[Federal Register Volume 75, Number 103 (Friday, May 28, 2010)]
[Proposed Rules]
[Pages 29920-29932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-12731]
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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.
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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.
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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 http://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
[email protected].
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 http://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: http://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 of the feasibility study and business plan
for eligibility purposes.
(6) If the applicant is an agricultural producer group, a farmer or
rancher cooperative, or a majority-controlled producer-based business
venture, the applicant must demonstrate that it is entering an emerging
market.
(7) All applicants for working capital must either be currently
marketing each value-added agricultural product that is the subject of
the grant application, or be ready to implement the working capital
activities in accord with the budget and work plan timeline proposed.
(c) Branding activities. Applications that propose only branding,
packaging, or other similar means of product differentiation are not
eligible under this subpart. However, applications that propose
branding, packaging, or other product differentiation activities that
are no more than 25 percent of total project costs 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 are eligible.
(d) Reserved funds eligibility. In addition to the requirements
specified in paragraphs (a) through (c) of this section, the
requirements specified in paragraphs (d)(1) and (2) of this section
must be met, as applicable. All eligible, but unfunded reserved funds
applications will be eligible to compete for general funds in that same
fiscal year, as funding levels permit.
(1) If the applicant is applying for beginning farmer or rancher,
or socially-disadvantaged farmer or rancher reserved funds, the
applicant must provide documentation demonstrating that the applicant
meets one of these definitions.
(2) If the applicant is applying for mid-tier value chain reserved
funds, the application must:
(i) Demonstrate that the project proposes development of a local or
regional supply network of an interconnected group of entities through
which agricultural products move from production through consumption in
a local or regional area of the United States, including a description
of the network, its component members, and its purpose;
(ii) Describe at least two alliances, linkages or partnerships
within the value chain that link independent producers with businesses
and cooperatives that market value-added agricultural products in a
manner that benefits small or medium-sized farms and ranches that are
structured as a family farm, including the names of the parties and the
nature of their collaboration;
(iii) Demonstrate how the project, due to the manner in which the
value-added product is marketed, will increase the profitability and
competitiveness of at least two eligible small or medium-sized farms or
ranches that are structured as a family farm;
(iv) Document that the eligible agricultural producer group/
cooperative/majority-controlled producer-based business venture
applicant organization has obtained at least one agreement with another
member of the supply network that is engaged in the value chain on a
marketing strategy; or that the eligible independent producer applicant
has obtained at least one agreement from an eligible agricultural
producer group/cooperative/majority-controlled producer-based business
venture engaged in the value-chain on a marketing strategy;
(v) Demonstrate that the applicant organization currently owns and
produces more than 50 percent of the raw agricultural commodity that
will be used for the value-added product that is the subject of the
proposal; and
(vi) Demonstrate that the project will result in 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.
Sec. 4284.923 Eligible uses of grant and matching funds.
Grant and cost-share matching funds have the same use restrictions
and must be used to fund only the costs for approved purposes as
defined in paragraphs (a) and (b) of this section.
(a) Planning funds may be used to pay for a qualified 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. Planning funds may not be used for
applicant participation in feasibility studies. In-kind contribution of
matching funds to cover applicant participation in development of
business plans and/or marketing plans is allowed to the extent that the
value of such work can be appropriately valued. Funds may not be used
to evaluate the agricultural production of the commodity itself, other
than to determine the project's input costs related to the feasibility
of processing and marketing the value-added product.
(b) Working capital funds may be used to pay the project's
operational costs directly related to the processing and/or marketing
of the value-added product. Examples of eligible working capital
expenses include designing or purchasing a financial accounting system
for the project, paying salaries of employees without ownership
interest to process and/or market and deliver the value-added product
to consumers, paying for inventory supply costs necessary to produce
the value-added product from the agricultural commodity or product, and
paying for a marketing campaign for the value-added product.
Sec. 4284.924 Ineligible uses of grant and matching funds.
