Rural Business Opportunity Grants

DEPARTMENT OF AGRICULTURE

Rural Business--Cooperative Service

Rural Utilities Service

7 CFR Part 4284

RIN 0570-AA05

Rural Business Opportunity Grants

AGENCIES: Rural Business--Cooperative Service and Rural Utilities

Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Business-Cooperative Service (RBS) is proposing to

issue new regulations for the Rural Business Opportunity Grant (RBOG)

Program. This action is needed to implement a new program authorized by

section 741 of the Federal Agriculture Improvement and Reform Act of

1996, Public Law 104-127, to assist economic development in rural

areas. The intended effect of this action is to implement the RBOG

program.

DATES: Written or E-mail comments must be received on or before March

20, 1998 to be assured of consideration. The comment period for

information collections under the Paperwork Reduction Act of 1995

continues through April 6, 1998.

ADDRESSES: Submit written comments in duplicate to the Branch Chief,

Regulations And Paperwork Management Branch, Rural Development, U.S.

Department of Agriculture, STOP 0743, Room 6345, 1400 Independence Ave.

SW, Washington, DC 20250-0743. Comments may be submitted via the

Internet by addressing them to ``C[email protected]'' and must

contain the word ``opportunity'' in the subject. All written comments

made pursuant to this notice will be available for public inspection

between 8:00 a.m. and 4:30 p.m. Monday through Friday, except Holidays,

at the above office.

FOR FURTHER INFORMATION CONTACT: M. Wayne Stansbery, Loan Specialist,

Specialty Lenders Division, Rural Business-Cooperative Service, U.S.

Department of Agriculture, STOP 1521, 1400 Independence Ave. SW,

Washington, DC 20250, Telephone (202) 720-6819.

SUPPLEMENTARY INFORMATION:

Classification

This rule has been determined to be significant and has been

reviewed by the Office of Management and Budget under Executive Order

12866.

Programs Affected

The Catalog of Federal Domestic Assistance number for the program

impacted by this action is 10.773, Rural Business Opportunity Grants.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.

chapter 35), RBS announces its intention to seek Office of Management

and Budget (OMB) approval of the reporting and recordkeeping

requirements associated with this proposed rule.

The purpose of the RBOG program is to promote sustainable economic

development in rural communities with exceptional needs. This will be

achieved through grants to public bodies, nonprofit community

development corporations or entities and other agencies, to enable the

recipients to carry on activities related to rural economic

development, such as identifying and analyzing business opportunities,

establishing business support centers, and providing training,

technical assistance, and planning.

The information requirements contained within the regulations are

requested from grant applicants and grant recipients. The information

is vital for RBS to make prudent decisions regarding eligibility of

applicants and selection priority among competing applicants, to ensure

compliance with applicable laws and regulations, and to evaluate the

program. It includes information to allow the Agency to determine that

an applicant is a legally organized entity with authority to enter into

contracts and carry out the proposed activities. It provides for a

description and scope of the proposed activities. It includes

information on the applicant's financial condition and stability. It

includes information to provide for evaluation of grantee

accomplishments. It requires information needed to ensure compliance

with Executive Orders and provides methods for applicants and grantees

to appeal adverse decisions, request changes in grant conditions and

request exceptions to the regulations. No new forms are created for

this program.

Public Burden in 7 CFR Part 4284, Subpart G

At this time, the Agency is requesting OMB clearance of the

following burden:

Section 4284.638(a)(2)(i). Copies of organizational documents, such

as Articles of Incorporation, Bylaws, and certificates of good

standing, are part of the grant application. They are needed so RBS can

be sure the applicant is a legal entity with authority to make

commitments and perform the activities called for under the proposed

grant. They also indicate who is officially in control of the applicant

organization.

Section 4284.638(a)(2)(ii). A written scope of work needed to

document what the grant funds are to be used for and what is to be

accomplished. This is important for evaluating the application and also

for monitoring to ensure that funds are used for the purpose for which

they were intended.

Section 4284.638(a)(2)(iii). A written narrative is required to

provide additional information, beyond what is provided in the scope of

work, as to the need for the project, the service area, the applicant's

ability to accomplish the planned activities, who will be assisted,

what impact is expected, and how the work will be performed. The

information is needed to properly evaluate each application and select

the most deserving applications for funding.

