Rural Microentrepreneur Assistance Program, 30114-30158 [2010-11931]

Agencies

• DEPARTMENT OF AGRICULTURE
• Rural Business-Cooperative Service

[Federal Register Volume 75, Number 103 (Friday, May 28, 2010)]
[Rules and Regulations]
[Pages 30114-30158]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-11931]



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Part II





Department of Agriculture





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Rural Business-Cooperative Service



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7 CFR Part 4280



Rural Microentrepreneur Assistance Program; Interim Final Rule

Federal Register / Vol. 75 , No. 103 / Friday, May 28, 2010 / Rules 
and Regulations

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DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

7 CFR Part 4280

RIN 0570-AA71


Rural Microentrepreneur Assistance Program

AGENCY: Rural Business-Cooperative Service, USDA.

ACTION: Interim rule with request for comments.

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SUMMARY: This interim rule establishes the Rural Microentrepreneur 
Assistance Program. This interim rule provides technical and financial 
assistance in the form of loans and grants to qualified Microenterprise 
Development Organizations (MDOs) to support microentrepreneurs in the 
development and ongoing success of rural microenterprises.

DATES: This interim rule is effective June 28, 2010. Comments must be 
received on or before July 27, 2010.

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 
commercial mail delivery 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: Lori Washington, Loan Specialist, 
Business Programs, Specialty Programs Division, USDA, Rural 
Development, Rural Business-Cooperative Service, Room 6868, South 
Agricultural Building, Stop 3225, 1400 Independence Avenue, SW., 
Washington, DC 20250-3225; Telephone: (202) 720-9815, E-mail: 
lori.washington@wdc.usda.gov.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This interim rule has been determined to be significant and has 
been reviewed by the Office Management and Budget in conformance with 
Executive Order 12866. The Agency conducted a qualitative benefit cost 
analysis to fulfill the requirements of Executive Order 12866. Based on 
the results of this qualitative analysis, the Agency has identified 
potential benefits to prospective program participants and the Agency 
that are associated with improving the availability of microlevel 
business capital, business-based training and technical assistance, and 
enhancing the ability of microlenders to service the microentrepreneurs 
to whom they are making their microloans.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act 1995 (UMRA), Public 
Law 104-4 establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, 
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. With certain exception, section 205 of UMRA 
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 interim 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. Participation in this program 
is voluntary. 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.

Executive Order 12988, Civil Justice Reform

    This interim 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 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 interim rule does not have sufficient federalism implications 
to warrant the preparation of a Federal Assessment. The provisions 
contain in the interim 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

    This interim rule has been reviewed with regard to the requirements 
of the Regulatory Flexibility Act (5 U.S.C 601-612). Rural Development 
has determined that this action will not have a significant economic 
impact on a substantial number of small entities for the reasons 
discussed below. While, the majority of MDOs expected to participate in 
this Program will be small businesses, the average cost to an MDO is 
estimated to be approximately 1 percent of the total mandatory funding 
available to the program in fiscal years 2009 through 2012. Further, 
this regulation only affects MDOs that choose to participate in the 
program.

Executive Order 12372, Intergovernmental Review of Federal Programs

    This program is subject to Executive Order 12372, which requires 
intergovernmental consultation with State and local officials. 
Intergovernmental consultation will occur for the assistance to MDOs in 
accordance with the process and procedures outlined in 7 CFR part 3015, 
subpart V. Assistance to rural microenterprises will not require 
intergovernmental review.
    Rural Development will conduct intergovernmental consultation using 
RD Instruction 1940-J, ``Intergovernmental Review of Rural Development 
Programs and Activities,''

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available in any Rural Development office, on the Internet at https://www.rurdev.usda.gov/regs and in 7 CFR part 3015, subpart V. Note that 
not all States have chosen to participate in the intergovernmental 
review process. A list of participating States is available at the 
following Web site: https://www.whitehouse.gov/omb/grants/spoc.html.

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, this interim 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 is 10.870.

Paperwork Reduction Act

    Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 
35; see 5 CFR part 1320), the information collection provisions 
associated with this interim rule have been submitted to the Office of 
Management and Budget (OMB) for approval as a new collection and 
assigned OMB number 0570-XXXX. In the publication of the proposed rule 
on October 7, 2009, the Agency solicited comments on the estimated 
burden. The Agency received no public comment letters in response to 
this solicitation. This information collection requirement will not 
become effective until approved by OMB. Upon approval of this 
information collection, the Agency will publish a notice in the Federal 
Register.
    Title: Rural Microentrepreneur Assistance Program.
    OMB Number: 0570-XXXX (assigned).
    Type of Request: New collection.
    Expiration Date: Three years from the date of approval.
    Abstract: The collection of information is vital to Rural 
Development to make decisions regarding the eligibility of projects and 
loan and grant recipients in order to ensure compliance with the 
regulations and to ensure that the funds obtained from the Government 
are being used for the purposes for which they were awarded. 
Microenterprise development organizations seeking funding under this 
program will have to submit applications that include specified 
information, certifications, and agreements as stated in the interim 
rule.
    The estimated information collection burden has decreased by 
approximately $38,500, from $275,844 estimated for the proposed rule to 
$237,339 estimated for the interim rule. The majority of this decrease 
is attributable to removing enhancement grants from the interim rule. 
This change was made in response to public comment, but will be re-
evaluated by the Agency upon receipt of public comment on enhancement 
grants after the interim rule is published.

E-Government Act Compliance

    USDA is committed to complying with the E-Government Act of 2002 
(Pub. L. 107-347, December 17, 2002), to promote the use of the 
Internet and other information technologies to provide increased 
opportunities for citizen access to government information and 
services, and for other purposes.