Grant funds awarded under this subpart may not be used to:
[[Page 29930]]
(a) Plan, repair, rehabilitate, acquire, or construct a building or
facility (including a processing facility);
(b) Purchase, lease purchase, or install fixed equipment, including
processing equipment;
(c) Purchase or repair vehicles, including boats;
(d) Pay for the preparation of the grant application;
(e) Pay expenses not directly related to the funded project;
(f) Fund research and development;
(g) Fund political or lobbying activities;
(h) Fund any activities prohibited by 7 CFR parts 3015 and 3019, 2
CFR part 230, and 48 CFR part 31.2.
(i) Fund architectural or engineering design work;
(j) Fund 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;
(k) Conduct activities on behalf of anyone other than a
specifically identified independent producer or group of independent
producers. The Agency considers conducting industry-level feasibility
studies or business plans, that are also known as feasibility study
templates or guides or business plan templates or guides, to be
ineligible because the assistance is not provided to a specific group
of Independent Producers;
(l) Duplicate current services or replace or substitute support
previously provided;
(m) Pay 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;
(n) Pay for assistance to any business that does not meet the
requirements of Sec. 4284.920(c);
(o) Pay any judgment or debt owed to the United States;
(p) Pay for any goods or services provided by a person or entity
that has a conflict of interest or an appearance of a conflict of
interest. Also, note that in-kind matching funds may not be provided by
a person or entity that has a conflict of interest or an appearance of
a conflict of interest;
(q) Purchase land; or
(r) Pay for costs associated with illegal activities.
Sec. 4284.925 Funding limitations.
(a) Grant funds may be used to pay up to 50 percent of the total
eligible project costs, subject to the limitations established for
maximum total grant amount.
(b) The maximum total grant amount provided to a grantee in any one
year shall not exceed the amount announced in an annual notice issued
pursuant to Sec. 4284.915, but in no event may the total amount of
grant funds provided to a grant recipient exceed $500,000.
(c) A grant under this subsection shall have a term that does not
exceed 3 years. Grant project periods should be scaled to the
complexity of the objectives for the project. The Agency may extend the
term of the grant period, not to exceed the 3-year maximum.
(d) The aggregate amount of awards to majority controlled producer-
based businesses may not exceed 10 percent of the total funds obligated
under this subpart during any fiscal year.
(e) Not more than 5 percent of funds appropriated each year may be
used to fund the Agricultural Marketing Resource Center, to support
electronic capabilities to provide information regarding research,
business, legal, financial, or logistical assistance to independent
producers and processors.
(f) Each fiscal year, the following amounts of reserved funds will
be made available:
(1) 10 percent to fund projects that benefit beginning farmers or
ranchers, or socially-disadvantaged farmers or ranchers; and
(2) 10 percent to fund projects that propose development of mid-
tier value chains.
(3) Funds not obligated by June 30 of each fiscal year shall be
available to the general fund for the program.
Sec. Sec. 4284.926-4284.929 [Reserved]
Section D--Applying for a Grant
Sec. 4284.930 Preliminary review.
The Agency encourages applicants to contact their State Office well
in advance of the application submission deadline, to ask questions and
to discuss project eligibility potential. At its option, the Agency may
establish a preliminary review deadline so that it may informally
assess the eligibility of the application and its completeness. The
result of the preliminary review is not binding on the Agency. To
implement this section, the Agency will issue a notification addressing
this issue in accordance with Sec. 4284.915.
Sec. 4284.931 Application package.
All applicants are required to submit an application package that
is comprised of the elements in this section.
(a) Application forms. The following application forms (or their
successor forms) must be completed when applying for a grant under this
subpart.
(1) Form SF-424, ``Application for Federal Assistance.''
(2) Form SF-424A, ``Budget Information-Non-Construction Programs.''
(3) Form SF-424B, ``Assurances--Non-Construction Programs.''
(4) Form RD 400-4, ``Assurance Agreement.''
(5) Form RD 400-1, ``Equal Opportunity Agreement.''
(6) All applicants are required to have a DUNS number (including
individuals and sole proprietorships).
