FEDERAL ADVISORY COUNCIL REGIONAL ECONOMIC DEVELOPMENT EIGHTH MEETING-JULY 29, 1971 WASHINGTON, DC. FEDERAL ADVISORY COUNCIL ON REGIONAL ECONOMIC DEVELOPMENT EIGHTH MEETING-JULY 29, 1971 Maurice H. Stans Secretary of Commerce and Chairman Federal Advisory Council Robert E. Ruddy Special Assistant to the Secretary and Executive Secretary Federal Advisory Council >» e U.S. Department of Commerce O V o e WASHINGTON, D.C. Table of Contents Page Introduction v Federal Advisory Council on Regional Economic Development Members of the Council vii Attendees at Meeting ix Agenda xi Discussion Leader 1 Robert E. Ruddy, Special Assistant to the Secretary Opening Remarks 1 William N. Letson, General Counsel Development of Ozarks Regional Commission Plan Introductory Remarks 5 Federal Cochairman E. L. Stewart, Jr. Analysis 6 John Opitz Planning and Goals 7 Ralph Rhoades Operation and Implementation 13 Sid Jeffers General Discussion by Executive Agency Participants Department of Health, Education, and Welfare 17 Department of Agriculture 19 Environmental Protection Agency . 20 Department of the Interior 21 Department of the Army 24 Department of Housing and Urban Development 25 Department of Labor 27 Department of Transportation 29 Office of Economic Opportunity 33 Small Business Administration 34 Department of Commerce 37 Appalachian Regional Commission 38 in Table of Contents — Continued Appendices Page Appendix A-Written Statements of Executive Agencies Appalachian Regional Commission 42 Department of Agriculture 45 Department of the Army 47 Department of Health, Education and Welfare 49 Department of Housing and Urban Development 51 Department of the Interior 53 Department of Labor 60 Department of Transportation 63 Environmental Protection Agency 67 Office of Economic Opportunity 70 Small Business Administration 74 Appendix B— Written Statements of Commerce Intradepartmental Committee Office of Regional Economic Coordination 78 Office of Business Economics 1 15 Bureau of Census 118 Economic Development Administration 119 National Oceanic and Atmospheric Administration 121 U. S. Travel Agency 124 Appendix C— Executive Order No. 1 1386, dated December 28, 1967, establishing Federal Advisory Council 127 Appendix D-Outline of Plan Review Process 133 INTRODUCTION On July 29, 1971, the Federal Advisory Council on Regional Economic Development met to formally review the five-year comprehensive development plan of the Ozarks Re- gional Commission in accordance with the requirements of Executive Order 1 1386. The plan as submitted bv the Ozarks Commission represents a two year effort and a close working relationship witn representatives of the four member states of Arkansas, Kansas, Missouri, and Oklahoma, their economic development districts and the pertinent regional offices of the member agencies of the Federal Advisory Council. The Federal Advisory Council, which was created by the above cited Executive Order, serves as the mechanism which links the Federal agencies responsible for major domestic economic programs with the six multi-state regional economic development commissions of Appalachia, Coastal Plains, Four Corners, New England, Ozarks, and Upper Great Lakes established under the Public Works and Economic Development Act of 1965 and the Appa- lachian Regional Development Act of 1965. In undertaking a review and making recommen- dations on this multi-state plan, the Council is executing one of its most important func- tions and performing a unique interagency role in the field of regional economic development. The recommendations made by the Council will be reflected in the revised Ozarks plan before it is submitted to the Secretary of Commerce for approval and transmittal to the President. ECONOMIC DEVELOPMENT REGION OZARKS MEMBERS OF THE FEDERAL ADVISORY COUNCIL ON REGIONAL ECONOMIC DEVELOPMENT Maurice H. Stans, Chairman and Secretary of Commerce Clifford M. Hardin Secretary of Agriculture Robert F. Froehlke Secretary of the Army Elliot L. Richardson Secretary of Health, Education, and Welfare George Romney Secretary of Housing and Urban Development Rogers C. B. Morton Secretary of the Interior James D. Hodgson Secretary of Labor John A. Volpe Secretary of Transportation Frank Carlucci Director, Office of Economic Opportunity Thomas S. Kleppe Administrator, Small Business Administration Robert E. Ruddy, Executive Secretary and Special Assistant to the Secretary for Regional Economic Coordination Donald Whitehead Federal Cochairman Appalachian Regional Commission G. Fred Steele, Jr. Federal Cochairman Coastal Plains Regional Commission Stanley Womer Federal Cochairman Four Corners Regional Commission Chester M. Wiggin, Jr. Federal Cochairman New England Regional Commission E. L. Stewart, Jr. Federal Cochairman Ozarks Regional Commission Thomas F. Schweigert Federal Cochairman Upper Great Lakes Regional Commission VI 1 Vlll ATTENDEES AT THE MEETING OF THE FEDERAL ADVISORY COUNCIL ON REGIONAL ECONOMIC DEVELOPMENT July 29, 1971 The meeting was called to order and presided over by Mr. Robert E. Ruddy, Special Assistant to the Secretary for Regional Economic Coordination, and Executive Secretary of the Council. The Honorable William N. Letson, General Counsel, Department of Commerce, made the introductory remarks. G. Fred Steele, Jr. Federal Cochairman Coastal Plains Regional Commission E. L. Stewart, Jr. Federal Cochairman Ozarks Regional Commission Thomas Schweigert Federal Cochairman Upper Great Lakes Regional Commission Thomas K. Cowden Assistant Secretary for Rural Development and Conservation Department of Agriculture J. R. Fernstrom Program Leader for Economic Development Office of the Secretary Department of Agriculture Major Gordon M. Clarke Assistant Executive for Civil Functions Department of the Army Fred Eaton Deputy Director, Office of Regional Economic Coordination Department of Commerce Alexander N. Christakis Consultant Department of Commerce Robert T. Murphy Program Officer Department of Commerce Robert A. Cox Special Program Officer Department of Commerce David Arnaudo Policy Analyst, Office of Policy Development Department of Commerce Ray Chambers Deputy Assistant Secretary Department of Health, Education, and Welfare Howard Ball Director, Office of State and Local Management Assistance Department of Housing and Urban Development Lois Dean Director, Division of Intergovernmental Relations Department of Housing and Urban Development Bruce Blanchard Staff Assistant, Policy Planning and Research Department of Interior Howard Rollman Office of Assistant Secretary for Programs Department of Interior Joseph B. Epstein Chief, Economic Development Group Office of Research and Development, Manpower Administration Department of Labor IX Philip E. Franklin Office of Policy and Planning Development Department of Transportation Bruce Campbell Special Assistant to the Assistant Administrator for Media Programs Environmental Protection Agency Joseph Krivak Acting Chief, Division of Planning and Interagency Programs Environmental Protection Agency John Crutcher Acting Assistant Director for Operations Office of Economic Opportunity Glenn A. Swanson Office of Community Development Small Business Administration Sandra S. Gruschin Special Assistant Appalachian Regional Commission Ward Miller, Jr. Special Assistant Coastal Plains Regional Commission Norris Ellertson Regional Planning Officer Four Corners Regional Commission John F. Donahue Special Assistant New England Regional Commission Donald Skinner Director of Planning New England Regional Commission Jim Edwards Deputy Director Ozarks Regional Commission Sidney Jeffers Special Assistant Ozarks Regional Commission T. R. Lakshmanan Contractor Ozarks Regional Commission W. John Opitz Executive Director Ozarks Regional Commission Ralph Rhoades Special Assistant Ozarks Regional Commission AGENDA FOR EIGHTH MEETING OF THE FEDERAL ADVISORY COUNCIL ON REGIONAL ECONOMIC DEVELOPMENT Moderator: Mr. Robert E. Ruddy Special Assistant to the Secretary for Regional Economic Coordination Time and place: 9:30 a.m., July 29, 1971 Departmental Auditorium Conference Room B I. Introductory Remarks: Honorable William N. Letson, General Counsel, U.S. Depart- ment of Commerce II. Development of the Ozarks Regional Commission Plan: Honorable E. L. Stewart, Jr., Federal Cochairman III. Individual agency comments on the Ozarks Regional Commission Plan: Department of Health, Education and Welfare Department of Agriculture Department of Army Department of Interior Department of Housing and Urban Development Department of Labor Department of Transportation Office of Economic Opportunity Environmental Protection Agency Small Business Administration Department of Commerce XI William N. Letson, General Counsel, addressing the meeting of the Federal Advisory Council on Regional Economic Development. Robert E. Ruddy, Special Assistant to the Secretary on Regional Economic Development, leads the discussion on the Ozarks plan. \ll OPENING REMARKS MR. RUDDY: Good morning. I am Bob Ruddy, Special Assistant to the Secretary for Regional Economic Coordination, and the moderator of this meeting. As you know, the purpose of this meeting is to review the development plan of the Ozarks Regional Commission, the third such plan that the Council has considered during the past several months. We had hoped this morning to have Bill Letson, the General Counsel of the Department of Commerce, give us a rundown on the status of our legislation, and I still hope that Bill will be here to say a few words to us. He has been detained because he and the Secretary are meeting with Congressman Ford this morning, but I expect that he will be joining us soon. I think before we get started it would be a good idea to have the members of the Council introduce themselves, and then we will come back and have the Ozarks people do the same. Bud Stewart, the Federal Cochairman, will take care of that. So let's go around the table. (At this point the members of the Council introduced themselves to the assembly.) Now that we have the introductions out of the way, I would like to introduce our main speaker for this morning who just arrived, but we will give him a few minutes to get settled. I think this is probably a good time to take a slight break. Bill Letson was appointed by the President as General Counsel for the Department of Commerce in March of this year. Before coming to Commerce he was a partner in the law firm of Letson, Letson, Griffith & Kightlinger in Warren, Ohio. He has practiced before the New York and Ohio bars and before several Federal District Courts. He is a graduate of the Harvard Law School where he was editor of the Harvard Law Review. 1 would like now to introduce Bill Letson. MR. LETSON: Thank you, Bob. I don't think I have ever given introductory remarks in the middle of a meeting before, and I have to apologize to you. I went to the wrong auditorium. I have been wandering around the Commerce building trying to find this meeting. But I am very pleased to be able to say hello to you, and to greet you on behalf of the Secretary. I know that all of you are familiar with the functions and responsibilities of this group and with the operations of the Regional Commissions themselves, so I will not try to go over all of that ground. I might bring you up to date a little bit on the legislative program and the authority that supports that program. As you probably know, S. 575, which was the legislation extending the Appalachian and Public Works and Economic Development Acts, was vetoed by the President because of the inclusion of the accelerated public works program, and that veto was then sustained by the Senate. The programs right now are operating under a Joint Resolution which is good until August 6, and we have good reason to believe that a legislative package will be passed before that time, so we won't go out of business. 1 The Senate Public Works Committee reported out our bill, S. 2317, which continues substantially the provisions of the earlier bill S. 575, with respect to the Appalachian and Public Works and Economic Development Acts, but without the accelerated public works provision. The Title V program remains unchanged with a two-year authorization of $305 million. As we all know, an authorization and an appropriation are two different things, so that figure may not be too terribly meaningful. Yesterday the House passed H.R. 9922, which differs somewhat from the Senate-passed version, but with no effect on the Title V regional program. It looks now that the legislative package is on a rather smooth course, and I am quite sure that the President will sign the bill. So there will be a two-year extension of the Title V and EDA programs and a four-year extension of the Appalachian program. If revenue sharing comes about, I guess we have to see what happens at that f ime. But at this moment the guidance and assistance you are giving the rommissio:.s is most important. I think work on the plans must go on, no matter what legislation is finally enacted by Congress. Let me say once again that we certainly value the work that this group is doing. We think it is helpful and good, and we thank you for the time and attention you are putting into it. Thank you very much. MR. RUDDY: Thank you, Bill, for giving us a rundown on the legislation. It is good to know we are still in business, or we might be, for the next couple of years. There are a couple items of Council business I would like to mention, and then we can proceed with the discussion of the plan. First of all, there are copies available on the back table of the comments we received on the Ozarks plan, as well as additional copies of the minutes of the March 17 meeting held on the Coastal Plains plan. With respect to the agencies' comments on the Ozarks plan, I assume in those cases where we have received no comments or comments only from the regional office, the representative participating in this morning's meeting will make a more detailed presentation than if comments had been received from Washington headquarters. I would like to emphasize that I hope we have a lot of discussion on the plan this morning, and not let the regal splendor of this beautiful conference room inhibit us in any fashion. This is my first meeting as Executive Secretary, but I have read the minutes of the past meetings. Some of them, quite frankly, I thought got a little bit dull and were not as productive as they could have been. I think sometimes people would rely too much on the prepared statements that they had ready to go, and there was not much exchange on the plan itself. Of course, the purpose of this Council is to really dig into this plan and analyze it critically. So I hope you will feel free to do so this morning. Finally, the New England regional plan has been revised and is on the table before you. We ask you to review the revised plan against your earlier comments on it, and hopefully a meeting of the Federal Advisory Council can be scheduled sometime during the second week in September to take up that plan. As a tentative schedule only, we are shooting for September 15, but we will pin it down in writing in the next week or so, if this is possible. I would now like to introduce the Federal Cochairman of the Ozarks Regional Com- mission, Bud Stewart, who in turn will introduce his staff and will give us a brief description of the Ozarks plan, how it was developed, who participated in its development, and how it has been reviewed and evaluated. So I turn it over now to Bud Stewart. E. L. Stewart, Jr., Federal Cochairman of the Ozarks Regional Commission, discusses the development of the Ozarks plan. federal Cochairman Stewart responds to a question from one of the FAC participants. DEVELOPMENT OF THE OZARKS REGIONAL COMMISSION PLAN Introductory Remarks MR. STEWART: Thank you very much, Bob and Bill. We certainly appreciate your rundown on the legislative act, and thank you very much for being here. It is always a privilege and an honor to have our General Counsel visit us, at least to tell us the things that we are doing well, so thank you very much. I am sure you have other things that need to be done, so you can be excused at any time. I would like to express my thanks to the group from Upper Great Lakes Regional Commission and Coastal Plains. It is always nice to kind of be in the middle of this exercise, and I think your comments perhaps have become more expert as these exercises go on. I would hate to be the last Commission coming before this group, as I am sure at that particular point everybody will be an expert, and the Commission may as well turn over the plan to the departments and have them write their particular sections. The Ozarks plan has been some two years in the making and this is, I think, probably the third revision. You have received one of them previously, and we hope that this will be the last time. Once we revise this we hope that we can then take this plan, call it complete, and go forth with the real serious process of operation and implementation of the plan. I would like to introduce briefly the group within the Commission and some of then- helpers who have had a part in building this plan. First of all, I would appreciate it if they would stand. It is a rather long table, and I would like for you to look at them. John Opitz, the Executive Director from Little Rock; Jim Edwards, on the Little Rock staff; Rick Wells, also on the Little Rock staff; Ralph Rhoades, on the Federal Co chairman's staff; Sid Jeffers, Federal Cochairman's staff; Bill Fribley, Federal Cochairman's staff. Also, I would like to introduce my secretary, who spent many long hours of typing on this, Charlene Martinson. Guy Berry I would also like to introduce, who is an intern on our staff this summer. There are two other individuals from the Ozarks research group, Will Steger and Dr. Lakshmanan. I would like for them to stand. Rather than have me as the Federal Cochairman try to build and explain various segments of this plan, we thought we would try to alter the format a little bit this morning and give at least three people on our staff an opportunity to explain some of these sections. We have not in what follows followed the exact outline of the table of contents. However, we will try to incorporate in three rather short, brief presentations those things that we believe to be highlights of the plan. Now, I think it is fair to say that when we became involved in putting words down for an action plan, and as Bob has mentioned, when you try to comment on these plans that something really is lost on the written page. Perhaps some of what is lost could be made up in the spoken word. So we are going to try to take generally the comments that you have made and incorporate them into our presentation. In this way, we'll try to explain our plan just a little bit better than perhaps we have on the written page. To start this out on the general heading that we would call "Analysis," I would like to present John Opitz, the Executive Director of the Ozarks Regional Commission. If you have questions or comments on these presentations— these are roughly going to be ten minutes— we will have about five minutes of questions and answers and comments after that on each one of these presentations— and, incidentally, the next one will be on "Planning and Goals." The first is "Analysis," and the next is "Planning and Goals," and the third one will be "Operation and Implementation." So the first one is "Analysis." Analysis MR. OPITZ: Thank you, Bud. As Bud mentioned, it is extremely difficult to get all of the concepts and ideas across in a written document of this nature. In reviewing the comments which came back from the various agencies, there seemed to be certain areas that did not come across in the plan. I would like to speak to those in terms of some of the original analyses that we made in designing the plan. One comment was that income gap identification has serious limitations in formulating prescriptions for solving the region's problems. Another, that location of the problem is not necessarily the location of the solution. Others included: How do you leap from problem analysis to the determination of solutions? What are the linkages among the problem analyses to the goals and the implementation strategy hierarchies? Should the primary focus of regional plans be on the real decisions facing the governments involved, and involved with the budgets? Well, one of the first decisions which we made, and it was a major decision, we said that we would look at the Ozarks region as a corporation. If we analyzed the region internally, all we were going to find were problems and costs. We would find absolutely no solutions. And given our limited staff and our small amount of resources, this type of analysis would be the wrong direction to go. We said that the solutions would be outside of the region. They would be in new opportunities, new markets, new products and new technology and innovations. What our plan should do would be to provide a framework for identifying opportunities and then relating them back to the institutions and people in the region, so that they would have the capability and availability to create economic development. We also reasoned that if we were good enough to aim at some points in the future and identify those new resources which were being generated that by this very process itself we would generate resources within the Ozarks region. Now, the people that we found who had done the most work in this futuristic type of planning were the marketing people of this country. So we began to look at the analyses and at the systems and at the things that they had designed to assist them with private industry. We began to look at these in terms of, how do we make these things available, these tools available to the people of the Ozarks? We also made another determination when we started looking at the question of how do you interface with private business, private industry, and how does a government organiza- tion help create economic development. We said that a business is really nothing more than a complex management information system. If we were to interface the region with external opportunities then we had to do it in an informational sense. We further said that a going concern in growth industries is usually sitting in an informa- tional environment, if you can imagine, on a scale of one to ten. Nine and ten in the scale would be proprietary information which operates it. The other seven levels come from environmental elements from the contacts that the business management has within an economic environment. They have these informational capabilities set up in certain hier- archies, such as marketing, technology, employee skills, financing, management, production, and any number of elements. What we would attempt to do is to build an informational environment, structured on the same basis, that would allow private industry to very quickly close these information gaps which exist in the Ozarks or in any rural area. We then said, how do we begin to measure what we are doing and whether we are on the right track or whether we are on the right direction or not? So with the Coastal Plains Regional Commission, we began to develop a working goal called the Income Gap. This concept gives not only a direction and a magnitude, but the very dynamics of moving towards a growth rate to provide the linkages between the various elements of the plan itself. And it is in