7 CFR 1703- DLT Regulation

DEPARTMENT OF AGRICULTURE

1703.131

Rural Utilities Service

1703.132

7 CFR Part 1703
DISTANCE LEARNING AND TELEMEDICINE
LOAN AND GRANT PROGRAM
Subpart D--Distance Learning and Telemedicine
Loan and Grant Program - General
Sec.
1703.100
Purpose.
1703.101
Policy.
1703.102
Definitions.
1703.103
Applicant eligibility and allocation
of funds.
1703.104
[Reserved]
1703.105
Processing of selected applications.
1703.106
Disbursement of loans and grants.
1703.107
Reporting and oversight
requirements.
1073.108
Audit requirements.
1703.109
Grant and loan administration.
1703.110
Changes in project objectives or
scope.
1703.111
Grant and loan termination
provisions.
1703.112
Expedited telecommunications
loans.
Subpart E -- Distance Learning and Telemedicine
Grant Program
Sec.
1703.120
[Reserved]
1703.121
Approved purposes for grants.
1703.122
Matching contributions.
1703.123
Nonapproved purposes for grants.
1703.124
Maximum and minimum grant
amounts.
1703.125
Completed application.
1703.126
Criteria for scoring applications.
1703.127
Application selection provisions.
1703.128
Submission of applications.
1703.129
Appeals.
Subpart F -- Distance Learning and Telemedicine
Combination Loan and Grant
Program
Sec.
1703.130
Use of combination loan and grant
Funds.

1703.133
1703.134
1703.135
1703.136
1703.137

Approved purposes for a combination
loan and grant.
Nonapproved purposes for a
combination loan and grant.
Maximum and minimum amounts.
Completed application.
Application selection provisions.
Submission of applications.
Appeals.

Subpart G -- Distance Learning and Telemedicine
Loan Program
Sec.
1703.140
Use of loan funds.
1703.141
Approved purposes for loans.
1703.142
Nonapproved purposes for loans.
1703.143
Maximum and minimum amounts.
1703.144
Completed application.
1703.145
Application selection provisions.
1703.146
Submission of applications.
1703.147
Appeals.
Subpart D--Distance Learning and
Telemedicine Loan and Grant Program General
§ 1703.100 Purpose.
The purpose of the Distance Learning and
Telemedicine (DLT) Loan and Grant Program is to
encourage and improve telemedicine services 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. This
subpart describes the general policies for
administering the DLT program. Subpart E contains
the policies and procedures related to grants; subpart
F contains the policies and procedures related to a
combination loan and grant; and subpart G contains
the policies and procedures related to loans.
§ 1703.101 Policy.
(a) The transmission of information is vital to the
economic development, education, and health of rural
Americans. To further this objective, RUS will
provide financial assistance to distance learning and
telemedicine projects that will improve the access of
people residing in rural areas to educational, learning,
training, and health care services.
(b) In providing financial assistance, RUS will
give priority to rural areas that it believes have the
greatest need for distance learning and telemedicine
services. RUS believes that generally the need is
greatest in areas that are economically challenged,

costly to serve, and experiencing outward migration.
This program is consistent with the provisions of the
Telecommunications Act of 1996 that designate
telecommunications service discounts for schools,
libraries, and rural health care centers. RUS will take
into consideration the community’s involvement in
the proposed project and the applicant’s ability to
leverage grant funds.
(c) In administering this subpart, RUS will not
favor or mandate the use of one particular technology
over another.
(d) Rural institutions are encouraged to
cooperate with each other, with applicants, and with
end-users to promote the program being implemented
under this subpart.
(e) RUS staff will make diligent efforts to inform
potential applicants in rural areas of the programs
being implemented under this subpart.
(f) The Administrator will provide only loans
under this subpart to any entity that has received a
telecommunications or electric loan under the Rural
Electrification Act of 1936. Telecommunications and
Electric borrowers are encouraged to seek a loan
under this subpart to bolster educational and health
care opportunities in the rural communities they
serve. A borrower receiving a loan shall:
(1) Make the loan available to entities that
qualify as distance learning or telemedicine projects
satisfying the requirements of this subpart, under any
terms it so chooses as long as the terms are no more
stringent than the terms under which it received the
financial assistance.
(2) Use the loan to acquire, install, improve, or
extend a distance learning or telemedicine system
referred to in this subpart.
(g) The Administrator will allocate funds that are
appropriated each fiscal year for the subparts E, F,
and G, respectively. Not more than 30 days before
the end of the fiscal year, the Administrator may
transfer any funds not committed to grants in the
combination loan and grant program to the grant
program.
(h) Financial assistance may be provided for end
user sites. Financial assistance may also be provided
for hubs located in rural or non-rural areas if they are
necessary to provide distance learning or
telemedicine services to rural residents at end user
sites.
(i) The Administrator will publish, at the end of
each fiscal year, a notice in the Federal Register of all
applications receiving financial assistance under this
subpart. Subject to the provisions of the Freedom of
Information Act, (5 U.S.C. 552), applications will be
available for public inspection at the U.S. Department
of Agriculture, 1400 Independence Avenue, SW.,
Washington, D.C., 20250.
§ 1703.102 Definitions.
1996 Act means the Federal Agriculture
Improvement Act of 1996.

Act means the Rural Electrification Act of 1936
(7 U.S.C. 901 et seq.).
Administrator means the Administrator of the
Rural Utilities Service, or designee or successor.
Applicant means an eligible organization that
applies for financial assistance under this subpart.
Approved purposes means project purposes for
which grant, loan, or combination loan and grant
financial assistance may be expended.
Champion community means any community
that submitted a valid application to become a USDA
Empowerment Zone/Enterprise Community (EZ/EC)
area, that met the requirements to be designated an
EZ/EC area, but not chosen because their score was
not high enough to be selected.
Combination loan and grant means a grant in
combination with a loan made under the DLT
program.
Completed application means an application that
includes all those items specified in §§ 1703.125,
1703.134, and 1703.144 in form and substance
satisfactory to the Administrator.
Computer networks mean 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
entities formed to undertake the purposes for which
the distance learning and telemedicine financial
assistance is provided. At least one of the entities in
a consortium must meet the requirements of
§ 1703.103.
Construct means to acquire, construct, extend,
improve, or install a facility or system.
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 teachers who are located in rural
areas; or
(2) Connect teachers and students, located in
one rural area with teachers and students that are
located in a different rural area.
DLT borrower means an entity that has an
outstanding loan under the provisions of the DLT
program.
DLT program means the Distance Learning and
Telemedicine Loan and Grant Program administered
by RUS.

Economic useful life as applied to equipment and
facilities financed under the DLT program 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 or video equipment, computer
network components, telecommunications terminal
equipment, data terminal equipment, inside wiring,
interactive video equipment, or other facilities that
would further telemedicine services or distance
learning services.
Eligible facilities means land, buildings, or
building construction needed to carry out an eligible
distance learning or telemedicine project for loan
financial assistance only.
Empowerment Zone and Enterprise Community
(EZ/EC) means any community whose designation as
such by USDA pursuant to 26 U.S.C. 1391 et seq., is
in effect at the time RUS agrees to provide financial
assistance.
End user is one or more of the following:
(1) Rural elementary, secondary schools, and
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, nursing homes,
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; and
(3) Other rural community facilities, institutions,
or entities that receive distance learning or
telemedicine services.
End user site means a facility that is part of a
network or telecommunications system that is
utilized by end users.
Financial assistance means a grant, combination
loan and grant, or loan.
GFR means RUS telecommunications program
General Field Representative.
Grant documents means the grant agreement,
including any amendments and supplements thereto,
between RUS and the grantee.
Grantee means a recipient of a grant from RUS
to carry out the purposes of the DLT program.
Guarantee means a guarantee for a loan provided
by a RUS borrower or other qualified third party.
Hub means a facility that is part of a network or
telecommunications system that provides educational
or medical services to end user sites.
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 equipment means equipment used to
produce and prepare for transmission audio and
visual signals from at least two distant locations so
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.
Loan means a loan made under the DLT program
bearing interest at a rate equal to the then current
cost-of-money to the government.
Loan documents mean the loan agreement, note,
and security instrument, including any amendments
and supplements thereto, between RUS and the DLT
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 contribution means the applicant’s
contribution for approved 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 approved purposes for which
financial assistance has been provided.
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.
Recipient means a grantee, borrower, or both of
a DLT program grant, loan or combination loan and
grant.
Rural community facility means a facility such
as a school, library, learning center, training facility,
hospital, or medical facility that provides educational
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, successor to the Rural Electrification
Administration.
Secretary means the Secretary of Agriculture.
Technical assistance means:
(1) Assistance in learning to manage, operate, or
use equipment or systems; and
(2) Studies, analyses, designs, reports, manuals,
guides, literature, or other forms of creating,
acquiring, or disseminating information.
Telecommunications carrier means any provider
of telecommunications services.
Telecommunications or electric borrower means
an entity that has outstanding RUS or Rural
Telephone Bank electric or telecommunications loans
or loan guarantees under the provisions of the Act.
Telecommunications systems plan means the
plan submitted by an applicant in accordance with §

