Designation of Rural Empowerment Zones and Enterprise Communities

SUMMARY: This interim regulation implements that portion of 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, approved August 10, 1993)

dealing with the designation of rural Empowerment Zones and Enterprise

Communities. Published elsewhere in this Federal Register is a

companion regulation by the Department of Housing and Urban Development

which implements their portion of title XIII of the Omnibus Budget

Reconciliation Act of 1993. This rule authorizes the Secretary of

Agriculture (USDA) to designate not more than three rural Empowerment

Zones and not more than thirty rural Enterprise Communities based upon

the effectiveness of the strategic plan submitted by an applicant and

nominated by a State or States and local governments.

The purpose of this program is to empower rural communities and

their residents to create jobs and opportunities to build for tomorrow

as part of a Federal-State-local and private-sector partnership.

Businesses will be encouraged to invest and create jobs in distressed

areas, and comprehensive local strategic plans are to be adopted and

implemented, encouraging entrepreneurship, furthering local self-

development and assisting in the revitalization of these areas.

DATES: Interim rule effective January 18, 1994. Written comments must

be submitted on or before February 17, 1994.

ADDRESSES: Comments on Rule: Interested persons are invited to submit

comments regarding this interim rule to the Office of the Chief,

Regulation Analysis and Control Branch, Farmers Home Administration,

Department of Agriculture, room 6348-S, 14th Street and Independence

Avenue, SW., Washington, DC 20250. Communications should refer to the

above CFR part and title. A copy of each communication submitted will

be available for public inspection and copying during regular business

hours at the above address.

FOR FURTHER INFORMATION CONTACT:

Beverly C. Gillot, Strategy Development Staff, Rural Development

Administration, Department of Agriculture, room 5405, 14th and

Independence Ave, SW., Washington, DC 20250-3200, telephone 202-690-

1045. (This is not a toll-free number), or by sending an Internet Mail

message to: [email protected] to obtain information.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The information collection requirements contained in this rule will

be submitted to the Office of Management and Budget (OMB) for review

under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520).

Because these requirements are identical to those being required by the

Department of Housing and Urban Development in their companion rule

being published elsewhere in this Federal Register, clearance was

sought through HUD for both agencies. The application was approved for

use under OMB Number 2506-0148.

I. Background

The Empowerment Zones program confers upon rural distressed

American communities the opportunity to take effective action to create

jobs and opportunities. The program combines tax benefits with

substantial investment of Federal resources and enhanced coordination

among Federal agencies.

All communities which complete the nomination process will be

strengthened by it; gaining by taking stock of their assets and

problems, by creating a vision of a better future, and by structuring a

plan for achieving their vision. Local partnerships among community

residents, businesses, financial institutions, service providers,

neighborhood associations and State and local governments will be

formed or strengthened by going through the application process.

Communities will be afforded an opportunity to work with these partners

in the creation and implementation of a community-based strategic plan.

Communities that are not designated as Empowerment Zones or

Enterprise Communities are eligible for certain benefits. Under a

separate program directed by the Department of Housing and Urban

Development, Community Development Corporations (CDCs) nominated by the

locality, or the applicant for the Empowerment Zone or Enterprise

Community, will be considered eligible for designation to receive tax

preferred contributions from donors. HUD has committed to designating

eight rural CDCs for this program. Communities with innovative visions

for change will be considered for requested waivers of Federal program

regulations, flexible use of existing program funds, and cooperation in

meeting essential mandates, even if they do not receive a designation

by the Secretary as an Empowerment Zone or Enterprise Community.

Communities that are designated as Enterprise Communities receive a

number of benefits. Enterprise Communities are eligible for new Tax-

Exempt Facilities Bonds for certain private business activities. States

with designated Communities will receive Empowerment Zone/Enterprise

Community Social Service Block Grants (EZ/EC SSBG) in the amount of

approximately $3 million for each rural Enterprise Community to pass

through to each designated area for approved activities identified in

the strategic plans. Enterprise Communities receive special

consideration in competition for funding under numerous Federal

programs, including the new National Service and Community Policing

initiatives. The Federal Government will focus special attention on

working cooperatively with designated Enterprise Communities to

overcome regulatory impediments, to permit flexible use of existing

Federal funds, and to assist these Communities in meeting essential

mandates.

Communities that are designated as Empowerment Zones receive all of

the benefits provided to Enterprise Communities, in addition to other

benefits. States with designated Empowerment Zones will receive

Empowerment Zone/Enterprise Community Social Service Block Grants in

the amount of $40 million for each rural Empowerment Zone. Employer

Wage Credits for Empowerment Zone residents are provided to qualified

employers engaged in trade, business, or human service delivery in

designated Empowerment Zones. Businesses are afforded an increased

deduction under section 179 of the Internal Revenue Code for qualified

investments.

