Rural Business-Cooperative Service, Rural Housing Service, Rural Utilities Service and Farm Service Agency, the U.S. Department of Agriculture.
Interim final rule with request for comments.
This Interim Final Rule is needed to ensure that the Agency will have a regulation in place to meet the Congressional mandate established in Congress in the Agricultural Act of 2014 (2014 Farm Bill). This mandate requires the Agency to establish a new program called the Rural Business Development Grant Program which combines the former Rural Business Enterprise Grant and Rural Business Opportunity Grant programs. The Agency has made no substantive changes to either the Rural Business Enterprise Grant or Rural Business Opportunity Grant programs when combining these regulations into the Rural Business Development Grant program.
Rural Development, Rural Business-Cooperative Service (RBS) is establishing a new regulation for the Rural Business Development Grant (RBDG) program. The program was established by the 2014 Farm Bill. The RBDG Program will combine the Rural Business Enterprise Grant (RBEG) and the Rural Business Opportunity Grant (RBOG) programs. There are no substantive programmatic changes to RBEG and RBOG with this consolidation.
This Interim Final Rule is effective March 25, 2015. Written comments on this Interim Final Rule must be received on or before May 26, 2015.
You may submit comments on this Interim Final Rule by any of the following methods:
•
•
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All written comments will be available for public inspection during regular work hours at the 300 7th Street SW., 7th Floor address listed above.
Melvin Padgett or Cindy Mason, Rural Development, Business Programs, U.S. Department of Agriculture, 1400 Independence Avenue SW., Stop 3226, Washington, DC 20250; email:
Additionally, in 2007, Rural Development published a proposed rule for RBEG, however, a final rule was never published. Rural Development appreciates the comments that were submitted on the proposed rule, and requests that reviewers resubmit comments on this consolidated rule if they believe they are still valid.
This rule has been determined to be not significant for purposes of Executive Order 12866 and has not been reviewed by the Office of Management and Budget (OMB).
The Catalog of Federal Domestic Assistance Program number assigned to the RBDG is 10.351.
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
The program is subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with State and local officials. Consultation will be completed at the time each grant is made.
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. The Agency has determined that this rule meets the applicable standards provided in section 3 of the Executive Order. Additionally, (1) all State and local laws and regulations that
The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of Government. Nor does this rule impose substantial direct compliance costs on State and local Governments. Therefore, consultation with States is not required.
Under section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(b), the Agency certifies that this rule will not have a significant economic impact on a substantial number of small entities. The Agency made this determination based on the fact that this regulation only impacts those who choose to participate in the program. Small entity applicants will not be impacted to a greater extent than large entity applicants.
This rule contains no Federal mandates (under the regulatory provisions of Title II of the Unfunded Mandates Reform Act of 1995) 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 Unfunded Mandates Reform Act of 1995.
This executive order imposes requirements on Rural Development in the development of regulatory policies that have Tribal implications or preempt Tribal laws. As previously noted, the consolidation of the RBEG and RBOG programs through the publication of this Interim Final Rule will not institute any substantive programmatic changes. However, since Congress has legislatively mandated funds to benefit federally recognized Indian Tribes in both programs, in the past, implementation of the RBDG program in future years may have substantial and direct effects on one or more Indian Tribe(s).
Consequently, the consolidation of the RBEG and RBOG programs under the RBDG program was featured in two Tribal Consultation webinars hosted by Rural Development in fiscal year (FY) 2014. On April 2, 2014, Rural Development hosted a Tribal Consultation webinar and teleconference that summarized significant changes to its programs mandated by the 2014 Farm Bill. During the webinar, in addition to summarizing the Farm Bill changes, Rural Development listed five Farm Bill provisions that would likely require further consultation—including the RBDG program. No objections were raised by participants to alter that assumption.
On August 25, 2014, Rural Development hosted a Tribal Consultation webinar and teleconference that covered the implementation of the RBDG program and the Strategic Economic and Community Development (Section 6025) provision in great depth. Again, no objections were raised by participants to alter the course of implementation for either the RBDG program or Section 6025.
For further information regarding Rural Development's past Tribal Consultation events or Rural Development's Tribal Consultation process, please contact Rural Development's Native American Coordinator at (720) 544–2911 or
In accordance with the Paperwork Reduction Act of 1995, this document announces the intention of RBS to request information collection in support of the RBDG program (7 CFR part 4280, subpart E). No new requirements have been added, but it is the intent of the Agency to combine the two current Paperwork Reduction Act packages into one. Until this paperwork burden is approved, the Agency will utilize the current RBEG and RBOG paperwork burdens. These burdens are approved under 0570–0022 and 0570–0024 respectively.