1703.125 for grants, § 1703.134 for a combination
loan and grant, or § 1703.144 for loans.
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 facilities that receive or transmit 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 voice,
video, or 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, fiberoptic 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.
§ 1703.103 Applicant eligibility and allocation of
funds.
(a) To be eligible to receive a grant, loan and
grant combination, or loan under this subpart:
(1) The applicant must be legally organized as an
incorporated organization or partnership, an Indian
tribe or tribal organization, as defined in 25 U.S.C.
450b (b) and (c), a state or local unit of government,
a consortium, as defined in § 1703.102, or other legal
entity, including a private corporation organized on a
for profit or not-for profit basis. Each applicant must
provide written evidence of its legal capacity to
contract with RUS to obtain the grant, loan and grant
combination, or the loan, and comply with all
applicable requirements. If a consortium lacks the
legal capacity to contract, each individual entity must
contract with RUS in its own behalf.
(2) The applicant proposes to utilize the
financing to:
(i) Operate a rural community facility; or
(ii) Deliver distance learning or telemedicine
services to entities that operate a rural community
facility or to residents of rural areas at rates
calculated to ensure that the benefit of the financial

assistance is passed through to such entities or to
residents of rural areas.
(b) Electric or telecommunications borrowers
are not eligible for grants.
§ 1703.104 [Reserved]
§ 1703.105 Processing of selected applications.
(a) During the period between the submission of
an application and the execution of documents, the
applicant must inform RUS if the project is no longer
viable or the applicant no longer is requesting
financial assistance for the project. When the
applicant so informs RUS, the selection will be
rescinded or the application withdrawn and written
notice to that effect sent to the applicant.
(b) If an application has been selected and the
scope of the project changes substantially, the
applicant may be required to submit a new
application to RUS for review and consideration
depending on the degree of change. A new
application will be subject to review in accordance
with this subpart. The financial assistance may not
be transferred by the applicant for use for another
project.
(c) If State or local governments raise objections
to a proposed project under the intergovernmental
review process that are not resolved within 90 days of
the Administrator's selection of the application, the
Administrator will rescind the selection and written
notice to that effect will be sent to the applicant. The
Administrator, in his sole discretion may extend the
90 day period if it appears resolution is imminent.
(d) RUS may request additional information to
complete the appropriate documents covering
financial assistance.
(e) Financial Assistance Documents:
(1) The documents will include a grant
agreement for grants; loan documents, including third
party guarantees, notes and security instruments for
loans; or any other legal documents the Administrator
deems appropriate, including suggested forms of
certifications and legal opinions.
(2) The grant agreement and the loan documents
will include, 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 financial assistance,
supplemental funds required for the project, and
certain agreements or commitments the applicant
may have proposed in its application. In addition, the
loan documents may contain covenants and
conditions the Administrator deems necessary or
desirable to provide additional assurance that loans
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 RUS and must, before receiving any
advance of loan funds, provide security that is
adequate, in the opinion of RUS, to assure

repayment, within the time agreed, of all loans to the
borrower under the DLT program. This assurance
will generally be provided by a first lien upon all
facilities and equipment financed by the loan. RUS
may require additional security as it deems necessary.
(4) Adequate security may also be provided by
third-party guarantees, letters of credit, pledges of
revenue, or other forms of security satisfactory to
RUS.
(5) The security instrument and other loan
documents required by RUS in connection with a
loan under the DLT program shall contain such
pledges, covenants, and other provisions as may, in
the opinion of RUS, be required to secure repayment
of the loan.
(6) If the project does not constitute a complete
operating system, the DLT recipient shall provide
evidence, in form and substance satisfactory to RUS,
demonstrating that the recipient has sufficient
contractual, financing, or other arrangements to
assure that the project will provide adequate and
efficient service.
(f) Prior to the execution of a grant and loan
document, RUS reserves the right to require any
changes in the project or legal documents covering
the project to protect the integrity of the DLT
program and the interests of the government.
(g) If the applicant fails to submit, within 120
calendar days from the date of RUS’ selection of an
application, all of the information that RUS
determines to be necessary to prepare legal
documents and satisfy other requirements of this
subpart, RUS may rescind the selection of the
application.

§ 1703.106 Disbursement of loans and grants.
(a) For financial assistance of $100,000 or
greater, prior to the disbursement of a grant and a
loan, the recipient, if it is not a unit of government,
will provide evidence of fidelity bond coverage as
required by 7 CFR part 3019.
(b) Grants and loans will be disbursed to
recipients on a reimbursement basis, or with unpaid
invoices for the eligible purposes contained in this
rule, 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) RUS will review the SF 270 for accuracy
when received and will schedule payment if the form
is satisfactory. Payment will ordinarily be made
within 30 days; and
(3) For financial assistance approved during and
subsequent to FY 1999, funds will be advanced in
accordance with 7 CFR 1744.69.
(c) The recipient’s share in the cost of the project
must be disbursed in advance of the loan and grant,
or if the recipient agrees, on a pro rata distribution
basis with financial assistance during the
disbursement period. Recipients will not be
permitted to provide their contributions at the end of
the project.
(d) A combination loan and grant will be
disbursed on a pro rata basis based on the respective
amounts of financial assistance provided.
§ 1703.107 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 expended by the
applicant.
(b) A final project performance report must be
provided by the recipient. 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 it determines
necessary, to assure that projects are completed in
accordance with the approved scope of work and that
the financial assistance is 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 project performance reports,
including, but not 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.
§ 1703.108 Audit requirements.
A recipient of financial assistance shall provide
RUS with an audit for each year, beginning with the
year in which a portion of the financial assistance is
expended, in accordance with the following:
(a) If the recipient is a for-profit entity, a
Telecommunications or Electric borrower, or any
other entity not covered by the following paragraph,
the recipient shall provide an independent audit
report in accordance with 7 CFR part 1773, “Policy
on Audits of RUS Borrowers.”
(b) If the recipient is a State or local
government, or non-profit organization, the recipient
shall provide an audit in accordance with 7 CFR part
3052, “Audits of States, Local Governments, and
Non-Profit Organizations.”
§ 1703.109 Grant and loan administration.
RUS will conduct reviews as necessary to
determine whether the financial assistance was
expended for approved purposes. The recipient is
responsible for ensuring that the project complies
with all applicable regulations, and that the grants
and loans are 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 RUS, 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 official conducting
an audit of the recipient’s financial statements or
records, and program performance for the grants and
loans made under this subpart. The recipient shall
permit RUS to inspect and copy any records and
documents that pertain to the project.
§ 1703.110 Changes in project objectives or scope.
The recipient shall obtain prior written approval
by RUS for any material change to the scope or
objectives of the project, including any changes to the
scope of work or the budget submitted to RUS. Any
material change shall be contained in a revised scope
of work plan to be prepared by the recipient,
submitted to, and approved by RUS in writing.