The rural part of the program will be administered by USDA as a

Federal-State-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, that deal with local

problems is a comprehensive way, and must demonstrate the capacity or

the commitment to carry out these plans. Development of an effective

plan must also involve the participation of the community affected by

the nomination of the rural area, and of the private sector, acting in

concert with the State or States 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. These key principles reflect the Secretary's

intention that Empowerment Zone and Enterprise Community designations

should be based on potential for successful economic and community

revitalization as reflected in the strategic planning process,

participants in the plan, and the quality of the plan. Poverty,

unemployment, and other need factors are critical in determining

eligibility for Empowerment Zone or Enterprise Community status, but

play a less significant role in the selection process. The four key

principles are:

(1) Economic opportunity, including job creation within the

community and throughout the region, entrepreneurial initiatives, small

business expansion, and training for jobs that offer upward mobility;

(2) Sustainable community development, to advance the creation of

liveable and vibrant communities through comprehensive approaches that

coordinate economic, physical, environmental, community and human

development;

(3) Community-based partnerships, involving participation of all

segments of the community, including the political and governmental

leadership, community groups, health and social service groups,

environmental groups, religious organizations, the private and non-

profit sectors, centers of learning, other community institutions, and

individual citizens; and

(4) Strategic vision for change, which identifies what the

community will become and a strategic map for revitalization. The

vision should build on assests 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.

State and local governments and economic development corporations

that are state chartered may nominate distressed rural areas for

designation as Empowerment Zones (which will also permit their

consideration for designation as Enterprise Communities), or solely for

designation as Enterprise Communities.

Title XIII of the Omnibus Reconciliation Act of 1993 included

Empowerment Zones and Enterprise Communities as a new program.

II. Program Description

General

Pursuant to title XIII of the Omnibus Reconciliation Act of 1993,

the Secretary of USDA may designate up to three rural Empowerment Zones

and up to thirty rural Enterprise Communities.

Eligibility

To be eligible for designation as rural Empowerment Zone or

Enterprise Community 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);

(b) 25 percent in 90 percent of the population census tracts and

BNAs within the nominated area;

(c) 35 percent for at least 50 percent of the population 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) If the nominated area consists of noncontiguous parcels, each

must independently meet the three poverty requirements;

(7) Be located entirely within the jurisdiction of the unit or

units of general local government making the nomination;

(8) Not include any portion of a census-defined central business

district unless the poverty rate for each population census tract is at

least 35 percent for an Empowerment Zone and 30 percent for an

Enterprise Community; and

(9) Not include any portion of an Indian reservation.

Nomination Process

The law requires that areas be nominated by one or more local

governments and the State(s) in which a nominated rural area is

located. Nominations can be considered for designation only if:

(1) The area meets the eligibility requirements set forth in these

rules;

(2) The area is within the jurisdiction of the nominating local

government(s) and the State(s);

(3) The local government(s) and State(s) provide assurances that

the required strategic plan submitted by the applicant will be

implemented;

(4) All information furnished by the nominating local government(s)

and State(s) is determined by the Secretary of USDA to be reasonably

accurate;

(5) The local government(s) and State(s) certify that no portion of

a nominated rural area is already in an Empowerment Zone or Enterprise

Community or in an area otherwise nominated for designation; and

(6) The local government(s) and State(s) certify that they possess

the legal authority to make the nomination.

The nomination must be accompanied by an application for

designation including a strategic plan, which:

(1) Indicates and briefly describes the specific groups,

organizations and individuals participating in the development of the

plan, and describes the history of these groups in the community;

(2) Explains how participants were selected and provides evidence

that the participants, taken as a whole, are broadly representative of

the racial, cultural and economic diversity of the community;

(3) Describes the role of the participants in the creation and

development of the plan and indicates how they will participate in its

implementation;

(4) Identifies two or three topics addressed in the plan that

caused the most serious disagreements among participants and describes

how those disagreements were resolved;

(5) Explains how the community participated in choosing the area to

be nominated and why the area was nominated;

(6) Provides evidence that key participants have the capacity or

how they will develop the capacity to implement the plan;

(7) Provides a brief explanation of the community's vision for

revitalizing the area;

(8) Explains how the vision creates economic opportunity,

encourages self-sufficiency and promotes sustainable community

development;

(9) Identifies key needs of the area and the barriers that restrict

the community from achieving such goals, including a description of

poverty and general distress, barriers to economic opportunity and

development and barriers to human development;

(10) Discusses how the vision is related to the assets and

capacities of the area and its surroundings; and

(11) Describes the ways in which the community's approaches to

economic development, social/human services, transportation, housing,

sustainable community development, public safety, drug abuse

prevention, and educational and environmental concerns will be

addressed in a coordinated fashion.

The strategic plan must identify how government resources will be

used to support the plan. Specifically, the plan must indicate:

(1) How Social Service Block Grant funds for designated Zones and

Communities, tax benefits for designated Zones and Communities, State

and local resources, existing Federal resources available to the

locality and additional Federal resources believed necessary to

implement the strategic plan will be utilized within the Empowerment

Zone or Enterprise Community;

(2) The level of commitment necessary to ensure that these

resources will be available to the area upon designation; and

(3) The Federal resources being applied for or for which

applications are planned.

The plan must identify private resources committed to its

implementation, including:

(1) Private resources and support, including assistance from

business, non-profit organizations and foundations, that are available

to be leveraged with public resources; and

(2) Assurances that these resources will be made available to the

area upon designation.