these linkages and around these linkages that we have developed our management information system, what we call our regional resources management informa- tion system. Mr. Rhoades will get in more detail on some of this. We also felt that if we could begin to reorganize the States around these goals, these objectives and these elements of the program, that we would in a few years generate the resources which would be necessary, or a large part of the resources which would be necessary, to interface with the future at some point down the road so that we could bring the area up to the national average. Thank you. MR. STEWART: Any questions of Mr. Opitz at this point? The next presentation will be on Planning and Goals by Mr. Ralph Rhoades. Planning and Goals MR. RHOADES: As John Opitz said, we viewed the Ozarks Regional Commission in the context of a going business concern, with up to, give or take, for an example, ten levels of management information, with nine and ten being proprietary and one, two, and three being a standard for information available to all businesses. Wherever you are, anywhere, in any corporation, certain basic informational levels exist. But with levels four, five, six and seven of information being optional and available in varying degrees of effectiveness. Our concern then became to increase the effectiveness of the Ozarks Regional Commission's information based on levels four, five, six, and seven— in other words, the middle spectrum of information. And in quantifying the goals for the Ozarks Regional Commission, the income gap was selected as both a goal and a program structure, if you please. Income, its generation and its use, became the framework around which the Ozarks Regional Commission's program was structured. In your comments we find, quite frankly, that we have either failed to communicate this in writing, or some other things occurred in the translation. As a result, the program is misunderstood to a degree, particularly in relation to the income gap. The only reason I present this chart here-I am not going to go over all of the details of the gap and its application— but the point that I want to make this morning is that whatever is going on in the Ozarks region now in its totality by Federal, state, local governments and the private sector, is generating $1 17 a year in increased per capita income, based on 1967 figures that are stated in this chart. The pattern still follows with the 1970 Census, we think. It is a traditional thing. Whatever is going on now is generating that much additional per capita income. The Nation meanwhile on the average is progressing at the rate of $191 per year in growth, per capita income. And, again we are talking about the gap. The planning and the goals that we have set forth in this document are not related to what is going on in the region at this point by both private and governmental activities. What we are addressing ourselves to is what is needed, what are the informational levels, what are the program levels, what is missing, what are the gaps between what is going on now and what it would take to bring the Ozarks up to parity or average with the rest of the country. I think probably this is the thing that is most misunderstood in the document. Many of the agencies commented that we have not structured their agency into our program. The facts are we have, but again— no criticism at all of what is going on in your agency— but based on the projections, whatever is going on, whatever you are doing in the Ozarks region, whatever we are doing is only generating this much income. Something else must be done, something extraordinary, something over and above whatever is going on now in the Ozarks region must be generated as a program for this plan, if the gap is to be closed. This is the context then in which the plan was structured. It is not designed specifically to respond to existing programs today, except possibly to draw those programs up into gap closure activities. Now, in developing the strategies to accomplish the goal, mary approaches were experi- mented with. It is not an easy task to settle down to four or five different elements in order to structure a plan, but in generating the strategies to accomplish these goals, the Ozarks Regional Commission decided on four basic strategies. First, to develop employment opportunities. We underscore the words "employment opportunities," rather than industrial development. This is a broader concept than industrial development. States are doing industrial development now. What we are saying here is this is a gap closure activity, not designed to duplicate what the states are doing now in industrial development. This is a broader concept involving developing employment opportunities. The second program element has to do with resource development; generating resources to generate other forms of personal income aimed again at closing the gap in per capita income. Two other supporting elements were designed into the program: Educate and train Ozarks people to increase their earning power— again aimed at enhancing what they are doing now— and fourthly, enhancing the general environment, aimed at economic development. John Opitz described what we termed economic development. This is developing the capability of the local people to generate increased income and wealth. Now, several of you commented on the linkages between goal determination and program operation. The only reason this chart is here is to illustrate that we view the program as a four-sided pyramid, with levels of information structured into ten or fifteen different levels of activity. This pyramid is designed to illustrate, frankly, one side of that program— employment development— again relating back to the four strategy elements. But to show you how the program breaks down into separate levels here is an example: Level 1 obviously is the goal of closing the income gap. Level 2 in the hierarchy becomes employment development. It is quantified. Several of you asked if we did have it quantified, and yesterday in our Department of Commerce review we commented that in the first version of the plan we did have all of this quantified. It caused such a great amount of comment that we left it out of this version, because the magnitude of the task seemed to overcome some of the people in the review process. So these elements are quantified. They do exist; they are in the computer. We can call on them at various times for planning. Developing the program hierarchies, one phase of employment development involves generating totally new employment in the region that does not exist there now. Again, that is quantified. And then an example of a specific industry that does not exist in the region at this point, a marine industry— obviously based on the McClellan-Kerr Arkansas River Navigation Project that is just now operational. Then in the Marine Industry we deal with boat building and boat rigging. Then down to Company "A", or however many individual companies that we begin to work with in generating employment opportunities in the Ozarks region. That gives you some idea then of the program levels and how each of these programs, each side of the pyramid, is structured into specific programs, tasks and activities that would work toward accomplishing the goal. I hope that explains to a degree the linkages between the goal and the various activities that the Commission is undertaking. Here is another side of the pyramid, having to do with resource development. You can't read this at the end of the table, but this is the resource development activity which breaks down further into market identification and development and investment and venture capital development. Then, it breaks down further into sub-units under each of those, and then gets down to projects, tasks and various other activities that are involved in that program element. Those two are income generating elements. We classify the last two as supporting elements. This one has to do with human resource development, education and training for professional positions and training for skilled jobs, and then further breaking that down into various program details. Another supporting element is the topic we call enhancing the general environment, again aimed at economic development. Community facilities, housing, health, public educa- tion and whatever els?- it takes to enhance the general environment, aimed at economic development. In your reviews, we are accused of leaving out environmental protection. It is in the program. It just was not specifically stated. We have an environmental protection monitoring subsystem that is just now being placed into the computer. The software is virtually completed. It will be computerized, and we will be working with the Environ- mental Protection Agency on this program. It is in there. It just was not specifically stated in this hierarchy, but was inferred by the program element Environmental Enhancement. Obviously, we are not about to generate a program that would destroy resources that the Ozarks region has now, and one of these resources is its good, clean environment. To move on down, we further asked in the planning process, where are the gaps in information that would go to support those program elements? What are the States doing now? What are the Federal government agencies doing now? What are the local agencies doing now? What do they need? What tools do they need to help them in their activities, again aimed at closing the income gap. And so far we have identified about 1 5 subsystems or gaps in the informational process. These are the 15 subsystems that have been identified at this point in time. This is the same as the table of contents under action plan, section 4 in the plan. I wanted you to see that we are actually in the process of relating the subsystems back to strategy hierarchies. Several of you also said that the action plan is all well and good. You may talk about regional resource management information systems, but can you do it? That is a good question— can we do it? Have we really the resources and the intellectual capability to create a management information system? At the time the plan was written, we didn't know whether we could or not, but as of today we have. It is in the computer. It is available for use. The computer terminals are going to be located in September in each of the State capitals. Later on, computer terminals will be located in each of the multi-county districts in the region. We will also have a terminal here in our Washington office. We do have some of the subsystems up to operational status, and I will point those out. You asked us about our priorities, how were we going to proceed first? First we pro- ceeded with the community development profile. This was basically an inventory of the communities in the region, what their assets were. More importantly, where were their gaps related to the program hierarchies and strategies that might cause problems in accomplishing the goals? The community development profile is now operational in each of the four States. Although all of the data in all four States is not gathered, we do have at least one multi- county district in each State. We can demonstrate to anybody our capability in giving an inventory of the community facilities that exist, some 1 ,700 data items on each community in the Ozarks region. The second priority that we attached in the program hierarchy involved contract manu- facturing subsystems. It relates back to employment development and expanding regional employer capabilities that exist in the region now. In that program element, we said that most of the jobs that were going to be generated and most of the income would come from existing employers, but obviously something was lacking in their information systems. So we developed a contract manufacturing subsystem initially for the metal working industry in the Ozarks region, and initially only in the State of Arkansas as a pilot program. It is now in the computer and operating successfully. It is generating contracts for metal working firms in the Ozarks region, and as a result of that marketing program, they are maintaining steady employment and some are expanding their plants. 10 We have been able to successfully locate new plants in the Ozarks region because of this subsystem. This system is also able to identify gaps in the metal-working activity going on in the State of Arkansas now. That is how the program works. When you find something that doesn't exist now, a gap, then you jump in and lake advantage of that opportunity. This is what John Opitz is referring to with reference to the opportunities that exist outside of what is going on in the region at the moment. Contract manufacturing. It is operating, and we can demonstrate it on the computer at any time. Incidentally, Rick Wells is our computer terminal operator. He is here, and has his portable machine to access the computer. However, I don't believe there is a telephone in this room. If you would like to see a demonstration of some of these subsystems as they exist today, we would be happy to invite you over to our office, and we will plug into that telephone and then into the computer which is located in Kansas City. We do not own one; we are leasing one at this moment. Other programs that are operational involve the leisure industry development subsystem. We have demonstrated that subsystem in one multi-county area. It is now being expanded into several other multi-county areas in the other states. Our growth and high technology attraction subsystem attracted a number of comments from the various agencies, and it is now operational from a theoretical point of view. We are in the process of gathering data from some pilot companies in the Ozarks Region to apply to that subsystem. Within the next, I would say, 30 days, we will be able to demonstrate that subsystem and how it works on actual data. Part of our agricultural industry expansion system exists in the region today. We have a pilot program going in the State of Kansas and in the State of Missouri on agricultural expansion, particularly into the horticultural industries. College management information system is not operational at this point, but is being worked on in both the States of Arkansas and Oklahoma. Occupational training information system is operational in the State of Oklahoma and is being expanded now into the State of Missouri. Then the ORC econometric ORC system is now operational, but it is rather compli- cated, and we are not ready to demonstrate it yet, but it is available. The data bank is being established and expanded at this point. We have the latest Census data. We have Dunn & Bradstreet information and county business patterns in the computer, and we are able to retrieve them. I might add some people have said, why do you say you have a management information system. Our computer programs provide for retrieval of data in the various sub- systems. They also provide for reports— we have a report-generating capability in which we can draw from information that are data based in, for example, contract manufacturing, in the community development profile, in the basic supporting data base, such as the Census data. We can draw from various subsystems withm tne program and generate a report that would provide management information. But further than that, we can take the same data and through a generalized planning system we can project that data into the future. The ORC generalized planning system software has been developed and it is now operational. Our computer technicians have tried to transfer that information to Mr. Opitz and myself, not too successfully yet, but we hope we will be able to operate it successfully within the next 30 days. These three capabilities give us considerable potential for an MIS. 11 That is basically where we are. We are operating many of the subsystems. As we get more support from our staff and from our consultants, more systems will become opera- tional. I suspect that the next system that we will go to work on will be venture and risk capital, those activities. Thank you very much. MR. STEWART: I would like to mention one clarifying statement. In this income gap, what he was talking about, $117 annually, was not per capita income, but the increase in per capita income annually in the region, compared to 190-some-odd dollar increase in annual income in the Nation. I think these figures are a rather poor indicator of the problem when we consider that this gap has increased. The fact is, as you will note in the plan in 1929 the gap was $387. It has always been with us, but today it is over a thousand dollars, so it has increased all along, and again, our whole program strategy is to try to determine a way to close that gap. Any questions of Mr. Rhoades at this point? Alex? MR. CHRISTAKIS: I don't want to ask anything. But I thought maybe it is worth- while, since you wanted some discussion, to comment a little bit on the approach that Ralph presented to us this morning. I will try to do it by using an input-output framework. The reason I do that is because a lot of misinterpretations have occurred concerning the utility of this particular plan. Maybe they can be clarified if one recognizes that the output of any planning endeavor is the goal. That is the only output of any meaningful planning. Now, the inputs are really the objectives and the means. In your case, of course, the goal is to close the income gap. Your objectives in the attainment of that goal are things like employment opportunities, upgrading of the labor market and the like, by means of the management information system or the design of institutions. This is how I read the presentation, and I just wanted to clarify what it is that a plan should actually do, because it has led to a lot of confusion. MR. STEWART: Are you suggesting, and I think you probably are, that in a revision, with an introduction or something like that, that we try to point this out? MR. CHRISTAKIS: It would be very useful for clarification purposes. MR. STEWART: I think you are right. Charlene, can you make some notes on these as we go along? We are going to revise this plan right away and have already started, based on your comments. Any other questions or comments on this portion of the presentation? No plan is worth anything unless you get to the point of operating it, implementing it. Ralph has touched on some of those portions, but I would like now to have Sid Jeffers talk about operation and implementation. 12 Operation and Implementation MR. JEFFERS: My purpose is to give you just a few brief remarks on what is called Chapter V of the plan. Chapter V really gets down to the question of dollars. Now, as you heard from Mr. Opitz and Mr. Rhoades, the objective of the Commission is to create the development to close this income gap. If we are to do this, you will find in Chapter V six different alternatives. I believe you will find them on page 344. And those alternatives are called in that section "Goals." One goal is closing 100 percent of the income gap by 1971, which would require $4.9 billion additional public investment. The next is 75 percent closure of the income gap, and the next is 50 percent closure, and we work on down to Goal 6, 50 percent closure of that gap by the year 1980. Sooner or later any governmental agency has got to get to the question of a program budget to carry out its goal. Recognizing the overall overriding national problem of budget restraints, the Ozarks Regional Action Plan foregoes these higher goals, the goals that we would really like to reach, and recommends a coordinated attempt to close 25 percent of the income gap in a five-year program budget period. Such a task would require an estimated $1.3 billion in extraordinary public investments, over and beyond what is being done now, and the plan anticipates that at least 90 percent of this additional public investment would come from the Federal government. We recognize that our present legislation permits only a maximum of 80 percent participation by the Federal government in the public facilities section of the program, and 100 percent in the technical assistance and demonstration. This Federal investment is then divided into program elements in Chapter V for the tirst two years. We have those first two years, 1973, 1974, and then by gross sums in the last three fiscal years. So our program budget shows for 1973, $63.2 million of new Federal investment in the Ozarks; for the second year, $143.3 million; and for the three succeeding years in that five year program budget laid out in this action plan, of $380.3 million a year. This is based not only on the analysis that is given through the plan; it is also based on the state Ozarks area investment plans submitted by each state and related to the regional plan. For example, our 1970 state investment plans showed a total of $190 million of priority projects immediately available for funding to fit into this regional plan, and this is only public facility projects. Each program element is set out and its underlying policy, its underlying planning and technical support projects, are laid out in this program budget. The regional plan and the resulting program budget clearly emphasize these points: these Federal investments must be new; they must be extraordinary; they must be over and beyond what is presently being done. And we recognize that we are only in this specific goal going to the lowest level goal because of budget restraints and then taking only 50 percent. Second, that it is not a question with this Commission whether all of these specific funds are appropriated to the Ozarks Regional Commission or whether some of them are appropriated to the on-going line agencies. That is not an issue. What is an issue is that in this extraordinary public investment to whomever the funds are appropriated, that the 13 expenditure of these funds be directed to those projects and to those programs which are identified and approved by the Ozarks Regional Commission. Third, that while the public facilities section of the action plan is identified by cate- gory, the ORC will not identify in its written plan the specific projects to carry out each program element. However, with our public facilities section, the states will identify those projects, and have done so. The reason we do not identify every specific project is that we recognize, I think, as each of you recognizes, that a program such as a development program is, to use a word that has been used many times, an on-going process. It is subject to change. It is subject to new opportunities to develop along that program line. Our governors in the past have been somewhat reluctant to identify specific projects with the low level of funding that we have had in the past. They might be less reluctant if the new authority is enriched with more adequate appropriation. The action plan then summarizes the tax benefits to be gained by launching a public investment program of this magnitude. I might note that the question could be asked of us, why not just make a simple division of these funds to all of the on-going agencies and simply let the Ozarks Regional Commis- sion be a planning and advisory body? First of all, we think that this would negate the concept of a partnership between the states and the Federal government, that there is something valuable in the active involvement of the governors. Each of these