[Federal Register Volume 62, Number 73 (Wednesday, April 16, 1997)]
[Proposed Rules]
[Pages 18678-18691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9422]
[[Page 18677]]
_______________________________________________________________________
Part II
Department of Agriculture
_______________________________________________________________________
7 CFR Part 1703
Distance Learning and Telemedicine Loan and Grant Program; Proposed
Rule
Federal Register / Vol. 62, No. 73 / Wednesday, April 16, 1997 /
Proposed Rules
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1703
RIN 0572-AB31
Distance Learning and Telemedicine Loan and Grant Program
AGENCY: Rural Utilities Service, USDA.
ACTION: Proposed rule.
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SUMMARY: The Rural Utilities Service (RUS) is proposing to amend its
regulation concerning the Distance Learning and Telemedicine Grant
Program. This proposed rule will promulgate regulations for a new loan
program that will provide both loans and grants for distance learning
and telemedicine projects benefiting rural areas. The regulation is
necessary to implement a new loan program mandated by the Federal
Agriculture Improvement and Reform Act of 1996. The regulation will
establish, among other things, RUS' policy, the method of selecting
projects to receive loans and grants and allocating the available
funds, and the requirements for submitting an application for financial
assistance.
DATES: Written comments must be received by RUS or carry a postmark or
equivalent not later than May 16, 1997.
ADDRESSES: Submit written comments to Robert Peters, Assistant
Administrator, Telecommunications Program, Rural Utilities Service,
1400 Independence Ave., SW, STOP 1590, Room 4056, South Building,
Washington, DC 20250-1590. RUS requests a signed original and three
copies of all comments (7 CFR part 1700). All comments received will be
made available for public inspection at Room 4034, South Building, U.S.
Department of Agriculture, Washington, DC, between 8:00 a.m. and 4:00
p.m. (7 CFR part 1.27(b)).
FOR FURTHER INFORMATION CONTACT: Barbara L. Eddy, Deputy Assistant
Administrator, Telecommunications Program, Rural Utilities Service,
STOP 1590, Room 4056, South Building, U.S. Department of Agriculture,
Washington, DC 20250-1590. Telephone number (202) 720-9554.
SUPPLEMENTARY INFORMATION:
Classification
This proposed rule has been determined to be significant and was
reviewed by the Office of Management and Budget (OMB) under Executive
Order 12866.
Civil Justice Reform
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. RUS has determined that this proposed rule meets
the applicable standards provided in Sec. 3. of the Executive Order.
Regulatory Flexibility Act Certification
In accordance with the requirements of the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.), the following analysis of regulatory
options that would minimize any significant impact on small businesses
is provided. Title VII, section 704, of the Federal Agriculture
Improvement and Reform Act of 1996 (FAIR Act) (Public Law 104-127)
amended Chapter 1 of subtitle D of title XXIII of the Food,
Agriculture, Conservation, and Trade Act of 1990 by authorizing the
Secretary of Agriculture to make loans for distance learning and
telemedicine services in rural areas. This proposed rule would amend 7
CFR part 1703 to set forth the rules for this new loan program to be
administered by the RUS. The objectives of the proposed rule are to
encourage and improve telemedicine and distance learning services in
rural areas through the use of telecommunications, computer networks,
and related advanced technologies by students, teachers, medical
professionals, and rural residents.
The new RUS Distance Learning and Telemedicine loan program would
assist in providing modern telecommunication interconnectivity to
educational and medical facilities in rural America. Through 4 years of
Distance Learning and Telemedicine grant program activity,
approximately 704 rural schools, serving hundreds of thousands of rural
students, will gain access to improved educational resources through
the information superhighway by sharing limited teaching resources and
gaining access to libraries, training centers, vocational schools, and
other institutions located in metropolitan centers. For telemedicine,
approximately 500 rural medical facilities will gain access to improved
medical care through linkage with other rural hospitals and major urban
medical centers for clinical interactive video consultation, distance
training of rural health care providers, management and transport of
patient information, and access to medical expertise or library
resources.
This proposed regulation would set forth the rules for the new loan
program which would provide supplementary funding for distance learning
and telemedicine services in rural areas. The proposed regulation would
optimize the use of a limited source of grant and loan funding by
setting forth certain criteria which enables the Agency to distribute
the amount of funding available among the greatest number of applicants
in an economical, efficient, and orderly manner. The regulatory
alternative would be to not publish a regulation; however, the desired
regulatory purposes, to improve the access of people residing in rural
areas to improved educational, learning, training, and health care
services and to achieve the maximum use of funds available, would not
be achieved.
Entities eligible for assistance under this proposed rule would be
those entities that provide, or would provide, educational or health
care services or the facilities needed to provide these services
through the use of advanced telecommunications in rural areas. There is
no good estimate, at this time, of the number of entities that would be
affected by the proposed rule since the regulatory requirements would
apply to only those entities which choose to apply for the financial
assistance. However, RUS is estimating between 250 and 300 applications
would be submitted annually under this program and of those applicants,
between 30 and 50 grants and 100 and 120 loans or combination thereof
would be awarded. RUS' existing Distance Learning and Telemedicine
Grant Program, since its inception in 1993, has received nearly 900
applications for grant funding.
The various reporting and compliance requirements contained in this
proposed rule for applicants are necessary to determine such factors
as: eligibility; funding purposes; compliance with other Federal
regulations; project costs and alternative funding sources; project
feasibility; and need for educational and/or telemedicine services.
Those reporting requirements imposed on recipients of financial
assistance are necessary to ensure proper use of financing for approved
purposes. Some of the required reporting documents include information
generally maintained by certain types of entities (i.e., patients or
students served, financial statements, contracts, audits, etc.). The
information collected is in a format designed to minimize the paperwork
burden on small businesses and other small entities. The information
collected is the minimum needed by the Agency to approve financial
assistance and monitor the grantee or borrower performance.
The impact on small entities would be limited to the reporting and
compliance regulations which were designed to minimize the burden in
order to
[[Page 18679]]
encourage applicants. Even the compliance regulations are designed to
only assure the Agency that the financial assistance was utilized for
Act purposes and also are regulations for already imposed Government-
wide financial assistance of any kind.
Information Collection and Recordkeeping Requirements
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35, as amended) RUS is requesting comments on the information
collection incorporated in this proposed rule.
Comments on this information collection must be received by June
16, 1997.
Comments are invited on: (a) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (b) The accuracy of the agency's estimate of the burden of the
proposed collection of information; (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 respondents,
including through the use of automated collection techniques or other
forms of information technology.
For further information contact Jonathan Claffey, Acting Deputy
Director, Advanced Telecommunications Services Staff, Rural Utilities
Service. Telephone: (202) 720-0530. Fax: (202) 720-2734.
Title: Distance Learning and Telemedicine Loan and Grant Program.
OMB Number: 0572-0096.
Type of Request: Revision of a previously approved information
collection.
Abstract: The RUS currently implements a program that provides
grants to rural community facilities, such as schools, hospitals, and
medical centers, to encourage, improve, and make affordable the use of
advanced telecommunications and computer networks to provide
educational and medical benefits to people living in rural areas and to
improve rural access to reliable facsimile, document and data
transmission, multi-frequency tone signaling services, 911 emergency
service with automatic number identification, interactive audio and
visual transmissions, voice mail services designed to record, store,
and retrieve voice messages, and other advanced telecommunications
services. RUS currently awards grants and is proposing to also award
loan funds to projects that will improve the quality of life of people
residing in rural areas by improving their access to improved
educational, training, and medical services; and, their access to
opportunities that rely on these advanced communication and information
technologies to provide such services. For grants, RUS funds up to 70
percent of any project selected, and requires at least a 30 percent
matching contribution from the grant applicant. For applicants who
voluntarily request loans, RUS proposes to fund up to 90 percent of any
project selected, and requires at least a 10 percent matching
contribution from the loan applicant.
In order for the public to receive the benefits of the new loan
program, they need to submit an application and the supporting
information for RUS to determine if they meet the eligibility
requirements. The Distance Learning and Telemedicine Loan and Grant
Program regulations (7 CFR 1703, subpart D), establish the method of
selecting projects to receive grants and loans, the method of
allocating the available funds, the method of determining the
beneficiaries of the program, and the requirements for the application
to be submitted to RUS, the method of notifying potential applicants of
maximum and minimum amounts of grant and loan funds that will be
considered for a single application.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 2 hours per response.
Respondents: Business or other for profit and non-profit
institutions.
Estimated Number of Respondents: 300.
Estimated Number of Responses per Respondent: 29.
Estimated Total Annual Burden on Respondents: 18,248.
Copies of this information collection can be obtained from Dawn
Wolfgang, Program Support and Regulatory Analysis, Rural Utilities
Service. Telephone: (202) 720-0812.
Send comments regarding this information collection requirement, to
the Office of Information and Regulatory Affairs, Office of Management
and Budget, ATTN: Desk Officer, USDA, Room 10102, New Executive Office
Building, Washington, DC 20503, and to F. Lamont Heppe, Jr., Director,
Program Support and Regulatory Analysis, Rural Utilities Service, 1400
Independence Ave., SW., STOP 1522, Room 4034, South Building,
Washington, DC 20250-1522.
Comments are best assured of having full effect if OMB receives
them within 30 days of publication in the Federal Register. All
comments will become a matter of public record.
