19108 Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations

DEPARTMENT OF AGRICULTURE

Office of the Secretary

7 CFR Part 25

RIN 0503–AA18

Designation of Rural Empowerment

Zones and Enterprise Communities

AGENCY: Office of the Secretary, USDA.

ACTION: Interim rule with request for

comments.

SUMMARY: This interim rule sets forth

the policy and procedures by which the

Secretary of the U.S. Department of

Agriculture (USDA) will designate not

more than five rural Empowerment

Zones (Round II) as authorized by the

Taxpayer Relief Act of 1997 (Pub. L.

105–34). This interim rule also amends

regulations pertaining to the existing

three (3) rural Empowerment Zones and

thirty (30) rural Enterprise Communities

which were designated pursuant to Title

XIII of the Omnibus Budget

Reconciliation Act of 1993 (Pub. L. 103–

66) (Round I). Published elsewhere in

this Federal Register is a Notice Inviting

Applications for Designation of rural

Empowerment Zones for Round II

pursuant to this implementing

regulation.

DATES: Effective May 18, 1998. Written

comments must be received on or before

June 15, 1998.

ADDRESSES: Submit written comments

in duplicate on the interim rule to the

Chief, Regulations and Paperwork

Management Branch, Support Services

Division, Rural Development, U.S.

Department of Agriculture, STOP 0743,

1400 Independence Ave., SW,

Washington, DC 20250–0743. Also,

comments may be submitted via the

Internet by addressing them to

‘‘comments@rus.usda.gov’’ and must

contain ‘‘Empowerment’’ in the subject.

All written comments will be available

for public inspection during regular

work hours at the above address. (In

addition, see the Paperwork Reduction

Act heading under the Supplementary

Information section of this preamble

regarding submission of comments on

the information collection burden.)

FOR FURTHER INFORMATION CONTACT:

Deputy Administrator for Community

Development, USDA Rural

Development, Office of Community

Development, Reporters Building, Room

701, STOP 3203, 300 7th Street, SW,

Washington, DC 20024–3203, telephone

1–800–851–3403, or by sending an

Internet e-mail message to

‘‘round2.rural@www.ezec.gov’’. For

hearing- and speech-impaired persons,

information concerning this program

may be obtained by contacting USDA’s

TARGET Center at (202) 720–2600

(Voice and TDD).

SUPPLEMENTARY INFORMATION:

Classification

This rule has been reviewed under

E.O. 12866 and has been determined to

be a significant regulatory action, as that

term is defined in Executive Order

12866, and has been reviewed by OMB.

Justification for Interim Rule

It is the policy of this Department that

rules relating to public property, loans,

grants, benefits, or contracts shall be

published for comment notwithstanding

the exemption of 5 U.S.C. 553 with

respect to such rules. However,

exemptions are permitted where an

agency finds, for good cause, that

compliance would be impracticable,

unnecessary, or contrary to the public

interest.

The Department finds that good cause

exists to publish this rule for effect

without first soliciting public comment.

USDA believes it would be contrary to

the public interest to delay the

effectiveness of the rule, since it will

prescribe the criteria for designating

new empowerment zones. The

governmental entities and other entities

that may work with them in partnership

to develop an application for

designation need to know the

requirements of the program in time to

develop their strategic plans and apply

for designation, which designations are

subject to a statutory deadline of

January 1, 1999.

The Department has already

published a rule for notice to comment

on the subject of designation of

Empowerment Zones, which was

codified at 7 CFR part 25. This new rule

to implement a second round of

designation of Empowerment Zones is

patterned on the prior rule. The major

differences between this rule and the

earlier rule are based on statutory

changes, which leave virtually no room

for exercise of discretion. Other

additions to the rule reflect USDA’s

experience with the first round,

clarifying the expectations of the parties

to reflect actual experience. These

changes are not controversial and,

therefore, do not signal a necessity for

advance public comment.

USDA’s finding that it would be

contrary to the public interest to delay

the effectiveness of the rule is based on

the practical necessity of preparing an

application for designation as an

empowerment zone within the

timeframe set by the authorizing statute.

The designations are required by the

statute (section 1391(g)(2)) to be made

before January 1, 1999. The

governmental entities and other entities

that may work with them in partnership

to develop an application for

designation need to know the

requirements of the program in time to

develop their strategic plans and apply

for designation. Delay in prescribing the

criteria for designating new

empowerment zones would delay the

development of these cooperative efforts

and make it extremely difficult for

applicants to develop their strategic

plans in a timely fashion.

For these reasons, USDA believes that

an interim rulemaking is justified.

USDA is soliciting public comments on

this rule and will consider these

comments in the development of a final

rule.

Programs Affected

The Catalog of Federal Domestic

Assistance Program number assigned to

this program is 10.772.

Program Administration

The program is administered through

the Office of Community Development

within the Rural Development mission

area of the Department of Agriculture.

Paperwork Reduction Act

The information collection

requirements contained in this rule, as

described in §§ 25.200(b), 25.201,

25.202, 25.203 together with the

implementing application form

(Application burden), §§ 25.400, 25.403,

25.405(b) and 25.405(b)(1) (Reporting

burden), have been approved by the

Office of Management and Budget

(OMB) under the Paperwork Reduction

Act of 1995 (44 U.S.C. 3501–3520) and

assigned OMB control numbers 0570–

0026 (Application burden) and 0570–

0027 (Reporting burden). This approval

has been granted on an emergency basis

through August 31, 1998. In accordance

with the Paperwork Reduction Act,

USDA may not conduct or sponsor, and

a person is not required to respond to,

a collection of information unless the

collection displays a currently valid

OMB control number.

In addition, USDA will seek an

extension of this approval for these

information collections. Therefore,

USDA asks for comments regarding the

information collections contained in the

sections of this rule stated above. At the

end of the comment period, USDA will

submit the proposed information

collections to OMB for approval.

Comments regarding the information

collections contained in the rule, must

be submitted by June 15, 1998.

Comments on these information
Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations 19109

collections should refer to the proposal

by name and/or OMB control number

and must be sent to: Cheryl Thompson,

Regulations and Paperwork

Management Branch, Support Services

Division, U.S. Department of

Agriculture, Rural Housing Service,

STOP 0743, 1400 Independence Ave.,

SW, Washington, DC 20250–0743.

Specifically, comments are solicited

from members of the public and affected

agencies concerning the proposed

collection of information to: (1) Evaluate

whether the proposed collection of

information is necessary for the proper

performance of the functions of the

agency, including whether the

information will have practical utility;

(2) evaluate the accuracy of the agency’s

estimate of the burden of the proposed

collection of information; (3) enhance

the quality, utility and clarity of the

information to be collected; and (4)

minimize the burden of the collection of

information on those who are to

respond, including through the use of

appropriate automated collection

techniques or other forms of information

technology, e.g., permitting electronic

submission of responses.

The following table identifies the

components of the information

collection:

Type of collection

Section of 7

CFR part 25

affected

Number of

respondents

Frequency

of response

Est. avg. response time

(hours)

Annual burden

(hours)

Application ................................................................................................ 25.200(b)

25.201

25.202

25.203

75 1 50 3,750

Periodic Reporting (all rural EZ/ECs) ....................................................... 25.400

25.403

25.405(b)

38 2 10 760

Response to Warning Letter ..................................................................... 25.405(b)(1) 1 1 1 1

Total Burden in the Round II

Application Year: 4,511 hours

Total Burden in each Reporting Year,

Years 2 through 10: 761 hours

Environmental Impact Statement

It is the determination of the Secretary

that this action is not a major Federal

action significantly affecting the

environment. Therefore, in accordance

with the National Environmental Policy

Act of 1969, Pub. L. 91–190, and 7 CFR

part 1940 subpart G, an Environmental

Impact Statement is not required.

Executive Order 12988

This interim rule has been reviewed

in accordance with E.O. 12988, Civil

Justice Reform. In accordance with this

rule: (1) All state and local laws and

regulations that are in conflict with this

rule will be preempted; (2) no

retroactive effect will be given to this

rule; and (3) administrative proceedings

in accordance with 7 CFR part 11 must

be exhausted before bringing suit in

court challenging action taken under

this rule unless those regulations

specifically allow bringing suit at an

earlier time.

The Unfunded Mandates Reform Act of

1995

Title II of the Unfunded Mandates

Reform Act of 1995 (UMRA), Pub. L.

104–4, establishes requirements for

Federal agencies to assess the effects of

their regulatory actions on state, local,

and tribal governments and the private

sector. Under section 202 of the UMRA,

USDA must prepare a written statement,

including a cost benefit analysis, for

proposed and final rules with ‘‘Federal

mandates’’ that may result in

expenditures to state, local or tribal

governments, in the aggregate, or to the

private sector, of $100 million or more

in any one year. When such a statement

is needed for a rule, section 205 of

UMRA generally requires USDA to

identify and consider a reasonable

number of regulatory alternatives and

adopt the least costly, more cost

effective or least burdensome alternative

that achieves the objectives of the rule.

This rule contains no Federal

mandates (under the regulatory

provisions of title II of the UMRA) for

state, local, and tribal governments or

the private sector. Therefore this rule is

not subject to the requirements of

sections 202 and 205 of UMRA.

Regulatory Flexibility Act

In compliance with the Regulatory

Flexibility Act (5 U.S.C. 601–612), the

undersigned has determined and

certified by signature of this document

that this rule will not have a significant

economic impact on a substantial

number of small entities. The

Regulatory Flexibility Act is intended to

encourage Federal agencies to utilize

innovative administrative procedures in

dealing with individuals, small

businesses, small organizations, and

small governmental bodies that would

otherwise be unnecessarily adversely

affected by Federal regulations. The

provisions included in this rule will not

impact a substantial number of small

entities to a greater extent than large

entities. Therefore, no regulatory

flexibility analysis under the Regulatory

Flexibility Act is necessary.

Executive Order 12611, Federalism

The policies contained in this rule

will not have substantial direct effects

on states or their political subdivisions,

or the relationship between the Federal

Government and the states, or on the

distribution of power and

responsibilities among the various

levels of government. The purpose of

this rule is to provide a cooperative

atmosphere between the Federal

Government and the states and local

governments, and to reduce any

regulatory burden imposed by the

Federal Government that impedes the

ability of state and local governments to

solve pressing economic, social, and

physical problems in their communities.

I. Background

The Empowerment Zones program

confers upon rural distressed American

communities the opportunity to design

and implement programs to create jobs,

support their residents in becoming

skilled and able to earn a livable income

and establish other strategies for

creating opportunity and building a

brighter future. The program combines

tax benefits with investment of Federal

resources and enhanced coordination

among Federal agencies.

The nomination process requires

applicant communities to take stock of

their assets and problems, create a

vision for the future, and structure a

strategic plan for achieving their vision.

Local partnerships among community

residents, businesses, financial

institutions, service providers,

transportation agencies, local court

systems, neighborhood associations,

tribal governments and state and local
19110 Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations

governments are formed or strengthened

by going through the application

process. Businesses will be encouraged

to invest and create jobs in distressed

areas. Communities are afforded an

opportunity to work with these partners

in the creation and implementation of a

community-based strategic plan. Local

strategic plans are intended to produce

more complete coordination between

community members working in the

areas of job creation, skills training,

social services, education, criminal

justice, infrastructure improvements

and other areas critical to community

development.

A. Champion Communities

Applicants which are not designated

as either an Empowerment Zone or

Enterprise Community, but which have

evidenced quality preparation and

strong support for implementing their

strategic plans, are eligible for

designation by the Secretary as

‘‘Champion communities.’’ Champion

communities are eligible for targeted

technical assistance, information and

outreach programs instituted by USDA.

They receive priority preference points,

where such discretionary points may be

granted by agency administrators and

state directors in administering USDA

programs. They receive priority

consideration under such other federal

programs as may be identified and such

other benefits as may be conferred by

statute. State directors are strongly

encouraged to use discretionary points

on behalf of Champion communities

where possible.

B. Community Development

Corporations

Under a separate program directed by

the Department of Housing and Urban

Development (HUD), Community

Development Corporations (CDCs)

nominated by the locality, or the Round

I applicants for the empowerment zone

or enterprise community designation,

are considered eligible for designation

to receive tax preferred contributions

from donors. HUD has designated eight

rural CDCs for this program.