states is in the economic development process, and they speak best in partnership with the Federal government for the economic development activities related around a regional plan. Second of all, we think it would negate the intent of Congress. As Mr. Ruddy pointed out to you and as the General Counsel pointed out to you, it now appears this program will be extended. It certainly does, with a vote of 82 to 2 in the Senate for a two-year extension of the program, at an authorized level of $305 million, and a vote yesterday in the House of 374 to 27. Therefore, you will note in the program budget that we have recommended, there is $63 million for 1973, which Mr. Stewart is submitting to the Secretary of Com- merce, and in fact has already sent up informally to Mr. Ruddy. This represents a share of a proposed authority that would result in $266 million in fiscal 1973. So we have incorpor- ated this into a program budget for this Commission to coordinate with the other Federal agencies and with the state and Federal agencies to coordinate with our regional plan. This has meant that for the first time our program budget for operation is a product of a regional plan. MR. STEWART: Any questions? I might add that we are in the process right now of, in order to manage this, reorganiz- ing our joint Federal and commission staffs along the specific lines of the program elements mentioned in this plan. We will have a Director of Human Resource Development, and all of the subsystems involved in that will be under his direction and operation. So we think then that we will truly be regional, and we will try to break down the geographic boundaries of the states and put this plan into implementation. Bob, that concludes our initial presentation. MR. RUDDY: Okay. Thank you, Bud. I think you and the staff did an excellent job. Now we come to that part of the program in which the agencies and the departments have an opportunity to make their comments on your plan. I know that you had the benefit 14 of some of their comments prior to the presentation this morning. In their written com- ments they raised several good questions. You have rebutted them, and now it is up to the agencies and the departments to see whether you have sufficiently answered their questions, or if there are any other points they would like to make as we go around the room. I missed Ray Chambers the first time around, so this time I am going to let him lead off. 15 John Crutcher, Acting Assistant Director for Operations, Office of Economic Opportunity, presenting OEO's comments to the Council. FAC participants reviewing the Ozarks plan. 16 GENERAL DISCUSSION BY EXECUTIVE AGENCY PARTICIPANTS Statement by Department of Health, Education, and Welfare MR. CHAMBERS: I suppose I can be heard without a microphone. Although I haven't been in the State Senate, I talk a lot. I am Ray Chambers, and am Acting Assistant Secretary for Community and Field Services in HEW. Tomorrow I will be Deputy Assistant Secretary for Community and Field Services, when my boss returns from Liberia, so I suppose I have some special empathy with the people of the Ozarks in that I, too, have had a little difficulty in achieving upward mobility this week. My remarks will not be too formal or structured, because my staff man who works on this sort of thing is on vacation for a month, and I am going on the raw materials we have here in our file. The Ozarks plan was reviewed in our regional office in Dallas and in Kansas City and also in Washington, D. C. I think that our basic conclusion was that the Ozarks plan we are considering today represents a significant improvement over earlier plans, and, in fact, is an outstanding endeavor for an organized program for human resource development in the area. We feel that the goal of a systematic approach to assure that human resources develop- ment reflects the real needs of the people is not only an outstanding concept, but could well be a trailblazing effort in our total national effort in human resources development. We did have some specific criticisms, basically relating to the health care delivery sys- tem. I suspect that these may be a result partially of the fact that the people who are reviewing the program were Unking your goal determination with our specific program efforts, and I realize that that is a difficulty you undoubtedly run into with all of the agency reviews. Nevertheless, I think we feel that a good employment development program for an area that is below the level of other areas of the country has got to go hand in hand with a first-class health care delivery system to the maximum extent possible. And I think we would like to have seen somewhat of a better indication of the health resources that exist in the area, that is, could these resources be utilized more effectively for the people of the area. I know there were some comments relating to the proposals for sub-professionals which we wholeheartedly concur with in the health area, but there wasn't a clear enough definition of the role that they might play. So I would say, basically, if we had any criticism it relates to the identification of health problems in an attempt to link them with existing health resources and to come up with a conclusion as to how there might be a more effective health care delivery system for the total region. In conclusion, I want to reiterate that I dealt with these plans before. I was on Capitol Hill for a while and worked with the Upper Great Lakes Regional Commission very closely. I think they are moving in an exciting direction, and I also believe the Ozarks Commission is 17 moving in an exciting direction. This proposal is well planned, well thought out, well I constructed. We are delighted that not only did headquarters have some input, but that also our regional offices, which are closer to the action, also had the opportunity for input. We feel this is most important. My concluding note is somewhat of a personal one. I seem to sit on a variety of councils, including the President's Inter-Agency Committee on Economic Adjustment, which deals with specific areas that have suffered from defense cutbacks, either in terms of contracts or in terms of base closures. I also sit on the Under Secretaries working group of the ten regional councils of the country. I have noticed that the goals of the regional commissions, the goals of the regional councils and of the President's Inter-Agency Committee are very similar in many instances when it comes to development of ideas for economic development plans and programs so that we can have a better impact with our variety of programs as far as treating the whole man is concerned, which was the favorite term of the Secretary. I do wish somewhere along the line the regional commissions and other agencies that are trying to accomplish similar objectives would sit down together and see what it is we have in common with these various programs, and how in specific geographical areas we may be able to tie them a little more closely together to accomplish what I think is a common goal. Thank you. MR. RUDDY: Thank you, Ray. Maybe we can establish another council or commission that you can sit on to coordinate this. Also on a personal note, I might mention that I remember Ray from back a few years ago. Senator Karl Mundt, for whom I then worked, proposed establishment of a balanced economic development commission. We were looking for House sponsorship, and I think your Congressman sponsored it at the time. Bud, do you have any comments you would like to make, or shall we move on to the next person? MR. STEWART: Certainly, HEW's comments are well received. We recognize that the health area, we need to improve and we need, I think, to perhaps try, just on a two-agency basis, to coordinate or in some way improve this. And quite frankly, with the limited resources that we have, we have not emphasized health and health care in this program up to this point. MR. CHAMBERS: I realize that. There may be some way we can help you. MR. STEWART: We would be inundated with hospital requests if we did, and we just don't have money to build hospitals, so we haven't emphasized that. MR. RHOADES: I might point out to Ray that we just recently met with representa- tives of both of the Areas 6 and 7, HEW, to specifically discuss the health section of the plan. I believe the statement was made at the end of the meeting that now they understood the context in which we wrote that health section. Now, they would change their com- ments. So we are going back, and they agreed to help us, frankly, to restructure or to incorporate some additions to that section of the plan with some of their programs. So we are working very closely with them. MR. RUDDY: Thank you very much. The next agency listed on our agenda is the Department of Agriculture, and we are honored to have with us this morning the Assistant Secretary of Agriculture, Mr. Cowden. 18 Statement by Department of Agriculture MR. COWDEN: Mr. Chairman, I will be brief. We sent a letter to Mr. Eaton. My comments will just highlight a few things. One is we feel that there should be more attention paid to resource related industries; for example, forestry and the role that we have to play in parts of that industry. The thing we would like to stress is the need to work with local groups, local individuals. The Depart- ment of Agriculture has several hundred employees and many offices in this area. Just as an example, there are seven Resource Conservation Development Districts, and these involve local people. There are better than 55 watershed projects, all involved with local leadership. I would like to stress one thing, and that is the use of the role of private enterprise to bring these things up, rather than turning it all over to the Government. From time to time a cooperative fruit and vegetable organization is proposed. The Department has considerable reservation on this cooperative. Cooperatives are a lot easier to get started than they are to make work. We earnestly advise that you check with the local people and the land grant colleges before you establish or put money into new cooperatives. In each of these states there are people who have experience ooth wnn agriculture and with cooperatives, and we have seen a number of cases where we go in and we set up one in a hurry and then they find they are difficult to work. This is not meant to be against the cooperative as such, except that time and advance planning can save a lot of headaches here. Thank you. MR. RUDDY: Ralph, do you have any comment? MR. RHOADES: I might add to my previous comments about agriculture resource development program that we have not totally finished developing all of the activities in that area that we would like to see developed. The cooperative happens to be one that was suggested as a practical solution. Dr. Cowden, we have checked with the land grant colleges in each of the states on this subject, and we have worked very closely with them, partic- ularly the University of Arkansas, Oklahoma State University and the University of Kansas. So far we haven't experienced any difficulty in our relationship to them and their relation- ship to the cooperative that is being formed for vegetable production in southeast Kansas. There is not a cooperative involved at this point in the Missouri experiments, but there may be, and again, it would depend on whether that was needed as a marketing operation or not. Those people in that experiment appear to be market oriented on their own and may not need a cooperative effort. But again, we will respond based on the needs of the local people to help them market their products as they produce them in these tests. I agree with you, that caution is the order of the day in this effort, because there are more failures in cooperatives than there are successes. MR. COWDEN: Like any business. MR. RHOADES: It is a business. Our people, though, have checked with the successful ones, and we hope that we are at least emulating those that are successful. MR. COWDEN: From the Washington standpoint, we talk about "local" when it gets to the state, but it is far from "local" at the state, as you fellows well know; and we do have 19 offices in every county and they work with the people, and they are very well trained. We also have work development committees to coordinate the work of the Department. We have asked them to tie in with you, and I hope they have. MR. RHOADES: I might add, Dr. Cowden, we have met a number of times with the Rural Development Councils in each of the four States. There are two I believe in each of the four States that have been formed and are operating and have committees. MR. COWDEN: Right. Dr. Eckberg- MR. RHOADES: Dr. Eckberg and that group. That group, incidentally, is going to meet again on August 6. They have some draft legislation that they are asking us to review- pertaining to agriculture resource conservation and development. They have formed a kind of ad hoc group-it is not an official part of their agency, but they have designated represen- tatives of each of the RC&D's in that area-and they have come together to talk about the Ozarks Regional Commission plan and their relationship to it. They are studying this plan at great length. So we are working with the local people. MR. RUDDY: Okay. I think we can move along. Yesterday I had a request from the Environmental Protection Agency to be moved up because of a problem Mr. Mosiman has of getting away. Does that still hold true? MR. CAMPBELL: Yes, it does and for me also. If I may, I would like to make a few remarks now. MR. RUDDY: With the indulgence of the rest of the Council, we will hear from the Environmental Protection Agency. This is their initial appearance at this Council. Statement by the Environmental Protection Agency MR. CAMPBELL: And already starting off rudely. It is a pleasure to be here and to be invited to the Council by Secretary Stans. Our review of the Ozarks plan indicates that the Commission did a fine job of consider- ing coordinating the various interests represented in the Ozarks area. The study does present general guidelines for the orderly development of the Ozarks in several areas, with particulai emphasis on natural and human resources development. A substantial part of the report is devoted to the present state of each State's economy as viewed from a regional viewpoint. It does offer a starting point for development on the actual plans. In our view, we place particular emphasis on the environmental aspect of the study. Although the primary goal is acceleration of the economic growth of the region, care must be given to maintaining and enhancing the environment, which in the Ozarks is an economic asset whose wise use and development can contribute to the region's growth. A full recognition of the economic and environmental cost associated with certain phases of resource development might result in a changing of the proposed development strategy. The economic goals outlined in the study -industry, mining and agriculture - embrace not only u brighter economic future but potential degradation of the natural 20 habitat as well. The concerned states and the Federal agencies have worked closely in development of air and water pollution standards to protect the quality of the environment in the Ozarks. The study is silent regarding the standards, although they will have an obvious influence on certain development activities in the report. In this regard, both the state agencies concerned with environment programs and the Environmental Protection Agency have a continuing interest in the Commission's plans. We should like at this time to offer our full cooperation at both the field and Washington levels in assuring that not only the Ozarks plan but all regional development plans meet Adminis- tration objectives. Thank you. MR. RUDDY: Thank you. Does anyone want to comment from Ozarks? I think we were having some trouble with the microphones on the table. MR. CAMPBELL: I think it is more apt to be nervousness. I will leave the statement here. MR. RUDDY: Thank you very much. Next on our agenda is the Department of the Interior, Mr. Rollman. Statement by Department of the Interior MR. ROLLMAN: I apologize for bringing a statement in this morning. It was given to the secretary. We would like to just reflect momentarily on the quality parts of your effort, because good work, creativity, and innovation are demonstrated in the plan. We consider the systems analysis approach to economic development to be a marvelous way of imposing discipline, for setting timing and priorities. It helps to find out where areas are counter-productive and contrary to the goals and objectives, and for this reason, this technique is kind of a pioneer. Now, with that in mind, I would like to get into some technical parts of it which might be construed as, hopefully, constructive criticism. It seems that this plan is not a plan in the sense that we have traditionally accepted it to be the setting of goals, evaluating resources, selecting alternatives, setting priorities and schedules. In fact, all of these things are considered as a method in fact and the process hasn't taken place. It seems there are two parts to this. One is the process and the other is the action plan, and it seems to us that a better descriptive and analytical link between the two is needed. Now, enough of the rationale of the action plan is there for us to evaluate the proposed systems, which, you know, is another matter. There is a tendency in the resource field— we feel the resource evaluation is not very good— for conjecture instead of analysis; where the other parts are very rigorous, in this area it is somewhat weak, almost supposition. 21 We would like to illustrate this by discussing, for example, the bauxite suggestion. The idea is to have increased bauxite production by small scale aluminum producers, and we are going to do this by exploration, tax extending, and releasing the reserves held by larger producers. Let's evaluate what this means. If we were to go after increased production of bauxite and satisfy the domestic requirement from Arkansas bauxite, we would be out of it in three or four years. The kind of sales you are going into in investment is made in anticipation of rational use of it over the long term. At the reduced rate of current mining, they will probably last 30 years before exhaustion. In terms of the employment and income genera- tion and stability of the economy, possibly this is a better way of working. Secondly, as far as exploration is concerned, again this is only illustrative, technical criticism. Take the small scale aluminum producer. Right now the tendency is, from bauxite to aluminum, for large consortia of major companies to get together for that sort of thing. So if someone is trying to enter this area on a small scale he is in a highly competitive situation. The Bureau of Mines and the Geological Survey did pretty well with Arkansas, and anything new you find is likely to be small. As for the petroleum industry, special tax incentives given in an area already well explored will not put more oil in the ground. Another illustration is the one on lead. It is argued that the presence of lead resources might induce storage battery production. Locational analysis of the storage battery industry would confirm or deny the premise. As it is, the discussion is pure supposition. Another one is construction material. It is stated that an effort should be made to increase construction activity. But the construction industry reacts to other forces and is not a causative force. Water and power are catalogued but there has been no analysis, and these are very influential parts of the system in evaluating how you are going to go and meet the goals. The leisure industry as an income generator, employment generator is quite evident in the report, and is an element. We offer the suggestion, however, that the plan would have been strengthened by an improved consideration of recreation, open space, conservation practices, community development, and other factors influencing the quality of life of the area and their relation to attracting managerial and professional people, skilled workers and entrepreneurs. I think we have some comments here on recreation, but, again, greater consideration of State plans would have strengthened the recreation and tourism aspects as a guide to tourism and investment. Ditto on environment, and with similar comments. On transportation, I will leave that to Mr. Franklin, but you have $800 million for corridors, and there doesn't seem to be any explanation for it. The question is what will the roads do specifically to serve regional development in measured monetary terms and what will they cost in terms of both dollars and the environment. While the plan calls for an integrated transportation, the relationship of the proposed system to the railroad system is ignored. This reflects not only on transportation planning but also on the selection of industrial sites. Excuse me, Mr. Franklin, but I have to go on. The part about the Arkansas River causing an internationalization of the Ozarks economy perhaps shouldn't get the emphasis that it has been given. There are 25,000 miles of navigable water in the United States, and there are economic centers up and down these 22 places and they haven't been internationalized. The materials moving on the Arkansas River are rock, sand and gravel, bauxite, coke, not the type of thing that lends itself to that. The biomedical technology or its products have never been moved by barge. We would like to suggest one thing that we hope you would consider— the develop- mental timing. In the selection of budgetary goals that the gentleman here was talking about, when you evaluate that and the time frame, you want to remember what the time and scale will mean to the social fabric in the economy that exists. It is very likely to tear it up by too rapid a move. You may not get what you want if the program isn't properly planned and imple- mented. The system is here to accomplish this thing, but a two-year plan is moving very rapidly, and you may find all you get is immigration of labor and other factors of produc- tion. While it may have a regional benefit in terms of the aggregate income, it doesn't help your goal of per capita income, and you have to have your local industry, the productive factors in your area, and labor, prepared when that happens. Otherwise, you are not going to get the bang. My final comment is a technical one, and I bring it up as one of the shortcomings in the plan. It is quite evident, on balance, that the capital incentive industries are able to pay more than the others. Remember, however, that regional commissions, Chambers of Commerce, colleges, are all going around trying to get the few employers that are coming in; and we all want the nice, highpaying stuff. But the relative mix of all production factors including the resource base should be considered as well as value added per manhour. MR. RUDDY: I have a feeling Bud might have some comments on this, so I will turn the mike over to him. MR. STEWART: First of all, I think much of what you said certainly is food for thought. I certainly would have appreciated it if we had received these very weighty comments much in advance of the meeting. I think you mentioned that. I think we are certainly disadvantaged in not being able to prepare a rebuttal. Further than that, I am sure