[Federal Register Volume 59, Number 207 (Thursday, October 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26418]
[[Page Unknown]]
[Federal Register: October 27, 1994]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Rural Electrification Administration
7 CFR Part 1703
RIN 0572-AB04
Rural Economic Development Loan and Grant Program: Empowerment
Zones
AGENCY: Rural Electrification Administration, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Rural Electrification Administration (REA) hereby amends
its regulation for the Rural Economic Development Loan and Grant
Program by adding a provision which will enhance the potential of
funding for applications from areas that: Were recently designated by
the President as natural disaster areas; have experienced severe
economic dislocation due to the loss, removal, or closing of a major
source of employment; have experienced long-term and severe economic
deterioration, demonstrated by severe unemployment or a high percentage
of population out-migration; or have been designated as a Rural
Empowerment Zone or Rural Enterprise Community.
EFFECTIVE DATE: This regulation is effective on November 28, 1994.
FOR FURTHER INFORMATION CONTACT: Lawrence L. Bryant, Jr., Chief,
Planning Branch, Rural Development Assistance Staff, Rural
Electrification Administration, Room 2237, South Building, U.S.
Department of Agriculture, 14th and Independence Avenue, SW.,
Washington, DC 20250-1500 (202) 690-3594.
SUPPLEMENTARY INFORMATION: This rule has been determined to be not
significant for purposes of Executive Order 12866 and therefore has not
been reviewed by the Office of Management and Budget. This rule has
been reviewed under Executive Order 12778, Civil Justice Reform. This
rule: (1) Will not preempt any State or local laws, regulations, or
policies; (2) Will not have any retroactive effect; and (3) Will not
require administrative proceedings before parties may file suit
challenging the provisions of this rule.
In compliance with the Regulatory Flexibility Act, the
Administrator certifies that this action would not have a significant
economic impact on a substantial number of small entities as defined in
the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Based on current
and historical funding levels for this program and a projected average
size loan and/or grant in the range of $300,000 to $400,000, it is
estimated that 50 to 60 loans and/or grants will be made nationwide
each year under the existing rule. Applicants whose rural development
projects are enhanced by this action are projected to be less numerous,
and therefore, the rule will have a limited impact upon small
businesses. Since credit will be channeled to areas which are generally
underdeveloped and financially depressed, job creation and economic
development resulting from newly emerging businesses and community
facilities funded by REA will not pose undue competition or other
adverse effects upon existing businesses. Therefore, this rule will
have no effect upon businesses or entities other than those to be
funded through this program.
In compliance with the Office of Management and Budget (OMB)
regulations (5 CFR part 1320) implementing the Paperwork Reduction Act
of 1980 (Pub. L. 96-511) and Section 3504 of that Act, the information
collection and recordkeeping requirements contained in this rule have
been approved by OMB under control number 0572-0090. Comments
concerning these requirements should be directed to the Office of
Information and Regulatory Affairs of OMB, Attention: Desk Officer for
USDA, room 10102, NEOB, Washington, DC, 20503.
The Administrator has determined that this rule will not
significantly affect the quality of the human environment as defined by
the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
Therefore, this action does not require an environmental impact
statement or assessment.
The program is subject to the provisions of Executive Order 12372,
which requires intergovernmental consultation with State and local
officials, with the exception of applications for Project Feasibility
Studies.
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.854, Rural Economic Development Loans and
Grants. This catalog is available on a subscription basis from the
Superintendent of Documents, United States Government Printing Office,
Washington, DC 20402-9325.
Background
On February 15, 1989, REA published the final rule, 7 CFR 1709,
subpart B, in the Federal Register (54 FR 6867) that implemented the
Rural Economic Development Loan and Grant Program, also known as the
Cushion of Credit Payments Program, established by Section 313 of the
Rural Electrification Act of 1936, as amended (Act). This program
provides funds to Act borrowers for the promotion of rural economic
development and job creation projects. On September 27, 1990, REA
changed the designation of this rule from 7 CFR part 1709 to part 1703
(55 FR 39393) and on September 25, 1992, published an amendment (57 FR
44314) to refine and improve the structure of the rule. On March 14,
1994, REA published a final rule (59 FR 11702) establishing procedures
to approve and administer grants and grants in conjunction with zero-
interest loans.
On July 28, 1994, a proposed rule was published (59 FR 38378) to
amend the rule to enhance the funding potential of Rural Economic
Development Loan and Grant Program (REDLGP) applications from
economically devastated areas. This constitutes the finalization of
that proposed rule.
Synopsis
This rule amends the Rural Economic Development Loan and Grant
Program as follows:
The Administrator will have the discretion to designate
special economic status under the REDLGP selection factors, adding up
to 25 points to an applicant's score if at least one of the four
conditions outlined in Sec. 1703.46(g)(7) has occurred.
The prohibition on funding community antenna television
systems or facilities has been reinstated except in special cases as
outlined in Sec. 1703.17(d).
The provision for disbursement of grant funds has been
revised to allow REA Borrowers with limited financial resources, or for
other reasons, to receive funds based on invoices from project owners
rather than committing their own funds under the reimbursement
provision. This arrangement will require prior REA approval. See
Sec. 1703.22(e).