C. Round I Enterprise Communities

Communities designated as Enterprise

Communities in Round I receive a

number of benefits. Enterprise

Communities are eligible for tax-exempt

facilities bonds for certain private

business activities. States with

designated Round I Enterprise

Communities received Empowerment

Zone/Enterprise Community Social

Service Block Grants (EZ/EC SSBGs) in

the amount of approximately $3 million

for each rural Enterprise Community for

activities identified in their strategic

plans which are consistent with the

statutory requirements for the use of

those funds. Enterprise Communities

received special consideration in

competition for funding under

numerous Federal programs. The

Taxpayer Relief Act of 1997 provided

for a new qualified academy zone bond

program to contribute toward

educational needs. Also new under this

recent legislation is a provision allowing

certain environmental cleanup costs to

be deducted from income for tax

purposes in the year incurred, which

costs would otherwise be capitalized

into the cost of the land. Eligible

cleanup costs include costs for cleaning

up sites in targeted areas, which areas

include Enterprise Communities.

D. Round I Empowerment Zones

Communities designated as Round I

Empowerment Zones receive all of the

benefits provided to Enterprise

Communities, in addition to other

benefits. States with rural

Empowerment Zones designated in

Round I received EZ/EC SSBGs in the

amount of $40 million for each rural

Empowerment Zone, or their

proportional share of $40 million in a

multi-state Empowerment Zone, equal

to the proportion of that Empowerment

Zone’s residents living in the state.

Employer Wage Credits for Round I

Empowerment Zone residents are

provided to qualified employers

engaged in trade, business, health care,

or human service delivery in designated

Round I Empowerment Zones.

E. Round II Empowerment Zones

Communities designated as Round II

Empowerment Zones will receive

virtually all of the benefits provided to

Round I Empowerment Zones. To the

extent direct federal funding for Round

II rural Empowerment Zones is not

authorized as of the publication date of

this rule, future authorization of direct

funding is possible. A major benefit for

Round II Empowerment Zones which is

not available to Round I Empowerment

Zones or Enterprise Communities is the

$60,000,000 authorization per zone for

issuing tax exempt facilities bonds,

which issuance authority is not subject

to the overall cap on state issuances of

federally tax-exempt private activity

bonds. A comparison of the benefits (as

of this publication date) afforded the

additional five Round II rural

empowerment zones to those available

to Round I Empowerment Zones

follows:

RURAL EMPOWERMENT ZONES BENEFIT COMPARISON TABLE

Round I Round II

Period ............................................................ From December 21, 1994 (Designation Date) to December 31, 2004.In most cases, ten full calendar years following the Designation Date

Title XX of the Social Security Act Appropriations.2 grants aggregating $40,000,000 per rural zone ..... To be determined.

Tax Exempt Bonds ....................................... A new category of tax-exempt private activity bonds

was authorized for certain zone facilities. Issues

are subject to state private activity bond cap levels on total issuances, and special limits on issue

size.

Also available to Round I ECs.

Round II rural zones can each issue up to

$60,000,000 in ‘‘new bonds’’ to finance

zone facilities in addition to Round I type

tax exempt bonds

Round II ‘‘new bonds’’ are not subject to

private activity bond volume caps or the

special limits on issue size applicable to

Round I type issues.

Wage Credit Provision: (exclusive to Round

I EZs).

20% wage credit for the first $15,000 of qualified

wages paid to a zone resident who works in the

zone, with a phaseout beginning in 2002. ‘‘Qualified zone wages’’ may not include wages for

which a work opportunity tax credit is claimed

(see next).

None.
Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations 19111

RURAL EMPOWERMENT ZONES BENEFIT COMPARISON TABLE—Continued

Round I Round II

Work Opportunity Tax Credit (not exclusive

to EZs; expires 6/30/98).

Available to Round I EZs ...........................................

Also available to Round I ECs.

40% of qualified first-year wages paid to a

member of a targeted group, where firstyear wages taken into account may not

exceed $6,000. Targeted employees include high risk youth residents of EZs

and ECs, food stamp and SSI recipients,

vocational rehabilitation referrals and others.

Internal Revenue Code 26 U.S.C. § 179 Expensing:.Capital costs of some kinds of business property

which must otherwise be capitalized and depreciated over time may be deducted in the year incurred under section 179. For a zone business,

the annual expensing allowance for section 179

property is increased by the lesser of (1) $20,000

or (2) actual cost of property placed in service

during the year. Eligible types of property do not

include buildings. The phaseout provision of section 179 that would otherwise apply to eligible 179

property is reduced for zone property.

As with Round I EZs, up to $20,000 of additional section 179 expensing, however,

the property in question must be on the

parcels qualified under the poverty rate

criteria.

Property on parcels included under the

‘‘developable site’’ per that eligibility provision is not eligible property (see Eligibility Criteria Table, below).

Brownfields Deductible Expense (not exclusive to EZs and ECs).Certain environmental remediation expenditures that

would otherwise be capitalized into the cost of the

land may be deducted if the costs are paid or incurred prior to January 1, 2001.

Also available to Round I ECs.

Also available to Round II EZs.

Qualified Zone Academy Bonds: (A national

limitation across all empowerment zones

and enterprise communities of up to $400

million each year for years 1998 and

1999).

Tax credit bonds whereby certain financial institutions (i.e., banks, insurance companies, and corporations actively engaged in the business of

lending money) that hold ‘‘qualified zone academy

bonds’’ are entitled to a nonrefundable tax credit

in an amount equal to a credit rate (set by the

Treasury Department) multiplied by the face

amount of the bond. They may or may not be interest bearing; if so, the interest is taxable.

The credit is effective for obligations issued after

December 31, 1997.

Also available to Round I ECs.

Also available to Round II EZs.

The statute does not expressly provide for

an allocation to rural empowerment

zones or enterprise communities.

The rural part of the program will be

administered by USDA as a Federalstate-local-private partnership, with a

minimum of red tape associated with

the application process. Applicants

must demonstrate the ability to design

and implement an effective strategic

plan for real opportunities for growth

and revitalization and must demonstrate

the capacity or the commitment to carry

out these plans. Effective plan

development must involve the

participation of the affected community,

and of the private sector, acting in

concert with the state, tribal and local

governments. The plan should be

developed in accordance with four key

principles, which will also serve as the

basis for the selection criteria that will

be used to evaluate the plan. Poverty,

unemployment, and other need factors

are critical in determining eligibility for

Empowerment Zone status, but play a

less significant role in the selection

process.

State and local governments, tribal

governments and economic

development corporations that are state

chartered may nominate distressed rural

areas for designation as Empowerment

Zones. A Round I Enterprise

Community may apply for Round II

Empowerment Zone status.

II. Program Description

General

Pursuant to Title XIII of the Omnibus

Budget Reconciliation Act of 1993, the

Secretary of Agriculture designated

three rural Empowerment Zones and

thirty rural Enterprise Communities on

December 21, 1994. The Secretary is

proposing to designate five more rural

empowerment zones pursuant to the

authorization in title IX of the Taxpayer

Relief Act of 1997 (Pub. L. 105–34,

approved August 5, 1997).

Eligibility

To be eligible for designation as a

Round II rural Empowerment Zone an

area must:

1. Have a maximum population of

30,000;

2. Be one of pervasive poverty,

unemployment, and general distress;

3. Not exceed one thousand square

miles in total land area;

4. Demonstrate a poverty rate that is

not less than:

a. 20 percent in each census tract or

census block numbering area (BNA);

and

b. 25 percent in 90 percent of the

census tracts and BNAs within the

nominated area;

5. Be located entirely within no more

than three contiguous states; if it is

located in more than one state, the area

must have one continuous boundary; if

located in only one state, the area may

consist of no more than three

noncontiguous parcels;

6. Show that each nominated parcel

independently meets the two poverty

rate requirements;

7. Be located entirely within the

jurisdiction of the unit or units of

general local government making the

nomination; and

8. Not include any portion of a central

business district as defined in the

Census of Retail Trade unless the

poverty rate for each Census tract is at

least 35 percent.

A table summarizing the Eligibility

Criteria applicable to Round II Rural

Empowerment Zone designations

follows:
19112 Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations

RURAL EMPOWERMENT ZONES ELIGIBILITY CRITERIA TABLE

Criteria Round II

Population ............................. The population of the nominated area may not exceed 30,000.

Distress ................................. The nominated area is one of pervasive poverty, unemployment, and general distress.

Area ...................................... Not more than 1,000 square miles.

Does not include any portion of a central business district (as defined in the most recent Census of Retail Trade)

unless the poverty rate for each population census tract in such district is 35 percent or higher.

Where a tract exceeds 1,000 square miles, the excess land may be excluded.

Where a tract includes substantial governmentally owned land, the governmentally owned land may be excluded.

Developable sites are not taken into account in determining whether the 1,000 square mile limitation is met.

Boundary (sub category

within Area).

May be continuous or consist of not more than 3 noncontiguous parcels. Where a rural area straddles more than

one state (it may not, in any event, straddle more than 3 states), the boundary must be continuous.

Subject to: Where a tract exceeds 1,000 square miles or a nominated area includes substantial governmentally

owned land, exclusion of the excess or government-owned land will not be treated as violating the continuous

boundary requirement.

Developable sites are not taken into account in determining whether the continuous boundary requirement is met.

Poverty Rate ......................... (1) Not less than a 20% poverty rate in each census tract; and

(2) At least 90% of the total census tracts each have a poverty rate of not less than 25%;

Subject to:

Up to an aggregate of 2,000 acres in not more than 3 noncontiguous parcels may be excluded from the nominated area for purposes of determining whether the 20% and 25% tests are met, where those acres may be

developed for commercial or industrial purposes.

Tracts with zero population are treated the same as tracts with population under 2,000 for purposes of applying

the poverty rate criteria.

Tracts with population under 2,000 are presumed to have a poverty rate of not less than 25% if:

(1) more than 75% of the tract is zoned for commercial or industrial use; and

(2) such tract is contiguous to 1 or more other tracts which have a poverty rate of not less than 25%, where that

determination for the contiguous tracts is made using the actual poverty rate, not by applying this provision.

Noncontiguous parcels must separately meet the 20% and 25% tests above.

In the case of an area not tracted for population census purposes, the equivalent county divisions, defined by the

Bureau of the Census for defining poverty areas, shall be used for determining poverty rates.

The Secretary of Agriculture may disregard the poverty rate test for not more than one Round II Rural Empowerment Zone and apply in lieu thereof an emigration test as contained in the applicable regulations.

Additional Factors ................. (1) Effectiveness of the strategic plan; and

(2) Assurances made by state and local governments that the strategic plan will be implemented.

(3) Other criteria as the Secretary may impose.

A Round I Enterprise Community (EC) may be designated a Round II Empowerment Zone, however, the enterprise community must apply for zone designation in its entirety, or in its entirety together with an additional

area. A sub area of an Enterprise Community may not apply. With the exception of a Round I EC applying for

a Round II Empowerment Zone designation, no portion of the area nominated may already be included in a

Round I Empowerment Zone or Enterprise Community.

A Round II Empowerment Zone may include an area on an Indian reservation.

A nominated area in Alaska or Hawaii is deemed to meet the Distress, Area and Poverty Rate Criteria above, if

for each census tract or block group at least 20% of the families within have an income which is 50% or less

than the statewide median family income. [Note: the Population and other requirements still apply.]

Application of Poverty Rate Test

A rounding methodology will be applied to the 90 percent calculation in determining the number of tracts which

must evidence a poverty rate of not less than 25 percent. Where the nominated area consists of fewer than ten tracts,

the following table reflects application of this methodology:

Total Number of Census Tracts in the Nominated Area

Number of tracts

which must demonstrate a poverty

rate of not less

than 25%

Number of tracts

which must demonstrate a poverty

rate of not less

than 20%

9 [.90 x 9 = 8.1; rounded to 8] ..................................................................................................................... 8 1

8 ................................................................................................................................................................... 7 1

7 ................................................................................................................................................................... 6 1

6 ................................................................................................................................................................... 5 1

5 [.90 x 5 = 4.5; rounded to 5] ..................................................................................................................... 5 ..............................

4 ................................................................................................................................................................... 4 ..............................

3 ................................................................................................................................................................... 3 ..............................

2 ................................................................................................................................................................... 2 ..............................

1 ................................................................................................................................................................... 1 ..............................

Nomination Process

The law requires that areas be nominated by one or more local governments and the states, or tribal government,

where the nominated rural area is located. Nominations can be considered for designation only if:

1. The rural area meets the applicable requirements for eligibility;
Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations 19113

2. The Secretary determines such

governments have the authority to

nominate the area for designation and to

provide the required assurances; and

3. The Secretary determines all

information furnished by the

nominating state and local governments

is reasonably accurate.