National Environmental Policy Act Certification
RUS has determined that this proposed rule will not significantly
affect the quality of the human environment as defined by the National
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.). Therefore,
this action does not require an environmental impact statement or
assessment.
Program Affected
The program described by this proposed rule is listed in the
Catalog of Federal Domestic Assistance programs under number 10.855,
Distance Learning and Telemedicine Loan and Grant Program. This catalog
is available on a subscription basis from the Superintendent of
Documents, the United States Government Printing Office, Washington, DC
20402.
Intergovernmental Review
This program is subject to the provisions of Executive Order 12372
that requires intergovernmental consultation with State and local
officials.
Unfunded Mandate
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the Unfunded Mandate Reform Act) for State,
local, and tribal governments or the private sector. Thus today's rule
is not subject to the requirements of sections 202 and 205 of the
Unfunded Mandate Reform Act.
Background
Title 7, CFR part 1703, subpart D, was originally published in the
Federal Register February 26, 1993, (58 FR 11507), and became effective
March 29, 1993. The Agriculture Improvement and Reform Act of 1996
(FAIR Act) modified the Distance Learning and Telemedicine (DLT) grant
program by creating a loan component. The regulation was modified and
published as a final rule in the Federal Register on June 27, 1996, (61
FR 33622), to incorporate the changes to the grant program mandated by
the FAIR Act, excluding those provisions for administering a loan
program since funds appropriated in fiscal year 1996 could only be used
for grants. This proposed rule, while based in part on the existing
rule, will (1) establish criteria for loan and grant eligibility, (2)
simplify the determination for the comparative rurality calculation,
and (3) place
[[Page 18680]]
greater emphasis on the need for distance learning or telemedicine
services in the scoring criteria.
Criteria for Loan and Grant Eligibility
The Administrator determines the portion of the financial
assistance provided to a recipient that consists of grants and the
portion that consists of cost of money loans so as to result in the
maximum feasible repayment to the government of the financial
assistance, based on the recipient's ability to repay and the full
utilization of the funds available.
RUS proposes to use the National School Lunch Program (NSLP) to
assist in determining the mix of grants, loans, and loan-grant
combinations for applicants requesting financial assistance. The extent
of participation by residents of an area in the NSLP is a widely
accepted measure of the relative well-being of the area. RUS believes
that using NSLP ratings in the allocation of grant and loan funds
furthers the FAIR Act's purpose of providing modern DLT services in the
most needy parts of rural America. A high rate of eligibility for
school lunch assistance indicates a low relative income in the area and
less ability to repay loans. Grants will be made available to only
those otherwise eligible applicants determined by the Administrator,
after review of the financial information furnished by the applicant,
to have the least ability to repay the full amount of the assistance.
RUS is proposing to use a subjective method to score, up to 45
points, documentation submitted to support ``the need for services and
benefits derived from services'' [see 1703.117(b)(1)]. RUS believes
that the need for services and the benefits derived from the services
should be a critical factor in determining which application will be
successful in obtaining financial assistance. RUS could not determine
an objective method to use in scoring this particular criterion due to
the nature of some of the benefits to be derived that are priceless,
such as lives saved, students attending higher education institutions,
etc. RUS would like to receive suggestions from commentors on any
objective method that could be used or indications from commentors that
the subjective method is acceptable.
The 1995 statistics for the NSLP indicate that the percentages to
be used to establish eligibility for loans and grants will result in
financial assistance in the form of loans for approximately 75 percent
of qualifying applications. However, before an applicant may be awarded
a loan, the applicant must be able to show that the loan will be repaid
within the repayment period and at the interest rate under which
financial assistance is offered. In addition, this proposed rule allows
for third party guarantees as evidence of an applicant's ability to
repay a loan. RUS believes that the use of third party secured loan
guarantees will provide adequate loan security and will increase the
number of successful applications for the loan program.
Rurality Calculation
The rurality calculation used in the existing regulation was based
on a scale which looked at the characteristics of an entire county
instead of the sites in which financial assistance being requested was
to be used. This methodology placed certain areas with ``rural''
characteristics, yet located in semi-urban counties, at a disadvantage.
The proposed methodology will address this situation by being more
``site'' specific when determining rural needs and characteristics. For
purposes of this determination, an area shall be considered rural if it
is included within the boundaries of any incorporated or unincorporated
city, village, or borough having a population not in excess of 10,000
inhabitants.
Need for Services
More emphasis has been placed on the need for services and benefits
derived from those services in the scoring criteria in this proposed
rule versus the existing rule. In seeking support for this criterion,
applicants may submit documentation explaining (1) the economic,
education or health care challenges facing the community, (2) proposed
plans to address those challenges, and (3) how financial assistance
will help and how the project could not be accomplished without RUS
funding. This scoring criterion seeks to measure the true ``outcomes''
of a proposed project and its derived benefits and therefore RUS
believes it merits increased scoring value. The points available for
this scoring criterion have been increased to represent 26 percent of
the total possible points available for any project.
List of Subjects in 7 CFR Part 1703
Community development, Grant programs--education, Grant programs--
health care, Grant programs--housing and community development, Loan
programs--education, Loan programs--health care, Loan programs--housing
and community development, Reporting and recordkeeping requirements,
Rural areas.
For the reasons set forth in the preamble, chapter XVII of title 7
of the Code of Federal Regulations is proposed to be amended as
follows:
PART 1703--RURAL DEVELOPMENT
1. The authority citation for part 1703 continues to read as
follows:
Authority: 7 U.S.C. 901 et seq. and 950aaa et seq., Pub. L. 103-
354, 108 Stat 3178 (7 U.S.C. 6941 et seq.).
2. Subpart D of part 1703 is revised to read as follows:
Subpart D--Distance Learning and Telemedicine Loan and Grant Program
Sec.
1703.100 Purpose.
1703.101 Policy.
1703.102 Definitions.
1703.103 Applicant eligibility and allocation of funds.
1703.104 Allowable grant and loan funding percentage.
1703.105 Grant and loan purposes.
1703.106 In-kind matching provisions.
1703.107 Ineligible loan and grant purposes.
1703.108 Maximum and minimum sizes of a grant and a loan.
1703.109 The funding application.
1703.110 Conflict of interest.
1708.111 [Reserved]
1703.112 Determination of types of funding.
1703.113 Application filing dates, location, processing, and public
notification.
1703.114-1703.116 [Reserved]
1703.117 Criteria for scoring applications.
1703.118 Other application selection provisions.
1703.119 Appeal provisions.
1703.120--1703.121 [Reserved]
1703.122 Further processing of selected applications.
1703.123--1703.125 [Reserved]
1703.126 Disbursement of loan and grant funds.
1703.127 Reporting and oversight requirements.
1703.128 Audit requirements.
1703.129 Repayment of loans.
1703.130--1703.134 [Reserved]
1703.135 Grant and loan administration.
1703.136 Changes in project objectives or scope.
1703.137 Grant and loan termination provisions.
1703.138--1703.139 [Reserved]
1703.140 Expedited telecommunications loans.
Appendix A to Subpart D of Part 1703--Environmental Questionnaire
Subpart D--Distance Learning and Telemedicine Loan and Grant
Program
Sec. 1703.100 Purpose.
The purpose of this subpart is to encourage and improve
telemedicine services and distance learning services in rural areas
through the use of telecommunications, computer networks, and related
advanced
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technologies by students, teachers, medical professionals, and rural
residents.
Sec. 1703.101 Policy.
(a) RUS recognizes that the transmission of information is vital to
the economic development, education, and health of rural Americans. To
further this objective, RUS will award loans and grants under this
subpart to distance learning and telemedicine projects that will
improve the access of people residing in rural areas to improved
educational, learning, training, and health care services. Unless a
distinction is made in the various sections of this subpart, all
aspects of this subpart will apply to all funding requests.
(b) In providing assistance under this subpart, RUS will give
priority to rural areas that it believes have the greatest need of
distance learning and telemedicine services. RUS believes that
generally the need is greatest in economically challenged areas and
those requiring high costs to serve. This program is consistent with
provisions of the 1996 Telecommunications Act (Public Law 104-104, 110
Stat. 56) that designates telecommunications service discounts for
schools, libraries, and rural health care providers providing benefits
to rural end-users. RUS will take into consideration the community's
involvement in the project and the applicant's ability to leverage
grant funds based on its access to capital.
(c) RUS believes that the residents of rural areas and their local
institutions which serve them can best determine what are the most
appropriate communications or information systems for use in their
respective communities. Therefore, in administering this subpart, RUS
will not favor or mandate the use of one particular technology over
another.
(d) All rural institutions are encouraged to cooperate with each
other and with applicants and end users in promoting the program being
implemented under this subpart.
(e) RUS staff will make diligent efforts to inform potential
applicants in rural areas of the program being implemented under this
subpart.
(f) Financial assistance under this subpart will consist of grants
or cost of money loans, or both. The Administrator shall determine the
portion of the financial assistance provided to a recipient that
consists of grants and the portion that consists of cost of money loans
so as to result in the maximum feasible repayment to the Federal
Government of the financial assistance, based on the ability of the
recipient to repay and with the full utilization of funds made
available to carry out this subpart.
(g) The Administrator may provide a cost of money loan to entities
using telemedicine and distance learning services, and, to entities
providing or proposing to provide telemedicine service or distance
learning service to other persons at rates calculated to ensure that
the benefit of the financial assistance is passed through to the other
persons.
