Value-Added Producer Grant Program, 29920-29932 [2010-12731]

Agencies

• DEPARTMENT OF AGRICULTURE
• Rural Business-Cooperative Service

[Federal Register Volume 75, Number 103 (Friday, May 28, 2010)]
[Proposed Rules]
[Pages 29920-29932]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-12731]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

========================================================================


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

[[Page 29920]]



DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

7 CFR Parts 1951 and 4284

RIN 0570-AA79


Value-Added Producer Grant Program

AGENCY: Rural Business-Cooperative Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Food, Conservation, and Energy Act of 2008 (the Act), 
amends section 231 of the Agricultural Risk Protection Act of 2000, 
which established the Value-Added Producer Grant Program. This program 
will be administered by the Rural Business-Cooperative Service. Under 
the proposed program, grants will be made to help eligible producers of 
agricultural commodities enter into or expand value-added activities 
including the development of feasibility studies, business plans, and 
marketing strategies. The program will also provide working capital for 
expenses such as implementing an existing viable marketing strategy. 
The Agency proposes to implement the program to meet the goals and 
requirements of the Act.
    The Agency is also proposing an amendment to existing regulations 
that would allow the delegation of the post-award servicing of the 
proposed program to USDA State Office personnel. Please note that this 
amendment would only affect the post-award servicing of the grant and 
would not affect the process for awarding grants, which would still 
occur at the National office.

DATES: Comments on the proposed rule must be received on or before June 
28, 2010 to be assured of consideration. A 30-day comment period is 
provided for interested persons to comment on the regulatory provisions 
of this proposed rule. The Agency has determined that a 30-day comment 
period, rather than the traditional 60 day comment period, is 
appropriate in order to provide a sufficient amount of time to comment 
while ensuring program performance during the current fiscal year. This 
action will also provide applicants more time to develop quality 
applications for the program with minimal disruptions in ongoing 
farming activities.
    The comment period for the information collection under the 
Paperwork Reduction Act of 1995 continues through July 27, 2010.

ADDRESSES: You may submit comments to this proposed rule by any of the 
following methods:
     Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the instructions for submitting comments 
electronically.
     Mail: Submit your 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 your 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: Andrew Jermolowicz USDA, Rural 
Development, Rural Business-Cooperative Service, Room 4016, South 
Agriculture Building, Stop 3250, 1400 Independence Avenue, SW., 
Washington, DC 20250-3250, Telephone: (202) 720-7558, E-mail 
CPGrants@wdc.usda.gov.

SUPPLEMENTARY INFORMATION:

I. Background

A. Statutory Authority

    Section 231 of the Agriculture Risk Protection Act of 2000 (Pub. L. 
106-224) as amended by section 6202 of the Food, Conservation, and 
Energy Act of 2008 (Pub. L. 110-246) (see 7 U.S.C. 1621 note) 
authorizes the establishment of the Value-Added Agricultural Product 
Market Development grants, also known as Value-Added Producer Grants. 
The Secretary of Agriculture has delegated the program's administration 
to USDA Rural Development Cooperative Programs.

B. Nature of the Program

    This subpart contains the provisions and procedures by which the 
Agency will administer the Value-Added Producer Grant (VAPG) Program. 
The primary objective of this grant program is to help Independent 
Producers of Agricultural Commodities, Agriculture Producer Groups, 
Farmer and Rancher Cooperatives, and Majority-Controlled Producer-Based 
Business Ventures develop strategies to create marketing opportunities 
and to help develop Business Plans for viable marketing opportunities 
regarding production of bio-based products from agricultural 
commodities. As with all value-added efforts, generating new products, 
creating expanded marketing opportunities, and increasing producer 
income are the end goal.
    Eligible applicants are independent agricultural producers, farmer 
and rancher cooperatives, agricultural producer groups, and majority-
controlled producer-based business ventures.
    Grant funds cannot be used for planning, repairing, rehabilitating, 
acquiring, or constructing a building or facility (including a 
processing facility). They also cannot be used to purchase, rent, or 
install fixed equipment.
    This program requires matching funds equal to or greater than the 
amount of grant funds requested. The Act provides for both mandatory 
and discretionary funding for the program, as may be appropriated. 
During subsequent years, additional funding may be appropriated. The 
number of grants awarded will vary from year to year, based on 
availability of funds and the quality of applications. The maximum 
grant amount that may be awarded is $500,000. However, the Agency may 
reduce that amount depending on the total funds appropriated for the 
program in a given fiscal year. This policy allows more grants to be 
awarded under reduced funding.
    The Agency notes, pursuant to general Federal directives providing 
guidance on grant usage, that the 100 percent matching funds 
requirement described in the Agricultural Risk Protection Act of 2000 
may include payment for the time of the applicant/producer or the 
applicant/producer's family members

[[Page 29921]]

only for the production of the business and marketing plans. Please 
contact the state office for further information.

II. Request for Public Comments on Specific Aspects of the Proposed 
Program

    The Agency is interested in receiving comments on all aspects of 
the proposed rule. Areas in which the Agency is seeking specific 
comments are identified below. All comments should be submitted as 
indicated in the ADDRESSES section of this preamble.
    a. Medium-sized farm. As proposed, medium-sized farm is defined as 
``A farm or ranch that has averaged between $250,001 and $700,000 in 
annual gross sales of agricultural products in the previous three 
years.'' The Agency is specifically requesting comment on whether it is 
more appropriate to use $500,000 as the upper limit in this definition. 
Please be sure to provide rationale for your position.
    b. Branding activities. The Agency is proposing to allow branding, 
packaging, or other product differentiation activities that are not 
more than 25 percent of the total project cost of a value-added project 
for products otherwise eligible in one of the five value-added 
methodologies specified in paragraphs (1)(i) through (v) of the 
definition of value-added agricultural product to be eligible. The 
Agency is seeking specific comment on the proposed 25 percent limit. If 
you believe a different limit is more appropriate, please identify your 
suggested limit and provide your rationale to support your suggestion.