The state and local governments

nominating an area for designation must

certify:

1. Each nominating governmental

entity has the authority to nominate the

rural area for designation as an

Empowerment Zone or Enterprise

Community and make the assurances

required under this part;

2. Each nominating governmental

entity has the authority to make the

state and local commitments contained

in the strategic plan and as required by

this part;

3. Each nominating governmental

entity has the authority to provide

written assurances satisfactory to the

Secretary that these commitments will

be met;

4. The nominated area satisfies the

eligibility criteria, inclusive of the

requirement that either

a. No portion of the area nominated is

already included in a designated

Empowerment Zone or Enterprise

Community or in an area otherwise

nominated to be designated under this

section; or

b. Where an existing Round I

Enterprise Community is seeking to be

designated as a Round II Empowerment

Zone, that the nominated area includes

the entirety of the applicable Round I

Enterprise Community and any other

areas as may be included in the

application do not comprise any portion

of a designated Empowerment Zone or

Enterprise Community or part of an area

otherwise nominated to be designated

under this section.

The state and local governments

nominating an area for designation must

provide the following written

assurances:

1. The strategic plan will be

implemented;

2. The nominating governments will

make available all information

requested by USDA to aid in the

evaluation of progress in implementing

the strategic plan; and

3. EZ/EC SSBG funds, as applicable,

will be used to supplement, not

supplant, other Federal or non-Federal

funds available for financing services or

activities which can be used to achieve

or maintain the objectives consistent

with EZ/EC SSBG purposes.

Strategic Plan

The application for designation must

include a strategic plan. The strategic

plan must be developed in accordance

with the following four key principles:

1. Strategic vision for change, which

identifies what the community will

become and a strategic map for

revitalization. The vision should build

on assets and coordinate a response to

community needs in a comprehensive

fashion. It should also set goals and

performance benchmarks for measuring

progress and establish a framework for

evaluating and adjusting the

revitalization plan.

2. Community-based partnerships,

involving the participation of all

segments of the community, including

the political and governmental

leadership, community groups, local

public health and social service

departments and nonprofit groups

providing similar services,

environmental groups, local

transportation planning entities, public

and private schools, religious

organizations, the private and nonprofit

sectors, centers of learning, and other

community institutions and individual

citizens;

3. Economic opportunity, including

job creation within the community and

throughout the region, entrepreneurial

initiatives, small business expansion,

job training and other important

services such as affordable childcare

and transportation services that may

enable residents to be employed in jobs

that offer upward mobility;

4. Sustainable community

development, to advance the creation of

livable and vibrant communities

through comprehensive approaches that

coordinate economic, physical,

environmental, community and human

development. These approaches should

preserve the environment and historic

landmarks—they may include

‘‘brownfields’’ clean-up and

redevelopment, and promote

transportation, education, and public

safety.

The strategic plan must:

1. Describe the coordinated economic,

human, community, and physical

development plan and related activities

proposed for the nominated area;

2. Describe the process by which the

affected community is a full partner in

the process of developing and

implementing the plan and the extent to

which local institutions and

organizations have contributed to the

planning process;

3. Identify the amount of state, local,

and private resources that will be

available in the nominated area and the

private and public partnerships to be

used, which may include participation

by, and cooperation with, universities,

medical centers, and other private and

public entities;

4. Identify the funding requested

under any Federal program in support

of the proposed economic, human,

community, and physical development

and related activities;

5. Identify the baselines, methods,

and benchmarks for measuring the

success of carrying out the strategic

plan, including the extent to which poor

persons and families will be empowered

to become economically self-sufficient;

6. Must not include any action to

assist any establishment in relocating

from one area outside the nominated

area to the nominated area, except that

assistance for the expansion of an

existing business entity through the

establishment of a new branch, affiliate,

or subsidiary is permitted if:

(i) The establishment of the new

branch, affiliate, or subsidiary will not

result in a decrease in employment in

the area of original location or in any

other area where the existing business

entity conducts business operations;

and

(ii) There is no reason to believe that

the new branch, affiliate, or subsidiary

is being established with the intention

of closing down the operations of the

existing business entity in the area of its

original location or in any other area

where the existing business entity

conducts business operation; and

7. Include such other information as

required by USDA in a Notice Inviting

Applications.

III. Differences Between the Round II

Interim Rule and the Round I Final

Rule

This interim rule amends the

February 6, 1995 final rule promulgated

with respect to Round I Empowerment

Zones and Enterprise Communities. In

addition to incorporating revised

eligibility criteria for Round II

Empowerment Zones, changes have

been made to streamline the application

process and provide guidance for the

format of required strategic plans.

Changes have been made to the post

designation monitoring activities for all

Empowerment Zones and Enterprise

Communities as well.

The broad categories for eligibility

continue to be population, distress, area

size and boundary configuration, and

poverty rate. Within those categories,

population limit and the requirement

that the nominated area evidence

pervasive poverty and general distress

remain unchanged. The area size and

boundary determinations were modified
19114 Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations

for Round II and the specific poverty

rate thresholds were relaxed somewhat.

The former requirement that at least half

of the nominated area consist of Census

tracts with poverty rates of 35 percent

or more does not apply to Round II

designees. Round II applicants must

demonstrate a poverty rate of not less

than 25 percent for 90 percent of the

census tracts and a poverty rate of not

less than 20 percent for all Census

tracts. The rule for Census tracts with

populations under 2,000 was changed.

The low population tract may qualify

under its actual poverty rate or by

application of a special rule. If (i) the

low population tract is contiguous to a

census tract which has an actual poverty

rate of not less than 25 percent, and (ii)

more than 75 percent of the area in the

low population tract area is zoned

commercial or industrial, then the low

population tract will be treated as

having a poverty rate of not less than 25

percent under the applicable statutory

provision.

The requirement that nominated areas

conform to census tract boundaries

remains unchanged in most instances

from Round I.

The 1,000 square mile limitation

continues to apply to rural areas;

however, for purposes of determining

whether a nominated area meets this

test, a special rule for rural areas allows

the exclusion in a single census tract of

square mileage in excess of 1,000 square

miles as well as land owned by the

Federal, state or local governmental

entities. The exclusion of such excess

area or governmentally owned land will

not be treated as violating the boundary

requirements.

The requirement that the nominated

rural area not exceed 3 noncontiguous

parcels if it is wholly within one state,

but observe a continuous boundary

requirement if it crosses state lines,

remains unchanged from Round I. It

may not involve more than three

contiguous states.

Round II nominated areas may

include developable sites for which the

poverty rate criteria do not apply. The

poverty rate criteria shall not apply to

up to three noncontiguous parcels in a

nominated area which may be

developed for commercial or industrial

purposes. The aggregate area of such

parcels may not exceed 2,000 acres.

This provision is subject to, and does

not modify, the overall limit of three

noncontiguous parcels for the entire

nominated area. Developable sites are

not taken into account in determining

whether the 1,000 square mile and

boundary limitations are met.

Round II provides that an area in an

Indian reservation may be nominated

for designation as a rural Empowerment

Zone. Where two [or more] governing

bodies have joint jurisdiction over an

Indian reservation, the nomination of a

reservation area must be a joint

nomination. Nominated areas wholly

within an Indian reservation are not

required to adhere to census tract

boundaries if sufficient credible data are

available to show compliance with other

requirements of the rule.

The Interim rule does not include

information concerning EZ/EC SSBG

funds that may become available from

the U.S. Department of Health and

Human Services (HHS). Information

about allowed uses of such grant funds

may be found in an appendix to the

USDA Notice Inviting Applications

published elsewhere in this issue of the

Federal Register.

Previously designated Round I

Enterprise Communities may apply for

Round II Empowerment Zone

designation. The Interim rule provides

that a Round I Enterprise Community

must apply in its entirety, or in its

entirety together with additional area. A

subportion of the Round I Enterprise

Community may not spin off such that

the remainder of the Round I Enterprise

Community is not included in the

application for Round II Empowerment

Zone designation.

The Interim rule provides that the

format of the strategic plans conform to

the requirements set forth in the Notice

Inviting Applications published

elsewhere in this Federal Register. This

is to offer guidance to the applicants

and facilitate greater efficiency in

reviewing the applications and post

designation evaluation. The Interim rule

clarifies and makes applicable to all

designees the USDA reporting

requirements which were instituted for

Round I Empowerment Zones and

Enterprise Communities.

The Notice Inviting Applications

published elsewhere in this Federal

Register includes as an appendix a

model Memorandum of Agreement

(MOA). Round I designees were asked to

sign comparable MOAs; Round II

applicants will also be required to sign

comparable MOAs.

List of Subjects in 7 CFR Part 25

Community development, Economic

development, Empowerment zones,

Enterprise communities, Housing,

Indians, Intergovernmental relations,

Reporting and recordkeeping

requirements, Rural development.

In accordance with the reasons set out

in the preamble, 7 CFR part 25 is

revised to read as follows:

1. Title 7 is amended by revising part

25 to read as follows:

PART 25—RURAL EMPOWERMENT

ZONES AND ENTERPRISE

COMMUNITIES

Subpart A—General Provisions

Sec.

25.1 Applicability and scope.

25.2 Objective and purpose.

25.3 Definitions.

25.4 Secretarial review and designation.

25.5 Waivers.

25.6–25.9 [Reserved]

Subpart B—Area Requirements

25.100 Eligibility requirements.

25.101 Data utilized for eligibility

determinations.

25.102 Pervasive poverty, unemployment

and general distress.

25.103 Area size and boundary

requirements.

25.104 Poverty rate.

25.105–25.199 [Reserved]

Subpart C—Nomination Procedure

25.200 Nominations by state and local

governments.

25.201 Application.

25.202 Strategic plan.

25.203 Submission of applications.

25.204 Evaluation of the strategic plan.

25.205–25.299 [Reserved]

Subpart D—Designation Process

25.300 USDA action and review of

nominations for designation.

25.301 Selection factors for designation of

nominated rural areas.

25.302–25.399 [Reserved]

Subpart E—Post-Designation Requirements

25.400 Reporting.

25.401 Responsibility of lead managing

entity.

25.402 Periodic performance reviews.

25.403 Ongoing 2-year work plan

requirement.

25.404 Validation of designation.

25.405 Revocation of designation.

25.406–25.499 [Reserved]

Subpart F—Special Rules

25.500 Indian reservations.

25.501 Governments.

25.502 Nominations by state-chartered

economic development corporations.

25.503 Rural areas.

25.504–25.599 [Reserved]

25.600–25.999 [Reserved]

Authority: 5 U.S.C. 301, 26 U.S.C. 1391.

Subpart A—General Provisions

§ 25.1 Applicability and scope.

(a) Applicability. This part sets forth

policies and procedures applicable to

rural Empowerment Zones and

Enterprise Communities, authorized

under the Omnibus Budget

Reconciliation Act of 1993, title XIII,

subchapter C, part I (Round I) and the

Taxpayer Relief Act of 1997, title IX,

subtitle F (Round II).

(b) Scope. This part contains

provisions relating to area requirements,
Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations 19115

the nomination process for rural

Empowerment Zones and rural

Enterprise Communities, and the

designation of these Zones and

Communities by the Secretary of the

U.S. Department of Agriculture

(Secretary) (USDA). Provisions dealing

with the nominations and designation of

urban Empowerment Zones and

Enterprise Communities are

promulgated by the U.S. Department of

Housing and Urban Development

(HUD). This part also contains

provisions relating to granting certain

nominated areas status as Champion

communities.

§ 25.2 Objective and purpose.

The purpose of this part is to provide

for the establishment of Empowerment

Zones and Enterprise Communities in

rural areas in order to facilitate the

empowerment of the disadvantaged and

long-term unemployed such that they

may become economically selfsufficient, and to promote revitalization

of economically distressed areas,

primarily by facilitating:

(a) Coordination of economic, human

services, health, transportation,

education, community, and physical

development plans, and other plans and

related activities at the local level;

(b) Local partnerships fully involving

affected communities and local

institutions and organizations in

developing and implementing a

comprehensive multi-sectoral strategic

plan for any nominated rural

Empowerment Zone or Enterprise

Community;

(c) Tax incentives and credits; and

(d) Distribution of other federal

resources including grants from USDA

and other federal departments,

including Empowerment Zone and

Enterprise Community Social Services

Block Grant (EZ/EC SSBG) funds as may

be available from the U.S. Department of

Health and Human Services (HHS).