The plan must address changes needed in Federal rules and

regulations necessary to implement the plan, including:

(1) Specific paperwork or other Federal program requirements that

need to be altered to permit effective implementation of the strategic

plan; and

(2) Specific regulatory and other impediments to implementing the

strategic plan for which waivers are requested, with appropriate

citations and an indication whether waivers can be accomplished

administratively or require statutory changes.

The plan must demonstrate how State and local governments will

reinvent themselves to help implement the plan, by:

(1) Identifying the changes that will be made in State and local

organizations, processes and procedures, including laws and ordinances,

to facilitate implementation of the plan; and

(2) Explaining how different agencies in State and local

governments will work together in new responsive ways to implement the

strategic plan.

The plan must provide details as to the manner in which the plan

will be implemented and indicate what benchmarks will be used to

measure progress, by:

(1) Identifying the specific tasks necessary to implement the plan;

(2) Describing the partnerships that will be established to carry

out the plan;

(3) Explaining how the strategic plan will be regularly revised to

reflect new information and opportunities; and

(4) Identifying the baselines, benchmarks and goals that will be

used in evaluating performance in implementing the plan.

III. 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 public interest. The Department finds that good cause

exists to publish this rule for effect without first soliciting public

comment, in that prior public comment would be contrary to the public

interest. The statute requires that communities prepare a comprehensive

strategic plan to submit their applications. For many communities, such

planning can take up to 5 months. Several additional months will be

required to evaluate the applications and make designations. Section

1391(c) of the legislation requires that designations be made only

after 1993 and before 1996. Given the statutory mandate to make all

designations within a two-year time period, the extra time required to

publish a proposed rule for a 60-day comment period before development

of a final rule for effect would be contrary to congressional intent

and the purpose of the legislation. The longer time period would unduly

postpone an economic recovery for those communities and their residents

for which this program is intended. Further, the Department finds that

good cause exists in that prior public comment is unnecessary because

the legislation being implemented by this rule is very prescriptive,

with little room for discretion on the part of the Secretary.

The Department is interested, however, in the public reaction to

the rule, and invites the public to comment. The Department is limiting

the comment period to 30 days to permit adequate time for review of

public comments and development of a final rule.

IV. Notice

USDA is simultaneously publishing in this issue of the Federal

Register a Notice Inviting Applications that contains more specific

guidance on submission deadlines and the process of submission of

applications.

V. Other Matters

National Environmental Policy Act

This document has been reviewed in accordance with 7 CFR part 1940,

subpart G, ``Environmental Program.'' It is the determination of USDA

that this action does not constitute a major Federal action

significantly affecting the quality of the human environment and in

accordance with the National Environmental Policy Act of 1969, Public

Law 91-190, an Environmental Impact Statement is not required.

Executive Order 12866, Regulatory Planning and Review

This rule was reviewed and approved by the Office of Management and

Review as a significant rule, as that term is defined in Executive

Order 12866, which was signed by the President on September 30, 1993.

The economic analysis required by Executive Order 12866 will be

retained in the public file with the Department's Rule Docket Clerk.

Regulatory Flexibility Act

The Secretary, in accordance with The Regulatory Flexibility Act (5

U.S.C. 605(b)), has reviewed this rule before publication and by

approving it certifies that the rule will not have a significant

economic impact on a substantial number of small entities. The 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. To the extent that this rule affects those entities, its

purpose is to reduce any disproportionate burden by providing for the

waiver of regulations and by affording other incentives directed toward

a positive economic impact. Therefore, no regulatory flexibility

analysis under the Act is necessary.

Executive Order 12611, Federalism

The General Counsel, as the Designated Official under section 6(a)

of Executive Order 12611, Federalism, has determined that 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.

List of Subjects in 7 CFR Part 25

Community development, Empowerment zones, Enterprise communities,

Economic development, Housing, Indians, Intergovernmental relations,

Reporting and recordkeeping requirements.

In accordance with the reasons set out in the preamble, title 7,

subtitle A, part 25 of the Code of Federal Regulations is added as

follows:

1. Title 7, subtitle A is amended by adding a new part 25

consisting only of subparts A through F at this time.

PART 25--RURAL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES

Sec.

Subpart A--General Provisions

25.1 Applicability and scope.

25.2 Objective and purpose.

25.3 Definitions.

25.4 Secretarial review and designation.

25.5 Waivers.

Subpart B--Area Requirements

25.100 Eligibility requirements and data usage.

25.101 Data utilized for eligibility determinations.

25.102 Tests of pervasive poverty, unemployment and general

distress.

25.103 Poverty rate.

Subpart C--Nomination Procedure

25.200 Nominations by State and local governments.

25.201 Evaluating the strategic plan.

25.202 Submission of nominations for designation.

Subpart D--Designation Process

25.300 USDA action and review of applications.

25.301 Selection factors for designation of nominated rural areas.

25.302 Number of Rural Empowerment Zones and Enterprise

Communities.

Subpart E--Post-Designation Requirements

25.400 Reporting.

25.401 Periodic performance reviews.

25.402 Validation of designation.

25.403 Revocation of designation.

Subpart F--Special Rules

25.500 Indian reservations.

25.501 Governments.

25.502 Nominations by economic development corporations.

25.503 Use of census data.

25.504 Rural areas.

Authority: 5 U.S.C. 301; 7 U.S.C. 1989 (a) I; 42 U.S.C. 1480.