I. Background

    Title VI, Section 6022 of the Food, Conservation, and Energy Act of 
2008 (Pub. L. 110-246, June 18, 2008) (the Act) established the Rural 
Microentrepreneur Assistance Program (RMAP). This interim rule 
implements the program to make loans and grants to microenterprise 
development organizations (MDOs) to support microentrepreneurs in the 
development and ongoing success of rural microenterprises.
    Under this program, the Agency will make available to MDOs direct 
loans and grants. As provided in the Act, MDOs that qualify for direct 
loans (participating microlenders) will use the funds borrowed from the 
Agency to make fixed interest rate microloans of not more than $50,000 
at a term not to exceed 20 years to microentrepreneurs for startup and 
growing rural microenterprises.
    The Agency will also make available technical assistance (TA) 
grants for microlenders and technical assistance only (TA-only) grants 
for entities that provide training and technical assistance to 
microentrepreneurs and microenterprises but do not wish to fund 
microloans under this program. The TA grants will be annual grants made 
to participating microlenders to provide business based training and 
technical assistance to microentrepreneurs that have received or are 
seeking a microloan from a microlender under this program.
    TA-only grants will also be made available, on a limited basis, to 
MDOs that are not participating in the program as microlenders.

II. Discussion of the Interim Rule

    USDA Rural Development is issuing this regulation as an interim 
rule, with an effective date of June 28, 2010. All provisions of this 
regulation are adopted on an interim final basis, are subject to a 60-
day comment period, and will remain in effect until the Agency adopts a 
final rule.

III. Changes to the Rule

    This section presents changes from the proposed rule. Most of the 
changes were the result of the Agency's consideration of public 
comments on the proposed rule. Some changes, however, are being made to 
clarify proposed provisions. Unless otherwise indicated, rule citations 
refer to those in this interim rule.

A. Highlighted Changes

    The following list highlights some of the changes made to the rule. 
These changes are also discussed in the section specific change portion 
that follows this list. All changes resulting from public comments are 
explained in detail in that portion of the preamble.
     Creation of a technical assistance only grant program for 
non-lending MDOs.
     Deferral of the enhancement grant category.
     Increasing the maximum size of technical assistance 
grants.
     Implementation of a simplified interest rate structure.
     Removing the maximum margin requirement on loans made by 
the microlender to the microentrepreneur.
     Implementation of a minimum score for qualification as a 
microlender or grantee.
     Adjusting the cost share and matching requirements, 
including limiting the cost share requirement to loans and the matching 
requirement to grants.
     Allowing microlenders two cost share options for 
establishing the rural microloan revolving fund.

B. Section-Specific Changes

Purpose and Scope (Sec.  4280.301)
    There were two primary changes to this section:
    First. The Agency added discussion concerning the availability of 
technical assistance-only grants as one of the types of funding to be 
available under the program (Sec.  4280.301(a)(4) and (d)).
    Second. The Agency clarified that participating microlenders can 
use the

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TA grants to provide technical assistance not only to 
microentrepreneurs who have actually received a loan from the 
microlender, but also to microentrepreneurs who are seeking a loan from 
the microlender (Sec.  4280.301(a)(2)).
    As the purpose of this Program is to support the development and 
ongoing success of rural microentrepreneurs and microenterprises, 
microentrepreneurs are encouraged to contact the Agency for a list of 
MDOs in or near their geographic area that are participating in this 
Program.
Definitions and Abbreviations (Sec.  4280.302)
    The Agency made changes to the definitions section of the rule, 
including adding several new definitions. Except for terms in which the 
changes were grammatical, the following identify each affected term.
    Agency personnel. Because no Agency personnel are eligible for a 
microloan under the interim rule, revised by removing the last clause 
(``who are more than 6 months from separating from the Agency'') 
because it is no longer necessary.
    Close relative. Added to clarify the implementation of Sec.  
4280.323(d) concerning the restrictions on the use of loan funds.
    Default. Has been simplified for purposes of clarity.
    Eligible project cost. Has been added as part of the implementation 
of the cost share requirement.
    Facilitation of access to capital. To clarify this term, the words 
``access to'' have been added.
    Fiscal year. Added the word ``Federal'' for clarity.
    Indian tribal government employee. Has been removed as a conforming 
change.
    Loan loss reserve fund. Revised by removing text not associated 
with the definition of the term, but which was also covered elsewhere 
within the rule.
    Microborrower. Added for clarification in implementing the rule.
    Microentrepreneur. Revised to clarify that both the 
microentrepreneur and the microenterprise to be assisted under the 
program must be located in a rural area. In addition, the phrase 
``business financing'' was replaced with ``business capital.'' Lastly, 
a sentence was added to note that a microentrepreneur who has received 
a loan under this program may also be referred to as a microborrower 
within the rule.
    Military personnel. Revised to add the words ``or grade'' after the 
word ``rank''; ``United States'' after the word ``active''; ``active 
duty'' after the word ``their''; and to remove to the word 
``enlisted''.
    Nonprofit entity. Has been simplified and reference to the ``U.S. 
Internal Revenue Service'' has been removed.
    Rural microenterprise. Revised the term to ``microenterprise'' and 
expanded the definition for clarity.
    Rural microloan revolving fund. Revised for clarity.
    Significant outmigration. Removed because the term is not used in 
the interim rule for the reasons discussed in the responses to 
comments.
    State. Added to clarify the applicability of the program.
Review of Appeal Rights and Administrative Concerns (Sec.  4280.304)
    In paragraph (a), the words ``a microlender, or grantee MDO'' were 
added after the word ``MDO'' to clarify the applicability of this 
paragraph.
Nondiscrimination and Compliance With Other Federal Laws (Sec.  
4280.305)
    In paragraph (a), ``Applicant'' was replaced with ``Any entity 
receiving funds under this subpart'' to clarify the applicability of 
this paragraph.
Forms, Regulations, and Instructions (Sec.  4280.306)
    This section has been added to identify where applicants can access 
forms, regulations, and instructions noted within the subpart.
Program Requirements for MDOs (Sec.  4280.310)
    This section has been revised and redesignated. The substantive 
changes are described below:
    First. The citizenship requirements have been clarified to apply 
only to non-profit entities (paragraph (a)(2)), not American Indian 
tribes or United States public institutions of higher education.
    Second. In addition to moving the requirements specific to 
potential microlenders into paragraph (a)(4), the Agency has added a 
new provision (paragraph (a)(4)(ii)) regarding obtaining an attorney's 
opinion regarding the microlender's legal status and its ability to 
enter into program transactions at the time of initial entry into the 
program.
    Third. A minimum score threshold has been added for MDOs to be 
considered for receiving an award under this subpart (paragraph (b)). 
Generally, applicants must receive at least 70 points out of 100 in 
order to be eligible to receive an award under the program.
    Fourth. The Agency removed ``is delinquent in meeting U.S. Internal 
Revenue Service (IRS) requirements'' from the list of provisions 
identifying ineligible applicants.
Loan Provisions for Agency Loans to Microlenders (Sec.  4280.311)
    A number of changes have been made to this section, including 
grammatical changes and redesignation of paragraphs. The substantive 
changes are described below:
    First. The Agency revised the provisions associated with the cost 
share requirements by applying them only to loans and identifying two 
options for how microlenders can establish Rural Microloan Revolving 
Funds (RMRFs). The provisions also allow microlenders the option of 
setting up multiple RMRFs (paragraph d)). Because of this revision, a 
conforming change was made to paragraph (c) to refer to ``RMRF'' funds 
instead of ``Agency loan'' funds.
    Second. The provisions concerning the term of a loan have been 
recast to state that a term shorter than 20 years will be considered if 
requested by the applicant MDO and must be agreed to by the microlender 
and the Agency (paragraph (e)(3)).
    Third. The number of days loan closing must take place has been 
revised to within 90 days, rather than 60 days as proposed, before 
funds would be forfeited (paragraph (e)(8)).
    Fourth. Revised the number of day microlenders have to make at 
least one microloan from within 30 days to within 60 days of 
disbursement (paragraph (e)(10)). Further, failure to make a microloan 
within this time period may result in the microlender not receiving any 
additional funds from the Agency and may result in the Agency demanding 
return of any funds already disbursed to the microlender.
    Fifth. Revised substantially the interest rate provisions. In the 
interim rule, each microloan made to a microlender during the first 
five years of participation will bear an interest rate of 2 percent and 
each loan made to the microlender after the fifth year of participation 
will bear an interest rate of 1 percent (paragraph (e)(12)).
    Sixth. Revised several dates in the section, including the date 
when the Agency will calculate and amortize the microlender's debt 
after the deferral period (e.g., (paragraph (e)(13)).
    Seventh. Removed the provisions associated with negative 
amortization and reamortization (proposed Sec.  4280.311(d)(15)(i) and 
(ii)).
    Eighth. Modified the rule to indicate that loans can be used to 
recapitalize existing Agency funded RMRFs (paragraph (f)(2)).
    Ninth. Added a provision to provide microlenders 30 days to 
replenish the loan loss reserve fund (LLRF) if it falls