§ 25.3 Definitions.

As used in this part—

Annual report means the report

submitted to USDA by all rural

Empowerment Zones and Enterprise

Communities pursuant to § 25.400.

Applicant means the entity that is

submitting the community’s strategic

plan for accomplishing comprehensive

economic, human community, and

physical development within the area;

such an entity may include, but is not

limited to, state governments, local

governments, tribal governments,

regional planning agencies, non-profit

organizations, community-based

organizations, or a partnership of

community members and other entities.

The applicant may be the same as or

different from the lead managing entity.

Baseline condition means a

measurable condition or problem at the

time of designation for which

benchmark goals have been established

for improvement.

Benchmark activity means a program,

project, task or combination thereof

which is designed to achieve a

benchmark goal.

Benchmark goal means a measurable

goal targeted for achievement in the

strategic plan.

Census tract means a population

census tract, or, if census tracts are not

defined for the area, a block numbering

area (BNA) as established by the Bureau

of the Census, U.S. Department of

Commerce. BNAs are areas delineated

by state officials or (lacking state

participation) by the Census Bureau,

following Census Bureau guidelines, for

the purpose of grouping and numbering

decennial census blocks in counties or

statistically equivalent entities in which

census tracts have not been established.

A BNA is equivalent to a census tract in

the Census Bureau’s geographic

hierarchy.

Brownfield means a ‘‘qualified

contaminated site’’ meeting the

requirements of section 941 of the

Taxpayer Relief Act of 1997, (26 U.S.C.

198(c)), where the site is located in an

empowerment zone or enterprise

community.

Champion Community means a rural

area granted such status by the Secretary

pursuant to this part from among those

communities which applied for

designation as either a rural

Empowerment Zone or Enterprise

Community and which were not so

designated.

Designation means the process by

which the Secretary designates rural

areas as Empowerment Zones or

Enterprise Communities eligible for tax

incentives and credits established by

subchapter U of the Internal Revenue

Code (26 U.S.C. 1391 et seq.), and for

certain consideration by Federal

programs such as the EZ/EC SSBG

program established pursuant to section

2007 of title XX of the Social Security

Act (42 U.S.C. 1397f).

Designation date means December 21,

1994 in the case of Round I designations

and, in the case of Round II

designations, the date designation is

made by the Secretary.

Developable site means a parcel of

land in a nominated area which may be

developed for commercial or industrial

purposes.

Empowerment Zone means a rural

area so designated by the Secretary

pursuant to this part.

Enterprise Community means a rural

area so designated by the Secretary

pursuant to this part.

EZ/EC SSBG funds or EZ/EC Social

Services Block Grant funds means any

funds that may be provided to states or

tribal governments by HHS in

accordance with section 2007(a) of the

Social Security Act (42 U.S.C. 1397f),

for use by designated Empowerment

Zones or Enterprise Communities.

HHS means the U.S. Department of

Health and Human Services.

HUD means the U.S. Department of

Housing and Urban Development.

Indian reservation means a

reservation as defined in section

168(j)(6) of the Internal Revenue Code,

26 U.S.C. 168(j)(6).

Lead managing entity means the

entity that will administer and be

responsible for the implementation of

the strategic plan.

Local government means any county,

city, town, township, parish, village, or

other general purpose political

subdivision of a state, and any

combination of these political

subdivisions that is recognized by the

Secretary.

Nominated area means an area which

is nominated by one or more local

governments and the state or states in

which it is located for designation in

accordance with this part.

Outmigration means the negative

percentage change reported by the

Bureau of the Census, U.S. Department

of Commerce, for the sum of:

(1) Net Domestic Migration;

(2) Net Federal Movement; and

(3) Net International Migration, as

such terms are defined for purposes of

the 1990 Census.

Poverty rate means, for a given Census

tract, the poverty rate reported in Table

19 of the Bureau of the Census CPH–3

series of publications from the 1990

Census of Population and Housing:

Population and Housing Characteristics

for Census Tracts and Block Numbering

Areas.

Revocation of designation means the

process by which the Secretary may

revoke the designation of an area as an

Empowerment Zone or Enterprise

Community pursuant to § 25.405.

Round I identifies designations of

rural Empowerment Zones and

Enterprise Communities pursuant to

subchapter C, part I (Empowerment

Zones, Enterprise Communities and

Rural Development Investment Areas) of

Title XIII of the Omnibus Budget

Reconciliation Act of 1993 (Pub. L. 103–

66).

Round II identifies designations of

rural Empowerment Zones pursuant to

subtitle F (Empowerment Zones,
19116 Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations

Enterprise Communities, Brownfields,

and Community Development Financial

Institutions) of Title IX of the Taxpayer

Relief Act of 1997 (Pub. L. 105–34).

Rural area means any area defined

pursuant to § 25.503.

Secretary means the Secretary of the

U.S. Department of Agriculture.

State means any state in the United

States.

Strategic plan means a plan for

achieving benchmark goals evidencing

improvement over identified baseline

conditions, developed with the

participation and commitment of local

governments, tribal governments, state

governments, private sector, community

members and others, pursuant to the

provisions of § 25.202.

USDA means the U.S. Department of

Agriculture.

§ 25.4 Secretarial review and designation.

(a) Designation. The Secretary will

review applications for the designation

of nominated rural areas to determine

the effectiveness of the strategic plans

submitted by applicants; such

designations of rural Empowerment

Zones and Enterprise Communities as

are made shall be from the applications

submitted in response to the applicable

Notice Inviting Applications. The

Secretary may elect to designate as

Champion communities, those

nominated areas which are not

designated as either a rural

Empowerment Zone or Enterprise

Community and whose applications

meet the criteria contained in § 25.301.

(b) Number of rural empowerment

zones, enterprise communities and

champion communities.—(1) Round I.

The Secretary may designate up to three

rural Empowerment Zones and up to

thirty rural Enterprise Communities

prior to December 31, 1996.

(2) Round II. The Secretary may, prior

to January 1, 1999, designate up to five

rural Empowerment Zones in addition

to those designated in Round I. The

number of Champion Communities is

limited to the number of applicants

which are not designated.

(c) Period of designation. The

designation of a rural area as an

Empowerment Zone or Enterprise

Community shall remain in effect

during the period beginning on the

designation date and ending on the

earliest of the:

(1) End of the tenth calendar year

beginning on or after the designation

date;

(2) Termination date designated by

the state and local governments in their

application for nomination;

(3) Date the Secretary revokes the

designation; or

(4) Date the Empowerment Zone or

Enterprise Community modifies its

boundary without first obtaining the

written approval of the Secretary.

§ 25.5 Waivers.

The Secretary may waive any

provision of this part in any particular

case for good cause, where it is

determined that application of the

requirement would produce a result

adverse to the purpose and objectives of

this part.

§§ 25.6—25.99 [Reserved]

Subpart B—Area Requirements

§ 25.100 Eligibility requirements.

A nominated rural area may be

eligible for designation pursuant to this

part only if the area:

(a) Has a maximum population of

30,000;

(b) Is one of pervasive poverty,

unemployment, and general distress, as

described in § 25.102;

(c) Meets the area size and boundary

requirements of § 25.103;

(d) Is located entirely within the

jurisdiction of the general local

government making the nomination;

and

(e) Meets the poverty rate criteria

contained in § 25.104.

(f) Provision for Alaska and Hawaii. A

nominated area in Alaska or Hawaii

shall be presumed to meet the criteria of

paragraphs (b), (c), and (e) of this

section if, for each Census tract or block

group in the area, at least 20 percent of

the families in such tract have an

income which is 50 percent or less of

the statewide median family income.

§ 25.101 Data utilized for eligibility

determinations.

(a) Source of data. The data to be

employed in determining eligibility

pursuant to this part shall be based on

the 1990 Census, and from information

published by the Bureau of Census and

the Bureau of Labor Statistics, provided,

however, that for purposes of

demonstrating outmigration pursuant to

§ 25.104(b)(2)(iii), interim data collected

by the Bureau of Census for the 1990–

1994 period may be used. The data shall

be comparable in point or period of time

and methodology employed.

(b) Use of statistics on boundaries.

The boundary of a rural area nominated

for designation as an Empowerment

Zone or Enterprise Community must

coincide with the boundaries of Census

tracts, or, where tracts are not defined,

with block numbering areas, except:

(1) Nominated areas in Alaska and

Hawaii shall coincide with the

boundaries of census tracts or block

groups as such term is used for purposes

of the 1990 Census;

(2) Developable sites are not required

to coincide with the boundaries of

Census tracts; and

(3) Nominated areas wholly within an

Indian reservation are not required to

adhere to census tract boundaries if

sufficient credible data are available to

show compliance with other

requirements of this part. The

requirements of § 25.103 are otherwise

applicable.

§ 25.102 Pervasive poverty, unemployment

and general distress.

(a) Pervasive poverty. Conditions of

poverty must be reasonably distributed

throughout the entire nominated area.

The degree of poverty shall be

demonstrated by citing available

statistics on low-income population,

levels of public assistance, numbers of

persons or families in poverty or similar

data.

(b) Unemployment. The degree of

unemployment shall be demonstrated

by the provision of information on the

number of persons unemployed,

underemployed (those with only a

seasonal or part-time job) or discouraged

workers (those capable of working but

who have dropped out of the labor

market—hence are not counted as

unemployed), increase in

unemployment rate, job loss, plant or

military base closing, or other relevant

unemployment indicators having a

direct effect on the nominated area.

(c) General distress. General distress

shall be evidenced by describing

adverse conditions within the

nominated area other than those of

pervasive poverty and unemployment.

Below average or decline in per capita

income, earnings per worker, per capita

property tax base, average years of

school completed; outmigration and

population decline, a high or rising

incidence of crime, narcotics use,

abandoned housing, deteriorated

infrastructure, school dropouts, teen

pregnancy, incidents of domestic

violence, incidence of certain health

conditions and illiteracy are examples

of appropriate indicators of general

distress. The data and methods used to

produce such indicators that are used to

describe general distress must all be

stated.

§ 25.103 Area size and boundary

requirements

(a) General eligibility requirements. A

nominated area:

(1) May not exceed one thousand

square miles in total land area;

(2) Must have one continuous

boundary if located in more than one
Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations 19117

state or may consist of not more than

three noncontiguous parcels if located

in only one state;

(3) If located in more than one state,

must be located within no more than

three contiguous states;

(4) May not include any portion of a

central business district (as such term is

used for purposes of the most recent

Census of Retail Trade) unless the

poverty rate for each Census tract in

such district is not less than 35 percent

for an Empowerment Zone (30 percent

in the case of an Enterprise

Community);

(5) Subject to paragraph (b)(4) of this

section, may not include any portion of

an area already included in an

Empowerment Zone or Enterprise

Community or included in an area

otherwise nominated to be designated

under this section;

(b) Eligibility requirements specific to

different rounds.

(1) For purposes of Round I

designations only, a nominated area

may not include any area within an

Indian reservation;

(2) For purposes of applying

paragraph (a)(1) of this section to Round

II designations:

(i) A Census tract larger than 1,000

square miles shall be reduced to a 1,000

square mile area with a continuous

boundary, if necessary, after application

of §§ 25.103(b)(2)(ii) and (iii);

(ii) Land owned by the Federal, state

or local government may (and in the

event the Census tract exceeds 1,000

square miles, will) be excluded in

determining the square mileage of a

nominated area; and

(iii) Developable sites, in the aggregate

not exceeding 2,000 acres, may (and in

the event the Census tract exceeds 1,000

square miles, will) be excluded in

determining the square mileage of the

nominated area;

(3) For purposes of applying

paragraph (a)(3) of this section to Round

II designations, the following shall not

be treated as violating the continuous

boundary requirement:

(i) Exclusion of excess area pursuant

to paragraph (b)(2)(i) of this section;

(ii) Exclusion of government owned

land pursuant to paragraph (b)(2)(ii) of

this section; or

(iii) Exclusion of developable sites

pursuant to paragraph (b)(2)(iii) of this

section; and

(4) Paragraph (a)(5) of this section

shall not apply where a Round I

Enterprise Community is applying

either in its entirety or together with an

additional area for a Round II

Empowerment Zone designation.

§ 25.104 Poverty rate.

