information with a high level of 

confidence sufficient for major capital 

investment decisions similar to but in 

more detail than an energy assessment. 

Energy efficiency improvement. 

Improvements to a facility, building, or 

process that reduces energy 

consumption, or reduces energy 

consumed per square foot. 

Equivalent dwelling unit. The level of 

service provided to a typical rural 

residential dwelling. 

Essential community facilities. The 

physical structure financed or the 

resulting service provided to primarily 

rural residents that is operated on a nonprofit basis and that combined or 

severally must: 

(i) Perform or fulfill a function 

customarily provided by a local unit of 

government; 

(ii) Be a public improvement needed 

for the orderly development of a rural 

community; 

(iii) Not include a project that benefits 

a single individual or group of single 

individuals as opposed to a class within 

a community; 

(iv) Not include private affairs or 

commercial or business undertakings 

(except for limited authority for 

industrial parks, agricultural exposition 

centers, fair grounds, farmers markets, 

assisted living facilities, adult day care 

facilities, and child care facilities) 

unless it is a minor part of the total 

facility; and 

(v) Be within the area of jurisdiction 

or operation for eligible public bodies or 

a similar local rural service area of a 

non-profit corporation. 

Facility. The physical structure 

financed by the Agency or the resulting 

service provided to rural residents. 

Farm or ranch. Any place from which 

$1,000 or more of agricultural products 

(crops and livestock) 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 

farmer or rancher owned and controlled 

business from which benefits are 

derived and distributed equitably on the 

basis of use by each of the farmer or 

rancher owners. 

Feasibility study. An analysis by a 

qualified consultant of the economic, 

market, technical, financial, and 

management capabilities of a proposed 

project, venture, or business in terms of 

its expectation for success. 

Financial feasibility. The ability of a 

project or business to achieve the 

income, credit, and cash flows to 

financially sustain a project over the 

long term. 

Fiscal year. Means the Federal 

government’s fiscal year. 

Grant. A legal instrument reflecting a 

relationship between the Agency and a 

State, a local government, or other 

recipient when the principal purpose of 

the relationship is to transfer a thing of 

value to the State, local government, or 

other recipient to carry out a public 

purpose of support or stimulation 

authorized by a law of the United States 

instead of acquiring (by purchase, lease, 

or barter) property or services for the 

direct benefit or use of the Agency. 

Hub. A facility that is part of a 

network or telecommunications system 

that provides educational or medical 

services to DLT end-user sites. 

In-kind contributions. Applicant or 

third-party real or personal property or 

services benefiting the Federally 

assisted project or program that are 

provided by the applicant or a thirdparty entity consistent with this part. 

The identifiable value of goods and 

services must be considered eligible 

expenditures, must be used for eligible 

purposes of the grant program, and must 

directly benefit the project. 

Independent producers. Agricultural 

producers, individuals or entities 

(including for-profit and non-profit 

corporations, limited liability 

companies (LLCs), partnerships, or 

limited liability partnerships (LLPs), 

where the entities are solely owned or 

controlled by agricultural producers 

who own a majority ownership interest 

in the agricultural product that is 

produced. Independent producers must 

produce and own the agricultural 

product to which value is being added. 

Producers who produce the agricultural 

product under contract for another 

entity but do not own the product 

produced are not independent 

producers. Independent producers must 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61233 

supply product they produce and own 

the value-added venture. 

Indian tribe. This term has the 

meaning given it in section 4 of the 

Indian Self-Determination and 

Education Assistance Act (25 U.S.C. 

450b). 

Institution of higher education. This 

term has the meaning given it in section 

102(a) of the Higher Education Act of 

1965 (20 U.S.C. 1002(a)). 

Instructional programming. 

Educational material, including 

computer software, that would be used 

for educational purposes in connection 

with eligible equipment but does not 

include salaries, benefits, and overhead 

of medical or educational personnel. 

Interactive video equipment. 

Equipment used to produce and prepare 

for transmission audio and visual 

signals from at least two distant 

locations so that individuals at such 

locations can orally and visually 

communicate with each other. Such 

equipment includes monitors, other 

display devices, cameras or other 

recording devices, audio pickup 

devices, and other related equipment. 

Local exchange carrier. A 

commercial, cooperative or mutual-type 

association, or public body that is 

engaged in the provision of telephone 

exchange service or exchange access. 

Majority-controlled producer-based 

business venture. A venture where more 

than 50 percent of the ownership and 

control is held by independent 

producers, or, partnerships, LLCs, LLPs, 

corporations, or cooperatives that are 

themselves 100 percent owned and 

controlled by independent producers. 

Matching funds. The applicant’s 

contribution for approved purposes in 

accordance with the Departmental 

regulations. 

Non-profit. Any entity or organization 

no part of the net earnings of which 

inures or may lawfully inure to the 

benefit of any private shareholder or 

individual. 

Passive investor. A third-party equity 

investor that does not actively 

participate in management and 

operation decisions of the business 

entity as evidenced by a contractual 

arrangement. 

Planning grants. Grants to facilitate 

the development of a defined program 

of economic activities to determine the 

viability of a potential value-added 

venture, including feasibility studies, 

marketing strategies, business plans and 

legal evaluations. 

Post-application. The period of time 

after the Agency has received an 

essentially completed application. An 

‘‘essentially completed’’ application is 

an application that contains all parts 

necessary for the Agency to determine 

applicant and project eligibility, to score 

the application, and to conduct the 

technical evaluation. 

Poverty line. The level of income for 

a family of four, as determined 

consistent with criteria established by 

the Department of Health and Human 

Services or the Department of Housing 

and Urban Development, as determined 

by the Agency. 

Pre-commercial technology. 

Technology that has emerged through 

the research and development process 

and has technical and economic 

potential for commercial application, 

but is not yet commercially available. 

Product segregation. Physical 

separation of a product or commodity 

from similar products. Physical 

separation requires a barrier to prevent 

mixing with the similar product. 

Public body. A municipality, county, 

or other political subdivision of a State; 

a special purpose district; or an Indian 

tribe on a Federal or State reservation or 

other Federally-recognized Indian tribe 

or an organization controlled by any of 

the above. 

Qualified consultant. An 

independent, third-party possessing the 

knowledge, expertise, and experience to 

perform in an efficient, effective, and 

authoritative manner the specific task 

required. 

Ranking date. A specified date on or 

after which the Agency will rank all 

scored applications for a specific grant 

program to create a priority list of 

applications. Grant programs may have 

more than one ranking date. 

Renewable biomass. 

(i) Materials, pre-commercial 

thinnings, or invasive species from 

National Forest System land and public 

lands (as defined in section 103 of the 

Federal Land Policy and Management 

Act of 1976 (43 U.S.C. 1702)) that: 

(A) Are byproducts of preventive 

treatments that are removed to reduce 

hazardous fuels; to reduce or contain 

disease or insect infestation; or to 

restore ecosystem health; 

(B) would not otherwise be used for 

higher-value products; and 

(C) are harvested in accordance with 

applicable law and land management 

plans and the requirements for oldgrowth maintenance, restoration, and 

management direction of paragraphs (2), 

(3), and (4) of subsection (e) of section 

102 of the Healthy Forests Restoration 

Act of 2003 (16 U.S.C. 6512) and largetree retention of subsection (f) of that 

section; or 

(ii) any organic matter that is available 

on a renewable or recurring basis from 

non-Federal land or land belonging to 

an Indian or Indian tribe that is held in 

trust by the United States or subject to 

a restriction against alienation imposed 

by the United States, including: 

(A) renewable plant material, 

including feed grains; other agricultural 

commodities; other plants and trees; 

and algae; and 

(B) waste material, including crop 

residue; other vegetative waste material 

(including wood waste and wood 

residues); animal waste and byproducts 

(including fats, oils, greases, and 

manure); and food waste and yard 

waste. 

Renewable energy. 

(i) Energy derived from a wind, solar, 

renewable biomass, ocean (including 

tidal, wave, current, and thermal), 

geothermal, or hydroelectric source; 

(ii) Hydrogen derived from renewable 

biomass or water using an energy source 

described in paragraph (i) of this 

definition. 

Renewable energy system. A system 

that produces or produces and delivers 

usable energy from a renewable energy 

source. 

Rural or rural area. 

(i) For purposes of providing 

Renewable Energy/Energy Efficiency 

and Rural Cooperative Development 

grants, rural and rural area are defined 

as 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. 

(ii) For the purpose of providing 

Community Facilities and Economic 

Impact Initiatives grants, rural and rural 

area are defined as any area not in a 

city, town, or Census Designated Place 

with a population of more than 20,000 

inhabitants according to the latest 

decennial census of the United States. 

(iii) For the purpose of providing 

Distance Learning and Telemedicine 

grants, rural and rural area are defined 

as any area not within the boundary of 

(A) an urbanized area or (B) an urban 

cluster in excess of 20,000 inhabitants 

according to the latest decennial census 

of the United States. 

(iv) For the purpose of providing 

Water and Waste Disposal facilities 

grants, rural and rural area are defined 

as any area not in a city, town, or 

Census Designated Place with a 

population in excess of 10,000 

inhabitants, according to the latest 

decennial census of the United States. 

(v) For cooperative agreements, the 

definition of rural or rural area is the 

definition for the program which 

provides the source of funds for the 

cooperative agreement. 

(vi) For the purposes of this 

definition, cities and towns are 


sroberts on PROD1PC70 with PROPOSALS
61234 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

incorporated population centers with 

definite boundaries, local selfgovernment, and legal powers set forth 

in a charter granted by the State. For 

Puerto Rico, Census Designated Place 

(CDP), as defined by the U.S. Census 

Bureau, will be used as the equivalent 

to city or town. 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. 

Rural community facility. A facility 

such as a school, library, learning 

center, training facility, hospital, or 

medical facility that provides 

educational or health care benefits 

primarily to residents of rural areas. 

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. 

Service area. The area reasonably 

expected to be served by the project/ 

facility. 

Small business. An entity is 

considered a small business in 

accordance with the Small Business 

Administration’s (SBA) small business 

size standards by the North American 

Industry Classification System found in 

Title 13 CFR part 121. A private entity, 

including a sole proprietorship, 

partnership, corporation, cooperative 

(including a cooperative qualified under 

section 501(c)(12) of the Internal 

Revenue Code), and an electric utility, 

including a Tribal or governmental 

electric utility, that provides service to 

rural consumers on a cost-of-service 

basis without support from public funds 

or subsidy from the Government 

authority establishing the district, 

provided such utilities meet SBA’s 

definition of small business. These 

entities must operate independent of 

direct Government control. With the 

exception of the entities described 

above, all other non-profit entities are 

excluded. 

State. Any of the 50 States of the 

United States, the Commonwealth of 

Puerto Rico, the District of Columbia, 

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. 

State program official. The Agency 

official at the State level who has been 

delegated the responsibility of 

administering the water and waste 

disposal facilities programs under this 

regulation for a particular State or 

States. 

State strategic plan. A plan developed 

by each State for Rural Development 

initiatives and the type of assistance 

required. Plans shall identify goals, 

methods, and benchmarks for measuring 

success. 

Statewide nonmetropolitan median 

household income. The median 

household income of the State’s 

nonmetropolitan counties and portions 

of metropolitan counties outside of 

cities, towns or places of 50,000 or more 

population. 

Technical assistance. Assistance in 

learning to manage, operate, or use 

equipment or systems; and studies, 

analyses, designs, reports, manuals, 

guides, literature, or other forms of 

creating, acquiring, or disseminating 

information. 

Telecommunications systems plan. 

The plan submitted by an applicant in 

accordance with § 1703.125 for grants. 

Telecommunications terminal 

equipment. The assemblage of 

telecommunications equipment at the 

end of a circuit or path of a signal, 

including but not limited to facilities 

that receive or transmit over the air 

broadcast, satellite, and microwave, 

normally located on the premises of the 

DLT end user, that interfaces with 

telecommunications transmission 

facilities, and that is used to modify, 

convert, encode, or otherwise prepare 

signals to be transmitted via such 

telecommunications facilities, or that is 

used to modify, reconvert, or carry 

signals received from such facilities, the 

purpose of which is to accomplish the 

goal for which the circuit or signal was 

established. 

Telecommunications transmission 

facilities. Facilities that transmit, 

receive, or carry voice, video, or data 

between the telecommunications 

terminal equipment at each end of the 

telecommunications circuit or path. 

Such facilities include microwave 

antennae, relay stations and towers, 

other telecommunications antennae, 

fiber-optic cables and repeaters, coaxial 

cables, communication satellite ground 

station complexes, copper cable 

electronic equipment associated with 

telecommunications transmissions, and 

similar items. 

Telemedicine. A telecommunications 

link to a DLT end user through the use 

of eligible equipment that electronically 

links medical professionals at separate 

sites in order to exchange health care 

information in audio, video, graphic, or 

other formats for the purpose of 

providing improved health care services 

primarily to residents of rural areas. 

Total project cost. The sum of all costs 

associated with a completed project. 

Tribal college or university. An 

institution of higher education that is 

formally controlled, or has been 

formally sanctioned, or chartered, by the 

governing body of an Indian tribe or 

tribes, except that no more than one 

such institution shall be recognized 

with respect to any such tribe, and 

includes an institution listed in the 

Equity in Educational Land Grant Status 

Act of 1994. 

Used equipment. Any equipment that 

has been used in any previous 

application and is provided in an ‘‘as 

is’’ condition. 

Value-added. The incremental value 

that is realized by the producer from an 

agricultural commodity or product as 

the result of (i) A change in its physical 

state, (ii) differentiated production or 

marketing, as demonstrated in a 

business plan, (iii) product segregation, 

or (iv) is aggregated and marketed as a 

locally-produced agricultural food 

product. Also, the economic benefit 

realized from the production of farm or 

ranch-based renewable energy, 

including E–85 fuel. Incremental value 

may be realized by the producer as a 

result of either an increase in value to 

buyers or the expansion of the overall 

market for the product. Examples 

include milling wheat into flour, 

slaughtering livestock or poultry, 

making strawberries into jam, the 

marketing of organic products, an 

identity-preserved marketing system, 

wind or hydro power produced on land 

that is farmed and collecting and 

converting methane from animal waste 

to generate energy. Identity-preserved 

marketing systems include labeling that 

identifies how the product was 

produced and by whom. 

Very small business. A business with 

fewer than 15 employees and less than 

$1 million in annual receipts. 

Working capital grants. Grants to 

provide funds to operate ventures and 

pay the normal expenses of the venture 

that are eligible uses of grant funds. 

(b) Abbreviations: 

CDP—Census Designated Place. 

DLT—Distance Learning and 

Telemedicine. 

EDU—Equivalent Dwelling Unit. 

LLC—Limited liability company. 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61235 

LLP—Limited liability partnership. 

NSLP—National School Lunch 

Program. 

RUS—The Rural Utilities Service or a 

successor agency, an agency within 

USDA established pursuant to section 

232 of the Department of Agriculture 

Reorganization Act of 1994 (Pub. L. 

103–354, 108 Stat. 3178), successor to 

the Rural Electrification Administration 

and successor to the Farmer’s Home 

Administration and the Rural 

Development Administration with 

respect to certain water and waste 

disposal loan and grant programs. 

SBA—Small Business Administration. 

USDA—United States Department of 

Agriculture. 

§ 5002.3 Appeal rights. 

A person may seek a review of an 

Agency decision under this part 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 of this 

title. 

§ 5002.4 Exception authority. 

Except as specified in paragraphs (a) 

through (c) of this section, the 

applicable Administrator may make 

exceptions to any requirement or 

provision of this part, 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. 

(c) Rural area definition. No 

exception to the definition of rural area 

can be made. 

§ 5002.5 Compliance with other Federal 

laws. 

Applicants must comply with other 

applicable Federal laws including Equal 

Employment Opportunities, Americans 

with Disabilities Act, Equal Credit 

Opportunity Act, Fair Housing Act, and 

the Civil Rights Act of 1964. 

§ 5002.6 State laws, local laws, regulatory 

commission regulations. 

If there are conflicts between this part 

and State or local laws or regulatory 

commission regulations, the provisions 

of this part will control. 