Comments on this document must be received by May 26, 2015 to be assured of consideration.
Rural Development is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies, to provide increased opportunities for citizens to access Government information and services electronically.
Rural Development is publishing this rule as an interim final rule for good cause in that:
Rural Development anticipates going forward that Congress will only be providing appropriations for RBDG and not for the RBOG and RBEG programs;
Since the RBEG and RBOG programs are being merged without substantive changes, the public will not be unfamiliar with the new RBDG provisions; and
Making the RBDG rule an interim final rule will assure the continuity of benefits historically provided under the RBOG and RBEG programs.
Additionally, notice and comment are not required because of the Administrative Procedures Act exceptions for loans and grants at 5 U.S.C. 553(a)(2).
Rural Development is charged with assisting, among other entities, the startup, expansion, and the continuation of small and emerging businesses and/or non-profits in rural communities. Rural Development supports this portion of the overall mission through two grant programs, the RBEG and RBOG programs.
Rural Development makes RBEGs to public bodies and non-profit corporations so that they may assist small and emerging businesses and/or non-profits in their communities to create and support jobs. RBEG funds may be used to: Acquire or develop land, buildings, plants, equipment; access streets and roads, parking areas, utility extensions, necessary water and supply and waste disposal facilities; provide technical assistance; establish revolving loan funds; and to create, expand, or operate rural distance learning programs that provide educational or job training instruction related to potential employment or job advancement to adult students.
RBOG funds are made to public bodies and non-profit corporations to assist businesses and/or non-profits in
In February 2014 the United States Congress passed the 2014 Farm Bill. This law combined the RBEG and RBOG programs into one grant program, the RBDG program. The Congressional Record emphasizes that the two programs should continue to operate in essentially the same manner as they operated when they were separate grant programs. Thus, Rural Development is publishing this Interim Final Rule to meet the statutory requirements of the 2014 Farm Bill.
Grants made before the implementation of the RBDG program will continue to be governed by the terms of the applicable RBOG and RBEG regulations in effect at the time the grants were made together with any other applicable agreements.
The Agency is publishing this Interim Final Rule to meet the statutory requirements of the 2014 Farm Bill including revising the definition of rural and rural areas to conform to the Consolidated Farm and Rural Development Act definition. The 2014 Farm Bill consolidated the RBEG and RBOG programs into one grant program while allowing both programs to operate essentially as they have in the past. The Agency is soliciting comments to this new regulation and will consider all comments received prior to publishing a Final Rule. Publishing this Interim Final Rule will permit the Agency to provide continuous service to rural small and emerging businesses, non-profit corporations, and local public bodies, while requesting input from the public on their views of this grant program.
The Agency combined 7 CFR part 1942, subpart G and 7 CFR part 4284, subpart G into the RBDG rule at 7 CFR part 4280, subpart E. Rural Development has also integrated applicable general provisions of 7 CFR part 4284, subpart A into the RBDG rule. Essentially, the Agency did not change any of the requirements of either program but blended the two regulations into one and eliminated duplicative portions so that there is only one set of requirements. The Agency also combined definitions so that the public has one definition for both programs as well as blended the scoring requirements of both former regulations. Finally, the Agency blended the application processes into one streamlined set of procedures under the RBDG funding, incorporating the statutory language of the 2014 Farm Bill (7 U.S.C. 1932(c)) specifying how the funding would be split.
The U.S. Department of Agriculture and the Agency is adopting the new the U.S. Department of Agriculture grant regulation at 2 CFR chapter IV for monitoring and servicing RBDG funding. If this rule is published prior to new the U.S. Department of Agriculture grant regulations being published and effective, the Agency will comply with all applicable parts of 2 CFR chapter IV and chapter XXX including 7 CFR parts 3015, 3016, 3019, and 3052.
Civil rights, Compliance reviews, Fair housing, and Minority groups.
Business and Industry, Grant programs—Housing and Community development, Industrial park, and Rural areas.
Business and Industry, Economic Development, Grant programs, Community development, Industrial Sites, and Rural Areas.
Business and Industry, Economic Development, Grant programs—Housing and Community development, and Rural Areas.
For the reasons set forth in the preamble, chapters XVIII and XLII, title 7, of the Code of Federal Regulations are being amended as follows:
5 U.S.C. 301; 7 U.S.C. 1989; 40 U.S.C. 442; 42 U.S.C. 1480, 2942.
(a) * * *
(16) Rural Business Development Grants.