Subpart A--General Provisions

Sec. 25.1 Applicability and scope.

(a) Applicability. This part establishes 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 (Pub. L. 103-66, approved August 10, 1993),

which amended the Internal Revenue Code by adding a new subchapter U,

relating to the designation and treatment of Empowerment Zones and

Enterprise Communities.

(b) Scope. This part contains provisions relating to area

requirements, the nomination process for rural Empowerment Zones and

rural Enterprise Communities, and the designation of these Zones and

Communities by USDA. Provisions dealing with the nominations and

designation of urban Empowerment Zones and Enterprise Communities are

promulgated by the United States Department of Housing and Urban

Development (HUD). USDA and HUD will consult in all cases in which

nominated areas possess both rural and urban characteristics, and will

utilize a flexible approach in determining the appropriate designation.

Sec. 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, to

stimulate the creation of new jobs, particularly for the disadvantaged

and long-term unemployed, and to promote revitalization of economically

distressed areas, primarily by providing or encouraging:

(a) Coordination of economic, human, community, and physical

development 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

strategic plan for any nominated rural Empowerment Zone or Enterprise

Community;

(c) Tax incentives and credits; and

(d) Empowerment Zone/Enterprise Community Social Service Block

Grant (EZ/EC SSBG) funds.

Sec. 25.3 Definitions.

As used in this part--Applicant means the lead entity that has

prepared and will implement the community's strategic plan, pursuant to

the provisions of Sec. 25.200(c) of this part, for comprehensive

economic, human, community, and physical development within the area;

such an entity may include, but is not limited to, state governments,

local governments, regional planning agencies, non-profit

organizations, community-based organizations, or a partnership of

community members and other entities.

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.), EZ/EC Social Service Block

Grants as established by the Department of Health and Human Services,

and for special consideration for programs of Federal assistance.

Empowerment Zone means a rural area so designated by the Secretary

pursuant to this part. Up to three such Zones may be designated.

Enterprise Community means a rural area so designated by the

Secretary pursuant to this part. Up to 30 such Communities may be

designated.

Indian reservation means a reservation as defined in section 3(d)

of the Indian Financing Act of 1974 (25 U.S.C. 1452(d)) or section

4(10) of the Indian Child Welfare Act of 1978 (25 U.S.C. 1903(10)).

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 which 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 pursuant to this part.

Population census tract means a census tract, or, if census tracts

are not defined for the area, a block numbering area.

Poverty means the number of persons listed as being in poverty in

the 1990 Census.

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 Sec. 25.403 of this part.

Rural area means any area defined pursuant to Sec. 25.504 of this

part.

Secretary means the Secretary of Agriculture.

State means any State in the United States.

Strategic plan means a strategy developed by the applicant, with

the participation and commitment of local governments, State

government(s), private sector, community members and others, pursuant

to the provisions of Sec. 25.200(c) of this part. The plan must include

written commitments from the local governments and State(s) that they

will adhere to the strategy.

USDA means the U.S. Department of Agriculture.

Sec. 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 in accordance with

Sec. 25.200 of this part. The Secretary will designate up to three

rural Empowerment Zones and up to 30 rural Enterprise Communities.

(b) Period of designation. The designation of a rural area as an

Empowerment Zone or Enterprise Community shall remain in full effect

during the period beginning on the date of designation and ending on

the earliest of:

(1) The close of the tenth calendar year beginning on or after the

date of designation;

(2) The termination date designated by the State and local

governments in their application for nomination; or

(3) The date the Secretary revokes or modifies the designation, in

accordance with Sec. 25.402 or Sec. 25.403 of this part.

Sec. 25.5 Waivers.

The Secretary may waive any provision of this part in any

particular case subject only to statutory limitations, 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.

Subpart B--Area Requirements

Sec. 25.100 Eligibility requirements and data usage.

Eligibility criteria. 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 Sec. 25.102 of this part;

(c) Does not exceed one thousand square miles in total land area;

(d) 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 up to three noncontiguous parcels;

(e) Is located entirely within the jurisdiction of the unit or

units of general local government making the nomination;

(f) Does not include any portion of a central business district, as

this term is used in the most recent Census of Retail Trade, unless the

individual poverty rate for each population census tract in the

district is not less than 35 percent for an Empowerment Zone and 30

percent for an Enterprise Community; and

(g) Does not include any area within an Indian reservation.

Sec. 25.101 Data utilized for eligibility determinations.

(a) Source of data. The data to be employed in determining

eligibility pursuant to the criteria described in Sec. 25.102 of this

part shall be based on the 1990 Census, and from information published

by the Bureau of the Census and the Bureau of Labor Statistics. 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.

Sec. 25.102 Tests of 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 and levels of public assistance. Poverty is demonstrated by

poverty data from the 1990 census.

(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 from 1980-1990; and a high or rising incidence of crime,

narcotics use, abandoned housing, deteriorated infrastructure, school

dropouts 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.

Sec. 25.103 Poverty rate.

