[Federal Register Volume 67, Number 245 (Friday, December 20, 2002)]
[Rules and Regulations]
[Pages 77907-77909]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-32050]



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 Rules and Regulations
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  Federal Register / Vol. 67, No. 245 / Friday, December 20, 2002 / 
Rules and Regulations  

[[Page 77907]]



DEPARTMENT OF AGRICULTURE

Rural Housing Service

Rural Business--Cooperative Service

Rural Utilities Service

Farm Service Agency

7 CFR Part 1942

RIN 0570-AA36


Rural Business Enterprise Grants and Television Demonstration 
Grants; Definition of ``Rural Area'' and New Types of ``Eligible Small 
and Emerging Private Business Enterprises''

AGENCY: Rural Business-Cooperative Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: The Rural Business--Cooperative Service (RBS) is amending the 
Rural Business Enterprise Grant (RBEG) Program regulation by revising 
the definition of rural area to comply with the amendment to section 
343(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 
1991(a)) made by section 6020 of the Farm Security and Rural Investment 
Act of 2002. The intended effect of this action is to provide a 
consistent definition of rural and rural area for programs administered 
under the Rural Community Advancement Program. RBS will be adding 
nonprofit entities and other tax-exempt organizations as eligible small 
and emerging private business enterprises under certain circumstances 
to comply with the amendment to section 310B(c)(1) of the Consolidated 
Farm and Rural Development Act (7 U.S.C.1932(c)) made by Section 6014 
of the Farm Security and Rural Investment Act of 2002. The intended 
effect of this action is to give priority to the newly authorized small 
and emerging private business enterprises.

EFFECTIVE DATE: December 20, 2002. Comments must be received on or 
before February 18, 2003.

ADDRESSES: Submit written comments via U.S. Postal Service, in 
duplicate, to the Regulations and Paperwork Management Branch, 
Attention Cheryl Thompson, U.S. Department of Agriculture, Rural 
Development, STOP 0742, 1400 Independence Avenue SW., Washington, DC 
20250-0742. Submit written comments via Federal Express, in duplicate, 
to the Regulations and Paperwork Management Branch, Attention Cheryl 
Thompson, U.S. Department of Agriculture, Rural Development, 300 7th 
Street SW., 7th Floor, Washington, DC 20024. Comments may be submitted 
via the Internet by addressing them to [email protected] and must 
contain the word ``rural'' in the subject. All written comments will be 
available for public inspection during normal working hours at the 300 
7th Street SW., address listed above.

FOR FURTHER INFORMATION CONTACT: Amy Cavanaugh, Rural Development 
Specialist, Specialty Lenders Division, Rural Business-Cooperative 
Service, U.S. Department of Agriculture, STOP 3225, 1400 Independence 
Ave. SW., Washington, DC 20250-3225, Telephone (202) 690-2516. The TDD 
number is (800) 877-8339 or (202) 708-9300.

SUPPLEMENTARY INFORMATION:

Classification

    This rule has been determined to be non-significant under Executive 
Order 12866.

Programs Affected

    The Catalog of Federal Domestic Assistance number for the program 
impacted by this action is 10.769, Rural Development Grants.

Paperwork Reduction Act

    There are no reporting and recordkeeping requirements associated 
with this interim final rule.

Intergovernmental Review

    The RBEG Program is subject to the provisions of Executive Order 
12372, which requires intergovernmental consultation with State and 
local officials. RBS will conduct intergovernmental consultation in the 
manner delineated in RD Instruction 1940-J, ``Intergovernmental Review 
of Rural Development Programs and Activities,'' and in the notice 
related to 7 CFR part 3015, subpart V (48 FR 29112, June 24, 1983).

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
602), the undersigned has determined and certified by signature of this 
document that this rule will not have a significant economic impact on 
a substantial number of small entities. New provisions included in this 
rule will not impact a substantial number of small entities to a 
greater extent than large entities. Therefore, a regulatory flexibility 
analysis was not performed.

Civil Justice Reform

    This interim final rule has been reviewed under Executive Order 
12988, Civil Justice Reform. In accordance with this rule: (1) All 
State and local laws and regulations that are in conflict with this 
rule will be preempted; (2) no retroactive effect will be given to this 
rule, and (3) administrative proceedings in accordance with the 
regulations of the Agency at 7 CFR part 11 must be exhausted before 
bringing suit in court challenging action taken under this rule unless 
those regulations specifically allow bringing suit at an earlier time.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' RBS has determined 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, 42 U.S.C. 4321 et seq, 
an Environmental Impact Statement is not required.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
L. 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, RBS 
must prepare a written statement, including a cost-benefit analysis, 
for proposed and final rules with ``Federal mandates'' that may result 
in

[[Page 77908]]

expenditures to State, local or tribal governments, in the aggregate, 
or to the private sector, of $100 million or more in any 1 year. When 
such a statement is needed for a rule, section 205 of UMRA generally 
requires RBS to identify and consider a reasonable number of regulatory 
alternatives and adopt the least costly, more cost-effective or least 
burdensome alternative that achieves the objectives of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of title II of the UMRA) for State, local, and tribal 
governments or the private sector. Thus, this rule is not subject to 
the requirements of sections 202 and 205 of UMRA.

Executive Order 13132, Federalism

    It has been determined under Executive Order 13132, Federalism, 
that this rule does not have sufficient federalism implications to 
warrant the preparation of a Federalism Assessment. The provisions 
contained in this rule will not have a substantial direct effect on 
States or their political subdivisions or on the distribution of power 
and responsibilities among the various levels of government.

