Rural Business Opportunity Grants

DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

7 CFR Part 4284

RIN 0570-AA05

Rural Business Opportunity Grants

AGENCY: Rural Business-Cooperative Service, USDA.

ACTION: Final rule.

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

assist economic development in rural areas. The intended effect of this

action is to implement the RBOG program.

EFFECTIVE DATE: January 24, 2000.

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

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

Department of Agriculture, STOP 3225, 1400 Independence Ave. SW,

Washington, DC 20250, Telephone (202) 720-6819. The TTD number is (800)

877-8339 or (202) 708-9300.

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

The information collection requirements contained in this

regulation have been approved by the Office of Management and Budget

(OMB) under the provisions of 44 U.S.C. chapter 35 and have been

assigned OMB control number 0570-0024 in accordance with the Paperwork

Reduction Act (44 U.S.C. 3501 et seq.). This rule does not revise or

impose any new information collection or recordkeeping requirements.

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 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 final 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, 42

U.S.C. 4321 et seq., an Environmental Impact Statement is not required.

Unfunded Mandates

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2

U.S.C. chapters 17A and 25, 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.

Background

RBS is implementing 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. 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;

[[Page 71985]]

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.

Discussion of Comments

This rule was published in the Federal Register as a proposed rule

on February 3, 1998 (60 FR 5474). Six comment letters were received,

most of which contained comments on several issues. A summary of the

comments follows.

Two respondents commented on the definition of rural and rural

area. Both thought the 10,000 population limit proposed was too low.

This limit is statutory and cannot be changed.

A respondent was concerned that a provision stating that grant

funds may not be used to duplicate, replace, or substitute for current

services might exclude organizations seeking to expand. We have added

language to clarify that this restriction is not intended to prevent

assistance for expanding the level of effort or services when the

current level is insufficient.

Respondents suggested that the terms sustainability and sustainable

development should be defined. We agree, and have provided a definition

consistent with Secretary's Memorandum 9500-6, ``Sustainable

Development,'' dated September 13, 1996.

A respondent objected to limiting grants to one or two years

funding. The respondent believes two years is too short for capacity

building projects. We are also concerned that there may be needed

projects that cannot be completed in two years. However, we expect the

appropriations for this program to be small and we do not want to

commit limited funds to projects that cannot be expected to be

completed within two years. Longer term projects may be funded, but

funds will only be committed for one year at a time. Such projects will

have to compete again for additional funds from future years

appropriations. This provision of the rule is unchanged.

We received three comments about the priority scoring criteria. One

respondent stated that the RBOG should not be used as a disaster relief

program and objected to giving priority points based on natural

disasters. One of the goals of the Rural Development mission area is to

target assistance to communities of greatest need, including

communities that are experiencing trauma due to a major natural

disaster. This criterion is not changed.

The respondent also questioned the awarding of priority points to

communities that have remained consistently poor for 60 years or more.

The respondent felt data may not be reliable and the 60-year standard

would penalize communities in the West, where communities are younger.

Communities that have been persistently poor over a long term have also

been identified as target communities for Rural Development and 60

years has been used before as a rule-of-thumb. However, we agree that

60 years is an excessive standard. For two other factors, population

decline and job deterioration, the proposed rule only required the

condition be ``long-term.'' In the final rule, we have also adopted the

term ``long-term'' instead of ``60 years'' for the condition of

consistently poor. We have defined ``long-term,'' to be the period of

time covered by the three most recent decennial censuses to the

present.

Another respondent requested priority points for communities that

have been adversely affected by changes in transportation. Although

this is a concern in some rural areas, we do not believe it warrants

special priority. The suggestion was not adopted.

A respondent asked for ``business incubator'' to be added to the

definition of Business Support Centers. Although some business

incubators perform many of the services of a business support center,

we believe including the term as suggested would imply that grant funds

could be used to provide building space. That is not the intent of the

RBOG program. The suggestion is not adopted.

A respondent suggested ``National nonprofit organizations'' be

included as eligible. We see no need to change the language that was

used in the proposed rule. Nonprofit corporations were already listed

as eligible, without regard to whether they are National, regional, or

local.

A respondent was concerned because the proposed rule did not

require a detailed budget as part of the application. The application

form required is Standard Form 424, ``Application for Federal

Assistance (For Non-Construction).'' The form contains a budget format

which we believe is adequate. No change is made in this regard from the

proposed rule.

A respondent was concerned because there is no reference to a grant

agreement document. We believe a grant agreement document is

unnecessary and have made no change as a result of the comment. Grant

projects will be defined by the Scope of Work and Letter of Conditions.

Grantees will be required to sign a Request for Obligation of Funds

form containing a certification that the grantee will comply with all

applicable regulations, including 7 CFR parts 3015, 3016, 3017, 3018,

3019, and 3052. Most of the material that might be put in a grant

agreement document is contained in those regulations.