§ 5002.7 Environmental requirements. 

(a) All grants awarded under this part 

are subject to the environmental 

requirements in subpart G of 7 CFR part 

1940 or 7 CFR 1794, as applicable, or 

successor regulations. 

(b) The applicant must not take any 

action or incur any obligations during 

the time of application or application 

review and processing that would either 

limit the range of alternatives to be 

considered or that would have an 

adverse effect on the environment, such 

as the initiation of construction. If the 

applicant takes such adverse actions, 

the project will be ineligible for funding 

under this part. 

§ 5002.8 Forms, regulations, and 

instructions. 

Copies of all forms, regulations, 

instructions, and other materials related 

to programs referenced in this part may 

be obtained through the Agency. 

§§ 5002.9—5002.14 [Reserved] 

Funding and Programmatic Change 

Notifications 

§ 5002.15 Notifications. 

In implementing this part, the Agency 

will issue notifications addressing 

funding and programmatic changes, as 

specified in paragraphs (a) and (b) of 

this section, respectively, for each grant 

program under this part. 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. The Agency will issue 

notifications concerning funding for 

each program as described in 

paragraphs (a)(1) through (3) of this 

section. 

(1) For each Nationally-competed 

grant program, the funding level and the 

minimum and maximum grant amount. 

(2) For each State-allocated grant 

program, the funding level and 

minimum and maximum grant amount, 

as proposed by State Directors and as 

approved by the Agency. 

(3) Any additional funding 

information associated with an 

individual grant program as determined 

by the Agency. 

(b) Programmatic changes. For each 

program, as applicable, the Agency will 

issue notifications of the programmatic 

changes specified in paragraphs (b)(1) 

through (5) of this section. 

(1) The set of Administrator priority 

categories or their point allocation, if 

the provisions specified in subparts A 

and B are not to be used for awarding 

Administrator points. 

(2) The set of State Director priority 

categories or their point allocation, if 

the provisions specified in subparts A 

and B are not to be used for awarding 

State Director points, as proposed by 

State Directors and as approved by the 

Agency. 

(3) Additional reports that are 

generally applicable across projects 

within a program associated with the 

monitoring of and reporting on project 

performance. 

(4) Any change in a program’s ranking 

dates. 

(5) For programs with a specified 

application date, any change in the 

application date. 

(c) Notification methods. The Agency 

will issue the information specified in 

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

specified in paragraphs (c)(1) through 

(3) of this section. 

(1) For Nationally-competed grant 

programs covered by this part, the 

Agency will issue one or more Federal 

Register notices. 

(2) For State-allocated grant programs 

covered by this part, the Agency will 

make the information available on the 

Agency’s Web site. 

(3) For both Nationally-competed 

grant programs and State-allocated grant 

programs, 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) and (b)(2) of this section available 

at least 30 days prior to the first ranking 

date in the year or the application 

deadline, as applicable. 

(3) The Agency will make the 

information specified in paragraphs 

(b)(3) through (b)(5) of this section 

available on an as needed basis. 

§ 5002.16—5002.19 [Reserved] 

Eligibility 

§ 5002.20 Applicant eligibility. 

To be eligible for a grant under this 

part, an applicant must meet the 

applicant eligibility requirements for the 

applicable grant program as specified in 

subpart B of this part and the 

requirements specified in paragraphs (a) 

and (b) of this section. 

(a) Citizenship. 

(1) Individual applicants must: 

(i) be citizens 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. 


sroberts on PROD1PC70 with PROPOSALS
61236 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

(2) Entities other than individuals 

must be at least 51 percent owned by 

persons who are either citizens as 

identified under paragraph (a)(1)(i) of 

this section or legally admitted 

permanent residents residing in the U.S. 

(b) Legal authority and responsibility. 

Each applicant must have, or obtain, the 

legal authority necessary to carry out the 

purpose of the grant. 

§ 5002.21 Ineligible applicants. 

(a) Consistent with the department 

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. 

§ 5002.22 Project eligibility. 

To be eligible for a grant under this 

part, a project or purpose must, at a 

minimum, meet the project or purposes 

eligibility requirements for the 

applicable grant program as specified in 

subpart B of this part. In addition, the 

project or purpose must meet each of 

the requirements specified in 

paragraphs (a) through (c) of this 

section, as applicable. 

(a) The project or purpose must 

primarily serve a rural area. 

(b) For those projects and purposes 

that acquire or improve real or personal 

property, the applicant must be the 

owner of the property or have leasehold 

interest acceptable to the Agency in the 

property and control the revenues and 

expenses of the project, including 

operation and maintenance. 

(c) For projects and purposes that are 

determined by a service area, 

boundaries for the proposed service area 

must be chosen in such a way that no 

user or area will be excluded because of 

race, color, religion, sex, marital status, 

age, disability, or national origin. This 

does not preclude: 

(1) Financing or constructing projects 

in phases when it is not practical to 

finance or construct the entire project at 

one time, and 

(2) Financing or constructing facilities 

where it is not economically feasible to 

serve the entire area, provided economic 

feasibility is determined on the basis of 

the entire system or facility and not by 

considering the cost of separate 

extensions to, or parts thereof. 

Additionally, the applicant must 

publicly announce a plan for extending 

service to areas not initially receiving 

service and must provide written notice 

to potential users located in such areas. 

§ 5002.23 Ineligible projects and purposes. 

Grants under this part must not be 

used for: 

(a) Investment or arbitrage, or 

speculative real estate investment. 

(b) Prostitution or projects generating 

income from activities of a prurient 

sexual nature. 

(c) Any project eligible for Rural 

Rental Housing and Rural Cooperative 

Housing loans under sections 515, 521, 

and 538 of the Housing Act of 1949, as 

amended. 

(d) Any facility used primarily for the 

purpose of housing Federal or State 

agencies. 

(e) Finders’, packagers’, or loan 

brokers’ fees. Pay costs of preparing the 

application package for funding under 

this program. 

(f) Any project deriving income from 

illegal drugs, drug paraphernalia, or any 

other illegal product or activity. 

(g) To pay the applicant for the rental 

of equipment or machinery owned by 

the applicant. 

(h) The payment of either a judgment 

or a debt owed to the United States. 

(i) Any project that creates, directly or 

indirectly, a conflict of interest or an 

appearance of a conflict of interest. 

(j) Properties to be used for 

commercial rent when the grantee has 

no control over tenants and services 

offered except for industrial-site 

infrastructure development and limited 

sections of essential community 

facilities when the activity in the leased 

space is related to and enhances the 

primary purpose for which the facility 

is being established by the grantee. 

(k) Any project located within the 

Coastal Barriers Resource System that 

does not qualify for an exception as 

defined in section 6 of the Coastal 

Barriers Resource Act, 16 U.S.C. 3501 et 

seq. 

(l) Any project located in a special 

flood or mudslide hazard area as 

designated by the Federal Emergency 

Management Agency in a community 

that is not participating in the National 

Flood Insurance Program unless the 

project is an integral part of a 

community’s flood control plan. 

(m) Fund political activity. 

(n) Any other similar project or 

purpose that the Agency determines is 

ineligible for funding under this part 

and publishes in a Federal Register 

notice. 

§§ 5002.24—5002.29 [Reserved] 

Applying for a Grant 

§ 5002.30 Applying for a grant. 

(a) Preapplications. Unless required 

under the Departmental regulations, the 

public has the option of submitting a 

preapplication as specified in § 5002.31. 

The submission of a preapplication, or 

the lack thereof, does not affect in any 

way the scoring of the subsequent 

application. In addition, applicants who 

submit a preapplication do not receive 

any priority for funding under this part. 

(b) Conformance with § 5002.32. All 

applicants are required to submit an 

application, as specified in § 5002.32. 

(c) Filing instructions. Unless 

otherwise specified in a notification 

issued under § 5002.15, the following 

requirements apply to all grant 

preapplications and applications 

submitted under this part. 

(1) When to submit. 

(i) Preapplications. For grant 

programs with an open application 

period, preapplications for all programs 

may be submitted at any time. For grant 

programs with an application deadline, 

preapplications must be submitted at 

least 90 days before the application 

deadline. 

(ii) Applications. For grant programs 

with an open application period, 

applications may be submitted at any 

time. For grant programs with an 

application deadline, applications must 

be received on or before the application 

deadline to receive consideration for 

funding for that fiscal year. 

(iii) 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. 

(2) Where to submit. All 

preapplications and applications may be 

submitted to any Rural Development 

office or on line through grants.gov. 

(3) Format. Preapplications and 

applications may be submitted as hard 

copy or electronically via grants.gov. If 

submitted as hard copy, an original and 

one hard copy of the entire application 

and supporting documentation must be 

submitted. 

§ 5002.31 Preapplications. 

Unless otherwise excepted, the 

provisions of this section apply to all 

programs under this part. 

(a) Submittal of a preapplication is 

optional under this part unless it is 

otherwise required under the 

Departmental regulations. 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61237 

(1) When submitting a preapplication, 

all applicants must comply with the 

Departmental regulations, except as 

provided in paragraph (a)(2) of this 

section. 

(2) In lieu of filing SF 424, 

‘‘Application for Federal Assistance,’’ a 

member of the public may instead 

submit a written request for an 

eligibility determination alone. 

Members of the public should contact a 

Rural Development office to obtain a list 

of the items needed to make an 

eligibility assessment for the specific 

grant program in which the member is 

interested. 

(b) The Agency will review all 

preapplications to make an assessment 

as to applicant and project eligibility. If 

the preapplication is submitted by a 

government applicant as required under 

the Departmental regulations, the 

Agency will make its assessment in 

accordance with the Departmental 

regulations. If the preapplication is 

submitted on a voluntary basis, the 

Agency will make an informal 

assessment of both the applicant’s 

eligibility and the project’s eligibility. In 

all instances, the Agency will then 

provide a written response to the 

applicant on its assessment. 

§ 5002.32 Applications. 

(a) Application forms. The following 

application forms, as applicable, must 

be used in applying for a grant under 

this part. 

(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 SF–424C, ‘‘Budget 

Information—Construction Programs.’’ 

(5) Form SF–424D, ‘‘Assurances— 

Construction Programs.’’ 

(b) Other forms and instructions. The 

Agency will make available to the 

public the necessary forms and 

instructions for filing an application on 

a program-specific basis. These forms 

and instructions may be obtained from 

any Rural Development office, Rural 

Development National Headquarters, 

and the Agency’s Web site. 

§§ 5002.33—5002.39 [Reserved] 

Processing and Scoring Applications 

§ 5002.40 Processing applications. 

(a) Initial review. Upon receipt of an 

application, the Agency will conduct a 

review to determine if the applicant and 

project are eligible and if the project is 

feasible or is likely to be feasible with 

regard to financial, technical, and 

environmental feasibility and 

sustainability of the project. If applicant 

or project eligibility has already been 

determined through the submittal of a 

required preapplication, the Agency 

will review the application to ensure no 

changes have occurred that would affect 

eligibility. 

(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 project is not likely 

to be feasible, 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. For grant 

programs with an open application 

period, each revised grant application 

will be processed by the Agency at the 

next applicable ranking date for the 

applicable grant program. For grant 

programs with a specified application 

deadline, each revised grant application 

will be processed by the Agency if it is 

received on or before the application 

deadline for that grant program. If such 

revised applications are not received by 

the specified application deadline for 

the grant program, the Agency will not 

process the application. 

(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. 

§ 5002.41 Application withdrawal. 

During the period between the 

submission of an application and the 

execution of documents, the applicant 

must notify, in writing, the Agency 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. 

§ 5002.42 Scoring applications. 

(a) General. The Agency will only 

score applications for which it has 

determined that the applicant and 

project are eligible and that the project 

is feasible or is likely to be feasible. 

(1) For grant programs with an open 

application period, each such 

application the Agency receives in a 

Federal fiscal year will be scored in the 

fiscal year in which it was submitted, 

unless it is received after the last 

ranking date in the fiscal year for that 

program. If an application is received 

after the last ranking date of the fiscal 

year, the Agency will score the 

application no later than the first 

ranking date of the next fiscal year. 

Such applications will be scored based 

on the priority categories and points 

effective for that next fiscal year. 

(2) For grant programs with an 

application deadline, 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. All 

applications received after a program’s 

application deadline will not be 

considered. 

(b) Scoring. The Agency will score 

applications for each grant program 

based on the priority categories and 

their associated points using the 

procedures specified in subpart B. All 

applications for grants under this part 

will be scored based on the information 

supplied by the applicant at the time the 

applicant submits the application to the 

Agency. 

(1) Administrator priority categories. 

Paragraphs (b)(1)(i) through (vi) of this 

section present the list of Administrator 

priority categories that a grant program 

may consider in awarding 

Administrator points to applications. 

The specific set of Administrator 

priority categories that each program 

will use is specified in subpart B. The 

Agency may elect to use a different set 

of Administrator priority categories than 

specified in subpart B, if it issues a 

notification in accordance with 

§ 5002.15. However, the Agency cannot 

add to the list of priority categories 

specified in this paragraph. 

(i) Unserved or underserved areas. 

(ii) Geographic diversity. 

(iii) Emergency conditions. 

(iv) To accomplish the mission area’s 

plans, goals, and objectives. 

(v) Public health and safety. 

(vi) Presidential initiatives. 

(2) State Director priority categories. 

Paragraphs (b)(2)(i) through (x) of this 

section present the list of State Director 

priority categories that a grant program 

may consider in awarding State Director 

points to applications. The specific set 

of State Director priority categories that 

each program will use is specified in 

subpart B. The Agency may elect to use 

a different set of State Director priority 

categories than specified in subpart B, if 

it issues a notification in accordance 

with § 5002.15. However, the Agency 

cannot add to the list of priority 

categories specified in this paragraph. 

(i) Persistent poverty counties and 

out-migration counties. 

(ii) Unserved or underserved areas. 

(iii) Geographic diversity. 


sroberts on PROD1PC70 with PROPOSALS
61238 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

(iv) Emergency conditions. 

(v) State, local, or regional 

governmental, and Tribal strategic plans 

and goals (must be consistent with 

program goals and objectives). 

(vi) To accomplish the mission area’s 

plans, goals, and objectives. 

(vii) Leveraging. 

(viii) Loss of essential services. 

(ix) Public health and safety. 

(x) Presidential initiatives. 

§§ 5002.43—5002.49 [Reserved] 

Awarding Grants 

§ 5002.50 Award process. 

(a) Ranking of applications. All 

scored applications for a program will 

be ranked by the Agency on or after 

each ranking date, as specified in 

subpart B, to create a priority list of 

scored applications for that program. 

(1) If a ranking date falls on a 

weekend or Federally-observed holiday, 

the ranking date will be the next Federal 

business day. 

(2) All applications that are ranked in 

a given fiscal year will be considered for 

selection for funding or potential 

funding, as applicable, for that entire 

fiscal year. 

(b) Selection of applications for 

funding and for potential funding. 

(1) Using the priority list created 

under paragraph (a) of this section for 

each grant program, the Agency will 

select applications for funding or for 

potential funding based on the criteria 

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

(iii) of this section and any additional 

criteria specified in subpart B for a 

specific program. The Agency will 

notify, in writing, applicants whose 

applications have been selected for 

funding or for potential funding. 

(i) Ranking. The Agency will consider 

the score an application has received 

compared to the scores of other 

applications in the priority list, with 

higher scoring applications receiving 

first consideration for funding. 

(ii) Availability of funds. The Agency 

will consider the size of the request 

relative to the funds that remain 

available to the program during the 

fiscal year. 

(A) If there are insufficient funds 

during a particular funding period to 

select a higher scoring application, the 

Agency may elect to select the next 

highest scoring application for further 

processing. Before this occurs, the 

Administrator or State Director, as 

applicable, will provide the applicant of 

the higher scoring application the 

opportunity to reduce the amount of its 

grant request to the amount of funds 

available. If the applicant agrees to 

lower its grant request, it must certify 

that the purposes of the project can be 

met, and the Administrator or State 

Director, as applicable, must determine 

the project is financially feasible at the 

lower amount. 