Section 4284.638(a)(2)(iv). A financial statement is required to

help RBS to ensure that an applicant has the financial stability to

remain in operation and supplement the grant funds as necessary to

accomplish the grant purposes.

Section 4284.638(a)(2)(v). It is an eligibility requirement that

applicants include a basis for determining the success or failure of

the project in their proposal. This requirement ensures that some

method exists for evaluating the success or failure of each grant and

that the applicants will have input in determining how they will be

evaluated.

Section 4284.638(a)(2)(vi). Intergovernmental Review comments,

[[Page 5475]]

obtained by the applicant through contact with the State Single Point

of Contact, are required to comply with Executive Order 12372 and to

ensure that the proposed activity is not in conflict with strategic

plans of State and local governments.

Section 4284.656(a). A project performance report is needed to help

the Agency ensure that projects in process are progressing

satisfactorily and that completed projects have, in fact been completed

and paid for in full. If cost overruns, deviations from the approved

scope, or other problems do develop this will help ensure that the

Agency is made aware in time to help find a solution.

Section 4284.656(b). A project evaluation is needed to assist the

Agency in determining the impact of the grant and of the program.

Section 4284.656(c). A project description is needed for selected

projects in order that the information gained from the project can be

shared with other communities, and thereby increase the overall

effectiveness of the program.

Section 4284.656 (d) and (e). It is necessary for the grantee to

keep complete and accurate accounting records as evidence that the

grant funds were used properly.

Section 4284.657. Audits are required to help monitor grantee

activities and financial condition and ensure the grant funds were used

as planned, as well as to comply with OMB circulars and applicable USDA

regulations located at 7 CFR 3015, 3016, 3019, and 3051.

Section 4284.668. This provision allows grantees to request changes

so that approved projects may be changed, with Agency review and

approval, when the change is needed and still within program

guidelines.

Section 4284.684. A provision permits grantees to request and

obtain, in limited circumstances, exceptions to provisions of this

subpart.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average 5.7 hours per response.

Respondents: Public Bodies and Nonprofit Corporations.

Estimated Number of Respondents: 100.

Estimated Number of Responses per Respondent: 15.23.

Estimated Total Annual Burden on Respondents: 8,704 hours.

The complete text of the proposed rule is published herein for

public review and comment. Additional copies of the proposed

regulations or copies of referenced forms may be obtained from Sam

Spencer, Rural Business Team Information Collection Coordinator, by

calling (202) 720-9588. Written requests may also be submitted to Sam

Spencer, Rural Business Team Information Collection Coordinator,

Regulations and Paperwork Management Division, U.S. Department of

Agriculture, Rural Development, STOP 0743, 1400 Independence Ave. SW,

Washington, DC 20250-0743.

Comments: Comments are invited on: (a) Whether the proposed

collection of information is necessary for the proper performance of

the functions of RBS, including whether the information will have

practical utility; (b) the accuracy of RBS's estimate of the burden of

the proposed collection of information including the validity of the

methodology and assumptions used; (c) ways to enhance the quality,

utility and clarity of the information to be collected; and (d) ways to

minimize the burden of the collection of information on those who are

to respond, including through the use of appropriate automated,

electronic, mechanical, or other technological collection techniques or

other forms of information technology. Comments should be submitted to

the Desk Officer for Agriculture, Office of Information and Regulatory

Affairs, Office of Management and Budget, Washington, DC 20503, and to

Sam Spencer, Rural Business Team Information Collection Coordinator,

Regulations and Paperwork Management Branch, U.S. Department of

Agriculture, Rural Development, STOP 0743, 1400 Independence Ave. SW,

Washington, DC 20250-0743. All responses to this notice will be

summarized, be included in the request for OMB approval, and become a

matter of public record. OMB is required to make a decision concerning

the collections of information contained in these proposed regulations

between 30 and 60 days after submission to OMB. Therefore, a comment to

OMB is best assured of having full effect if OMB receives it within 30

days of publication. This does not affect the deadline for the public

to comment on the proposed regulation.