(a) General. Eligibility of an area on

the basis of poverty shall be established

in accordance with the following

poverty rate criteria specific to Round I

and Round II nominated areas:

(1) Round I: (i) In each Census tract,

the poverty rate may not be less than 20

percent;

(ii) For at least 90 percent of the

Census tracts within the nominated

area, the poverty rate may not be less

than 25 percent; and

(iii) For at least 50 percent of the

Census tracts within the nominated

area, the poverty rate may not be less

than 35 percent.

(2) Round II: (i) In each Census tract,

the poverty rate may not be less than 20

percent;

(ii) For at least 90 percent of the

Census tracts within the nominated

area, the poverty rate may not be less

than 25 percent;

(iii) Up to three noncontiguous

developable sites, in the aggregate not

exceeding 2,000 acres, may be excluded

in determining whether the

requirements of paragraphs (a)(2)(i) and

(a)(2)(ii) of this section are met; and

(iv) The Secretary may designate not

more than one rural Empowerment

Zone without regard to paragraphs

(a)(2)(i) and (a)(2)(ii) of this section if

such nominated area satisfies the

emigration criteria specified in

paragraph (b)(2)(iii) of this section.

(b) Special rules. The following

special rules apply to the determination

of poverty rate for Round I and Round

II nominated areas:

(1) Round I—(i) Census tracts with no

population. Census tracts with no

population shall be treated as having a

poverty rate that meets the requirements

of paragraphs (a)(1)(i) and (a)(1)(ii) of

this section, but shall be treated as

having a zero poverty rate for purposes

of applying paragraph (a)(1)(iii) of this

section;

(ii) Census tracts with populations of

less than 2,000. A Census tract with a

population of less than 2,000 shall be

treated as having a poverty rate which

meets the requirements of paragraphs

(a)(1)(i) and (ii) of this section if more

than 75 percent of the tract is zoned for

commercial or industrial use;

(iii) Adjustment of poverty rates for

Round I Enterprise Communities. For

Round I Enterprise Communities only,

the Secretary may, where necessary to

carry out the purposes of this part,

apply one of the following alternatives:

(A) Reduce by 5 percentage points one

of the following thresholds for not more

than 10 percent of the Census tracts (or,

if fewer, five Census tracts) in the

nominated area:

(1) The 20 percent threshold in

paragraph (a)(1)(i) of this section;

(2) The 25 percent threshold in

paragraph (a)(1)(ii) of this section;

(3) The 35 percent threshold in

paragraph (a)(1)(iii) of this section; or

(B) Reduce the 35 percent threshold

in paragraph (a)(1)(iii) of this section by

10 percentage points for three Census

tracts.

(2) Round II—(i) Census tracts with no

population. Census tracts with no

population shall be treated the same as

those Census tracts having a population

of less than 2,000;

(ii) Census tracts with populations of

less than 2,000. A Census tract with a

population of less than 2,000 shall be

treated as having a poverty rate of not

less than 25 percent if:

(A) More than 75 percent of such tract

is zoned for commercial or industrial

use; and

(B) Such tract is contiguous to 1 or

more other Census tracts which have a

poverty rate of 25 percent or more,

where such determination is made

without applying § 25.104(b)(2)(ii).

(iii) Emigration Criteria. For purposes

of the discretion as may be exercised by

the Secretary pursuant to paragraph

(a)(2)(iv) of this section, a nominated

area must demonstrate outmigration of

not less than 15 percent over the period

1980–1994 for each census tract. The

outmigration for each census tract in the

nominated area shall be as reported for

the county in which the census tract is

located: Provided, however, That the

nominated area may include not more

than one census tract where the

reported outmigration is less than 15

percent, which tract shall be contiguous

to at least one other census tract in the

nominated area.

(c) General rules. The following

general rules apply to the determination

of poverty rate for both Round I and

Round II nominated areas.

(1) Rounding up of percentages. In

making the calculations required by this

section, the Secretary shall round all

fractional percentages of one-half

percentage point or more up to the next

highest whole percentage point figure.

(2) Noncontiguous parcels. Each such

parcel (excluding, in the case of Round

II, up to 3 noncontiguous developable

sites not exceeding 2,000 acres in the

aggregate) must separately meet the

poverty criteria set forth in this section.

(3) Areas not within census tracts. In

the case of an area which is not tracted

for Census tracts, the block numbering

area shall be used for purposes of

determining poverty rates. Block groups

may be used for Alaska and Hawaii.
19118 Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations

§§ 25.105–25.199 [Reserved]

Subpart C—Nomination Procedure

§ 25.200 Nominations by State and local

governments.

(a) Nomination criteria. One or more

local governments and the states in

which an area is located must nominate

such area for designation as an

Empowerment Zone or Enterprise

Community. Nominated areas can be

considered for designation only if:

(1) The rural area meets the applicable

requirements for eligibility identified in

§ 25.100;

(2) The Secretary determines such

governments have the authority to

nominate the area for designation and to

provide the assurances described in

paragraph (b) of this section; and

(3) The Secretary determines all

information furnished by the

nominating states and local

governments is reasonably accurate.

(b) Required certifications and

assurances. The state and local

governments nominating an area for

designation must:

(1) Submit the following

certifications:

(i) Each nominating governmental

entity has the authority to:

(A) Nominate the rural area for

designation as an Empowerment Zone

or Enterprise Community and make the

assurances required under this part;

(B) Make the state and local

commitments contained in the strategic

plan or otherwise required under this

part; and

(C) Provide written assurances

satisfactory to the Secretary that these

commitments will be met; and

(ii) The nominated area satisfies the

eligibility criteria referenced in § 25.100,

inclusive of the requirement that either;

(A) No portion of the area nominated

is already included in a designated

Empowerment Zone or Enterprise

Community or in an area otherwise

nominated to be designated under this

section; or

(B) Where an existing Round I

Enterprise Community is seeking to be

designated as a Round II Empowerment

Zone, that the nominated area includes

the entirety of the applicable Round I

Enterprise Community and that any

other areas as may be included in the

application do not comprise any portion

of a designated Empowerment Zone or

Enterprise Community or part of an area

otherwise nominated to be designated

under this section; and

(2) Provide written assurance that:

(i) The strategic plan will be

implemented;

(ii) The nominating governments will

make available, or cause to be made

available, all information requested by

USDA to aid in the evaluation of

progress in implementing the strategic

plan; and

(iii) EZ/EC SSBG funds, as applicable,

will be used to supplement, not

supplant, other Federal or non-Federal

funds available for financing services or

activities which promote the purposes

of section 2007 of the Social Security

Act.

§ 25.201 Application.

No rural area may be considered for

designation pursuant to this part unless

the application:

(a) Demonstrates that the nominated

rural area satisfies the eligibility criteria

contained in § 25.100;

(b) Includes a strategic plan, which

meets the requirements contained in

§ 25.202;

(c) Includes the written commitment

of the applicant, as applicable, that EZ/

EC SSBG funds will be used to

supplement, not replace, other Federal

and non-Federal funds available for

financing services or activities that

promote the purposes of section 2007 of

the Social Security Act; and

(d) Includes such other information as

may be required by USDA.

§ 25.202 Strategic plan.

(a) Principles of strategic plan. The

strategic plan included in the

application must be developed in

accordance with the following four key

principles:

(1) Strategic vision for change, which

identifies what the community will

become and a strategic map for

revitalization. The vision should build

on assets and coordinate a response to

community needs in a comprehensive

fashion. It should also set goals and

performance benchmarks for measuring

progress and establish a framework for

evaluating and adjusting the

revitalization plan.

(2) Community-based partnerships,

involving the participation of all

segments of the community, including

the political and governmental

leadership, community groups, local

public health and social service

departments and nonprofit groups

providing similar services,

environmental groups, local

transportation planning entities, public

and private schools, religious

organizations, the private and nonprofit

sectors, centers of learning, and other

community institutions and individual

citizens.

(3) Economic opportunity, including

job creation within the community and

throughout the region, entrepreneurial

initiatives, small business expansion,

job training and other important

services such as affordable childcare

and transportation services that may

enable residents to be employed in jobs

that offer upward mobility.

(4) Sustainable community

development, to advance the creation of

livable and vibrant communities

through comprehensive approaches that

coordinate economic, physical,

environmental, community, and human

development. These approaches should

preserve the environment and historic

landmarks—they may include

‘‘brownfields’’ clean-up and

redevelopment, and promote

transportation, education, and public

safety.

(b) Minimum requirements. The

strategic plan must:

(1) Describe the coordinated

economic, human, community, and

physical development plan and related

activities proposed for the nominated

area;

(2) Describe the process by which the

affected community is a full partner in

the process of developing and

implementing the plan and the extent to

which local institutions and

organizations have contributed to the

planning process;

(3) Identify the amount of state, local,

and private resources that will be

available in the nominated area and the

private and public partnerships to be

used, which may include participation

by, and cooperation with, universities,

medical centers, and other private and

public entities;

(4) Identify the funding requested

under any Federal program in support

of the proposed economic, human,

community, and physical development

and related activities, including details

about proposed uses of EZ/EC SSBG

funds that may be available from HHS;

(5) Identify the baselines, methods,

and benchmarks for measuring the

success of carrying out the strategic

plan, including the extent to which poor

persons and families will be empowered

to become economically self-sufficient;

(6) Must not include any action to

assist any establishment in relocating

from one area outside the nominated

area to the nominated area, except that

assistance for the expansion of an

existing business entity through the

establishment of a new branch, affiliate,

or subsidiary is permitted if:

(i) The establishment of the new

branch, affiliate, or subsidiary will not

result in a decrease in employment in

the area of original location or in any

other area where the existing business

entity conducts business operations;

and
Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations 19119

(ii) There is no reason to believe that

the new branch, affiliate, or subsidiary

is being established with the intention

of closing down the operations of the

existing business entity in the area of its

original location or in any other area

where the existing business entity

conducts business operation; and

(7) Include such other information as

required by USDA in the Notice Inviting

Applications.

(c) Implementation of strategic plan.

The strategic plan may be implemented

by state governments, tribal

governments, local governments,

regional planning agencies, non-profit

organizations, community-based

organizations, or other nongovernmental

entities. Activities included in the

strategic plan may be funded from any

source, Federal, state, local, or private,

which agrees to provide assistance to

the nominated area.

(d) Public access to materials and

proceedings. The applicant or the lead

managing entity, as applicable, must

make available to the public copies of

the strategic plan and supporting

documentation and must conduct its

meetings in accordance with the

applicable open meetings acts.

§ 25.203 Submission of applications.

General. A separate application for

designation as an Empowerment Zone

or Enterprise Community must be

submitted for each rural area for which

such designation is requested. The

application shall be submitted in a form

to be prescribed by USDA in the Notice

Inviting Applications as published in

the Federal Register, and must contain

complete and accurate information.

§ 25.204 Evaluation of the Strategic plan.

The strategic plan will be evaluated

for effectiveness as part of the

designation process for nominated rural

areas described in subpart D of this part.

On the basis of this evaluation, USDA

may request additional information

pertaining to the plan and the proposed

area and may, as part of that request,

suggest modifications to the plan,

proposed area, or term that would

enhance its effectiveness. The

effectiveness of the strategic plan will be

determined in accordance with the four

key principles contained in § 25.202(a).

USDA will review each plan submitted

in terms of the four equally weighted

principal objectives, and of such other

elements of these principal objectives as

are appropriate to address the

opportunities and problems of each

nominated area, which may include:

(a) Strategic vision for change.—(1)

Goals and coordinated strategy. The

extent to which the strategic plan

reflects a projection for the community’s

revitalization which links economic,

human, physical, community

development and other activities in a

mutually reinforcing, synergistic way to

achieve ultimate goals;

(2) Creativity and innovation. The

extent to which the activities proposed

in the plan are creative, innovative and

promising and will promote the civic

spirit necessary to revitalize the

nominated area;

(3) Building on assets. The extent to

which the vision for revitalization

realistically addresses the needs of the

nominated area in a way that takes

advantage of its assets; and

(4) Benchmarks and learning. The

extent to which the plan includes

performance benchmarks for measuring

progress in its implementation,

including an on-going process for

adjustments, corrections and building

on what works.