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below the required amount (paragraph (g)(2)(i)).
    Tenth. Removed the phrase ``and partially funded'' in paragraph 
(g)(4).
    Eleventh. Added a conforming change to the requirement for 
maintaining a minimum 100 percent of the amount owed by the microlender 
to the Agency for those microlenders with 3 years or less experience 
(paragraph (h)(2)).
    Twelfth. Added a provision requiring microlenders to provide Agency 
access to any of the microlender's records pertaining to any microloan 
made to the microlender under this program. This was added to enable 
the Agency to better enforce the provision of this program (paragraph 
(h)(7)).
    Thirteenth. Added a provision requiring prior written Agency 
approval before the microlender makes any key personnel changes 
(paragraph (h)(8)).
Loan Approval and Closing (Sec.  4280.312)
    This section has been added and is comprised of proposed Sec.  
4280.311(g) and (h) for clarity. Changes to these paragraphs are:
     The promissory note and security agreement have been added 
to the list of items that may be used to demonstrate that the RMRF and 
LLRF have been established and the LLRF has been, or will be, funded as 
described in Sec.  4280.11(f)(4) prior to loan closing (paragraph 
(c)(1)).
     This section has been clarified to explain what 
constitutes ``sufficient evidence'' to demonstrate that no law suits 
are pending or threatened that would adversely affect the security of 
the microlender when the security instruments are filed (paragraph 
(c)(3)).
Grant Provisions (Sec.  4280.313)
    This section has been redesignated (proposed Sec.  4280.312) and a 
number of changes have been made, including grammatical changes and 
reordering of paragraphs. The substantive changes are described below:
    First. The calculation of the maximum TA grant amount has been 
revised such that the maximum annual TA grant to any one microlender 
could be $205,000 (paragraphs (a)(1)(i) and (b)(2)). The maximum TA 
grant amount for a microlender is now calculated as 25 percent of the 
first $400,000 of outstanding microloans owed to the microlender under 
this program, plus an additional 5 percent of the outstanding loan 
amount owed by the microborrowers to the lender over $400,000 up to and 
including $2.5 million.
    Second. The addition of provisions that a microlender who expends 
more than 10 percent of its TA grant funding on administrative expenses 
will be considered in performance default and may have to forfeit 
funding (paragraph (b)(3)(iii)).
    Third. Provisions have been added to address funding of the TA-only 
grants (paragraphs (a)(1)(ii) and (c)).
    Fourth. The matching requirements have been revised (paragraph 
(a)(2)).
    Fifth. The Agency added a provision requiring prior written Agency 
approval before the microlender makes any key personnel additions 
(paragraph (a)(5)).
    Sixth. The grant oversight provisions were moved from this section 
and consolidated with those in Sec.  4280.320.
MDO Application and Submission Information (Sec.  4280.315)
    Most of the changes to the section reflect a reorganization of the 
provisions found in the proposed rule. Substantive changes include:
     Redefining less experienced MDOs as those with 3 years or 
less experience, rather than less than 3 years experience, and 
redefining more experienced MDOs as those with more than 3 year 
experience, rather than 3 or more years experience;
     Requiring certificates of good standing to be not more 
than 6 months old;
     Adding documentation requirements for TA-only grant 
applications;
     Requiring documentation that the applicant has certified 
to the Agency that it cannot find credit elsewhere (pursuant to the 
requirements as provided in the Consolidated Farm and Rural Development 
Act (Sec. 333(1));
     Revising and simplifying the requirement associated with 
separate applications to indicate that MDOs may only submit and have 
pending for consideration, at any given time, one application, 
regardless of funding category; and
     Requiring all applicants seeking status as a microlender 
to identify which cost share option(s) they will use to set up their 
RMRF(s) and the amount(s) and source(s) of the non-Federal share.
Application Scoring (Sec.  4280.316)
    A number of changes have been made to this section, including 
grammatical changes, redesignation of paragraphs, and clarification as 
to whether the information to be submitted applied to rural or non-
rural microentrepreneurs and microenterprises, or both, and to 
microloans or loans or the microlenders entire portfolio. The 
substantive changes are described below:
    The Agency notes that, except for applications from microlenders 
with more than 5 years experience with this program:
    1. The maximum number of points that each application can receive 
is 100;
    2. Each application will be scored against the criteria specified 
in Sec.  4280.316(a) for which it can receive a maximum of 45 points;
    3. Each application will be scored against the criteria specified 
in Sec.  4280.316(b), (c), or (d), as applicable, for which it can 
receive a maximum of 55 points; and
    4. An application must receive at least 70 points in order to be 
eligible.
    Applications from lenders with more than 5 years experience in this 
program will be scored on a pass/fail basis. Those applications that 
pass will be assigned a score of 90 points.
    Figure 1 illustrates the RMAP scoring process.