(B) If the amount of funding required 

is greater than 25 percent of a State’s 

allocated funds for a State-allocated 

grant program, or is greater than 25 

percent of a program’s funds for a 

Nationally-competed grant program, 

then the Agency may elect to select the 

next highest scoring application for 

further processing, provided the higher 

scoring applicant is notified of this 

action and given an opportunity to 

revise their application and resubmit it. 

(iii) Availability of other funding 

sources. If other financial assistance is 

needed for the project, the Agency will 

consider the availability of Rural 

Development loans and of other nonRural Development funding sources. If 

funds for these other sources are not 

available at the time of selecting 

applications for funding or potential 

funding, the Agency may instead select 

the next highest scoring application for 

further processing ahead of the higher 

scoring application. 

(2) [Reserved] 

(c) Ranked applications not funded. 

The disposition of ranked applications 

not funded depends on whether the 

program has an open application period 

or an application deadline, and on the 

reason for which the application was 

not funded. 

(1) Grant programs with an open 

application period. 

(i) If a ranked application has been 

selected for potential funding, but has 

not been funded due to the Agency’s 

lack of funds by the next ranking date 

or by the end of the fiscal year in which 

it was selected for potential funding, the 

Agency will carry the application 

forward into the next fiscal year unless 

the applicant otherwise notifies the 

Agency in writing to withdraw the 

application from further consideration. 

Such applications are not subject to reevaluation or re-scoring, but information 

in the application may need to be 

updated. 

(ii) If a ranked application has been 

selected for potential funding, but has 

not been funded because additional 

information is needed, the Agency will 

notify the applicant of what information 

is needed, including a timeframe for the 

applicant to provide the information. If 

the applicant does not provide the 

information within the specified 

timeframe, the Agency will remove the 

application for further processing. 

(iii) If a ranked application has not 

been selected for potential funding 

because of its ranking and the available 

level of funds to the Agency, it will be 

included in the set of applications 

considered in each subsequent ranking 

date in the fiscal year in which it was 

ranked until it is either selected for 

potential funding, funded, or the end of 

the fiscal year in which the application 

was ranked is reached, whichever 

occurs first. The Agency will retain the 

application for consideration in the next 

fiscal year. The Agency will provide 

applicants the opportunity to update 

their application accordingly. At a 

minimum, all such retained 

applications must be updated by the 

applicant as required by the Agency 

(e.g., financial conditions, change in 

supporting documentation 

requirements). The application will then 

be re-evaluated and re-scored along with 

new applications received for 

consideration for funding in the next 

fiscal year. 

(iv) If a ranked application has not 

been selected for potential funding 

because the Agency has determined the 

application is non-competitive due to a 

very low score, the Agency will remove 

the application from further 

consideration and will so notify the 

applicant. 

(2) Grant programs with an 

application deadline. (i) 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. 

(ii) If an application has been selected 

for funding, but has not been funded 

because additional information is 

needed, the Agency will notify the 

applicant of what information is 

needed, including a timeframe for the 

applicant to provide the information. If 

the applicant does not provide the 

information within the specified 

timeframe, the Agency will remove the 

application from further consideration 

and will so notify the applicant. 

(d) 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 selection of the application, 

the Agency will rescind the selection 

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. 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61239 

§§ 5002.51–5002.59 [Reserved] 

Grant Agreements and Conditions 

§ 5002.60 Actions prior to grant closing or 

start of construction, whichever occurs 

first. 

(a) Excess grant funds. If there is a 

significant reduction in project cost or 

changes in project scope, the applicant’s 

funding needs will be reassessed. 

Decreases in Agency funds will be based 

on revised project costs and current 

number of users. However, other factors 

including Agency regulations used at 

the time of grant approval will remain 

the same. Obligated grant funds not 

needed to complete the project will be 

de-obligated. 

(b) Evidence of and disbursement of 

other funds. Applicants expecting funds 

from other sources for use in completing 

projects being partially financed with 

Agency funds will present evidence of 

the commitment of these funds from 

such other sources. Agency funds will 

not be used to pre-finance funds 

committed to the project from other 

sources without prior Agency approval. 

(c) Acquisition of land, easements, 

water rights, and existing facilities. 

Applicants are responsible for acquiring 

all property rights necessary for the 

project and determining that prices paid 

are reasonable and fair. The Agency may 

require an appraisal by an independent 

appraiser or Agency employee. 

(1) Rights-of-way and easements. 

Where applicable, applicants will obtain 

valid, continuous, and adequate rightsof-way and easements needed for the 

construction, operation, and 

maintenance of the facility. For user 

connections funded by the Agency, 

applicants will obtain adequate rights to 

construct and maintain the connection 

line or other facilities located on the 

user’s property. 

(2) Title for land or existing facilities. 

Title to land essential to the successful 

operation of facilities or title to facilities 

being purchased must not contain any 

restrictions that will adversely affect the 

suitability, successful operation, 

security value, or transferability of the 

facility. The Agency may waive title 

defects or restrictions, such as utility 

easements, that do not adversely affect 

the suitability, successful operation, 

security value, or transferability of the 

facility. 

(3) Lease agreements. Where the right 

of use or control of real property not 

owned by the applicant is essential to 

the successful operation of the facility, 

such right will be evidenced by written 

agreements or contracts, acceptable to 

the Agency, between the owner of the 

property and the applicant. 

§ 5002.61 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 will set out the conditions under 

which the grant will be made. If the 

applicant agrees with the conditions, 

the applicant must acknowledge, in 

writing, acceptance of the 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 changes proposed to the letter of 

conditions by the applicant before the 

application will be further processed. 

(b) Grant agreement. Each grant 

awarded under this part must be 

executed through an Agency-approved 

grant agreement between the Agency 

and the grantee and through any other 

documents as identified by the Agency. 

(c) Cooperative agreement. Each 

cooperative agreement made under this 

part must be executed through an 

Agency-approved cooperative 

agreement, or similar Agency-approved 

document, between the Agency and the 

grantee and through any other 

documents as identified by the Agency. 

Cooperative Agreements must provide 

for significant Agency involvement. 

(d) Grant disbursements. Grant 

disbursement will be made in 

accordance with the letter of conditions 

or the grant agreement as applicable. 

§ 5002.62 Use of remaining funds. 

Funds remaining after all costs 

incident to the basic project have been 

paid or provided for are to be handled 

as specified in this section. 

(a) Remaining funds are not to include 

grantee contributions. 

(b) Remaining funds may be refunded 

to each source in direct proportion to 

the amounts obtained from each source. 

(c) Remaining funds may be used 

based on prior approval by the Agency 

for eligible grant purposes, provided: 

(1) The use will not result in major 

changes to the project; 

(2) The purpose of the grant remains 

the same; and 

(3) The project remains within its 

original scope. 

(d) Grant funds not expended after 

being used for eligible grant purposes 

will be cancelled by the Agency. Prior 

to the actual cancellation, the Agency 

will notify, in writing, the grantee of the 

Agency’s intent to cancel the remaining 

funds. 

§§ 5002.63–5002.69 [Reserved] 

Post Award Activities and 

Requirements 

§ 5002.70 Monitoring and reporting 

program performance. 

The requirements specified in this 

section shall apply to grants made under 

this part. 

(a) Grantees will be monitored to the 

extent necessary to ensure that facilities 

are constructed in accordance with 

Agency-approved plans and 

specifications and to ensure that funds 

are expended for approved purposes. 

(b) Grantees shall submit performance 

reports that include a comparison of 

accomplishments with the objectives 

stated in the application. 

(1) Performance reports shall be 

submitted on a semiannual basis. A 

final performance report is required. 

(2) Additional reports shall be 

submitted as specified in the grant 

agreement, as otherwise provided in a 

notification issued under § 5002.15, or 

as specified in subpart B. 

(3) The Agency may request any 

additional project and/or performance 

data for the project for which grant 

funds have been received. 

§ 5002.71 Programmatic changes and 

budget revisions. 

In addition to the requirements 

specified in the Departmental 

regulations, if an application has been 

selected and the scope of the project 

changes, the Agency, at its sole 

discretion, may require the applicant to 

submit a new application. A new 

application will be re-ranked in 

accordance with this part. 

§ 5002.72 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. 

§§ 5002.73–5002.79 [Reserved] 

Grant Close Out and Related Activities 

§ 5002.80 Grant close out and related 

activities. 

In addition to the requirements 

specified in the Departmental 


sroberts on PROD1PC70 with PROPOSALS
61240 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

regulations, failure to submit 

satisfactory reports on time under the 

provisions of § 5002.70(b) may result in 

the suspension or termination of a grant. 

The provisions of this section apply to 

grants and sub-grants. 

§§ 5002.81–5002.100 [Reserved] 

Subpart B—Program-Specific 

Provisions 

§ 5002.101 Community Facilities. 

The Community Facilities grant 

program is a State-allocated grant 

program with an open application 

period. 

(a) Applicant eligibility. In addition to 

the requirements specified in § 5002.20 

in subpart A of this part, as appropriate, 

the following requirements also apply 

where applicable: 

(1) Type of applicant. The applicant 

must be one of the following: 

(i) A public body, such as a 

municipality, county, district, authority, 

or other political subdivision of a State; 

(ii) Non-profit corporation or 

association; or 

(iii) Federally recognized Indian tribe. 

(2) Local community ties. Applicants 

must have significant ties with the local 

rural community. Ties may be 

evidenced by items such as: 

(i) Association with, or controlled by, 

a local public body or bodies or broadly 

based ownership and controlled by 

members of the community; or 

(ii) Substantial public funding 

through taxes, revenue bonds, or other 

local government sources, or substantial 

voluntary community funding such as 

would be obtained through a 

community-wide funding campaign. 

(b) Project eligibility. In addition to 

the requirements specified in § 5002.22 

in subpart A of this part, the project 

must be an essential community facility 

primarily serving rural areas. In 

addition, the project must meet the 

conditions specified in paragraphs (b)(1) 

through (5) of this section. 

(1) Located in rural area. Except for 

eligible utility-type services, such as 

telecommunications or hydroelectric, 

serving both rural and non-rural areas, 

the project must be located in a rural 

area. In the case of an eligible utilitytype service project serving both rural 

and non-rural areas, grant funds issued 

under this section may be used to fund 

only that portion serving rural areas, 

regardless of the facility’s location. 

(2) Household income. The median 

household income of the population to 

be served by the proposed facility must 

be below the higher of the poverty line 

or the eligible percentage (60, 70, 80, or 

90) of the State non-metropolitan 

median household income (paragraph 

(e)(2) of this section). 

(3) Economic feasibility. All projects 

funded under the provisions of this 

section must be based on satisfactory 

sources of revenues as outlined in the 

economic feasibility requirements for 

the Community Facility direct loan 

program. The amount of grant assistance 

must be the minimum amount sufficient 

for feasibility that will provide for 

facility operation and maintenance, 

reasonable reserves, and debt 

repayment. The applicant’s available 

excess funds must be used to 

supplement eligible project costs. 

(4) Facility operation and 

maintenance. The applicant shall be 

responsible for operating, maintaining, 

and managing the facility and providing 

for its continued availability and use at 

reasonable rates and terms. This 

responsibility shall be the applicant’s 

even though the facility may be 

operated, maintained, or managed by a 

third party under contract or 

management agreement. 

(5) Credit elsewhere. Applicants must 

certify in writing and the Agency shall 

determine and document that the 

applicant is unable to finance the 

proposed project from their own 

resources or through commercial credit 

at reasonable rates and terms. 

(c) Eligible uses of grant funds. Grant 

funds made under this section may be 

used for the purposes listed in 

paragraphs (c)(1)through (6) of this 

section. 

(1) Construct, enlarge, extend, or 

otherwise improve essential community 

facilities providing essential service 

primarily to rural residents and rural 

businesses. ‘‘Otherwise improve’’ 

includes, but is not limited to, the 

following: 

(i) The purchase of major equipment 

that will in themselves provide an 

essential service to rural residents; and 

(ii) The purchase of existing facilities 

when it is necessary either to improve 

or to prevent a loss of service. 

(2) Construct or relocate public 

buildings, roads, bridges, fences, or 

utilities and to make other public 

improvements necessary to the 

successful operation or protection of 

facilities authorized in paragraph (c)(1) 

of this section. 

(3) Relocate private buildings, roads, 

bridges, fences, or utilities, and other 

private improvements necessary to the 

successful operation or protection of 

facilities authorized in paragraph (c)(1) 

of this section. 

(4) Facilities that have no more than 

25 percent of the floor space occupied 

by Federal Agencies, State Agencies, or 

other ineligible entities or purposes, 

when these entities enhance the primary 

purpose of the facility; 

(5) Facilities that house State funded 

organizations that are typically housed 

in community funded facilities and 

offering services provided by an 

essential community facility; 

(6) Pay the following expenses, but 

only when such expenses are a 

necessary part of a project to fund 

facilities authorized in paragraphs (c)(1) 

through (5) of this section: 

(i) Reasonable fees and costs such as 

legal, engineering, architectural, 

accounting, environmental, 

archeological, and appraisal. 

(ii) Costs of acquiring interest in land; 

rights, such as water rights, leases, 

permits, and rights-of-way; and other 

evidence of land or water control 

necessary for development of the 

facility. 

(iii) Purchasing or renting equipment 

necessary to install, maintain, extend, 

protect, operate, or utilize facilities. 

(iv) Obligations for construction 

incurred before grant approval. 

Construction work should not be started 

and obligations for such work or 

materials should not be incurred before 

the grant is approved. However, if there 

are compelling reasons for proceeding 

with construction before grant approval, 

applicants may request Agency approval 

to pay such obligations. Such requests 

may be approved if the Agency 

determines that: 

(A) Compelling reasons exist for 

incurring obligations before grant 

approval; 

(B) The obligations will be incurred 

for authorized grant purposes; 

(C) Contract documents have been 

approved by the Agency; 

(D) All environmental requirements 

applicable to the Agency and the 

applicant have been met; and 

(E) The applicant has the legal 

authority to incur the obligations at the 

time proposed, and payment of the 

debts will remove any basis for any 

mechanic’s, material, or other liens that 

may attach to the security property. 

(7) The Agency may authorize 

payment of such obligations at the time 

of grant closing. The Agency’s 

authorization to pay such obligations, 

however, is on the condition that it is 

not committed to make the grant; it 

assumes no responsibility for any 

obligations incurred by the applicant; 

and the applicant must subsequently 

meet all grant approval requirements. 

The applicant’s request and the 

Agency’s authorization for paying such 

obligations shall be in writing. 

(d) Ineligible uses of grant funds. 

Grant funds under this section may not 

be used to fund: 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61241 

(1) Initial operating expenses or 

annual recurring costs, including 

purchases or rentals that are generally 

considered to be operating and 

maintenance expenses; 

(2) Construction or repair of electric 

generating plants, electric transmission 

lines, or gas distribution lines to provide 

services for commercial sale; 

(3) Refinancing of existing 

indebtedness; 

(4) Interest; 

(5) Any cost of a project when the 

median household income of the 

population to be served by the proposed 

facility is above the higher of the 

poverty line or eligible percent (60, 70, 

80, or 90) of the State non-metropolitan 

median household income (paragraph 

(e)(2) of this section); 

(6) Recreational facilities, except for 

community parks and community 

wellness centers; or 

(7) Any purposes restricted under the 

Community Facilities direct loan 

program. 

(e) Funding limitations and matching 

funds. Grant assistance cannot exceed 

the applicable percentages contained in 

this paragraph and may be further 

limited due to availability of funds or by 

the maximum grant assistance allowable 

determined in accordance with 

paragraph (e)(1) of this section. 

(1) Maximum grant assistance. Grant 

assistance cannot exceed the lower of: 

(i) Qualifying percentage of eligible 

project cost determined in accordance 

with paragraph (e)(2) of this section; 

(ii) Minimum amount sufficient to 

provide for economic feasibility as 

determined in accordance with 

paragraph (b)(3) of this section; or 

(iii) Either 50 percent of the annual 

State allocation or $50,000, whichever is 

greater, unless otherwise concurred 

with Agency approval. 