Intergovernmental Review

Rural Business Opportunity Grants are subject to the provisions of

Executive Order 12372 which requires intergovernmental consultation

with State and Local officials. RBS has conducted or will conduct

intergovernmental consultation in the manner delineated in RD

Instruction 1940-J, ``Intergovernmental Review of Farmers Home

Administration Programs and Activities,'' and in 7 CFR 3015, subpart V.

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

Agency at 7 CFR part 11 must be exhausted before bringing suit in court

challenging action taken under this rule unless those regulations

specifically allow bringing suit at an earlier time.

Environmental Impact Statement

This document has been reviewed in accordance with 7 CFR part 1940,

subpart G, ``Environmental Program.'' RBS has determined that this

proposed action does not constitute a major Federal action

significantly affecting the quality of the human environment, and in

accordance with the National Environmental Policy Act of 1969, Public

Law 91-190, an Environmental Impact Statement is not required.

Unfunded Mandates

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public

Law 104-4, establishes requirements for Federal agencies to assess the

effects of their regulatory actions on State, local, and tribal

governments and the private sector. Under section 202 of the UMRA, RBS

must prepare a written statement, including a cost-benefit analysis,

for proposed and final rules with ``Federal mandates'' that may result

in expenditures to State, local or tribal governments, in the

aggregate, or to the private sector, of $100 million or more in any one

year. When such a statement is needed for a rule, section 205 of UMRA

generally requires RBS to identify and consider a reasonable number of

regulatory alternatives and adopt the least costly, more cost effective

or least burdensome alternative that achieves the objectives of the

rule.

This rule contains no Federal mandates (under the regulatory

provisions of Title II of the UMRA) for State, local, and tribal

governments or the private sector. Thus this rule is not subject to the

requirements of sections 202 and 205 of UMRA.

Regulatory Flexibility Act

In compliance with the Regulatory Flexibility Act, RBS has

determined that this action would not have a significant economic

impact on a substantial number of small entities because the action

will not affect a significant number of small entities as defined by

the Regulatory Flexibility Act (5 U.S.C.

[[Page 5476]]

601). RBS made this determination based on the fact that this

regulation only impacts those who choose to participate in the grant

program. Small entity applicants will not be impacted to a greater

extent than large entity applicants.

Background

RBS proposes a new regulation to implement a grant program to fund

technical assistance and planning activities in rural areas for the

purpose of improving economic conditions in the areas. This action is

necessary to comply with section 741 of the Federal Agriculture

Improvement and Reform Act of 1996, Public Law 104-127. Grants will be

available to public bodies, nonprofit corporations, Indian tribes, and

cooperatives. Grants may be used for technical assistance for business

development and economic development planning; identifying and

analyzing business opportunities that will use local rural materials or

human resources, including opportunities in export markets as well as

feasibility and business plan studies; identifying, training, and

providing technical assistance to existing or prospective rural

entrepreneurs and managers; establishing business support centers and

otherwise assisting in the creation of new rural businesses; conducting

local community or multi-county economic development planning;

establishing centers for training, technology, and trade that will

provide training to rural businesses in the utilization of interactive

communications technologies to develop international trade

opportunities and markets; and conducting leadership development

training of existing or prospective rural entrepreneurs and managers.

Nonmetropolitan median family income stagnated during the 1980's

and continued substantially unchanged through the early 1990's. The

1992 rural poverty rate of 16.8 percent was not statistically different

from the 1989 rate, but was significantly higher than the urban poverty

rate of 13.9 percent. Perhaps of more concern than the average or

median figures is that rural income, poverty levels, and employment are

uneven. During the 1980's, over one half of rural counties suffered

declines in real median household income. Median real income generally

increased in metropolitan areas, held steady in counties adjacent to

metropolitan areas, and fell in more isolated rural counties. This put

remote and persistently low-income counties in a relatively worse

income position compared to metropolitan areas. Also, rural minorities

continue to be disproportionately poor, with poverty rates highest

among blacks, but increasing more rapidly among Hispanics.

The implementation of this program is part of an initiative to

enhance the future prosperity of rural people through investments that

enhance rural competitiveness, facilitate industrial conversion, and

enable rural citizens to profit from private economic activity. The

implementation of this program will provide rural business with

technical assistance not previously available. The business will be

able to provide jobs, economic activity, and economic diversification

in rural communities.