Application Requirements for All Applicants (Sec.  4280.316(a))

BILLING CODE 3410-XY-P

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[GRAPHIC] [TIFF OMITTED] TR28MY10.002

BILLING CODE 3410-XY-C

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    Changes to these application requirements are mostly editorial in 
nature; there were no changes in the basic scoring criteria or points 
to be awarded. Substantive changes included:
     Indicating that there should be a corresponding resume for 
each of the key individuals noted and named on the organizational 
chart;
     Noting that the mission statement does not need to be 
submitted twice if it is already included in other submitted documents; 
and
     Deleting ``as well as the needs of the service area'' and 
reference to areas of significant outmigration from the scoring 
criterion addressing information regarding the geographic area to be 
served.

Program Loan Application Requirements for MDOs Seeking To Participate 
as RMAP Microlenders With More Than 3 Years of Experience (Sec.  
4280.316(b))

    There were several important changes associated with the scoring 
criteria for these applications, including:
     Removing reference to demographic group and replacing that 
term with reference to racial and ethnic minorities, women, and the 
disabled in Figure 1;
     Replacing reference to the U.S. Census Bureau with the 
``applicable decennial census for the State'' (paragraph (b)(1)(v));
     Replacing ``race, ethnicity, and socio-economic status'' 
with ``racial and ethnic minority status'' and indicating that 
disability will be defined as under The Americans with Disabilities Act 
under the scoring criterion for diversity (paragraph (b)(1)(v));
     Replacing ``percentage points'' with ``percent'' 
(paragraph (b)(1)(v));
     Removing the scoring criterion for outmigration and adding 
``non-rural'' to the total number of microentrepreneurs that received 
both microloans and TA services in the scoring criterion for history of 
provision of technical assistance to microentrepreneurs (paragraph 
(b)(3));
     Removing ``socially-disadvantaged'' and clarifying that 
the percentage of rural entrepreneurs that received both microloans and 
TA services will be broken down by racial and ethnic minority, 
disabled, and gender in paragraph (b)(3)(iii); and
     Adding a new scoring criterion on the ratio of TA clients 
that also received microloans during each of the last three years 
(paragraph (b)(4)).
    With the removal of outmigration as a scoring criterion for loans 
and the addition of the new scoring criterion, the points associated 
with most of the criteria also changed.

Application Requirements for MDOs Seeking To Participate as RMAP 
Microlenders With 3 Years or Less Experience (Sec.  4280.316(c))

    There are no significant substantive changes to the scoring 
criteria for these applications other than a redistribution of points.

Application Requirements for MDOs Seeking Technical Assistance-Only 
Grants (Sec.  4280.316(d))

    This is a completely new set of scoring criteria required by the 
addition to the interim rule of providing technical assistance grants 
to MDOs that are otherwise not participating as a microlender. The 
criteria included address: History of provision of technical assistance 
to microentrepreneurs, ability to provide technical assistance to 
microentrepreneurs, technical assistance plan, and proposed 
administrative expenses to be spent from TA grant funds.

Re-Application Requirements for Participating Microlenders With More 
Than 5 Years Experience as a Microlender Under This Program (Sec.  
4280.316(e))

    The substantive changes to this section were to:
     Replace ``the number of businesses'' with ``the number and 
percent of program microentrepreneurs and microenterprises'' and 
replace ``after loan repayment'' with ``after microloan disbursement'' 
in paragraph (e)(1)(iii);
     Add to paragraph (e)(2) ``over the life of its 
participation in the program'' to indicate the appropriate timeframe 
that data are to be reported;
     Provide better guidance on requirements for assessing 
overall program performance with regards to the successful use of TA 
dollars (paragraph (e)(2)(iii));
     Replaced proposed Sec.  4280.316(e)(2)(iv), because it is 
duplicative of Sec.  4280.316(e)(1)(iii), with a request for a 
statement discussing the need for more funding; and
     Removing proposed Sec.  4280.316(e)(2)(vi) regarding other 
such issues as deemed appropriate.
Selection of Applications for Funding (Sec.  4280.317)
    A few changes have been made to this section as briefly described 
below:
     The introductory text is revised to clarify that all 
applications will be scored on a 100-point scale and will be ranked 
together and to allow the Administrator to prioritize applications that 
score the same for geographic diversity. This latter provision is added 
in order to facilitate the distribution of limited program funds 
throughout rural America, because the Agency does not want program 
funds to be concentrated in a few states.
     Provisions for application packages have been added 
(paragraph (a)(1)).
     Provisions associated with internal procedures were 
removed (proposed Sec.  4280.317(c) and (d)).
     Clarification that awardees have 90 days to close or 
forfeit their funding (paragraph (d)).
Grant Administration (Sec.  4280.320)
    The changes made to this section addressed presentation of the 
requirements and updating and revising the forms to be submitted. This 
section now also states that if a microlender has more than one grant 
from the Agency, a separate report must be made for each.
Loans From the Microlenders to the Microentrepreneurs and 
Microenterprises (Sec.  4280.322)
    A number of changes have been made to this section, including 
grammatical changes and reordering of paragraphs. The substantive 
changes are described below:
     The provision limiting the margin of the interest rate on 
the loan made to the microborrower has been deleted. Instead, the 
microlender may establish its margin of earnings but may not adjust the 
margin so as to violate Fair Credit Lending laws. In addition, margins 
must be reasonable so as to ensure that microloans are affordable to 
the microborrowers (paragraph (b)(3)).
     The provisions in Sec.  4280.322(c) concerning insurance 
requirements have been revised by removing ``except that * * * 
excessive.''
     The requirement that a microborrower has been turned down 
has been removed and replaced with more appropriate options for meeting 
the test that have a lesser impact on the microborrower's ability to 
build a favorable credit history. (paragraph (d)), In the introductory 
text of paragraph (f), the rule clarifies that Agency loan funds may be 
used for any legal business purpose provided it is not identified in 
Sec.  4280.323 as ineligible.
     The rule includes clarification on the eligibility of 
military personnel for funding under the program (paragraph (g)). The 
rule also clarifies that Indian Tribal government employees will be 
treated as any other MDO employee regarding eligibility for a 
microloan.
Ineligible Microloan Purposes (Sec.  4280.323)
    A few changes have been made to this section:

