Modernizing Grant Program Regulation

<RULE> DEPARTMENT OF AGRICULTURE <SUBAGY>Rural Business-Cooperative Service</SUBAGY> <CFR>7 CFR Part 4284</CFR> <DEPDOC>[Docket No. RBS-24-BUSINESS-0004]</DEPDOC> <RIN>RIN 0570-AB03</RIN> <SUBJECT>Modernizing Grant Program Regulation</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Rural Business-Cooperative Service, USDA. <HD SOURCE="HED">ACTION:</HD> Final rule; confirmation and response to comments. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Rural Business-Cooperative Service (RBCS or the Agency), an agency of the Rural Development (RD) mission area within the U.S. Department of Agriculture (USDA), published a final rule with comment in the <E T="04">Federal Register</E> on September 16, 2024, to implement the provisions of the Agriculture Improvement Act of 2018 related to the Value-Added Producer Grant (VAPG) Program and the Agriculture Innovation Center (AIC) Program and to modernize the Rural Cooperative Development Grant Program (RCDG). These changes will also help simplify and streamline RD program delivery. Through this action, RBCS is confirming the final rule as it was published and providing responses to the public comments that were received. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> The final rule published September 16, 2024, at 89 FR 75762, and is confirmed and effective November 15, 2024. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Melinda Martin, Program Management Division, U.S. Department of Agriculture, 1400 Independence Avenue SW, Washington, DC 20250-3201; telephone (202) 720-1400; email: <E T="03">melinda.c.martin@usda.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> RD is a mission area within USDA comprised of RBCS, the Rural Utilities Service and the Rural Housing Service. RD's mission is to increase economic opportunity and improve the quality of life for all rural Americans. RD meets its mission by providing loans, grants, loan guarantees, and technical assistance through a multitude of programs aimed at creating and improving businesses, housing and infrastructure throughout rural America. The final rule that published September 16, 2024 (89 FR 75762), included a 30-day comment period that ended October 16, 2024. The changes implemented the mandatory provisions outlined in sections 7608 and 10102 of the Agriculture Improvement Act of 2018 (Pub. L. 115-334) and updated and reorganized subparts F, J and K. In addition, language in subpart J was updated to incorporate a new application intake system that was developed and will streamline the application process for VAPG. With the changes, each subpart is a standalone set of definitions and requirements for each individual grant program. The Agency received detailed comments from 19 respondents consisting of nonprofit cooperative development centers, individuals, and current and past awardees of RBCS grant programs. The majority of the respondents felt the changes were positive and would provide clarity for the applicants, but several did identify areas where additional changes may be needed. The Agency reviewed the comments, categorized them as general or by section of the final rule, and provided an Agency response below. The Agency has decided to proceed with implementation of the final rule without further amendments. <HD SOURCE="HD1">General—Program Accessibility</HD> <E T="03">Comments:</E> Three respondents stated that accessibility for Federal programs should be improved for small businesses and nonprofits. One identified the audit requirement, stating that requiring an audit limits these organizations from applying because they cannot afford an audit. Another identified a lack of inclusivity for small and micro-sized agricultural businesses and nonprofit organizations led by Afro-American, Native, and transplanted American communities in the Northern Mariana Islands. A third identified matching funds requirements as a concern. <E T="03">Agency Response:</E> The Agency agrees. The Agency is aware that accessing Federal programs is difficult for smaller organizations and strives to limit program requirements to those that are required by applicable laws and regulations. Neither the RCDG program nor the VAPG program have audit requirements beyond the ones required by 2 CFR part 200. The AIC program does have an audit requirement for all applicants. However, it must be noted that small businesses are not eligible applicants for the program. It is imperative that applicants who are considered for funding have the financial capability to administer up to a $1.5 million project. Thus, reviewing the audit for certain financial standards is a critical part of the review process to ensure that the Agency selects applicants who have the financial resources to carry out the authorized work for the program. The Agency recognizes the need to be inclusive of all people and ensure equitable access to funding opportunities