(2) Funding limitations. Not more 

than 75 percent Federal grant funds, 

including CF grant funds, may be used 

to fund a project funded with CF grant 

funds. Grant assistance will be provided 

on a graduated scale with smaller 

communities with the lowest median 

household incomes being eligible for 

projects with a higher proportion of 

grant funds. Grant assistance is limited 

to the following percentages of eligible 

project costs: 

(i) 75 percent when the proposed 

project is: 

(A) Located in a rural community 

having a population of 5,000 or less; and 

(B) The median household income of 

the population to be served by the 

proposed facility is below the higher of 

the poverty line or 60 percent of the 

statewide non-metropolitan median 

household income. 

(ii) 55 percent when the proposed 

project is: 

(A) Located in a rural community 

having a population of 12,000 or less; 

and 

(B) The median household income of 

the population to be served by the 

proposed facility is below the higher of 

the poverty line or 70 percent of the 

statewide non-metropolitan median 

household income. 

(iii) 35 percent when the proposed 

project is: 

(A) Located in a rural community 

having a population of 20,000 or less; 

and 

(B) The median household income of 

the population to be served by the 

proposed facility is below the higher of 

the poverty line or 80 percent of the 

statewide non-metropolitan median 

household income. 

(iv) 15 percent when the proposed 

project is: 

(A) Located in a rural community 

having a population of 20,000 or less; 

and 

(B) The median household income of 

the population to be served by the 

proposed facility is below the higher of 

the poverty line or 90 percent of the 

statewide non-metropolitan median 

household income. 

(v) 60 percent when the proposed 

project is: 

(A) Located in a rural community 

having a population of 20,000 or less; 

and 

(B) The median household income of 

the population to be served by the 

proposed facility is below the higher of 

the poverty line or 90 percent of the 

State non-metropolitan median 

household income. The 60 percent 

grants are only available to communities 

affected by a catastrophic natural 

disaster that has resulted in a loss of 60 

percent of the community’s population 

and is located in a county designated as 

a major disaster area by the President. 

(3) Matching. Funding for the balance 

of the project may consist of other 

Community Facility financial 

assistance, applicant contributions, or 

loans and grants from other sources. 

However, other Federal grant funds 

cannot be used as matching funds 

unless provided by other authorizing 

legislation. Matching funds may not be 

made up of in-kind contributions other 

than real estate donated to the project 

from any entity other than the grantee. 

(f) Scoring applications. Each 

application for a grant under this 

section will be scored based on the 

priority categories and points specified 

in paragraphs (f)(1) through (3) of this 

section. The maximum number of 

points that will be awarded to an 

application is 100. 

(1) Program-specific priority 

categories and points. The Agency will 

award program-specific points for the 

priority categories described in 

paragraphs (f)(1)(i) through (iii) of this 

section. 

(i) Population priorities. The proposed 

project is located in a rural community 

having a population of: 

(A) 5,000 or less—25 points; 

(B) Between 5,001 and 12,000, 

inclusive—15 points; and 

(C) Between 12,001 and 20,000, 

inclusive—10 points; 

(ii) Income priorities. The median 

household income of the population to 

be served by the proposed project is 

below the higher of the poverty line or: 

(A) 60 percent of the statewide nonmetropolitan median household 

income—25 points; 

(B) 70 percent of the statewide nonmetropolitan median household 

income—15 points; 

(C) 80 percent of the statewide nonmetropolitan median household 

income—10 points; or 

(D) 90 percent of the statewide nonmetropolitan median household 

income—5 points. 

(iii) Other priorities. If the project is 

for health care, for public safety, or for 

an educational facility, 20 points will be 

awarded. 

(2) Administrator priority categories 

and points. Unless otherwise specified 

in a notification issued under § 5002.15 

of subpart A of this part, the 

Administrator may award up to 20 

points to an application under this 

section to improve the geographic 

diversity of awardees in a fiscal year. 

(3) State director priority categories 

and points. Unless otherwise specified 

in a notification issued under § 5002.15 

of subpart A of this part, a State Director 

may award up to 10 points to an 

application that meets any of the State 

Director priority categories to specified 

in § 5002.42(b)(2)(i) through (x). No 

more than a total of 10 State Director 

points may be awarded under this 

paragraph to an application. 

(g) Ranking applications. Unless 

otherwise specified in a notification 

issued under § 5002.15 of subpart A of 

this part, the Agency will rank 

applications on or after the following 

dates each fiscal year: December 15, 

March 15, July 15, and August 15. 

(h) Additional criteria for selecting 

applications for funding. The Agency 

may select the next highest scoring 

application for funding before a higher 

scoring application when the 

application is a subsequent request for 

a previously approved project. If the 


sroberts on PROD1PC70 with PROPOSALS
61242 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

request is due to cost overruns, the cost 

overruns must be due to high bids or 

unexpected construction problems that 

cannot be reduced by negotiations, 

redesign, use of bid alternatives, 

rebidding, or other means. Cost 

overruns exceeding 20 percent of the 

development cost at time of grant 

approval or where the scope of the 

original purpose has changed will not 

be considered in selecting the next 

highest scoring application over the 

higher scoring application. 

(i) Public Information Process. All 

grants awarded under this section are 

subject to the public information 

process required under the Community 

Facility direct loan program. 

§ 5002.102 Rural Energy for America 

Grants. 

The Rural Energy for America grant 

program is a Nationally-competed grant 

program with a specified application 

deadline. 

(a) Applicant eligibility. In addition to 

the requirements specified in § 5002.20 

in subpart A of this part, an applicant 

must be an agricultural producer or 

rural small business. 

(b) Project eligibility. In addition to 

the requirements specified in 

§ 5002.22(b) and (c) in subpart A of this 

part, the project must also meet the 

criteria specified in paragraphs (b)(1) or 

(2) of this section. The requirement 

specified in § 5002.22(a) in subpart A 

does not apply to projects seeking a 

grant under this section. 

(1) The project must: 

(i) Be for the purchase, installation, 

expansion and/or other energy-related 

improvement of a renewable energy 

system or to make energy efficiency 

improvements; 

(ii) Be located in a rural area; 

(iii) Be for technology that is: 

(A) Pre-commercial or commercially 

available, and 

(B) Replicable; and 

(iv) Have technical merit as 

determined by the Agency. Projects that 

the Agency determines are without 

technical merit are ineligible for grants. 

(2) The project must be for a 

feasibility study for a project that meets 

the criteria specified in paragraph (b)(1) 

of this section. 

(c) Additional preapplication and 

application considerations. In addition 

to the requirements specified in 

§§ 5002.30, 5002.31, and 5002.32, the 

following requirements apply to 

preapplications and applications 

submitted under this section. 

(1) Preapplications. If an applicant 

elects to submit a preapplication, the 

preapplication must be received by the 

Agency on or before January 15 of each 

year to be considered. Preapplications 

received after January 15 will not be 

considered by the Agency. 

(2) Applications—(i) Application 

deadline. Applications must be received 

on or before June 15 of each year to be 

considered for funding for that fiscal 

year. Applications received by the 

Agency after June 15 will not be 

considered. 

(ii) Business plans. The business plan 

submitted with the application must 

include at least three years of pro forma 

financial statements. 

(iii) Simplified applications. 

Applicants with projects that meet both 

criteria specified in paragraphs 

(c)(2)(iii)(A) and (B) of this section and 

agree to the terms specified in paragraph 

(c)(2)(iii)(C) of this section will be 

allowed to submit an application under 

this section that has less documentation 

than for applications that do not meet 

these two criteria. The requirements for 

simplified applications are available at 

any Rural Development office and on 

the Agency Web site. 

(A) The total eligible project costs are 

$200,000 or less. 

(B) The proposed project uses either 

commercially available renewable 

energy systems or energy efficiency 

improvements. 

(C) The project is complete when the 

applicant has provided a written final 

project development, testing, and 

performance report acceptable to the 

Agency. Upon notification of receipt of 

an acceptable project completion report, 

the applicant may request grant 

reimbursement. The Agency reserves 

the right to observe the testing. 

(d) Eligible project costs. Grant funds 

under this section may only be used for 

those costs associated with the items 

listed in paragraphs (d)(1) through (9) of 

this section, as long as the items are an 

integral and necessary part of the 

renewable energy system or energy 

efficiency improvement. The eligible 

project costs also apply to a mixed 

business and residential project if the 

applicant is an agricultural producer. If 

the mixed business and residential 

project, however, is from an applicant 

who is a rural small business, these 

eligible project costs apply to the 

applicant’s mixed business and 

residential project only if the residential 

portion of the project is less than 25 

percent of the square footage of the 

entire project. 

(1) Post-application purchase and 

installation of equipment (new, 

refurbished, or remanufactured), except 

agricultural tillage equipment, used 

equipment, and vehicles. 

(2) Post-application construction or 

improvements. 

(3) Energy audits or assessments. 

(4) Permit and license fees. 

(5) Professional service fees, except 

for application preparation. 

(6) Feasibility studies and technical 

reports. 

(7) Business plans. 

(8) Retrofitting. 

(9) Construction of a new energy 

efficient facility only when the facility 

is used for the same purpose, is 

approximately the same size, and based 

on the energy audit will provide more 

energy savings than improving an 

existing facility. Only costs identified in 

the energy audit for energy efficiency 

improvements are allowed. 

(e) Funding limitations, matching 

funds, and availability of other funds— 

(1) Funding limitations. (i) The amount 

of grant funds that will be made 

available to an eligible project under 

this section must not exceed 25 percent 

of total eligible project costs. Eligible 

project costs are specified in paragraph 

(d) of this section. 

(ii) The maximum amount of grant 

assistance to one individual or entity 

will not exceed $750,000 per Federal 

fiscal year. 

(2) Matching funds. (i) Without 

specific statutory authority, other 

Federal grant funds and applicant inkind contributions cannot be used to 

meet the matching fund requirement. 

Third-party, in-kind contributions are 

limited to 10 percent of the matching 

fund requirement of the grant. 

(ii) Passive investor equity 

contributions are acceptable for 

renewable energy system projects, 

including those that are eligible for 

Federal production tax credits, provided 

the passive investor meets the 

requirements of paragraph (a) of this 

section. 

(3) Availability of other funds. In 

determining funding grant applications, 

the Agency will consider the following: 

(i) If the size of the grant amount 

being requested in the application is 

$50,000 or less, the Agency will 

consider funding the application on its 

own merit, without consideration of 

other sources of funding. 

(ii) If the size of the grant amount 

being requested in the application is 

more than $50,000, the Agency will 

consider funding the application only to 

the extent that: 

(A) The applicant cannot obtain a 

loan guaranteed by the Agency for any 

portion of the project; or 

(B) the amount being requested in the 

grant application is necessary for the 

bank to make a guaranteed loan to the 

applicant. 

(C) If neither of the two situations 

described in paragraphs (e)(3)(ii)(A) or 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61243 

(B) of this section apply, then the 

Agency will not consider the 

application under this rule. 

(f) Grant award amount. In 

determining the amount of a grant 

awarded, the Agency will take into 

consideration the following eight 

criteria: 

(1) The type of renewable energy 

system to be purchased; 

(2) The estimated quantity of energy 

to be generated by the renewable energy 

system; 

(3) The expected environmental 

benefits of the renewable energy system; 

(4) The extent to which the renewable 

energy system will be replicable; 

(5) The amount of energy savings 

expected to be derived from the activity, 

as demonstrated by an energy audit 

comparable to an energy audit under 7 

U.S.C. 8105; 

(6) The estimated length of time it 

would take for the energy savings 

generated by the activity to equal the 

cost of the activity; 

(7) The expected energy efficiency of 

the renewable energy system; and 

(8) The amount of energy produced 

per amount of grant award. 

(g) Scoring applications. Each 

application for a grant under this 

section will be scored based on the 

priority categories and points specified 

in paragraphs (g)(1) and (2) of this 

section. The maximum number of 

points that will be awarded to an 

application is 100. 

(1) Program-specific priority 

categories and points. The Agency will 

award program-specific points for the 

priority categories described in 

paragraphs (g)(1)(i) through (x) of this 

section. 

(i) Quantity of energy replaced, 

produced, or saved (maximum score of 

13 points). Points may only be awarded 

for energy replacement, energy savings, 

or energy generation. Points will not be 

awarded for more than one category. 

Renewable energy projects are eligible 

for points under either paragraph 

(g)(1)(i)(A) or (g)(1)(i)(C). Energy 

efficiency improvement projects are 

eligible for points under paragraph 

(g)(1)(i)(B) only. 

(A) Energy replacement (maximum 

score of 13 points). If the proposed 

renewable energy system is intended 

primarily for self-use by the agricultural 

producer or rural small business and 

will provide energy replacement of 

greater than zero, but equal to or less 

than 25 percent, 6 points will be 

awarded; greater than 25 percent, but 

equal to or less than 50 percent, 9 points 

will be awarded; or greater than 50 

percent, 13 points will be awarded. 

Energy replacement is to be determined 

by dividing the estimated quantity of 

renewable energy to be generated over a 

12-month period by the estimated 

quantity of energy consumed over the 

same 12-month period during the 

previous year by the applicable energy 

application. The estimated quantities of 

energy must be converted to either 

British thermal units, Watts, or similar 

energy equivalents to facilitate scoring. 

If the estimated energy produced equals 

more than 150 percent of the energy 

requirements of the applicable 

process(es), the project will be scored as 

an energy generation project. 

(B) Energy savings (maximum score of 

13 points). If the estimated energy 

expected to be saved by the installation 

of the energy efficiency improvements 

will be from 20 percent up to, but not 

including 30 percent, 6 points will be 

awarded; 30 percent up to, but not 

including 35 percent, 9 points will be 

awarded; or, 35 percent or greater, 13 

points will be awarded. Energy savings 

will be determined by the projections in 

an energy assessment or audit. Projects 

with total eligible project costs of 

$50,000 or less that opt to obtain a 

professional energy audit will be 

awarded an additional 3 points. 

(C) Energy generation (maximum 

score of 13 points). If the proposed 

renewable energy system is intended 

primarily for production of energy for 

sale, 13 points will be awarded. 

(ii) Environmental benefits (maximum 

score of 3 points). If the purpose of the 

proposed system contributes to the 

environmental goals and objectives of 

other Federal, State, or local programs, 

3 points will be awarded. Points will 

only be awarded for this paragraph if 

the applicant is able to provide 

documentation from an appropriate 

authority supporting this claim. 

(iii) Commercial availability 

(maximum score of 9 points). If the 

proposed system or improvement is 

currently commercially available and 

replicable, 5 points will be awarded. If 

the proposed system or improvement is 

commercially available and replicable 

and is also provided with a 5-year or 

longer warranty providing the purchaser 

protection against system degradation or 

breakdown or component breakdown, 9 

points will be awarded. 

(iv) Technical merit score (maximum 

score of 30 points). The Technical Merit 

of each project will be determined using 

the procedures specified in paragraphs 

(g)(1)(iv)(A) and (B) of this section. The 

procedures specified in paragraph 

(g)(1)(iv)(A) will be used to score 

paragraphs (g)(1)(iv)(A)(1) through (10) 

of this section. The final score awarded 

will be calculated using the procedures 

described in paragraph (g)(1)(iv)(B) of 

this section. 

(A) Technical merit. Paragraphs 

(g)(1)(iv)(A)(1) through (10) of this 

section have their own maximum 

possible score and will be scored 

according to the following criteria: If the 

description in the subparagraph has no 

significant weaknesses and exceeds the 

requirements of the subparagraph, 100 

percent of the total possible score for the 

subparagraph will be awarded. If the 

description has one or more significant 

strengths and meets the requirements of 

the subparagraph, 80 percent of the total 

possible score will be awarded for the 

subparagraph. If the description meets 

the basic requirements of the 

subparagraph, but also has several 

weaknesses, 60 percent of the points 

will be awarded. If the description is 

lacking in one or more critical aspects, 

key issues have not been addressed, but 

the description demonstrates some 

merit or strengths, 40 percent of the 

total possible score will be awarded. If 

the description has serious deficiencies, 

internal inconsistencies, or is missing 

information, 20 percent of the total 

possible score will be awarded. If the 

description has no merit in this area, 0 

percent of the total possible score will 

be awarded. The total possible points 

for Technical Merit is 30 points. 

