Rural Development Grants, 61198-61254 [E8-23286]

Agencies

• DEPARTMENT OF AGRICULTURE
• Rural Business-Cooperative Service
• Rural Housing Service
• Rural Utilities Service

[Federal Register Volume 73, Number 200 (Wednesday, October 15, 2008)]
[Proposed Rules]
[Pages 61198-61254]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-23286]



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Part II





Department of Agriculture





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Rural Utilities Service



Rural Business-Cooperative Service



Rural Housing Service



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7 CFR Parts 1703, 1780, 3570 et al.



Rural Development Grants; Proposed Rule

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

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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.

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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: https://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

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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 https://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

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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 nationally-competed 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

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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 non-rural 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 Sec.  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.

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     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 
federally-recognized 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 non-
metropolitan 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 Nationally-
competed 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 Value-
added 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

[[Page 61203]]

NOSA or NOFA indicates this to the public.
    As noted above, the nationally-competed 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 
nationally-competed 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;

[[Page 61204]]

     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 
``non-eligible'' 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 on-line 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

[[Page 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.
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[[Page 61208]]

    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 https://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 State-
allocated grant programs and nationally-competed 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 (Nationally-competed 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

[[Page 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 a