we could involve ourselves in a very lengthy debate, not only for the rest of the period, but for the rest of the day, and maybe the rest of the week. I would suggest that we try to arrange an appointment and have you either come to our office, or we could go to yours, and I would like to take this up in detail. There is one particular statement— this is just a little personal note— I happen to have been involved in the oil and gas industry for 19 years, and I happen very definitely to know greater incentives would produce more oil, so maybe the rest of your comments can be as easily rebutted as that; but we have to find people with 19 years' experience in some of the other areas. So I think we will accept this as constructive criticism and as food for thought, and we will try to get together with you and go into it in detail. MR. RHOADES: I might add that your staff is the only agency that requested all of the back-up reports that have gone into this plan in order to make their initial evaluation. They reviewed every bit of the research, I might add-quite a stack-that had gone into this plan. And so Interior has had quite an input into the document. I just wanted to tell you that, because we have been working very closely with your staff in the past. MR. ROLLMAN: That information has been asked for, and the people tell us they never did receive it. 23 MR. RHOADES: They did, and they made quite an evaluation, frankly. Now, with respect to your comment, it might have occurred because Dr. Quarles left or something, and you might not be able to find it, but we have it. MR. RUDDY: I would hope Bud's suggestion would be followed up, and you are able to get together and work on the problems you might have. Because Mr. Rollman did bring up points that might have touched on other areas, I would like to say that if anyone else on the Council wants to comment on his comments or other comments that have been made, feel free to do so. You don't have to wait until you are called upon. You can make your comments at any time. Mr. Blanchard. MR. BLANCHARD: I am sorry to be late. Howard and I handled this somewhat in tandem. I am generally the good guy, and his job is to go into the technical details. Unfortunately, I didn't get here to be heard first. I think he did a very effective job on his end of the bargain. Our basic concern here is that we don't see the mechanism from the planning process to the completed plan. I think there are some very interesting systems being set up, but then there is an investment plan jumping from $7 million today to an aggregate of $375 million in a couple of years. There seems to be a tremendous infusion in a short period of time, yet all we had to review at this point was this action plan. Based upon the plan we have before us, it seemed to us to be an awful lot in a short period. In terms of meeting with the Commission, we would be glad to. Howard's comments are offered up as technical sugges- tions, and we know that there is give and take within them. They come from the bureaus within the Department, and I am sure that with some give and take we can find our way through this. MR. RUDDY: I would hope so. I might add here that I think this is good. I think if we take the attitude that, once a plan is presented to us it is an adopted plan, we are going about this process the wrong way. The idea of this Council is to be able to make suggestions, to have byplay going back and forth, so in the final analysis we can come up with the best plan possible. So I hope the meeting will help bring about stronger planning in that regard. Now, after my staff prepared this agenda for me, I see I have already missed one. Ralph, I am going to lend you my glasses, because they are not doing me any good. The Department of the Army, Mr. Clarke. Statement by Department of the Army MR. CLARKE: Mr. Chairman, it is a pleasure for me to be here. On behalf of Mr. Ford, I would just like to say briefly that we have reviewed the action plan, and we think it is a very good one, and comprehensive. The Department of the Army and, specifically, the Corps of Engineers is particularly interested in the water resources development, the enhancement of recreational potential, the transportation, the wildlife and the environ- mental considerations of the action plan. If there are any technical questions, I have with me this morning Mr. Tom Kern from the Corps of Engineers. Thank you. MR. RUDDY: Next is the Department of Housing and Urban Development. Lois, are you carrying the ball? 24 Statement by Department of Housing and Urban Development MR. BALL: I will carry the front end of the ball. I don't want to dwell too long on what is in Mr. Jackson's memorandum to the Commis- sion, but let me talk just a little bit about the key paragraph, which essentially fashions the question of whether or not, in the light of this great step forward in planning— and in contrast to other plans we have seen we think it is one— sufficient attention has been paid to all of the institutional software, the institutional change, the catalyzing of state, local and multi-jurisdictional bodies that are going to have to be called on to get anything faintly resembling timely coordination and delivery through the plan. It has been our experience, working over many years of comprehensive 701 planning, that this is where plan failure sets in. I am joining really the remarks of some other people around the table and raising the question whether or not sufficient linkage is in place, or a sufficient level of effort is contemplated, to get plan translation through the various action arms of the Federal, state and local governments. I won't even take on the question of linkages to the private sector. From what I listen to people say and what I find in the plan, it seems to me in one sense that might have been better thought out than the question of public sector thrust. There are some other things I would like to toss out in a very informal sense, simply to get things stirred up, if I can. I notice that if you take your five year projection of capital inputs, it comes close to $1.5 billion. Actually, it is under that. It is $1.35 billion. I have stretched it a little bit to make the arithmetic easier. Using the Canadian industry job creation subsidy formula, $15,000 per job, you have sitting in this proposal, by their terms, and I am not sure they apply to the United States, but they ought to come close to applying to the Ozarks, something on the order of 100,000 jobs. I don't know whether you realize this or not. You have a proposal for capital level of incremental investment, using this same dollar base that you suggest, of about slightly under $100,000 per person per year, based on a 1970 population of that region. Now, it seems to me that one of the things that comprehensive planning or systems analysis approach to economic development ought to evolve is whether or not an asymmet- rical attack may not be the best strategy. In reading your list of possible strategies, the first you consider is deep and direct subsidy, and you kiss it off and come on to the second, third, fourth, and finally the fifth level strategy which, if I read it correctly, is essentially this spending. This Federal invest- ment model in the main will go into public infrastructure. I didn't do the analysis, so I can't say that is bad or good. I find it a little surprising when I look at the top of that pyramid which says "Increased Income." We have had lots of experience in creating better public infrastructure on the assump- tion this would gain the necessary private sector differential response. I am talking about changing the decisions of organizations like Fantus Corp., or those big corporations that have their own decision makers on site location, industry expansion, and analysis of rate of return, opportunity, costs-all of the things they have to do. I certainly don't want to sit 2S here and suggest that that total budget could, or should, or would be politically feasible to get and to put it all into raw job creation— subsidies to the private sector. There have been some proposals that might be the best way to go in some of these underdeveloped regions of the United States. I would like to come at this another way. Is enough going that way under your plan, or are you taking high risks that your information system and your contemplated large improvements in public sector, hardware and software, are in fact going to galvanize the job creation response, the income generation out of the private sector, that you are reaching for? I notice planning funds which are in your budget are running around one percent of the total out of this $1.3-some-odd billion. I would suggest that that is too low. In fact, it was that dollar figure that raised in our minds initially the question as to whether or not you were really investing sufficiently in institutional improvement and managerial capability improvements for state and local agencies that will have to help in all of this. A couple other things: I don't see, and it may be I didn't read the plan thoroughly enough, an input in anticipation of improved capacity to the existing populations of the Ozarks in response to the family assistance plan or some other version of an about-to- happen maintenance scheme. By the same token, I think the strategy should be influenced by, and you ought to anticipate in this three to five year time span you are planning for, the advent of general revenue sharing. This is going to open up forces of discretion to governors and to locally elected officials that they have not had in the past. It is going to change some of the rules, I think, as to where this money stream goes and how it is applied. The same would hold for all of the new block grants that are in the six point special revenue sharing proposals and legislative submissions of the President, including the one in the urban sector for HUD. I also, and this may arise out of inadequate detailed study of the plan, would like to raise a question as to whether or not there is buried in the Ozarks income distribution pattern the same have-have not additional gaps and differentials based on race and ethnic factors. As we know, they exist certainly in many other sub-regions of the country. I didn't find a breakout on that score. I would suggest that if that is a quality of life in the region, it would behoove the Commission to come down rather hard on it and make it a very special and very high priority for its attention. Thank you very much. MR. RUDDY: Do you have a question? MR. JEFFERS: Just a minor point of explanation. I think you said about one percent for planning administration. That is not a fault, but that is the way the regional planning section sets the program budget out in the context of how Commerce and OMB requested it to be done. For example, you find one million, if you look up in our program element, and remember under our legislation we are permitted demonstration funds, you will find quite a few more million dollars in what we would characterize, because of our legislation, as demonstration funds, that during an operating run we take it out of there and put it into demonstration, and it becomes planning funds. So probably if you go over the whole program budget, you will find rather than being $1 million, it will be closer to $10 to $12 million that you can characterize as planning or experimentation. That is just a fault-not a fault, but a method of setting out the budget. That million dollars down there is only the corporate planning support. 26 MR. STEWART: I would certainly agree, Mr. Ball, that some of these areas, while we need improvement, I think we haven't gone solely on the infrastructure. We probably, as you alluded, could make more of an effort to link in the private sector. I think we have tried to come up with a mix between the two, recognizing that just the building of facilities and all of this certainly is not the way to go in its entirety. And I think that the plan does present a mix. Sometimes it takes a lot more money when you get into the infrastructure than it does in the operating and coordinating phases, as you well know. We all recognize that the jobs to be created are going to be created by private enterprise and no other group, so I think we have taken that into consideration. I don't know that we really should dwell on legislation that is not yet in existence, and as you have remarked, we have not. I think that at a time, and we hope these plans will continue to be revised, that those things pass, then this could be generated in. MR. RUDDY: Just one comment on Bud's last statement. It is true that this planning process is a continuing process, and regardless of the legislation which will finally emerge, the plan in all probability is still going to be funded one way or another. At that time the plan is just going to have to be altered so it conforms with the particular Government program under which we will be operating. Before I move on, I would like to say this. I was not jumping over you, but our new legislation has an anti-discrimination provision on sex, so I am following that very, very strictly. MR. BALL: Well, you may call on Lois. MR. RUDDY: Next is the Department of Labor, Mr. Epstein. Statement by Department of Labor MR. EPSTEIN: I would like to point out most of the comments relating to the Labor Department's reaction are in the letter which was sent earlier to the Commission. I would like to say in addition to the very obvious need for cooperation with existing state agencies I think we share with Agriculture and perhaps HEW a rather far-flung network of state or state-Federal agencies, however you wish to look at it. A service function already exists in most of the states or in every state and in many of the rural and urban areas. In our official response it was pointed out that we would hope as programs become more definite and as we see the labor implications of the investment plans, that these plans be coordinated as quickly and as fully as possible with the local and state employment security agencies and the committees that exist in all of the cities. Planning ahead for labor is an integral part of economic planning, and so often two agencies in the same state don't talk to each other. So I was very happy to notice that the occupational training information system, in which my particular office had a very pleasant relationship with Oklahoma State University and Dr. Tuttle of the State group, and with the OESC, is now being developed for more comprehensive use. We think that in the states with reasonably modest economies— and they are not terribly diversified areas— this system provides a kind of rationalizing framework against which many other decisions can be made, 27 thus keeping or helping to keep educational resources in line with ongoing economic developments. I must underline, I suppose, my own concern with the thinking that it is quite easy to develop an information system which will tell us what the economic development will be. The Department of Labor has for several years tried all kinds of techniques for estimating projections of occupational requirements. Even in the rather large sophisticated metro- politan areas where considerable resources exist for this sort of thing, the problem of detailing what we need to know in order that we can mount both the institutions and the courses for adequate manpower programs is still a very slippery eel, and I sympathize with those on the Commission staff who had to wrestle with this sort of thing, because I don't think the answers are here with us. I think OTIS certainly is one way that has to be used. I think also that trying to anticipate economic development and therefore labor require- ment, which I think is basically back to the same point, are essential items. I am afraid an ongoing and very difficult part of the whole job with the Ozarks Commission, as with every other commission, relates to distressed areas. It is hard enough in areas where they don't need help, and it is even more difficult where you are trying to create jobs that don't come automatically out of the system. So we look to greater cooperation with the Ozarks Commission, and we hope our state agencies will be contacted early enough to be able to give some help. We will be interested to see what happens, but the occupational projections are tough. MR. RUDDY: Thank you very much, Mr. Epstein. MR. RHOADES: I might comment here at this point. I left out two things in my presentation because I was trying to hurry. One of them involved this problem, or the question you may have of why a particular system is operational in one state and not in all four. We are continually having to clear this matter up. So I thought I probably better take that opportunity at this time, because you brought up OTIS. Several of you mentioned there are some innovative things in this plan. Frankly, for governors there are. And probably too many for them to absorb in state government all at one time. So as a result we, through demonstrations, put a program into effect, for example like OTIS in the State of Oklahoma. We participated in that program, along with Oklahoma State University, with the understanding that it would be demonstrated as practical for the other states. And so the thing that is going on in OTIS is, as it was demonstrated, as practical in Oklahoma. Missouri is now picking it up, and we have a contract now with the State of Missouri to expand OTIS into Missouri. We assume then that as the governor's priorities in Arkansas encompass that area, OTIS will be picked up in Arkansas, and the same in Kansas. This works the same with these other systems, but I didn't specifically point that out. In relation to the leisure industry, for example, we have demonstrated the leisure sub- system technique in the State of Arkansas. It was demonstrated as successful. The governors in other states say they like it and want more of it. Now, as a result, they are expanding it from that demonstration into their states. This is an example of how these programs spread. Some programs are regional, all at one walk, because all four governors have agreed they want it right now. Different governors have different priorities, so that is why that is a problem. The other item is related to HUD's comments in which Mr. Ball questioned the amount of public investment as being rather substantial, and could we absorb that? Again it was not 28 our intention to just blindly spend more money, unrelated to the private sector, because as the private sector expands into the region, then the public sector must respond. We feel that we have to have the capability to expand the public sector into that area in response to private enterprise and its activities. Now, there is a chicken-egg proposition here that you get into in these programs: Do you make it attractive for industry first, or do you get the industry in first? And the answer to that is, quite frankly, both. The community development profile system was designed to respond both to industry that wanted to locate a branch plant in the Ozarks region and to local planning needs. We can feed an industry's location criteria into the system and come out with the locations in the Ozarks where they would most logically locate; then response from the public sector is needed. The problem is that our institutions in the Ozarks do not have the financial ability to respond, and this is why we need Federal money available. They don't have the tax base to respond to a new industry which needs a huge water and sewer installation when they locate. We have to develop the capability here to respond to the private sector. It was not our intent to go willy-nilly around building water and sewer plants because some city commission says, "We have to have a big one; maybe we will get an industry." It does work both ways. For example, in Baxter Springs, Kansas, we found out through the community develop- ment profile system that if a new industry were to locate in Baxter Springs, Kansas, they didn't have the sewage facilities to handle any discharge that might result. So as a result, Baxter Springs got busy and made application for funds from both the state and Federal agencies and local resources in order to bring those capabilities up to snuff. So the whole thing is designed to interact with each other both ways, frankly, both from making it attractive ahead of time, and responding when industry locates. I failed to make that clear in my presentation, and I wanted to state that. MR. RUDDY: Mr. Epstein, any comments on Ralph's points? MR. EPSTEIN: No. I am delighted to hear OTIS is spreading wings a little bit and will be benefiting other states. MR. RUDDY: Fine. I think we will move on now to the Department of Transportation. Mr. Franklin. Statement by Department of Transportation MR. FRANKLIN: Thank you. At the outset I would like to apologize for not getting our written comments to you. This was my fault. I addressed our views to Secretary Stans rather than to the Cochairman with a copy to Fred Eaton. Anyway, we lost two weeks in the process, so because of this, I will go into some detail, and hopefully we will get comments to you within three or four days. 29 At the outset I would like to state the Department of Transportation is in full agreement with the action plan's goals of narrowing the gap between the income level prevailing in the Ozarks and the rest of the country through improved productivity. The pragmatic approach to the planning strategy found in Chapter 3 we find to be quite commendable in its recognition of the distinctive features of the regional forms of economic and social activity which the resources of the region can be expected to support. Although we recognize the conceptual difficulties in establishing criteria for growth centers, we were disappointed to find that the action plan contains neither designation of growth centers nor procedures for making their selection. In this connection DOT has suggested in its commentary on the transportation aspects of earlier plans, reviewed by this Council, that it would be useful to have a description of existing intermodal transportation facilities which would show their linkages with the growth centers in the hinterland. Such a document would show the missing transportation links, and the supporting criteria would indicate that if a missing link were created it would have a potential for stimulating the necessary development. In essence, we would in fact like to see some reasonable assurance that transportation investment will promote long-term development for the area, rather than provide only temporary employment in the construction of highways or other transportation infrastruc- tures. I believe my predecessors at these meetings have pointed out that in a mature economy, such as the United States, transportation is believed to be playing a declining role in determining the location of economic activity. Among the reasons for this are: decreasing percentage of industrial and economic activity tied to raw material locations; the increasing importance of market-oriented service employment; the increasing complexity of industrial production; and the increasing input of both professional and managerial manpower needed for such development, which usually requires a metropolitan setting. I would like now to go to our specific comments in regard to highways. This aspect of the plan recommends both a corridor system and an Ozarks