[[Page 30120]]

     Reference to ``his/her family members'' has been removed 
(paragraph (d));
     The paragraph on military personnel has been moved to 
Sec.  4280.322;
     Reference to swimming pools has been removed from 
(paragraph (l);
     Proposed paragraphs (o) and (p) have been removed; and
     Lines of credit and subordinated liens were added as an 
ineligible purpose (paragraphs (n) and (o)).

IV. Discussion of Comments

    The proposed rule was published in the Federal Register on October 
7, 2009 (74 FR 51713), with a 45-day comment period that ended November 
23, 2009. Comments were received from 48 commenters yielding over 450 
individual comments on the proposed rule, which have been grouped into 
similar categories. Commenters included members of Congress, Rural 
Development personnel, microenterprise development organizations, trade 
associations, states, universities, environmental organizations, and 
individuals. As a result of some of the comments, the Agency made 
changes in the rule. The Agency sincerely appreciates the time and 
effort of all commenters. Responses to the comments on the proposed 
rule are discussed below.

General

    Comment: Several commenters provided general support for the 
program, and positive discussion of other microenterprise development 
activities and programs to address rural need.
    One commenter provided general support for the program's efforts to 
build the capacity of the microenterprise development industry to 
achieve new levels of performance and effectiveness. Due to tightened 
credit markets as a result of the recession, microlenders face 
increased demands to provide capital and technical assistance to both 
start-ups and existing microentrepreneurs.
    Several commenters stated that they strongly support this 
commenter's comments on the proposed rule.
    Response: The Agency appreciates the support for the program 
reflected by the commenters, acknowledges the microenterprise 
development work that has produced positive activity both in the United 
States and abroad for several decades, and looks forward to formalizing 
the Agency's participation in this economic development sector.
    Comment: One commenter stated that they believe RMAP will do much 
good in reversing the economic and financial crisis in rural 
communities. With many rural areas underserved or not served at all by 
MDOs, the Agency should be doing all it can to recruit as many 
qualified organizations as possible to become engaged in rural training 
and microentrepreneur lending. The proposed rule's scoring should 
encourage the effort to build MDO networks to serve these communities 
with as many organizations with the necessary expertise as possible.
    Response: The Agency acknowledges the commenter's support.
Funding Allocations
    Comment: Four commenters stated that the terms of the proposed rule 
make it difficult to determine how USDA will make decisions on 
applications that seek funding from different components (the so-called 
``enhancement grants'' and the loans/TA grants) without stating how 
much of available funding goes to each component. The commenters 
recommended that the final rule should contain information concerning 
program funding, including the subsidy rate that will be used to 
calculate the RMAP loan program level and legislative intent in the 
USDA FY 2010 appropriations bill. If this information is unattainable 
or otherwise not available, the commenter recommended that all RMAP 
dollars not previously identified by Congress as loan subsidy dollars 
be used to provide TA training grants to MDOs.
    Response: The Agency considered a standard division among the 
program components and determined that such a balance should be 
adjustable in future years based on market demands and conditions. 
Therefore, the Agency has not included program funding in the rule with 
one exception. As noted later in this preamble, the Agency plans to use 
up to 10 percent of program funding each year for technical assistance 
only grants for MDOs that are not otherwise participating in the 
program. The Agency will publish program levels annually in a Notice of 
Funding Availability (NOFA).
Existing MDO Emphasis
    Comment: Several commenters were concerned that the proposed rule 
applies exclusively to existing MDOs, especially those heavily involved 
in lending. The commenters stated that one of the purposes of the law 
is to build and enhance microenterprise services in rural areas, 
particularly remote rural areas and believe the application and scoring 
emphasis on MDO history (particularly an MDO's lending history) implies 
funding only for existing MDOs, and the ``enhancement grants'' 
provision (of the proposed rule) is defined in terms of 
``microlenders'' and ``projects'' and activities that enhance the 
microlenders' capabilities, implying that funds will go exclusively for 
existing MDOs involved in lending. According to the commenters, this 
upsets the intended balance in RMAP between training, technical 
assistance (not connected to loans to MDOs) and lending, and between 
existing MDOs and developing a network of MDOs in unserved and 
underserved rural areas. The commenters suggested that the final rule 
restore the intended balance in both respects.
    Response: With regard to the comment concerning training and 
technical assistance, the Agency agrees that microlenders who are not 
participating in RMAP as lenders should have access to technical 
assistance grants in order to provide such assistance to rural 
microentrepreneurs. Thus, the Agency has included in the rule Sec.  
4280.301 provisions for MDOs who are otherwise not participating in the 
program to be eligible to receive technical assistance grants.
    With regard to the comment concerning existing MDOs and developing 
a network of MDOs, the Agency disagrees with the commenters that the 
rule does not address both. As provided in both the proposed rule and 
this interim rule, MDOs with less than 3 years experience are eligible 
to compete for program funds. Thus, this would allow for developing a 
network of MDOs. However, to further meet the need for developing a 
network, the Agency is requesting that comments and suggestions 
regarding the delivery of an enhancement grant program be submitted 
(see Section V of this preamble).
Administrative Management
    Comment: One commenter expressed concern that the interest rate 
criteria specified were too complex for the current automated systems 
to monitor or effectively manage.
    Response: During the development of the regulation, the program 
area has been engaged in system requirements discussions with Agency 
information technology staff. The Agency anticipates that, by the time 
the first applications are received, systems (the Rural Utilities Loan 
Servicing System (RULSS)) will be ready to accommodate the interest 
rate provisions in the rule.
    Comment: One commenter stated that the program should be aligned 
with existing Rural Development programs and administrative 
capabilities. The