(b) Application content. The following content items must be
completed when applying for a grant under this subpart:
(1) Eligibility discussion. Using the format prescribed by the
application package, the applicant must describe in detail how the:
(i) Applicant (Sec. Sec. 4284.920 and 921) and project eligibility
(Sec. 4284.922) requirements are met;
(ii) Eligible use of grant and matching funds (Sec. Sec. 4284.923
and 924) requirements are met; and
(iii) Funding limitation (Sec. 4284.925) requirements are met.
(2) Evaluation criteria. Using the format prescribed by the
application package, the applicant must address each evaluation
criterion identified below.
(i) Performance evaluation criteria. Applicants for planning grants
must suggest at least one criterion by which their performance under a
grant could be evaluated. Applicants for working capital grants must
identify the projected increase in customer base, revenue accruing to
independent producers, and number of jobs attributed to the project.
Working capital projects with significant renewable energy components
must also identify the projected increase in capacity per unit of
measure annually attributed to the project. Performance criteria will
be incorporated into the applicant's semi-annual and final reporting
requirements if selected for award.
(ii) Proposal evaluation criteria. Applicants must address each
proposal evaluation criterion identified in Sec. 4284.942 in narrative
form, in the application package.
(3) Certification of matching funds. Using the format prescribed by
the application package, applicants must certify that:
(i) Cost-share matching funds will be spent in advance of grant
funding, such that for every dollar of grant funds disbursed, not less
than an equal amount of matching funds will have
[[Page 29931]]
been expended prior to submitting the request for reimbursement; and
(ii) If matching funds are proposed in an amount exceeding the
grant amount, those matching funds must be spent at a proportional rate
equal to the match-to-grant ratio identified in the proposed budget.
(4) Verification of cost-share matching funds. Using the format
prescribed by the application package, the applicant must provide
authentic documentation from the source to confirm the eligibility and
availability of both cash and in-kind contributions that meet the
following requirements:
(i) Matching funds are subject to the same use restrictions as
grant funds, and must be spent on eligible project expenses during the
grant project period.
(ii) Matching funds must be from eligible sources without a
conflict of interest and without the appearance of a conflict of
interest.
(iii) Matching funds must be at least equal to the amount of grant
funds requested, and combined grant and matching funds must equal 100
percent of the total eligible project costs.
(iv) Unless provided by other authorizing legislation, other
Federal grant funds cannot be used as matching funds.
(v) Matching funds must be provided in the form of confirmed
applicant cash, loan, or line of credit; or confirmed third-party cash
or eligible third-party in-kind contribution.
(vi) Examples of ineligible matching funds include funds used for
an ineligible purpose, contributions donated outside the proposed grant
period, third-party in-kind contributions that are over-valued,
expected program income at time of application, or instances where the
potential for a conflict of interest exists, including applicant in-
kind contributions in Sec. 4284.923(a).
(5) Business plan. As part of the application package, applicants
for working capital grants must provide a copy of the business plan
that was completed for the proposed project. The Agency must concur in
the acceptability or adequacy of the business plan.
(6) Feasibility study. As part of the application package,
applicants for working capital grants must provide a copy of the third-
party feasibility study that was completed for the proposed project.
The Agency must concur in the acceptability or adequacy of the
feasibility study.
Sec. 4284.932 Simplified application.
Applicants requesting less than $50,000 will be allowed to submit a
simplified application, the contents of which will be announced in an
annual notice issued pursuant to Sec. 4284.915.
Sec. 4284.933 Filing instructions.
Unless otherwise specified in a notification issued under Sec.
4284.915, the requirements specified in paragraphs (a) through (e) of
this section apply to all applications.
(a) When to submit. Complete applications must be received by the
Agency on or before March 15 of each year to be considered for funding
for that fiscal year. Applications received by the Agency after March
15 will not be considered.
(b) Incomplete applications. Incomplete applications will be
rejected. Applicants will be informed of the elements that made the
application incomplete. If a resubmitted application is received by the
applicable application deadline, the Agency will reconsider the
application.
(c) Where to submit. All applications must be submitted to the
State Office of Rural Development in the State where the project
primarily takes place, or on-line through grants.gov.