(h) The Administrator may provide a cost of money loan under this
subpart to a borrower of a telecommunications or electric loan under
the Rural Electrification Act of 1936. A borrower receiving a cost of
money loan under this subpart shall:
(1) Make the funds provided available, under any terms it so
chooses as long as the terms are no more stringent than the terms under
which it received the funding, to entities that qualify as distance
learning and/or telemedicine projects satisfying the requirements of
this subpart.
(2) Use the funds provided to acquire, install, improve, or extend
a system referred to in this subpart.
Sec. 1703.102 Definitions.
Act means the Rural Electrification Act of 1936, as amended (7
U.S.C. 901 et seq.).
Administrator means the Administrator of the Rural Utilities
Service or his or her designee.
Applicant means an eligible organization which applies for funding
under this subpart.
Champion community means any community or area so designated under
the proper procedures.
Completed application means an application that includes all those
items specified in Sec. 1703.109 in form and substance satisfactory to
the Administrator.
Comprehensive rural telecommunications plan means the plan
submitted by an applicant in accordance with Sec. 1703.109(a).
Computer networks means computer hardware and software, terminals,
signal conversion equipment including both modulators and demodulators,
or related devices, used to communicate with other computers to process
and exchange data through a telecommunication network in which signals
are generated, modified, or prepared for transmission, or received, via
telecommunications terminal equipment and telecommunications
transmission facilities.
Consortium means a combination or group of eligible entities formed
to undertake the purposes for which the distance learning and
telemedicine funding is provided. Each consortium shall be composed of
a minimum of two eligible entities that meet the requirements of
Sec. 1703.103.
Construct means to acquire, construct, extend, improve, or install
a facility or system.
Cost of money loan. The term cost of money loan means a loan made
under Title XXIII bearing interest at a rate equal to the then current
cost of money to the Federal Government, at the time the feasibility
study is completed, for loans of similar maturity not to exceed 10
years.
Data terminal equipment means equipment that converts user
information into data signals for transmission, or reconverts the
received data signals into user information, and is normally found on
the terminal of a circuit and on the premises of the end user.
Distance learning means a telecommunications link to an end user
through the use of eligible equipment to:
(1) Provide educational programs, instruction, or information
originating in one area, whether rural or not, to students and/or
teachers who are located in rural areas; or
(2) Connect teachers and/or students, located in one rural area
with teachers and/or students that are located in a different rural
area.
DLT borrower means an entity that has outstanding loans under the
provisions of Title XXIII.
Economic useful life as applied to facilities financed under Title
XXIII means the number of years resulting from dividing 100 percent by
the depreciation rate (expressed as a percent) based on Internal
Revenue Service depreciation rules or recognized telecommunications
industry guidelines.
Eligible equipment means computer hardware and software, audio and
visual equipment, computer network components, telecommunications
terminal equipment, telecommunications transmission facilities, data
terminal equipment, inside wiring, interactive video equipment, or
other facilities that would further telemedicine services or distance
learning services. Land, buildings, or building construction are not
considered eligible equipment (see Sec. 1703.107(a)(10)).
Eligible organization means an incorporated entity that meets the
requirements of Sec. 1703.103.
Empowerment Zone and Enterprise Community (EZ/EC) means any
community whose designation as such
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pursuant to 26 U.S.C. 1391 et seq. is in effect at the time RUS agrees
to provide financial assistance.
End user means either or both of the following:
(1) Rural elementary or secondary schools or other educational
institutions, such as institutions of higher education, vocational and
adult training and education centers, libraries, and teacher training
centers, and students, teachers and instructors using such rural
educational facilities, that participate in a rural distance learning
telecommunications program through a project funded under this subpart;
(2) Rural hospitals, primary care centers or facilities, such as
medical centers and clinics, and physicians and staff using such rural
medical facilities, that participate in a rural telemedicine program
through a project funded under this subpart.
End user site means a facility that is part of a network or
telecommunications system that is utilized by end users.
Financial assistance shall consist of grants, cost of money loans,
or both, made under Title XXIII.
Grant documents means the letter of agreement, including any
amendments and supplements thereto, between RUS and the grant
recipient.
Grantee means a recipient of a grant from RUS to carry out the
purposes of Title XXIII.
Hub means control center of a network or telecommunications system.
Instructional programming means educational material, including
computer software, which would be used for educational purposes in
connection with eligible equipment but does not include salaries,
benefits, and overhead of medical or educational personnel.
Interactive video equipment means equipment used to produce and
prepare for transmission audio and visual signals from at least two
distant locations such that individuals at such locations can orally
and visually communicate with each other. Such equipment includes
monitors, other display devices, cameras or other recording devices,
audio pickup devices, and other related equipment.
Letter of agreement means a legal document executed by RUS and the
grantee that contains specific terms, conditions, requirements, and
understandings applicable to a particular grant.
Loan documents mean the loan agreement, note, and security
agreement, including any amendments and supplements thereto, between
RUS and the DLT or Telecommunications/Electric borrower.
Local exchange carrier means a commercial, cooperative or mutual-
type association, or public body that is engaged in the provision of
telephone exchange service or exchange access.
Matching funds means the applicant's funding contribution for
allowable purposes.
National School Lunch Program (NSLP) means the federally assisted
meal program established under the National School Lunch Act of 1946
(42 U.S.C. 1751).
Project means an undertaking to provide or improve distance
learning or telemedicine by using financial assistance from RUS under
this subpart.
Project service area means the area in which at least 90 percent of
the persons to be served by the project are likely to reside.
Rural community facilities means facilities such as schools,
libraries, learning centers, training facilities, hospitals, medical
centers, or similar facilities, primarily used by residents of rural
areas, that will use a telecommunications, computer network, or related
advanced technology system to provide educational and/or health care
benefits primarily to residents of rural areas.
RUS means the Rural Utilities Service, an agency of the United
States Department of Agriculture formerly known as REA. See 7 CFR
1700.1.
Scope of work means a detailed plan of work that has been approved
by the Administrator to be performed by the applicant using funding
provided under this subpart.
Secretary means the Secretary of Agriculture.
Technical assistance means:
(1) Assistance in learning to operate equipment or systems; and
(2) Studies, analyses, designs, reports, manuals, guides,
literature, or other forms of creating, acquiring, and/or disseminating
information.
Telecommunications carrier means any provider of telecommunications
services.
Telecommunications/Electric borrower means an entity that has
outstanding electric or telephone RUS and/or Rural Telephone Bank loans
or loan guarantees under the provisions of the Act.
Telecommunications terminal equipment means the assembly of
telecommunications equipment at the end of a circuit or path of a
signal, including but not limited to over the air broadcast, satellite,
and microwave, normally located on the premises of the end user, that
interfaces with telecommunications transmission facilities, and that is
used to modify, convert, encode, or otherwise prepare signals to be
transmitted via such telecommunications facilities, or that is used to
modify, reconvert, or carry signals received from such facilities, the
purpose of which is to accomplish the goal for which the circuit or
signal was established.
Telecommunications transmission facilities means facilities that
transmit, receive, or carry data between the telecommunications
terminal equipment at each end of the telecommunications circuit or
path. Such facilities include microwave antennae, relay stations and
towers, other telecommunications antennae, fiber-optic cables and
repeaters, coaxial cables, communication satellite ground station
complexes, copper cable electronic equipment associated with
telecommunications transmissions, and similar items.
Telemedicine means a telecommunications link to an end user through
the use of eligible equipment which electronically links medical
professionals at separate sites in order to exchange health care
information in audio, video, graphic, or other format for the purpose
of providing improved health care services primarily to residents of
rural areas.
Title XXIII means subtitle D, chapter 1, of the Rural Economic
Development Act of 1990 (7 U.S.C. 950aaa through 950aaa-4).
Sec. 1703.103 Applicant eligibility and allocation of funds.
(a) To be eligible to receive funding under this subpart, the
applicant must be organized in one of the following corporate
structures:
(1) An incorporated organization, partnership, Indian tribe and
tribal organization as defined in 25 U.S.C. 450b (b) and (c), or other
legal entity, including a municipal corporation or a private
corporation organized on a for-profit or not-for-profit basis, which
operates, or will operate, a school, college, university, learning
center, training facility, or other educational institution, including
a regional educational laboratory, library, hospital, medical center,
medical clinic or any rural community facility. A state government,
other than a state government entity that operates a rural community
facility, is not considered an eligible applicant; or
(2) A consortium, as defined in Sec. 1703.102. A consortium which
includes a state government entity is only eligible if the state
government entity operates a rural community facility; or
[[Page 18683]]
(3) An incorporated organization, partnership, Indian tribe and
tribal organization as defined in 25 U.S.C. 450b (b) and (c), or other
legal entity which is providing or proposes to provide telemedicine
service or distance learning service to other legal entities or
consortia at rates calculated to ensure that the economic value and
other benefits of the distance learning or telemedicine grant is passed
through to such other legal entities or consortia.
(b) At least one of the entities in a partnership or consortium
must be eligible individually, and the partnership or consortium must
provide written evidence of its legal capacity to contract with RUS. If
a partnership or consortium lacks the capacity to contract, each
individual entity must contract with RUS on its own behalf.
(c) A borrower of an electric or telecommunications loan under the
Rural Electrification Act of 1936 is eligible for a cost of money loan
only.