§ 1703.111 Grant and loan termination.
(a) The financial assistance may be terminated
when RUS and the recipient agree upon the
conditions of the termination, the effective date of the
termination, and, in the case of a partial termination
of the financial assistance, any unadvanced portion of
the financial assistance to be terminated and any
advanced portion of the financial assistance to be
returned.
(b) The recipient may terminate the financial
assistance by written notification to RUS, providing
the reasons for such termination, the effective date,
and, in the case of a partial termination, the portion of
the financial assistance to be terminated. In the case
of a partial termination, if RUS believes that the
remaining portion of the financial assistance will not
accomplish the approved purposes, then, RUS may
terminate the financial assistance in its entirety,
pursuant to the provisions of paragraph (a) of this
section.
§ 1703.112 Expedited telecommunications loans.
RUS will expedite consideration and
determination of an application submitted by an RUS
telecommunications borrower for a loan under the
Act or an advance of such loan funds to be used in
conjunction with financial assistance under subparts
E, F, or G. See 7 CFR part 1737 for loans and 7 CFR
part 1744 for advances under this section.
§§ 1703.113 - 1709.119 [Reserved]
Subpart E – Distance Learning and
Telemedicine Grant Program
§ 1703.120 [Reserved]
§ 1703.121 Approved purposes for grants.
For distance learning and telemedicine projects,
grants shall finance only the costs for approved
purposes. Grants shall be expended only for the costs
associated with the initial capital assets associated
with the project. The following are approved grant
purposes:
(a) Acquiring, by lease or purchase, eligible
equipment as defined in § 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
grant (this purpose shall not exceed 10 percent of the
grant).
§ 1703.122 Matching contributions.

(a) The grant applicant's minimum matching
contribution must equal 15 percent of the grant
amount requested and shall be used for approved
purposes for grants listed in § 1703.121. Matching
contributions generally must be in the form of cash.
However, in-kind contributions solely for the
purposes listed in § 1703.121 may be substituted for
cash.
(b) In-kind items listed in § 1703.121 must be
non-depreciated or new assets with established
monetary values. Manufacturers’ or service
providers’ discounts are not considered in-kind
matching.
(c) Costs incurred by the applicant, or others on
behalf of the applicant, for facilities or equipment
installed, or other services rendered prior to
submission of a completed application, shall not be
considered as an eligible in-kind matching
contribution.
(d) Costs incurred for non-approved purposes for
grant outlined in § 1703.123 shall not be used as an
in-kind matching contribution.
(e) Any financial assistance from Federal sources
will not be considered as matching contributions
under this subpart unless there is a Federal statutory
exception specifically authorizing the Federal
financial assistance to be considered as a matching
contribution.

(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;
(13) Except for leases provided for in §
1703.121, to pay the cost of recurring or operating
expenses for the project; or
(14) For any other purposes not specifically
contained in § 1703.121.
(b) Except as otherwise provided in § 1703.112,
grants shall not be used to finance a project, in part,
when the success of the project is dependent upon the
receipt of additional financial assistance under this
subpart or is dependent upon the receipt of other
financial assistance that is not assured.

§ 1703.123 Nonapproved purposes for grants.
(a) A grant made under this subpart will not be
provided or used:
(1) To cover the costs of acquiring, installing or
constructing telecommunications transmission
facilities;
(2) To pay for medical equipment not having
telemedicine as its essential function;
(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 unless that
service provider is the applicant;
(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 financial assistance under this program;
(8) For projects whose sole objective is to
provide links between teachers and students or
between 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;

§ 1703.125 Completed application.
The following items are required to be submitted
to RUS in support of an application for grant funds:
(a) An application for Federal Assistance. A
completed Standard Form 424
(b) An executive summary of the project. The
applicant must provide RUS with a general project
overview that addresses 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, the types of educational or medical
services to be offered by the project, and the benefits
to rural residents;
(3) A description of the applicant, documenting
eligibility in accordance with § 1703.103;
(4) An explanation of the total project cost
including a breakdown of the grant required and the
source of matching contribution and other financial
assistance for the remainder of the project;
(5) A statement specifying whether the project is
either a distance learning or telemedicine facility as
defined in § 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;

§ 1703.124 Maximum and minimum grant
amounts.
Applications for grants under this subpart will be
subject to limitations on the proposed amount of
grant funds. The Administrator will establish the
maximum amount of a grant 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 sooner than 45 days
before the period for accepting applications begins.
The minimum amount of a grant is $50,000.

(7) A description of the participating hubs and
end user sites and the number of rural residents that
will be served by the project at each end user site;
and
(8) A certification by the applicant that facilities
constructed with grants do not duplicate adequate
established telemedicine or distance learning
services.
(9) A listing of the location of each end user site
(city, town, village, borough, or rural areas) plus the
State.
(c) Scoring criteria documentation. Each grant
applicant must address and provide documentation on
how it meets each of the scoring criteria contained in
§ 1703.126.
(d) A scope of work. The scope of work must
include, 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 all capital expenditures
reflecting the line item costs for approved purposes
for both the grant funds and other sources of funds
for the project. Separately, the budget must specify
any line item costs that are nonapproved purposes for
grants as contained in § 1703.123.
(e) Financial information and sustainability. The
applicant must provide a narrative description
demonstrating: feasibility of the project, including
having sufficient resources and expertise necessary to
undertake and complete the project; and, how the
project will be sustained following completion of the
project.
(f) 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 project. Experience in a similar
project is desirable but not required.
(g) Funding commitment from other sources.
The applicant must provide evidence, in form and
substance satisfactory to RUS, that funding
agreements have been obtained to ensure completion
of the project. These agreements shall be sufficient
to ensure (1) payment of all proposed expenditures
for the project; (2) all required matching contribution
in § 1703.120; (3) any additional matching funding
provided in accordance with § 1703.126(b)(4); and
(4) any other funds necessary to complete the project.
(h) A telecommunications system plan. A
telecommunications system plan consisting of the
following:
(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 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 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.
(i) Compliance with other Federal statutes. The
applicant must provide evidence of compliance with
other Federal statutes and regulations including, but
not limited to the following:
(1) E.O. 11246, Equal Employment Opportunity,
as amended by E.O. 11375 and as supplemented by
regulations contained in 41 CFR part 60;
(2) Architectural barriers;
(3) Flood hazard area precautions;
(4) Assistance and Real Property Acquisition
Policies Act of 1970;
(5) Drug-Free Workplace Act of 1998 (41 U.S.C.
701);
(6) E.O.s 12549 and 12689, Debarment and
Suspension;
(7) Byrd Anti-Lobbying Amendment (31 U.S.C.
1352).
(j) Environmental impact and historic
preservation.
(1) The applicant must provide details of the
project’s impact on the environment and historic
preservation. Grants made under this part are subject
to part 1794 of this chapter which contains RUS’
policies and procedures for implementing a variety of
Federal statutes, regulations, and executive orders
generally pertaining to the 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) The applicant may use the “Environmental
Questionnaire,” available from RUS, to assist in
complying with the requirements of this section.
(k) Evidence of legal authority and existence.
The applicant must provide evidence of its legal
existence and authority to enter into a grant

agreement with RUS and perform the activities
proposed under the grant application.
(l) Federal debt certification. The applicant must
provide a certification that it is not delinquent on any
obligation owed to the government (7 CFR parts
3016 and 3019).
(m) Consultation with USDA State Director,
Rural Development. The applicant must provide
evidence that it 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) State Strategic Plan Conformity. The
applicant must provide 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) 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 project
would further the purposes of the 1996 Act.
(p) Additional information required by RUS.
The applicant must provide any additional
information RUS may consider relevant to the
application and necessary to adequately evaluate the
application. RUS may request modifications or
changes, including changes in the amount of financial
assistance requested, in any proposal described in an
application submitted under this subpart.
§ 1703.126 Criteria for scoring grant
applications.
(a) Criteria. The criteria in this section will be
used by RUS to score applications that have been
determined to be in compliance with the requirements
of this subpart. Applications for grants must meet the
rurality requirements in paragraph (b)(2)(iv) of this
section and address each of the following scoring
criteria:
(1) The need for services and benefits derived
from services (up to 55 points);
(2) The comparative rurality of the project
service area (up to 45 points);
(3) The economic need of the applicant’s service
area as estimated by the NSLP or other supplemental
objective criteria (up to 35 points);
(4) The ability of the applicant to leverage
resources (up to 35 points);
(5) Innovativeness of the project (up to 15
points);
(6) The cost effectiveness of the system (up to 35
points);
(7) Project participation in EZ/ECs
(Empowerment Zone and Enterprise Communities)
and Champion Communities (up to 15 points).
(b) Scoring criteria:

(1) The need for services and benefits derived
from services - up to 55 Points.
(i) This criterion will be used by RUS to score
applications based on the documentation in support
of the need for services, benefits derived from the
services proposed by the project, and local
community involvement in planning, implementing,
and financial assistance of the project. Applicants
may receive up to 45 points for documenting the need
for services and benefits derived from service as
explained in this section. Applicants with an average
NSLP percentage less than 50 percent as determined
in paragraph (b)(3) of this section may receive up to
an additional 10 points based on information
submitted that evidences the economic need of the
project’s service area. This determination will be
made by RUS based on information submitted by the
applicant under paragraph (b)(1) of this section.
(ii) RUS will consider the extent of the
applicant’s documentation explaining the economic,
education, or health care challenges facing the
community; the applicant’s proposed plan to address
these challenges; how the grant can help; and why the
applicant cannot complete the project without a grant.
RUS will also consider the extent to which the
applicant provides evidence that economic,
education, or health care challenges could not be
addressed without employing advanced technology.
The Administrator will also consider any support by
recognized experts in the related educational or
health care field, any documentation substantiating
the educational or health care underserved nature of
the applicant’s proposed service area, and any
justification for specific educational or medical
services which are needed and will provide direct
benefits to rural residents.
(A) Some examples of benefits to be provided by
the project include, but are not limited to:
(1) Improved educational opportunities for a
specified number of students;
(2) Travel time and money saved by
telemedicine diagnoses;
(3) Number of doctors retained in rural areas;
(4) Number of additional students electing to
attend higher education institutions;
(5) Lives saved due to prompt medical diagnoses
and treatment;
(6) New education courses offered, including
college level courses;
(7) Expanded use of educational facilities such as
night training;
(8) Number of patients receiving telemedicine
diagnoses;
(9) Provision of training, information resources,
library assets, adult education, lifetime learning,
community use of technology, jobs, connection to
region, nation, and world.
(B) Other matters that will be considered by
RUS under this criterion include:
(1) That rural residents, and other beneficiaries,
desire the educational or medical services to be

provided by the project. A strong indication of need
is the willingness of local end users or institutions, to
the extent possible, to contribute to the capital costs
of establishing the project. This could include letters
of financial commitment toward the project from
local institutions.
(2) The extent of the project’s planning,
development, and support by local residents and
institutions. This may include evidence of
community involvement, as exemplified in
community meetings, public forums, and surveys. In
addition, applicants should provide evidence of local
residents’ participation in the project planning and
development.
(3) The extent to which the application addresses
the problems of population out-migration and how
the project seeks to slow, halt, or prevent population
loss.
(4) 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 project
service area - up to 45 Points.
This criterion will be used to evaluate the relative
rurality of service areas for various projects. Under
this system, the end user sites and hubs (as defined in
§ 1703.102) contained within the project service area
are identified and given a score according to the
population of the area where the end user sites are
located.
(i) 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) Mid-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 10,000 and not in
excess of 20,000 inhabitants.
(D) 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 20,000
inhabitants.
(ii) There are a total of 45 possible points for this
criterion. Each end user site will receive points based
on its location in accordance with paragraph (b)(2)(i)
of this section. If a hub is utilized as an end user site,
the hub will be considered as an end user site. The
applicant will receive points as follows:
(A) If the end user site is located in an
Exceptionally Rural Area, it will receive 45 points.

(B) If the end user site is located in a Rural Area,
it will receive 30 points.
(C) If the end user site is located in a Mid-Rural
Area, it will receive 15 points.
(D) If the end user site is located in an Urban
Area, it will receive 0 points.
(iii) The total score for this criterion will be
based on the average score for all the end user sites
included in the project.
(iv) An application must receive a minimum of
20 points as an average score for all the end user sites
under this criterion to be eligible for a grant.
(3) The economic need of the applicant’s service
area as estimated by NSLP - up to 35 points.
This criterion 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 NSLP for each area to be served by
the end user site. The appropriate State or local
organization administering the program must certify
the percentages as being correct. The applicant must
provide RUS with a listing of the location of each
end user site (city, town, village, borough or rural
area plus the State) discussing how the appropriate
NSLP percentage was determined in accordance with
this section. 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. For purposes of this
subpart, the NSLP percentage will reflect the
percentage of eligibility rather than the percentage of
actual participation.
(i) The following guidelines will be used to
determine the applicable NSLP percent for a
particular application:
(A) Public schools or non-profit private schools
of high school grade or under will use the actual
eligibility percentage for that particular school.
(B) Schools and institutions of higher learning
ineligible to participate in the NSLP 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.
(C) Percentage ratios will be rounded up to the
next highest or rounded down to the next lowest
whole number for fraction of percentages at or
greater than .5 or less than .5, respectively.
(D) The project NSLP percentage will be
determined by the average of the NSLP percentages
of the end user sites. 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. 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.
(ii) The applicant will receive points as follows:
(A) NSLP percentage greater than or equal to 75
percent – 35 points

(B) NSLP percentage greater than or equal to 50
percent but less than 75 percent – 20 points
(C) NSLP percentage greater than or equal to 25
percent but less than 50 percent – 15 points
(D) NSLP percentage less than 25 percent – 0
points.
(4) The ability of the applicant to leverage
financial resources - Up to 35 points.
This criterion will be used to evaluate the ability
of the applicant to provide a matching contribution
for the project using other non-Federal financial
assistance. Documentation submitted in support of
the application should reflect any additional financial
support for the project from non-Federal sources
above the applicant's minimum matching contribution
of 15 percent as required by § 1703.122. The
applicant must include evidence, from authorized
representatives of the sources, of a commitment that
the funds are available and will be used for the
project. The applicant will receive points as follows:
(i) Matching contribution for approved purposes
greater than 15 percent, but less than or equal to 30
percent of the grant requested — 0 points.
(ii) Matching contribution for approved purposes
greater than 30 percent, but less than or equal to 50
percent of the grant requested — 15 points.
(iii) Matching contribution for approved
purposes greater than 50 percent, but less than or
equal to 75 percent of the grant requested — 25
points.
(iv) Matching contribution for approved
purposes greater than 75 percent, but less than or
equal to 100 percent of the grant requested — 30
points.
(v) Matching contribution for a grant for
approved purposes greater than 100 percent of the
grant requested — 35 points.
(5) Innovativeness of the project - up to 15
points.
This criterion will be used to evaluate the
innovativeness of application based on
documentation that shows how the project utilizes
advanced telecommunications in a unique way to
address the needs of the community. Innovativeness
should be addressed in the context of how the project
will deliver distance learning or telemedicine services
more effectively or at a lower cost. The following
issues may be addressed to show how the project
differs from a typical distance learning and
telemedicine network as follows:
(i) The extent to which the project differs from a
technical standpoint;
(ii) The extent to which the project differs from
an educational or medical programmatic standpoint;
(iii) The extent to which the project reflects a
unique adaptation of technology based on the special
needs or circumstances of the proposed area to be
served by the project; and
(iv) The potential of the project to influence or
lead changes in how telecommunications services can
be delivered in other areas.

(6) The cost-effectiveness of the project - Up to
35 points
This criterion will be used to evaluate the cost
effectiveness of the application based on the extent
that cost-efficiency is considered in delivering the
services in the project. The following issues should
be addressed under this criterion:
(i) The extent to which the applicant has
considered various technological options for
delivering the services. The applicant must provide
sufficient documentation reflecting accepted
analytical and financial methodologies to substantiate
its choice of technology as the most cost-effective
option. RUS will consider the applicant’s
documentation and analysis comparing various
systems and technologies.
(ii) Whether buying or leasing specific
equipment is more cost effective.
(iii) The extent to which the project will utilize
other existing networks at the regional, statewide,
national or international levels. To the extent
possible, educational and health care networks should
be designed to utilize the widest practicable number
of other networks that expand the capabilities of the
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.
(iv) The extent to which the facilities being
constructed with 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 project.
(v) The extent to which the project utilizes
existing telecommunications transmission facilities
that could provide the transmission path for the
needed services. For projects that do not utilize
existing transmission facilities, RUS will consider
documentation explaining the necessity of this
option. RUS will also consider any agreements
between the applicant and other entities for sharing
transmission facilities to lower the fixed costs of such
facilities.
(7) Project participation in EZ/ECs and
champion communities - (up to 15 Points).
This criterion will be used by RUS to score
applications based on the number of end user sites
within an EZ/EC and Champion Community. Ten
(10) points will be assigned if at least one end user
site is located in an EZ/EC. Five (5) points will be
assigned if at least one end user site is located in a
Champion Community.
§ 1703.127 Application selection provisions.
(a) Applications will be selected for approval
based on scores assigned, availability of funds, and
the provisions of this section. RUS will make
determinations regarding the reasonableness of all
numbers; dollar levels; rates; the nature and design of
the project; costs; location; and other characteristics
of the application and the project to determine the