III. Discussion of the Proposed Rule

    The following paragraphs present a discussion of provisions of each 
section of the proposed rule in the order that they appear.

A. Purpose (Sec.  4284.901)

    This section implements the value-added agricultural product market 
development grant program administered by the Rural Business-
Cooperative Service whereby grants are made to enable producers to 
develop businesses that produce and market value-added agricultural 
products.

B. Definitions (Sec.  4284.902)

    This section presents program specific definitions which are 
included to more clearly implement the program.

C. Review or Appeal Rights (Sec.  4284.903)

    This section addresses how a person may seek a review of an Agency 
decision or file an appeal.

D. Exception Authority (Sec.  4284.904)

    This section explains the Administrator's authority to make 
exceptions to regulatory requirements or provisions and specifically 
excludes permission to make exceptions for:

 Applicant eligibility
 Project eligibility

    The Agency believes that applicant and project eligibility criteria 
must be maintained at all times in order to be consistent with 
statutory authority.

E. Nondiscrimination and Compliance With Other Federal Laws (Sec.  
4284.905)

    This section explains that applicants must comply with all 
applicable Federal laws. Additionally, this section explains how an 
applicant that believes it has been discriminated against as a result 
of applying for funds under this program can file a Civil Rights 
complaint with the USDA Office of Adjudication and Compliance.

F. State Laws, Local Laws, Regulatory Commission Regulations (Sec.  
4284.906)

    This section addresses how conflicts between this subpart and State 
or local laws, or regulatory commission regulations will be resolved.

G. Environmental Requirements (Sec.  4284.907)

    This section addresses the relationship between grants awarded 
under this subpart and the environmental requirements of subpart G of 7 
CFR part 1940.

H. Incorporation by Reference (Sec.  4284.908)

    This section identifies the various regulations that are 
incorporated by reference in this subpart.

I. Forms, Regulations, and Instructions (Sec.  4284.909)

    This section identifies how forms, regulations, instructions and 
other materials related to programs may be obtained.

J. Notifications (Sec.  4284.915)

    This section describes the methods the Agency will use in making 
notifications regarding funding and programmatic changes.

K. Applicant Eligibility (Sec.  4284.920)

    This section describes the requirements an applicant must meet to 
be eligible for a grant under this subpart, including, but not limited 
to, such areas as citizenship, legal authority, and multiple grants. An 
applicant must demonstrate that they meet all definition requirements 
for one of the following applicant types:
     An independent producer;
     An agricultural producer group;
     A farmer or rancher cooperative; or
     A majority-controlled producer-based business venture.

L. Ineligible Applicants (Sec.  4284.921)

    This section describes those conditions under which an applicant 
will be considered ineligible to participate in this program.

M. Project Eligibility (Sec.  4284.922)

    The eligibility requirements applicable to this subpart are 
described in this section. For a product to be eligible it must meet 
the definition of a value-added agricultural product. The applicant 
must also demonstrate that, as a result of the project, the customer 
base for the agricultural commodity or product is expanded, and that a 
greater portion of the revenue derived from the marketing or processing 
of the value-added product is available to the agricultural producer of 
the commodity or product.
    Other aspects of project eligibility discussed in this section 
include, but are not limited to, availability of matching funds, 
submittal of various items such as work plans, budgets, feasibility 
studies, and business plans, and how applications that include branding 
and packaging will be handled.

N. Eligible Uses of Grant Funds (Sec.  4284.923)

    The section identifies the eligible uses of grant and matching 
funds for both planning funds and working capital funds, and requires 
that grant and matching funds meet the same use restrictions, including 
being used to fund only the costs for approved purposes.

O. Ineligible Uses of Grant and Matching Funds (Sec.  4284.924)

    This section describes those activities for which Agency funds 
under this subpart may not be used. Ineligible uses include expenses 
related to payment for preparation of the grant application and any 
activities prohibited by 7 CFR parts 3015 and 3019, 2 CFR part 230, and 
48 CFR part 31. Expenses related to the production of any agricultural 
commodity or product, including seed, rootstock, labor for harvesting 
the crop, and delivery of the commodity to a processing facility are 
not eligible. Any costs of the project incurred prior to the date of 
grant approval, including legal or other expenses needed to incorporate 
or organize a business, are ineligible.

[[Page 29922]]

P. Funding Limitations (Sec.  4284.925)

    This section describes the maximum grant fund amount that a grant 
recipient can receive ($500,000) and several grant terms, including, 
but not limited to, the portion of total project eligible costs that 
grant funds can be used to pay (up to 50%) and the term of a grant (not 
to exceed 3 years).

Q. Preliminary Review (Sec.  4284.930)

    This section encourages applicants to contact their State Office 
before they submit their applications.

R. Application Package (Sec.  4284.931)

    The application forms, content, evaluation criteria, verifications 
and certifications required in the application package are detailed in 
this section.

S. Siplified Application (Sec.  4284.932)

    This section addresses simplified applications, which are 
applicable to applicants requesting less than $50,000.

T. Filing Instructions (Sec.  4284.933)

    This section provides the instructions for filing an application 
with the Agency. Completed applications must be received on or before 
March 15 of each year to be considered for funding that fiscal year. 
Late and/or incomplete applications will not be considered. Included in 
this section is information on where to submit and the format required 
for submission.

U. Processing Applications (Sec.  4284.940)

    This section explains the process by which the Agency will conduct 
an application review to determine if the application is complete and 
meets program requirements. After review, the Agency will notify 
applicants in writing of their findings. Applicants determined to be 
ineligible may revise and resubmit their applications to the Agency on 
or before the application deadline.

V. Application Withdrawal (Sec.  4284.941)

    This section describes the process whereby an applicant must notify 
the Agency in writing of its intention to withdraw its application for 
assistance.

W. Scoring Applications (Sec.  4284.942)

    This section describes the process and criteria the Agency will use 
to score applications. The Agency will only score applications for 
which it has determined that the applicant and project are eligible and 
that the application is complete and sufficiently responsive to program 
requirements. Each such application the Agency receives on or before 
the application deadline in a fiscal year will be scored in the fiscal 
year in which it was received. Applications will be scored based on the 
information provided and/or referenced in the scoring section of the 
application at the time the applicant submits the application to the 
Agency. The maximum number of points that may be awarded to an 
application is 100, based on the criteria specified in this section.