(b) Community-based partnerships.—

(1) Community partners. The extent to

which residents of the community

participated in developing the strategic

plan and their commitment to

implementing it, the extent to which

community-based organizations in the

nominated area have participated in the

development of the nominated area, and

their record of success measured by

their achievements and support for

undertakings within the nominated

area;

(2) Private and nonprofit

organizations as partners. The extent to

which partnership arrangements

include commitments from private and

nonprofit organizations, including

corporations, utilities, banks and other

financial institutions, human services

organizations, health care providers,

and educational institutions supporting

implementation of the strategic plan;

(3) State and local government

partners. The extent to which states and

local governments are committed to

providing support to the strategic plan,

including their commitment to

‘‘reinventing’’ their roles and

coordinating programs to implement the

strategic plan; and

(4) Permanent implementation and

evaluation structure. The extent to

which a responsible and accountable

implementation structure or process has

been created to ensure that the plan is

successfully carried out and that

improvements are made throughout the

period of the zone or community’s

designation.

(c) Economic opportunity. (1) The

extent to which businesses, jobs, and

entrepreneurship will increase within

the zone or community;

(2) The extent to which residents will

achieve a real economic stake in the

zone or community;

(3) The extent to which residents will

be employed in the process of

implementing the plan and in all phases

of economic, community and human

development;

(4) The extent to which residents will

be linked with employers and jobs

throughout the entire area and the way

in which residents will receive training,

assistance, and family support to

become economically self-sufficient;

(5) The extent to which economic

revitalization in the zone or community

interrelates with the broader regional

economies; and

(6) The extent to which lending and

investment opportunities will increase

within the zone or community through

the establishment of mechanisms to

encourage community investment and

to create new economic growth.

(d) Sustainable community

development.—(1) Consolidated

planning. The extent to which the plan

is part of a larger strategic community

development plan for the nominating

localities and is consistent with broader

regional development strategies;

(2) Public safety. The extent to which

strategies such as community policing

will be used to guarantee the basic

safety and security of persons and

property within the zone or community;

(3) Amenities and design. The extent

to which the plan considers issues of

design and amenities that will foster a

sustainable community, such as open

spaces, recreational areas, cultural

institutions, transportation, energy, land

and water uses, waste management,

environmental protection and the

vitality of life of the community;

(4) Sustainable development. The

extent to which economic development

will be achieved in a manner consistent

that protects public health and the

environment;

(5) Supporting families. The extent to

which the strengths of families will be

supported so that parents can succeed at

work, provide nurture in the home, and

contribute to the life of the community;

(6) Youth development. The extent to

which the development of children,

youth, and young adults into

economically productive and socially

responsible adults will be promoted and

the extent to which young people will

be:

(i) Provided with the opportunity to

take responsibility for learning the

skills, discipline, attitude, and initiative

to make work rewarding;

(ii) Invited to take part as resources in

the rebuilding of their community; and
19120 Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations

(iii) Provided the opportunity to

develop a sense of industry and

competency and a belief they might

exercise some control over the course of

their lives.

(7) Education goals. The extent to

which schools, religious organizations,

non-profit organizations, for-profit

enterprises, local governments and

families will work cooperatively to

provide all individuals with the

fundamental skills and knowledge they

need to become active participants and

contributors to their community, and to

succeed in an increasingly competitive

global economy;

(8) Affordable housing. The extent to

which a housing component, providing

for adequate safe housing and ensuring

that all residents will have equal access

to that housing is contained in the

strategic plan;

(9) Drug abuse. The extent to which

the plan addresses levels of drug abuse

and drug-related activity through the

expansion of drug treatment services,

drug law enforcement initiatives, and

community-based drug abuse education

programs;

(10) Health care. The extent to which

the plan promotes a community-based

system of health care that facilitates

access to comprehensive, high quality

care, particularly for the residents of EZ/

EC neighborhoods;

(11) Equal opportunity. The extent to

which the plan offers an opportunity for

diverse residents to participate in the

rewards and responsibilities of work

and service. The extent to which the

plan ensures that no business within a

nominated zone or community will

directly or through contractual or other

arrangements subject a person to

discrimination on the basis of race,

color, creed, national origin, gender,

handicap or age in its employment

practices, including recruitment,

recruitment advertising, employment,

layoff, termination, upgrading,

demotion, transfer, rates of pay or the

forms of compensation, or use of

facilities. Applicants must comply with

the provisions of Title VI of the Civil

Rights Act of 1964, section 504 of the

Rehabilitation Act of 1973, and the Age

Discrimination Act of 1975.

§§ 25.205—25.299 [Reserved]

Subpart D—Designation Process

§ 25.300 USDA action and review of

nominations for designation.

(a) Establishment of submission

procedures. USDA will establish a time

period and procedure for the

submission of applications for

designation as Empowerment Zones or

Enterprise Communities, including

submission deadlines and addresses, in

a Notice Inviting Applications, to be

published in the Federal Register.

(b) Acceptance for processing. USDA

will accept for processing those

applications as Empowerment Zones

and Enterprise Communities which

USDA determines have met the criteria

required under this part. USDA will

notify the states and local governments

whether or not the nomination has been

accepted for processing. The application

must be received by USDA on or before

the close of business on the date

established by the Notice Inviting

Applications published in the Federal

Register. The applications must be

complete, inclusive of the strategic plan,

as required by § 25.202, and the

certifications and written assurances

required by § 25.200(b).

(c) Site visits. In the process of

reviewing each application accepted for

processing, USDA may undertake site

visits to any nominated area to aid in

the process of evaluation.

(d) Modification of the strategic plan,

boundaries of nominated rural areas, or

period during the application review

period. Subject to the limitations

imposed by § 25.100.

(1) USDA may request additional

information pertaining to the strategic

plan and proposed area and may, as a

part of that request, suggest

modifications to the strategic plan or

nominated area that would enhance the

effectiveness of the strategic plan;

(2) Enlargement of a nominated area

will not be allowed if the inclusion of

the additional area will result in an

average poverty rate less than the

average poverty rate at the time of initial

application; and

(3) An applicant may modify the

nominated area or strategic plan during

the application review period with

USDA approval.

(e) Designations. Final determination

of the boundaries of areas and the term

for which the designations will remain

in effect will be made by the Secretary.

§ 25.301 Selection factors for designation

of nominated rural areas.

In choosing among nominated rural

areas eligible for designation as

Empowerment Zone, Enterprise

Community or Champion Community,

the Secretary shall consider:

(a) The potential effectiveness of the

strategic plan, in accordance with the

key principles in § 25.202(a);

(b) The strength of the assurances

made pursuant to § 25.200(b) that the

strategic plan will be implemented;

(c) The extent to which an application

proposes activities that are creative and

innovative;

(d) The extent to which areas

consisting of noncontiguous parcels are

not so widely separated as to

compromise achievement by the

nominated area of a cohesive

community or regional identity; and

(e) Such other factors as established

by the Secretary, which include the

degree of need demonstrated by the

nominated area for assistance under this

part and the diversity within and among

the nominated areas. If other factors are

established by USDA, a Federal Register

Notice will be published identifying

such factors, along with an extension of

the application due date if necessary.

§§ 25.302–25.399 [Reserved]

Subpart E—Post-Designation

Requirements

§ 25.400 Reporting.

(a) Periodic reports. Empowerment

Zones, Enterprise Communities and

Champion Communities shall submit to

USDA periodic reports which identify

the community, local government and

state actions which have been taken in

accordance with the strategic plan. In

addition to these reports, such other

information relating to designated

Empowerment Zones, Enterprise

Communities and Champion

communities as USDA may request from

time to time shall be submitted

promptly. On the basis of this

information and of on-site reviews,

USDA will prepare and issue periodic

reports on the effectiveness of the

Empowerment Zones/Enterprise

Communities Program.

(b) Annual report. All rural

Empowerment Zones and Enterprise

Communities shall submit an annual

report to USDA for each calendar year

which includes an executive summary

and benchmark progress report as

follows:

(1) Executive summary. The executive

summary shall identify the progress and

setbacks experienced in efforts to

achieve benchmark goals. Activities

other than those expressly included in

the strategic plan should also be noted

in order to provide an understanding of

where the community stands with

respect to implementation of the

strategic plan. Furthermore, the

executive summary should address the

following:

(i) Identify the most significant

accomplishments to date.

(ii) Describe the level of community

participation and overall support for the

EZ/EC initiative.

(iii) List and describe new

partnerships or alliances formed.
Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations 19121

(iv) Identify problems or obstacles not

otherwise anticipated in the strategic

plan.

(v) Describe solutions developed or

efforts to address the problems and

obstacles.

(vi) Identify practices or concepts

which were found especially effective in

implementing the strategic plan.

(2) Benchmark progress report. For

each benchmark goal the community

will provide a current measure of the

baseline condition which is the subject

of targeted improvement and whether

the current measure represents an

improvement from the baseline

condition as initially stated in the

strategic plan. For each benchmark

activity the community will provide a

status report in form and substance

acceptable to USDA.

(c) Timely state data. Where not

prevented by state law, nominating state

governments must provide the timely

release of data requested by USDA for

the purposes of monitoring and assisting

the success of Empowerment Zones and

Enterprise Communities.

§ 25.401 Responsibility of lead managing

entity.

(a) Financial. The lead managing

entity will be responsible for strategic

plan program activities and monitoring

the fiscal management of the funds of

the Empowerment Zone or Enterprise

Community.

(b) Reporting. The lead managing

entity will be responsible for developing

the reports required under this subpart.

(c) Cooperation. All entities with

significant involvement in

implementing the strategic plan shall

cooperate with the lead managing entity

in its compliance with paragraphs (a)

and (b) of this section.

§ 25.402 Periodic performance reviews.

USDA will regularly evaluate the

progress in implementing the strategic

plan in each designated Empowerment

Zone and Enterprise Community on the

basis of performance reviews to be

conducted on site and using other

information submitted. USDA may also

commission evaluations of the

Empowerment Zone program as a whole

by an impartial third party. Evidence of

continual involvement of all segments

of the community, including low

income and disadvantaged residents,

must be evidenced in the

implementation of the strategic plan.

§ 25.403. Ongoing 2-year work plan

requirement.

(a) Each Empowerment Zone and

Enterprise Community shall prepare

and submit annually, work plans for the

subsequent 2-year interval of the

designation period.

(b) The 2-year work plan shall be

submitted to USDA 45 days prior to the

start of the applicable 2-year period.

(c) The 2-year work plan must include

the following sections and content:

(1) Section 1—Work Plan. Identify the

benchmark goals to be achieved in the

applicable 2 years of the strategic plan,

together with the benchmark activities

to be undertaken during the applicable

2 years of implementation. Include

references to the applicable baseline

conditions and performance indicators

to be used in assessing performance.

(2) Section 2—Operational Budget.

For each benchmark activity to be

undertaken in the applicable 2 years of

the strategic plan, set forth the following

information:

(i) Expected implementation costs;

(ii) Proposed sources of funding and

whether actual commitments have been

obtained;

(iii) Technical assistance resources

and other forms of support pledged by

Federal, state and local governments,

non-profit organizations, foundations,

private businesses, and any other entity

to assist in implementation of the

community’s strategic plan, and

whether this support is conditional

upon the designation of the community

as an Empowerment Zone; and

(iv) Documentation of applications for

assistance and commitments identified

as proposed funding and other

resources.

§ 25.404 Validation of designation.

(a) Reevaluation of designations. On

the basis of the performance reviews

described in § 25.402, and subject to the

provisions relating to the revocation of

designation appearing at § 25.405,

USDA will make findings as to the

continuing eligibility for and the

validity of the designation of any

Empowerment Zone, Enterprise

Community, or Champion Community.

(b) Modification of designation. Based

on a rural zone or community’s success

in carrying out its strategic plan, and

subject to the provisions relating to

revocation of designation in accordance

with § 25.405 and the requirements as to

the number, maximum population and

other characteristics of rural

Empowerment Zones referenced in

§ 25.100, the Secretary may modify

designations by reclassifying rural

Empowerment Zones as Enterprise

Communities or Enterprise

Communities as Empowerment Zones.

§ 25.405 Revocation of designation.

(a) Basis for revocation. The Secretary

may revoke the designation of a rural

area as an Empowerment Zone or

Enterprise Community, or withdraw

status as a Champion Community, if the

Secretary determines, on the basis of the

periodic monitoring and assessments

described in § 25.402, that the applicant,

lead managing entity, or the states or

local governments in which the rural

area is located have:

(1) Modified the boundaries of the

area without written approval from

USDA;

(2) Failed to make progress in

implementing the strategic plan; or

(3) Not complied substantially with

the strategic plan (which may include

failing to apply funds as contained in

the strategic plan without advance

written approval from USDA).