number of points assigned to a grant application for
all selection criteria.
(b) Regardless of the number of points an
application receives in accordance with § 1703.126,
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. In this case,
however, the Administrator will provide the applicant
of the higher scoring application the opportunity to
reduce the amount of its grant request to the amount
of funds available. If the applicant agrees to lower its
grant request, it must certify that the purposes of the
project can be met, and the Administrator must
determine the project is financially feasible at the
lower amount in accordance with § 1703.125(e)(1).
An applicant or multiple applicants affected under
this paragraph will have the opportunity to be
considered for loan financing in accordance with
subparts F and G of this part.
(c) RUS will not approve a grant if RUS
determines that:
(1) The applicant’s proposal does not indicate
financial feasibility or is not sustainable in
accordance with the requirements of §
1703.125(e)(1);
(2) The applicant’s proposal indicates technical
flaws, which, in the opinion of RUS, would prevent
successful implementation, operation, or
sustainability of the project;
(3) Other applications would provide more
benefit to rural America based on a review of the
financial and technical information submitted in
accordance with § 1703.125(e).
(4) Any other aspect of the applicant’s proposal
fails to adequately address any requirement of this
subpart or contains inadequacies which would, in the
opinion of RUS, undermine the ability of the project
to meet the general purpose of this subpart or comply
with policies of the DLT Program contained in §
1703.101.
(d) Grant applications will be ranked by the type
of application (health care or educational) and total
points scored. Grants available for medical and
educational applicants may be allocated based on the
total number of medical and educational applications
scoring in the top 50 percent of all applications
received for that fiscal year. Based on the number
and type of applications received, applications may
be ranked only in one category based on the
predominant use of the project.
(e) RUS may reduce the amount of the
applicant’s grant based on insufficient program
funding for the fiscal year in which the project is

reviewed. 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 (f) of this section.
(f) RUS will provide the applicant with an
explanation of any determinations made with regard
to paragraphs (c)(1) through (c)(4) of this section
prior to making final project selections for the year.
The applicant will be provided 15 days from the date
of RUS’ 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 § 1703.129.
(g) Grantees shall comply with all applicable
provisions of 7 CFR parts 3015, 3016, and 3019.
§ 1703.128 Submission of applications.
(a) Applications for grants shall be submitted to
the RUS, 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 must be submitted to RUS
postmarked not later than the application filing
deadline established by the Administrator if the
applications are to be considered during the period
for which the application was submitted. The
deadline for submission of applications each fiscal
year will be published, and provided through other
notices, by RUS in the Federal Register, at least 30
days before the deadline occurs. It is suggested that
applications be submitted prior to the respective
deadline to ensure they can be reviewed and
considered complete by the deadline. RUS will
review each application for completeness in
accordance with § 1703.125, and notify the applicant,
within 15 working days of the receipt of the
application, of the results of this review, citing any
information that is incomplete. To be considered for
a grant, the applicant must submit the information to
complete the application within 15 working days of
the date of RUS’ written response. If the applicant
has submitted an application prior to the application
filing deadline, the applicant will have 15 working
days from RUS’ response or until the application
filing deadline to submit information, whichever
provides the applicant more time. If the applicant
fails to submit such information by the appropriate
deadline, the application will be considered during
the next established application period.

(c) All applicants must submit an original and
two copies of a completed application. Applicants
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 required by § 1703.125.
§ 1703.129 Appeals.
All qualifying applications under this subpart
will be scored based on the criteria contained in §
1703.126. Awards will be made by RUS based on
the highest ranking applications and the amount of
financial assistance available for grants. 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, that 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, RUS, 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.
Subpart F – Distance Learning and Telemedicine
Combination Loan and Grant Program
§ 1703.130 Use of combination loan and grant.
(a) A combination loan and grant may be used by
eligible organizations as defined in
§ 1703.103 for distance learning and telemedicine
projects to finance 100 percent of the cost of
approved purposes contained in § 1703.131 provided
that no financial assistance may exceed the maximum
amount for the year in which the combination loan
and grant is made.
(b) Applicants must meet the minimum
eligibility requirement for determining the extent to
which the project serves rural areas as determined in
§ 1703.126(b)(2) (the applicant must receive at least
20 points to be eligible to receive financial assistance
under this subpart).
§ 1703.131 Approved purposes for a combination

loan and grant.
The approved purposes for a combination loan
and grant are:
(a) Acquiring, by lease or purchase, eligible
equipment or facilities as defined in § 1703.102;
(b) Acquiring instructional programming;
(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 a
combination loan and grant (this purpose shall not
exceed 10 percent of the total requested financial
assistance);
(d) Paying for medical or educational equipment
and facilities that are shown to be necessary to
implement the project, including vehicles utilizing
distance learning and telemedicine technology to
deliver educational and health care services. The
applicant must demonstrate that such items are
necessary to meet the purposes under this subpart and
financial assistance for such equipment and facilities
is not available from other sources at a cost which
would not adversely affect the economic viability of
the project;
(e) Providing links between teachers and
students or medical professionals who are located at
the same facility, provided that such facility receives
or provides distance learning or telemedicine services
as part of a distance learning or telemedicine network
which meets the purposes of this subpart;
(f) Providing for site development and alteration
of buildings in order to meet the purposes of this
subpart. Financial assistance for this purpose must be
necessary and incidental to the total amount of
financial assistance requested;
(g) Purchasing of land, buildings, or building
construction determined by RUS to be necessary and
incidental to the project. The applicant must
demonstrate that funding from other sources is not
available at a cost that does not adversely impact the
economic viability of the project as determined by
the Administrator. Financial assistance for this
purpose must be necessary and incidental to the total
amount of financial assistance requested; and,
(h) Acquiring telecommunications transmission
facilities provided that no telecommunications carrier
will install such facilities under the Act or through
other financial procedures within a reasonable time
period and at a cost to the applicant that does not
impact the economic viability of the project, as
determined by the Administrator.
§ 1703.132 Nonapproved purposes for a
combination loan and grant.
(a) Without limitation, a combination loan and
grant made under this subpart shall not be expended:
(1) To pay salaries, wages, or employee benefits
to medical or educational personnel;

(2) To pay for the salaries or administrative
expenses of the applicant or the project;
(3) To purchase equipment that will be owned by
the local exchange carrier or another
telecommunications service provider, unless the
applicant is the local exchange carrier or other
telecommunications service provider;
(4) 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;
(5) For projects located in areas covered by the
Coastal Barrier Resources Act (16 U.S.C. 3501 et
seq.);
(6) For any purpose that the Administrator has
not specifically approved;
(7) Except for leases (see § 1703.131), to pay the
cost of recurring or operating expenses for the
project; or,
(8) For any other purposes not specifically
outlined in § 1703.131.
(b) Except as otherwise provided in
§ 1703.112, funds shall not be used to finance a
project, in part, when the success of the project is
dependent upon the receipt of additional financial
assistance under this subpart or is dependent upon the
receipt of other funding that is not assured.
§ 1703.133 Maximum and minimum amounts.
Applications for a combination loan and grant
under this subpart will be subject to limitations on the
proposed amount of loans and grants. The
Administrator will establish the maximum amount of
loans and grants and the portion of grant funds as a
percentage of total assistance for each project 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 before
the beginning the fiscal year to carry out this subpart.
The minimum amount of a combination loan and
grant is $50,000.
§ 1703.134 Completed application.
The following items are required to be submitted
to RUS in support of an application for a combination
loan and grant:
(a) An application for federal assistance: A
completed Standard Form 424.
(b) An executive summary of the project. The
applicant must provide RUS with a general project
overview that addresses each of 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, the types of educational or medical
services to be offered by the project, and the benefits
to the rural residents;
(3) A description of the applicant, documenting
eligibility in accordance with § 1703.103;