List of Subjects in 7 CFR Part 4284

Business and industry, Economic development, Grant programs--

Housing and community development, Rural areas.

Therefore, chapter XLII, title 7, Code of Federal Regulations, is

proposed to be amended as follows:

PART 4284--GRANTS

1. The authority citation for part 4284 continues to read as

follows:

Authority: 5 U.S.C. 301, 7 U.S.C. 1989, 16 U.S.C. 1005.

2. Subpart G of part 4284, consisting of Sec. Sec. 4284.601 through

4284.700, is added to read as follows:

Subpart G--Rural Business Opportunity Grants

Sec.

4284.601 Purpose.

4284.602 Policy.

4284.603 Definitions.

4284.604-4284.619 [Reserved]

4284.620 Applicant eligibility.

4284.621 Eligible grant purposes.

4284.622-4284.628 [Reserved]

4284.629 Ineligible grant purposes.

4284.630 Other considerations.

4284.631-4284.637 [Reserved]

4284.638 Application processing.

4284.639 Grant selection criteria.

4284.640 Appeals.

4284.641-4284.646 [Reserved]

4284.647 Grant approval and obligation of funds.

4284.648 Fund disbursement.

4284.649-4284.655 [Reserved]

4284.656 Reporting.

4284.657 Audit requirements.

4284.658-4284.666 [Reserved]

4284.667 Grant servicing.

4284.668 Programmatic changes.

4284.669-4284.683 [Reserved]

4284.684 Exception authority.

4284.685-4284.698 [Reserved]

4284.699 Congress.

4284.700 OMB control number.

Subpart G--Rural Business Opportunity Grants

Sec. 4284.601 Purpose.

This subpart outlines Agency policies and authorizations and sets

forth procedures for making grants to provide technical assistance for

business development and conduct economic development planning in rural

areas. The purpose of this program is to promote sustainable economic

development in rural communities with exceptional needs by:

(a) Promoting economic development that is sustainable over the

long term through local effort without subsidies or external support

and that leads to improvements in quality as well as the quantity of

economic activity in the community;

(b) Catalyzing economic development projects by providing critical

investments that enable effective development projects to be undertaken

by rural communities that, with the assistance, will be able to

identify their needs and take full advantage of available resources and

opportunities;

(c) Focusing assistance on priority communities (defined in

Sec. 4284.603); and

(d) Sponsoring economic development activities with significant

potential to serve as examples of ``best practices'' that merit

implementation in rural communities in similar circumstances.

Sec. 4284.602 Policy.

(a) The grant program will be used to assist in the economic

development of rural areas.

(b) Funds allocated for use in accordance with this subpart are

also to be considered for use by Indian tribes within the State

regardless of whether State development strategies include Indian

reservations within the State's boundaries. Indians residing on such

reservations must have equal opportunity, along with other rural

residents, to participate in the benefits of these programs.

Sec. 4284.603 Definitions.

Agency--The Federal agency within the United States Department of

Agriculture (USDA) with responsibility assigned by the Secretary of

Agriculture to administer the Rural Business Opportunity Grants (RBOG)

Program. At the time of publication, of this part in the Federal

Register, that agency is the Rural Business-Cooperative Service.

Best practice project--An action that has potential applicability

in other rural communities and which potentially has instructional

value when shared with those communities.

[[Page 5477]]

Business support centers--Centers established to provide assistance

to businesses in such areas as counseling, business planning, training,

management assistance, marketing information, and locating financing

for business operations. The centers need not be located in a rural

area, but must provide assistance to businesses located in rural areas.

Economic development--The industrial, business and financial

augmentation of an area as evidenced by increases in total income,

employment opportunities, value of production, duration of employment,

or diversification of industry, reduced outmigration, higher labor

force participation rates or wage levels, or gains in other

measurements of economic activity, such as land values.

Planning--A process to coordinate economic development activities,

develop guides for action, or otherwise assist local community leaders

in the economic development of rural areas.

