Comment on FR Doc # E8-23286

MEMORANDUM DATE: December 11, 2008 TO: Branch Chief Regulations and Paperwork Management Branch U.S. Department of Agriculture STOP 0742 1400 Independence Avenue SW Washington, DC20250-0742 FROM: Brent Searle, Special Assistant to the Director Stephanie Page, Renewable Energy Specialist SUBJECT: Comments on proposed rule for Rural Development grants, 7 CFR parts 1703, 1780, 3570, 4280, 4284, and 5002, RIN 0570-AA68 The Oregon Department of Agriculture (department) appreciates the opportunity to comment on the proposed rule for Rural Development Grants. In the past few years, Oregon’s agricultural producers and rural small businesses have been relatively successful in accessing Rural Development renewable energy and energy efficiency grants and Value Added Producer Grants. However, we are concerned that several provisions in the proposed rule will make these programs less accessible for agricultural and rural small business applicants in Oregon and across the United States. We begin with some general comments before commenting on specific sections of the proposed rule. 1. Remove the Rural Energy for America Program (REAP) and Value Added Producer Grant Program (VAPG) from the rule consolidation. The background section of the rulemaking notice states that the goal of the rule consolidation is to reduce the burden to applicants that may be applying for multiple grant programs. However, the proposed rule does not reduce the burden to agricultural producer and rural small business applicants for three main reasons. First, most agricultural producer and rural small business applicants are first-time applicants who will only apply for one or at most, two programs. Second, the rules would require agricultural producers and small business applicants to fill out the same forms and adhere to the same rules as municipal applicants. Municipal applicants generally have more time and resources to complete forms and understand rules compared to agricultural producers and small business applicants. Finally, if the need arises to change the rule to make REAP or VAPG more effective, it will be more difficult to make any revisions because the rule changes will need to be evaluated across all programs included in the consolidation. The department recommends that Rural Development grant program rules should be separated into at least two groups based on the type of applicant: (1) programs for municipalities, and (2) programs for agricultural producers, producer groups, and rural small businesses. This would allow the forms and process to be streamlined for agricultural producers and rural small businesses, which have minimal time and resources to figure out the application process. 2. Make all agricultural producers eligible to apply for REAP and VAPG, regardless of location. Several of Oregon’s top agricultural products, including nursery products, fruits, and vegetables, are grown near large urban areas. In Oregon, five of the top ten agricultural counties contain the largest metropolitan areas in the state. Hundreds of agricultural producers within these counties are ineligible to apply for REAP and VAPG because of the rural area requirement. Agricultural producers should have the opportunity to apply for Rural Development grants regardless of their location. 3. Establish state-level rather than national-level competition for funds. While we are pleased that many Oregon producers have received funds from this program in the past, many other high quality Oregon projects were turned down for funding. The bulk of the funding was awarded to producers in just a few states. A state-by-state allocation would ensure more equitable distribution of the funding and promote energy project development across the U.S. Rule-specific comments: §5002.102(c)(1). We believe several provisions within this rule are helpful, including the establishment of a pre-application process and open application period throughout the year. However, the preapplication process would be more effective if it were set closer to the beginning of the federal fiscal year. This would allow staff most of the year to evaluate and award projects after all necessary due diligence and environmental investigation. Also, rather than allowing only one round of applications and awards each year, Rural Development should establish quarterly application deadlines and grant awards to allow agricultural producers and rural small businesses to complete projects in a timely manner. §5002.102(c)(2)(ii). This section of the rule should be deleted. Applicants should not have to submit a business plan to apply for REAP funds. Applicants already have to provide information about project costs, payback time frame, operation and maintenance plans, and dismantling of the project. This information should be adequate to determine whether a project is economically viable. §5002.102(e)(2). Some level of applicant in-kind match should be allowed. Agricultural producers and rural small businesses often contribute in-kind services towards project costs, such as equipment time, land clearing, or building part of a structure. Some limit to the in-kind contribution could be applied, similar to the third-party allowed in-kind contribution level of ten percent. §5002.102(g)(1)(viii) This section should be deleted. It is irrelevant to a project’s merit whether it uses a single energy technology or multiple technologies. §5002.102(g)(1)(ix) and (x) These sections will likely cancel each other out. Section (ix) awards points for a quick return on investment, while section (x) awards points if an applicant cannot achieve the income and cash flows to sustain the project over the long term without grant assistance. Projects with a quick return on investment are more likely to be sustained by applicants over the long term without grant assistance. To simplify the application form and avoid sections that cancel each other out, these two sections should be deleted. §5002.105(c)(1) This new proposed requirement should be deleted. Even if the applicant is located in a rural area, a value-added venture could be located outside of a rural area for several important reasons, including proximity to labor, markets for the product, and shipping. §5002.105(h)(2)(v) This section appears to allow in-kind contributions from applicants, but this should be clarified. Applicants should be allowed to provide in-kind match for a VAPG project up to a specified level. Thank you for considering our comments. We believe the recommended changes will greatly improve the delivery of the Rural Energy for America and Value Added Producer Grant programs.