(a) General. Eligibility of an area on the basis of poverty shall

be established in accordance with the following criteria:

(1) In each census tract within a nominated area, the poverty rate

shall be not less than 20 percent; and

(2) For at least 90 percent of the population census tracts within

the nominated area, the poverty rate shall not be less than 25 percent;

and

(3) For at least 50 percent of the population census tracts within

the nominated area, the poverty rate shall be not less than 35 percent.

(b) Special rules relating to the determination of poverty rate.

(1) Census tracts with no population. Census tracts with no

population shall be treated as having a poverty rate that meets the

standard of paragraphs (a)(1) and ((a))(2) of this section, but shall

be treated as having a zero poverty rate for purposes of applying

paragraph (a)(3) of this section.

(2) Census tracts with populations of less than 2,000. A population

census tract with a population of less than 2,000 shall be treated as

having a poverty rate that meets the requirements of paragraphs (a)(1)

and (a)(2) of this section if more than 75 percent of the tract is

zoned for commercial or industrial use.

(3) Adjustment of poverty rates for Enterprise Communities. For

Enterprise Communities only, the Secretary has the discretion to reduce

by 5 percentage points one of the following thresholds for not more

than 10 percent of the census tracts, or, if fewer, five population

census tracts in the nominated area:

(i) The 20 percent threshold in paragraph (a)(1) of this section;

(ii) The 25 percent threshold in paragraph (a)(2) of this section;

and

(iii) The 35 percent threshold in paragraph (a)(3) of this section;

Provided that, the Secretary may in the alternative reduce the 35

percent threshold by 10 percentage points for three population census

tracts.

(4) 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.

(c) Noncontiguous areas. There can be no more than 3 noncontiguous

areas if the nominated area is located within one state; noncontiguous

areas are not allowed in the multistate areas. Each such parcel must

separately meet the poverty criteria set forth in this section.

(d) Area not within census tracts. In the case of an area that does

not have population census tracts, the block numbering area shall be

used for purposes of determining poverty rates.

Subpart C--Nomination Procedure

Sec. 25.200 Nominations by State and local governments.

(a) Nomination criteria. One or more local governments and the

State or States in which an area is located must nominate such area for

designation as an Empowerment Zone or Enterprise Community; if:

(1) The rural area meets the requirements for eligibility described

in Sec. 25.100 and Sec. 25.103 of this part;

(2) The rural area is entirely within the jurisdiction of the

nominating State or States and local government(s); such governments

must have the authority to nominate the area for designation and

provide written assurances satisfactory to the Secretary that the

strategic plan described in paragraph (c) of this section will be

implemented;

(3) All information furnished by the nominating State(s) and local

government(s) is determined by the Secretary to be reasonably accurate;

and

(4) The State(s) and local government(s) certify that no portion of

the area nominated is already included in an Empowerment Zone or

Enterprise Community under this Act or in an area otherwise nominated

to be designated under this section.

(b) Nomination for designation. No rural area may be considered for

designation pursuant to subpart D of this part unless the application

for designation:

(1) Demonstrates that the nominated rural areas satisfies the

eligibility criteria set forth at Sec. 25.100 of this part;

(2) Includes a strategic plan, as described in paragraph (c) of

this section; and

(3) Includes such other information as may be required by USDA in a

Notice Inviting Applications, to be published in the Federal Register.

(c) Strategic plan. Each application for designation must be

accompanied by a strategic plan, which must be developed in accordance

with four key principles that will be utilized to evaluate the plan.

These key principles are:

(1) Economic opportunity, including job creation within the

community and throughout the region, entrepreneurial initiatives, small

business expansion, and training for jobs that offer upward mobility;

(2) Sustainable community development, to advance the creation of

liveable and vibrant communities through comprehensive approaches that

coordinate economic, physical, environmental, community and human

development;

(3) Community-based partnerships, involving the participation of

all segments of the community, including the political and governmental

leadership, community groups, health and social service groups,

environmental groups, religious organizations, the private and non-

profit sectors, centers of learning, and other community institutions

and individual citizens; and

(4) 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.

(d) Elements of strategic plan. The strategic plan should:

(1) Indicate and briefly describe the specific groups,

organizations, and individuals participating in its production, and

describe the history of these groups in the community;

(2) Explain how participants were selected and provide evidence

that the participants, taken as a whole, are broadly representative of

the entire community;

(3) Describe the role of the participants in the creation and

development of the plan and indicate how they will participate in its

implementation;

(4) Identify two or three topics addressed in the plan that caused

the most serious disagreements among participants and describe how

those disagreements were resolved;

(5) Explain how the community participated in choosing the area to

be nominated and why the area was nominated;

(6) Provide evidence that key participants have the capacity to

implement the plan;

(7) Provide a brief explanation of the community's vision for

revitalizing the area;

(8) Explain how the vision creates economic opportunity, encourage

self-sufficiency and promotes community development;

(9) Identify key community goals and the barriers that restrict the

community from achieving these goals, including a description of

poverty and general distress, barriers to economic opportunity and

development, and barriers to human development;

(10) Discuss how the vision is related to the assets and needs of

the area as well as to the surrounding community;

(11) Describe the ways in which the community's approaches to

economic development, social/human services, transportation, housing,

community development, public safety, drug abuse prevention and

educational and environmental concerns will be addressed in a

coordinated fashion; and explain how these linkages support the

community's vision;

(12) Indicate how EZ/EC SSBG funds for the designated Empowerment

Zone or Enterprise Community will be utilized.