The definition of ``Rural economic development'' has been
revised to clarify REA policy on funding projects located outside rural
areas as defined in Section 13 of the Rural Electrification (RE) Act
but which provide significant benefits to rural areas.
Comments
REA received seven comments regarding this regulation, which were
taken into consideration in preparing this final rule. Comments were
received from the following:
(1) Minnesota Rural Electric Association.
(2) Riverside County Economic Development Agency, Riverside,
California.
(3) City of Hollister, California.
(4) Maine Ambulatory Care Coalition, Manchester, Maine.
(5) Crown Economic Development Corporation, Hanford, California.
(6) Merced County Board of Supervisors, Merced, California.
(7) Community Development Division, Fresno, California.
Of the comments received, one commenter suggested that REA accept
``local'' unemployment data, if available, instead of county-wide data
because of significant variances in larger counties. We recognize that
large geographical counties are at a disadvantage if only countywide
data is accepted. Therefore the use, where appropriate, of State-
published information, would be a reasonable alternative and have
amended Sec. 1703.46(g)(7)(iii) is hereby amended to allow the REA
Administrator to consider State-published statistics, provided by the
applicant, in those situations where the Census material is clearly not
representative of the project location. However, the data must be
verifiable and part of a recognized database which reflects information
for other areas within the State.
One community expressed concern that requiring disbursement of
funds up front and awaiting reimbursement could be a hardship on small
rural communities. However, this requirement does not actually impact
community government entities because the reimbursement policy is
applicable only in cases where REA Borrowers receive grants to
establish revolving loan funds. This final rule provides special
arrangements only for REA Borrowers establishing revolving loan funds,
who are unable to fund projects using the reimbursement method.
Another comment was that REA's definition of ``rural'' in this rule
was too broad and would allow reviewers to fund projects not directly
benefiting rural communities. The commenter suggested that the funds
either be restricted to the 2500 population limit or controlled by
organizations from such communities, that at least 70 percent of the
funds be spent in communities under 2500 and that the urban entity
provide at least 60 percent in matching funds. All REDLGP applications
are reviewed by the REA staff and selected based on the evaluation
criteria outlined in Sec. 1703.46, much of which is based on benefit to
rural areas. Moreover, REA borrowers serve primarily rural areas, and
they are well-suited to determine that the final benefits are directed
toward the local community. As discussed previously in this preamble,
the rule has been revised to allow projects which are not located in
rural areas. However, those projects must result in significant benefit
to rural areas.
Another recommendation was to assign bonus points to areas
``nominated'' by State and local governments for designation as Rural
Empowerment Zones or Rural Enterprise Communities as well as those
areas primarily designated by USDA as Rural Empowerment Zones or Rural
Enterprise Communities. It was suggested that these communities be
rewarded for the development of the plans and partnerships required by
the nominating process and receive a portion of the points they would
have received if actually designated as Rural Empowerment Zones or
Rural Enterprise Communities. REA recognizes that community strategic
planning is a key component of the Empowerment initiative, however,
this additional planning aspect will directly benefit the communities
in other ways such as allowing them to realize and unlock their own
potential to partnership with the private sector and other federal and
state entities. The strategic planning process also improves the
applicant's overall REDLGP application which should be reflected under
the normal evaluation criteria.
List of Subjects in 7 CFR Part 1703
Community development, Grant programs--housing and community
development, Loan programs--housing and community development,
Reporting and recordkeeping requirements, Rural areas.
For the reasons set out in the preamble, chapter XVII of title 7 of
the Code of Federal Regulations is amended as follows:
PART 1703--RURAL DEVELOPMENT
1. The authority citation for 7 CFR part 1703 continues to read as
follows:
Authority: 7 U.S.C. 901 et seq. and 950aaa et seq.
Subpart B--Rural Economic Development Loan and Grant Program
2. In Sec. 1703.12 of this subpart B, the following definition is
revised to read as follows:
Sec. 1703.12 Definitions.
* * * * *
Rural economic development--job creation or preservation or
community facilities improvement projects that clearly demonstrate
significant benefits to rural areas.
* * * * *
3. In Sec. 1703.17, paragraph (d) is added to read as follows:
Sec. 1703.17 Uses of zero-interest loans and grants.
* * * * *
(d) Zero-interest loans and grants may be used for community
antenna television systems or facilities. The borrower will document
that such facilities provide a tangible economic benefit to the
proposed service area in accordance with Sec. 1703.46 of this subpart.
Notwithstanding this, the Administrator reserves the right to deny any
proposal for community antenna television systems or facilities.
Community antenna television systems or facilities will be considered
for funding in accordance with Sec. 1703.46 of this subpart and this
section only when all of the following conditions exist:
(1) The proposed community antenna television system or facility is
established in cooperation with a local educational and/or medical
entity(ies) to provide educational and/or medical programming which
addresses specific needs of rural residents;
(2) Services to be provided by the proposed community antenna
television systems or facilities are not available in the area to be
served, or services are not being provided by the existing television
programming carrier at an affordable cost to residents; and
(3) Such community antenna systems or facilities will not present
undue competition for existing television programming carriers in the
area.