5 U.S.C. 301; 7 U.S.C. 1989.
5 U.S.C. 301: 7 U.S.C. 940c and 7 U.S.C. 1932(c).
This subpart implements the RBDG program administered by the Agency. Grants made under this subpart will be made to eligible entities for use in funding various business opportunity and business enterprise Projects that serve Rural Areas.
The Administrator may make an exception, on a case-by-case basis, to any requirement or provision of this subpart that is not inconsistent with any authorizing statute or applicable law if the Administrator determines that application of the requirement or provision would adversely affect the Government's financial interest.
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.
(a)
(b)
(c)
All references to statutes and regulations are to include any and all successor statutes and regulations.
(a)
(b)
(c)
(1) Initial compliance reviews will be conducted by the Agency prior to funds being obligated.
(2) Grants will require one subsequent compliance review following Project completion. This will occur prior to the last disbursement of grant funds.
(d)
(1) Any required environmental review must be completed by the Agency prior to the Agency obligating any funds.
(2) The applicant will be notified of all specific compliance requirements, including, but not limited to, the publication of public notices, and consultation with State Historic Preservation Offices (or Tribal Historic Preservation Offices where appropriate) and the U.S. Fish and Wildlife Service.
(3) A site visit by the Agency may be scheduled, if necessary, to determine the scope of the review.
(4) Applications for Technical Assistance or Planning Projects are generally excluded from the environmental review process by § 1940.333 of this title provided the assistance is not related to the development of a specific site. However, as further specified in 7 CFR 1940.330, the grantee for a Technical Assistance grant, in the process of providing Technical Assistance, must consider the potential environmental impacts of the recommendations provided to the recipient of the Technical Assistance.
(5) Applicants for grant funds must consider and document within their plans the important environmental factors within the Planning area and the potential environmental impacts of the plan on the Planning area, as well as the alternative Planning strategies that were reviewed.
(6) Whenever an applicant files an application that includes a direct construction Project and a plan, they must have a separate environmental evaluation.
(e)
(2)
(f)
(g)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
All forms, guides, and attachments referenced in this subpart are available online at:
Sections 4280.416 through 4280.439 identify the provisions that the Agency will use for making awards for Rural Business Development Grants.
To receive an RBDG under this subpart, an applicant must meet the requirements specified in paragraphs (a) through (e) of this section. If an award is made to an applicant, that applicant (grantee) must continue to meet the requirements specified in this section. If the grantee does not, then grant funds may be recovered from the grantee by the Agency in accordance with Departmental Regulations.
(a)
(1) A Public Body/Government Entity;
(2) An Indian Tribe; or
(3) A Nonprofit entity.
(b)
(1) Financial strength will be analyzed by the Agency based on financial data provided in the application. The analysis will consider the applicant's tangible net worth, which must be positive, and whether the applicant has dependable sources of revenue or a successful history of raising revenue sufficient to meet cash requirements.
(2) Expertise will be analyzed by the Agency based on the applicant staff's training and experience in activities similar to those proposed in the application and, if consultants will be used, on the staff's experience in choosing and supervising consultants.
(c)
(1) Be registered in the System for Awards Management (SAM) prior to submitting an application;
(2) Maintain an active SAM registration with current information at all times during which it has an active Federal award or an application under consideration by the Agency; and
(3) Provide its Dun and Bradstreet Data Universal Numbering System (DUNS) number in each application it submits to the Agency. Generally, the DUNS number is included on Standard Form (SF) 424, “Application for Federal Assistance.”
(d)
(e)
For a Project to be eligible for funding under this subpart, the proposed Project must meet each of the requirements specified in paragraphs (a) through (e) of this section.
(a)
(1)
(i) Identify and analyze business opportunities that will use local rural materials or human resources. This includes opportunities in export markets, as well as feasibility and business plan studies;
(ii) Identify, train, and provide Technical Assistance to existing or prospective rural entrepreneurs and managers;
(iii) Establish Business Support Centers and otherwise assist in the creation of new Rural businesses;
(iv) Conduct local community or multi-county Economic Development Planning;
(v) Conduct leadership development training of existing or prospective adult rural entrepreneurs and managers;
(vi) Establish centers for training, technology, and trade that will provide training to Rural businesses in the utilization of interactive communications technologies to develop international trade opportunities and markets; or
(vii) Pay reasonable fees and charges for professional services necessary to conduct the Technical Assistance, training, or planning functions.