(d) All applicants for financial assistance, with the exception of
applicants requesting a loan and having the minimum required score,
will be ranked by the type of application (health care or educational)
and total points scored. Grant funds available for medical and
educational applicants will be allocated based on the total number of
medical and educational applications scoring in the top 50 percent of
all applications received. Applications will be ranked only in one
category based on the predominant use of the project.
Sec. 1703.104 Allowable grant and loan funding percentage.
(a) Financial assistance, except as noted in paragraph (b) of this
section, may be used by eligible organizations for distance learning
and telemedicine projects to finance up to 70 percent of the cost of
allowable purposes outlined in Sec. 1703.105 provided that no financial
assistance may exceed the maximum grant or loan amount for the year in
which the grant or loan is made.
(b) Cost of Money Loans requested by an applicant may be used by
eligible organizations for distance learning and telemedicine projects
to finance up to 90 percent of the cost of allowable loan purposes
outlined in Sec. 1703.105, provided that no loan may exceed the maximum
loan amount for the year in which the loan is made. Financial
assistance applications that do not request a loan and qualify for a
loan or combination loan and grant will be funded up to 70 percent of
the cost of allowable purposes.
Sec. 1703.105 Grant and loan purposes.
(a) Grants and loans shall be limited to costs associated with the
initial capital assets associated with the project. Grant and loan
funds as set out in the last sentence of this section shall not exceed
twenty percent (20 percent) of the requested financial assistance. The
following are allowable grant and loan purposes:
(a) Acquiring, by lease or purchase, eligible equipment as defined
in Sec. 1703.102;
(b) Acquiring instructional programming; and
(c) Providing technical assistance and instruction for using
eligible equipment, including any related software; developing
instructional programming; providing engineering or environmental
studies relating to the establishment or expansion of the phase of the
project that is being financed with the financial assistance.
Sec. 1703.106 In-kind matching provisions.
(a) In-kind matching, the applicant's minimum funding contribution
(specified in Sec. 1703.104) for allowable purposes, is generally
required in the form of cash. However, in-kind contributions for the
purposes listed in Sec. 1703.105 may be substituted for cash.
(b) In-kind items listed in Sec. 1703.105 must be non-depreciated
or new assets with established monetary value. Manufacturers or service
providers discounts are not considered in-kind matching.
(c) Funding may be provided for end user sites. Funding may also be
provided for hubs located in rural or non-rural areas, if they are
necessary to provide distance learning and/or telemedicine services to
rural residents at end user sites.
Sec. 1703.107 Ineligible loan and grant purposes.
(a) Without limitation, funding under this subpart will not be
provided:
(1) To cover the costs of installing or constructing
telecommunications transmission facilities, except as provided in
paragraph (c) of this section;
(2) To pay for medical equipment except medical equipment primarily
used for encoding and decoding data, such as images, for transmission
over a telecommunications or computer network;
(3) To pay salaries, wages, or employee benefits to medical or
educational personnel;
(4) To pay for the salaries or administrative expenses of the
applicant or the project;
(5) To purchase equipment that will be owned by the local exchange
carrier or another telecommunications service provider;
(6) To duplicate facilities providing distance learning or
telemedicine services in place or to reimburse the applicant or others
for costs incurred prior to RUS' receipt of the completed application;
(7) To pay costs of preparing the application package for funding
under this program;
(8) For projects whose sole objective is to provide links between
teachers and students or medical professionals who are located at the
same facility;
(9) For site development and the destruction or alteration of
buildings;
(10) For the purchase of land, buildings, or building construction;
(11) For projects located in areas covered by the Coastal Barrier
Resources Act (16 U.S.C. 3501 et seq.);
(12) For any purpose that the Administrator has not specifically
approved; or
(13) Except for leases provided in Sec. 1703.105, to pay the cost
of recurring or operating expenses for the project.
(b) Except as otherwise provided in Sec. 1703.140, funds shall not
be used to finance a project in part when success of the project is
dependent upon the receipt of additional funding under this subpart D
or is dependent upon the receipt of other funding that is not assured.
(c) Loans can be used to cover the costs of telecommunications
transmission facilities if no telecommunications carrier will install
such facilities under the Act or through other financing procedures
within a reasonable time period and at a cost to the applicant that
does not jeopardize the feasibility of the project, as determined by
the Administrator.
Sec. 1703.108 Maximum and minimum sizes of a grant and a loan.
Applications for grants and loans to be considered under this
subpart will be subject to limitations on the proposed amount of
funding. The Administrator may establish the maximum amount of
financial assistance to be made available to an individual recipient
for each fiscal year under this subpart, by publishing notice of the
maximum amount in the Federal Register not more than 45 days after
funds are made available for the fiscal year to carry out this subpart.
The minimum size of a grant and/or loan is $50,000.
Sec. 1703.109 The funding application.
The following items comprise the required material that must be
submitted to RUS in support of the funding request:
[[Page 18684]]
(a) Proposed scope of work of the project. The proposed scope of
work of the project which includes, at a minimum:
(1) The specific activities to be performed under the project;
(2) Who will carry out the activities;
(3) The time-frames for accomplishing the project objectives and
activities; and
(4) A budget for capital expenditures reflecting the line item
costs for both the grant and/or loan funds and other sources of funds
for the project.
(b) Executive summary for the project. The applicant must provide
RUS a general project overview, verification of compliance with the
general requirements of this subpart, and documentation of eligibility.
The executive summary shall contain the following 9 categories:
(1) A description of why the project is needed.
(2) An explanation of how the applicant will address the need cited
in paragraph (b)(1) of this section, why the applicant requires
financial assistance and types of educational and/or medical services
to be offered by the project, and the benefits to the rural residents.
(3) A description of the applicant, documenting eligibility with
Sec. 1703.103.
(4) An explanation of the total cost of the project including a
breakdown of the RUS funding required and the source of funding for the
remainder of the project.
(5) A statement that the project is either a distance learning or
telemedicine facility as defined in Sec. 1703.102. If the project
provides both distance learning and telemedicine services, the
applicant must identify the predominant use of the system.
(6) A general overview of the telecommunications system to be
developed, including the types of equipment, technologies, and
facilities used.
(7) A description of the participating hubs and end user sites and
the number of rural residents which will be served by the proposed
project at each end user site.
(8) The applicant must certify that facilities using financial
assistance do not duplicate adequate established telemedicine services
or distance learning services. RUS will make the final determination
whether or not financial assistance requested by an applicant will
duplicate such adequate established services.
(9) A listing of the location of each end user site [city, town,
village, borough or rural area plus the state] discussing how the
appropriate National School Lunch Program eligibility percentage was
determined in accordance with Sec. 1703.112. These percentages may be
obtained from the State or local organization that administers the
program and must be certified by that organization as being correct.
(c) Financial Information. The applicant must provide financial
information to support the need for the funding requested for the
project. It must show its financial capacity to carry out the proposed
work, and show project feasibility. For educational institutions
participating in a project application (including all members of a
consortium), the financial data must reflect revenue and expense
reports and balance sheet reports, reflecting net worth, for the most
recent annual reporting period preceding the date of the application.
For medical institutions participating in a project application
(including all members of a consortium), the financial data must
include income statement and balance sheet reports, reflecting net
worth, for the most recent completed fiscal year preceding the date of
the application. When the applicant is a partnership, company,
corporation or other entity, current balance sheets, reflecting net
worth, are needed from each of the entities that has at least a 20
percent interest in such partnership, company, corporation or other
entity. When the applicant is a consortium, a current balance sheet,
reflecting net worth, is needed from each member of the consortium and
from each of the entities that has at least a 20 percent interest in
such member of the consortium.
(1) Applicants must include sufficient pro-forma financial data
which adequately reflects the financial capability of project
participants and the project as a whole to continue a sustainable
project for a minimum of 10 years after completion of the project. This
documentation should include sources of sufficient income or revenues
to pay operating expenses including telecommunications access and/or
toll charges, system maintenance, salaries, training, and any other
general operating expenses, and provide for replacement of depreciable
items.
(2) For applicants requesting a loan and applicants who qualify for
a loan or a combination loan/grant in accordance with Sec. 1703.112,
the documentation must demonstrate the ability to repay the loan. RUS
will consider a secured loan guarantee by a third party as evidence of
the ability of the applicant to repay a loan.
(3) For each hub and end user site, the applicant must identify and
provide reasonable evidence of each source of revenue. If the
projection relies on cost sharing arrangements among hub and end user
sites, the applicant must provide evidence of agreements made among
project participants.
(4) For applicants eligible under Sec. 1703.103(a)(3), an
explanation of the economic analysis justifying the rate structure to
ensure that the benefit, including cost saving, of the financial
assistance is passed through to the other persons receiving
telemedicine or distance learning services.
(5) For RUS telecommunications and electric borrowers applying for
a cost of money loan, the only financial information required in
support of that application is the respective most recent Annual Report
to RUS (i.e. RUS Form 479, Form 7, or Form 12).
(d) A statement of experience. The applicant must provide a written
narrative (not exceeding three single spaced pages) describing its
demonstrated capability and experience, if any, in operating an
educational or health care endeavor and any project similar to the
proposed project. Experience in a similar project is desirable but not
required.
(e) Funding commitment from other sources. The applicant must
provide evidence, in form and substance satisfactory to the
Administrator, that all funds in addition to funds provided under this
subpart are committed and will be used for the proposed project.