4. In Sec. 1703.20, paragraphs (a)(10) and (a)(11) are redesignated
as paragraphs (a)(11) and (a)(12) and a new paragraph (a)(10) is added
to read as follows:
Sec. 1703.20 Ineligible uses of zero-interest loans and grants.
(a) * * *
(10) For community antenna television systems or facilities except
as provided in Sec. 1703.17(d) of this subpart;
* * * * *
5. In Sec. 1703.22, paragraphs (e) introductory text, (e)(1),
(e)(3) and (e)(4) are revised to read as follows:
Sec. 1703.22 Revolving loan program.
* * * * *
(e) Disbursement of grant funds. Borrowers are not authorized to
commence projects to be funded under this section until those projects
have been submitted for authorization in accordance with paragraph
(c)(1) of this section, or the projects have been submitted for
authorization subsequent to grant approval in accordance with paragraph
(e)(2) of this section. REA grant funds will be disbursed on a
reimbursement basis. However, upon written justification by borrowers
and approval by the Administrator, borrowers unable to fund projects
under reimbursement provisions, for financial or other extraordinary
reasons, may receive grant funds under the special disbursement method
by submitting unpaid invoices from project owners, and grant funds will
be disbursed to borrowers and passed directly to project owners. In
either case, REA grant funds will be disbursed in accordance with the
provisions of 7 CFR Part 3015, Uniform Federal Assistance Regulations,
the applicable requirements of this subpart, the administrative
provisions outlined in paragraph (g) of this section, and the following
requirements:
(1) Only projects authorized by REA in accordance with paragraphs
(c)(1) and (e)(2) of this section, for which adequate documentation is
submitted, including receipts for expenditures under the reimbursement
method or unpaid invoices under the special disbursement method, as
applicable, and certification of approved purposes, will be considered
for disbursement;
* * * * *
(3) Under the reimbursement method, grant funds requisitioned for
individual projects in increments of less than $100,000, or less than
25 percent of the amount approved for the revolving loan fund,
whichever is less, may be disbursed semi-annually. Submission periods
for requisitioning grant funds on a semi-annual disbursement basis will
be 14 days commencing from the 6-month anniversary date of grant
approval. Grant funds under the special disbursement method will be
requisitioned in accordance with the applicable provision in paragraph
(e)(4) of this section;
(4) For the reimbursement method, grant funds requisitioned for
individual projects in increments of $100,000 or greater, or at least
25 percent of the amount approved for the revolving loan fund,
whichever is less, may be submitted for disbursement at any time. Under
the special disbursement method, grant funds of less than $100,000 may
be requisitioned for disbursement at any time. However, the minimum
requisition will be $50,000, or the total grant award, whichever is
less.
* * * * *
6. In Sec. 1703.46, the period at the end of paragraph (h)(10)(iii)
is removed and a semicolon is added in its place, and paragraphs (g)(7)
and (h)(11) are added to read as follows:
Sec. 1703.46 Documenting the evaluation and selection of applications
for zero-interest loans and grants.
* * * * *
(g) Other selection factors. * * *
* * * * *
(7) Special economic status. The Administrator has the discretion
to designate special economic status (up to 25 points) to applications
submitted by borrowers that have documented one or more of the
following four conditions in one or more county(ies) to be served by
the proposed project:
(i) A designation of disaster area by the President of the United
States which has been so designated within three years prior to
applying to REA;
(ii) The loss, removal, or closing of a major source or sources of
employment in the last 3 years which causes an increase of 2 percentage
points or more in the area's most recent unemployment rate compared
with the period immediately before the dislocation;
(iii) Chronic or long-term economic deterioration, documented by
one or both of the following conditions:
(A) An unemployment level equal to or greater than 1.5 times the
National average unemployment percentage from 4 out of the last 5
years, starting with the most current statistics available. The
applicant, when calculating recent years' unemployment percentages,
should compare county statistics with the National Average unemployment
for the corresponding year. Statistics on unemployment will be based on
figures provided by the U.S. Bureau of Labor Statistics. However, the
Administrator may, at his discretion, also consider verifiable,
published State statistical data provided by the applicant in
situations where county-wide statistical data is not representative of
local conditions. Such statistical data must be part of a recognized
database which reflects information for other areas within the State;
(B) A 15% loss of population due to out-migration over the most
recent 10-year decennial census, based on the U.S. Bureau of the Census
decennial data;
(iv) A designation as a Rural Empowerment Zone or Rural Enterprise
Community by the Empowerment Zone Program authorized by Section 13301
of the Omnibus Reconciliation Act of 1993, Public Law 103-66 (107 Stat.
312), 26 U.S.C. 1391-1393.
(h) * * *
(11) Special economic status--25 points.
* * * * *
Dated: October 19, 1994.
Bob J. Nash,
Under Secretary, Small Community and Rural Development.
[FR Doc. 94-26418 Filed 10-26-94; 8:45 am]
BILLING CODE 3410-15-P