X. Award Process (Sec.  4284.950)

    This section describes the process by which the Agency will select 
applications for funding. Funding will be based on the score an 
application has received compared to the scores of other applications. 
Higher scoring applications will receive first consideration for 
funding. The Agency will notify in writing applicants whose 
applications have been selected for funding as well as inform those who 
did not receive funding, including a brief explanation as to why.

Y. Grant Agreement (Sec.  4284.951)

    This section describes the conditions under which the grant will be 
made to the applicant. Each grantee will be required to meet all terms 
and conditions of the award within 90 days of receiving the Letter of 
Conditions, unless otherwise specified by the Agency at the time of the 
award.

Z. Monitoring and Reporting Program Performance (Sec.  4284.960)

    The required monitoring and reporting activities are described in 
this section. Requirements include semiannual performance reports which 
must be submitted to the Agency within 30 days following March 31 and 
September 30. Failure to submit timely performance reports may result 
in the Agency withholding grant funds.

AA. Grant Servicing (Sec.  4284.961)

    This section states that all grants awarded under this subpart will 
be serviced pursuant to 7 CFR part 1951, subparts E and O, and in 
Departmental Regulations. Note that as a separate action being proposed 
today, the Agency is proposing an amendment to Sec.  1951.215 of 
subpart E. Paragraph (b)(2) in that section currently states that ``All 
other grants will be serviced in accordance with the Grant Agreement 
and this subpart. Prior approval of the Administrator is required 
except for actions covered in the preceding paragraph.'' The Agency is 
proposing to amend this paragraph by deleting the second sentence. This 
proposed amendment would facilitate the delegation of the servicing of 
the proposed program, and other grant programs that use part 1951 as 
their servicing regulation, to USDA State Office personnel. As noted 
earlier, the awarding of grants will occur at the National office.

BB. Transfer of Obligations (Sec.  4284.962)

    This section explains those circumstances under which an obligation 
of funds established for an applicant may be transferred to a different 
(substituted) applicant.

CC. Grant Close out and Related Activities (Sec.  4284.963)

    This section addresses the requirements for conducting grant close 
out and other related activities.

IV. Administrative Requirements

A. Executive Order 12866

    This proposed rule has been reviewed under Executive Order (EO) 
12866 and has been determined not 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 cost-benefit analysis to fulfill the 
requirements of Executive Order 12866. The Agency has identified 
potential benefits to prospective program participants and the Agency 
that are associated with improving the availability of funds to help 
producers (farmers) expand their customer base for the products or 
commodities that they produce. This results in a greater portion of the 
revenues derived from the value-added activity being made available to 
the producer of the product. These benefits are important to the 
success of individual producers, farmer or rancher cooperatives, 
agriculture producer groups, and majority-controlled producer based 
business ventures.

B. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of

[[Page 29923]]

their regulatory actions on State, local, and tribal governments and 
the private sector. Under section 202 of the UMRA, Rural Development 
must prepare, to the extent practicable, 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 exceptions, section 205 
of UMRA requires Rural Development to identify and consider a 
reasonable number of regulatory alternatives and adopt the least 
costly, most 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.

C. 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.

D. Executive Order 12988, Civil Justice Reform

    This rule has been reviewed in accordance with Executive Order 
12988, Civil Justice Reform. Except where specified, all State and 
local laws and regulations that are in direct conflict with this rule 
will be preempted. Federal funds carry Federal requirements. No person 
is required to apply for funding under this program, but if they do 
apply and are selected for funding, they must comply with the 
requirements applicable to the Federal program funds. This rule is not 
retroactive. It will not affect agreements entered into prior to the 
effective date of the rule. Before any judicial action may be brought 
regarding the provisions of this rule, the administrative appeal 
provisions of 7 CFR parts 11 and 780 must be exhausted.

E. 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.

F. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601-602) 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. If an agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities, this analysis is not required. 
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 for the reasons discussed below. 
While, the majority of producers of agricultural commodities expected 
to participate in this Program will be small businesses, the average 
cost to participants is estimated to be approximately 20 percent of the 
total mandatory funding available to the program in fiscal years 2009 
through 2012. Further, this regulation only affects producers that 
choose to participate in the program. Lastly, small entity applicants 
will not be affected to a greater extent than large entity applicants.

G. 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 
producers of agricultural commodities in accordance with the process 
and procedures outlined in 7 CFR part 3015, subpart V.
    Rural Development will conduct intergovernmental consultation using 
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. 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.

H. 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.

I. Programs Affected

    Catalog of Federal Domestic Assistance (CFDA) Number: This program 
is listed in the Catalog of Federal Domestic Assistance under Number 
10.352.

J. Paperwork Reduction Act

    The collection of information requirements contained in this 
proposed rule have been submitted to the Office of Management and 
Budget (OMB) for clearance. In accordance with the Paperwork Reduction 
Act of 1995, USDA Rural Development will seek standard OMB approval of 
the reporting requirements contained in this proposed rule and hereby 
opens a 60-day public comment period.
    Title: Value-Added Producer Grant Program.
    Type of Request: New Collection.
    Abstract: The collection of information is vital to Rural 
Development to make decisions regarding the eligibility of 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. Entities seeking funding 
under this program will have to submit applications that include 
information on the entity's eligibility, information on each of the 
evaluation criteria, certification of matching funds, verification of 
cost-share matching funds, business plan, and feasibility study. This 
information will be used to determine applicant eligibility and to 
ensure that funds are used for authorized purposes.
    Once an entity has been approved and their application accepted for 
funding, the entity would be required to sign a Letter of Conditions 
and a grant agreement. The grant agreement outlines