[[Page 30121]]

commenter believes that the Administrative requirements overall are too 
complex to manage within existing Agency systems and substantially out 
of sync with other Agency programs to be cost-effective to the taxpayer 
for management. According to the commenter, the proposed rule must 
align payment and deferral options with the Intermediary Relending 
Program (IRP) in order to be cost-effective.
    Response: The Agency disagrees with the commenter's 
characterization of the proposed RMAP regulation. The Agency is in the 
process of placing its administrative systems under RULSS. RMAP will be 
aligned with other similar programs to leverage electronic reporting 
resources with the objective of improved information-gathering and more 
efficient program management. The RMAP program will begin the program 
area's move to newer, more flexible, more responsive administration of 
the program. This is expected to result in improved electronic 
reporting, less paper-based program administration, and mitigation of 
duplicative or unnecessary work, thereby allowing RMAP to be 
implemented efficiently.
    Furthermore, RMAP is different from the IRP and, thus, certain 
provisions will not align intentionally with the IRP. Finally, the 
Agency believes that the RMAP provisions are very similar to other 
existing Federal microenterprise programs and the participating 
entities will understand the provisions contained in RMAP.
    Comment: One commenter believes that the rule as proposed could 
cause issues with Office of the Inspector General (OIG) audits.
    Response: The Agency believes that OIG audits are helpful in terms 
of suggesting program improvements. It further believes that programs 
that are efficiently and effectively managed will have few negative 
comments as the result of such audits.
Micromanagement
    Comment: One commenter stated that as proposed there is too much 
micro-management in the program, especially if the MDO is applying for 
the minimum loan amount of $50,000. According to the commenter, the 
reporting burden is too great to make it worth their while.
    Response: Reporting requirements for this program have been kept to 
a minimum as a result of instituting an electronic reporting system. 
Reporting is flexible, automated, and easily accessed by lenders, 
grantees, and agency personnel.
Loans, TA Grants, Enhancement Grants
    Comment: A number of commenters believe that the proposed rule 
should be revised to maintain the intent of Congress by restoring the 
balance between the funding for loan capital and funding for training 
and technical assistance. As one claimed, the proposed rule is in 
``direct contradiction to the law'' because it eliminates all grants to 
microenterprise programs to provide business training to existing and 
prospective microentrepreneurs. The commenter stated that, by 
eliminating the training funds (and by capping technical assistance 
funds), the proposed rule will make it difficult for organizations to 
fund the staff needed to work with borrowers and other clients.
    Another commenter stated that the proposed rule directs most of the 
RMAP funds to loan capital and gives short shrift to support for 
training, financial planning, and critical support services that MDOs 
offer. The proposed rule does this by limiting the purposes of grants 
to support microenterprise development and by capping the maximum 
technical assistance grant an MDO can receive at $100,000, rather than 
25 percent of the MDO's total balance of microloans.
    Response: The Agency disagrees that the proposed rule was in direct 
contradiction to the law, because it provided for loans and for grants 
for both technical assistance to microentrepreneurs (referred to as 
technical assistance grants) and training of MDOs staff to enhance 
their capabilities in providing technical assistance to their clients 
(referred to as enhancement grants). Nevertheless, the Agency, as noted 
later in this preamble, has added in Sec.  4280.301 that technical 
assistance grants may be made available to MDOs that are not otherwise 
participating in RMAP. The Agency believes that this change provides 
for an improved program and satisfies the concerns expressed by these 
commenters.
    Finally, the Agency understands that those seeking technical 
assistance funding would prefer no funding cap. The Agency believes 
that, in order to fund more MDOs in rural areas nationwide, a cap is 
necessary. However, as later discussed, the maximum amount of technical 
assistance grants has been increased.
Inflexibility
    Comment: Several commenters stated that the proposed rule is 
inflexible and will unnecessarily increase expenses for microenterprise 
service providers. To illustrate their concern, one commenter states 
that programs must identify prospective borrowers before they can 
receive loan funds from USDA. The result is that more time must be 
spent completing paperwork, leaving less time to serve 
microentrepreneurs. These rules ignore the flexibility needed to help 
microentrepreneurs be successful.
    One commenter believes that the proposed rule does not reflect the 
reality of how lending to microentrepreneurs actually works.
    Another commenter believes that the approach is far too elaborate 
and unnecessarily complex, particularly in the way RMAP loans are 
structured and reamortized and in the scoring system. The commenter 
stated there is the maximum need for flexibility and latitude for the 
program to succeed.
    Three of the commenters stated that the rule, as proposed, will add 
to the administrative burdens on MDOs and decrease the portion of staff 
time that can be devoted where it should be devoted--servicing loans, 
providing technical assistance and conducting outreach that brings more 
microentrepreneurs in the door for services.
    Response: It is not the intent of the Agency to require 
microlenders to identify prospective borrowers before they can receive 
loan funds from the USDA. There is no such requirement in the proposed 
rule. Similarly, the restrictions placed on the relationship between 
the microlender and the microborrowers are minimal and stem from 
statutory requirements, such as the maximum loan amount, the maximum 
term of a microloan, and the provision of technical assistance and 
training for microborrowers. The proposed rule did, however, require 
that the microlender make a microloan within 30 days of receipt of 
funds from the Agency. To the extent that the commenter may be 
referring to this policy, the interim rule instead adopts a 60 day 
requirement to provide microlenders more flexibility.
Notice of Funding Availability
    Comment: Two commenters proposed that the Agency set a timeline for 
a NOFA that both reflects the Congressional funding process and allows 
for greater accountability to RMAP participants. The commenter 
recommended that a NOFA be made either no later than 45 days after the 
enactment of the appropriate spending bill or no later than 30 days 
after the disbursement of funds and/or budget authority to USDA.
    Response: The Agency disagrees that it is necessary to set a 
timeline for issuing a NOFA, in part because there is no relationship 
between when the

[[Page 30122]]