(b) Letter of Warning. Before revoking

the designation of a rural area as an

Empowerment Zone or Enterprise

Community, the Secretary will issue a

letter of warning to the applicant, the

lead managing entity (if different from

the applicant) and the nominating states

and local governments, with a copy to

all affected Federal agencies of which

USDA is aware:

(1) Advising that the Secretary has

determined that the applicant and/or

lead managing entity and/or the

nominating local governments and state:

(i) Have modified the boundaries of

the area without written approval from

USDA; or

(ii) Are not complying substantially

with, or have failed to make satisfactory

progress in implementing the strategic

plan; and

(2) Requesting a reply from all

involved parties within 90 days of the

receipt of this letter of warning.

(c) Notice of revocation. To revoke the

designation, the Secretary must issue a

final notice of revocation of the

designation of the rural area as an

Empowerment Zone or Enterprise

Community, after:

(1) Allowing 90 days from the date of

receipt of the letter of warning for

response; and

(2) Making a determination pursuant

to paragraph (a) of this section.

(d) Notice to affected Federal

agencies. USDA will notify all affected

Federal agencies of which it is aware of

its determination to revoke any

designation pursuant to this section or

to modify a designation pursuant to

§ 25.404(b).

(e) Effective date. The final notice of

revocation of designation will be

published in the Federal Register, and

the revocation will be effective on the

date of publication.
19122 Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations

§§ 25.406–25.499 [Reserved]

Subpart F—Special Rules

§ 25.500 Indian reservations.

(a) An area in an Indian reservation

shall be treated as nominated by a state

and a local government if it is

nominated by the reservation governing

body.

(b) For purposes of paragraph (a) of

this section, a reservation governing

body must be the governing body of an

Indian entity recognized and eligible to

receive services from the United States

Bureau of Indian Affairs, U.S.

Department of Interior.

(c) Where two or more governing

bodies have joint jurisdiction over an

Indian reservation, the nomination of a

reservation area must be a joint

nomination.

§ 25.501 Governments.

If more than one state or local

government seeks to nominate an area

under this part, any reference to or

requirement of this part shall apply to

all such governments.

§ 25.502 Nominations by state-chartered

economic development corporations.

Any rural area nominated by an

economic development corporation

chartered by a state and qualified to do

business in the state in which it is

located shall be treated as nominated by

a state and local government.

§ 25.503 Rural areas.

(a) What constitutes ‘‘rural’’. A rural

area may consist of any area that lies

outside the boundaries of a

Metropolitan Area, as designated by the

Office of Management and Budget, or, is

an area that has a population density

less than or equal to 1,000 persons per

square mile, the land use of which is

primarily agricultural.

(b) Exceptions to the definition. On a

case by case basis, the Secretary may

grant requests for waiver from the

definition of ‘‘rural’’ stated in paragraph

(a) of this section upon a showing of

good cause. Applicants seeking to apply

for a rural designation who do not

satisfy the definition in paragraph (a) of

this section must submit a request for

waiver in writing to the Deputy

Administrator, USDA Office of

Community Development, Reporters

Building, Room 701, STOP 3203, 300

7th Street, SW, Washington, DC 20024–

3202. Requests must include:

(1) The name, address and daytime

phone number of the contact person for

the applicant seeking the waiver; and

(2) Sufficient information regarding

the area that would support the

infrequent exception from the

definition.

(c) Waiver process. The Secretary, in

consultation with the Department of

Commerce, will have discretion to

permit rural applications for

communities that do not meet the above

rural criteria.

§§ 25.504–25.999 [Reserved]

Dated: April 10, 1998.

Dan Glickman,

Secretary of Agriculture.

Regulatory Impact Analysis

DEPARTMENT OF AGRICULTURE

OFFICE OF THE SECRETARY

1. Title/Description:

Designation of Rural Empowerment

Zones and Enterprise Communities.

This rule establishes procedures for

designating five new rural

Empowerment Zones.

2. Cite/Status: 7 CFR Part 25 Interim

Rule.

3. Purpose: This rule implements that

portion of Subtitle F of Title IX of the

Taxpayer Relief Act of 1997 (P. L. 105–

34, approved August 5, 1997)

concerning procedures for designating

five rural Empowerment Zones (Round

II). It also amends regulations pertaining

to the three existing rural Empowerment

Zones that were designated pursuant to

Title XIII of the Omnibus Budget

Reconciliation Act of 1993 (P. L. 103–

66, approved August 10, 1993).

4. Degree of Discretion: Mandated by

Subtitle F, referred to above.

5. Special Considerations:

a. Statutory or judicial deadlines: The

law requires that designations be made

prior to January 1, 1999.

b. Public health and safety deadlines:

None identified.

c. Others: None identified.

6. Economic Impacts:

A. Costs:

a. Nature of hindrance to economic

growth:

This rule establishes procedures for

designating places to receive Round II

rural Empowerment Zone (EZ) status.

No hindrance to economic growth is

expected, rather, the program objective

is to foster economic growth in the

designated communities. However,

various participants will contribute

funding to the program, hence there are

some costs involved.

b. Who is affected:

This is a highly competitive program.

It is expected that more than one

hundred rural communities will submit

applications with strategic plans in

order to qualify for one of the five new

rural EZ’s. In comparison, there were

227 applicants for 3 Round

Empowerment Zones and 30 Round I

Enterprise Communities. All

communities that apply will incur some

relatively minor costs in completing

their plans—probably in the range of

$2,000 to $20,000 per community. More

significant costs may be incurred by

those communities that receive

designations. These costs will be borne

by all entities that have promised to

invest in the community, including

Federal, State, and local governments,

nonprofit organizations, neighborhood

groups, and businesses.

c. Degree of impact on individuals

and society:

It is important to distinguish between

the concepts of ‘‘cost’’ and

‘‘investment.’’ A cost estimate involves

an attempt to summarize the amount of

new or additional funds committed to

implementation of community strategic

plans or—in the case of the designated

Empowerment Zones—the amount of

revenues foregone as the result of tax

benefits. Ordinarily, costs are assumed

to be an involuntary burden on society,

which it is necessary to minimize.

Investments, on the other hand, are

considered to be the application of

resources in such a way as to produce

desirable outcomes. Investments are

considered to be both voluntary and

likely to produce a rate of return that

justifies their expenses. Because the

expenditures of Empowerment Zones

are made for the purpose of

implementing the long-term strategic

plans of these communities, these

expenditures must be considered to be

investments.

The total costs to society associated

with the five new zones are difficult to

predict. The Department of Treasury

estimates that the cost to the Federal

Treasury in terms of taxes foregone

associated with the various Federal tax

incentives for the five new rural zones

will be $200 million over the 10-year

life of the designated zones. This

estimate is subject to considerable

uncertainty because the zones will

receive tax incentives that are relatively

new and it is hard to predict how much

they will be used in the five zones.

Unlike the first round of rural EZ’s,

which received $40 million each in

Title XX Social Service Block Grants

(SSBG), no automatic grant funding has

been supplied for the Round II zones,

though the Administration has proposed

to include some such grant funding.

Additional uncertainty over the cost to

the Federal government involves other

Federal assistance that these zones are

likely to request in the future in order

to carry out their strategic plans. The

amount of such grants is a function of

what the communities envision they
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need to implement their plans and the

priority the Administration places on

responding to their funding requests.

The zone revitalization plans will also

draw on the resources of State and local

governments, the private sector, and on

non-profit organizations. The costs

incurred by these entities are difficult to

predict, since they will depend on the

communities’ plans and on the

willingness of these entities to

contribute.

A rough idea of the potential

magnitude of these costs may be

revealed from the experience of the

three Round I rural EZ’s designated in

December 1994. (Round I also included

30 Enterprise Communities (EC’s),

which receive substantially less

assistance than the EZ’s—because

Round II does not include any EC’s, we

will ignore here the costs and benefits

associated with EC’s and focus only on

the EZ’s in this analysis). According to

data collected by USDA covering the

first three years since their designation,

the three Round I rural EZ’s have used

the following funds (excluding the cost

of tax incentives which remain

unknown): $25 million from Federal

SSBG funds, $35 million from other

Federal funds, $24 million from State

governments, $3 million from local

governments, $53 million from the

private sector, and $4 million from

nonprofit organizations. These

investments are expected to continue to

accumulate over the 10-year duration of

the zones.

While the magnitude of the

investments by the Federal Government

associated with these zones appears

very small relative to the total Federal

budget, their total for some of the other

entities, such as the individual State

and local governments contributing to

these zones, may be more substantial

relative to their budgets. However, these

costs might be offset at least in part by

development-induced increases in tax

revenues resulting from the program,

and by reduction in other government

costs associated with higher levels of

poverty and unemployment, both of

which are expected to be reduced by

this program. In addition, with the

exception of Federal SSBG funds, all

other expenditures of public and private

funds represent voluntary investments

from existing sources of funding that

would otherwise be spent in other

places, and they thus do not represent

a net additional cost.

The purpose of this regulatory impact

analysis is to determine the extent to

which program costs (and benefits)

might be affected by USDA’s rules.

Because this is a bottom-up program

that allows localities to make their own

plans, most of the costs are determined

by the locality and participating funding

sources. Hence the magnitude of costs is

not directly determined by USDA’s

regulations. The rule mainly affects

costs through its selection criteria, in

which communities are encouraged to

develop and implement comprehensive

plans using whatever Federal, State, and

local resources are required for a

successful, sustainable revitalization.

The more comprehensive these plans

are, the more costly (and beneficial)

their implementation is likely to be.

While USDA does not require a

minimum amount of spending for each

of its zones, given the comprehensive

nature of its guidelines, that might lead

applicants to propose more ambitious

(and hence more costly) strategies than

they might otherwise propose. However,

these other Federal costs represent a

redirection of funds that would

otherwise be spent in other

communities and they are therefore not

a net additional burden on the Treasury.

The highly competitive nature of the

program’s selection process is also

expected to result in many communities

going through the strategic planning

process required as part of the

application requirements. Since only

five of these communities will receive

designation, the remaining,

undesignated communities will be left

with a plan but without any automatic

Federal support. USDA will designate

applicant communities that complete a

satisfactory planning process as

Champion Communities. Following

designation of the Round I zones, many

of these communities have been found

to follow through with some portion of

their plans, seeking other types of

assistance from various sources

(Federal, State, local, etc.). This in turn

will lead to additional costs (and

benefits). However, these Federal costs

represent a redirection of funds that

would otherwise be spent in other

communities and they are therefore not

a net additional burden on the Treasury.

The rule also provides a mechanism

whereby zone designation may be

terminated in the event that a zone does

not live up to its promised strategy. This

might also be expected to add to

program costs (and benefits) because it

places pressure on participants (States,

local governments, private and

nonprofit sectors) to make a good faith

effort to deliver on their promised

contributions to the zone.

B. Benefits

a. Nature:

The Empowerment Zones program

represents a radically new approach to

the development of severely depressed

rural communities. Unlike other Federal

programs, the Empowerment Zone

program is targeted heavily toward

those rural communities with the

highest levels of poverty or population

loss. These communities are typically

locked in a pattern of hopelessness from

which it is very difficult to extricate

themselves. Often, they have neither the

will nor the organizational capacity, in

addition to a lack of resources, to

extricate themselves from the cycle of

distress in which they are trapped. The

objective of the Empowerment Zone

program is not merely to expend Federal

and other program dollars within the

Zones. Instead, the program seeks to

change the whole equation by which

these communities approach their

futures by helping them to develop fresh

visions of what their futures can be like,

build comprehensive, long-term

strategic plans to achieve these visions,

assemble resources and partners to

assist with plan implementation, and

build internal community capacity to

plan and implement programs so that at

the end of the ten-year designation

period the communities have achieved

a position in which the economic and

social gains they have made will be

sustainable without continued

governmental assistance.

This process of building sustainability

cannot occur through isolated, singleprogram investments, even though these

may individually meet pressing needs

within the community. It requires the

coordinated and comprehensive

development of a wide range of

community assets, skills and capacities

that occur in a variety of sectors. One

way of thinking about this process of

building toward sustainability is by

using the analogy of an ‘‘empowerment

staircase.’’ The first steps on the

staircase are building hope that a

different future may be possible,

forming a vision of what future is

desired for the community, creating a

realistic plan for achieving that vision,

obtaining resources to implement the

plan, achieving some initial positive

results, revising the plan to reflect

changed conditions and aspirations,

building additional partnerships and

leveraging additional resources,

enhancing the community’s

organizational and skill base and its

capacity to continue its development

process after the Federal support runs

out.