(f) Telecommunications System Plan. A Telecommunications System
Plan, consisting of the following, is required. The items in paragraphs
(f)(4) and (5) of this section are needed only when the applicant is
requesting loan funds for telecommunications transmission facilities:
(1) The capabilities of the telecommunications terminal equipment,
including a description of the specific equipment which will be used to
deliver the proposed service. The applicant must document discussions
with various technical sources which could include consultants,
engineers, product vendors, or internal technical experts, provide
detailed cost estimates for operating and maintaining the end user
equipment and provide evidence that alternative equipment and
technologies were evaluated.
(2) A listing of the proposed purchases or leases of
telecommunications terminal equipment, telecommunications transmission
facilities, data terminal equipment, interactive video equipment,
computer hardware and software systems, and components that process
data for transmission via telecommunications, computer network
components, communication satellite
[[Page 18685]]
ground station equipment, or any other elements of the
telecommunications system designed to further the purposes of this
subpart, that the applicant intends to build or fund using RUS
financial assistance.
(3) A description of the consultations with the appropriate
telecommunications carriers (including other interexchange carriers,
cable television operators, enhanced service providers, providers of
satellite services and telecommunications equipment manufacturers and
distributors) and the anticipated role of such providers in the
proposed telecommunications system.
(4) Results of discussion with local exchange carriers serving the
project area addressing concerns in Sec. 1703.107(c).
(5) The capabilities of the telecommunications transmission
facilities, including bandwidth, networking topology, switching,
multiplexing, standards and protocols for intra-networking and open
systems architecture (the ability to effectively communicate with other
networks). In addition, the applicant must explain the manner in which
the transmission facilities will deliver the proposed services. For
example, for medical diagnostics, the applicant might indicate whether
or not a guest or other diagnosticians can join the network from
locations off the network. For educational services, indicate whether
or not all hub and end-user sites are able to simultaneously hear in
real-time and see each other or the instructional material in real-
time. The applicant must include detailed cost estimates for operating
and maintaining the network, and include evidence that alternative
delivery methods and systems were evaluated.
(g) Proposed evaluation methodology. The applicant must provide a
proposed method of evaluating the success of the project in meeting the
objectives of the program as set forth in Sec. 1703.100 and
Sec. 1703.101 and the proposed scope of work.
(h) Compliance with other Federal statues and regulations. The
applicant is required to submit evidence that it is in compliance with
other Federal statues and regulations, as detailed in Sec. 1703.33 as
follows:
(1) Equal opportunity and nondiscrimination requirements;
(2) Architectural barriers;
(3) Flood hazard area precautions;
(4) Uniform Relocation Assistance and Real Property Acquisition for
Federal and Federally Assisted Programs;
(5) Drug-free workplace;
(6) ``Certification Regarding Debarment, Suspension and Other
Responsibility Matters--Primary Covered Transaction'' (See 7 CFR
3017.510);
(7) Intergovernmental review of Federal programs if clearing
house(s) exists for the state(s) in which project is located; and
(8) Restrictions on lobbying. For an application for funding in
excess of $100,000, a certification statement, ``Certification
Regarding Lobbying'' is required. If the applicant is engaged in
lobbying activities , the applicant must submit a completed disclosure
form, ``Disclosure of Lobbying Activities'' (see 7 CFR part 3018).
(i)(1) Environmental impact and historic preservation. The
applicant must provide details of the project's impact on the
environment and historic preservation. Grants and loans made under this
part are subject to 7 CFR part 1794 which contains the policies and
procedures of RUS for implementing a variety of Federal statues,
regulations and executive orders generally pertaining to protection of
the quality of the human environment that are listed in 7 CFR 1794.1.
The application shall contain a separate section entitled
``Environmental Impact of the Project.''
(2) Environmental information. An ``Environmental Questionnaire,''
appendix A to this subpart, may be used by applicants to assist in
complying with the requirements of this section. Copies of the
Environmental Questionnaire are available from RUS.
(j) A completed Standard Form 424, ``Application for Federal
Assistance,'' along with a board of directors resolution authorizing
the funding request.
(k) Evidence of the applicant's legal existence and authority to
enter into a grant and/or loan agreement with RUS and perform
activities proposed under the grant or loan application.
(l) Evidence that the applicant is not delinquent on any obligation
owed to the Federal government (7 CFR parts 3015 and 3016).
(m) Evidence that the applicant has consulted with the USDA State
Director, Rural Development, concerning the availability of other
sources of funding available at the state or local level.
(n) Evidence from the USDA State Director, Rural Development, that
the application conforms with the State strategic plan as prepared
under section 381D of the Consolidated Farm and Rural Development Act 7
U.S.C. 1921 et seq.). The applicant should indicate if such a plan does
not exist.
(o) A depreciation schedule covering all assets of the project.
Those assets for which financial assistance is being requested should
be clearly indicated.
(p) Supplemental information. The applicant should provide any
additional information it considers relevant to the project and likely
to be helpful in determining the extent to which the proposed project
would further the purposes of this subpart.
(q) Additional information requested by RUS. The applicant must
provide any additional information the Administrator may consider
relevant to the application and necessary to adequately evaluate the
application and make funding decisions. The Administrator may also
request modifications or changes, including changes in the amount of
funds requested, in any proposal described in an application submitted
under this subpart.
Sec. 1703.110 Conflict of interest.
At any time prior to the disbursement of a grant or loan awarded
under this subpart, the Administrator may disqualify an otherwise
eligible project whenever, in the judgment of the Administrator, the
project would create a conflict of interest or the appearance of a
conflict of interest. The Administrator will notify the applicant in
writing of his/her intention to disqualify the project under this
section and set forth the basis for his/her determination that a
conflict of interest or appearance exists. Thereafter, the applicant
will have 30 days from the date of such notice to file a written
response with the Administrator. If the Administrator receives the
applicant's response within the 30-day period, the Administrator will
consider the information contained therein before making a final
determination whether to disqualify the project. The Administrator will
promptly notify the applicant of the final determination whether a
conflict of interest or appearance of a conflict exists. If the
determination is affirmative, the notice will also advise the applicant
whether the project is disqualified or conditionally disqualified. If
the project is conditionally disqualified, the notice will state under
what circumstances the project may continue to be eligible for
assistance under this subpart. The Administrator's decision under this
section will be final.
Sec. 1703.111 [Reserved]
Sec. 1703.112 Determination of types of funding.
(a) To maximize the use of available funding and to obtain the
maximum repayment to the Federal Government, RUS will determine if an
applicant will
[[Page 18686]]
be awarded a grant, loan or a combination of both loans and grants
based upon the following:
(1) The percentage of students eligible to participate in the
National School Lunch Program in the areas where the end user sites
comprising the project are located; and
(2) The applicant's ability to pay for the project.
(b) The methodology contained in this section will be used to
evaluate the relative financial need of the applicant, community, and
project. All applicants are required to provide the applicable
percentage of students eligible to participate in the National School
Lunch Program for each end user site which must be certified as being
correct by the appropriate State or local organization administering
the program. The type of financial assistance will be determined as
follows:
(1) If the end user site(s) for the project have, or are located in
school districts which have, from 0-32 percent student eligibility in
the National School Lunch Program, the project qualifies for a loan.
(2) If the end user site(s) for the project have, or are located in
school districts which have, from 33-60 percent student eligibility in
the National School Lunch Program, the project qualifies for a loan and
may be eligible for some grant funds.
(3) If the end user site(s) for the project have, or are located in
school districts which have, from 61-100 percent student eligibility in
the National School Lunch Program, the project qualifies for a grant.
The applicant may indicate its desire to be considered for a loan or a
combination loan and grant if denied a grant provided the financial
data required in Sec. 1703.109(c) indicates the ability to repay a
loan. Grant applicants should indicate if they desire to be considered
for a loan.
(c) The following guidelines will be used to determine the
applicable National School Lunch Program eligibility percent for a
particular end user site:
(1) Public schools or non profit private schools of high school
grade or under will use the actual eligibility percentage for that
particular school.
(2) Schools and institutions of higher learning ineligible to
participate in the National School Lunch Program and non-school end
user sites (medical facilities, libraries, etc.) will use the
eligibility percentage of all students in the school district where the
end user will be located.
(d) If all the end user sites in a proposed network or system fall
within the same percentile category, the project will be eligible for
the type of financial assistance set forth in paragraph (b) of this
section.
(e) If end user sites fall within different percentile categories
the eligibility percentages associated with each end user site will be
averaged to determine the percentile category and type of financial
assistance the applicant is eligible for. For purposes of averaging, if
a hub is also utilized as an end user site, the hub will be considered
as an end user site.
(f) For those applicants which qualify for a combination loan/
grant, the Administrator will determine the amount of grant funding the
applicant will receive, if any, based upon analysis of the financial
condition of the applicant as reflected by the information submitted
under Sec. 1703.109(c). The minimum amount of grant funding will be
$5,000.
(g) RUS will submit a letter to those applicants being offered
financial assistance in the form of a loan, or a combination of a loan
and grant, outlining terms and conditions of such assistance. The
applicant will have 15 days from the date of the letter to accept the
terms and conditions in the letter. If the applicant fails to respond
within this time the Administrator may withdraw the offer of financial
assistance and the applicant will have no right to appeal the
withdrawal.
Sec. 1703.113 Application filing dates, location, processing, and
public notification.