Agency will accept applications and when it issues a NOFA. It is the 
Agency's intent, however, to publish RMAP NOFAs as early as possible 
each fiscal year. This comment is associated with the administration of 
RMAP and not with the proposed rule itself. Thus, no changes have been 
made to the rule as a result of this comment.
MDO Administrative Costs
    Comment: One commenter believes that the Agency's expectation, 
noted under its Regulatory Flexibility Act discussion, that 
participating MDOs will be able to cover most of their administrative 
costs by ``the interest rate spread between the one percent loan from 
Rural Development and the interest rate on loans made to the 
microentrepreneurs by the MDO'' seems to be in conflict with subsequent 
sections of the proposed rule that severely limit MDO uses of interest 
income and must be clarified.
    Response: The Agency agrees with the commenter that the statement 
in the preamble to the proposed rule was in error. The Agency has not 
repeated this statement in this preamble.
Intermediary Relending Program
    Comment: One commenter recommended that the program be delivered 
under the published IRP regulations with the exception that the term 
must be 20 years and that microborrowers comply with the criteria in 
the proposed rule (i.e., proposed Sec. Sec.  4280.322 and 4280.323). 
The commenter further suggested that RMAP grant funds be administered 
under the published Rural Business Enterprise Grants regulations with 
the exception that the RMAP grants would be awarded in the proportional 
amounts indicated in the proposed rule (25 percent of the RMAP loan) 
and accompany RMAP loan awards. According to the commenter, adopting 
existing, well-understood, functional program regulations will allow 
rapid deployment and operation of the important RMAP initiative.
    Response: The Agency disagrees with the commenter's recommendation 
to administer RMAP under the IRP and RBEG regulations because of the 
many statutory differences between the programs.
Purpose and Scope--(Sec.  4280.301)
    Comment: In referring to proposed Sec.  4280.301(b), one commenter 
expressed concern that the sentence ``Technical assistance grants will 
be awarded to microlenders to provide technical assistance to 
microentrepreneurs who have received one or more microloans from the 
MDO under this program'' would mean that entrepreneurs that have not 
received a microloan from an MDO under this program would not be able 
to receive technical assistance.
    Response: The Agency agrees that it is in the best interest of the 
program not to limit technical assistance only to those microborrowers 
who actually receive a microloan under RMAP. Therefore, the Agency has 
revised the sentence for clarity to indicate that a microentrepreneur 
seeking a microloan would also be eligible to receive technical 
assistance.
Definitions and Abbreviations--(Sec.  4280.302)
Administrative Expenses
    Comment: One commenter recommended removing the limitation on the 
percent of TA grant funding that may be used to fund expenses because 
it has nothing to do with the definition.
    Response: While the Agency does not disagree with the commenter's 
observation, the Agency believes that it is helpful here to explain the 
limitations to the public and Agency staff. For these reasons, and 
because it does ``no harm,'' the Agency has not revised the definition 
as suggested by the commenter.
Agency Personnel
    Comment: Two commenters asked why there was a distinction made in 
the definition for personnel who are more than 6 months from separating 
from the Agency. One of the commenters also asked how someone would 
know that they are more than 6 months from separating from the Agency. 
One of the commenters believes that it is inappropriate, if not 
illegal, for the Agency to ask its staff when they plan to separate and 
the other commenter suggested deleting this phrase.
    Response: As proposed, the Agency intended to allow Agency 
personnel who knew that they would be leaving the Agency within 6 
months to apply for and receive RMAP funds. This distinction was 
intended to parallel the provisions for military personnel elsewhere in 
the proposed rule. After considering this and other similar comments, 
the Agency has determined that a ``blanket'' prohibition for all Agency 
employees while they are still with the Agency is easier to implement 
and consistent with other program regulations. The Agency, therefore, 
has removed the language from the rule.
Application
    Comment: One commenter suggested adding ``required to be'' after 
the word ``documentation'' in the definition, so that it would read: 
``The forms and documentation required to be submitted by an MDO for 
acceptance into the program.''
    Response: The Agency disagrees with the commenter's suggestion. The 
application is what is submitted, not what is required. Section 
4280.315 makes clear what items are required for a complete 
application. Therefore, the Agency has not revised this definition.
Business Incubator
    Comment: One commenter stated that a business incubator is not an 
organization, but is generally a ``thing'', such as a building.
    Response: The Agency disagrees with the commenter. As used in this 
interim rule, a business incubator is an organization that can perform 
such tasks as renting space, using equipment, etc. A building cannot do 
such tasks. The Agency, however, is adding to the definition the 
condition that, to be considered a business incubator, the organization 
provides temporary premises ``at below market rates.'' This is a 
condition that the Agency overlooked when proposing the rule and 
believes is an important aspect of a business incubator.
Default
    Comment: One commenter asked why a definition of default was 
included in the proposed rule.
    Response: The Agency is including a definition of default for 
clarity because its history in the administration of other loan 
programs has shown that defaults other than the more common monetary 
default (e.g., nonperformance is a form of default) can and do occur.
    Comment: One commenter stated the definition of monetary default 
(found in paragraph (i) of the proposed definition of default) is 
extremely and unnecessarily complex. Further, according to the 
commenter, it is inconsistent with current Agency practice of annual 
installments for principal and interest or semi-annual installments for 
interest.
    Response: The Agency agrees that a simpler definition is sufficient 
and has revised the definition accordingly. The Agency notes that it 
will collect payments on a monthly basis via an automated system.
Fiscal Year
    Comment: One commenter stated that ``fiscal year'' should be 
clarified as ``Federal fiscal year'' because most organizations work 
off of either the calendar year or their individual fiscal year.
    Response: The Agency agrees with the commenter and has revised the 
rule to