A respondent suggested clarifying whether grants can support

indirect costs. Allowable costs are set out in 7 CFR parts 3015, 3016,

and 3019 and in applicable OMB circulars referenced in 7 CFR parts

3015, 3016, and 3019. We have purposely avoided restating material from

those regulations to avoid repetition, the possibility of misstating

requirements, and the need to amend this regulation if 7 CFR parts

3015, 3016, or 3019 is amended. Therefore, we have not adopted the

suggestion. Generally, indirect costs are allowable.

A respondent correctly pointed out that the proposed rule made

references to 7 CFR part 3051, ``Audits of Institutions of Higher

Education and other Nonprofit Institutions,'' which has been replaced

by 7 CFR part 3052, ``Audits of States, Local Governments, and Non-

profit Organizations.'' We have made the appropriate corrections.

In addition to responding to public comments, we have removed a

provision that would have prevented material developed with grant funds

from being copyrighted because it conflicted with 7 CFR 3016 and 3019.

Implementation

It is the policy of this Department that rules relating to public

property, loans, grants, benefits, or contracts shall comply with 5

U.S.C. 553, notwithstanding the exemption of that section with respect

to such rules. Accordingly, this rule has previously been published as

a proposed rule, on February 3, 1998 (63 FR 5474), for public comment,

and will be effective 30 days after publication of this final rule in

the Federal Register.

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

amended as follows:

PART 4284--GRANTS

1. The authority citation for part 4284 is amended to read as

follows:

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

[[Page 71986]]

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

4284.700, is added to read as follows:

PART 4284--GRANTS

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 Member delegate clause.

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 Rural Business Opportunity Grants

(RBOG) 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 RBOG Program. At the time of publication,

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.

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.

Long-term. The period of time covered by the three most recent

decennial censuses of the United States to the present.

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, 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.

Sustainable development. Development planned and designed to

consider and balance environmental quality, economic needs, and social

concerns.

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.

(1) Financial strength will be analyzed by the Agency based on

financial data provided in the application. The

[[Page 71987]]

analysis will consider the applicant's tangible net worth, which must

be positive, and whether the applicant has dependable sources of

revenue or a successful history of raising revenue sufficient to meet

cash requirements.

(2) Expertise will be analyzed by the Agency based on the applicant

staff's training and experience in activities similar to those proposed

in the application and, if consultants will be used, on the staff's

experience in choosing and supervising consultants.

(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. 4284.622-4287.628 [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. 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;

(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 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 provided the assistance is not related to

the development of a specific site. Applicants for grant funds must

consider and document within their plans the important environmental

factors within the planning area and the potential environmental

impacts of the plan on the planning area, 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;

(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 3052, Audits of States, Local Governments, and Non-

profit Organizations.

Secs. 4284.631-4284.637 [Reserved]

Sec. 4284.638 Application processing.

(a) Applications.

(1) Applicants will file an original and one copy of ``Application

For

Federal Assistance (For Nonconstruction),'' with the Agency State

Office (available in any Agency office).

(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;

[[Page 71988]]

(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 notify the approved

applicant in writing, 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.

(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,

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 3 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 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 experienced long-term poverty--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) The State Director 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. Permissible justifications are geographic

distribution of funds, special importance for implementation of a

strategic plan in partnership with other organizations, or

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. If

the Agency makes a determination that a decision is not appealable, a

request for a determination of appealability may be made to the

National Appeals Staff.

Secs. 4284.641-4287.646 [Reserved]

Sec. 4284.647 Grant approval and obligation of funds.

(a) 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 with and will

continue to comply with all applicable laws; regulations; Executive

Orders; and other generally applicable requirements, including those

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

3017, 3018, 3019, and 3052 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, (available in

any Agency office) 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 (available in any Agency office) and

a project performance activity report will

[[Page 71989]]

be required of all grantees on a quarterly 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).

(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.

Grantees must provide an annual audit in accordance with 7 CFR part

3052. The audit requirements apply to the years in which grant funds

are received 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.

Sec. 4284.668 Programmatic changes.

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

or 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.

Secs. 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 provided the Administrator

determines that application of the requirement or provision would

adversely affect USDA's interest.

Secs. 4284.685-4284.698 [Reserved]

Sec. 4284.699 Member delegate clause.

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.

The reporting and recordkeeping requirements contained in this

regulation have been approved by the Office of Management and Budget

under the provisions of 44 U.S.C. chapter 35 and have been assigned OMB

control number 0570-0024 in accordance with the Paperwork Reduction Act

of 1995. You are not required to respond to this collection of

information unless it displays a valid OMB control number.

Dated: December 13, 1999.

Jill Long Thompson,

Under Secretary, Rural Development.

[FR Doc. 99-33203 Filed 12-22-99; 8:45 am]

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