[[Page 29924]]

the approved use of funds and actions, as well as the restrictions and 
applicable laws and regulations that apply to the award. Grantees must 
maintain a financial system and, in accordance with Departmental 
regulations, property and procurement standards. Grantees must submit 
semi-annual financial performance reports that include a comparison of 
accomplishments with the objectives stated in the application and a 
final performance report. Finally, grantees must provide copies of 
supporting documentation and/or project deliverables for completed 
tasks (e.g., feasibility studies, business plans, marketing plans, 
success stories, best practices).
    The following estimates are based on the anticipated average over 
the first three years the program is in place:
    Estimate of Burden: Public reporting for this collection of 
information is estimated to average 34.1 hours per response.
    Respondents: Producers of agricultural commodities.
    Estimated Number of Respondents: 535.
    Estimated Number of Responses per Respondent: 3.3.
    Estimated Number of Responses: 1,783.
    Estimated Total Annual Burden (hours) on Respondents: 60,724.
    Copies of this information collection can be obtained from Cheryl 
Thompson, Regulations and Paperwork Management Branch at (202) 692-
0043.
Comments
    Comments are invited regarding: (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 Rural Development's estimate of 
the burden of the proposed collection of information including the 
validity of the methodology and assumptions used; (c) ways to enhance 
the quality, utility and clarity of the information to be collected; 
and (d) ways to minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology. Comments may be 
sent to 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. All responses to this proposed rule will be summarized and 
included in the request for OMB approval. All comments will also become 
a matter of public record.

K. 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.

List of Subjects in 7 CFR Parts 1951 and 4284

    Agricultural commodities, agricultural products, grant programs, 
rural areas, rural development, value-added activities.
    For the reasons set forth in the preamble, parts 1951 and 4284 of 
title 7 of the Code of Federal Regulations is proposed to be amended as 
follows:

PART 1951--SERVICING AND COLLECTIONS

    1. The authority citation for part 1951 continues to read as 
follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1932 Note; 7 U.S.C. 1989; 31 
U.S.C. 3716; 42 U.S.C. 1480.

Subpart E--Servicing of Community and Direct Business Programs 
Loans and Grants

    2. Section 1951.215 is amended by revising paragraph (b)(2) to read 
as follows:


Sec.  1951.215  Grants.

* * * * *
    (b) * * *
    (2) All other grants will be serviced in accordance with the Grant 
Agreement and this subpart.

PART 4284--GRANTS

    3. The authority citation for part 4284 continues to read as 
follows:

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

    4. Part 4284 is amended by revising subpart J to read as follows:
Subpart J--Value-Added Producer Grant Program

Section A--General

Sec.
4284.901 Purpose.
4284.902 Definitions.
4284.903 Review or appeal rights.
4284.904 Exception authority.
4284.905 Nondiscrimination and compliance with other Federal laws.
4284.906 State laws, local laws, regulatory commission regulations.
4284.907 Environmental requirements.
4284.908 Incorporation by reference.
4284.909 Forms, regulations, and instructions.
4284.910--4284.914 [Reserved]

Section B--Funding and Programmatic Change Notifications

4284.915 Notifications.
4284.916--4284.919 [Reserved]

Section C--Eligibility

4284.920 Applicant eligibility.
4284.921 Ineligible applicants.
4284.922 Project eligibility.
4284.923 Eligible uses of grant funds.
4284.924 Ineligible uses of grant and matching funds.
4284.925 Funding limitations.
4284.926--4284.929 [Reserved]

Section D--Applying for a Grant

4284.930 Preliminary review.
4284.931 Applications.
4284.932 Simplified applications.
4284.933 Filing instructions.
4284.934--4284.939 [Reserved]

Section E--Processing and Scoring Applications

4284.940 Processing applications.
4284.941 Application withdrawal.
4284.942 Scoring applications.
4284.943--4284.949 [Reserved]

Section F--Grant Awards and Agreement

4284.950 Award process.
4284.951 Grant agreement.
4284.952--4284.959 [Reserved]

Section G--Post Award Activities and Requirements

4284.960 Monitoring and reporting program performance.
4284.961 Grant servicing.
4284.962 Transfer of obligations.
4284.963 Grant close out and related activities.
4284.964--4284.999 [Reserved]

Section A--General


Sec.  4284.901  Purpose.

    This subpart implements the value-added agricultural product market 
development grant program (Value-Added Producer Grants) administered by 
the Rural Business-Cooperative Service whereby grants are made to 
enable producers to develop businesses that produce and market value-
added agricultural products.


Sec.  4284.902  Definitions.

    Administrator. The Administrator of the Rural Business-Cooperative 
Service or designees or successors.
    Agency. The Rural Business-Cooperative Service or successor for the 
programs it administers.
    Agricultural commodity. An unprocessed product of farms, ranches, 
nurseries, and forests and natural and man-made bodies of water to 
which the producer has legal access. Agricultural commodities include 
any product

[[Page 29925]]