(1) Qualifications of the project team 

(maximum score of 10 points). The 

applicant has described the project team 

service providers, their professional 

credentials, and relevant experience. 

The description supports that the 

project team service, equipment, and 

installation providers have the 

necessary professional credentials, 

licenses, certifications, or relevant 

experience to develop the proposed 

project. 

(2) Agreements and permits 

(maximum score of 5 points). The 

applicant has described the necessary 

agreements and permits required for the 

project and the schedule for securing 

those agreements and permits. 

(3) Energy or resource assessment 

(maximum score of 10 points). The 

applicant has described the quality and 

availability of a suitable renewable 

resource or an assessment of expected 

energy savings for the proposed system. 

(4) Design and engineering (maximum 

score of 30 points). The applicant has 

described the design, engineering, and 

testing needed for the proposed project. 

The description supports that the 

system will be designed, engineered, 

and tested so as to meet its intended 

purpose, ensure public safety, and 

comply with applicable laws, 

regulations, agreements, permits, codes, 

and standards. 


sroberts on PROD1PC70 with PROPOSALS
61244 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

(5) Project development schedule 

(maximum score of 5 points). The 

applicant has described the 

development method, including the key 

project development activities and the 

proposed schedule for each activity. The 

description identifies each significant 

task, its beginning and end, and its 

relationship to the time needed to 

initiate and carry the project through to 

successful completion. The description 

addresses grantee or borrower project 

development cash flow requirements. 

(6) Project economic assessment 

(maximum score of 20 points). The 

applicant has described the financial 

performance of the proposed project, 

including the calculation of simple 

payback. The description addresses 

project costs and revenues, such as 

applicable investment and production 

incentives, and other information to 

allow the assessment of the project’s 

cost effectiveness. 

(7) Equipment procurement 

(maximum score of 5 points). The 

applicant has described the availability 

of the equipment required by the 

system. The description supports that 

the required equipment is available, and 

can be procured and delivered within 

the proposed project development 

schedule. 

(8) Equipment installation (maximum 

score of 5 points). The applicant has 

described the plan for site development 

and system installation. 

(9) Operation and maintenance 

(maximum score of 5 points). The 

applicant has described the operations 

and maintenance requirements of the 

system necessary for the system to 

operate as designed over the design life. 

(10) Dismantling and disposal of 

project components (maximum score of 

5 points). The applicant has described 

the requirements for dismantling and 

disposing of project components at the 

end of their useful life and associated 

wastes. 

(B) Calculation of Technical Merit 

Score (maximum score of 30 points). To 

determine the actual points awarded a 

project for Technical Merit, the 

following procedure will be used: The 

scores awarded for paragraphs 

(g)(1)(iv)(A)(1) through (10) of this 

section will be added together and then 

divided by 100, the maximum possible 

score, to achieve a percentage. This 

percentage will then be multiplied by 

the total possible points of 30 to achieve 

the points awarded for the proposed 

project for Technical Merit. 

(v) Readiness (maximum score of 10 

points). If the applicant has written 

commitments from the source(s) 

confirming commitment of 50 percent 

up to but not including 75 percent of the 

matching funds prior to the Agency 

receiving the complete application, 3 

points will be awarded. If the applicant 

has written commitments from the 

source(s) confirming commitment of 75 

percent up to but not including 100 

percent of the matching funds prior to 

the Agency receiving the complete 

application, 6 points will be awarded. If 

the applicant has written commitments 

from the source(s) of matching funds 

confirming commitment of 100 percent 

of the matching funds prior to the 

Agency receiving the complete 

application, 10 points will be awarded. 

(vi) Small agricultural producer/very 

small business (maximum score of 8 

points). If the applicant is an 

agricultural producer producing 

agricultural products with a gross 

market value of less than $600,000 in 

the preceding year, 4 points will be 

awarded. If the applicant is an 

agricultural producer producing 

agricultural products with a gross 

market value of less than $200,000 in 

the preceding year or is a very small 

business, 8 points will be awarded. 

(vii) Simplified application/low cost 

project (maximum score of 3 points). If 

the applicant is eligible for and uses the 

simplified application process or the 

project has total eligible project costs of 

$200,000 or less, 3 points will be 

awarded. 

(viii) Hybrid technology (maximum 

score of 3 points). If the application is 

for a combination of two or more 

renewable energy technologies 

incorporated into a single project, 3 

points will be awarded. 

(ix) Return on investment (maximum 

score of 6 points). If the proposed 

project will return the cost of the 

investment in less than 4 years, 6 points 

will be awarded; 4 years up to but not 

including 8 years, 4 points will be 

awarded; or 8 years up to 11 years, 2 

points will be awarded. 

(x) Financial need (maximum score of 

5 points). If the applicant can 

demonstrate either that the applicant is 

unable to finance the project from its 

own and commercially available 

resources without grant assistance or 

that the project proposed by the 

applicant cannot achieve the income 

and cash flows to sustain it financially 

over the long term without grant 

assistance, 5 points will be awarded. 

(2) Administrator priority categories 

and points. Unless otherwise specified 

in a notification issued under § 5002.15 

of subpart A of this part, the 

Administrator may award up to 10 

points to an application under this 

section in the priority categories 

specified in paragraphs (g)(2)(i) through 

(v) of this section. No more than 10 

Administrator points will be awarded to 

an application. 

(i) Unserved or underserved areas; 

(ii) Geographic diversity; 

(iii) Emergency conditions; 

(iv) Public health and safety; and 

(v) Presidential initiatives. 

(h) Ranking applications. Unless 

otherwise specified in a notification 

issued under § 5002.15 of subpart A of 

this part, the Agency will rank 

applications on or after March 15 and 

July 15 each year. 

§ 5002.103 Rural Cooperative 

Development Grants 

The Rural Cooperative Development 

grant program is a Nationally-competed 

grant program with a specified 

application deadline. 

(a) Definition. For the purpose of this 

section, ‘‘Center’’ is defined as the entity 

established or operated by the grantee 

for rural cooperative development. It 

may or may not be an independent legal 

entity separate from the grantee. 

(b) Applicant eligibility. In addition to 

the requirements specified in § 5002.20 

in subpart A of this part, as appropriate, 

the applicant must be a non-profit 

organization or institution, including an 

accredited institution of higher 

education. Public bodies are not eligible 

to receive grants under this section. 

(c) Project eligibility. In addition to 

the requirements specified in § 5002.22 

in subpart A of this part, the project 

must be for the establishment and 

operation or the continuation of a rural 

cooperative development center 

(Center). 

(1) Applications that focus on only 

one cooperative will not be considered 

for funding. 

(2) Except for 1994 Institutions, 

applicants must provide 25 percent of 

total project cost. 

(3) Applications for providing for the 

sharing of information among Centers 

will not be considered for funding if 

more than 10 percent of the funding 

request is for the provision of sharing of 

information among Centers. 

(d) Additional application 

requirements. In addition to the 

application requirements specified in 

§ 5002.32, all applications under this 

section must include a plan for the 

establishment and operation by the 

institution of a Center or Centers for 

cooperative development. This plan 

must contain the following elements: 

(1) A provision that substantiates that 

the Center will effectively serve rural 

areas in the United States; 

(2) A provision that the primary 

objective of the Center will be to 

improve the economic condition of rural 

areas through cooperative development; 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61245 

(3) A description of the contributions 

that the proposed activities are likely to 

make to the improvement of the 

economic conditions of the rural areas 

for which the Center will provide 

services. 

(4) Provisions that the Center, in 

carrying out the activities, will seek, 

where appropriate, the advice, 

participation, expertise, and assistance 

of representatives of business, industry, 

educational institutions, the Federal 

Government, and State and local 

governments. 

(5) Provisions that the applicant will: 

(i) Take all practicable steps to 

develop continuing sources of financial 

support for the Center, particularly from 

sources in the private sector; 

(ii) Make arrangements for the 

activities by the non-profit operating the 

Center to be monitored and evaluated; 

and 

(iii) Provide an accounting for the 

money received by the grantee under 

this section. 

(e) Eligible uses of grant funds. Grant 

funds may be used for, but are not 

limited to, providing the following to 

individuals, cooperatives, small 

businesses and other similar entities in 

rural areas served by the Center: 

(1) Applied research, feasibility, 

environmental and other studies that 

may be useful for the purpose of 

cooperative development. 

(2) Collection, interpretation and 

dissemination of principles, facts, 

technical knowledge, or other 

information for the purpose of 

cooperative development. 

(3) Providing training and instruction 

for the purpose of cooperative 

development. 

(4) Providing loans and grants for the 

purpose of cooperative development in 

accordance with this section. 

(5) Providing technical assistance, 

research services and advisory services 

for the purpose of cooperative 

development. 

(6) Providing for the coordination or 

services and the sharing of information 

among Centers. 

(f) Ineligible uses. Grant funds under 

this section will not be provided and 

cannot be used to: 

(1) Duplicate current services or 

replace or substitute support previously 

provided. If the current service is 

inadequate, however, grant funds may 

be used to expand the level of effort or 

services beyond that which is currently 

being provided; 

(2) pay costs of the project incurred 

prior to the date of grant approval; 

(3) plan, repair, rehabilitate, acquire, 

or construct a building or facility, 

including a processing facility; 

(4) purchase, rent, or install fixed 

equipment. Fixed equipment means 

nonexpendable, tangible personal 

property having a useful life of more 

than one year and an acquisition cost of 

greater than or equal to $5,000. 

(5) Pay for the repair of privately 

owned vehicles; or 

(6) Fund research and development. 

(g) Grant agreement and conditions. 

The length of grant agreements made 

under this section are subject to the 

conditions specified in paragraphs (g)(1) 

through (3) of this section. 

(1) A grant awarded to a center that 

has received no prior funding under this 

section shall be made for a period of one 

year. 

(2) If the Agency determines that it is 

in the best interest of the program, 

grants will be awarded for a period of 

more than one year, but not more than 

three years, to a center that has 

successfully met the parameters 

described in paragraphs (i)(1)(i) through 

(v) of this section, as determined by the 

Agency. 

(3) The Agency will not approve 

requests to extend the grant period for 

more than 12 months. 

(h) Funding limitations and matching 

funds. 

(1) Funding limitations. For 1994 

Institutions, the maximum amount of a 

grant awarded under this section will be 

no more than 95 percent of the total cost 

of the Center. The Agency shall not 

require a match of more than 5 percent 

of the total cost of the Center. 

(2) Matching funds. 

(i) Applicants must verify in their 

application that all matching funds are 

available for the time period of the 

grant. 

(ii) Matching funds must be spent in 

advance of, or as a pro rata portion of, 

grant funds being expended. 

(iii) All matching funds must be spent 

on eligible expenses and must be from 

eligible sources. 

(iv) All matching funds must be 

provided by either the applicant or a 

third party in the form of cash or inkind contributions. 

(A) Matching funds contributed by the 

applicant may include a loan from 

another federal source. However, other 

Federal grant funds cannot be used as 

matching funds unless provided by 

other authorizing legislation. 

(B) Any in-kind contributions must be 

performed for the benefit of the Center. 

The Center must be able to document 

and verify the number of hours worked 

and the value associated with the 

contribution. In-kind contributions 

provided by individuals, businesses, or 

cooperatives who are being assisted by 

the Center cannot be provided for the 

benefit of their own projects because the 

Agency considers this a conflict of 

interest or the appearance of a conflict 

of interest. 

(i) Scoring applications. Each 

application for a grant under this 

section will be scored based on the 

priority categories and points specified 

in paragraphs (i)(1) and (2) of this 

section. The maximum number of 

points that will be awarded to an 

application is 100. 

(1) Program-specific priority 

categories and points. The Agency will 

award program-specific points for the 

priority categories described in 

paragraphs (i)(1)(i) through (viii) of this 

section. 

(i) Administrative capabilities 

(maximum score of 10 points). The 

Agency will evaluate the application to 

determine whether the applicant has a 

proven track record of carrying out 

activities to promote and assist the 

development of cooperatively and 

mutually owned businesses. The 

applicant must also discuss their 

financial systems and audit controls, 

personnel and program administration 

performance measures and rules of 

governance. Applicants that evidence 

capable systems and controls and clear 

rules of governance will receive more 

points. 

(ii) Technical assistance and other 

services (maximum score of 15 points). 

The Agency will evaluate the 

applicant’s demonstrated expertise in 

providing technical assistance and 

accomplishing effective outcomes in 

cooperative development in rural areas 

to promote and assist the development 

of cooperatively and mutually owned 

businesses. The applicant should also 

discuss their potential for delivering 

effective technical assistance, the 

expected effects of that assistance, and 

the sustainability of organizations 

receiving the assistance. Applicants that 

evidence effective delivery systems for 

cooperative development will receive 

more points. 

(iii) Economic development 

(maximum score of 15 points). The 

Agency will evaluate the applicant’s 

demonstrated ability to assist in the 

retention of businesses, facilitate the 

establishment of cooperatives and new 

cooperative approaches and generate 

employment opportunities that will 

improve the economic conditions of 

rural areas. Applicants that provide 

statistics and identify their role in the 

economic development outcomes will 

receive more points. 

(iv) Networking and regional focus 

(maximum score of 10 points). The 

Agency will evaluate the applicant’s 

demonstrated commitment to: 


sroberts on PROD1PC70 with PROPOSALS
61246 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

(A) networking with and sharing the 

results of the efforts of the center with 

other cooperative development centers 

and other organizations involved in 

rural economic development efforts 

(maximum score of 5 points); and 

(B) developing multiorganization and 

multistate approaches to addressing the 

economic development and cooperative 

needs of rural areas (maximum score of 

5 points). 

(v) Commitment (maximum score of 

10 points). The Agency will evaluate the 

applicant’s commitment to providing 

technical assistance and other services 

to underserved and economically 

distressed areas in rural areas of the 

United States. Applicants that provide 

statistics and tie their service area and 

projects to the underserved and the 

economically distressed areas as 

appropriate will receive more points. 

(vi) Qualifications of those performing 

the tasks (maximum score of 10 points). 

The Agency will evaluate the 

application to determine if the 

personnel expected to perform key 

Center tasks have a track record of 

positive solutions for complex 

cooperative development and/or 

marketing problems, or a successful 

record of conducting accurate feasibility 

studies, business plans, marketing 

analysis, or other activities relevant to 

cooperative development Center success 

as determined by the tasks identified in 

applicant’s work plan. Applicants that 

evidence commitment/availability of 

qualified personnel expected to perform 

the tasks will receive more points. 

(vii) Local support (maximum score of 

10 points). The Agency will evaluate the 

applications for previous and expected 

local support for the Center and plans 

for coordinating with other 

developmental organizations (including 

state and local institutions) in the 

proposed service area. Applicants that 

evidence strong support from potential 

beneficiaries and formal evidence of 

intent to coordinate with other 

developmental organizations will 

receive more points. 

(viii) Future support (maximum score 

of 10 points). The Agency will evaluate 

the applicant’s vision for funding Center 

operations for future years. Discussion 

should include issues such as sources 

and uses of alternative funding; reliance 

on Federal, State, and local grants; and 

the use of in-house personnel for 

providing services versus contracting 

out for that expertise. Applicants that 

evidence vision of long-term 

sustainability with diversification of 

funding sources and building in-house 

technical assistance capacity will 

receive more points. 

(2) Administrator priority categories 

and points. Unless otherwise specified 

in a notification issued under § 5002.15 

of subpart A of this part, the 

Administrator may award up to 10 

points to an application under this 

section to improve the geographic 

diversity of awardees in a fiscal year. 

(j) Ranking applications. Unless 

otherwise specified in a notification 

issued under § 5002.15 of subpart A of 

this part, the Agency will rank 

applications on or after July 15 each 

year. 

(k) Additional criteria for selecting 

applications for funding. If two projects 

obtain the same total score, the Agency 

will select the project whose aggregate 

score for the criteria specified in 

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

section is higher. 

§ 5002.104 Distance Learning and 

Telemedicine Grants. 

