[Federal Register Volume 59, Number 11 (Tuesday, January 18, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-1147]


[[Page Unknown]]

[Federal Register: January 18, 1994]


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Part VII





Department of Agriculture





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7 CFR Part 25



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Department of Housing and Urban Development





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24 CFR Part 597



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Designation of Empowerment Zones and Enterprise Communities; Interim 
Rules and Notices
DEPARTMENT OF AGRICULTURE

Office of the Secretary

7 CFR Part 25

RIN 0503-AA09

 

Designation of Rural Empowerment Zones and Enterprise Communities

AGENCY: Office of the Secretary, USDA.

ACTION: Interim rule with request for comments.

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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