(i) In doing so, the Strategic Plan shall provide the following

information:

(A) A commitment by the applicant, as well as by the State

government(s), that the EZ/EC SSBG funds will be used to supplement,

not replace, other Federal or non-Federal funds for services or

activities eligible under the SSBG program;

(B) A description of the entities that will administer the EZ/EC

SSBG funds;

(C) A certification by such entities that they will provide

periodic reports on the use of the EZ/EC SSBG funds; and

(D) A detailed description of the activities to be financed with

the EZ/EC SSBG funds and how such funds will be allocated.

(ii) The EZ/EC SSBG funds may be used to achieve or maintain the

following goals, through undertaking one of the below specified program

options:

(A) The goal of economic self-support to prevent, reduce or

eliminate dependencies, through one of the following program options:

(1) Funding community and economic development services focused on

disadvantaged adults and youths, including skills training,

transportation services and job, housing, business and financial

management counseling;

(2) Supporting programs that promote home ownership, education or

other routes to economic independence for low-income families, youth

and other individuals;

(3) Assisting in the provision of emergency and transitional

shelter for disadvantaged families, youth and other individuals;

(B) The goal of self-sufficiency, including reduction or prevention

of dependencies, through one of the following program options:

(1) Providing assistance to non-profit organizations and/or

community and junior colleges that provide disadvantaged individuals

with opportunities for short-term training courses in entrepreneurial,

self employment and other skills that promote individual self-

sufficiency, and the interest of the community;

(2) Funding programs to provide training and employment for

disadvantaged adults and youths in construction, rehabilitation or

improvement of affordable housing, public infrastructure and community

facilities; and,

(C) The goal of prevention or amelioration of the neglect, abuse,

or exploitation of children and/or adults unable to protect themselves;

and where appropriate the goal of preservation or rehabilitation of

families, through one of the following program options:

(1) Providing support for residential or non-residential drug and

alcohol prevention and treatment programs that offer comprehensive

services for pregnant women, mothers and their children;

(2) Establishing programs that provide activities after school

hours, including keeping school buildings open during evenings and

weekends for mentor and study programs.

(iii) If the applicant intends to use the EZ/EC SSBG funds for

program options not included in paragraph (b) of this section, the

strategic plan must indicate how the proposed activities meet the goals

set forth in paragraph (b) of this section, and the reasons any

approved program options were not pursued.

(iv) To the extent that the EZ/EC SSBG funds are used for the

program options included in paragraph (b) of this section, the

applicant may use EZ/EC SSBG funds for the following activities, in

addition to those activities permitted by section 2005 of the Social

Security Act:

(A) To purchase or improve land or facilities;

(B) To make cash payments to individuals for subsistence or room

and board;

(C) To make wage payments to individuals as a social service;

(D) To make cash payments for medical care; and

(E) To provide social services to institutionalized persons.

(v) The State must obligate the EZ/EC SSBG funds to the applicant

in accordance with the Strategic Plan within 2 years from the date of

designation of the Empowerment Zone or Enterprise Community.

(vi) The Strategic Plan must indicate how the EZ/EC SSBG funds will

be invested and used for the 10-year period of designation. The EZ/EC

SSBG funds may be used to promote economic independence for low-income

residents, such as capitalizing revolving or micro-enterprise loan

funds for the benefit of residents. The EZ/EC SSBG funds may also be

used to create jobs and promote economic opportunity for low-income

families and individuals through matching grants, loans, or investments

in community development financial institutions.

(13) Indicate how tax benefits for designated Zones and

Communities, State and local resources, existing Federal resources

available to the locality and additional Federal resources believed

necessary to implement the strategic plan will be utilized within the

Empowerment Zone or Enterprise Community;

(14) Indicate a level of commitment necessary to ensure that these

resources will be available to the area upon designation;

(15) Identify the Federal resources applied for or for which

applications are planned;

(16) Identify private resources and support, including assistance

from businesses, non-profit organizations, and foundations, which are

available to be leveraged with public resources; and provide assurances

that these resources will be made available to the area upon

designation.

(17) Identify changes requested in Federal rules and regulations

necessary to implement the plan, including specific paperwork or other

Federal program requirements that must be altered to permit effective

implementation of the strategic plan;

(18) Identify specific regulatory and other impediments to

implementing the strategic plan for which waivers are requested, with

appropriate citations and an indication whether waivers can be

accomplished administratively or require statutory changes;

(19) Demonstrate how State and local governments will reinvent

themselves to help implement the plan, by identifying changes that will

be made in State and local organizations, processes and procedures,

including laws and ordinances;

(20) Explain how different agencies in State and local governments

will work together in new responsive ways to implement the strategic

plan;

(21) Identify the specific tasks necessary to implement the plan;

(22) Describe the partnerships that will be established to carry

out the plan;

(23) Explain how the plan will be regularly revised to reflect new

information and opportunities; and

(24) Identify baselines, benchmarks and goals that will be used in

evaluating performance in implementing the plan.