Priority communities--Communities targeted for Agency assistance as

determined by the USDA Under Secretary for Rural Development. Priority

communities are those that are experiencing trauma due to natural

disasters or are undertaking or completing fundamental structural

changes, have remained persistently poor over the past 60 years or

longer, or have experienced long-term population decline or job

deterioration.

Project--The result of the use of grant funds provided under this

subpart through technical assistance or planning relating to the

economic development of a rural area.

Rural and rural area--Any area of a State that is not within the

boundaries of a city with a population in excess of 10,000 inhabitants

according to the latest decennial census of the United States.

State--Any of the 50 states, the Commonwealth of Puerto Rico, the

Virgin Islands of the United States, 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.

Technical assistance--A nonconstruction, problem solving activity

performed for the benefit of a business or community to assist in the

economic development of a rural area. The Agency will determine whether

a specific activity qualifies as technical assistance.

United States. The 50 States of the United States of America, the

District of Columbia, the Commonwealth of Puerto Rico, the Virgin

Islands of the United States, 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.

Sec. Sec. 4287.604-4287.619 [Reserved]

Sec. 4284.620 Applicant eligibility.

(a) Grants may be made to public bodies, nonprofit corporations,

Indian tribes on Federal or State reservations and other Federally

recognized tribal groups, and cooperatives with members that are

primarily rural residents and that conduct activities for the mutual

benefit of the members.

(b) Applicants must have sufficient financial strength and

expertise in activities proposed in the application to ensure

accomplishment of the described activities and objectives.

(c) Any delinquent debt to the Federal Government shall cause the

applicant to be ineligible to receive any RBOG funds until the debt has

been paid.

Sec. 4284.621 Eligible grant purposes.

(a) Grant funds may be used to assist in the economic development

of rural areas by providing technical assistance for business

development and economic development planning. Grant funds may be used

for, but are not limited to, the following purposes:

(1) Identify and analyze business opportunities that will use local

rural materials or human resources. This includes opportunities in

export markets, as well as feasibility and business plan studies;

(2) Identify, train, and provide technical assistance to existing

or prospective rural entrepreneurs and managers;

(3) Establish business support centers and otherwise assist in the

creation of new rural businesses;

(4) Conduct local community or multi-county economic development

planning;

(5) Establish centers for training, technology, and trade that will

provide training to rural businesses in the utilization of interactive

communications technologies to develop international trade

opportunities and markets;

(6) Conduct leadership development training of existing or

prospective rural entrepreneurs and managers; or

(7) Pay reasonable fees and charges for professional services

necessary to conduct the technical assistance, training, or planning

functions.

(b) Grants may be made only when there is a reasonable prospect

that the project will result in the economic development of a rural

area.

(c) Grants may be made only when the proposal includes a basis for

determining the success or failure of the project and individual major

elements of the project and outlines procedures that will be taken to

assess the project's impact at its conclusion.

(d) Grants may be made only when the proposed project is consistent

with local and area-wide strategic plans for community and economic

development, coordinated with other economic development activities in

the project area and consistent with any USDA Rural Development State

Strategic Plan.

(e) A grant may be considered for the amount needed to assist with

the completion of a proposed project, provided that the project can

reasonably be expected to be completed within 2 full years after it is

begun. If grant funds are requested to establish or assist with an

activity of more than 2 years duration, the amount of a grant approved

in any fiscal year will be limited to the amount needed to assist with

no more than 1 full year of operation. Subsequent grant requests may be

considered in subsequent years, if needed to continue the operation,

but funding for 1 year provides no assurance of additional funding in

subsequent years.

Sec. Sec. 4284.622-4284.628 [Reserved]

Sec. 4284.629 Ineligible grant purposes.

Grant funds may not be used to:

(a) Duplicate current services or replace or substitute support

previously provided;

(b) Pay costs of preparing the application package for funding

under this program;

(c) Pay costs of the project incurred prior to the effective date

of the grant made under this subpart;

(d) Fund political activities;

(e) Pay for assistance to any private business enterprise which

does not have at least 51 percent ownership by those who are either

citizens of the United States or reside in the United States after

being legally admitted for permanent residence;

(f) Pay any judgment or debt owed to the United States; or

(g) Pay costs of real estate acquisition or development or building

construction.