cultivated, raised, or harvested by the producer. Agricultural 
commodities do not include horses or other animals raised or sold as 
pets, such as cats, dogs, and ferrets.
    Agricultural producer. An individual or entity directly engaged in 
the production of an agricultural commodity that is the subject of the 
value-added project.
    Agricultural producer group. A membership organization that 
represents independent producers and whose mission includes working on 
behalf of independent producers and the majority of whose membership 
and board of directors is comprised of independent producers.
    Agricultural product. Plant and animal products and their by-
products to include crops (including farming); livestock (including 
ranching); forestry products; hydroponics; nursery stock; aquaculture; 
and fish and seafood products.
    Anticipated award date. A date when the Agency expects to announce 
applications selected to receive grant funding.
    Beginning farmer or rancher. This term has the meaning given it in 
section 343(a) of the Consolidated Farm and Rural Development Act (7 
U.S.C. 1991(a)) and is an entity in which none of the individual owners 
have operated a farm or a ranch for more than 10 years. For the 
purposes of this subpart, a Beginning Farmer or Rancher must currently 
own and produce the agricultural commodity to which value will be 
added.
    Business plan. A formal statement of a set of business goals, the 
reasons why they are believed attainable, and the plan for reaching 
those goals, including pro forma financial statements appropriate to 
the term and scope of the project and sufficient to evidence the 
viability of the venture. It may also contain background information 
about the organization or team attempting to reach those goals.
    Conflict of interest. A situation in which a person or entity has 
competing professional or personal interests that make it difficult for 
the person or business to act impartially. An example is a grant 
recipient or an employee of a recipient that conducts or significantly 
participates in conducting a feasibility study for the recipient.
    Day. Calendar day, unless otherwise stated.
    Departmental regulations. The regulations of the Department of 
Agriculture's Office of Chief Financial Officer (or successor office) 
as codified in 7 CFR parts 3000 through 3099, including, but not 
necessarily limited to, 7 CFR parts 3015 through 3019, 7 CFR part 3021, 
and 7 CFR part 3052, and successor regulations to these parts.
    Emerging market. A new or developing product that is new to the 
applicant or the applicant's product.
    Family Farm. The term has the meaning given it in section 761.2 of 
title 7, Code of Federal Regulations (as in effect on December 30, 
2007), in effect that, a Family Farm produces agricultural commodities 
for sale in sufficient quantity to be recognized as a farm and not a 
rural residence, owners are primarily responsible for daily physical 
labor and management, hired help only supplements family labor, and 
owners are related by blood or marriage or are immediate family.
    Farm or ranch. Any place from which $1,000 or more of agricultural 
products were raised and sold or would have been raised and sold during 
the previous year, but for an event beyond the control of the farmer or 
rancher.
    Farmer or rancher cooperative. A business owned and controlled by 
agricultural producers that is incorporated, or otherwise identified by 
the state in which it operates, as a cooperatively operated business.
    Feasibility study. An analysis by a qualified consultant of the 
economic, market, technical, financial, and management capabilities of 
a proposed project or business in terms of the project's expectation 
for success.
    Financial feasibility. The ability of a project or business to 
achieve the income, credit, and cash flows to financially sustain a 
venture over the long term.
    Fiscal year. The Federal government's fiscal year.
    Immediate family. Individuals who are closely related by blood, 
marriage, or adoption, or live within the same household, such as a 
spouse, domestic partner, parent, child, brother, sister, aunt, uncle, 
grandparent, grandchild, niece, or nephew.
    Independent producers.
    (1) Individual agricultural producers or entities that are solely 
owned or controlled by agricultural producers. Independent producers 
must produce and own a majority of the agricultural commodity to which 
value is being added and that is the subject of the project proposal. 
Independent producers must maintain ownership of the agricultural 
commodity or product from its raw state through the production of the 
value-added product. Producers who produce the agricultural commodity 
under contract for another entity, but do not own the product produced 
are not considered independent producers. Entities that contract out 
the production of an agricultural commodity are not considered 
independent producers.
    (2) A steering committee composed of specifically identified 
agricultural producers in the process of organizing an eligible entity 
to operate a value-added venture that will be owned or controlled by 
those specifically identified agricultural producers supplying the 
agricultural product to the market. The steering committee must have 
formed the eligible entity by the time of award.
    Local or regional supply network. An interconnected group of 
entities through which agricultural based products move from production 
through consumption in a local or regional area of the United States. 
Examples of participants in a supply network may include agricultural 
producers, processors, distributors, wholesalers, retailers, consumers, 
and entities that organize or provide technical assistance for 
development of such networks.
    Locally-produced agricultural food product. Any agricultural food 
product that is raised, produced, and distributed in:
    (1) The locality or region in which the final product is marketed, 
so that the total distance that the product is transported is less than 
400 miles from the origin of the product; or
    (2) The State in which the product is produced.
    Majority-controlled producer-based business venture. An entity 
(except farmer or rancher cooperatives) in which more than 50 percent 
of the financial ownership and voting control is held by independent 
producers.
    Marketing plan. A plan for the project conducted by a qualified 
consultant that identifies a market window, potential buyers, a 
description of the distribution system and possible promotional 
campaigns.
    Matching funds. A cost-sharing contribution to the project via 
confirmed cash or funding commitments from eligible sources without a 
conflict of interest, that are used for eligible project purposes 
during the grant period. Eligible matching funds include confirmed 
applicant cash, loan or line of credit, non-Federal grant sources 
(unless otherwise provided by law), and third-party cash or eligible 
third-party in-kind contributions. Matching funds must be at least 
equal to the grant amount, and combined grant and matching funds must 
equal 100 percent of the total project costs. All eligible cash and 
third-party in-kind matching funds contributions must be spent on 
eligible expenses during the grant period, and are subject to the same

[[Page 29926]]