The Distance Learning and 

Telemedicine (DLT) grant program is a 

Nationally-competed grant program 

with a specified application deadline. 

(a) Definition. For the purpose of this 

section, ‘‘Telecommunications or 

electric borrower’’ is defined as an 

entity that has outstanding RUS or Rural 

Telephone Bank electric or 

telecommunications loans or loan 

guarantees under the provisions of the 

Rural Electrification Act of 1936. 

(b) Applicant eligibility. In addition to 

the requirements specified in § 5002.20, 

except for § 5002.20(c), in subpart A of 

this part: 

(1) The applicant must be: 

(i) Legally organized as an 

incorporated organization or 

partnership; 

(ii) An Indian tribe or tribal 

organization, as defined in 25 U.S.C. 

450b (b) and (c); 

(iii) A state or local unit of 

government or a consortium; or 

(iv) Other legal entity, including a 

private corporation organized on a profit 

or non-profit basis. 

(v) If the applicant is a consortium, at 

least one member of the consortium 

must meet the requirements of 

paragraphs (b)(1)(i) through (iv) of this 

section. If a consortium lacks the legal 

capacity to contract, each individual 

entity must contract with the Agency in 

its own behalf. 

(2) Each applicant must provide 

written evidence of its legal capacity to 

contract with the Agency to obtain the 

grant, and comply with all applicable 

requirements. If a consortium lacks the 

legal capacity to contract, each 

individual entity must contract with the 

Agency on its own behalf. 

(3) Individuals are not eligible for 

program financial assistance under this 

program directly. 

(4) Telecommunications or electric 

borrowers under the Rural 

Electrification Act of 1936 ((7 U.S.C. 

950aaa et seq.) are not eligible for grants, 

provided, however, that such borrowers 

are eligible for funding under the 

Distance Learning Telemedicine 

Combination Loan and Grant Program (7 

CFR 1703, subpart D) and the Distance 

Learning Telemedicine Loan Program (7 

CFR 1703, subpart G). 

(c) Project eligibility. In addition to 

the requirements specified in § 5002.22 

in subpart A of this part: 

(1) The project must be to deliver 

distance learning or telemedicine 

services to entities that operate a rural 

community facility, including libraries, 

or to residents of rural areas at rates 

calculated to ensure that the benefit of 

the financial assistance is passed 

through to such entities or to residents 

of rural areas; and 

(2) DLT end-user sites must be located 

in a rural area described in one of the 

four rural areas described in paragraph 

(h)(1)(ii)(A) of this section, although the 

DLT hub site may be located in either 

a rural or non-rural area. DLT end-user 

facilities not within one of these four 

defined rural areas are not eligible for 

grant funding under this section. 

(d) Additional preapplication and 

application requirements. In addition 

to, or in lieu of, as applicable, the 

requirements specified in §§ 5002.30, 

5002.31, and 5002.32, the following 

requirements apply to preapplications 

and applications submitted under this 

section. 

(1) Preapplications. If an applicant 

elects to submit a preapplication, the 

preapplication must be received by the 

Agency on or before January 1 of the 

year in which a related application is 

received. Preapplications received after 

January 1 will not be considered by the 

Agency. 

(2) Applications—(i) Application 

submittal. When submitting 

applications, the applicant shall submit 

one original and two copies of the 

application to the Agency. 

(ii) Application deadline. 

Applications must be received on or 

before March 31 of each year to be 

considered for funding for that fiscal 

year. Applications received by the 

Agency after March 31 will not be 

considered for funding that fiscal year. 

(iii) State strategic plan. The 

application must contain evidence from 

the Agency State Director, Rural 

Development, that the application 

conforms with the State strategic plan as 

prepared under section 381D of the 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61247 

Consolidated Farm and Rural 

Development Act (7 U.S.C. 1921). The 

applicant should indicate if such a plan 

does not exist. 

(e) Eligible uses of grant funds. Grant 

funds under this section must be used 

to fund only the costs for approved 

purposes as defined in paragraphs (e)(1) 

through (5) of this section. Grants shall 

be expended only for the costs 

associated with the initial capital assets 

associated with the project. 

(1) Acquiring, by lease or purchase, 

constructing, or installing eligible 

equipment, which is computer 

hardware and software, audio or video 

equipment, computer network 

components, telecommunications 

terminal equipment, data terminal 

equipment, inside wiring, interactive 

video equipment, or similar equipment, 

or other facilities that would further 

telemedicine services or distance 

learning services. 

(2) Acquiring or installing 

instructional programming. 

(3) Providing technical assistance and 

instruction for using eligible equipment, 

including any related software. 

(4) Developing instructional 

programming. 

(5) Providing engineering or 

environmental studies relating to the 

establishment or expansion of the phase 

of the project that is being funded with 

the grant. 

(f) Ineligible uses of grant funds. Grant 

funds under this section will not be 

provided and cannot be used: 

(1) To cover the costs of acquiring, 

installing or constructing 

telecommunications transmission 

facilities; 

(2) To pay for medical equipment not 

having telemedicine as its essential 

function; 

(3) To pay salaries, wages, or 

employee benefits to medical or 

educational personnel; 

(4) To pay for the salaries or 

administrative expenses of the applicant 

or the project; 

(5) To purchase equipment that will 

be owned by the local exchange carrier 

or another telecommunications service 

provider unless that service provider is 

the applicant; 

(6) To duplicate facilities providing 

distance learning or telemedicine 

services in place or to reimburse the 

applicant or others for costs incurred 

prior to the Agency’s receipt of the 

completed application; 

(7) To pay costs of preparing the 

application package for financial 

assistance under this program; 

(8) For projects whose primary 

objective is to provide links between 

teachers and students or between 

medical professionals who are located at 

the same facility; 

(9) For site development and the 

destruction or alteration of buildings; 

(10) For the purchase of land, 

buildings, or building construction; 

(11) For any purpose that the 

Administrator has not specifically 

approved; or 

(12) Except for leases provided for in 

paragraph (e)(1) of this section, to pay 

the cost of recurring or operating 

expenses for the project. 

(g) Funding considerations and 

matching funds—(1) Limitation on 

funding certain purposes. No more than 

10 percent of the funds for a grant under 

this section can be used for any one of 

the purposes listed in paragraphs (e)(3) 

through (5) of this section, or for any 

combination thereof. 

(2) Matching funds. The grant 

applicant’s minimum matching 

contribution must equal 15 percent of 

the grant amount requested and shall be 

used for approved purposes for grant 

funds listed in paragraph (e) of this 

section. 

(i) Matching contributions generally 

must be in the form of cash. However, 

in-kind contributions solely for the 

purposes listed in paragraph (e) of this 

section may be substituted for cash. 

(ii) In-kind items listed in paragraph 

(e) of this section must be nondepreciated, new assets with established 

monetary values. Manufacturers’, 

vendors’, or service providers’ discounts 

are not considered in-kind matching. 

(iii) Costs incurred by the applicant, 

or others on behalf of the applicant, for 

facilities or equipment installed, or 

other services rendered prior to 

submission of a completed application, 

shall not be considered as an eligible inkind matching contribution. 

(iv) Costs incurred for non-approved 

purposes identified in paragraph (f) of 

this section shall not be used as an inkind matching contribution. 

(v) Any financial assistance from 

Federal sources will not be considered 

as matching contributions under this 

section unless there is a Federal 

statutory exception specifically 

authorizing the Federal financial 

assistance to be considered as a 

matching contribution, and that 

exception is documented in the 

application. 

(h) Scoring applications. Each 

application for a grant under this 

section will be scored based on the 

priority categories and points specified 

in paragraphs (h)(1) and (2) of this 

section. The maximum number of 

points that will be awarded to an 

application is 100. 

(1) Program-specific priority 

categories and points. The Agency will 

award program-specific points for the 

priority categories described in 

paragraphs (h)(1)(i) through (iii) of this 

section. 

(i) The critical need for the project 

(maximum score of 35 points). (A) This 

criterion will be used to score 

applications based on the 

documentation in support of the need 

for services, the benefits derived from 

the services proposed by the project, the 

local community involvement in 

planning and implementing the project, 

the local participation in financing the 

project, the financial need of the 

applicant, and the technical and 

functional quality of the project. 

Technical and functional quality is 

determined in part by the utilization of 

existing or non-project 

telecommunications resources in an 

area, the integration of the project into 

other networks, and the ability of the 

project to serve the greatest practical 

number of residents in the project’s 

area. This determination will be made 

by the Agency based on information 

submitted by the applicant under 

paragraph (d)(2) of this section. 

(B) The Agency will consider the 

extent of the applicant’s documentation 

explaining the economic, education, or 

health care challenges facing the 

community; the applicant’s proposed 

plan to address these challenges; how 

the grant can help; and why the 

applicant cannot complete the project 

without a grant. The Agency will also 

consider the extent to which the 

applicant provides evidence that 

economic, education, or health care 

challenges could not be addressed 

without employing the specific 

technology proposed. The Agency will 

also consider any support by recognized 

experts in the related educational or 

health care field, any documentation 

substantiating the educational or health 

care underserved nature of the 

applicant’s proposed service area, and 

any justification for specific educational 

or medical services that are needed and 

will provide direct benefits to rural 

residents. The Agency will consider the 

extent to which the applicant 

demonstrates that the project most 

efficiently provides the needed services. 

The Agency will also consider evidence 

of local support of the project, including 

demonstrations of local (applicant and 

community) financial contributions for 

eligible and ineligible grant purposes, 

planning and administrative support for 

the project, and support from 

community and institutional leaders. 

When an applicant believes a project 

area’s or beneficiaries’ financial need is 


sroberts on PROD1PC70 with PROPOSALS
61248 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

greater than the need expressed by the 

project’s National School Lunch 

Program (NSLP) eligibility score, the 

Agency will consider evidence of this 

unusual need. 

(ii) The comparative population 

sparsity of the service area (maximum 

score of 30 points). This criterion will be 

used to evaluate the relative rurality of 

service areas for various projects. Under 

this system, the DLT end-user sites 

contained within the service area are 

identified and given a score according to 

the population of the area where the 

DLT end-user sites are located. 

(A) The following definitions are used 

in the evaluation of sparsity: 

(1) Most Rural Area means any area of 

the United States not included within 

the boundaries of any Census-defined 

urban cluster or urbanized area having 

a population of 2,500 or more 

inhabitants. 

(2) Extremely Rural Area means any 

area of the United States not included 

within the boundaries of any Censusdefined urbanized area but which is 

included in an urban cluster of from 

2,501 to 5,000 inhabitants. 

(3) Mid-Rural Area means any area of 

the United States not included within 

the boundaries of any Census-defined 

urbanized area but which is included 

within the boundaries of an urban 

cluster having a population of from 

5,001 to 10,000 inhabitants. 

(4) Rural Area means any area of the 

United States not included within the 

boundaries of any Census-defined 

urbanized area but which is included in 

an urban cluster of from 10,001 to 

20,000 inhabitants. 

(B) There are a total of 30 possible 

points for this criterion. Each end-user 

site will receive points based on its 

location in accordance with paragraphs 

(h)(1)(ii)(B)(1) through (4) of this 

section. If a hub is utilized as an enduser site, the hub will be considered as 

an end-user site. The applicant will 

receive points as follows: 

(1) If the end-user site is located in a 

Most Rural Area, it will receive 30 

points. 

(2) If the end-user site is located in an 

Extremely Rural Area, it will receive 25 

points. 

(3) If the end-user site is located in a 

Mid-Rural Area, it will receive 15 

points. 

(4) If the end-user site is located in a 

Rural Area, it will receive 0 points. 

(C) The total score for this criterion 

will be based on the average score for 

all the end-user sites included in the 

project. 

(iii) The economic need of the 

applicant’s service area as estimated by 

the NSLP (maximum score of 25 points). 

This criterion will be used to evaluate 

the relative financial need of the 

applicant, community, and project. All 

applicants are required to provide the 

applicable percentage of students 

eligible to participate in the NSLP for 

each area to be served by the end-user 

site. The appropriate State or local 

organization administering the program 

must certify the percentages as being 

correct. The applicant must provide a 

listing of the location of each end-user 

site (city, town, village, borough or rural 

area) discussing how the appropriate 

NSLP percentage was determined in 

accordance with this section. These 

percentages may be obtained from the 

State or local organization that 

administers the program and must be 

certified by that organization as being 

correct by such entity. For purposes of 

this section, the NSLP percentage will 

reflect the percentage of eligibility 

rather than the percentage of actual 

participation. 

(A) The following guidelines will be 

used to determine the applicable NSLP 

percent for a particular application: 

(1) The eligibility percentage for each 

end-user site is the eligibility percentage 

of the school district where the end-user 

will be located. 

(2) Percentage ratios will be rounded 

up to the next highest or rounded down 

to the next lowest whole number for 

fraction of percentages at or greater than 

0.5 or less than 0.5, respectively. 

(3) The project NSLP percentage will 

be determined by the average of the 

NSLP percentages of the end-user sites. 

If end-user sites fall within different 

percentile categories, the eligibility 

percentages associated with each enduser site will be averaged to determine 

the percentile category. For purposes of 

averaging, if a hub is also utilized as an 

end-user site, the hub will be 

considered as an end-user site. 

(B) The applicant will receive 

economic need points based on the 

project NSLP percentage, as follows: 

(1) NSLP percentage greater than or 

equal to 74 percent receives 25 points. 

(2) NSLP percentage less than 25 

percent receives zero points. 

(3) One point is scored for each two 

percentage point increase in project 

NSLP percentage. For example, if the 

project NSLP percentage is 25 percent or 

26 percent, the economic need score is 

1 point. If the project NSLP percentage 

is 47 percent or 48 percent, the 

economic need score is 12 points. 

(2) Administrator priority categories 

and points. Unless otherwise specified 

in a notification issued under § 5002.15 

of subpart A of this part, the 

Administrator may award up to 10 

points to an application under this 

section to improve the geographic 

diversity of awardees in a fiscal year. 

(i) Ranking applications. Unless 

otherwise specified in a notification 

issued under § 5002.15 of subpart A of 

this part, the Agency will rank 

applications on or after July 15 each 

year. 

§ 5002.105 Value-Added Producer Grants. 

The Value-Added Producer grant 

program is a Nationally-competed grant 

program with a specified application 

deadline. For the purposes of the 

application of the requirements in 

subpart A, in the case of this section the 

term ‘‘venture’’ means ‘‘project’’ as that 

term is used in subpart A and includes 

the project and any other activities 

related to the production, processing, 

and marketing of the value-added 

product that is the subject of the valueadded producer grant request. 

(a) Definitions. 

Agricultural producer. Persons or 

entities, including farmers, ranchers, 

loggers, agricultural harvesters, and 

fishermen, that engage in the production 

or harvesting of an agricultural product. 

Producers may or may not own the land 

or other production resources, but must 

have majority ownership interest in the 

agricultural product to which valueadded is to accrue as a result of the 

venture. Examples of agricultural 

producers include: a logger who has a 

majority interest in the logs harvested 

that are then converted to boards, a 

fisherman that has a majority interest in 

the fish caught that are then smoked, a 

wild herb gatherer that has a majority 

interest in the gathered herbs that are 

then converted into essential oils, a 

cattle feeder that has a majority interest 

in the cattle that are fed, slaughtered 

and sold as boxed beef, and a corn 

grower that has a majority interest in the 

corn produced that is then converted 

into corn meal. 

Beginning farmer or rancher. The 

term ‘‘beginning farmer or rancher’’ has 

the meaning given the term in section 

343(a) of the Consolidated Farm and 

Rural Development Act (7 U.S.C. 

1991(a)). 

Family farm. The term ‘‘family farm’’ 

has the meaning given the term in 

section 761.2 of title 7, Code of Federal 

Regulations (as in effect on December 

30, 2007). 

Special purpose equipment. 

Equipment that is used only for 

research, medical, scientific, or other 

technical activities. 

Socially disadvantaged farmer or 

rancher. The term ‘‘socially 

disadvantaged farmer or rancher’’ has 

the meaning given the term in section 

355(e) of the Consolidated Farm and 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61249 

Rural Development Act (7 U.S.C. 