Background

    This regulatory package is an initiative mandated from Congress to 
revise the definition of rural area and add nonprofit entities and 
other tax-exempt organizations as eligible small and emerging private 
business enterprises when certain conditions exist. Section 6020 of the 
Farm Security and Rural Investment Act of 2002, Public. Law. 107-424, 
amended section 343(a) of the Consolidated Farm and Rural Development 
(ConAct) to change the definition of rural area for several programs 
authorized under that Act, including the RBEG Program. Section 
343(a)(13) of the ConAct provides, in part, as follows:
    (13) Rural and Rural Area--
    (A) In General.--Except as otherwise provided in this paragraph, 
the terms `rural' and `rural area' mean any area other than--
    (i) A city or town that has a population of greater than 50,000 
inhabitants; and
    (ii) The urbanized area contiguous and adjacent to such as city or 
town.
    The revised definition in Section 343(a) of the ConAct supersedes 
the current definition for rural area used for the RBEG Program. The 
current definition includes ``all territory of a State that is not 
within the outer boundary of any city having a population of 50,000 or 
more and its immediately adjacent urbanized and urbanizing areas with a 
population density of more than 100 persons per square mile, as 
determined by the Secretary of Agriculture according to the latest 
decennial census of the United States.'' The new definition in Section 
343(a)(13) expands eligibility to include urbanizing areas; adds 
``town'' to an area which can have a population of 50,000 or more; and 
deletes the requirement that the urbanized area be ``immediately'' 
adjacent to the city, requiring only that it be ``contiguous and 
adjacent'' to the city or town. Cities or towns with populations 
greater than 50,000 inhabitants and the urbanized area, which is 
contiguous and adjacent to such cities and towns, are ineligible for 
the RBEG Program. This revision is intended to help the Agency simplify 
the rural area eligibility determination process and provide a 
consistent definition of rural area for programs administered by RBS 
under the Rural Community Advancement Program.
    Congress also added nonprofit entities and other tax-exempt 
organizations as eligible small and emerging private business 
enterprises under certain circumstances. The end result of a project 
funded under the RBEG Program must finance or develop a small and 
emerging private business enterprise. A small and emerging private 
business enterprise is defined as a business that has no more than 50 
new employees and has less than $1 million in gross revenues. Under the 
new legislation, if the small and emerging private business enterprise 
is a nonprofit entity or other tax-exempt organization located in a 
city, town or unincorporated area with a population of 5,000 or less 
and has a principal office on land of an existing or former Native 
American reservation, it is exempt from meeting the small and emerging 
private business enterprise definition previously discussed. In 
addition, it is intended for these types of business enterprises to 
receive additional priority points for funding.

Discussion of Interim Final 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, it would be contrary to the public interest to 
wait for public comment before implementing the mandated Act. Comments 
will be accepted for 60 days after publication of this interim final 
rule and will be considered in the development of the final rule.

List of Subjects in 7 CFR Part 1942

    Business and industry, Grant programs--Housing and community 
development, Industrial park, Rural areas.

    Therefore, chapter XVIII, title 7, Code of Federal Regulations, is 
amended as follows:

PART 1942--ASSOCIATIONS

    1. The authority citation for part 1942 is revised to read as 
follows:

    Authority: 5 U.S.C. 301, 7 U.S.C. 1932, 7 U.S.C. 1989, and 16 
U.S.C. 1005.

Subpart G--Rural Business Enterprise Grants and Television 
Demonstration Grants

    2. Amend Sec.  1942.304 to revise the definition of ``rural and 
rural area'' and remove the definitions of ``urbanized area'' and 
``urbanizing area'' to read as follows:


Sec.  1942.304  Definitions.

* * * * *
    Rural and Rural Area. Any area other than a city or town that has a 
population of greater than 50,000 inhabitants and the urbanized area 
contiguous and adjacent to such a city or town according to the latest 
decennial census of the United States.
* * * * *

    3. Amend Sec.  1942.305 as follows: a. Revise paragraph (a);
    b. Add a new paragraph (b)(3)(iv)(G). The revision and addition 
read as follows:


Sec.  1942.305  Eligibility and priority.

    (a) Eligibility. (1) RBE grants may be made to public bodies and 
private nonprofit corporations serving rural areas. Public bodies 
include States, counties, cities, townships, and incorporated town and 
villages, boroughs, authorities, districts, and Indian tribes on 
Federal and State reservations and other Federally recognized Indian 
Tribal groups in rural areas.
    (2) The end result of the project must finance or develop a small 
and emerging private business enterprise. The small business receiving 
assistance must meet the definition contained in Sec.  1942.304. 
However, if the small and emerging private business enterprise is an 
eligible nonprofit entity or other tax-exempt organization located in a 
city, town or unincorporated area with a population of 5,000 or less 
and has a principal office on land of an existing or former Native 
American reservation, the small and emerging private business

[[Page 77909]]

enterprise is exempt from meeting the definition contained in Sec.  
1942.304.
    (3) Regional Commission Grant applicants must meet eligibility 
requirements of the Regional Commission and also of the Agency, in 
accordance with paragraph (a)(1) of this section, for the Agency to 
administer the Regional Commission Grant under this subpart.
    (4) Television demonstration grants may be made to statewide, 
private, nonprofit, public television systems whose coverage is 
predominantly rural. An eligible applicant must be organized as a 
private, nonprofit, public television system, licensed by the Federal 
Communications Commission, and operated statewide and within a coverage 
area that is predominantly rural.
    (b) * * *
    (3) * * *
    (iv) * * *
    (G) The project will assist a small and emerging private business 
enterprise as described in Sec.  1942.305 (a)(2) of this subpart--10 
points.
* * * * *

    Dated: December 13, 2002.
Thomas C. Dorr,
Under Secretary.
[FR Doc. 02-32050 Filed 12-19-02; 8:45 am]
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