use restrictions as grant funds. Matching funds must be spent at a rate 
equal to or greater than the rate at which grant funds are expended, 
and if matching funds are proposed in an amount exceeding the grant 
amount, those matching funds must be spent at a proportional rate 
equaling the match-to-grant ratio identified in the budget. Expected 
program income may not be used to fulfill the matching funds 
requirement at time of application. Further, funds used for an 
ineligible purpose, contributions donated outside the proposed grant 
period, and in-kind contributions that are invalid, over-valued or 
include potential for a conflict of interest are not acceptable 
matching funds. All matching funds must be verified by authentic 
documentation from the source as part of the application.
    Medium-sized farm. A farm or ranch that has averaged between 
$250,001 and $700,000 in annual gross sales of agricultural products in 
the previous three years.
    Mid-tier value chain. Local and regional supply networks that link 
independent producers with businesses and cooperatives that market 
value-added agricultural products in a manner that:
    (1) Targets and strengthens the profitability and competitiveness 
of small and medium-sized farms and ranches that are structured as a 
family farm; and
    (2) Obtains agreement from an eligible agricultural producer group, 
farmer or rancher cooperative, or majority-controlled producer-based 
business venture that is engaged in the value chain on a marketing 
strategy.
    (3) For mid-tier value chain projects the Agency recognizes that, 
in a supply chain network, a variety of raw agricultural commodity and 
value-added product ownership and transfer arrangements may be 
necessary. Consequently, applicant ownership of the raw agricultural 
commodity and value-added product from raw through value-added is not 
necessarily required, as long as the mid-tier value chain proposal can 
demonstrate an increase in customer base and an increase in revenue 
returns to the applicant producers supplying the majority of the raw 
agricultural commodity for the project.
    Planning grant. A grant to facilitate the development of a defined 
program of economic planning activities to determine the viability of a 
potential value-added venture, and specifically for the purpose of 
paying for a qualified (third-party) consultant to conduct and develop 
a feasibility study, business plan, and/or marketing plan associated 
with the processing and/or marketing of a value-added agricultural 
product.
    Product segregation. Separating an agricultural commodity or 
product on the same farm from other varieties of the same commodity or 
product on the same farm during production and harvesting, with 
assurance of continued separation from similar products during 
processing and marketing in a manner that results in the enhancement of 
the value of the separated commodity or product.
    Pro forma financial statement. A financial statement that projects 
the future financial position of a company. The statement is part of 
the business plan and includes an explanation of all assumptions, such 
as input prices, finished product prices, and other economic factors 
used to generate the financial statements. The statement must include 
projections in the form of cash flow statements, income statements, and 
balance sheets.
    Project. All activities to be funded by grant and matching funds.
    Qualified consultant. An independent, third-party possessing the 
knowledge, expertise, and experience to perform the specific task 
required in an efficient, effective, and authoritative manner.
    Rural Development. A mission area of the Under Secretary for Rural 
Development within the U.S. Department of Agriculture (USDA), which 
includes Rural Housing Service, Rural Utilities Service, and Rural 
Business-Cooperative Service and their successors.
    Rural or rural area. Any area of a State not in a city or town that 
has a population of more than 50,000 inhabitants, according to the 
latest decennial census of the United States, and the contiguous and 
adjacent urbanized area, and any area that has been determined to be 
``rural in character'' by the Under Secretary for Rural Development, or 
as otherwise identified in this definition. In determining which census 
blocks in an urbanized area are not in a rural area, the Agency will 
exclude any cluster of census blocks that would otherwise be considered 
not in a Rural Area only because the cluster is adjacent to not more 
than two census blocks that are otherwise considered not in a rural 
area under this definition.
    (1) For the purposes of this definition, cities and towns are 
incorporated population centers with definite boundaries, local self 
government, and legal powers set forth in a charter granted by the 
State.
    (2) For the Commonwealth of Puerto Rico, the island is considered 
rural and eligible for Business Programs assistance, except for the San 
Juan Census Designated Place (CDP) and any other CDP with greater than 
50,000 inhabitants. CDPs with greater than 50,000 inhabitants, other 
than the San Juan CDP, may be determined to be eligible if they are 
``not urban in character.'' Any such requests must be forwarded to the 
National Office, Business and Industry Division, with supporting 
documentation as to why the area is ``not urban in character'' for 
review, analysis, and decision by the Rural Development Under 
Secretary.
    (3) For the State of Hawaii, all areas within the State are 
considered rural and eligible for Business Programs assistance, except 
for the Honolulu CDP within the County of Honolulu.
    (4) For the purpose of defining a rural area in the Republic of 
Palau, the Federated States of Micronesia, and the Republic of the 
Marshall Islands, the Agency shall determine what constitutes rural and 
rural area based on available population data.
    (5) The determination that an area is ``rural in character'' under 
this definition will be to areas that are within:
    (i) An urbanized area that has two points on its boundary that are 
at least 40 miles apart, which is not contiguous or adjacent to a city 
or town that has a population of greater than 150,000 inhabitants or 
the urbanized area of such a city town; or
    (ii) An urbanized area contiguous and adjacent to a city or town of 
greater than 50,000 population that is within one-quarter mile of a 
rural area.
    Small farm. A farm or ranch that has averaged $250,000 or less in 
annual gross sales of agricultural products in the previous three 
years.
    Socially disadvantaged farmer or rancher. This term has the meaning 
given it in section 355(e) of the Consolidated Farm and Rural 
Development Act (7 U.S.C. 2003(e)). A farmer or rancher who is a member 
of a ``socially disadvantaged group.'' In this definition, the term 
farmer or rancher means a person that is engaged in farming or ranching 
or an entity solely owned by individuals who are engaged in farming or 
ranching. A socially disadvantaged group means a group whose members 
have been subjected to racial, ethnic, or gender prejudice because of 
their identity as members of a group without regard to their individual 
qualities. In the event that there are multiple farmer or rancher 
owners of the applicant organization, the Agency requires that at least 
51 percent of the ownership be held by

[[Page 29927]]

members of a socially disadvantaged group.
    State. Any of the 50 States of the United States, the Commonwealth 
of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the 
Commonwealth of the Northern Mariana Islands, the Republic of Palau, 
the Federated States of Micronesia, and the Republic of the Marshall 
Islands.
    State director. The term ``State Director'' means, with respect to 
a State, the Director of the Rural Development State Office.
    State office. USDA Rural Development offices located in each state.
    Total project cost. The sum of all grant and matching funds in the 
project budget that reflects the eligible project tasks associated with 
the work plan.
    Value-added agricultural product. Any agricultural commodity or 
product that meets the requirements specified in paragraphs (1) and (2) 
of this definition.
    (1) The agricultural commodity or product must meet one of the 
following five value-added methodologies:
    (i) Has undergone a change in physical state;
    (ii) Was produced in a manner that enhances the value of the 
agricultural commodity or product;
    (iii) Is physically segregated in a manner that results in the 
enhancement of the value of the agricultural commodity or product;
    (iv) Is a source of farm- or ranch-based renewable energy, 
including E-85 fuel; or
    (v) Is aggregated and marketed as a locally-produced agricultural 
food product.
    (2) As a result of the change in physical state or the manner in 
which the agricultural commodity or product was produced, marketed, or 
segregated:
    (i) The customer base for the agricultural commodity or product is 
expanded and
    (ii) A greater portion of the revenue derived from the marketing, 
processing, or physical segregation of the agricultural commodity or 
product is available to the producer of the commodity or product.
    Venture. The business, including the project and other related 
activities.
    Working capital grant. A grant to provide funds to operate a value-
added project, specifically to pay the eligible project expenses 
related to the processing and/or marketing of the value-added product 
that are eligible uses of grant funds.