(a) Applications for funding under this subpart shall be submitted
to the Administrator, Rural Utilities Service, U.S. Department of
Agriculture, 1400 Independence Avenue, SW., STOP 1590, Washington, DC
20250-1590. Applications should be marked ``Attention: Assistant
Administrator, Telecommunications Program''.
(b) Applications for loans can be submitted at any time. RUS will
review each application for completeness in accordance with
Sec. 1703.109, and notify the applicant, within 15 working days of the
receipt of the application, of the results of this review, citing any
information which is incomplete. To be considered for loan funds during
the fiscal year (FY) that the application is submitted, the applicant
must submit any information needed to complete the application by June
30. If this review concludes that a loan is feasible and the
application receives the required minimum number of points as
determined using the scoring criteria in Sec. 1703.117, the
Administrator will immediately process the application. The minimum
number of points required for a loan application to be immediately
processed will be published in the Federal Register each fiscal year.
(c) Applications requesting grant funds must be submitted to RUS to
arrive not later than May 31, 1997, if the applications are to be
considered during FY 1997. Beyond FY 1997, all applications requesting
grant funds must be submitted to RUS to arrive not later than April 30
if the applications are to be considered during the fiscal year the
application is submitted. It is suggested that applications be
submitted prior to the above deadline to ensure they can be reviewed
and considered complete by the deadline. RUS will review each
application for completeness in accordance with Sec. 1703.109, and
notify the applicant, within 15 working days of the receipt of the
application, of the results of this review, citing any information
which is incomplete. To be considered for grant funds, the applicant
must submit the information to complete the application by May 31 in FY
97 and April 30 beyond FY 97. If the applicant fails to submit such
information by the appropriate deadline, the application will be
considered during the next fiscal year.
(d) The Administrator will publish, at the end of each fiscal year,
a notice in the Federal Register of all completed applications
receiving funding under this subpart. The Administrator will also make
those applications available for public inspection at the U.S.
Department of Agriculture, 1400 and Independence Avenue, SW.,
Washington, DC. For purposes of this paragraph, applications include
any information not protected by the Privacy Act of 1974, 5 U.S.C.
552a, and any other information that has not been designated as
proprietary information by the applicant.
(e) All applicants must submit an original and two copies of a
completed application. A grant applicant must also submit a copy of the
application to the State government point of contact, if one has been
designated for the state, at the same time it submits an application to
RUS. All applications must include the information described in
Sec. 1703.109.
Secs. 1703.114-1703.116 [Reserved]
Sec. 1703.117 Criteria for scoring applications.
(a) Criteria. The criteria in this section will be used by the
Administrator to score applications that have been determined to be in
compliance with the requirements of this subpart.
[[Page 18687]]
Applicants shall address the following criteria:
(1) The need for services and benefits derived from services;
(2) The comparative rurality of the proposed project service area;
(3) The ability to leverage resources;
(4) Innovativeness of design;
(5) Connectivity with outside networks;
(6) The cost effectiveness of the design;
(7) Project participation in EZ/EC (Empowerment Zone and Enterprise
Communities); and
(8) Project participation in Champion communities.
(b) Scoring criteria--(1) The need for services and benefits
derived from services. (i) This criterion will be used by the
Administrator to score applications based on the documentation
submitted in the support of the funding application that reflects the
need for services and benefits derived from the services proposed by
the project. Up to 45 points can be assigned to this criterion.
(ii) The Administrator will consider the extent of the applicant's
documentation explaining the economic, education or health care
challenges facing the community; the applicants proposed plan to
address these challenges; how the financial assistance can help; and
why the applicant cannot complete the project without a loan or grant.
The Administrator will also consider any support by recognized experts
in the related educational or health care field, any documentation
substantiating the educational and/or health care underserved nature of
the applicant's proposed service area, and any justification for
specific educational and/or medical services which are needed and will
provide direct benefits to rural residents. Some examples of benefits
to be provided by the project include, but are not limited to:
(A) Improved education opportunities for a specified number of
students;
(B) Travel time and money saved by telemedicine diagnosis;
(C) Number of doctors retained in rural areas;
(D) Number of additional students electing to attend higher
education institutions;
(E) Lives saved due to prompt medical diagnosis and treatment;
(F) New education courses offered, including college level courses;
(G) Expanded use of educational facilities such as night training;
(H) Number of patients receiving telemedicine diagnosis;
(I) Provision of training, information resources, library assets,
adult education, lifetime learning, community use of technology, jobs,
connection to region, nation, and world.
(iii) That rural residents, and other beneficiaries, desire the
educational and/or medical services to be provided by the project (a
strong indication of need is the willingness of local end users or
institutions to pay, to the extent possible, for proposed services).
(iv) The project's development and support based on input from the
local residents and institutions.
(v) The extent to which the application is consistent with the
State strategic plan prepared by the Rural Development State Director
of the United States Department of Agriculture.
(2) The comparative rurality of the proposed project service area.
(i) The methodology contained in this section is used to evaluate the
relative rurality (i.e. population) of service areas for various
projects. Under this system, the end user sites and hubs (as defined in
Sec. 1703.102) contained within the proposed project service area are
identified. Then, those locations are given a score according to the
population of the area where the end user sites are located. Up to 35
points can be assigned to this criterion.
(ii) The following definitions are used in the evaluation of
rurality:
(A) Exceptionally Rural Area means any area of the United States
not included within the boundaries of any incorporated or
unincorporated city, village, or borough having a population in excess
of 5,000 inhabitants.
(B) Rural Area means any area of the United States included within
the boundaries of any incorporated or unincorporated city, village, or
borough having a population over 5,000 and not in excess of 10,000
inhabitants.
(C) Urban Area means any area of the United States included within
the boundaries of any incorporated or unincorporated city, village, or
borough having a population in excess of 10,000 inhabitants.
(iii) The applicant will receive points as follows:
(A) There are a total of 35 possible points for this criterion. The
maximum number of points each end user site can receive is determined
by dividing the total possible points for this criterion, 35, by the
total number of end user sites. If a hub is utilized as an end user
site, the hub will be considered as an end user site.
(B) If the end user site is located in an Exceptionally Rural Area,
it will receive the maximum number of points each end user site. If the
end user site is located in a Mid-Rural Area, it will receive 50
percent of the maximum number of points each end user site. If the end
user site is located in an Urban Area, it will receive 0 percent of the
maximum number of points each end user of the applicant can receive.
(C) The total points for each end user site will be added to reach
a final point total for the project.
(D) An application must receive a minimum of 18 points under this
criterion to be eligible for any financial assistance.
(3) The ability to leverage resources. (i) This section is used to
evaluate the ability of the applicant to contribute financially to the
project and to secure other non-Federal sources of funding.
Documentation submitted in the support of the funding application
should reflect any additional financial support for the project from
non-Federal sources above the applicant's required percent matching of
the RUS financial assistance as set forth in Sec. 1703.104. The
applicant must include evidence from authorized representatives of the
sources that the funds are available and will be used for the proposed
project--up to 35 points.
(ii) The applicant will receive points as follows:
(A) Matching for allowable financial assistance purposes greater
than 30 percent, but less than or equal to 50 percent of the RUS
financial assistance--10 points.
(B) Matching for allowable financial assistance purposes greater
than 50 percent, but less than or equal to 100 percent of the RUS
financial assistance--20 points.
(C) Matching for allowable financial assistance purposes greater
than 100 percent, but less than or equal to 150 percent of the RUS
financial assistance--25 points.
(D) Matching for allowable financial assistance purposes greater
than 150 percent, but less than or equal to 200 percent of the RUS
financial assistance --30 points.
(E) Matching for allowable financial assistance purposes greater
than 200 percent of the RUS financial assistance--35 points.
(4) Innovativeness of project. This criterion will be used by the
Administrator to score applications based on the documentation
submitted in the support of the funding application that reflects the
innovative nature of the project. The applicant should explain the
extent to which, if any, the project is an innovative approach to
either delivering or using telecommunications to address the needs of
the community, and how the project differs in approach from the
[[Page 18688]]
typical educational or health care application of technology. Up to 20
points can be assigned to this criterion.
(5) Connectivity with outside networks. (i) This criterion will be
used by the Administrator to score applications based on the
documentation submitted in support of the funding application that
reflects the extent to which the proposed project can be connected to
other educational and/or health care networks. Up to 20 points can be
assigned to this criterion.
(ii) Consideration will be given to the extent that the proposed
project will interconnect with other existing networks at the regional,
statewide, national or international levels. RUS believes that to the
extent possible, educational and health care networks should be
designed to connect to the widest practicable number of other networks
that expand the capabilities of the proposed project, thereby affording
rural residents opportunities that may not be available at the local
level. The ability to connect to the internet alone can not be used as
the sole basis to fulfill this criteria.
(iii) Consideration will also be given to the extent that
facilities constructed with federal financial assistance, particularly
financial assistance under this chapter provided to entities other than
the applicant, will be utilized to extend or enhance the benefits of
the proposed project.
(6) Cost effective design. (i) This criterion will be used by the
Administrator to score applications based on the documentation
submitted in the support of the funding application that reflects the
cost efficiency of the project design. Up to 15 points can be assigned
to this criterion.
(ii) Consideration will be given to the extent that the proposed
technology or technologies for delivering the proposed educational and/
or health care services for the project service area are the most cost
effective for the project proposed. The application must contain
information necessary for the Administrator to use accepted analytical
and financial methodologies to determine whether the applicant is
proposing the most cost-effective option. The Administrator will
consider the applicant's documentation comparing various systems and
technologies, whether the applicant's system is the most cost-effective
system, and whether buying or leasing specific equipment is more cost
effective. Points will be deducted from the scores of the applications
that fail to utilize existing telecommunications facilities that could
provide the transmission path for the needed services.