access highway system. Although the two recommended systems are consistent with highway planning of both the state highway departments and the Federal Highway Administration, we feel the Commi- ssion should keep in mind that concerned highway departments normally consider statewide highway transportation needs rather than regional needs in the development of their pro- grams and in determining priorities in carrying out the programs. It is probable those highway projects in the less developed areas of the Ozarks would receive lower priority under presently available funds. Undoubtedly additional funds will be needed if the Com- mission expects to develop the arterial highways and the other projects described in the action plan. In regard to railroads, the Federal Railroad Administration was troubled by the absence of an analysis of rail freight transportation, including the recently installed AMTRAK passenger service. I think that is a bit unrealistic. Although the region is now poorly served by passenger trams, we feel that going to AMTRAK could probably result in some improve- ment. The only reference to rail transportation is on page 308, and I will quote it because it is brief: "A basic assumption in recommending increased functions for the major freight industry was that the railroads would follow a competitive and generally similar pattern of development as the highways." This is interpreted to mean both major highway motor freight terminals and railway terminals would follow similar patterns of development. The Federal Railroad Administration questions the logic of this assumption and feels that the Commission should assess both the costs and benefits of relocating rail yards and 30 developing intermodal transfer of facilities in rural areas and other places where rail activity could be used to enhance regional development. There are strong feelings here that in view of the continuing importance of rail trans- portation in the region any future planning done by the Commission should take a more balanced view among rail, highway and water transportation development. In regard to aviation, the air transportation aspect of the action plan is not provided in sufficient detail for FAA to make a really constructive evaluation. The plan makes reference to a study that describes airport construction needs during the 1968-72 period, but those proposals are not included in the action plan. In Chapter V, where a two-year investment requirement is considered, mention is made of 25 airport projects having a cost in excess of $ 15 million, but from this it is impossible to assign priorities because they are identified only at the state level. However, the action plan endorses all recommended airport development activity contained in the national airport system plan, and in this sense the action plan complements this overall plan, which is periodically updated by FAA. Hopefully there is a regional integrated system plan which has this type of information but which was not presented in the document we received. It is suggested that the Commission staff discuss its ideas and plans for airport development with field representatives and the FAA and give more attention to setting priorities. I would also like to mention in this connection that FAA has for the first time expressed a strong interest in working with this regional group as well as with other groups. I believe in the past only the Federal Highway Administration has made an input to your activities at the field level. In conclusion, I would like to touch on the inland waterways aspect of the plan. We are quite interested in the developmental possibilities attributed to the newly opened Arkansas Waterway and to the international trade development zone proposal that is associated witn it. Although it is out of our area, I have the feeling that the creation of such zones or anything else should be explored very seriously, in view of our deteriorating trade balance at this time. With the continuing export of products to foreign countries, this may be a very timely proposal. I might also comment, parenthetically, I think this group had a fair amount of interest in the Executive Branch proposal looking at the desirability and feasibility of imposing user charges on inland waterway transportation. The apparent recent decision of the Administra- tion to take no action in this area, I think, should brighten the outlook of developing barge transportation on the Arkansas River. In connection with our role with the inland waterways, the Coast Guard indicates in its comments it stands ready to work with the Commission or any other body in its areas of responsibility for port and vessel safety, as well as aids to navigation and the safety aspect of recreational boating. We would like to comment, in regard to your hovercraft hydrofoil discussions, that you may find if these concepts are ever implemented they would require not only changes of channels but other aids to navigation, so you may want to make contact with the Depart- ment in regard to any economic feasibility studies of this particular mode of transportation. Experience has not been too encouraging during the past decade. In conclusion we support the intentions of the action plan and are hopeful that the Commission will review its transportation plans in terms of identifying those aspects of it which can help bring about rapid social and economic development. We stand ready to cooperate further at both the headquarters and regional levels in this effort. 31 Thank you. MR. STEWART: First of all, Mr. Franklin, did I understand you correctly to say that you think that the waterway user situation has been resolved as tar as the Arkansas is concerned? MR. FRANKLIN: It would be all inland waterways. My understanding is that the Administration has decided not to recommend legislation at this time. MR. STEWART: That is good news. We fought quite a battle on that. MR. FRANKLIN: This was under study I guess for the past 18 months, and during the past six months there has been, as some of the people here undoubtedly know, the usual interagency review of the legislation. As a result of this, they decided this was not the appropriate time. MR. STEWART: I would like to comment just a little bit. We, as far as the highways are concerned, have recommended, as you know, in this plan that this be an over and above program. I think that those of you who dealt with the state governments will recognize that the financial capacities are attractive now. Whether a specific roadway is on their priority system, or not, they will rapidly get it there, as it costs them very little to do so. So we really are regional, and these proposals, particularly for the access roads, are certainly over and above any that are now in existence. And this is the only area that the regional commission really has expanded the state investment plans. The state investment plans were quite lacking, we felt, on the highways, primarily because I think they were very realistic. They didn't feel that under existing legislative 50-50 funding that there was any way that they were going to rapidly improve their situation, so for the most part they left it out. I think your comments on rail-freight inventory are certainly valid. Sometimes I think we are guilty of just accepting things as they are, that we do have adequate rail transporta- tion, but this certainly would be expandable from a private enterprise standpoint with additional industry as it has been done already in meeting navigable waterways and potential responsibilities. Many were expanded without any governmental direction or anything. The growth center subject has been brought up several times. We are not sure we are quite in conformance with the thinking around town on growth centers; primarily, I think, because of our community growth profile system. In the short time it has been operational, in a few areas, we have found that what normally would be considered a growth center, after the detailed information and comparisons are made, perhaps isn't. But we do think the national growth policy as now being formulated in other words, trying to place greater emphasis on rural development— certainly brings in the regional context of what we are trying to do, even though we might not specifically become a growth center. I recognize under the Transportation Act that we are going to have to get to that point because it is very definitely specified. We may through our system argue on what might be considered growth centers, and some of the factors are really not spelled out in detail. So I think this is something that could come out of our system, and certainly will, because we would like to participate very much in that regional commission transportation action. MR. FRANKLIN: I was just going to say we may have a fairly practical opportunity in the future as we move forward on the Section 127 Developmental Highways Program under the Federal Aid to Highways Act of 1970. Hopefully by the next few days the Secretary of Transportation will send out invitations to the 50 governors for their designation of the 32 three growth centers in each state which they would like to see receive this additional funding for the construction of developmental highways for access purposes. MR. STEWART: Much of the data we are incorporating into the system just by its very nature is statewide even though, for instance, in the three larger states, Missouri, Arkansas and Oklahoma, we only cover roughly a third of each of those states. The state highway departments, for example, are looking for the total. MR. FRANKLIN: An area of coordination will be DOT, Commerce and the Regional Commissions. They will be working together on the review. MR. JEFFERS: I might point out some people might question the corridors that were laid out. The Commission has never said that all of those corridors are to be built now. Secondly, you will note those corridors transsect. Therefore, their costs are completely across not only the designated section of the state, but the non-designated as well. In other words, that figure which was based on 1968 costs, $770 million, is for all recommended corridors. That cost is not just that part of the corridor cost in the Ozarks, but is the corridor all of the way across. That is not true, of course, of the access roads. Now, the Commission may or may not select one corridor to be the priority corridor? I don't think anyone really anticipates all of those corridors are going to be built now. MR. STEWART: I think our intern this year, or this summer, is trying to relate the Appalachian development of the highway system to the economic development that has taken place, and I think this is in addition to the report made on the Appalachia system. One thing you said on it I think certainly is supporting the argument that it can come. The Arkansas Navigation System as such is certainly a developmental thing, and only just projections on what might happen, which is a little bit different than the Bureau of Public Roads has worked. They want to count the traffic before they build the roads. So I think these can work hand in glove. It seems to me if for a waterway it is workable, it is also workable for a highway system. Proving it might be a little more difficult. MR. RUDDY: We have a pretty good track record for trying to close these meetings by noon. We might not make it this time, so I think we better move along. The next is Office of Economic Opportunity. Mr. Crutcher. Statement by the Office of Economic Opportunity MR. CRUTCHER: Thank you very much. Our formal remarks largely parallel those made previously by the good guy and the bad guy in the Department of Interior and by Mr. Ball, so I won't go into that. I would like to call your attention, though, to the fact that for the last seven years we have had community action agencies operating in almost this entire area. I think only a few counties are not covered by the operations of our community action people; and it is our 33 earnest hope that we can work closely together, through our grantees, to be of maximum advantage to each other. In addition to that, we fund the Northeast Oklahoma Industrial Development Corps, and we have other such similar activities that we are in the process of considering. We also fund the state Offices of Economic Opportunity in the four states involved. My primary concern, and I think our Agency's primary concern, is that we do not have too parochial an interest in all of this. To that end it would seem to me it would be advisable, if you have not already done so, to invite from time to time all of our community action agency directors and perhaps the chairmen of the boards to get together to enlarge their vision, and perhaps at the same time to be of maximum advantage to you. The same thing also could be said of the four state Offices of Economic Opportunity. We have been trying to push them into wider utilization of state resources, and I think in the case of Rex Sparger, at least in Oklahoma-Mr. Rhoades, you will pardon the reference to him, because he is a former member of the Oklahoma House and you are from the exaulted Senate— we do have people operating at the local level and we believe you should make maximum utilization of their good offices. MR. STEWART: I think that is certainly true, although in this particular case because OEO is so closely tied to the Governor's office, we feel in many instances we do have that linkage through that office. I might just make a general statement. The biggest difficulty I think we have implement- ing this plan is to develop the contacts with the people who are going to provide the jobs, again the private sector, and I think we should encourage cooperation and information, but at the same time not at the expense of staff time, et cetera, to go out and really try to work with the state industrial development projects. This region, unlike New England, needs just raw industry, and this to me is the most rapid way we are going to cure a lot of the problems we have. We have to get out to meet them to get the jobs. But we will coordinate them. I don't want to deemphasize that. But at the same time, I don't want to over-emphasize it. MR. RUDDY: The Small Business Administration, Mr. Swanson. Statement by Small Business Administration MR. SWANSON: Mr. Chairman, we were pleased to have an opportunity to review the final action plan prepared by the Ozarks Commission. We were very impressed with the mechanism set up for a solid development program. Within the SBA, of course, we feel we can make a contribution, particularly, since a large number of the business firms in the Ozarks are small businesses. As we look at our Nation, we find that 95 percent of all business is small business. And in generated employment, under your employment development system, we can use many programs that are well tried in SBA circles. We also, of course, give priority to redevelopment areas, deprived areas, and lagging economies. We set aside a certain part of our resources to go directly into deprived areas. 34 Not only that, but to some extent we relax our equity standards for development loans. Instead of requiring the usual 20 percent equity on a development loan in a target area, in a development area, we can reduce this equity requirement to as low as ten percent. We have a 502 program, named after Section 502 of our Community Development Investment Act, which has stimulated and provided over a period of years some 100,000 jobs. We think that SBA, if we were given an opportunity to fully utilize this program, could work in concert with the banks and provide some real inputs. We have found that there is a certain lack of enthusiasm on the part of banks in this particular region, as is true in Appalachia and many other deprived areas of the country. How you will go about stimul- ating the banks, how you will go about bringing them into good development programs, I think remains to be seen. We certainly are ready and willing to work with them. In a large number of our programs we must rely upon the banks to put up the funds which can be guaranteed by SBA. You also make mention of the need for upgrading the people in your region by providing entrepreneural training, and, particularly, bringing them up to a higher level of performance and income capability. I think this is one area where SBA can also make a contribution. We have Management Assistance Programs where we work with local universities and colleges, putting on programs that are extremely beneficial to small business people, either they are already in business or are small business enterpreneurs who want to go into business. I think this should be given a try. We have found our program for prospective entrepreneurs to be especially useful in areas where we have had defense cutbacks. Entrepreneurs have found that they can get many of the answers that they need by taking this short-term course. You also mentioned the possibility of moving industry into the Ozarks area, particularly, industry that would have an upgrading effect on your economy. Many of these industries, I am sure, will be looking for some support from the Federal government, some assurance that they will be able to maintain their lease obligations. We have a lease guarantee program which is designed to assist the small businessman who generally can't avail himself of facilities comparable to the Triple "A" tenant with the million dollar net worth. This program, of course, does several things. It not only gives that small businessman the opportunity to gain access to a desirable site and facility, it gives the landlord a guarantee on the rental payments that will be accruing to his benefit. It also may furnish the lending institution which has financed the facility a guarantee by the faith and credit of the U.S. Government that payments will be made to the landlord and in turn will be returned to them as mortgage payments. It has, of course, another benefit to the community itself. It enables the community to move forward with meaningful development programs, whether it be an urban community or a rural community. One of the things that seemed to be underplayed in this action plan was that of the development banking facility. No details were furnished as to how this bank would be structured. You mentioned the fact that you would like to get $26 million identified for the development bank. Our experience across the country leads us to believe that many of the state lending authorities, the development banks that do exist, are frustrated with lack of loanable resources, and the lack of people to handle the detailed investigations that go along with development projects. It is a very worthy effort in SBA, and, of course, we can use a development bank as a companion in working out various types of financing projects. You have encouraged cities and towns to support medical facilities, libraries, schools, business enterprises and other types of improvements. Very little has been said, however, 35 about how you go about stimulating this kind of activity. Someone mentioned earlier this morning that maybe the key to this development is that leader down in that small town, or community. How are you going to spark that man? How are you going to make him realize that this is important to his area? We have worked with small communities over a period of years, and we have some examples of things that they have done that are rather outstanding. We certainly recognize the fact that your resource management system is going to provide the type of profile information that these community leaders will need, but beyond that, we see a very definite need for a community organization along the lines of a local economic development corporation. We have recently discussed possibilities of forming a master local development corporation for certain economic development districts. I have worked with Mr. Francis in setting up a master development corporation in Georgia within the last couple weeks. We think this local development corporation can become the vehicle not only for loans; it can become the vehicle for providing management and legal assistance of various types that are needed by a business that is coming into your area. If they have broader areas of jurisdiction, of course, they have a better means for attracting capital from local investors as well as investors in the whole region. We think that these units can generate capital, management capability, and feasibility analyses that will supplement what is already being done by the Commission. Somewhere along the line I think the Commission will have to go right down to the community level and say, we think a soybean plant might be good for your economy; and then who carries the ball? Someone has to be there, someone has to be ready and willing to take the leadership. With these few ideas, we would like to cooperate fully in helping you move forward with the implementation of your plan. MR. STEWART: I just have a couple of comments. I think again this ought to be emphasized, that we really do not see our role as getting down to the local level as an initiative. We feel that to do this would be somewhat duplicating the role of EDA, although this role is coordinated again at the state level. Now, I would agree, if asked, and we can push at the state level, to go down, but again if we are really to go stimulate local leadership, other than just in a seminar way or presentation way, if we are to get down there and sit across the desk, why we are going to have to have so much more staff and more people and bigger administrative budgets that I don't think really this is what we want to do. We would like to point the way and try to point it out to the economic development district directors that maybe you ought to go down and stimulate these guys, because they have all of these resources that they aren't really utilizing. So I think we ought to try to understand, maybe, at least how we consider this. Now, others may consider it otherwise. In fact, when local people come to us for financial support, we refer them to the state because we are really a state-Federal partnership, bringing in and helping locally but not to the point of initiation. You certainly are right, the investment centers and development bank need additional fleshing out, and we are in the process of doing that now, not only based on your comments, but recognizing this was weak. We hope in revision we will be able to detail it down to the point of what our staff coordinated effort is going to be there. 