(d) Format. Applications may be submitted as hard copy, or
electronically via grants.gov. If submitted as hard copy, only one
original copy should be submitted.
(e) Other forms and instructions. Upon request, the Agency will
make available to the public the necessary forms and instructions for
filing applications. These forms and instructions may be obtained from
any State Office of Rural Development, or the Agency's Value-Added
Producer Grant program Web site--http://www.rurdev.usda.gov/rbs/coops/vadg.htm.
Sec. Sec. 4284.934-4284.939 [Reserved]
Section E--Processing and Scoring Applications
Sec. 4284.940 Processing applications.
(a) Initial review. Upon receipt of an application on or before the
application submission deadline for each fiscal year, the Agency will
conduct a review to determine if the applicant and project are
eligible, and if the application is complete and sufficiently
responsive to program requirements.
(b) Notifications. After the review in paragraph (a) of this
section has been conducted, the Agency will notify the applicant in
writing of the Agency's findings. If the Agency has determined that
either the applicant or project is ineligible or that the application
is not complete to allow evaluation of the application or sufficiently
responsive to program requirements, it will include in the notification
the reason(s) for its determination(s).
(c) Resubmittal by applicants. Applicants may submit revised
applications to the Agency in response to the notification received
under paragraph (b) of this section. If a revised grant application is
received on or before the application deadline, it will be processed by
the Agency. If such revised applications are not received by the
specified application deadline, the Agency will not process the
application and will inform the applicant that their application was
not reviewed due to tardiness.
(d) Subsequent ineligibility determinations. If at any time an
application is determined to be ineligible, the Agency will notify the
applicant in writing of its determination.
Sec. 4284.941 Application withdrawal.
During the period between the submission of an application and the
execution of award documents, the applicant must notify the Agency in
writing if the project is no longer viable or the applicant no longer
is requesting financial assistance for the project. When the applicant
so notifies the Agency, the selection will be rescinded or the
application withdrawn.
Sec. 4284.942 Proposal evaluation criteria and scoring applications.
(a) General. The Agency will only score applications for which it
has determined that the applicant and project are eligible, the
application is complete and sufficiently responsive to program
requirements, and the project is likely feasible. Any applicant whose
application will not be reviewed because the Agency has determined it
fails to meet the preceding criteria will be notified of appeal rights
pursuant to Sec. 4284.903. 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. Each application 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.
(b) Scoring applications. The maximum number of points that will be
awarded to an application is 100, plus an additional 10 points if the
project is located in a rural area. The criteria specified in
paragraphs (b)(1) through (7) of this section will be used to score
each application. The Agency will specify how points are awarded for
each
[[Page 29932]]
criterion in a Notice published each fiscal year.
(1) Nature of the proposed project (maximum 25 points).
(2) Personnel qualifications (maximum 20 points).
(3) Commitments and support (maximum 10 points).
(4) Work plan/budget (maximum 20 points).
(5) Type of applicant (maximum 15 points).
(6) Administrator priority categories and points (maximum 10
points).
(7) Rural or rural area location (10 points may be awarded).
Sec. Sec. 4284.943-4284.949 [Reserved]
Section F--Grant Awards and Agreement
Sec. 4284.950 Award process.
(a) Selection of applications for funding and for potential
funding. The Agency will select and rank applications for funding based
on the score an application has received in response to the proposal
evaluation criteria, compared to the scores of other value-added
applications received in the same fiscal year. Higher scoring
applications will receive first consideration for funding. The Agency
will notify applicants, in writing, whether or not they have been
selected for funding. For those applicants not selected for funding,
the Agency will provide a brief explanation for why they were not
selected.
(b) Ranked applications not funded. A ranked application that is
not funded in the fiscal year in which it was submitted will not be
carried forward into the next fiscal year. The Agency will notify the
applicant in writing.