2003(e)). 

(b) Applicant eligibility. In addition to 

the requirements specified in § 5002.20 

in subpart A of this part: 

(1) The applicant must be: 

(i) An independent producer; 

(ii) Agricultural producer group; 

(iii) Farmer or rancher cooperative; or 

(iv) A majority-controlled producerbased business venture. 

(2) An applicant that is a farmer or 

rancher cooperative, an agriculture 

producer group, or a majority-controlled 

producer-based business venture must 

be entering into an emerging market as 

a result of the proposed venture. 

(3) An applicant that is an 

independent producer does not have to 

be entering into an emerging market. 

(c) Venture eligibility. In order for a 

venture to be eligible for grant funding 

under this section, the venture must 

evidence a high likelihood of creating 

value-added for an agricultural product 

by meeting at least one of the categories 

in the definition of value-added. The 

project eligibility requirements specified 

in § 5002.22 in subpart A of this part do 

not apply to ventures seeking a grant 

under this section. 

(1) The venture must be located in a 

rural area. 

(2) Working capital grants must have 

a feasibility study and business plan 

completed specifically for the proposed 

venture before the application is 

submitted. The feasibility study and 

business plan must be submitted when 

requested by the Agency during 

application processing. 

(3) Applicants who have already 

received a planning grant for the 

proposed venture cannot receive 

another planning grant for the same 

venture. Applicants who have already 

received a working capital grant for a 

venture cannot receive any additional 

grants for that venture. 

(4) No venture may be the subject of 

more than one planning grant or more 

than one working capital grant under 

this section. The same venture may, 

however, be awarded one planning 

grant and subsequently apply for and 

receive a working capital grant. 

(5) Not more than one venture per 

funding cycle per applicant may receive 

grant funding under this section. 

(6) If the agricultural product is a 

value-added product, agricultural 

producers must have a majority 

ownership interest in the agricultural 

product to which value-added is to 

accrue. 

(d) Eligible uses of grant funds. Grant 

funds under this section must be used 

to fund only the costs for approved 

purposes as defined in paragraphs (d)(1) 

and (2) of this section. 

(1) Planning grant funds may be used 

to develop a business plan or perform a 

feasibility study to establish a viable 

marketing opportunity for a value-added 

producer. These uses include, but are 

not limited to, the following: 

(i) Conduct, or hire a qualified 

consultant to conduct, a feasibility 

analysis of the proposed value added 

venture to help determine the potential 

success of the venture; 

(ii) Develop, or hire a qualified 

consultant to develop, a business 

operations plan that provides 

comprehensive detail on the 

management, planning and other 

operational aspects of the proposed 

venture; 

(iii) Develop, or hire a qualified 

consultant to develop, a marketing plan 

for the proposed value-added product(s) 

including the identification of a market 

window, potential buyers, a description 

of the distribution system and possible 

promotional campaigns; and 

(iv) Hire counsel to provide legal 

advice and to draft organizational and 

other legal documents related to the 

proposed venture. 

(2) Working capital grant funds may 

be used to provide capital to establish 

alliances or business ventures that allow 

the producer of the value-added 

agricultural product to better compete in 

domestic or international markets. 

These uses include, but are not limited 

to, the following: 

(i) Establish a working capital account 

to fund operations prior to obtaining 

sufficient cash flow from operations; 

(ii) Hire counsel to provide legal 

advice and to draft legal documents 

related to the proposed venture; 

(iii) Hire a certified public accountant 

or other qualified individual to design 

an accounting system for the proposed 

venture; and 

(iv) Pay salaries, utilities and other 

operating costs such as inventory 

financing, the purchase of office 

equipment, computers and supplies and 

finance other related activities. 

(v) Conduct a marketing campaign for 

a proposed value-added product. 

(e) Ineligible uses of grant funds. 

Grant funds under this section may not 

be used to: 

(1) Duplicate current services or 

replace or substitute support previously 

provided. If the current service is 

inadequate, however, grant funds may 

be used to expand the level of effort or 

services beyond what is currently being 

provided; 

(2) Pay costs of the venture incurred 

prior to the date of grant approval; 

(3) Plan, repair, rehabilitate, acquire, 

or construct a building or facility 

(including a processing facility); 

(4) Purchase, rent, or install fixed 

equipment. Fixed equipment means 

nonexpendable, tangible personal 

property having a useful life of more 

than one year and an acquisition cost of 

greater than or equal to $5,000. Rental 

or purchase of special purpose 

equipment for specific, limited 

applications related to planning grants 

may be approved at the discretion of the 

Agency; 

(5) Pay for the repair of privately 

owned vehicles; 

(6) Fund research and development; 

(7) Purchase real property and/or 

vehicles, including boats; 

(8) Pay expenses not directly related 

to the funded venture; 

(9) Fund architectural or engineering 

design work for a specific physical 

facility; 

(10) Fund any expenses related to the 

production of any commodity or 

product to which value will be added, 

including seed, rootstock, labor for 

harvesting the crop, and delivery of the 

commodity to a processing facility. The 

Agency considers these expenses to be 

ineligible because the intent of the 

program is to assist producers with 

marketing value-added products rather 

than producing agricultural 

commodities; or 

(11) Conduct activities on behalf of 

anyone other than a specific 

independent producer or group of 

independent producers. The Agency 

considers conducting industry-level 

feasibility studies and 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. 

(f) Additional preapplication and 

application requirements. In addition to 

the requirements specified in 

§§ 5002.30, 5002.31, and 5002.32, the 

following requirements apply to 

preapplications and applications 

submitted under this section. 

(1) Preapplications. If an applicant 

elects to submit a preapplication, the 

preapplication must be received by the 

Agency on or before January 15 of each 

year to be considered. Preapplications 

received after January 15 will not be 

considered by the Agency. 

(2) Applications—(i) Deadline. Unless 

otherwise specified in a notification 

issued under § 5002.15, applications 

must be received on or before March 1 

of each year to be considered for 

funding for that fiscal year. Applications 

received by the Agency after March 1 

will not be considered. 


sroberts on PROD1PC70 with PROPOSALS
61250 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

(ii) Business plan. The business plan 

must include at least three years of pro 

forma financial statements. 

(iii) Feasibility study. The feasibility 

study should show how the venture 

would operate under a set of 

assumptions, the technology used (the 

facilities, equipment, production 

process, etc.), the qualifications of the 

management team, and the financial 

aspects (capital needs, volume, cost of 

goods, wages, etc.) of the venture. The 

analysis should answer the following 

questions about the venture. 

(A) Where is it now? 

(B) Where does the group want to go? 

(C) Why does the group want to go 

forward with the venture? 

(D) How will the group accomplish 

the venture? 

(E) What resources are needed? 

(F) Who will provide assistance? 

(G) When will the venture be 

completed? 

(H) How much will the venture cost? 

(I) What are the risks? 

(3) Simplified application. Applicants 

with ventures requesting less than 

$50,000 will be allowed to submit an 

application under this section that has 

less documentation than for applicants 

with ventures requesting $50,000 or 

more. The requirements for simplified 

applications are available at any Rural 

Development office and on the Agency 

Web site. 

(g) Grant agreement and conditions. 

The length of grant agreements made 

under this section shall not exceed three 

years. 

(h) Funding limitations and matching 

funds—(1) Funding Limitations. (i) 

Grant funds may be used to pay up to 

50 percent of the costs for carrying out 

relevant ventures. 

(ii) The aggregate amount of awards to 

majority controlled producer-based 

business ventures may not exceed ten 

percent of the total funds obligated 

under this program during any fiscal 

year. 

(iii) The total amount provided to a 

grantee in any one year shall not exceed 

$500,000. 

(2) Matching funds. (i) Applicants 

must verify in their applications that 

matching funds are available for the 

time period of the grant. 

(ii) Matching funds must be at least 

equal to the amount of grant funds 

requested. 

(iii) Unless provided by other 

authorizing legislation, other Federal 

grant funds cannot be used as matching 

funds. 

(iv) Matching funds must be spent at 

a rate equal to or greater than the rate 

at which grant funds are expended. 

(v) Matching funds must be provided 

by either the applicant or by a third 

party in the form of cash or in-kind 

contributions. 

(vi) Matching funds must be spent on 

eligible expenses and must be from 

eligible sources. 

(i) Scoring applications. Each 

application for a grant under this 

section will be scored based on the 

priority categories and points specified 

in paragraphs (i)(1) and (2) of this 

section. The maximum number of 

points that will be awarded to an 

application is 100. 

(1) Program-specific priority 

categories and points. The Agency will 

award program-specific points for the 

priority categories described in 

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

section, as applicable. 

(i) Nature of the proposed venture 

(maximum score of 25 points). Ventures 

will be evaluated for technological 

feasibility, operational efficiency, 

profitability, sustainability and the 

likely improvement to the local rural 

economy. Also considered will be the 

potential for expanding the customer 

base for the Value-Added product and 

the expected increase in returns to the 

producer-owners of the venture. 

(ii) Personnel qualifications 

(maximum score of 20 points). Ventures 

will be evaluated for whether the 

personnel who are responsible for 

completing the proposed tasks, 

including those leading or managing the 

venture and those leading the venture, 

have the necessary qualifications. 

(iii) Commitments and support 

(maximum score of 20 points). 

Commitment to the venture will be 

evaluated on the basis of the number of 

independent producers currently 

involved as well as how many may 

potentially be involved, and the nature, 

level, and quality of their contributions. 

End-user commitments will be 

evaluated on the basis of potential 

markets and the potential amount of 

output to be purchased. Applications 

will also be reviewed for evidence that 

the venture has significant third party 

support, with financial support being 

most important, followed by in-kind 

support and finally general support. 

(iv) Work plan/budget (maximum 

score of 20 points). The work plan will 

be evaluated based on whether it 

provides specific and detailed task 

descriptions, reasonable and specific 

timeframes for the tasks, and the key 

personnel responsible for the tasks that 

will accomplish the venture’s goals. The 

budget will be evaluated based on 

whether it provides a detailed 

breakdown of all estimated costs (both 

grant and matching) associated with the 

proposed activities, allocates these costs 

among the listed tasks, and is 

reasonable. 

(v) Type of applicant (maximum score 

of 5 points). If an application is from an 

applicant that is a beginning farmer or 

rancher, a socially disadvantaged farmer 

or rancher, or an operator of a small- or 

medium-sized farm or ranch that is 

structured as a family farm, 3 points 

will be awarded. If the application is 

from an applicant that meets any two of 

these three applicant types, 4 points 

will be awarded. If the application is 

from an applicant that meets all three 

applicant types, 5 points will be 

awarded. 

(2) Administrator priority categories 

and points. Unless otherwise specified 

in a notification issued under § 5002.15 

of subpart A of this part, the 

Administrator may award up to 10 

points to an application under this 

section to improve the geographic 

diversity of awardees in a fiscal year. 

(j) Ranking applications. Unless 

otherwise specified in a notification 

issued under § 5002.15 of subpart A of 

this part, the Agency will rank 

applications on or after July 15 each 

year. 

§ 5002.106 Water and Waste Disposal 

Facilities Grants. 

The Water and Waste Disposal 

Facilities grant program is a Stateallocated grant program with an open 

application period. 

(a) General. Water and waste 

applicants must demonstrate that they 

possess the financial, technical, and 

managerial capability necessary to 

consistently comply with pertinent 

Federal and State laws and 

requirements. In developing water and 

waste systems, applicants must consider 

alternatives of ownership, system 

design, and the sharing of services. 

(b) Applicant eligibility. In addition to 

the requirements specified in § 5002.20 

in subpart A of this part, as appropriate, 

an applicant must be: 

(1) A public body, such as a 

municipality, county, district, authority, 

or other political subdivision of a State, 

territory or commonwealth; 

(2) An organization operated on a 

non-profit basis, such as an association, 

cooperative, or private corporation. The 

organization must be an association 

controlled by a local public body or 

bodies, or have a broadly based 

ownership by or membership of people 

of the local community; or 

(3) An Indian tribe on Federal and 

State reservations and other Federallyrecognized Indian tribe. 

(c) Project eligibility. In addition to 

the requirements specified in § 5002.22 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61251 

in subpart A of this part, the project 

must meet the following requirements: 

(1) Rural area. The project must serve 

a rural area that, if such project is 

completed, is not likely to decline in 

population below that for which the 

project was designed. Facilities funded 

by the Agency may be located in nonrural areas. However, loan and grant 

funds may be used to fund only that 

portion of the facility serving rural 

areas, regardless of facility location. 

(2) Capacity. The project must be 

designed and constructed so that 

adequate capacity will or can be made 

available to serve the present population 

of the area to the extent feasible and to 

serve the reasonably foreseeable growth 

needs of the area to the extent 

practicable. 

(3) Community development and 

plan. The project must be necessary for 

orderly community development and 

consistent with a current 

comprehensive community water, waste 

disposal, or other current development 

plan for the rural area. 

(4) Revenue sources. All projects 

funded under the provisions of this 

section must be based on taxes, 

assessments, income, fees, or other 

satisfactory sources of revenues in an 

amount sufficient to provide for facility 

operation and maintenance, reasonable 

reserves, and debt payment. If the 

primary use of the facility is by business 

and the success or failure of the facility 

is dependent on the business, then the 

economic viability of that business must 

be assessed. 

(5) Public use. All facilities funded 

under the provisions of this section 

shall be for public use. The facilities 

will be installed so as to serve any 

potential user within the service area 

who desires service and can be feasibly 

and legally served. 

(i) This does not preclude: 

(A) Financing or constructing projects 

in phases when it is not practical to 

finance or construct the entire project at 

one time; and 

(B) Financing or constructing facilities 

where it is not economically feasible to 

serve the entire area, provided economic 

feasibility is determined on the basis of 

the entire system or facility and not by 

considering the cost of separate 

extensions to or parts thereof. 

Additionally, the applicant must 

publicly announce a plan for extending 

service to areas not initially receiving 

service. Additionally, the applicant 

must provide written notice to potential 

users located in the areas not to be 

initially served. 

(ii) Should the Agency determine that 

inequities exist within the applicant’s 

service area for the same type service 

proposed (i.e., water or waste disposal) 

such inequities will be remedied by the 

applicant prior to grant approval or 

included as part of the project. 

Inequities are defined as unjustified 

variations in availability, adequacy or 

quality of service. User rate schedules 

for portions of existing systems that 

were developed under different funding, 

rates, terms or conditions do not 

necessarily constitute inequities. 

(iii) Developers are expected to 

provide utility-type facilities in new or 

developing areas in compliance with 

appropriate State statutes. 

(6) Credit elsewhere. Applicants must 

certify in writing and the Agency shall 

determine and document that the 

applicant is unable to finance the 

proposed project from their own 

resources or through commercial credit 

at reasonable rates and terms. 

(d) Notice of intent to apply for grant. 

An applicant must publish a notice of 

intent to apply for a grant under this 

program not more than 60 days before 

filing the application with the Agency. 

The notice of intent must be published 

in a newspaper of general circulation in 

the proposed area to be served. 

(e) Eligible uses of grant funds. Grant 

funds under this section may be used 

only for the following purposes: 

(1) To construct, enlarge, extend, or 

otherwise improve rural water, sanitary 

sewage, solid waste disposal, and storm 

wastewater disposal facilities. 

(2) To construct or relocate public 

buildings, roads, bridges, fences, or 

utilities, and to make other public 

improvements necessary for the 

successful operation or protection of 

facilities authorized in paragraph (e)(1) 

of this section. 

(3) To relocate private buildings, 

roads, bridges, fences, or utilities, and 

other private improvements necessary 

for the successful operation or 

protection of facilities authorized in 

paragraph (e)(1) of this section. 

(4) For payment of other utility 

connection charges as provided in 

service contracts between utility 

systems. 