36 MR. RUDDY: The Ozarks plan has also been evaluated within the Department of Commerce. I have asked Bob Murphy of our staff to make that presentation and, Bob, in view of the time and circumstances here, would you just hit the highlights. MR. MURPHY: Do you want to hold off for the Appalachian Commission? They have comments too. MR. RUDDY: I know they do, but I'd like Commerce's comments first. Statement by Department of Commerce MR. MURPHY: Generally speaking, Commerce has reviewed the plan carefully. We have actually prepared 9 reviews of the plan, four by our office and five by the various Bureaus of Commerce. We had two hours with the Commission yesterday, and I think we are all on common ground. Basically, Commerce feels the Federal Register's legal requirements are met by the plan. The plan is especially good in that, as a management document, it starts from assumptions and goals and moves on, albeit somewhat defectively, to final conclusions, and in the process poses a great many economic and other issues for decision makers. We like the way it is practical. For example, in the matter of what industries can give the most to the Ozarks, in terms of value-added, the plan looks internally to industries already there. It has been honest enough to say that we don't really know how to use growth center thinking at the present. And the Commission has also said clearly that their present conclusions and their recommendations for action don't necessarily at the moment flow from their analysis, but they will. And we think all of this is very good. One point in particular is worth mentioning. Yesterday we queried the Commission if they could be more precise in giving us the most efficient of their six proposed goals. I think we came out with the conclusion that perhaps it might be best to have a floating goal, to try one apparently optimal goal and see what are the efficiencies and the inefficiencies. For example, someone today mentioned that by following a given plan and its goal you might get in-migration instead of jobs going to people presently in the region. The feeling yesterday was that the goal should actually be a floating goal, to be reiterated and changed as experience dictates. That is the essence of my comments. MR. RUDDY: Thank you, Bob. All of the commissions are represented here today, and one of them has submitted a statement. Sandra Gruschin. 37 Statement by Appalachian Regional Commission MISS GRUSCHIN: First of all, I would like to thank you for the opportunity to present the views of our staff. They are very complimentary to your contribution to the techniques of regional and economic analysis, particularly, in the calculation of productivity and employment gaps; and they were rather intrigued by the whole approach and would like to try it in some of our own planning efforts. The major problem that they identified has already been discussed, and that is the problem of going from the economic analysis and translating that into provisions for answering the problems of the region. They also commented on the growth center discussion in the plan, and although we understand that this is analytically very difficult to handle, we find that it is essential in our own programming. We have used a simple strategy, and it might not meet some of the analytical levels that you have in your own plan. However, we found that it is invaluable in setting priorities, since there is not enough money to do everything everywhere. It is very important to concentrate on investments so that we can at least put something in the reserve development threshhold, rather than scattering investments so no community gets a significant input of funds. Finally, they commented on the fact that the strategy hierarchies concentrate on rather traditional economic development discussions, and we feel a broader focus might be helpful. We found that the commission projects have little leverage in the direct attraction of industry into communities. Solving the region's problems requires a broadscale, separate investment in human and physical resources, as well as, the facilities needed directly for industrial plants. We have done a considerable amount of research in many areas, especially recently, in human resources and we would be very happy to share these results with you. I remember very early in the discussion Ray Chambers mentioned his interest in health. We have, as you are probably aware, done quite a bit in this field relating to the development of health resources to the economic development, and you may find some of our work in this field helpful. Thank you. MR. RUDDY: And thank you, Sandy. As the grandfather of the Commissions, of course, we can still learn a lot from the Appalachian Commission, and we look forward to working with you in the future. The other Commissions are all represented here, and I would just like to name them. Tom Schweigert, Upper Great Lakes; Fred Steele from Coastal Plains; John Donahue, New England; and Norris Ellertson, the Four Corners. I think it may be significant that the only two Federal Cochairmen who had the courage to come here today are the Upper Great Lakes and Coastal Plains whose plans have already been critiqued by this Council. Are there any comments anyone would like to make before we close the meeting, because we are running over a little bit. 38 We are hoping to have another meeting around September 15. If you will take the revised New England plan with you, we will see you in a little over a month. (Whereupon, at 12:15 p.m., the meeting was closed.) 39 APPENDIX A WRITTEN STATEMENTS OF EXECUTIVE AGENCIES 41 THE APPALACHIAN REGIONAL COMMISSION 1666 CONNECTICUT AVENUE WASHINGTON, D.C. 20235 July 19, 1971 OFFICE OF FEDERAL COCHAIRMAN Honorable Maurice H. Stans Secretary of Commerce Washington, D.C. 20230 Dear Mr. Secretary: Thank you very much for affording us an opportunity to comment on the Ozarks Regional Commission Action Plan . Our comments will, of course, be in a somewhat different vein than those of the Federal agencies, which will be discussing how the Plan affects their programming in the Ozarks Region. As another regional commission, we should confine our remarks to an assessment of how this Plan compares to our own planning activities. We surely face the same analytical problems and have not yet solved many of them. First, the Ozarks Action Plan is a definite contribution to the techniques of regional economic analysis. The Appalachian Regional Commission has been developing a 15-year regional program plan and budget, which attempts to measure the Region's problems, allow goals to be set, calculate achievement gaps, and finally specify alternate program inputs to fill the Region's needs. Although there are some substantial differences in orientation between the Ozarks and the Appalachian approach, we are intrigued by the economic analysis of the Ozarks Plan and may try some similar techniques for the Appalachian Region. The central analytical building block in the Ozarks Plan is the calcula- tion of productivity, income, and employment gaps. This is a good way of identifying the magnitude of the region's economic problems. It has severe limitations, however, in formulating prescriptions for solving the region's problems. Certainly, it is difficult to argue with goal 1. Twenty-four billion dollars in new public and private investments would go a long way toward solving the Ozarks area problems by 1975, but the resulting questions are: How can we bring about this magnitude of invest- ment? And, what are the chances of getting it in competition with all other regions of the United States? Our own planning, let me confess, also has been weak on this latter point. 4: Honorable Maurice H. Stans July 19, 1971 Page 2 The investment, income, or job gaps are also poor techniques for allocating program funds within the region. The location of the problem is not neces- sarily the location of the solution. However, the current Plan does not attempt to use gaps as an allocation device. The report has perhaps too narrow and academic a view of the growth center approach. On page 123, the use of growth centers as an investment strategy is dismissed primarily because it is analytically difficult to handle. We feel this would miss the point. The economic concept of growth poles and the political concept of growth centers are two related but distinct ideas. In the Appalachian Regional Commission's programming, the growth center strategy has been a simple and an invaluable way of setting priorities. There is not enough money to do everything everywhere, so we should make program investments in those places that offer better prospects for success. Identification of those places has never been precise or particularly scientific. The emphasis has been on concentrating investments so that some communities are put over the development threshold, rather than scattering investment so no community gets a significant input of funds. The greatest planning problem the regional commissions face is making the leap from problem analysis to the prescription of solutions. This is a weaker point of the current Ozarks Plan and the current state of the art in our own Commission. What are the linkages among the problem analysis with the goals and the strategy hierarchies and the two-year investment program? This raises the question of the purpose of the Action Plan. If its purpose is to make the case for more Federal program funds for the region, this Plan serves the purpose well. This is a legitimate function for such a report. The Appalachian case was made by the report of the President's Appalachian Regional Commission in 1964. If, however, the purpose is to give Federal agency heads and the governors of the States a notion of the policy options they face in the Ozarks Region and their expected consequences or the relationship between program level and degree of improvement, this report does not fill that need. We are not very far along this road ourselves, but we do believe the primary focus of both State and regional planning should be on the real decisions facing the governments involved. The plans should complement the budget process. Finally, the strategy hierarchies concentrate on industrial development. We believe a broader focus would be helpful. We have found the commissions and commission projects have little leverage in the direct attraction of 43 Honorable Maurice H. Stans July 19, 1971 Page 3 industry into communities. Solving the region's problems requires a broad scale set of investments in human and physical resources as well as the facilities needed directly for industrial plants. We, however, have done a considerable amount of research in many of the strategy fields selected by the Ozarks Commission and would be happy to share the results with you. Sincerely, Donald W. Whitehead Federal Cochairman 44 DEPARTMENT OF AGRICULTURE OFFICE OF THE SECRETARY WASHINGTON. D. C. 20250 July 21, 1971 SUBJECT: Comments on Ozarks Regional Commission Action Plan - May 1, 1 97 1 TO: Frederick H. Eaton, Deputy Director Office of Regional Economic Coordination This plan sets goals related to the improvement of per capita in- come in order to achieve income gap closure for the region and establishes the public and private investment requirements to them in relationship to the rates of public and private investment that may be committed. An heavy infusion of public and private capital is required if the goals of the plan are to be achieved. The strategies for achieving or approaching goals appear to be reasonable and related to the region's interaction with the national economy. Successful implementation will require accept- ance of a longer period of time to attain objectives than is en- visioned. New manufacturing employment opportunities that would be brought into the area along with the secondary activity which they might generate is needed by the region. However, more attention should be given to sustaining present resource-related activities for the longer period. The very valuable forestry resources which are vital to the future well-being of the region's people have been largely overlooked. Estimates of needed forestry program activities in the Ozarks Region for a 20-year period exceed $100 million. Investment in timber management practices would provide an estimated 25,000 man- days of direct employment for local people per million dollars in- vested. In addition, improving the yield and quality of products of the forest and providing for fuller utilization of the forestry resources could provide at least 225 new jobs and $2 million in new income per hundred thousand improved. The soil, water and related land resources which are highly signifi- cant in the Ozarks Region have been given little consideration. Their proper development would add substantially to the economic growth of the region. The plan could be strengthened by including how local groups are to be involved; also, by including how the existing allocation of re- sources could be used more efficiently and effectively. 45 Frederick H. Eaton FHA authorizations for planning grants do not cover the subject of solid waste disposal planning. FHA can, however, make loans and grants for solid waste disposal in addition to other loans and grants for water and sewer systems. Provision to meet the need for solid waste disposal planning funds in the Action Plan by the Ozarks Regional Commission could close this gap and make it possible for FHA to assist more communities within the region. The integrity of the plan needs to be strengthened by including more detail as to how the private sector will be motivated in order to achieve the increased manufacturing employment goals. =^*££- / " THOMAS K. COWDEN Assistant Secretary 46 DEPARTMENT OF THE ARMY WASHINGTON, D.C. 20310 Mr. E. L. Stewart, Jr. Federal Cochairman The Ozarks Regional Commission % '?' J|J[ 1g?'. Department of Commerce Washington, D. C. 20230 Dear Mr. Stewart: We have reviewed the Ozarks Regional Commission Action Plan submitted to the members of the Federal Advisory Council on Regional Economic Development by Mr. Eaton's Memorandum of 25 May 1971. We note that the Action Plan makes reference to the water base for recreation made possible by the number of federally owned reser- voirs existing in the area, and gives due credit to the fact that all but one were constructed by the Corps of Engineers, Department of the Army. The Army, through the Corps, is desirous of working with the Commission in continuing to develop the water resources of the Ozarks Region. The plan makes recommendations for the immediate establishment of a development bank in the region, which is not novel in international development, as pointed out in the plan, but is relatively new for rural development in the United States. We compliment the foresight of the Commission in considering this important source for development loan monies. The plan's authors observe that the Arkansas-Verdigris River Water- way could be utilized in the development of the Ozarks potential locational and transportation resources. The Corps continuing involve- ment in present or future studies of the impact of the project could be of assistance to your Commission. Our field representative, General Parfitt, Division Engineer, U. S. Army Engineer Division, Southwestern, has previously furnished you with detailed substantive comments and editorial suggestions on the Action Plan. In his capacity as a member of the Ozarks Regional Commission, we expect him to work out specific action in that role cooperatively with the Commission in the future. 47 Mr. E. L. Stewart, Jr. We appreciate this additional opportunity to review and comment on the economic development of the Ozarks region. Sincerely, Thaddeus R. Beal Under Secretary of the Army 4S DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE OFFICE OF THE SECRETARY WASHINGTON, DC 20201 JUL 16 1971 Mr. E. L. Stewart, Jr. Federal Co-Chairman The Ozarks Regional Commission Room 209 9-B Department of Commerce Building Washington, D. C. 20230 Dear Mr. Stewart: The final draft of the Ozarks Regional Commission Action Plan has been reviewed here and in our Regional Offices in Dallas and Kansas City. The comments of the Dallas Office were sent directly to you on June 17, 1971. We are listing below additional comments and suggestions made by the Kansas City Office. Human Resource Development Program This is considered a strong feature of the plan. Its goal of a systematic approach to assure that human resources development reflects the real need of the people and industry of the Ozarks is well conceived. The development of the Human Resource Management Institute which had previously been questioned, in its present role is considered an asset of the plan. Health Care Delivery System The system proposed is not considered adequate for the following reasons: 1. There is insufficient indication of what health resources exist in the area and how these can be coordinated and integrated in terms of a system. 2. The services provided are not comprehensive. 3. There is no indication how health problems discovered by the screening will be cared for. There must be a follow-up if there 1s to be a true system. 49 4. There is still some question regarding routine physicals and laboratory studies. They are very costly in terms of pathology found and are of very little value as a free-standing activity. There is greater value in pin-pointing routine physicals to specific segments of a population. 5. The training of sub-professionals without a clearer identification of role does not appear appropriate. There may be certain tasks the physician can be relieved of, but even considering the basic functions he must carry out, the physician manpower needs would be too unrealistically high to accomplish the task. 6. There is a need to identify the health problems and the resources needed to meet them; to identify existing resources and to determine how they can be coordinated. There is also a need to identify problems relating to access, trans- portation and patient flow. Overall, we consider the Plan well conceived and constructed. We are very pleased that as part of the review process a valuable dialogue has been established between the Commission and our Regional Offices. This should prove mutually profitable not only in terms of the current Plan but also in its eventual effectuation. With best wishes, f^J- cxy^-^-4' (Mrs.) Patricia Reilly Hitt Assistant Secretary for Community & Field Services 50 * Inl \ S DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT I'll / WASHINGTON, D. C. 20410 ASSISTANT SECRETARY FOR COMMUNITY PLANNING AND MANAGEMENT JUL 2 7 1971 Mr. E. L. Stewart, Jr. Federal Cochairman Ozarks Regional Commission Department of Commerce Room 2099-B Washington, D. C. 20230 Dear Mr. Stewart: We appreciate the opportunity to review and comment on the Ozarks Regional Commission Action Plan . We are favorably impressed with the quality of the report and its careful development of procedures for selecting among policy alternatives. We offer the following comments: Although coordination with Federal, State, regional and local agencies responsible for planning in the Ozarks region is touched upon briefly in the report, we feel that this issue is vital and should be dealt with in some depth by the Commission. The Commission might consider a separate section which would deal specifically with coordination and implementation pro- cedures. The section might include (a) the extent of co- ordination in development of the action plan; (b) institu- tional barriers to plan implementation and strategy to overcome them; (c) institutional resources for plan implementation and strategy to maximize their effectiveness; (d) consideration of the role of the states in coordinating and executing elements of the plan; (e) effective use of regional and local planning and development resources; and (f) techniques to coordinate and focus all aspects of the development process including such vital components as transportation, education, housing and employment. 51 -2- One of our major concerns is that the Regional Commission exercise its ability to contribute to the development and institutionalization of planning capabilities within its member States and their local jurisdictions. We commend the Commission on the quality of its plan and appreciate the opportunity to review and comment on it. Sincerely, /C^-v^. 52 United States Department of the Interior OFFICE OF THE SECRETARY WASHINGTON, D.C. 20240 JUL 1971 Dear Mr. Stewart: At the request of the Department of Commerce, we have reviewed the Ozarks Regional Commission's Action Plan. As a planning document, the report is not conventional. Many parts of it are innovative and creative, and there is clear evidence of good work. It is difficult to appraise in terms of the traditional planning process involving setting goals, evaluating resources and alternatives, developing programs, setting priorities and scheduling. The report seems to be more of an explanation of a system for preparing a plan rather than a plan itself. The major concern is with method and technique. The technical aspects are well conceived but the reconciliation process does not appear to be effective in terms of a decision stage. The report state succeeding years studies and proj completed during anticipated leve plan. " Were thi tend to be compl useful input to Plan, however, c million in FY 19 In this sense th and the attached s : "The detailed action plan for the is dependent on both the results of ect and program evaluations to be the first and second years, and the 1 of funding commitments to the total s to be the case, our review would ementary and we would hope to provide this plan. The Two-Year Investment alls for a budget increase from $7 71 to $375 million for the two years. e Action Plan is a decision document review construes it as such. The opportunity to review the Action Plan is appreciated. Hopefully our comments are constructive and will be useful in your planning for the regional development of the Ozarks. Sinceraly Deputy Assistant Se / r J J a] J,AL f Mr. E. L. Stewart, Jr. Federal Cochairman Ozarks Regional Commission 12 5 Mart Building Little Rock, Arkansas 72202 Enclosure 53 Department of the Interior Review THE OZARKS REGIONAL COMMISSION ACTION PLAN May 1, 19 71 There are two major parts in this report: A description of a planning process and a Two-Year Investment Plan. There is no clear descriptive or analytical link between the two. The first part is a status report on a system of analysis rather than a plan of action. The short-term "ihvestment~program proposed in the report is not supported by a description of need and its objective. There is a calculus that a certain amount of money is needed to create a certain determined level of jobs and income. By dividing this sum by a number of years, the figure of $37 5 million is provided for the Two-Year Investment Plan. Essentially this money would be invested in industrial sites, roads, training, health facilities, and a development bank. Not enough of the rationale is given to permit an evaluation of this proposal. It may be a poor strategy to begin selecting industrial sites before the detailed plan of action is developed. The suggested systems analysis approach in the ORC Action Plan we consider to be an innovative means of coordinating and optimizing efforts through the wide range of related activities involved in economic development. The system should provide the means of imposing discipline on diverse activities to see that timing and priorities are compatible to program objectives. Complex development programs and their interaction can be simulated so that alternative courses of action can be evaluated to eliminate counterproductive and contradictory programs before funds are wasted and to optimize investment. A plan developed through this systems approach should be a good one and the ORC system seems to be well conceived. The Action Plan recognizes limitations of comprehensive planning and attempts to avoid them. In so doing, it also avoids the advantages of such planning in respect to balanced considerations of social, economic, and physical factors affecting the region and its future. Systems analysis techniques still must consider the resources with which the regional development will be accomplished. These resources are natural, human, and cultural. On balance, consideration of the human and cultural factors was handled satisfactorily in the report. Natural resources evaluation, however, was generally inadequate, superficial and sometimes seemed to lack understanding. Without good, substantive resource evaluation, potentials for development are entirely conjectural. This tendency for conjecture rathar than documentation and analysis is scattered throughout the report. 