(4) An explanation of the total project cost
including a breakdown of the combination loan and
grant required and the source of funding, if
applicable, for the remainder of the project;
(5) A statement specifying whether the project
provides predominantly distance learning or
telemedicine services as defined in § 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 that
will be served by the project at each end user site;
(8) A certification by the applicant that facilities
constructed with a combination loan and grant do not
duplicate adequately established telemedicine or
distance learning services.
(9) A listing of the location of each end user site
(city, town, village, borough, or rural area plus the
State).
(c) A scope of work. The scope of work must
include, 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 combination loan and
grant and any other sources of funds for the project.
(d) Financial information. The applicant must
show its financial ability to complete the project;
show project feasibility; and provide evidence that it
can execute a note for a loan with a maturity period
greater than one year. 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 that 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 and repay the loan portion of
the combination loan and grant. This documentation
should include sources of sufficient income or
revenues to pay operating expenses including
telecommunications access and toll charges, system
maintenance, salaries, training, and any other general
operating expenses, provide for replacement of
depreciable items, and show repayment of interest
and principal for the loan portion of the combination
loan and grant.
(2) A list of property which will be used as
collateral to secure repayment of the loan. The
applicant shall purchase and own collateral that
secures the loan free from liens or security interests
and take all actions necessary to perfect a security
interest in the collateral that secures the loan. RUS
considers as adequate security for a loan, a guarantee
by a RUS telecommunications or electric borrower or
by another qualified party. Additional forms of
security, including letters of credit, real estate, or any
other items will be considered. RUS will determine
the adequacy of the security offered.
(3) As applicable, a depreciation schedule
covering all assets of the project. Those assets for
which a combination loan and grant are being
requested should be clearly indicated.
(4) 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.
(5) For applicants eligible under
§ 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.
(e) 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 similar to the
project. Experience in a similar project is desirable
but not required.
(f) A telecommunications system plan. A
telecommunications system plan, consisting of the
following (the items in paragraphs (g)(4) and (g)(5)
of this section are required only when the applicant is
requesting a combination loan and grant 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 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 a
combination loan and grant.
(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 discussions with local exchange
carriers serving the project area addressing the
concerns Contained in § 1703.131(h).
(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) Compliance with other Federal statutes. The
applicant must provide evidence of compliance with
other federal statutes and regulations including, but
not limited to the following:
(1) E.O. 11246, Equal Employment Opportunity,
as amended by E.O. 11375 and as supplemented by
regulations contained in 41 CFR part 60;
(2) Architectural barriers;
(3) Flood hazard area precautions;
(4) Assistance and Real Property Acquisition
Policies Act of 1970;
(5) Drug-Free Workplace Act of 1998 (41 U.S.C.
701);

(6) E.O.s 12549 and 12689, Debarment and
Suspension;
(7) Byrd Anti-Lobbying Amendment (31 U.S.C.
1352).
(h) Environmental impact and historic
preservation.
(1) The applicant must provide details of the
project’s impact on the environment and historic
preservation. Loans and grants made under this part
are subject to 7 CFR part 1794 which contains RUS’
policies and procedures for implementing a variety of
Federal statutes, regulations, and executive orders
generally pertaining to the 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) The applicant may use the “Environmental
Questionnaire,” available from RUS, to assist in
complying with the requirements of this section.
(i) Evidence of legal authority and existence.
The applicant must provide evidence of its legal
existence and authority to enter into a grant and incur
debt with RUS.
(j) Federal debt certification. The applicant must
provide evidence that it is not delinquent on any
obligation owed to the government.
(k) 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 project
would further the purposes of this subpart.
(l) Additional information required by RUS. The
applicant must provide any additional information
RUS may consider relevant to the application and
necessary to adequately evaluate the application.
RUS 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.
§ 1703.135 Application selection provisions.
(a) A combination loan and grant will be
approved based on availability of funds, the financial
feasibility of the project in accordance with §
1703.134(d), the services to be provided which
demonstrate that the project meets the general
requirements of this subpart, the design of the
project; costs; location; and other characteristics of
the application.
(b) RUS will determine, from the information
submitted with each application for a combination
loan and grant, whether the application achieves
sufficient priority, based on the criteria set forth in
the 1996 Act, to receive a combination loan and grant
from funds available for the fiscal year. If such
priority is achieved, RUS will process the
combination loan and grant application on a first-in,
first-out basis, provided that the total amount of
applications on-hand for combination loans and
grants does not exceed 90 percent of the total loan

and grant funding available for the fiscal year. At
such time as the total amount of applications eligible
for combination loans and grants, if such applications
were approved, exceeds 90 percent of amount of
combination loan and grant funding available, RUS
will process the remaining applications using the
evaluation criteria set forth in § 1703.126.
(c) RUS will not approve a combination loan and
grant if RUS determines that:
(1) The applicant’s proposal does not indicate
financial feasibility, or will not be adequately secured
in accordance with the requirements contained in §
1703.134(d);
(2) The applicant’s proposal indicates technical
flaws, which, in the opinion of RUS, would prevent
successful implementation, or operation of the
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 RUS, undermine the ability of the project
to meet the general purpose of this subpart or comply
with policies of the DLT program contained in §
1703.101.
(d) RUS will provide the applicant with a
statement of any determinations made with regard to
paragraphs (c)(1) through (c)(3) of this section. The
applicant will be provided 15 days from the date of
RUS’ 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 § 1703.137.
§ 1703.136 Submission of applications.
(a) RUS will accept applications for a
combination loan and grant submitted by RUS
telecommunications General Field representatives
(GFRs), by Rural Development State Directors, or by
applicants themselves. Applications for a
combination loan and grant under this subpart may be
filed at any time and will be evaluated as received.
(b) Applications submitted to the State Director,
Rural Development, in the State serving the
headquarters of the project will be evaluated as they
are submitted. All applicants must submit an original
and two copies of a completed application. The
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 the State Director. The
State Director will:
(1) Review each application for completeness in
accordance with § 1703.134, and notify the applicant,
within 15 working days of receiving the application,
of the results of this review, acknowledging a
complete application, or citing any information that is

incomplete. To be considered for a combination loan
and grant, the applicant must submit any additional
information requested to complete the application
within 15 working days of the date of the State
Director’s written response. If the applicant fails to
submit such information, the application will be
returned to the applicant.
(2) Within 30 days of the determination of a
completed application in accordance with paragraph
(b)(1) of this section, review the application to
determine suitability for financial assistance in
accordance with § 1703.135, and other requirements
of this subpart. Based on its review, the State
Director will work with the applicant to resolve any
questions or obtain any additional information. The
applicant will be notified, in writing, of any
additional information required to allow a financial
assistance recommendation and will be provided a
reasonable period of time to furnish the additional
information.
(3) Based on the review in accordance with
§ 1703.135 and other requirements of this subpart,
make a preliminary determination of suitability for
financial assistance. A combination loan and grant
recommendation will be prepared by the State
Director with concurrence of the RUS
telecommunications GFR that addresses the
provisions of sections § 1703.134 and § 1703.135
and other applicable requirements of this subpart.
(4) If the application is determined suitable for
further consideration by RUS, forward an original
and one copy of the application with a financial
assistance recommendation, signed jointly, to the
Assistant Administrator, Telecommunications
Program, Rural Utilities Service, Washington, DC.
The applicant will be notified by letter of this action.
Upon receipt of the application from the State
Director, RUS will conduct a review of the
application and the financial assistance
recommendation. A final determination will be made
within 15 days. If the Administrator determines that
a combination loan and grant can be approved, the
State Director will be notified and the State Director
will notify the applicant. A combination loan and
grant will be processed, approved, and serviced in
accordance with §§ 1703.105 through 1703.112 of
subpart D.
(5) If the State Director determines that the
application is not suitable for further consideration by
RUS, notify the applicant with the reasons for this
determination. The applicant may appeal this
determination pursuant to section § 1703.137 of this
subpart.
(c) Applications submitted by RUS
telecommunications GFRs or directly by applicants
will be evaluated as they are submitted. All
applicants must submit an original and two copies of
a completed application. The 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. RUS will:
(1) Review each application for completeness in
accordance with § 1703.134, and notify the applicant,
within 15 working days of receiving the application,
of the results of this review, acknowledging a
complete application, or citing any information that is
incomplete. To be considered for a combination loan
and grant assistance, the applicant must submit any
additional information requested to complete the
application within 15 working days of the date of the
RUS written response. If the applicant fails to submit
such information, the application will be returned to
the applicant.
(2) Within 30 days of the determination of a
completed application in accordance with paragraph
(c)(1) of this section, review the application to
determine suitability for financial assistance in
accordance with § 1703.135, and other requirements
of this subpart. Based on its review, RUS will work
with the applicant to resolve any questions or obtain
any additional information. The applicant will be
notified, in writing, of any additional information
required to allow a financial assistance
recommendation and will be provided a reasonable
period of time to furnish the additional information.
(3) If the application is determined suitable for
further consideration by RUS, conduct a review of
the application and financial assistance
recommendation. A final determination will be made
within 15 days. If the Administrator determines that
a combination loan and grant can be approved, the
applicant will be notified. A combination loan and
grant will be processed, approved, and serviced in
accordance with §§ 1703.105 through 1703.112 of
subpart D.
(4) If RUS determines that the application is not
suitable for further consideration, notify the applicant
with the reasons for this determination. The
applicant will be able to appeal in accordance with §
1703.137 of this subpart.
§ 1703.137 Appeals.
Any appeal must be made, in writing, within 10
days after the applicant is notified of the
determination to deny the application. Appeals shall
be submitted to the Administrator, RUS, U.S.
Department of Agriculture, 1400 Independence Ave.,
SW., STOP 1590, Washington, DC 20250-1590.
Thereafter, the Administrator will review the appeal
to determine whether to sustain, reverse, or modify
the original 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.
§§ 1703.138 -- 1703.139 [Reserved]