(5) When a necessary part of the 

project relates to those facilities 

authorized in paragraphs (e)(1) through 

(4), grant funds may be used for: 

(i) Reasonable fees and costs such as 

legal, engineering, architectural, 

accounting, environmental, 

archeological, and appraisal; 

(ii) Costs of acquiring interest in land; 

rights, such as water rights, leases, 

permits, rights-of-way; and other 

evidence of land or water control or 

protection necessary for development of 

the facility; 

(iii) Purchasing or renting equipment 

necessary to install, maintain, extend, 

protect, operate, or utilize facilities; 

(iv) Cost of additional applicant labor 

and other expenses necessary to install 

and extend service; and 

(v) In unusual cases, the cost for 

connecting the user to the main service 

line. 

(vi) To restore loan funds used to 

prepay grant obligated costs. 

(6) Construction incurred before grant 

approval. 

(i) Funds may be used to pay 

obligations for eligible project costs 

incurred before grant approval if such 

requests are made in writing by the 

applicant and the Agency determines 

that: 

(A) Compelling reasons exist for 

incurring obligations before grant 

approval; 

(B) The obligations will be incurred 

for authorized grant purposes; and 

(C) The Agency’s authorization to pay 

such obligations is on the condition that 

it is not committed to make the grant; 

it assumes no responsibility for any 

obligations incurred by the applicant; 

and the applicant must subsequently 

meet all grant approval requirements, 

including environmental and 

contracting requirements. 

(ii) If construction is started without 

Agency approval, post-approval in 

accordance with this section may be 

considered, provided the construction 

meets applicable requirements 

including those regarding approval and 

environmental matters. 

(f) Ineligible uses of grant funds. Grant 

funds under this section may not be 

used to fund: 

(1) Facilities that are not modest in 

size, design, and cost; 

(2) Loan or grant finder’s fees; 

(3) The construction of any new 

combined storm and sanitary sewer 

facilities; 

(4) Any portion of the cost of a facility 

that does not serve a rural area; 

(5) That portion of project costs 

normally provided by a business or 

industrial user, such as wastewater 

pretreatment, etc.; 

(6) For other purposes not directly 

related to operating and maintenance of 

the facility being installed or improved; 

(7) Reduce equivalent dwelling unit 

(EDU) costs to a level less than similar 

system cost; 

(8) Pay any costs of a project when the 

median household income of the service 

area is more than 100 percent of the 

nonmetropolitan median household 

income of the State; 

(9) Pay project costs when other loan 

funding for the project is not at 

reasonable rates and terms; or 


sroberts on PROD1PC70 with PROPOSALS
61252 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

(10) Pay project costs when other 

funding is a guaranteed loan obtained in 

accordance with the guaranteed loan 

program for water and waste disposal 

facilities. 

(g) Funding considerations and 

matching funds—(1) Funding 

considerations. Grants will be 

determined by the Agency in 

accordance with the provisions of this 

paragraph. 

(i) Similar system cost. If the grant 

results in an annual EDU cost that is not 

comparable with similar systems, the 

Agency will determine a grant amount 

based on achieving EDU costs that are 

not below similar system user costs. 

(ii) Wholesale service. When an 

applicant provides wholesale sales or 

services on a contract basis to another 

system or entity, similar wholesale 

system cost will be used in determining 

the amount of grant needed to achieve 

a reasonable wholesale user cost. 

(iii) Subsidized cost. When annual 

cost to the applicant for delivery of 

service is subsidized by the state, 

commonwealth, or territory, and 

uniform flat user charges regardless of 

usage are imposed for similar classes of 

service throughout the service area, the 

Agency may proceed with a grant in an 

amount necessary to reduce such 

delivery cost to a reasonable level. 

(2) Matching funds. Grants may not be 

made in excess of the percentages 

specified in paragraphs (g)(2)(i) and (ii) 

of this section. These percentages are 

based on Agency eligible project 

development costs. Facilities previously 

installed will not be considered in 

determining the development costs. 

Applicants are advised that the 

percentages contained in paragraphs 

(g)(2)(i) and (ii) of this section are 

maximum amounts and may be further 

limited due to availability of funds or 

the grant determination procedures 

contained in paragraph (g)(1) of this 

section. 

(i) When the median household 

income of the service area is below the 

higher of the poverty line or 80 percent 

of the state nonmetropolitan median 

income and the project is necessary to 

alleviate a public health and safety or 

security problem, the maximum amount 

of the grant will not exceed 75 percent 

of Agency eligible project development 

costs. 

(ii) When the median household 

income of the service area exceeds the 

80 percent, but is not more than 100 

percent of the statewide 

nonmetropolitan median household 

income, the maximum amount of the 

grant will not exceed 45 percent of 

Agency eligible project development 

costs. 

(h) Scoring applications. Each 

application for a grant under this 

section will be scored based on the 

priority categories and points specified 

in paragraphs (h)(1) and (2) of this 

section. The maximum number of 

points that will be awarded to an 

application is 100. 

(1) Program-specific priority 

categories and points. The Agency will 

award program-specific points for the 

priority categories described in 

paragraphs (h)(1)(i) through (iv) of this 

section. 

(i) Population priorities (maximum 

score of 10 points). 

(A) 10 points will be awarded if the 

proposed project will primarily serve a 

rural area having a population not in 

excess of 1,000; 

(B) 7 points will be awarded if the 

proposed project primarily serves a 

rural area having a population between 

1,001 and 2,500; 

(C) 2 points will be awarded if the 

proposed project primarily serves a 

rural area having a population between 

2,501 and 5,500. 

(ii) Health priorities (maximum score 

of 30 points). (A) 12 points will be 

awarded if the proposed project is 

needed to alleviate an emergency 

situation, correct unanticipated 

diminution or deterioration of a water 

supply, or to meet Safe Drinking Water 

Act requirements that pertain to a water 

system; 

(B) 12 points will be awarded if the 

proposed project is required to correct 

inadequacies of a wastewater disposal 

system, or to meet health standards that 

pertain to a wastewater disposal system; 

(C) 6 points will be awarded if the 

proposed project is required to meet 

administrative orders issued to correct 

local, State, or Federal solid waste 

violations. 

(iii) Median household income 

priorities (maximum score of 10 points). 

If the median household income of the 

population to be served by the proposed 

project is: 

(A) Less than the poverty line if the 

poverty line is less than 80 percent of 

the statewide non-metropolitan median 

household income, 10 points will be 

awarded; 

(B) Less than 80 percent of the 

statewide non-metropolitan median 

household income, 8 points will be 

awarded; 

(C) Equal to or more than the poverty 

line and between 80 percent and 100 

percent, inclusive, of the statewide nonmetropolitan median household 

income, 6 points will be awarded. 

(iv) Other priorities (maximum score 

of 30 points). (A) 7 points will be 

awarded if the proposed project will 

merge ownership, management, and 

operation of smaller facilities providing 

for more efficient management and 

economical service; 

(B) 5 points will be awarded if the 

proposed project will enlarge, extend, or 

otherwise modify existing facilities to 

provide service to additional rural areas; 

(C) 2 points will be awarded if the 

applicant is a public body or Indian 

tribe; 

(D) If the amount of other than 

Agency funds committed to the 

proposed project is: 

(1) 50 percent or more, 6 points will 

be awarded; 

(2) 20 percent to 49 percent, 4 points 

will be awarded; 

(3) 5 percent to 19 percent, 2 points 

will awarded; 

(E) 4 points will be awarded if the 

proposed project will serve Agency 

identified target areas; 

(F) 2 points will be awarded if the 

proposed project primarily will recycle 

solid waste products thereby limiting 

the need for solid waste disposal; 

(G) 4 points will be awarded if the 

proposed project will serve an area that 

has an unreliable quality or supply of 

drinking water. 

(2) Administrator priority categories 

and points. Unless otherwise specified 

in a notification issued under § 5002.15 

of subpart A of this part, the 

Administrator may award up to 10 

points to an application under this 

section for grant size and to improve the 

geographic diversity of awardees in a 

fiscal year. No more than 10 

Administrator points will be awarded to 

an application. 

(3) State director priority categories 

and points. Unless otherwise specified 

in a notification issued under § 5002.15 

of subpart A of this part, a State Director 

may award up to 10 points to an 

application that meets any of the State 

Director priority categories specified in 

§ 5002.42(b)(2)(i) through (x) and 

paragraphs (h)(3)(i) and (ii) of this 

section. No more than a total of 10 State 

Director points may be awarded under 

this paragraph to an application. 

(i) Arsenic (as specified in a 

memorandum of understanding with the 

U.S. Environmental Protection Agency). 

(ii) Areas located within 100 miles of 

New York City’s ‘‘ground zero’’ as the 

result of the September 11, 2001, 

attacks. 

(i) Ranking applications. Unless 

otherwise specified in a notification 

issued under § 5002.15 of subpart A of 

this part, the Agency will rank 

applications on or after the following 

dates each fiscal year: December 15, 

March 15, July 15, and August 15. 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 61253 

(j) Additional criteria for selecting 

applications for funding. The Agency 

may select the next highest scoring 

application for funding before a higher 

scoring application when the 

application is a subsequent request for 

a previously approved project. If the 

request is due to cost overruns, the cost 

overruns must be due to high bids or 

unexpected construction problems that 

cannot be reduced by negotiations, 

redesign, use of bid alternatives, 

rebidding, or other means. Cost 

overruns exceeding 20 percent of the 

development cost at time of grant 

approval or where the scope of the 

original purpose has changed will not 

be considered in selecting the next 

highest scoring application over the 

higher scoring application. 

(k) User charges. The user charges 

should be reasonable and produce 

enough revenue to provide for all costs 

of the facility after the project is 

complete. The planned revenue should 

be sufficient to provide for all debt 

service, debt reserve, operation and 

maintenance, and, if appropriate, 

additional revenue for facility 

replacement of short-lived assets 

without building a substantial surplus. 

(l) Professional services and contracts 

related to the facility. Fees provided for 

in contracts or agreements shall be 

reasonable. The Agency shall consider 

fees to be reasonable if they are not in 

excess of those ordinarily charged by 

the profession as a whole for similar 

work when Agency funding is not 

involved. Applicants will be responsible 

for providing the services necessary to 

plan projects including design of 

facilities, environmental review and 

documentation requirements (in 

accordance with the environmental 

policies and procedures of the Rural 

Utilities Service), preparation of cost 

and income estimates, development of 

proposals for organization and funding, 

and overall operation and maintenance 

of the facility. Applicants should 

negotiate for procurement of 

professional services, whereby 

competitors’ qualifications are evaluated 

and the most qualified competitor is 

selected, subject to negotiations of fair 

and reasonable compensation. Contracts 

or other forms of agreement between the 

applicant and its professional and 

technical representatives are required 

and are subject to Agency concurrence. 

(1) Engineering and architectural 

services. (i) Applicants shall publicly 

announce all requirements for 

engineering and architectural services, 

and negotiate contracts for engineering 

and architectural services on the basis of 

demonstrated competence and 

qualifications for the type of 

professional services required and at a 

fair and reasonable price. 

(ii) When project design services are 

procured separately, the selection of the 

engineer or architect shall be done by 

requesting qualification-based proposals 

and in accordance with this section. 

(iii) Applicants may procure 

engineering and architectural services in 

accordance with applicable State 

statutes or local requirements provided 

the State Director determines that such 

procurement meets the intent of this 

section. 

(2) Other professional services. 

Professional services of the following 

may be necessary: Attorney, bond 

counsel, accountant, auditor, appraiser, 

and environmental professionals (if 

desired by applicant). 

(3) Contracts for other services. 

Contracts or other forms of agreements 

for other services including 

management, operation, and 

maintenance will be developed by the 

applicant and presented to the Agency 

for review and concurrence. 

(m) User estimates. Applicants 

dependent on users’ fees for operation 

and maintenance expenses shall base 

their income and expense forecast on 

realistic user estimates. For users 

presently not receiving service, 

consideration must be given to the 

following: 

(1) An estimated number of maximum 

users should not be used when setting 

user fees and rates since it may be 

several years before all residents will 

need service by the system. In 

establishing rates, a realistic number of 

users should be employed. 

(2) The amount of cash contributions 

required will be set by the applicant and 

concurred in by the Agency. A new user 

cash contribution is not required when: 

(i) The Agency determines that the 

potential users as a whole in the 

applicant’s service area cannot make 

cash contributions; or 

(ii) State statutes or local ordinances 

require mandatory use of the system and 

the applicant or legal entity having such 

authority agrees in writing to enforce 

such statutes, or ordinances. 

(n) Water rights. The following will be 

furnished as applicable: 

(1) A statement by the applicant’s 

attorney regarding the nature of the 

water rights owned or to be acquired by 

the applicant (such as conveyance of 

title, appropriation and decree, 

application and permit, public notice 

and appropriation and use). 

(2) A copy of a contract with another 

company or municipality to supply 

water; or stock certificates in another 

company that represents the right to 

receive water. 

§ 5002.107 Economic Impact Initiatives 

Grants. 

(a) The Economic Impact Initiatives 

grant program is a State-allocated grant 

program with an open application 

period. 

(b) The Economic Impact Initiatives 

grant program will be implemented 

according the requirements of subpart A 

and the requirements of § 5002.101, 

except that the essential community 

facility must be located in a rural 

community where the ‘‘not employed 

rate’’ is greater than the percentage 

established under section 306(a)(2) of 

the Consolidated Farm and Rural 

Development Act (7 U.S.C. 

1926(a)(20)(B)). The ‘‘not employed 

rate’’ is the percentage of individuals 

over the age of 18 who reside within the 

community and are ready, willing, and 

able to be employed but are unable to 

find employment, as determined by the 

Department of Labor of the State in 

which the community is located. 

§ 5002.108 Tribal College Grants. 

The requirements specified in 

§§ 5002.1 through 5002.14 and 

§§ 5002.60 through 5002.80 of this part 

apply to Tribal College grants. In 

addition, the requirements specified in 

paragraphs (a) through (f) of this section 

apply to Tribal College grants. 

(a) Notifications. The Agency will 

issue each year a notice to Tribal 

colleges and universities that identifies: 

(1) maximum grant size and 

(2) the date that preapplications are to 

be submitted. 

(b) Applicant eligibility. Only 

applicants that are 1994 Institutions are 

eligible for grants under this section. 

(c) Eligible projects and purposes. 

Grant funds can only be used to develop 

facilities provided by the Tribal college 

or university. 

(1) Eligible projects are those projects 

that meet the requirements specified in 

§ 5002.101(b), except that 

§ 5002.101(b)(3) does not apply to 

projects under this section. 

(2) Eligible purposes are identified in 

§ 5002.101(c) of this part. 

(d) Preapplications and applications. 

All preapplications and applications 

must be submitted to the State Office in 

the State in which the Tribal college or 

university is located. 

(1) Preapplications. Preapplications 

received by the Agency on or before the 

date specified in the notification issued 

under paragraph (a) of this section will 

receive priority consideration over 

preapplications received after the 

specified preapplication date. 

(2) Applications. (i) Applications 

received on or before March 31 of each 

year will receive priority consideration 


sroberts on PROD1PC70 with PROPOSALS
61254 Federal Register / Vol. 73, No. 200 / Wednesday, October 15, 2008 / Proposed Rules 

for funding over applications received 

by the Agency after March 31 for that 

fiscal year. 

(ii) An applicant submitting more 

than one application in a year must 

provide a priority listing for the grants 

it is seeking. 

(e) Funding limitations. The 

maximum amount of a grant awarded 

under this section will be no more than 

95 percent of the total cost of the 

facility. The Agency shall not require a 

match of more than 5 percent of the 

total cost of the facility. 

(f) Award process. The Agency will 

use a graduated scale, as specified in 

§ 5002.101(e)(2), in selecting 

applications for funding. In addition, 

the Agency may: 

(1) Choose to fund only one grant per 

round from a single applicant; 

(2) reduce the grant amount for all 

applicants to a maximum level that will 

fund at least one application per Tribal 

college or university that applied during 

that round; and 

(3) negotiate to increase the scope of 

Tribal College projects and grants if 

funds remain available after the grant 

selection round. 

§§ 5002.109–5002.200 [Reserved.] 

Dated: September 25, 2008. 

Thomas C. Dorr, 

Under Secretary for Rural Development. 

[FR Doc. E8–23286 Filed 10–14–08; 8:45 am] 

BILLING CODE 3410–XY–P 


sroberts on PROD1PC70 with PROPOSALS