54 -2- Minerals In our estimate the discussion of bauxite in "Resource Industry Expansion System" is illustrative of this and should be reconsidered. The ORC report calls for increased bauxite production in Arkansas, major producers releasing reserves to possible new producers, tax incentives, and an exploration program. This is to be done so that "some of the many small aluminum producers or potential producers might be induced to locate in the Region..." If Arkansas bauxite deposits were to supply all U.S. requirements, they would be exhausted in 3 to 5 years. At the reduced rate of current mining, they will probably last 30 years before exhaustion. In terms of employment and the wise use of mineral resources , an increase of mining is not a sound long-term solution. Present significant investments in the State are based on logical use of bauxite on a long-term basis. While it is true that new deposits of bauxite may be found in the future, those deposits are likely to be small and deeply buried. All of the most favorable areas for bauxite in Arkansas have already been explored by the Geological Survey and the Bureau of Mines. The idea of encouraging small aluminum producers is contrary to existing trends and economic forces. The scale of the operations from bauxite-alumina-aluminum involves massive investments and would be highly competitive for a small producer entering the field. Many of the huge aluminum facilities at various places in the world are operated by consortia which are owned by several of the major corporations. Similar criticism is levied against the unsupported argument that the presence of lead resources might induce storage battery production. Locational analysis of the storage battery industry would confirm or deny the premise. As it is, the discussion is pure supposition and this sort of thing is detrimental to the integrity of the report. Under construction materials it is stated that "efforts should be made ... to increase construction activity within the Region...' The construction industry reacts to other forces and is not a causitive force. Economic growth will cause the construction industry to grow but the construction industry in itself will not cause economic growth in the long run (except as caused by a program of public expenditure) . 55 -3- Water and Power It is noted that the availability of adequate supplies of water and power are not discussed in the report. Recreation The emphasis of the recreation-related concerns of the report casts recreation in terms of tourism development and personal income generated by the tourist industry. While these are important considerations to economic development, xne report would have been strengthened by an improved consideration of recreation, open space, conservation practices, community development, and other factors influencing the quality of life of the area and their relation to attracting managerial and professional people, skilled workers, and entrepreneurs. The potential for 62,000 new jobs in the leisure industry by 19 75 presumably is considered as an opportunity rather than a plan for now. To' carry out such a development will require tremendous monetary expenditures and a very close degree of coordination. The report recognizes the need for this coordination, but no mention is made of coordination with the State comprehensive outdoor recreation plans, although State parks, recreation areas, monuments, fishing and hunting areas, and Oklahoma's State lodges, which are unique to this area, are mentioned. Greater consideration of the State plans would have strengthened the recreation and tourism aspects as a guide to tourism and investment. In addition, a total of 26 leisure and tourism development projects estimated to cost over $38 million are suggested in the Two-Year Investment Plan. The relation of these projects to the State outdoor recreation plans of the individual States could not be determined from the information supplied. Interior programs are considered by way of a brief description of existing Federal outdoor recreation resources and facilities, including national parks, monuments, forests, wildlife areas, recreation areas, the Ozark National Scenic Riverway, and Federal reservoirs. Water and related land resources projects in construction or in the planning stages are cited. It would be more accurate if the title on page 80 was changed from "National Recreation Areas" to "Federal Reservoir Recreation Areas" since technically national recreation areas are only those established by Act of Congress. 56 -4- By way of information, legislative proposals to establish a Buffalo National River have been introduced in the 91st and 92nd Congresses. The College of Business Administration of the University of Arkansas in a 19 6 8 study showed the economic benefits that would result from protecting the Buffalo River and developing it for public recreational uses. Environment The costs of development in terms of its effects on the environment and the lives of the citizens of the Ozark region are not properly considered. Clearer evidence is needed to show that qualitative factors of the environment have been satisfactorily considered in the early stages of planning for economic development. We assume that the relative silence concerning resource planning and environmental protection stems from the fact that planning is still in the conceptual stage. It is our view that all projects to implement the development goal should be undertaken with respect for natural and cultural resources and with full knowledge of their ecological consequences. The proposal for reclaiming strip-mined land by restoring the land where grazing could take place is certainly environmentally desirable but it is notable as an exception. As conceived in the ORC report losses and environmental impacts resulting from proposed projects are not considered in the benefit-cost analysis. Perhaps the new system of accounts under consideration for use in water and related land planning by the Water Resources Council can be used in conjunction with the present system so that net efficiency gains can be evaluated in relation to aspects of social well-being, environmental considerations, and regional development. Transportation $800 million is proposed for arterial corridors alone. The relationship of benefits to costs are not shown. The generalized tourist interest would not be sufficient for this level of expenditure and the other interests are vague and unquantif ied . The question is what will the roads do specifically to serve regional development in measured monetary terms and what will they cost in terms of both dollars and the environment. 57 ■5- While the report calls for an integrated transportation, the relationship of the proposed system to the railroad system is ignored. This reflects not only on transportation planning but also on the selection of industrial sites. The report describes a study that favorably evaluated potentials for international trade and associated services resulting from the inland waterway. The expectation that making the Arkansas River navigable will cause an internationalization of the Ozark economy does not deserve the same developmental efforts as other parts of the plan. It should be remembered that there are 25,000 miles of navigable waterways in the United States that are lined with economic centers that are not developing as international trade zones. It is the demand for or production of commodities which causes trade. The materials moving on the Arkansas are rock, sand and gravel, bauxite, iron and steel, chemicals, coal, and grain. These would not appear to be commodities that would lend themselves to a trade zone, with its associated finance, communication and service industries. Biomedical health products and technology will not move by barge. The containerization and the LASH system still must relate to an economic good. The question is what is it that would be produced that would be economically competitive. We suggest a very low priority on this aspect of regional development. The Ozarks are not like Hawaii and Puerto Rico. These areas have direct access to maritime shipping - unlike being in the center of a continental land mass. Development Timing The selection of the time period for achieving developmental goals is important in terms of social well-being as well as financial considerations. Improperly planned and implemented programs could have seriously harmful effects on the existing economy and the social fabric. Without careful preparation, large-scale expenditure made too soon would give different results than intended. Until the labor force resident to the area are prepared in advance (along with industry and other productive factors) large expenditures might simply result in an inmigration of labor force and other factors with relatively little impact on regional development of local resources. Value Added Value added per man-hour is used as a criteria for selecting industries for promoting jobs and income. The argument for this needs to be clarified. There is a high correlation between capital intensity of an industry and the value added per man-hour. The argument would then seem to run that largely capital intensive industries should be sought for Ozark development. This is contrary to job creation. 5X -6- Furthermore , a labor intensive industry might be desirable if productivity of the Ozarks work force were higher than competing regions. This would mean they would be paid more than less productive workers in other areas. On the other hand, a more capital intensive industry, whose combination of production factors was less favorable than other areas, might have a lower wage than competition. The relative mix of all production factors including the resource base should be considered as •well as value added per man-hour. All value-added cannot be attributed to labor nor consequently will all income. Changes in value-added over time, however, are useful for measuring changes in productivity per worker. In general highly capital intensive industries do pay more than less intensive ones but this factor is only one of several criteria useful for selecting candidate industries for the region. Coordination Not enough specifics were supplied to determine whether the Action Plan is in conflict or accord with Interior programs , policies, and priorities. While the report cites the necessity to develop coordination among a wide variety of agencies, it is not apparent that the contents of the Action Plan were developed through any such level of coordination. At this juncture in plan development, coordination between the Department of the Interior and ORC has not been effective. 59 U.S. DEPARTMENT OF LABOR Office of the Secretary WASHINGTON JUN 1 6 1971 Mr. E. L. Stewart Federal Cochairman Ozarks Regional Commission Department of Commerce - Room 2099B Washington, D. C. 20230 Dear Mr. Stewart: We have reviewed the comprehensive, long-range Action Plan of the Ozarks Regional Commission (ORC) as requested by Fred Eaton. The Department of Labor believes that through inter-State coordination and cooperation such as this by Kansas, Arkansas, Missouri and Oklahoma, real progress can be made to achieve the economic development goals of the region. Because a summary of the Plan was intentionally not included in this step of the review process, we will outline what we see as the essentials of this long-range Plan. This is an Action Plan in which economic development is defined in terms of changing the productive arrangement in the region to the end result of raising per capita income. The region suffers from high out-migration in the productive age groups, lower labor participation rates, an unfavorable industrial mix, a widening income gap, lower wages and productivity and less investment in public amenities than the national average. To change these factors, ORC's objective is to raise the median family income of Ozarks residents--to close the income gap, the difference between per capita personal income of the region and that of the United States—by improved education, transportation, industrial development, social services, public health, recreation, capital improve- ment, water and natural resources development, agriculture and public safety. A program of economic development embodying the above elements would be accomplished by implementing one of the goals set by the ORC. Goal 1 would require $4.9 billion in extra-ordinary investment of public funds to close 100 percent of the income gap by 1975. Goal 6 would require $2.7 billion, the smallest investment, to close 50 percent of the 60 2. income gap by 1980. It is estimated this would earn and save $13.5 billion in new tax revenues between 1970-80. An initial two-year program placing emphasis on specific public facilities projects presented in the 1970 State Investment Plans of Arkansas, Kansas, Missouri and Oklahoma would require $204 million. The funds would either be placed solely in ORC to invest itself, or would be made available for ORC supervision. The Plan states that goal choices will be dependent on the rate of real national growth the Administration and Congress would like to achieve. The investment would be essentially Federal. On Page 348, in discussing increasing difficulty of State and local governments in the Ozarks to make funds available for significant, new public economic growth and development investments, the statement is made, "This difficulty could be eased greatly by increasing Federal participation to a level commensurate with national goals--perhaps even to 100 percent in top priority situations." In discussing the two-year program, the statement is made that this program "presupposes that the Federal share from all agencies participating will be 90 percent." We would like to point out that the pending Manpower Revenue Sharing Act and Welfare Reform Act, when and if enacted, will provide sub- stantial additional funds to the States and areas to help meet their needs for expanded manpower programs, one aspect of the development Plan. However, the heavy reliance on Federal expenditures should be reexamined in line with the commitments State and local governments are prepared to make for economic development programs. The Plan states any additional funds would be used in the areas of employment development, resource development, human resource development, environmental development and coordination and management. If the projects outlined in this Action Plan are those which Ozarks citizens feel can best meet their needs and expectations, then the role of ORC is to seek ways to best implement the Plan and to provide expertise as to what assistance our respective Departments can provide. However, it is not clear what role civic and community groups in the Ozarks play in developing the Action Plan which will profoundly affect them. We would also like to see a more clearly defined coordination function that has been undertaken with other planning activities within the Department of Labor. For example, the State Employment Service Agencies prepare annual plans describing what manpower services are needed in their States. In addition, the Department of Labor participates in State and Area Cooperative Manpower Planning System (CAMPS) Committees. While we understand Area CAMPS representatives are included on the ORC, we are unclear whether they had any input to the Action Plan or whether CRC had the opportunity to provide input to the CAMPS annual plans, rfe believe such mutual coordination to be vital. 61 3. After reviewing the Plan, we find no clear indication of the manpower role under any of the six proposed Goals. While we are aware that the Plan is an integrated plan aimed at helping people in the Ozarks, the Department of Labor's concern is primarily in the employment and human resources development aspects of the Plan. The Plan states, on Page 217, "the region offers unsatisfactory employment opportunity. There are too few jobs and they are not good enough. The Employment Development Program element encompasses projects aimed at directly improving the quality and quantity of the work available to Ozark residents." When the Plan mentions employment development, it is in terms of invest- ment incentives, operation of contract manufacturing, new product and high technology systems and industry-related facilities. For human resource development, the Plan discusses selected human resource development projects to overcome the under training, underemployment and underutilization of Ozarks residents: a Human Resources Management Information System, a Human Resources Management Institute, a College Management Information System, and an Occupational Training Information System. How these systems tie into or make use of such DOL systems such as Labor Market Information, Job Banks, etc., is not specified. We feel this should be done to avoid duplication of efforts between coopera- ting agencies. We also think it would be beneficial to explore how our manpower training and work experience programs- -MDT A Institutional, Job Opportunities in the Business Sector and JOBS Optional, Public Service Careers, Work Incentive Program, Neighborhood Youth Corps, Job Corps, Operation Mainstream or the Concentrated Employment Program might be utilized. In sum, our reaction to this Plan is that more emphasis should be placed on the services that will be provided and the benefits which should be expected to accrue to Ozarks residents. A larger proportion of the funds should be allocated to human resources development. The role of the Federal agencies which may be expected to help to implement this Plan should be made clear, as well as the role and commitment expected of State and local government officials in supporting the Plan. We look forward to seeing comments of other reviewers and to meeting with you to work to maximize the effectiveness of this planning effort and translate it into affirmative action to meet the needs of the Ozarks residents. Sincerely, t Michael Moskow Deputy Under Secretary for Economic Affairs and Program Coordination 62 OFFICE OF THE SECRETARY OF TRANSPORTATION WASHINGTON, D.C. 20590 JS ASSISTANT SECRETARY Mr. E. L. Stewart, Jr. '■ '- ; •;, |(Vg|,; Federal Co-chairman Ozarks Regional Commission 2000 L Street, N.W. Washington, D.C. 20230 Dear Mr. Stewart: This is in response to Mr. Eaton's memorandum of May 25 and Secretary Stans' memorandum of June 29 to Secretary Volpe concerning the Depart- ment of Transportation review of the May 1, 1971 Action Plan of the Ozarks Regional Commission. General . At the outset, we would like to state that the Department of Transportation is in full agreement with the Action Plan's goal of narrow- ing the gap between the income level prevailing in the Ozarks and the national average through improved productivity. The pragmatic approach to planning strategy (Chapter III) is commendable in its recognition of the distinctive features of the Region and of the forms of economic and social activity which the resources of the Region can be expected to support. Although we recognize the conceptual difficulties in establishing criteria for "growth centers, " we were disappointed to find that the Action Plan contains neither designations of "growth centers" nor procedures for making such designations. In this connection, DOT has suggested in its commentary on the transportation aspects of earlier plans reviewed by the Federal Advisory Council on Regional Economic Development that a description of existing intermodal transportation facilities be included in the regional plan to show their linkages with the "growth centers" as well as to the hinterland. Such a document would show the missing transpor- tation links and the supporting criteria would indicate that if a missing transportation link were created, it would have the potential for stimulating the socio-economic development. In essence, we would like to see some reasonable assurance that transportation investment will promote long term development for the area rather than provide only temporary employ- ment in the construction of highways or other transportation facilities. 63 The Department of Transportation feels that, in general, only limited reliance should be placed upon transportation investment as a stimulus for economic growth. In a mature economy such as the United States, transportation infrastructure is believed to be playing a declining role in determining the location of economic activity. Among the reasons for this trend are: the decreasing percentage of industrial and economic activity tied to raw material locations; the increasing importance of market-oriented service employment; the increasing complexity of indus- trial production; and the increasing demand for professional and mana- gerial skills which require a metropolitan setting to function efficiently. Highways . The highway aspect of the Plan recommends both a corridor system and an Ozarks access highway system. Although the two recom- mended systems are highly ambitious, they are consistent with the highway planning of the concerned State highway departments and the Federal High- way Administration. It should be noted that State highway departments normally consider statewide highway needs rather than regional needs in the development of their regular programs and in determining the priority for such improvements. It is probable that highway projects in the less developed areas of the Ozarks will receive low priority under the present availability of funds and that additional funds will be needed if the Commis- sion expects to develop the highway projects described in the Action Plan at a date earlier than they would be completed under regular programs. Hence, we remain concerned because the Action Plan does not establish priorities for the construction of these highway projects. Railroads. The Federal Railroad Administration was troubled by the absence of an analysis of railroad freight transportation in the Action Plan. The only reference to rail transportation was found on page 308: "A basic assumption in recommending increased functions for the motor freight industry was that the railroads would follow a competitive and generally similar pattern of develop- ment. Despite competition, both experience major problems in the maintenance of, and competition on, low yield routes. " This is interpreted to mean that both motor freight terminals and rail-way terminals would follow similar patterns of development and we question the logic of such a premise. From it, one could conclude that expanding the transportation system for a competitive mode in excess of the needs of the potential market will spur growth to the point where all modes will operate profitably. This is not demonstrable from our highway expansion 64 experience in Appalachia. In connection with this, the Commission might want to assess the costs and benefits of relocating railyards and developing intermodal transfer facilities in rural areas or in any other place where rail activity might enhance regional development. Hence, we feel that in view of the continuing importance of rail transportation to the Region, future planning should take a more balanced view of road and rail trans- port improvements as factors in regional economic development. Aviation . The air transportation aspect of the Action Plan is not provided in sufficient detail to permit a full evaluation. The Plan makes reference to a study that describes airport construction needed during 1968-72, but those proposals are not included in the Action Plan. In Chapter V, where a two-year investment requirement is considered, mention is made of 25 airport projects at a cost of $15,313,200, but it is impossible to assign priorities because they are identified only by State. However, the Action Plan endorses all recommended airport development contained in the National Airport System Plan; and in this sense the Action Plan complements FAA planning. Our FAA Southwest Regional Office has made three comments: (1) the Commission's airport system for Oklahoma should be derived from the current State of Oklahoma Airport Plan; (2) the State of Arkansas Air- port Plan should be updated; and (3) the Southwest Regional Office intends to encourage Arkansas to revise the plan; and perhaps this might be accom- plished under FAA's Planning Grant Program which provides two-thirds of the cost of such a study on a matching funds basis. Inland Waterways . We are interested in the development possibilities of the newly opened Arkansas waterway. It is our understanding that the State of Arkansas has attracted a bauxite plant through this new access to barge transportation. Also, the potentialities for LASH (lighter aboard ship) offers promise for expanding international trade. In this connection, the U.S. Coast Guard stands ready to work with the Commission in the areas of port and vessel safety, as well as in providing additional aids to navigation when the need arises. In regard to your hovercraft discussion, the Commission may find that especially marked channels would probably become necessary to accommodate such craft and that because of their high operating costs, hardheaded economic feasibility studies should precede any demonstration programs. 