(2)
(i) Acquisition and development of land, easements and rights-of-way;
(ii) Construction, conversion, enlargement, repairs or modernization of buildings, plants, machinery, equipment, access streets and roads, parking areas, utilities, and pollution control and abatement facilities;
(iii) Provision of loans for startup operating cost and working capital;
(iv) Reasonable fees and charges for professional services necessary for the planning and development of the Project;
(v) Establishment of a revolving loan fund to provide financial assistance to third parties through a loan; and
(vi) Establishment, expansion, and operation of Rural distance learning networks or development of Rural learning programs that provide educational instruction or job training instruction related to potential employment or job advancements for adult students;
(vii) Provision of Technical Assistance for Small and Emerging Businesses, including but not limited to feasibility studies and business plans; and/or
(viii) Provision of Technical Assistance and training to rural communities for the purpose of improving passenger transportation services or facilities.
(b)
(2) For business enterprise type grants, the Project must have a reasonable prospect that it will result in the development or financing of Small and Emerging Businesses.
(c)
(d)
A grant may be considered for the amount needed to assist with the completion of a proposed Project, provided that the Project can reasonably be expected to be completed within 1 full year after it has begun.
To the extent permitted by law, Agency grant funds may be used jointly and in proportion with funds furnished by the grantee or from other sources including Agency loan funds.
Grant funds may not be used towards any of the uses identified in paragraphs (a) through (n) of this section.
(a) Duplicate current services or substitute support previously provided. If the current service is inadequate, however, grant funds may be used to expand the level of effort or services beyond what is currently being provided.
(b) Pay costs of preparing the application package for funding under this program or any other program.
(c) Pay costs for any expenses incurred prior to receipt of a full application, except for those permitted under Departmental Regulations.
(d) Fund political activities.
(e) Pay for assistance to any private business enterprise which does not create and/or support jobs in the United States.
(f) Pay any judgment or debt owed to the United States.
(g) Fund Agriculture Production either directly or through horizontally integrated livestock operations except for commercial nurseries, timber operations or limited Agricultural Production related to Technical Assistance Projects. The following are not considered Agriculture Production:
(1) Aquaculture, including conservation, development, and utilization of water for aquaculture;
(2) Commercial fishing;
(3) Commercial nurseries engaged in the production of ornamental plants and trees and other nursery products such as bulbs, flowers, shrubbery, flower and vegetable seeds, sod, and the growing of plants from seed to the transplant stage;
(4) Forestry, which includes businesses primarily engaged in the operation of timber tracts, tree farms, and forest nurseries and related activities such as reforestation; or
(5) The growing of mushrooms or hydroponics.
(h) To finance comprehensive area-wide type Planning. This does not preclude the use of grant funds for Planning for a given Project.
(i) To make loans when the rates, terms, and charges for those loans are not reasonable or would be for purposes not eligible under 7 CFR part 4274, subpart D.
(j) For programs operated by cable television systems.
(k) To fund a part of a Project that is dependent on other funding unless there is a firm commitment of the other funding to ensure completion of the Project.
(l) To pay for Technical Assistance that duplicates assistance provided to implement an action plan funded by the Forest Service (FS) under the National Forest-Dependent Rural Communities Economic Diversification Act for 5 continuous years from the date of grant approval by the FS. To avoid duplicate assistance, the grantee shall coordinate with FS and the Agency to ascertain if a grant has been made in a substantially similar geographical or defined local area in a State for Technical Assistance under the FS program. The grantee will provide documentation to FS and the Agency regarding the contact with each agency.
(m) Pass through grants. Pass through grants are for, but not limited to:
(1) The purchase, refurbishing, or remodeling of real estate for use as a business incubator without charging a fair market rental;
(2) The purchase of equipment for use by an ultimate recipient without charging a fair market rental; and
(3) The making of a Revolving Loan Fund (RLF) loan without taking appropriate security to reasonably assure repayment of the loan.
(n) For a Project that would result in the transfer of existing employment or business activity more than 25 miles from its existing location.