Sec.  4284.903  Review or appeal rights.

    A person may seek a review of an Agency decision under this subpart 
from the appropriate Agency official that oversees the program in 
question or appeal to the National Appeals Division in accordance with 
7 CFR part 11.


Sec.  4284.904  Exception authority.

    Except as specified in paragraphs (a) and (b) of this section, the 
Administrator may make exceptions to any requirement or provision of 
this subpart, if such exception is necessary to implement the intent of 
the authorizing statute in a time of national emergency or in 
accordance with a Presidentially-declared disaster, or, on a case-by-
case basis, when such an exception is in the best financial interests 
of the Federal Government and is otherwise not in conflict with 
applicable laws.
    (a) Applicant eligibility. No exception to applicant eligibility 
can be made.
    (b) Project eligibility. No exception to project eligibility can be 
made.


Sec.  4284.905  Nondiscrimination and compliance with other Federal 
laws.

    (a) Other Federal laws. Applicants must comply with other 
applicable Federal laws, including the Equal Employment Opportunities 
Act of 1972, the Americans with Disabilities Act, the Equal Credit 
Opportunity Act, Title VI of the Civil Rights Act of 1964, Section 504 
of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, 
and 7 CFR part 1901-E.
    (b) Nondiscrimination. The U.S. Department of Agriculture (USDA) 
prohibits discrimination in all its programs and activities on the 
basis of race, color, national origin, age, disability, and where 
applicable, sex, marital status, familial status, parental status, 
religion, sexual orientation, genetic information, political beliefs, 
reprisal, or because all or part of an individual's income is derived 
from any public assistance program. (Not all prohibited bases apply to 
all programs.) Persons with disabilities who require alternative means 
for communication of program information (Braille, large print, 
audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 
(voice and TDD). Any applicant that believes it has been discriminated 
against as a result of applying for funds under this program should 
contact: USDA, Director, Office of Adjudication and Compliance, 1400 
Independence Avenue, SW., Washington, DC 20250-9410, or call (800) 795-
3272 (voice) or (202) 720-6382 (TDD) for information and instructions 
regarding the filing of a Civil Rights complaint. USDA is an equal 
opportunity provider, employer, and lender.
    (c) Civil rights compliance. Recipients of grants must comply with 
Title VI of the Civil Rights Act of 1964, Section 504 of the 
Rehabilitation Act of 1973. This includes collection and maintenance of 
data on the basis of race, sex and national origin of the recipient's 
membership/ownership and employees. These data must be available to 
conduct compliance reviews in accordance with 7 CFR part 1901, subpart 
E. For grants initial compliance review will be conducted after Form RD 
400-4, ``Assurance Agreement,'' is signed and one subsequent compliance 
review after the last disbursement of grant funds have been made, and 
the facility or programs been in full operations for 90 days.
    (d) Executive Order 12898. When a project is proposed and financial 
assistance is requested, the Agency will conduct a Civil Rights Impact 
Analysis (CRIA) with regards to environmental justice. The CRIA must be 
conducted and the analysis documented utilizing Form RD 2006-38, 
``Civil Right Impact Analysis Certification.'' This certification must 
be done prior to grant approval, obligation of funds, or other 
commitments of Agency resources, including issuance of a Letter of 
Conditions, whichever occurs first.


Sec.  4284.906  State laws, local laws, regulatory commission 
regulations.

    If there are conflicts between this subpart and State or local laws 
or regulatory commission regulations, the provisions of this subpart 
will control.


Sec.  4284.907  Environmental requirements.

    All grants awarded under this subpart are subject to the 
environmental requirements in subpart G of 7 CFR part 1940 or successor 
regulations. Applications for planning grants are generally excluded 
from the environmental review process by Sec.  1940.333 of this title. 
Applicants for working capital grants must submit Form 1940-22, 
Categorical Exclusion Checklist.


Sec.  4284.908  Incorporation by reference.

    (a) Departmental regulations. Unless specifically stated, this 
subpart incorporates by reference the regulations of the Department of 
Agriculture's Office of Chief Financial Officer (or successor office) 
as codified in 7 CFR parts 3000 through 3099, including, but not 
necessarily limited to, 7 CFR parts 3015 through 3019, 7 CFR part 3021, 
and 7 CFR part 3052, and successor regulations to these parts.
    (b) Cost principles. This subpart incorporates by reference the 
cost

[[Page 29928]]

principles found in 2 CFR part 230 and in 48 CFR part 31.2.
    (c) Definitions. If a term is defined differently in the 
Departmental Regulations, 2 CFR 230, or 48 CRF 31.2 and in this 
subpart, such term shall have the meaning as found in this subpart.


Sec.  4284.909  Forms, regulations, and instructions.

    Copies of all forms, regulations, instructions, and other materials 
related to the program referenced in this subpart may be obtained 
through the Agency.


Sec. Sec.  4284.910-4284.914  [Reserved]

Section B--Funding and Programmatic Change Notifications


Sec.  4284.915  Notifications.