[[Page 30123]]

more clearly identify the fiscal year as being the Federal fiscal year.
MDO
    Comment: One commenter suggested adding quasi-public entities that 
are formed by State or other governmental statutes whose purposes for 
operation are consistent with the program as eligible MDOs. According 
to the commenter, many quasi-public state agencies operate business and 
micro-business programs and, therefore, they need to be included as 
eligible entities.
    Another commenter believes the term ``non-profit'' is used rather 
ambiguously in the proposed rule and recommended that the Agency 
provide a clarification to ensure that public non-profit entities, such 
as Councils of Governments, Regional Planning Commissions and Economic 
Development Districts, are eligible to apply for program assistance as 
MDOs. The commenter stated that many of these entities are experienced 
lenders as they currently operate USDA IRP, a program similar to RMAP, 
which also provides valuable assistance for financing business and 
economic development activity in rural regions of this country.
    A third commenter requested that local governments be included as 
eligible applicants for program funds. The commenter asked why their 
local government organization is not considered the equivalent of an 
MDO, or at least eligible to apply for the funding as USDA has 
considered them capable of providing these services in the past when 
they awarded funding. The commenter suggests the language of the RMAP 
be changed to refer to MDOs and other entities that provide assistance 
to microentrepreneurs.
    Response: Section 379E of the Consolidated Farm and Rural 
Development Act provides the definition for MDO. The Agency cannot 
change the definition and, thus, for example, quasi-governmental 
organizations cannot be included unless they otherwise meet the 
definition. Consistent with the eligibility requirements provided in 
other loan programs under the Consolidated Farm and Rural Development 
Act, the reference to non-profits is understood to mean only private 
non-profits. If Congress had intended to include other entities, they 
would have done so as they have done for other provisions in the 
Consolidated Farm and Rural Development Act. For this reason, the 
Agency has not revised the definition of MDO as suggested by the 
commenters.
    Comment: A number of commenters requested that the rule clarify the 
ability of multiple groups to collaborate on an application (example: 
statewide microenterprise associations, statewide community action 
agency/programs). According to the commenters, such collaboratives 
could prove valuable in unserved and underserved rural areas, and bring 
together efficient and effective microenterprise development services 
among multiple MDOs. Potential collaborations are likely to be non-
profit entities as contained in the definition of MDO in the proposed 
rule. The commenters suggest that the final rule be clarified to allow 
applications by such collaborations where other eligibility 
requirements are met. Scoring of such collaborative applications should 
consider the combined strengths and experiences of the collaborators.
    Three of the commenters further stated that the Agency should 
apportion 20 percent of available funds to enhancement grants and allow 
collaborations and associations that have proven track records in 
providing capacity building services to MDOs to apply for these grants. 
Enhancement programs are an opportunity to build the capacity of MDOs 
to reach more clients with stronger and more effective services. This 
involves training trainers; curriculum development; increasing access 
to markets; quality assessment and evaluation; and much more. One of 
the purposes of this legislation is to create a strong network of MDOs. 
Collaborations and associations serve to build the strength of the 
entire industry.
    Response: The Agency is not opposed to collaborative MDO efforts. 
MDOs selected to participate in the program are encouraged to develop 
community-based partnerships. However, such partnerships and 
collaboratives will be developed outside of the relationship between 
the Agency and the participating MDOs.
    The Agency disagrees with the commenters' suggestion to specify a 
percent of available funds to be apportioned to any single aspect of 
the program. In order to facilitate equitable distribution between 
loans and grants and provide for flexibility to meet program needs, the 
Agency will announce anticipated distributions in an annual Federal 
Register notice.
Microentrepreneur
    Comment: Two commenters pointed out that the proposed definition 
states that ``All microentrepreneurs assisted under this regulation 
must be located in rural areas.'' The commenters recommended changing 
this to read ``All microenterprises assisted under this regulation must 
be located in rural areas''. The commenters stated that, while some 
entrepreneurs do work from home, they are concerned that an 
entrepreneur that provides a service or operates a microenterprise in a 
rural area may be disqualified from participation under this 
definition.
    Response: The Agency disagrees with the commenters' recommendation. 
It is the Agency's intent that both the microenterprise and 
microentrepreneur be located in a rural area, so both definitions have 
been revised to clearly state this. The Agency has not revised this 
definition as suggested by the commenter.
Military Personnel
    Comment: One commenter was concerned that the proposed rule was 
purposefully eliminating National Guard employees that are not 
deployed. The commenter pointed out that there was an administrative 
notice issued for the IRP that addressed IRP loans to certain military 
personnel. The commenter, therefore, recommended that RMAP be as 
inclusive as it can to service members.
    Response: Although it was not the intent of the Agency, the Agency 
agrees with the commenter that National Guard employees that are not 
deployed would have been excluded from the program. The Agency has 
revised the definition to remove the reference to ``enlisted'' and 
added other provisions (see Sec.  4280.322(g)) that would make such 
personnel eligible under this program.
Nonprofit Entity
    Comment: One commenter recommended removing ``that has applied for 
or received such designation from the U.S. Internal Revenue Service'' 
as a criterion for defining a non-profit entity. According to the 
commenter, this criterion is inconsistent with all other Rural 
Development programs. The commenter suggested that instead the 
criterion should be ``registered as a non-profit in the State, 
Commonwealth, Territory, etc. in which the entity is located.''
    Response: The Agency agrees with the commenter that the proposed 
rule would have been too restrictive. Therefore, the Agency removed the 
IRS requirement from the definition and has revised it to read: ``A 
private entity chartered as a nonprofit entity under State law.''
Rural or Rural Area
    Comment: One commenter stated that, for the purposes of this 
program, the terms ``rural'' and ``rural area'' are defined as any area 
of a State not in a city or town that has a population of more than 
50,000 inhabitants, according to the latest decennial census of the

[[Page 30124]]

United States; and the contiguous and adjacent urbanized area. The 
commenter then pointed out that the Freely Associated States (Republic 
of Palau, Republic of the Marshall Islands, and the Federated States of 
Micronesia) are not under the jurisdiction of the U.S. Census Bureau 
and do their own internal Census. The commenter, therefore, recommended 
adding after ``according to the latest decennial census of the United 
States'' the following: ``or of any of the Freely Associated States, as 
appropriate.''
    Response: The Agency agrees with the commenter's concern. However, 
rather than revising the text as suggested by the commenter, the Agency 
has added a definition of ``State'' to include reference to each of the 
Freely Associated States identified by the commenter. By doing so, it 
is unnecessary to make the change suggested by the commenter.
Significant Outmigration
    Comment: Four commenters stated that this definition was more 
restrictive than it should be and that the definition rejects the 
definitions of the term that already exist in law or proposed in 
legislation. The commenters provided, as examples, the American Jobs 
Creation Act of 2004 (Pub. L. 108-357) and the proposed ``New Homestead 
Act of 2007'' (S. 1093). These use a net out-migration of at least 10 
percent during a 20-year period. The commenters suggested defining 
``significant outmigration'' as outmigration of 7.5 percent over two 
Census periods and/or 5 percent outmigration over one Census period in 
order to recognize the current state of rural demographics and to 
enable the program to be widespread