and services. Priority is given to distressed and disadvantaged communities and also to historically underserved agricultural producers. With regard to matching funds, all three programs have statutory requirements that are implemented through this regulation. <HD SOURCE="HD1">General—Local Agriculture Market Program (LAMP) Report to Congress</HD> <E T="03">Comment:</E> One respondent noted that while VAPG awards reach all states, very few awards reached the following states: Wyoming, Utah, Arizona, Nevada, North Dakota, Louisiana, Arkansas, Alabama, and Mississippi. To strengthen program implementation, the commenter suggested that the annual LAMP Report to Congress include additional factors such as the number of applications being received from these underrepresented states, what type of projects are being funded in those states, the agricultural products created, and the proportion of awards by priority categories within individual states. <E T="03">Agency Response:</E> The Agency will collaborate with the Agriculture Marketing Service to assess the information that will appear in future LAMP reports to Congress. <HD SOURCE="HD1">Sec. 4284.501 Purpose</HD> <E T="03">Comment:</E> One respondent states that § 4284.501 mentions that grants are made to <E T="03">non-profit institutions,</E> then § 4284.503 defines <E T="03">institutions</E> as a college. The respondent continues by stating it is vital that private, non-profit charitable organizations be explicitly eligible for the grants and would like for the Agency to clarify the eligibility of 501(c)(3) charitable non-profits. <E T="03">Agency Response:</E> In § 4284.503 Definitions, the final rule defines a Nonprofit Institution as “any organization or institution, including an accredited Institution of Higher Education, no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual.” A 501(c)(3) charitable non-profit would be included in this definition. In addition, RCDG applicants must have a mission that is in line with the purpose of the program and provide targeted support for the startup, expansion, and operational improvement of Cooperatively and Mutually Owned Businesses in Rural Areas. <HD SOURCE="HD1">Sec. 4284.503 Definitions</HD> <E T="03">Comment:</E> One respondent recommended that the Agency include the International Cooperative Alliance (ICA)'s Statement on Cooperative Identity in its processes and written materials. <E T="03">Agency Response:</E> The Agency acknowledges that many cooperatives in the United States look to the Alliance's Statement of Cooperative Identity for guidance; however, the Agency will be using a definition of Cooperative based on legal concepts recognized in the United States. <E T="03">Comment:</E> One respondent stated that the definition for Cooperative Development fails to include many of the essential business development activities, such as business plans, feasibility analysis, and financial analysis that are critical in cooperative development. The respondent recommends adding these activities to the definition of Cooperative Development. <E T="03">Agency Response:</E> Cooperative Development is a subset of the defined term Technical Assistance which incorporates the activities of assessment and analysis through Feasibility Studies and Business Plans, customized training, written information, in person or virtual exchanges, web-based curricula, and webinars. <E T="03">Comment:</E> One respondent requested that the Agency amend the definition of Mutually Owned Business to include the following: “This section allows for cooperatively governed businesses that may not distribute patronage.” The respondent believes this will explicitly recognize childcare and housing cooperatives (that provide a service at cost and use cost savings instead of patronage), as well as purchasing cooperatives that may include not-for-profit members such as school districts. <E T="03">Agency Response:</E> The Agency understands that some cooperatives like childcare and housing cooperatives operate at cost and may not distribute patronage, but that members benefit in proportion to their use of the cooperative business. Mutually Owned Businesses and Cooperatives that operate at cost are Cooperatives as defined in the regulation. Therefore, no change will be made to the definition of Mutually Owned Business. <E T="03">Comment:</E> Two respondents stated that including a separate definition for Mutually Owned Business was unnecessary and creates confusion. One goes on to state that “ <E T="03">Mutually Owned Business</E> ” means a business not incorporated under a Cooperative statute but operating as a Cooperative. Cooperative operation of the business is reflected in the articles and bylaws.” The respondent believes this substantially undercuts the clarity of the Rule's definition of Coop ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 41k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━