(e) Prohibition against business relocation. The strategic plan may

not include any action to assist any establishment in relocating from

an 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:

(1) The establishment of a 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

(2) 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 operations.

(f) Implementation of strategic plan. The strategic plan may be

implemented by the State government(s), local governments, regional

planning agencies, non-profit organizations, community-based

organizations, and/or by other nongovernmental entities. Activities

included in the plan may be funded from any resource, Federal, State,

local, or private, which agrees to provide assistance to the nominated

area.

(g) Elements of the strategic plan. A strategic plan may include,

but is not limited to, activities that address:

(1) Economic problems, through measures designed to create

employment opportunities; support business startup or expansion; or

development of community institutions;

(2) Human concerns, through the provision of social services, such

as rehabilitation and treatment programs or the provision of training,

education or other services within the affected area;

(3) Community needs, such as the expansion of housing stock and

homeownership opportunities, efforts to reduce homelessness, to promote

fair housing and equal opportunity, to reduce and prevent crime and

improve security in the area; and

(4) Physical improvements, such as the provision or improvement of

public infrastructure, or the provision or improvement of recreational,

transportation, or other public services within the affected area.

Sec. 25.201 Evaluating the strategic plan.

The strategic plan will be evaluated for effectiveness as part of

the designation process for nominated rural areas described in

Sec. 25.301 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 set forth in Sec. 25.200(c) of this part.

USDA will review each plan submitted in terms of the four equally

weighted key principles, and of such other elements of these key

principles as are appropriate to address the opportunities and problems

of each nominated area, which may include:

(a) Economic opportunity. 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 and community

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.

(b) 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 provided with the opportunity to take

responsibility for learning the skills, discipline, attitude, and

initiative to make work rewarding;

(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; and

(10) 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, national orgin, 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, as implemented by

USDA.

(c) Community-based partnerships--(1) Community partners. The

extent to which residents of the nominated area have participated in

the development of 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 plan,

and their record of success measured by their achievements and support

for undertakings within the nominated area;

(2) Private and non-profit organizations as partners. The extent to

which partnership arrangements include commitments from private and

non-profit organizations, including corporations, utilities, banks and

other financial institutions, and educational institutions supporting

implementation of the strategic plan;

(3) State and local government partners. The extent to which

State(s) 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.

(d) Strategic vision for change--(1) Goals and coordinated

strategy. The extent to which 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 ongoing process for adjustments, corrections and building

on what works.

Sec. 25.202 Submission of nominations for designation.

(a) General. A separate nomination for designation as an

Empowerment Zone and/or Enterprise Community must be submitted for each

rural area for which such designation is requested. The nomination

shall be submitted in a form to be prescribed by USDA in the Notice

Inviting Applications published in the Federal Register, and must

contain complete and accurate information.

(b) Certifications. Certifications must be submitted by the

State(s) and local government(s) requesting designation stating that:

(1) The nominated area satisfies the boundary tests of

Sec. 25.100(d) of this part;

(2) The nominated area is one of pervasive poverty, unemployment,

and general distress, as prescribed by Sec. 25.102 of this part;

(3) The nominated area satisfies the poverty rate criteria set

forth in Sec. 25.103 of this part;

(4) The nominated rural area contains no portion of an area that is

either already designated as an Empowerment Zone and/or Enterprise

Community or is otherwise included in any other area nominated for

designation as an Empowerment Zone and/or Enterprise Community;

(5) Each nominating governmental entity has the authority to:

(i) Nominate the rural area for designation as an Empowerment Zone

and/or Enterprise Community;

(ii) Make the State and local commitments required by

Sec. 25.200(d) of this part; and

(iii) Provide written assurances satisfactory to the Secretary that

these commitments will be met;

(6) Provide assurances the amounts provided to the State for the

area under section 2007 of title XX of the Social Security Act will not

be used to supplant Federal or non-Federal funds for services and

activities which promote the purposes of section 2007;

(7) Provide that the nominating governments or corporations agree

to make available all information requested by USDA to aid in the

evaluation of progress in implementing the strategic plan and reporting

on the use of Empowerment Zone/Enterprise Community Social Service

Block Grant funds; and

(8) Provide assurances that the nominating State(s) agrees to

distribute the Empowerment Zone/Enterprise Community Social Service

Block Grant funds in accordance with the strategic plan submitted for

the designated Zone or Community.

(c) Maps and area description. Maps and general description of the

nominated area shall accompany the nomination request.

Subpart D--Designation Process

Sec. 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 application 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 or Enterprise Communities which

USDA determines have met the criteria required under this part. USDA

will notify the State(s) and local government(s) whether or not the

nomination has been accepted for processing. The criteria for

acceptance for processing are as follows:

(1) The application as an Empowerment Zone or Enterprise Community

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 and must be

accompanied by a strategic plan, as required by Sec. 25.200(c) and the

certifications required by Sec. 25.202(b).

(2) The application as an Empowerment Zone or Enterprise Community

must be complete and must be accompanied by a strategic plan, as

required by Sec. 25.200(c) of this part, and the certifications

required by Sec. 25.202(b) of this part.