(7) Project participation in EZ/ECs. This criterion will be used by
the Administrator to score applications based on the documentation
submitted in support of the funding application that reflects the
designation of Empowerment Zones and Enterprise Communities (EZ/EC)
included as beneficiaries of the proposed project. Ten (10) points will
be assigned if at least one end user site is located in an EZ/EC.
(8) Project participation in Champion communities. This criterion
will be used by the Administrator to score applications based on the
documentation submitted in support of the funding application that
reflects the designation of Champion communities included as
beneficiaries of the proposed project. Five (5) points will be assigned
if at least one end user site is located in a Champion community.
Sec. 1703.118 Other application selection provisions.
(a) Selection. Applications will be selected for funding based on
scores, availability of funds, and the provisions of this section. The
Administrator will make determinations regarding the reasonableness of
all numbers; dollar levels; rates; the nature and design of the
project; cost; location; and other characteristics of the application
and the proposed project to determine the number of points assigned to
a grant application for all selection criteria. Joint applications
submitted by multiple applicants as set forth in Sec. 1703.113 will be
rated as a single application.
(b) Regardless of the number of points an application receives in
accordance with Sec. 1703.117 or the feasibility of the proposed
project, the Administrator may, based on a review of the applications
in accordance with the requirements of this subpart:
(1) Limit the number of applications selected for projects located
in any one state during a fiscal year;
(2) Limit the number of selected applications for a particular
project;
(3) Select an application receiving fewer points than another
higher scoring application if there are insufficient funds during a
particular funding period to select the higher scoring application;
provided, however, the Administrator may ask the applicant of the
higher scoring application if it desires to reduce the amount of its
application to the amount of funds available if, notwithstanding the
lower grant amount, the Administrator determines the project is
financially feasible in accordance with Sec. 1703.109(d)(1) at the
lower amount;
(4) Award a grant to an applicant whose application carries out the
priorities listed in the scoring criteria in such a way to make the
application unique; or
(5) Award a grant to an applicant which would normally qualify for
other financial assistance, if the project achieves one or more of the
following:
(i) Utilizes cutting edge technology to provide a solution to a
unique problem;
(ii) Provides services otherwise not possible in an extremely
isolated geographic area; or
(iii) Provides inordinate quantifiable benefit to rural communities
relative to the amount of financial assistance requested.
(c) The Administrator will not approve an application if the
Administrator determines that:
(1) The applicant's proposal does not indicate financial
feasibility or is not sustainable in accordance with the requirements
of Sec. 1703.109(d)(1);
(2) The applicant's proposal indicates technical flaws, which, in
the opinion of the Administrator, would prevent successful
implementation, operation, or sustainability of the proposed project;
or
(3) Any other aspect of the applicant's proposal fails to
adequately address any requirements of this subpart or contains
inadequacies which would, in the opinion of the Administrator,
undermine the ability of the project to meet the general purpose of
this subpart or comply with policies of the Distance Learning and
Telemedicine Loan and Grant Program set forth in Sec. 1703.101.
(d) The Administrator may reduce the amount of the applicant's
grant award based on insufficient program funding for the fiscal year
in which the project is reviewed, and/or offer the applicant loan funds
in addition to the grant funds, if the Administrator determines that,
notwithstanding a lower grant award, the project will show financial
feasibility in accordance with Sec. 1703.109(d)(1), and continues to
meet all other provisions of this subpart. RUS will discuss its
findings informally with the applicant and make every effort to reach a
mutually acceptable agreement with the applicant. Any discussions with
the applicant and agreements made with regard to a reduced grant amount
will be confirmed in writing, and these actions shall be deemed to have
met the notification requirements set forth in paragraph (e) of this
section.
(e) The Administrator will provide the applicant an explanation of
any determinations made with regard to paragraphs (c)(1) through (c)(3)
of this section prior to making final project funding selections for
the year. The
[[Page 18689]]
applicant will be provided 15 days from the date of the Administrator's
letter to respond, provide clarification, or make any adjustments or
corrections to the project. If, in the opinion of the Administrator,
the applicant fails to adequately respond to any determinations or
other findings made by the Administrator, the project will not be
funded, and the applicant will be notified of this determination. If
the applicant does not agree with this finding an appeal may be filed
in accordance with Sec. 1703.119.
Sec. 1703.119 Appeal provisions.
All qualifying applications under this subpart will be scored based
on criteria in section Sec. 1703.117. A determination will be made by
the Administrator based on the highest ranking applications and the
amount of funds available for grants and loans. All applicants will be
notified in writing of the score each application receives, and
included in this notification will be a tentative minimum required
score to receive financial assistance. If the score received by the
applicant could result in the denial of its application, or if its
score, while apparently sufficient to qualify for financial assistance,
may be surpassed by the score awarded to a competing application after
appeal, the applicant may appeal its numerical scoring. Any appeal must
be based on inaccurate scoring of the application by RUS and no new
information or data that was not included in the original application
will be considered. The appeal must be made in writing within 10 days
after the applicant is notified of the scoring results. Appeals shall
be submitted to the Administrator, Rural Utilities Service, U.S.
Department of Agriculture, 1400 Independence Ave., SW, STOP 1590,
Washington, DC 20250-1590. Thereafter, the Administrator will review
the original scoring to determine whether to sustain, reverse or modify
the original scoring determination. Final determinations will be made
after consideration of all appeals. The Administrator's determination
will be final. A copy of the Administrator's decision will be furnished
promptly to the applicant. An appeal based solely upon the type of
financial assistance the applicant qualifies for will not be
considered.
Secs. 1703.120-1703.121 [Reserved]
Sec. 1703.122 Further processing of selected applications.
(a) During the period between the submission of the application and
the execution of implementing documents, the applicant must inform the
Administrator if the project is no longer viable or the applicant no
longer desires financial assistance for the project. If the applicant
so informs the Administrator, the selection will be rescinded and
written notice to that effect shall be sent promptly to the applicant.
(b) If an application has been selected and the nature of the
project changes, the applicant may be required to submit a new
application to the Administrator for consideration depending on the
degree of change. A new application will be subject to review in
accordance with this subpart. The selection may not be transferred to
another project.
(c) If state or local governments raise objections to a proposed
project under the intergovernmental review process that are not
resolved within 3 months of the Administrator's selection of the
application, the Administrator may rescind the selection and written
notice to that effect will be sent promptly to the applicant.
(d) Recipients of financial assistance will be required to submit
RUS Form 479-A, ``Distance Learning and Telemedicine Technical
Questionnaire.''
(e) After an applicant selected for financial assistance has
submitted such additional information, if any, the Administrator
determines is necessary for completing the financial assistance
documents, the Administrator will send the documents to the applicant
to execute and return to RUS.
(1) The financial assistance documents will include a letter of
agreement for grants; loan documents, including third party guarantees,
for loans; or any other legal documents the Administrator deems
appropriate, including suggested forms of certifications and legal
opinions.
(2) The letter of agreement and the loan documents will contain,
among other things, conditions on the release or advance of funds and
include at a minimum, a project description, approved purposes, the
maximum amount of the funding, supplemental funds, required of the
project and certain agreements or commitments the applicant may have
proposed in its application. In addition, the loan documents will
contain covenants and conditions the Administrator deems necessary or
desirable to provide assurance that the loan will be repaid and the
purposes of the loan will be accomplished.
(3) The recipient of a loan will be required to execute a security
instrument in form and substance satisfactory to the Administrator.
(4) DLT borrowers must, before receiving any advances of loan
funds, provide security that is adequate, in the opinion of the
Administrator, to assure repayment, within the time agreed, of all
loans to the borrower under Title XXIII. This assurance will generally
be provided by a first lien upon all of the borrower's assets or such
portion thereof as shall be satisfactory to the Administrator. The
Administrator may consider the projected revenues from the facilities
subject to the lien.
(5) Security may also be provided by third-party guarantees,
letters of credit, pledges of revenue or other forms of security
satisfactory to the Administrator.
(6) The mortgage, deed of trust, security agreement and other loan
documents required by the Administrator in connection with loans under
Title XXIII shall contain such pledges, covenants, and other provisions
as may, in the opinion of the Administrator, be necessary or desirable
to secure repayment of the loan.
(7) If the facilities financed do not constitute a complete
operating system, the DLT borrower shall provide evidence
demonstrating, to the Administrator's satisfaction, that the borrower
has sufficient contractual or other arrangements to assure that the
facilities financed will provide adequate and efficient service.
(f) Until the letter of agreement or loan documents have been
executed and delivered by RUS and by the applicant, the Administrator
reserves the right to require any changes in the project or legal
documents covering the project to protect the integrity of the program
and the interests of the United States Government.
(g) If the applicant fails to submit, within 120 calendar days from
the date of the Administrator's selection of an application, all of the
information that the Administrator determines to be necessary to
prepare legal documents and satisfy other requirements of this subpart,
the Administrator may rescind the selection of the application and
written notice of such rescission will be sent promptly to the
applicant.
Secs. 1703.123-1703.125 [Reserved]
Sec. 1703.126 Disbursement of loan and grant funds.