The experience with the Round I

Empowerment Zones and Enterprise

Communities, which are approximately

three years into the implementation of

their development plans, shows that

most of these communities have

climbed the first five steps of the

empowerment staircase. The
19124 Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations

announcement of a program specifically

limited to the most distressed

communities gave the 227 applicant

communities hope that a different

outcome might be possible for them.

The competition for designation and the

required strategic planning process itself

led most applicant communities to

establish community-determined

visions of different futures and to build

meaningful, comprehensive, long-term

strategic plans for reaching them. Both

designated communities and those

deemed to be Champion Communities

have also obtained resources to

implement portions of their plans and

have achieved promising results, some

of which are discussed further below.

Many are now beginning to re-examine

their strategic plans and to substitute

alternative, more empowering

development strategies for these

strategies they employed initially. For

example, the Mid-Delta Empowerment

Zone Alliance, in Mississippi, has

already created a number of jobs to help

enable unemployed workers to be

gainfully employed. Now it is turning

its attention to strategies that will

increase the number of opportunities for

local workers to become business

owners and increase the rates of

entrepreneurship within the

community. In addition, through

training offered by the USDA and other

sources, as well as on-the-job

experience, the staff and board members

of Empowerment Zones and Enterprise

Communities are learning valuable

skills in community organizing,

resource identification and

mobilization, strategic planning, and

project implementation which will help

them to continue their gains through

local effort once the ten-year

designation ends.

The comprehensive and holistic

nature of the community strategic plans

is itself a significant benefit over the

more typical pattern of disconnected,

single-program investments that

characterizes most Federally-assisted

development efforts. Economic and

community development relies on a

number of factors to be successful, all of

which must be present for significant

and lasting gains to be accomplished.

For example, not only must jobs be

created, but workers must be trained

with appropriate skills for these jobs in

order for them to take these jobs and

other services such as transportation

and day care must be available. Not only

must new small business financing be

available, but entrepreneurship training

and technical support must be available

during the start-up phase to assure

higher rates of business success. As a

result of such coordinated and holistic

development, the likely benefits from

Federal and other investments are

significantly higher than if the

investments occurred singly, without

linkage to other, complementary actions

and investments.

The statute entitles each of the five

new rural Empowerment Zones to

qualify for new Empowerment Zone

Facility Bonds, a new category of tax

exempt private activity bond, not

subject to State volume caps. Each new

rural zone may issue up to $60 million

in these bonds. These are in addition to

the more limited zone facility bonds

available to Round I Empowerment

Zones. The new rural Empowerment

Zones also receive additional tax

incentives for expensing of private

investment in equipment. These tax

incentives last for ten years. The new

zones will also be eligible for some

short-term tax reductions, including (1)

Brownfields expensing of

environmental cleanup costs for certain

contaminated properties (through year

2000), (2) tax exempt Qualified Zone

Academy Bonds for school programs,

equipment, curriculum and

rehabilitation, subject to a national

volume cap (through 1999), and (3)

Work Opportunity Tax Credits to

employers hiring targeted groups of

employees, including youths age 18–24

that reside within Empowerment Zones

and Enterprise Communities (through

June 30, 1998). All three of these tax

benefits are to some extent available to

other urban and rural communities,

including Round I Empowerment Zones

and Enterprise Communities, so that the

total cost of these tax benefits cannot be

attributed to the five rural

Empowerment Zones.

In addition, Federal agencies are

expected to give special preference to

Empowerment Zones and Enterprise

Communities with legitimate requests

for program assistance. State and local

governments and private firms and

nonprofit are also expected to confer

grants or assistance to these places. The

new zones, however, will not be eligible

for some of the benefits that the first

round of Empowerment Zones received,

such as the employer wage tax credits,

and to date, no Title XX Social Service

Block Grants funds are available for the

new zones.

The comprehensive strategic planning

approach employed by this program is

meant to help poor communities

identify their development needs and

design strategies to address those needs.

This type of approach should benefit the

communities by helping them to focus

their limited resources on their most

important community goals and

strategies, and it should also give them

an advantage in obtaining outside

assistance.

If the program works as expected, the

communities should benefit through

economic and community revitalization,

including economic growth in the form

of increased employment and income

and improved economic self sufficiency

(reduction of unemployment, welfare

dependency), and improved overall

conditions in the community in the

form of lower crime rates, less drug

dependency, better housing, better

education, and improved public and

private services available to the

population. In addition, as discussed

above, empowerment—the capacity of

communities to design and implement

local strategies for long-term community

and economic enhancement—is

expected to occur.

Recognizing the experimental

character of this new approach, and also

its demonstration value for other rural

communities in similar circumstances,

USDA has collected baseline

information on the economic and social

conditions that existed in each

community at the time the program was

inaugurated. In addition, USDA has

undertaken a research project with Iowa

State University to develop and collect

information about the effect of the

program on intangible community

capacities, such as the extent of

community participation in this highly

democratic method of promoting

community growth. USDA collects and

publicizes best practices drawn from

among the successes of the existing

Empowerment Zones and Enterprise

Communities and makes these available

to all rural communities through

publications and the EZ/EC web site.

USDA regularly collects information

from each of the Round I Empowerment

Zones and Enterprise Communities

about the actions they have undertaken

and the results achieved, some of which

results are reported below. At later

stages in the implementation of Round

I of the program, USDA will collect

information about the overall impacts

within the designated communities to

evaluate both the extent of the benefits

and costs of the program and the

conditions under which optimal

benefits were achieved.

b. Who is affected:

The residents of the designated

Empowerment Zones will be the

primary beneficiaries. The statute

liberalizes the eligibility rules for the

new Round II rural zones. The poverty

rate eligibility threshold was higher for

Round I, and Indian reservations were

excluded. This was changed by statute

for Round II. One of the five new rural
Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations 19125

zones is eligible based on outmigration,

regardless of poverty, and Indian

reservations can participate if they meet

eligibility criteria. These and other

changes in the statute’s eligibility

provisions should allow more places to

be eligible. In addition, the regions

surrounding these places are also

expected to benefit. The existing statute

prohibits development plans from

proposing a strategy that actively

encourages or assists the relocation of

firms or branch plants into the zones.

The rule further encourages

communities to adopt strategies that

complement, rather than compete with,

the development of the surrounding

region. Also expected to benefit are

those places that apply but that do not

receive designations (in rural areas,

these are called Champion

Communities). Such places should

benefit through the value of the

community partnerships formed and the

strategic plans they produced in the

process of applying for the program.

They are also eligible, along with the

designated Empowerment Zones, for

certain tax breaks for contributors to

HUD-designated Community

Development Corporations.

c. Degree of benefits to individuals

and society:

The magnitude of the economic

benefits that each designated zone

community will receive from this

program is difficult to predict. Most of

the tax incentives are new, as is the

program itself. Because the benefits are

also affected by the strategies the

communities choose in their strategic

plans, the benefits might be expected to

vary from zone to zone.

If the new Round II zones were to

receive benefits like those of the Round

I zones, an idea of the magnitude of

such benefits is revealed by USDA

statistics on Round I zones. As of

January 1998, after the three Round I

rural Empowerment Zones had

completed their first 3 years as EZ’s,

they had reported a total of $144 million

in direct new public and private

investment, and 2,000 jobs created or

saved. These zones have created a total

of 15 job training programs, 6 job

training facilities, and trained 442

persons. They have created 20 youth

development programs serving 3,375

youths, and 3 educational facilities and

4 heath care facilities have been built or

upgraded. The three zones have

established or upgraded 18 computer

learning centers and have received

3,480 Federal surplus computers. Five

revolving loan or microenterprise funds

have been created, 44 housing units

have been built or rehabilitated, 19

water and waste projects are under

construction.

These measures are indicative of

recent performance and do not convey

the full extent of benefits expected in

the long run. A copy of a progress report

based on information supplied by

program participants is contained in

Appendix A (attached).

These zones have used the resources

available to them at a pace that will

allow them to use these funds

throughout the ten-year period of

designation. As of January 1998—a little

over two years into the implementation

of their plans—they had used about a

fifth of the Title XX SSBG funds allotted

to them—$25 million out of a total of

$120 million. These reserve SSBG funds

should be able to leverage additional

Federal, State, local, and private

investments—the leverage ratio of nonSSBG funds to SSBG funds in the first

three years averaged about 4.7:1. Thus,

activity levels might be expected to pick

up in the coming years as the bulk of the

SSBG funds are spent. Although their

zone designations officially end in the

year 2004, they may continue to benefit

from this program in the following

years, since many of their investments

are in infrastructure, training,

community development financial

institutions, and other forms of capital—

including social capital—which should

enhance their future productivity long

after they stop receiving EZ tax

incentives and priority in receipt of

Federal funds.

The Round II zones will go through

the same strategic planning process as

did the Round I zones, and they may be

expected to pursue similar

comprehensive development strategies,

drawing on various sources for funding.

Other things being equal, their benefits

should be roughly comparable to those

of Round I zones. However, the five

Round II zones might experience

different economic impacts than those

of the Round I zones because of the

differences in tax incentives and the

lack—thus far—of specially allocated

Title XX grants that the Round I zones

received. The difference in tax

incentives might result in greater

benefits, since the new zone facility

bonds are not subject to the State

volume cap and hence are more likely

to be issued than the previous, more

limited zone facility bonds. The

additional $20,000 in expensing should

also stimulate more private investment.

And, although the employer wage tax

credit is no longer available, this might

be offset by the Work Opportunity Tax

Credit and some of the other new tax

incentives. However, if no speciallyprovided Title XX grant funds are

provided to the Round II zones, as is

true now, then this would dampen the

economic benefits in the new zones. As

currently structured, it seems likely that

net benefits to Round II zones will be

lower than those enjoyed by Round I

zones, but it is difficult to estimate the

actual amount of economic benefits

involved.

The magnitude of the economic

benefits will also depend on the extent

that State Governments and various

Federal agencies are encouraged to give

preference to these places in providing

grants and loans and regulatory relief. It

also depends on the extent that Federal

grants are devoted to non-economic

purposes, such as reduced crime and

drug use, and improved recreational

programs.

Most of the program’s benefits flow

from the statutory aspects of the

program and not from the rule itself. As

previously noted, this rule pertains

primarily to the application and

selection process for the zones. The

benefits that flow directly from the rule

are related to the strategies that are

being encouraged through the selection

criteria specified in the rule. If

successful, these strategies will result in

sustainable, long-term development for

the selected EZ’s. This could lead to

similar strategies being encouraged by

other Federal and State programs that

assist distressed areas, thereby having a

more profound effect on society.

C. Dynamic implications that may

affect economic growth:

Although the program is expected to

significantly affect the economies of the

designated local zones, in only a very

minor way does this program affect

dynamic aspects of national economic

growth. Since it will tend to add to

overall national spending and

investment, this could slightly add to

inflationary pressures while the

economy remains near full-employment

and slightly reduce unemployment

during recessions. However, because the

designated communities tend to have

high rates of unemployment, this would

dampen any inflationary pressure

associated with the program. Moreover,

the magnitude of these shifts is not large

enough to make much of a difference,

nationwide.

It is expected that, in addition to these

direct contributions to national

economic growth, the comprehensive,

long-term, community-based model of

development that is employed in this

program will serve as a model to

Champion Communities and to other

rural communities, which may choose

to employ similar methods of

development in order to achieve some

of the same results as the Empowerment
19126 Federal Register / Vol. 63, No. 73 /Thursday, April 16, 1998 /Rules and Regulations

Zones and Enterprise Communities have

been able to achieve. If the model

should come into widespread

application throughout rural America,

the net contribution to the national

economy could be substantial. Such an

impact is unlikely to occur, however,

within the period of designation of the

Round II Empowerment Zones but

would most likely occur over a period

of one or two generations.

7. ‘‘User Friendliness’’:

Every effort has been made to make

this program work for all communities

that apply. The regulations allow the

communities maximum flexibility in the

form that their plans take and the

strategies that can be employed. A

guidebook will be available to

communities to guide them through the

application process and to clarify any

questions they may have about the

program rules and procedures. In

addition, lessons learned from Round I

should add to the user-friendliness for

the Round II zones, as modifications

have been made to streamline the

applications process and improve the

structure of the required strategic plans.

Attachment: Appendix A, Progress

Report

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[FR Doc. 98–10156 Filed 4–14–98; 11:38 am]

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