Sec. 4284.630 Other considerations.

(a) Civil rights compliance requirements. All grants made under

this subpart are subject to Title VI of the Civil Rights Act of 1964

and part 1901, subpart E, of this title.

(b) Environmental review. All grants made under this subpart are

subject to

[[Page 5478]]

the requirements of subpart G of part 1940 of this title. Applications

for technical assistance or planning projects are generally excluded

from the environmental review process by Sec. 1940.333 of this title.

However, as further specified in that section, the grantee in the

process of providing technical assistance, must consider the potential

environmental impacts of the recommendations provided to the ultimate

recipient of the technical assistance. Plans developed with grant funds

received under this subpart must be generally documented to include the

important environmental resources within the planning area and the

potential environmental impacts of the plan as well as the alternative

planning strategies that were reviewed.

(c) Other USDA regulations. This program is subject to the

provisions of the following regulations, as applicable, which are

incorporated by reference herein:

(1) 7 CFR part 3015, ``Uniform Federal Assistance Regulations'';

(2) 7 CFR part 3016, ``Uniform Administrative Requirements for

Grants and Cooperative Agreements to State and Local Governments'';

(3) 7 CFR part 3017, ``Governmentwide Debarment and Suspension

(Nonprocurement) and Governmentwide Requirements for Drug-Free

Workplace (Grants)'';

(4) 7 CFR part 3018, ``New Restrictions on Lobbying'';

(5) 7 CFR part 3019, ``Uniform Administrative Requirements for

Grants and Agreements with Institutions of Higher Education, Hospitals,

and Other Non-Profit Organizations''; and

(6) 7 CFR part 3051, ``Audits of Institutions of Higher Education

and other Nonprofit Institutions.''

Secs. 4284.631-4284.637 [Reserved]

Sec. 4284.638 Application processing.

(a) Applications. (1) Applicants will file an original and one copy

of an ``Application For Federal Assistance (For Nonconstruction)'' with

the Agency State Office. This form is available in all Agency offices.

(2) All applications shall be accompanied by:

(i) Copies of applicant's organizational documents showing the

applicant's legal existence and authority to perform the activities

under the grant;

(ii) A proposed scope of work, including a description of the

proposed project, details of the proposed activities to be accomplished

and timeframes for completion of each task, the number of months

duration of the project, and the estimated time it will take from grant

approval to beginning of project implementation;

(iii) A written narrative which includes, at a minimum, the

following items:

(A) An explanation of why the project is needed, the benefits of

the proposed project, and how the project meets the grant selection

criteria;

(B) Area to be served, identifying each governmental unit, i.e.,

town, county, etc., to be affected by the project;

(C) Description of how the project will coordinate economic

development activities with other economic development activities

within the project area;

(D) Business to be assisted, if appropriate; economic development

to be accomplished;

(E) An explanation of how the proposed project will result in

increased or saved jobs in the area and the number of projected new and

saved jobs;

(F) Description of the applicant's demonstrated capability and

experience in providing the proposed project assistance or similar

economic development activities, including experience of key staff

members and persons who will be providing the proposed project

activities and managing the project;

(G) Method and rationale used to select the areas and businesses

that will receive the service;

(H) Brief description of how the work will be performed including

whether organizational staff or consultants or contractors will be

used; and

(I) Other information the Agency may request to assist it in making

a grant award determination.

(iv) The latest financial information to show the organization's

financial capacity to carry out the proposed work. At a minimum, the

information should include the most recent balance sheet and an income

statement. A current audited report is required if available;

(v) An evaluation method to be used by the applicant to determine

if objectives of the proposed activity are being accomplished; and

(vi) Intergovernmental review comments from the State Single Point

of Contact, or evidence that the State has elected not to review the

program under Executive Order 12372.

(b) Letter of conditions. The Agency will deliver a letter to the

applicant setting out the conditions under which the grant will be

made.

(c) Applicant's intent to meet conditions. Upon reviewing the

conditions and requirements in the letter of conditions, the applicant

must complete, sign and return a ``Letter of Intent to Meet

Conditions,'' to the Agency; or if 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.

Sec. 4284.639 Grant selection criteria.