    In implementing this subpart, the Agency will issue notifications 
addressing funding and programmatic changes, as specified in paragraphs 
(a) and (b) of this section, respectively. The methods that the Agency 
will use in making these notifications is specified in paragraph (c) of 
this section, and the timing of these notifications is specified in 
paragraph (d) of this section.
    (a) Funding and simplified applications. The Agency will issue 
notifications concerning:
    (1) The funding level and the minimum and maximum grant amount and 
any additional funding information as determined by the Agency; and
    (2) The contents of simplified applications, as provided for in 
Sec.  4284.932.
    (b) Programmatic changes. The Agency will issue notifications of 
the programmatic changes specified in paragraphs (b)(1) through (4) of 
this section.
    (1) The set of Administrator priority categories or their point 
allocation, if the provisions specified in Sec.  4284.942(b)(6) are not 
to be used for awarding Administrator points. Administrator priorities 
that the program may consider are:
    (i) Unserved or underserved areas.
    (ii) Geographic diversity.
    (iii) Emergency conditions.
    (iv) To more effectively accomplish the mission area's plans, 
goals, and objectives.
    (v) Public health and safety.
    (2) Additional reports that are generally applicable across 
projects within a program associated with the monitoring of and 
reporting on project performance.
    (3) Any information specified in Sec.  4284.933.
    (4) Preliminary review information.
    (c) Notification methods. The Agency will issue the information 
specified in paragraphs (a) and (b) in one or more Federal Register 
notices. In addition, all information will be available at any Rural 
Development office.
    (d) Timing. The Agency will make the information specified in 
paragraphs (a) and (b) of this section available as specified in 
paragraphs (d)(1) through (3) of this section.
    (1) The Agency will make the information specified in paragraph (a) 
of this section available each fiscal year.
    (2) The Agency will make the information specified in paragraphs 
(b)(1) of this section available at least 60 days prior to the 
application deadline, as applicable.
    (3) The Agency will make the information specified in paragraphs 
(b)(2) through (4) of this section available on an as needed basis.


Sec. Sec.  4284.916-4284.919   [Reserved]

Section C--Eligibility


Sec.  4284.920  Applicant eligibility.

    To be eligible for a grant under this subpart, an applicant must 
demonstrate that they meet the requirements specified in paragraphs (a) 
through (d) of this section, as applicable, and are subject to the 
limitations specified in paragraphs (e) and (f) of this section.
    (a) Type of applicant. The applicant must demonstrate that they 
meet all definition requirements for one of the following applicant 
types:
    (1) An independent producer;
    (2) An agricultural producer group;
    (3) A farmer or rancher cooperative; or
    (4) A majority-controlled producer-based business venture.
    (b) Emerging market. An applicant that is an agricultural producer 
group, a farmer or rancher cooperative, or a majority-controlled 
producer-based business venture must demonstrate that they are entering 
into an emerging market as a result of the proposed project.
    (c) Citizenship.
    (1) Individual applicants must demonstrate that they:
    (i) Are citizens or nationals of the United States (U.S.), the 
Republic of Palau, the Federated States of Micronesia, the Republic of 
the Marshall Islands, or American Samoa, or
    (ii) Reside in the U.S. after legal admittance for permanent 
residence.
    (2) Entities other than individuals must demonstrate that they are 
at least 51 percent owned by individuals who are either citizens as 
identified under paragraph (c)(1)(i) of this section or legally 
admitted permanent residents residing in the U.S. This paragraph is not 
applicable if the entity is owned solely by members of one immediate 
family. In such instance, if at least one of the immediate family 
members is a citizen or national, as defined in paragraph (c)(1) of 
this section, then the entity is eligible.
    (d) Legal authority and responsibility. Each applicant must 
demonstrate that they have, or can obtain, the legal authority 
necessary to carry out the purpose of the grant.
    (e) Multiple grant eligibility. An applicant may submit only one 
application in response to this notice, and must direct that it compete 
in either the general funds competition or in one of the reserved funds 
competitions. Separate entities with identical or greater than 75 
percent common ownership may only submit one application for one entity 
per year. Applicants who have already received a planning grant for the 
proposed project cannot receive another planning grant for the same 
project. Applicants who have already received a working capital grant 
for the proposed project cannot receive any additional grants for that 
project.
    (f) Active VAPG grant. If an applicant has an active value-added 
grant at the time of a subsequent application, the current grant must 
be closed out within 90 days of the annual NOFA.


Sec.  4284.921  Ineligible applicants.

    (a) Consistent with the Departmental regulations, an applicant is 
ineligible if the applicant is debarred or suspended or is otherwise 
excluded from or ineligible for participation in Federal assistance 
programs under Executive Order 12549, ``Debarment and Suspension.''
    (b) An applicant will be considered ineligible for a grant due to 
an outstanding judgment obtained by the U.S. in a Federal Court (other 
than U.S. Tax Court), is delinquent on the payment of Federal income 
taxes, or is delinquent on Federal debt.


Sec.  4284.922  Project eligibility.

    To be eligible for a VAPG grant, the application must demonstrate 
that the project meets the requirements specified in paragraphs (a) 
through (d) of this section, as applicable.
    (a) Product eligibility. Each product that is the subject of the 
proposed project must meet the definition of a value-added agricultural 
product, including a demonstration that:
    (1) The value-added product results from one of the value-added 
methodologies identified in paragraphs

[[Page 29929]]

(1)(i) through (v) of the definition of value-added agricultural 
product;
    (2) As a result of the project, the customer base for the 
agricultural commodity or product is expanded; and
    (3) As a result of the project, a greater portion of the revenue 
derived from the marketing or processing of the value-added product is 
available to the agricultural producer of the commodity or product.
    (b) Purpose eligibility.
    (1) The grant funds requested must not exceed the amount specified 
annually for planning and working capital grant requests.
    (2) The matching funds required for the project budget must be 
available during the project period and verified in the application.
    (3) The proposed project must be limited to eligible planning or 
working capital activities as defined at Sec.  4284.923, as applicable, 
with eligible tasks directly related to the processing and/or marketing 
of the subject value-added product.
    (4) The project work plan and budget must:
    (i) Present a detailed breakdown of all estimated costs associated 
with the eligible planning or working capital activities related to the 
processing and/or marketing of the value-added product and allocate 
those costs among the listed tasks;
    (ii) Identify the sources and uses of grant and matching funds for 
all tasks specified in the budget; and
    (iii) Present a project budget period of not longer than 36 months, 
scaled to complexity, and concluding not later than 3 years after the 
proposed start date.
    (5) Working capital applications must include a feasibility study 
and business plan completed specifically for the proposed value-added 
project by a qualified consultant. The Agency must concur in the 
acceptability or adequacy