(c) Evaluation of applications. In the process of reviewing each

application accepted for processing, USDA may undertake a site visit(s)

to any nominated area to aid in the process of evaluation.

(d) Modification of the strategic plan, boundaries of nominated

rural areas, and/or period during which designation is in effect.

Subject to the limitations imposed by Sec. 25.100 of this part, USDA

may request additional information pertaining to the plan and proposed

area and may, as a part of that request, suggest modifications to the

plan that would enhance its effectiveness.

(e) Publication of 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. Announcements of those

nominated areas designated as Empowerment Zones or Enterprise

Communities will be made by publication of a Notice in the Federal

Register.

Sec. 25.301 Selection factors for designation of nominated rural

areas.

In choosing among nominated rural ares eligible for designation,

the Secretary shall consider:

(a) The effectiveness of the strategic plan, in accordance with the

key principles set out in Sec. 25.201.

(b) The effectiveness of the assurances made pursuant to

Sec. 25.200(a)(2) that the strategic plan will be implemented.

(c) The extent to which an application proposes activities that are

creative and innovative.

(d) 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.

Sec. 25.302 Number of Rural Empowerment Zones and Enterprise

Communities.

The Secretary may designate up to 3 rural Empowerment Zones and up

to thirty rural Enterprise Communities.

Subpart E--Post-Designation Requirements

Sec. 25.400 Reporting.

USDA will require periodic reports for the Empowerment Zones and

Enterprise Communities designated pursuant to this part. These reports

will 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 and Enterprise Communities as USDA shall 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.

Sec. 25.401 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 important

third party. 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.

Sec. 25.402 Validation of designation.

(a) Reevaluation of designations. On the basis of the performance

review described in Sec. 25.401 of this part, and subject to the

provisions relating to the revocation of designation appearing at

Sec. 25.403 of this part, USDA will make findings as to the continuing

eligibility for the validity of the designation of any Empowerment Zone

or Enterprise Community. Determinations of whether any designated

Empowerment Zone or Enterprise Community remains in good standing shall

be promptly communicated to all Federal agencies providing assistance

or administering programs under which assistance can be made available

in such Zone or 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 appearing at

Sec. 25.403 of this part and the requirements as to the number, maximum

population and other characteristics of rural Empowerment Zones set

forth in Sec. 25.100 of this part, the Secretary may modify

designations by reclassifying rural Empowerment Zones as Enterprise

Communities or Enterprise Communities as Empowerment Zones.

Sec. 25.403 Revocation of designation.

(a) Basis for revocation. The Secretary may revoke the designation

of a rural area as an Empowerment Zone or Enterprise Community if the

Secretary determines on the basis of the periodic monitoring described

in Sec. 25.401 of this part, that the applicant of the State(s) or

local government(s) in which the rural area is located:

(1) Has modified the boundaries of the area;

(2) Has failed to make satisfactory progress in achieving the

benchmarks set forth in the strategic plan; or

(3) Has not complied substantially with the strategic plan.

(b) Warning letter. 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 and the nominating State(s)

and local government(s):

(1) Advising that the Secretary has determined that the applicant

and/or the nominating local government(s) and/or State(s) has:

(i) modified the boundaries of the area; or

(ii) is not complying substantially with, or has failed to make

satisfactory progress in achieving the benchmarks set forth in the

strategic plan prepared pursuant to Sec. 25.200(d) of this part; and

(2) Requesting a reply from all involved parties within 90 days of

the receipt of this letter of warning.

(c) Notice of revocation. After allowing 90 days from the date of

receipt of the letter of warning for response, and after making a

determination pursuant to paragraph (a) of this section, the Secretary

may issue a final notice of revocation of the designation of the rural

area as an Empowerment Zone or Enterprise Community.

(d) Notice to affected Federal agencies. USDA will notify all

affected Federal agencies providing assistance in a rural Empowerment

Zone or Enterprise Community of its determination to revoke any

designation pursuant to this section or to modify a designation

pursuant to Sec. 25.402 of this part.

Subpart F--Special Rules

Sec. 25.500 Indian reservations.

No rural Empowerment Zone or Enterprise Community may include any

area within an Indian reservation.

Sec. 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.

Sec. 25.502 Nominations by 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

governments.

Sec. 25.503 Use of census data.

Population and poverty rate data shall be determined by the 1990

Census Data.

Sec. 25.504 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, as an area that

is primarily rural and has at least 50 percent of the population of the

nominated area residing outside of a Metropolitan Area. For the purpose

of this section, the 1993 Census Bureau definition of Metropolitan Area

is applied.

(b) Exceptions to the definition. On a case by case basis, the

Secretary will grant requests for waiver from the above definition of

``rural'' upon a showing of good cause. Applicants seeking to apply for

a rural designation who do not satisfy the above subsection, must

submit a request for waiver in writing to the Rural Development

Administration, Empowerment Zone Office, Department of Agriculture, AG

Box 3202, 14th Street and Independence Avenue SW., Washington, DC

20250-3200. 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) The 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.

Dated: January 12, 1994.

Bob J. Nash,

Under Secretary, Small Community and Rural Development.

[FR Doc. 94-1147 Filed 1-14-94; 8:45 am]

BILLING CODE 3410-07-M