Agency officials will select projects to receive assistance under

this program according to the following criteria:

(a) A score of 0 to 10 points will be awarded based on the Agency

assessment of the extent to which economic development resulting from

the proposed project will be sustainable over the long term by local

efforts, without the need for continued subsidies by governments or

other organizations outside the community or communities that will

receive the primary benefit of the grant.

(b) A score of 0 to 10 points will be awarded based on the Agency

assessment of the extent to which the project should lead to

improvements in the quality of economic activity within the community

or communities that will receive the primary benefit of the grant, such

as higher wages, improved benefits, greater career potential, and the

use of higher levels of skills than currently are typical within the

economy.

(c) If the grant will fund a critical element of a larger program

of economic development, without which the overall program either could

not proceed or would be far less effective, or if the program to be

assisted by the grant will also be partially funded from other sources,

points will be awarded as follows based on the percentage of the cost

of the overall program that will be funded by the grant.

(1) Less than 20 percent--30 points;

(2) 20 but less than 50 percent--20 points;

(3) 50 but less than 75 percent--10 points; or

(4) More than 75 percent--0 points.

(d) Points will be awarded for each of the following criteria met

by the community or communities that will receive the primary benefit

of the grant. However, regardless of the mathematical total of points

indicated by paragraphs (d)(1) through (d)(5) of this section, total

points awarded under paragraph (d) must not exceed 40.

(1) Experiencing trauma due to a major natural disaster that

occurred not more than three years prior to the filing of the

application for RBOG assistance--15 points;

(2) Undergoing fundamental structural change in the local economy,

such as that caused by the closing or

[[Page 5479]]

major downsizing of a military facility or other major employer not

more than 3 years prior to the filing of the application for RBOG

assistance--15 points;

(3) Has remained consistently poor over the past 60 years or more--

10 points;

(4) Has experienced long-term population decline--10 points; and

(5) Has experienced long-term job deterioration--10 points.

(e) A score of 0 to 10 points will be awarded based on the Agency

determination of the extent of the project's usefulness as a new best

practice as defined in Sec. 4284.603.

(f) State Directors may assign up to 15 discretionary points to an

application. If allocation of funds under National Office control is

being considered, the Agency Administrator may assign up to 20

additional discretionary points. Assignment of discretionary points by

either the State Director or the Agency Administrator must include a

written justification. Justifications are geographic distribution of

funds, special importance for implementation of a strategic plan in

partnership with other organizations, and extraordinary potential for

success due to superior project plans or qualifications of the grantee.

Sec. 4284.640 Appeals.

Any appealable adverse decision made by the Agency may be appealed

in accordance with USDA appeal regulations found at 7 CFR part 11.

Secs. 4284.641-4284.646 [Reserved]

Sec. 4284.647 Grant approval and obligation of funds.

The following statement will be entered in the comment section of

the ``Request for Obligation of Funds,'' which must be signed by the

Grantee:

``The Grantee certifies that it is in compliance and will

continue to comply with all applicable laws; regulations; Executive

Orders; and other generally applicable requirements, including those

set forth in 7 CFR part 4284, subpart G, and 7 CFR parts 3015, 3016,

3017, 3018, 3019, and 3051 in effect on the date of grant approval;

and the approved Letter of Conditions.''

Sec. 4284.648 Fund disbursement.

The Agency will determine, based on 7 CFR parts 3015, 3016, and

3019 as applicable, whether disbursement of a grant will be by advance

or reimbursement. A ``Request for Advance or Reimbursement'' must be

completed by the grantee and submitted to the Agency no more often than

monthly to request either advance or reimbursement of funds.

Secs. 4284.649-4284.655 [Reserved]

Sec. 4284.656 Reporting.