Subpart G – Distance Learning and Telemedicine
Loan Program
§ 1703.140 Use of loan funds.
A loan may be used by eligible organizations as
defined in §1703.103 for distance learning and
telemedicine projects to finance 100 percent of the
cost of approved purposes contained in §1703.141
provided that no financial assistance may exceed the
maximum amount for the year in which the loan is
made. Entities seeking a loan must be able to provide
security and execute a note with a maturity period
greater than one year. The following entities are
eligible for loans under this subpart:
(a) Organizations as defined in § 1703.103. If a
RUS telecommunications borrower is seeking a loan,
the borrower does not need to submit all of the
financial security information required by §
1703.144(d). The borrower’s latest financial report
(Form 479) filed with RUS and any additional
information relevant to the project, as determined by
RUS, will suffice;
(b) Any non-profit or for-profit entity, public or
private entity, urban or rural institution, or rural
educational broadcaster, which proposes to provide
and receive distance learning and telemedicine
services to carry out the purposes of this subpart; or
(c) Any entity that contracts with an eligible
organization in paragraphs (a) or (b) of this section
for constructing distance learning or telemedicine
facilities for the purposes contained in § 1703.141,
except for those purposes in § 1703.141(h).
(d) Applicants must meet the minimum
eligibility requirement for determining the extent to
which the project serves rural areas as contained in §
1703.126(b)(2) (the applicant must receive at least 20
points to be eligible to receive financial assistance
under this subpart).
§ 1703.141 Approved purposes for loans.
The following are approved purposes for loans:
(a) Acquiring, by lease or purchase, eligible
equipment or facilities as defined in § 1703.102;
(b) Acquiring instructional programming;
(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
loan (financial assistance for this purpose shall not
exceed 10 percent of the requested financial
assistance);
(d) Paying for medical or educational equipment
and facilities which are shown to be necessary to
implement the project, including vehicles utilizing
distance learning and telemedicine technology to
deliver educational and health care services. The
applicant must demonstrate that such items are
necessary to meet the purposes under this subpart and
financial assistance for such equipment and facilities

is not available from other sources at a cost which
would not adversely affect the economic viability of
the project;
(e) Providing links between teachers and
students or medical professionals who are located at
the same facility, provided that such facility receives
or provides distance learning or telemedicine services
as part of a distance learning or telemedicine network
which meets the purposes of this subpart;
(f) Providing for site development and alteration
of buildings in order to meet the purposes of this
subpart. Loans for this purpose must be necessary
and incidental to the total amount of financial
assistance requested;
(g) Purchasing of land, buildings, or building
construction, where such costs are demonstrated
necessary to construct distance learning and
telemedicine facilities. The applicant must
demonstrate that funding from other sources is not
available at a cost which does not adversely impact
the economic viability of the project as determined
by the Administrator. Financial assistance for this
purpose must be necessary and incidental to the total
amount of financial assistance requested; and,
(h) Acquiring of telecommunications
transmission facilities provided that no
telecommunications carrier will install such facilities
under the Act or through other financial procedures
within a reasonable time period and at a cost to the
applicant that does not impact the economic viability
of the project, as determined by the Administrator.
(i) Any project costs, except for salaries and
administrative expenses, not included in paragraphs
(a) through (h) of this section, incurred during the
first two years of operation after the financial
assistance has been approved. The applicant must
show that financing such costs are necessary for the
establishment or continued operation of the project
and that financing is not available for such costs
elsewhere, including from the applicant’s financial
resources. The Administrator will determine whether
such costs will be financed based on information
submitted by the applicant. Loans shall not be made
exclusively to finance such costs, and financing for
such costs will not exceed 20 percent of the loan
provided to a project under this section.
(j) For all of the costs needed to provide distance
learning broadcasting to rural areas. Loans may be
used to cover the costs of facilities and end-user
equipment dedicated to providing educational
broadcasting to rural areas for distance learning
purposes. If the facilities are not 100 percent
dedicated to broadcasting, a portion of the financing
may be used to fund such facilities based on a
percentage of use factor that approximates the
distance learning broadcasting portion of use.
§ 1703.142 Nonapproved purposes for loans.
(a) Loans made under this subpart will not be
provided to pay the costs of recurring or operating

expenses incurred after two years from approval of
the project except for leases (see § 1703.141).
(b) Loans made under this subpart will not be
provided for any of the following costs:
(1) To purchase equipment that will be owned by
the local exchange carrier or another
telecommunications service provider, unless the
applicant is the local exchange carrier or other
telecommunications service provider;
(2) 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;
(3) For projects located in areas covered by the
Coastal Barrier Resources Act (16 U.S.C. 3501 et
seq.);
(4) To pay for salaries, wages, or administrative
expenses; or
(5) For any purpose that the Administrator has
not specifically approved.
(c) Except as otherwise provided in § 1703.112,
funds shall not be used to finance a project, in part,
when the success of the project is dependent upon the
receipt of additional financial assistance under this
subpart D or is dependent upon the receipt of other
funding that is not assured.
§ 1703.143 Maximum and minimum amounts.
Applications for loans under this subpart will be
subject to limitations on the proposed amount of
loans. The Administrator will establish the
maximum amount of a loan available to an applicant
under this subpart, by publishing notice of the
maximum amount in the Federal Register before the
opening of the application window. The minimum
amount of a loan is $50,000.
§ 1703.144 Completed application.
The following items are required to be submitted
in support of an application for a loan:
(a) An application for federal assistance: A
completed standard form 424
(b) An executive summary of the project. The
applicant must provide RUS with a general project
overview that addresses each of the following 9
categories:
(1) A description of why the project is needed;
(2) An explanation of how the applicant will
address the need (see paragraph (b)(1) of this
section), why the applicant requires financial
assistance, the types of educational or medical
services to be offered by the project, and the benefits
to the rural residents;
(3) A description of the applicant, documenting
eligibility in accordance with § 1703.103;
(4) An explanation of the total project cost
including a breakdown of the loan required and the
source of funding, if applicable, for the remainder of
the project;
(5) A statement specifying whether the project
provides predominantly distance learning or

telemedicine services as defined in § 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 project at each end user site;
(8) A certification by the applicant that facilities
funded by a loan do not duplicate adequate
established telemedicine or distance learning
services.
(9) A listing of the location of each end user site
(city, town, village, borough, or rural area plus the
State).
(c) A scope of work. The scope of work must
include, 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 the loan and any other sources
of funds for the project.
(d) Financial information. The applicant must
show its financial ability to complete the project;
show project feasibility; and provide evidence that it
can execute a note for a loan for a maturity period
greater than one year. 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 and repay the requested loan.
This documentation should include sources of
sufficient income or revenues to pay operating