(c) Intergovernmental review. If State or local governments raise
objections to a proposed project under the intergovernmental review
process that are not resolved within 90 days of the Agency's award
announcement date, the Agency will rescind the award and will provide
the applicant with a written notice to that effect. The Agency, in its
sole discretion, may extend the 90-day period if it appears resolution
is imminent.
Sec. 4284.951 Grant agreement.
(a) Letter of conditions. When a grant is obligated subject to
conditions established by the Agency, the Agency will notify, in
writing, each applicant whose application has been selected for funding
using a Letter of Conditions, which defines the conditions under which
the grant will be made. If the applicant agrees with the conditions,
the applicant must complete, sign, and return the Agency's ``Letter of
Intent to Meet Conditions.'' If the applicant believes that certain
conditions cannot be met, the applicant may propose alternate
conditions to the Agency. The Agency must concur with any proposed
changes to the Letter of Conditions by the applicant before the
application will be further processed. If the Agency agrees to any
proposed changes, the Agency will issue a revised or amended Letter of
Conditions that defines the final conditions under which the grant will
be made.
(b) Grant agreement and conditions. Each grantee will be required
to meet all terms and conditions of the award within 90 days of
receiving a Letter of Conditions unless otherwise specified by the
Agency at the time of award. Each grantee will also be required to sign
a grant agreement that outlines the approved use of funds and actions
under the award, as well as the restrictions and applicable laws and
regulations that pertain to the award.
(c) Grant disbursements. Grant disbursement will be made in
accordance with the Letter of Conditions, and/or the grant agreement,
as applicable. Adequate supporting documentation is required for all
disbursements.
Sec. Sec. 4284.952-4284.959 [Reserved]
Section G--Post Award Activities and Requirements
Sec. 4284.960 Monitoring and reporting program performance.
The requirements specified in this section shall apply to grants
made under this subpart.
(a) Grantees are responsible to expend funds only for eligible
purposes and will be monitored by Agency staff for compliance. Grantees
must maintain a financial management system, and property and
procurement standards in accordance with Departmental Regulations.
(b) Grantees must submit prescribed narrative and financial
performance reports that include a comparison of accomplishments with
the objectives stated in the application. The Agency will prescribe
both the narrative and financial report formats in the grant agreement.
(1) Semi-annual performance reports shall be submitted within 30
days following March 31 and September 30 each fiscal year. A final
performance report shall be submitted to the Agency within 90 days of
project completion. Failure to submit a performance report within the
specified timeframes may result in the Agency withholding grant funds.
(2) Additional reports shall be submitted as specified in the grant
agreement or Letter of Conditions, or as otherwise provided in a
notification issued under Sec. 4284.915.
(3) Copies of supporting documentation and/or project deliverables
for completed tasks must be provided to the Agency in a timely manner
in accord with the development or completion of materials and in
conjunction with the budget and project timeline. Examples include, but
are not limited to, a feasibility study, marketing plan, business plan,
success story, or best practice.
(4) The Agency may request any additional project and/or
performance data for the project for which grant funds have been
received.
Sec. 4284.961 Grant servicing.
All grants awarded under this subpart shall be serviced in
accordance with 7 CFR part 1951, subparts E and O, and the Departmental
Regulations.
Sec. 4284.962 Transfer of obligations.
An obligation of funds established for an applicant may be
transferred to a different (substituted) applicant provided:
(a) The substituted applicant:
(1) Is eligible;
(2) Has a close and genuine relationship with the original
applicant; and
(3) Has the authority to receive the assistance approved for the
original applicant; and
(b) The need, purpose(s), and scope of the project for which the
Agency funds will be used remain substantially unchanged.
Sec. 4284.963 Grant close out and related activities.
In addition to the requirements specified in the Departmental
regulations, failure to submit satisfactory reports on time under the
provisions of Sec. 4284.970(b) may result in the suspension or
termination of a grant.
Sec. Sec. 4284.964-4284.999 [Reserved]
Dated: May 21, 2010.
Pandor H. Hadjy,
Acting Administrator, Rural Business-Cooperative Service.
[FR Doc. 2010-12731 Filed 5-27-10; 8:45 am]
BILLING CODE 3410-XY-P