(a) For financial assistance of $100,000 or greater, prior to the
disbursement of funds, the recipient, if it is not a unit of
government, will provide evidence of fidelity bond coverage as required
by 7 CFR 3015.17.
(b) Financial assistance will be disbursed to recipients on a
reimbursement basis, or with unpaid invoices for the eligible purposes
set
[[Page 18690]]
forth in this subpart, by the following process:
(1) An SF 270, ``Request for Advance or Reimbursement,'' will be
completed by the recipient and submitted to RUS not more frequently
than once a month;
(2) After receipt of a properly completed SF 270, RUS will review
for accuracy and if the form is satisfactory will schedule payment.
Payment will ordinarily be made within 30 days; and
(3) For financial assistance approved during and subsequent to FY
1997, funds will be advanced in accordance to 7 CFR 1744.69.
(c) The recipient's share in the cost of the project will be
disbursed in advance of financial assistance, or if the recipient
agrees, on a pro rata distribution basis with financial assistance
during the disbursement period. Recipient will not be permitted to
provide its contribution at the end of the project.
(d) Concurrent grant and loan funds will be disbursed on a pro rata
distribution basis.
Sec. 1703.127 Reporting and oversight requirements.
(a) A project performance activity report will be required of all
recipients on an annual basis until the project is complete and the
funds are disbursed by the applicant.
(b) A final project performance report will be required. It must
provide an evaluation of the success of the project in meeting the
objectives of the program. The final report may serve as the last
annual report.
(c) RUS will monitor recipients as the Administrator determines
necessary to assure that projects are completed in accordance with the
approved scope of work and that funds are expended for approved
purposes.
(d) Recipients shall diligently monitor performance to ensure that
time schedules are being met, projected work by time periods is being
accomplished, and other performance objectives are being achieved.
Recipients are to submit an original and one copy of all reports
submitted to RUS. The project performance reports shall include, but
not be limited to, the following:
(1) A comparison of actual accomplishments to the objectives
established for that period;
(2) A description of any problems, delays, or adverse conditions
which have occurred, or are anticipated, and which may affect the
attainment of overall project objectives, prevent the meeting of time
schedules or objectives, or preclude the attainment of particular
project work elements during established time periods. This disclosure
shall be accompanied by a statement of the action taken or planned to
resolve the situation; and
(3) Objectives and timetable established for the next reporting
period.
Sec. 1703.128 Audit requirements.
The grant and DLT borrower loan recipients will provide an audit
report in accordance with 7 CFR part 3015, subpart I. For grant
recipients the audit requirements only apply to the year(s) in which
grant funds are expended. For DLT borrowers the audit requirements
apply until the loan is repaid. Audits must be prepared in accordance
with generally accepted government auditing standards (GAGAS) using
publication, ``Standards for Audit of Governmental Organization,
Programs, Activities and Functions.'' RUS Telecommunications/Electric
borrowers receiving cost of money loans will be subject to the same
audit requirements for these loans as are provided for in 7 CFR part
1773.
1703.129 Repayment of loans.
The term of cost of money loans will be based on the life of the
facilities to be financed, not to exceed 10 years. If the recipient
requests, a one year deferment of principal will be included. In
special hardship cases, which the recipient must justify, the
Administrator may approve a two year deferment of principal. Interest
on the loan will be due and payable during the principal deferral
period. RUS will establish uniform debt service payments based on the
total amortization period.
Secs. 1703.130-1703.134 [Reserved]
Sec. 1703.135 Grant and loan administration.
(a) The Administrator will review recipients as necessary to
determine whether funds were expended for approved purposes. The
recipient is responsible for ensuring that the project complies with
all applicable regulations, and that the financial assistance is
expended only for approved purposes. The recipient is responsible for
ensuring that disbursements and expenditures of funds are properly
supported by invoices, contracts, bills of sale, canceled checks, or
other appropriate forms of evidence, and that such supporting material
is provided to the Administrator, upon request, and is otherwise made
available, at the recipient's premises, for review by the RUS
representatives, the recipient's certified public accountant, the
office of Inspector General, U. S. Department of Agriculture, the
General Accounting Office and any other officials conducting an audit
of the recipient's financial statements or records, and program
performance for the funding awarded under this subpart. The recipient
will be required to permit RUS to inspect and copy any records and
documents that pertain to the project.
(b) Grants provided under this program will be administered under,
and are subject to 7 CFR parts 3015 through 3018, as appropriate. 7 CFR
parts 3015 and 3016 subject grantees to a number of requirements which
cover, among other things, financial reporting, accounting records,
budget controls, record retention and audits, bonding and insurance,
cash depositories for grant funds, grant related income, use and
disposition of real property and/or equipment purchased with grant
funds, procurement standards, allowable costs for grant related
activities, and grant close-out procedures.
Sec. 1703.136 Changes in project objectives or scope.
The recipient will obtain prior approval for any material change to
the scope or objectives of the approved project, including changes to
the scope of work or budget. Failure to obtain prior approval of
changes can result in suspension or termination of funds.
Sec. 1703.137 Grant and loan termination provisions.
(a) Termination for cause. The Administrator may terminate any
financial assistance in whole, or in part, at any time before the date
of completion of funding disbursement, whenever it is determined that
the recipient has failed to comply with the conditions of the financial
assistance. The Administrator will promptly notify the recipient in
writing of the determination and the reasons for the termination,
together with the effective date.
(b) Termination for convenience. The Administrator or the recipient
may terminate financial assistance in whole, or in part, when both
parties agree that the continuation of the project would not produce
beneficial results commensurate with further expenditure of funds. The
two parties will agree upon termination conditions, including the
effective date, and in the case of partial terminations, the portion to
be terminated. The recipient will not incur new obligations for the
terminated portion after the effective date, and will cancel as many
outstanding obligations as possible. The Administrator will allow full
credit to the applicant for the Federal share of the noncancelable
obligations, properly incurred by the recipient prior to termination.
[[Page 18691]]
Secs. 1703.138-1703.139 [Reserved]
Sec. 1703.140 Expedited telecommunications loans.
General. The Administrator will expedite consideration and
determination of an application for a loan or a request for advance of
funds submitted by an RUS telecommunications borrower that supports the
project seeking financial assistance under this subpart. See 7 CFR part
1737 for loans and 7 CFR part 1744 for advances under this section.
Appendix A to Subpart D of Part 1703--Environmental Questionnaire
Note: It is extremely important to respond to all questions
completely to ensure expeditious processing of the Distance Learning
and Telemedicine application. The information herein is required by
Federal law.
Important: Any activity related to the project that may
adversely affect the environment or limit the choice of reasonable
development alternatives shall not be undertaken prior to the
completion of Rural Utilities Service's environmental review
process.
Legal Name of
Applicant--------------------------------------------------------------
Signature
(Type/Sign/Date)-------------------------------------------------------
The applicant's representative certifies, to the best of his/her
knowledge and belief, that the information contained herein is
accurate. Any false information may result in disqualification for
consideration of the grant or rescission of the grant.
I. Project Description--Detailing construction, including, but
not limited to, internal modifications of existing structures, and/
or installation of telecommunications transmission facilities
(defined in 7 CFR 1703.102), including satellite uplinks or
downlinks, microwave transmission towers, and cabling.
1. Describe the portion of the project, and site locations
(including legal ownership of real property), involving internal
modifications, or equipment additions to buildings or other
structures (e.g., relocating interior walls or adding computer
facilities) for each site.
2. Describe the portion of the project, and site locations
(including legal ownership or real property), involving construction
of transmission facilities, including cabling, microwave towers,
satellite dishes; or, disturbance of property of .99 acres or
greater for each project site.
3. Describe the nature of the proposed use of the facilities,
and whether any hazardous materials, air emissions, wastewater
discharge or solid waste will result.
4. State whether or not any project site(s) contain or are near
properties listed or eligible for listing in the National Register
of Historic Places, and identify any historic properties (The
applicant must supply evidence that the State Historic Preservation
Officer (SHPO) has cleared development regarding any historical
properties).
5. Provide information whether or not any facility(ies) or
site(s) are located in a 100-year floodplain. A National Flood
Insurance Map should be included reflecting the location of the
project site(s).
II. For projects which involve construction of transmission
facilities, including cabling, microwave towers, satellite dishes,
or physical disturbance of real property of .99 acres or greater,
the following information must be submitted (7 CFR 1703.109(i)(3)).
1. A map (preferably a U.S. Geological Survey map) of the area
for each site affected by construction (include as an attachment).
2. A description of the amount of property to be cleared,
excavated, fenced or otherwise disturbed by the project and a
description of the current land use and zoning and any vegetation
for each project site affected by construction.
3. A description of buildings or other structures (i.e.,
transmission facilities), including dimensions, to be constructed or
modified.
4. A description of the presence of wetlands or existing
agricultural operations and/or threatened or endangered species or
critical habitats on or near the project site(s) affected by
construction.
5. Describe any actions taken to mitigate any environmental
impacts resulting from the proposed project (use attachment if
necessary).
Note: The applicant may submit a copy of any environmental
review, study, assessment, report or other document that has been
prepared in connection with obtaining permits, approvals or other
financing for the proposed project from State, local or other
Federal bodies. Such material, to the extent relevant, may be used
to meet the requirements herein.
Dated: April 7, 1997.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 97-9422 Filed 4-15-97; 8:45 am]
BILLING CODE 3410-15-P