expenses including telecommunications access and
toll charges, system maintenance, salaries, training,
and any other general operating expenses, provide for
replacement of depreciable items, and show
repayment of interest and principal for the loan.
(2) A list of property which will be used as
collateral to secure repayment of the proposed loan.
The applicant shall purchase and own collateral that
secures the loan free from liens or security interests
and take all actions necessary to perfect a first lien in
the collateral that secures the loan. RUS will
consider as adequate security a loan guarantee by a
telecommunications or electric borrower or by
another qualified party. Additional forms of security,
including letters of credit, real estate, or any other
items will be considered. RUS will determine the
adequacy of the security offered.
(3) As applicable, a depreciation schedule
covering all assets of the project. Those assets for
which a loan is being requested should be clearly
indicated.
(4) 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.
(5) For applicants eligible under §
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.
(e) 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 project. Experience in a similar
project is desirable but not required.
(f) A telecommunications system plan. A
telecommunications system plan, consisting of the
following (the items in paragraphs (g)(4) and (g)(5)
of this section are required only when the applicant is
requesting a loan 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 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 a loan.
(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 discussions with local exchange
carriers serving the project area addressing the
concerns contained in § 1703.141(h).
(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) Compliance with other federal statutes. The
applicant must provide evidence of compliance with
other Federal statutes and regulations including, but
not limited to the following:
(1) E.O. 11246, Equal Employment Opportunity,
as amended by E.O. 11375 and as supplemented by
regulations contained in 41 CFR part 60;
(2) Architectural barriers;
(3) Flood hazard area precautions;
(4) Assistance and Real Property Acquisition
Policies Act of 1970;
(5) Drug-Free Workplace Act of 1998 (41 U.S.C.
701);
(6) c.o.'s 12549 and 12689, Debarment and
Suspension;
(7) Byrd Anti-Lobbying Amendment (31 U.S.C.
1352).
(h) Environmental impact and historic
preservation.
(1) The applicant must provide details of the
project’s impact on the environment and historic
preservation. Loans made under this part are subject
to 7 CFR part 1794 which contains RUS’ policies and
procedures for implementing a variety of Federal

statutes, regulations, and executive orders generally
pertaining to the 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) The applicant may use the “Environmental
Questionnaire,” available from RUS, to assist in
complying with the requirements of this section.
(i) Evidence of legal authority and existence.
The applicant must provide evidence of the its legal
existence and authority to enter into debt with RUS
and perform the activities proposed under the loan
application.
(j) Federal debt certification. The applicants
must provide a certification that it is not delinquent
on any obligation owed to the government (7 CFR
parts 3016 and 3019).
(k) 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 project
would further the purposes of this subpart.
(l) Additional information required by RUS. The
applicant must provide any additional information
RUS determines is necessary to adequately evaluate
the application. Modifications or changes, including
changes in the loan amount requested, may be
requested in any project described in an application
submitted under this subpart.
§ 1703.145 Application selection provisions.
(a) Loans will be approved based on availability
of funds, the financial feasibility of the project in
accordance with § 1703.144(d), the services to be
provided which demonstrate that the project meets
the general requirements of this subpart, the design of
the project; costs; location; and other characteristics
of the application.
(b) RUS will determine, from the information
submitted with each application for a loan, whether
the application achieves sufficient priority, based on
the criteria set forth in the 1996 Act, to receive a loan
from funds available for the fiscal year. If such
priority is achieved, RUS will process the loan
application on a first-in, first-out basis, provided that
the total amount of applications on-hand for loans
does not exceed 90 percent of the total loan funding
available for the fiscal year. At such time as the total
amount of applications eligible for loans, if such
applications were approved, exceeds 90 percent of
amount of loan funding available, RUS will process
the remaining applications using the evaluation
criteria set forth in § 1703.126.
(c) A loan will not be approved if it is
determined that:
(1) The applicant’s proposal does not indicate
financial feasibility, or is not adequately secured in
accordance with the requirements of § 1703.144(d);
(2) The applicant’s proposal indicates technical
flaws, which, in the opinion of RUS, would prevent

successful implementation, or operation of the
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 RUS, undermine the ability of the project
to meet the general purpose of this subpart or comply
with policies of the DLT program contained in §
1703.101.
(d) RUS will provide the applicant with a
statement of any determinations made with regard to
paragraphs (c)(1) through (c)(3) of this section. The
applicant will be provided 15 days from the date of
the RUS 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 loan
will not be approved, 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 § 1703.147.
§ 1703.146 Submission of applications.
(a) RUS will accept applications for loans
submitted by RUS telecommunications General Field
Representatives (GFRs), by Rural Development State
Directors, or by applicants themselves. Applications
for loans under this subpart may be filed at any time
and will be evaluated as received on a noncompetitive basis.
(b) Applications submitted to the State Director,
Rural Development, in the State serving the
headquarters of the project will be evaluated as they
are submitted. All applicants must submit an original
and two copies of a completed application. The
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 the State Director. The
State Director will:
(1) Review each application for completeness in
accordance with § 1703.144, and notify the applicant,
within 15 working days of receiving the application,
of the results of this review, acknowledging a
complete application, or citing any information that is
incomplete. To be considered for a loan, the
applicant must submit any additional information
requested to complete the application within 15
working days of the date of the State Director’s
written response. If the applicant fails to submit such
information, the application will be returned to the
applicant.
(2) Within 30 days of the determination of a
completed application in accordance with paragraph
(1) of this section, review the application to
determine suitability for financial assistance in
accordance with § 1703.145, and other requirements
of this subpart. Based on its review, the State
Director will work with the applicant to resolve any
questions or obtain any additional information. The

applicant will be notified, in writing, of any
additional information required to allow a financial
assistance recommendation and will be provided a
reasonable period of time to furnish the additional
information.
(3) Based on the review in accordance with §
1703.145 and other requirements of this subpart,
make a preliminary determination of suitability for
financial assistance. A loan recommendation will be
prepared by the State Director with concurrence of
the RUS telecommunications GFR that addresses the
provisions of §§ 1703.144 and 1703.145 and other
applicable requirement of this subpart.
(4) If the application is determined suitable for
further consideration by RUS, forward an original
and one copy of the application with a loan
recommendation, signed jointly, to the Assistant
Administrator, Telecommunications Program, Rural
Utilities Service, Washington DC. The applicant will
be notified by letter of this action. Upon receipt of
the application from the State Director, RUS will
conduct a cursory review of the application and the
recommendation. A final determination will be made
within 15 days. If the Administrator determines that
a loan can be approved, the State Director will be
notified and the State Director will notify the
applicant. Applications for loans will be processed,
and approved loans serviced, in accordance with §§
1703.105 through 1703.112.
(5) If the State Director determines that the
application is not suitable for further consideration by
RUS, notify the applicant with the reasons for this
determination. The applicant will be offered appeal
rights in accordance with § 1703.147.
(c) Applications submitted by RUS
telecommunications GFRs or directly by applicants
will be evaluated as they are submitted. All
applicants must submit an original and two copies of
a completed application. The 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 the RUS. RUS will:
(1) Review each application for completeness in
accordance with § 1703.144, and notify the applicant,
within 15 working days of receiving the application,
of the results of this review, acknowledging a
complete application, or citing any information that is
incomplete. To be considered for a loan, the
applicant must submit any additional information
requested to complete the application within 15
working days of the date of the RUS written
response. If the applicant fails to submit such
information, the application will be returned to the
applicant.
(2) Within 30 days of the determination of a
completed application in accordance with paragraph
(c)(1) of this section, review the application to
determine suitability for financial assistance in
accordance with this subpart. Based on its review,
RUS will work with the applicant to resolve any

questions or obtain any additional information. The
applicant will be notified, in writing, of any
additional information required to allow a financial
assistance recommendation and will be provided a
reasonable period of time to furnish the additional
information.
(3) If the application is determined suitable for
further consideration by RUS, conduct a review of
the application and financial assistance
recommendation. A final determination will be made
within 15 days. If the Administrator determines that
a loan can be approved, the applicant will be notified.
Applications will be processed, and approved loans
serviced, in accordance with §§ 1703.105 through
1703.112 of subpart D.
(4) If RUS determines that the application is not
suitable for further consideration, notify the applicant
with the reasons for this determination. The
applicant will be offered appeal rights in accordance
with § 1703.147 of this subpart.

§ 1703.147 Appeals.
Any appeal must be made, in writing, within 10
days after the applicant is notified of the
determination to deny the application. Appeals shall
be submitted to the Administrator, RUS, U.S.
Department of Agriculture, 1400 Independence Ave.,
SW., STOP 1590, Washington, DC 20250-1590.
Thereafter, the Administrator will review the appeal
to determine whether to sustain, reverse, or modify
the original 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.
Hilda Gay Legg,
Administrator, Rural Utilities Service
as amended March 11, 2002

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