Applications for an RBDG grant as specified in § 4280.417(a)(1) and (2) must contain the following:
(a) An original and one copy of SF 424, “Application For Federal Assistance (For Non-construction);”
(b) Copies of applicant's organizational documents showing the applicant's legal existence and authority to perform the activities under the grant;
(c) A proposed scope of work, including a description of the proposed Project,
(d) A written narrative that includes, at a minimum, the following items:
(1) An explanation of why the Project is needed, the benefits of the proposed Project, and how the Project meets the grant eligible purposes;
(2) Area to be served, identifying each governmental unit,
(3) Description of how the Project will coordinate Economic Development activities with other Economic Development activities within the Project area;
(4) Business to be assisted, if appropriate, and Economic Development to be accomplished;
(5) An explanation of how the proposed Project will result in newly created, increased, or supported jobs in the area and the number of projected new and supported jobs within the next 3 years;
(6) A description of the applicant's demonstrated capability and experience in providing the proposed Project assistance or similar Economic
(7) The method and rationale used to select the areas and businesses that will receive the service;
(8) A brief description of how the work will be performed including whether organizational staff or consultants or contractors will be used; and
(9) Other information the Agency may request to assist it in making a grant award determination;
(e) The latest 3 years of financial information to show the applicant's financial capacity to carry out the proposed work. If the applicant is less than 3 years old, at a minimum, the information should include all balance sheet(s), income statement(s) and cash flow statement(s). A current audited report is required if available;
(f) Intergovernmental review comments from the State Single Point of Contact, or evidence that the State has elected not to review the program under Executive Order 12372;
(g) Documentation regarding the availability and amount of other funds to be used in conjunction with the funds from the RBDG;
(h) A budget which includes salaries, fringe benefits, consultant costs, indirect costs, and other appropriate direct costs for the Project; and
(i) RBDG construction Project grants must conform with 7 CFR part 1924, subpart A requirements.
When the Agency has determined that an application is not eligible or that no further action will be taken, the Agency will notify the applicant in writing of the reasons why the application was not favorably considered and provide any appeal rights.
The Agency will review each application for assistance in accordance with the priorities established in § 4280.435. The Agency will assign each application a priority rating and will select applications for funding based on the priority ratings and the total funds available to the program.
(a)
(b)
The Agency will use the criteria in this section to score applications for purposes identified under § 4280.417(a)(1)and (2).
(a)
(1) If Rural Development's portion of Project funding is:
(i) Less than 20 percent—30 points;
(ii) 20 but less than 50 percent—20 points;
(iii) 50 but less than 75 percent—10 points; or
(iv) 75 percent or more—0 points.
(2) [Reserved]
(b) Points will be awarded for each of the following criteria met by the community or communities that will receive the benefit of the grant. However, regardless of the mathematical total of points indicated by paragraphs (b)(1) through (4) of this section, total points awarded under this paragraph (b) must not exceed 40.
(1)
(2)
(3)
(4)
(c)
(1) Under 5,000 population—15 points;
(2) Between 5,000 and less than 15,000 population—10 points; or
(3) Between 15,000 and 25,000 population—5 points.
(d)
(1) exceeds the State rate by 25 percent or more—20 points;
(2) exceeds the State rate by less than 25 percent—10 points; or
(3) is equal to or less than the State rate—0 points.
(e)
(1) Less than poverty line—25 points;
(2) More than poverty line but less than 65 percent of State MHI—15 points;
(3) Between 65 and 85 percent of State MHI—10 points; or
(4) Greater than 85 percent State MHI—0 points.
(f)
(1) 10 or more years-30 points;
(2) At least 5 but less than 10 years-20 points;
(3) At least 3 but less than 5 years-10 points; or
(4) At least 1 but less than 3 years-5 points.
(g)
(h)
(1) One job for less than $5,000—25 points;
(2) one job for $5,000 but less than $10,000—20 points;
(3) one job for $10,000 but less than $15,000—15 points;
(4) one job for $15,000 but less than $20,000—10 points; or
(5) one job for $20,000 but less than $25,000—5 points.
(i)
(1) less than $100,000—25 points;
(2) $100,000 to $200,000—15 points; or
(3) more than $200,000 but not more than $500,000—10 points.
(j)
(k)
The Agency will award and administer RBDG grants in accordance with applicable Departmental regulations, this subpart, and the unauthorized grant provisions of 7 CFR part 1951, subpart O.
(a)
(b)
RBDG grants will be monitored and serviced in accordance with the grant agreement, this subpart, and 2 CFR chapter IV.
The Agency will approve transfer and assumption requests on grants awarded under this subpart on a case by case basis, and then only to eligible entities under § 4280.416.
The reporting and recordkeeping requirements contained in this regulation have been approved by the Office of Management and Budget (OMB) under the provisions of 44 U.S.C. chapter 35 and have been assigned OMB control numbers 0570–0022 and 0570–0024 in accordance with the Paperwork Reduction Act of 1995. You are not required to respond to this collection of information unless it displays a valid OMB control number.
5 U.S.C. 301 and 7 U.S.C. 1989.
Subpart F also issued under 7 U.S.C 1932(e).
Subpart G also issued under 7 U.S.C 1926(a)(11).
Subpart J also issued under 7 U.S.C 1621 note.
Subpart K also issued under 7 U.S.C. 1621 note.