(a) A ``Financial Status Report'' and a project performance

activity report will be required of all grantees on a quarterly

calendar year basis. The Grantee will cause said program to be

completed within the total sums available to it, including the grant,

in accordance with the scope of work and any necessary modifications

thereof prepared by Grantee and approved by the Agency. A final project

performance report will be required with the final Financial Status

Report. The final report may serve as the last quarterly report. The

final report must provide complete information regarding the jobs

created and saved as a result of the grant. Grantees shall constantly

monitor performance to ensure that time schedules are being met,

projected work by time periods is being accomplished, and other

performance objectives are being achieved. Grantees are to submit an

original of each report to the Agency. The project performance reports

shall include, but not be limited to, the following:

(1) A comparison of actual accomplishments to the objectives

established for that period;

(2) Problems, delays, or adverse conditions, if any, which have

affected or will affect attainment of overall project objectives,

prevent meeting time schedules or objectives, or preclude the

attainment of particular project work elements during established time

periods. This disclosure shall be accompanied by a statement of the

action taken or planned to resolve the situation; and

(3) Objectives and timetable established for the next reporting

period.

(b) Within 1 year after the conclusion of the project, the grantee

will provide a project evaluation report based on criteria developed in

accordance with Sec. Sec. 4284.621(c) and 4284.638(a)(2)(v) of this

subpart.

(c) The Agency may also require grantees to prepare a report

suitable for public distribution describing the accomplishments made

through the use of the grant and, in the case where the grant funded

the development or application of a ``best practice,'' to describe that

``best practice.''

(d) The grantee will provide for Financial Management Systems which

will include:

(1) Accurate, current, and complete disclosure of the financial

result of each grant.

(2) Records which identify adequately the source and application of

funds for grant-supporting activities, together with documentation to

support the records. Those records shall contain information pertaining

to grant awards and authorizations, obligations, unobligated balances,

assets, liabilities, outlays, and income.

(3) Effective control over and accountability for all funds.

Grantee shall adequately safeguard all such assets and shall assure

that funds are used solely for authorized purposes.

(e) The grantee will retain financial records, supporting

documents, statistical records, and all other records pertinent to the

grant for a period of at least 3 years after grant closing except that

the records shall be retained beyond the 3-year period if audit

findings have not been resolved or if directed by the United States.

Microfilm copies may be substituted in lieu of original records. The

Agency and the Comptroller General of the United States, or any of

their duly authorized representatives, shall have access to any books,

documents, papers, and records of the grantee which are pertinent to

the specific grant program for the purpose of making audit,

examination, excerpts, and transcripts.

Sec. 4284.657 Audit requirements.

Public body grantees will provide an annual audit in accordance

with 7 CFR part 3015, subpart I. Nonprofit corporation grantees will

provide an annual audit in accordance with 7 CFR part 3051. The audit

requirements apply to the years in which grant funds are disbursed to

the grantee and years in which work is accomplished that will be paid

for with grant funds.

Secs. 4284.658-4284.666 [Reserved]

Sec. 4284.667 Grant servicing.

Grants will be serviced in accordance with part 1951, subparts E

and O, of this title. Grantees will permit periodic inspection of the

program operations by a representative of the Agency. All non-

confidential information resulting from the Grantee's activities shall

be made available to the general public on an equal basis. Grantee

shall relinquish any and all copyrights or privileges to the material

developed under this grant as published in whole or in part. The

material shall contain notice and be identified by language to the

following effect: ``This material is the result of tax-supported

research and as such is not copyrightable. It may be freely reprinted

with the customary crediting of the source.''

Sec. 4284.668 Programmatic changes.

The Grantee shall obtain prior approval for any change to the scope

or

[[Page 5480]]

objectives of the approved project. Failure to obtain prior approval of

changes to the scope of work or budget may result in suspension,

termination, and recovery of grant funds.

Sec. Sec. 4284.669-4284.683 [Reserved]

Sec. 4284.684 Exception authority.

The Administrator may, in individual cases, grant an exception to

any requirement or provision of this subpart which is not inconsistent

with any applicable law, provided the Administrator determines that

application of the requirement or provision would adversely affect

USDA's interest.

Sec. Sec. 4284.685-4284.698 [Reserved]

Sec. 4284.699 Congress.

No member of Congress shall be admitted to any share or part of

this grant or any benefit that may arise therefrom; but this provision

shall not be construed to bar as a contractor under the grant a

publicly held corporation whose ownership might include a member of

Congress.

Sec. 4284.700 OMB control number.

Dated: January 22, 1998.

Jill Long Thompson,

Under Secretary, Rural Development.

[FR Doc. 98-2553 Filed 2-2-98; 8:45 am]

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