65 In conclusion, we support the purpose of the Action Plan and appreciate this opportunity to review its findings and recommendations. Sincerely, Robert Henri Binder Acting Assistant Secretary for Policy and International Affairs cc: Mr. Fred Eaton, OREC, DOC 66 ENVIRONMENTAL PROTECTION AGENCY WASHINGTON, D.C. 20460 office of the Administrator Mr. E. L. Stewart, Jr. Cochairman The Ozarks Regional Commission 125 Mart Building Little Rock, Arkansas 72202 Dear Mr. Stewart: We have reviewed the Ozarks Regional Commission Action Plan as requested, in Secretary Maurice H. Stans ' letter of May 28, 1971, and have the following comments to offer. The study does present general guidelines for the orderly development of the Ozarks in several areas with particular emphasis on natural resource and human resource development. A substantial part of the report is devoted to the present state of each segment of the economy as viewed from a regional viewpoint. It does offer a starting point for development of more discrete, action oriented, plans. In our review we placed, particular emphasis on the environmental related, aspects of the study. Although the primary goal of the Ozarks Regional Commission is acceleration of the economic growth of the region, care must be given to maintaining and enhancing the environment which, in the Ozarks, is an economic asset whose wise use and. development can contribute to the region's growth. The study treats the environmental concerns rather lightly. As an example it does not provide sufficient information in the resource development strategy outlined, in the report to evaluate the environmental trade- offs which must be considered. A full recognition of the economic and. environmental costs associated with certain phases of resource developrre nt might result in a changing of the proposed developmental strategy. We believe the early institution of an ecological concern should be a paramount study principle and its application to every 67 aspect of the study is required. The economic goals outlined in the study (industry, mining, agriculture) embrace not only a brighter economic future, but potential degradation of the natural habitat as well. Specific examples of the need to expand the study as it relates to environmental concerns include: 1. The "Outline of Strategy Hierarchies", p. 176, Roman IV, is far too brief as regards "Environmental Enhancement" and should be expanded to include an assessment viewed in the light of possible ecological disturbance, of each step to be undertaken. The program element number Al under IV ( "Identify relative importance of environmental condition in industrial location decision") is a key element in this regard. 2. On P. 192, - it is proposed to develop industries based, on high-quality ground water in limestone regions. The potential environmental dangers associated with this are apparent and must be given additional consideration. 3. The promise of economic growth occurring in response to the Arkansas - Verdigris Waterway System (p. 282) carries with it a grave responsibility to insure that no capricious misuse of the flood plain be fostered. Much of the natural purpose of the flood plain has already been lost as a result of channelization. Only through thoughtful development can irreparable damage to a valuable natural resource be fore- stalled. In addition, serious pollution problems (sewage, oil, chemical spills, etc) may well result from increased water traffic. 4. Highway construction (p. 286) requires special care to assure that natural drainage systems will not be disturbed and that undue siltation does not result. The concerned States and the Federal government have worked closely in developing air and water quality standards to protect the quality of the environment in the Ozarks . The study is silent regarding the standards although these standards will 68 have an obvious influence on certain development activities addressed in the report. In this regard both the State agencies concerned with environmental programs and the Environmental Protection Agency regional offices have a continuing interest in the Commission's plans. We appreciate the opportunity to comment on the report and the invitation to the Federal Advisory Council on Regional Economic Development. We hope our comments will be helpful Sincerely yours, Assistant Administrator for Media Programs 69 EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF ECONOMIC Washington, d.c. 20506 OPPORTUNITY r> wo >£3 The Honorable Maurice Stans U1 Secretary, Department of Commerce Department of Commerce Zi: Washington, D.C. 20230 _£. Dear Mr. Stans: 0\ ^o m We have reviewed the Ozarks Regional Commission Action Plan , dated May 1, 1971. A copy of our report is attached. The most important points can be summarized as follows: 1. It is not totally clear how the goal of the Commission, as formu- lated in the Plan , relates to the national objective of eliminating poverty. Obviously this has policy implications of great interest to the Office of Economic Opportunity. 2. The presentation in the crucial area of capital investment is not clear enough to allow a complete evaluation of some of the technical aspects of the Plan . 3. The Plan as presented does not display sufficient information to justify some of the Commission's proposed major allocations of funds. 4. The Office of Economic Opportunity wishes to cooperate fully with the Ozarks Regional Commission, not only through exercises such as these, but also through the involvement of OEO supported Community Action Agencies and Community Development Corporations. We are convinced of the importance of people in a community or region planning their own future, and we welcome the efforts of the Ozarks Commission in this field. Sincerely, ^JO- phillip v. Sanchez Assistant Director, Operations 70 ANALYSIS OF THE OZARKS REGIONAL COMMISSION'S ACTION PLAN OF MAY 1971 The Office of Economic Opportunity has carefully reviewed the Action Plan of the Ozarks Regional Commission. The Plan in general demonstrates a high degree of competence and sophistication. However, it is silent or vague on a number of matters crucial to a full understanding of the Regional Commission's thinking and planning and until these points are made clear 0E0 will not be able to finally formulate its position. The first problem involves the Commission's goal of a certain desired "quality of life" for the region. We are worried that, in a pursuit of a statistical equality in overall income indicators, the actual state of the people's welfare be ignored. We do note that the Plan makes clear a realization that measuring the drive for that "quality of life" by the change in regional per capita income relative to U.S. per capita income is simply a computational convenience. The Commission is not explicit as to what would really constitute an acceptable quality of life for the residents of the region, and we would strongly urge the absence of poverty as an essential component. Note that these two measures of an area's quality of life--per capita income and incidence of poverty — are not necessarily identical nor incompatible. But the fact is that the very existence of both 0E0 and the Regional Commissions is a reflection of an awareness that high and growing national income statistics mask the existence of unconscionable poverty concentrated in certain groups and regions of the Nation. There is probably no real difference among us on this issue. Indeed, with the Ozarks Commission's existence and influence predicated on a claim in equity for the less advantaged on the rest of the country, we would hardly expect the Commission in going about its work to rely exclusively on a laissez-faire, a rising tide raises all ships', type of philosophy. A major problem presents itself in the part following the Plan's discussion of the region's overall economy in the forecast of investment capital require- ments. We found that the discussion of the "additional capital required" to achieve various alternative goals could not be evaluated since no projections were given for the "normal" new capital investments. In fact, it is not until the last section of the Plan that we even see that the stated amounts of additional capital required are cumulative totals rather than yearly figures. We do not find the implied ratio of additional Federal capital contributions to additional private investment to be obviously correct and we would prefer to see some evidence or argument in support of it. 71 Another unfortunate aspect of this omission is that due to it we were unable to reconstruct and check the Commission's estimates and projections of population, employment, and income. Thus, at this point in our review we are unable to judge either the reasonableness of the estimated "need" for new investment capital or the reality of expecting the amounts to be forthcoming. There then remains what the Regional Commission correctly recognizes as the crucial problem: how to allocate the government funds so as to best catalyze and direct private investment for developing the economy of the region. But this is actually two questions; how to go about deciding on the optimal allocation of funds and what actual allocation is optimal. The Commission's answer to the first is far more persuasive than its answer to the second, and at this stage this is as it should be. The formation of the Regional Commission and its thinking and studying which went into formulating the Plan represent essential steps in the process of deciding how best to influence the region's economic development. But the Commission is not and probably cannot be ready yet to take the last step, to say "if so many dollars of federal money are spent here and here and here, there will be set in motion a train of events which will eliminate poverty or raise the region's per capita income to that of the United States, or reach some other desired goal." Therefore the commission Plan includes a group of related intermediate steps. First, there is outlined a procedure by which strategies for obtaining the goal (the most important evidently being "develop employment opportunities to generate personal income through wages and salaries") will be pursued. Although there is not a timetable, one can infer that to some extent the pursuit of these strategies will be dependent on two other elements of the plan: coordination of government and private investment activities, and the establishment and operation of a management information system. The existence of the Ozarks Regional Commission is, of course, a partial response to the need for coordination, as is the existence of the Federal Advisory Council. A Regional Resource Management Information System is designed to develop the data essential to rational and responsible planning. It should be noted that the Commission has done studies on a variety of subjects relating to its proposed strategies. These have given the ommission the confidence to state in some detail its recommendation on certain subjects, for example, highway construction. In some cases actual dollar amounts have 72 been set. However, 0E0 feels unable to give even a general endorsement to these projects, and in fact suggests that some of them be held in obeyance until more progress has been made in data assimilation and organizational coordination. One major factor which impels us to take this view is the fact that while the Arkansas River Project represents a $1.2 billion investment for developing the economy of the area, only scant mention of it is made in the Plan . Although we are certain that the Commission did in fact take full account of the project, the very magnitude of the expenditure (compared, for example, to the total 0E0 budget) makes necessary for our understanding of the Region a more explicit discussion of the waterway's merits and effects. The Office of Economic Opportunity funds Community Action Agencies in most of the counties of the Ozarks Region. Experienced in dealing with the very poverty which the Regional Commission wishes to do away with, these agencies are not only an invaluable source of information regarding the poor of the Ozarks, but also represent possible partners of the Commission in allocating resources. 0E0 also supports the Northeast Oklahoma Community Development Corporation, a community controlled corporation specializing in investing venture capital in productive facilities to provide jobs and income to the poor. Given the organization's experience in this field, the Regional Commission may wish to consider some special form of cooperation with it. We note that the Four Corners Regional Commission provides financial assistance to an OEO-supported Community Development Corporation in New Mexico. In conclusion, we would like to affirm our belief that the Plan , submitted by the Ozarks Regional Commission displays a high degree of knowledge and dedication to purpose by the commission and its staff. It commands a similar dedication from the members of the Federal Advisory Commission. It is for this reason we have ventured what criticisms we have, and we pledge our continued cooperation with the work of the Commission in developing the productive resources of the Ozarks for the benefit of all the people, particularly the poor of the Region. ^4— PHILLIP V„ 'SANCHEZ Assistant Director, Operations 73 > *ys /A U.S. GOVERNMENT Small Business Administration Washington, D.C. 20416 OFFICE OF THE ADMINISTRATOR JUL 2 7 1971 Honorable E. L. Stewart, Jr. Federal Co-Chairman Ozarks Regional Commission Plan U.S. Department of Commerce Washington, D.C. 20230 Dear Mr. Stewart: We have reviewed the Ozarks Regional Commission Action Plan submitted to us by Fred Eaton, Deputy Director, Office of Regional Economic Coordination, U.S. Department of Commerce. The Commission suggests a variety of economic and social innovations to improve the economy of the Ozarks Region. Through a "planning process" the Commission has developed an Action Plan based upon a systems approach . Within our Agency, special attention may be given to your employment development system. The Commission plans to create and implement programs to develop latent entrepreneurial talent. The Small Business Administration can and has improved the environment for entrepreneurial innovation in many areas through financial and technical assistance programs. Business and development loans, along with management counseling, can often be the key to success of new business ventures and upgrading of existing businesses. Efforts on the part of the Commission to attract growth and highly technical industries is also of special interest to SBA. One of the inducements for a prospective investor or lending institution may take the form of an SBA lease guarantee. Under this program we closely examine the location factors to determine the risk of the venture proposed and critically appraise the management of the business concern which is to be assisted. We feel that the Applied Development Systems Contract will provide a better selection of businesses to locate in the Ozarks Region. 74 The capital system discussed, unfortunately, does not furnish details as to plans for raising development funds. We recognize the merit in setting up a development bank, but we have only had limited opportunity to observe development banks in action. Generally, most state development programs have suffered from limitations imposed on their loanable resources and qualified staffing to handle the research characteristic of development lending. We note that ORC will encourage towns and cities to develop their capabilities to support medical services, libraries, schools, airports, technical services, industrial parks, and other private service operations. We are also pleased that a Regional Resources Management Information System is proposed which would serve to update community profile information on a regular basis and evaluate data on a variety of development opportunities. Nowhere do we find, however, a recommended plan of action on the part of the small community. It has been our experience that such community action programs can play a vital role in correcting economic conditions in a region. Our experience with communities leads us to believe that a local economic development corporation is an essential ingredient for long-range planning. Through this type of organization, the community can provide for market analyses, management and technical assistance, legal services, business opportunity research, and of course, financial assistance. We have recently agreed to enter- tain a request for a master local economic development district. We are hopeful that this innovation in development lending may lead to greater financial capacity and direction of economic growth within multicounty districts. Implementation of the Action Plan will, of course, be dependent upon the cooperation given by Federal, state, and local governments. You may be assured that SBA will give its fullest possible support to your program. Sincerely, Anthony G. Chase Deputy Administrator 75 APPENDIX B WRITTEN STATEMENTS OF COMMERCE I NT R AD EP ARTM E NT A L COMMITTEE 77 U.S. DEPARTMENT OF COMMERCE Office of the Secretary Washington, D.C. 20230 July 13, 1971 MEMORANDUM Review of Revised Ozarks Regional Commission Action Plan (May 1, 1971) Anthony Radspieler, OREC The above revised Ozarks Action Plan represents a significant improvement over the earlier April 1970 version. Major inconsistencies and short-comings of substance have been removed. The present document is replete with charts, statistical tables, diagrams, maps and other visual aids permitting the reader to gain a more complete understanding of the complex interrelationships of the Ozarks regional economic development situation. Chapter I (Introduction and Overview ) furnishes useful introductory material with an explanation of the regional process and a glossary of terms useful for both the layman and professional. Chapter II (Economic, Physical and Social Survey of the Region ) provides a detailed description of the historical and present economic situation in the Region. A liberal supply of statistical tables and graphical presentations is included to provide clarity and ease of compre- hension. The employment and income statistics and the sector -by- sector industry analysis in this chapter should prove helpful for obtaining insight of the regional economic process. As noted on page 28 of the Action Plan , "The design of a development program for the region to forge ahead rapidly calls for an appreciation of the nature of the potentials and inhibiting factors in the region. " An editorial suggestion concerns the appropriateness of placing Section D (Selected Issues in Regional Development) of Chapter II, where it is presently located. It is recommended that Section D be placed in more strategic se- quence, such as perhaps within Chapter I, or as an introduction to Chapter III ( Planning and Goals for Regional Economic Development ). Chapter III contains a wealth of very useful material for reference, both of immediate relevance to the Ozarks regional development effort, and in terms of long range planning. Tables 3. 3 and 3. 4 (pages 144/145) showing alternatave goals and hypothetical growth rates and projections of current trends represent an excellent guide to develop a realistic action plan. Further, the implication 78 and interpretation of these alternative projections (p. 164 ff. ) and the identification of industries with comparative cost advantage (i. e. , as com- pared with other areas of the U.S. ) suggests a useful approach toward sound economic development. The comparative advantage thesis, however, might be pursued somewhat further. In this respect the reviewer concurs with the Office of Business Economics (Regional Economics Division) review of June 21, 1971, suggesting a more penetrating analysis as to "why these industries have not developed in the past and why , in light of this failure to develop, they can be expected to develop in the future. " The practical orientation of the Action Plan is enhanced by the space devoted to coordination procedures (Section C, p. 191 ff. ) and the stress laid on proper coordination to carry out a successful regional economic development program. Section D (p. 198) provides a summary of the pros and cons of high technology, s_ome of which might be detailed in greater depth to enhance its usefulness. /All too often the negative aspects of high technology are ignored in an attempt to embrace the new, yet often impractical when dealing with the unique charac- teristics (e.g., depletion of specific resources, high unemployment, under- employment) of the economically lagging regions in the United States_y The Ozarks Action Plan as presented in Chapter IV (Action Plan ) adopts the "systems approach" to stress the interaction and the complex economic interrelationships which exist within the Ozarks Region. Employment and job creation is correctly linked to the various economic sectors of the Region. A question arises in Paragraph 3 of Page 204: "Migration is defined as a mixture of employment and demography, and value added is defined as a mixture of labor skills and capital investment. " To avoid confusion, the aforementioned statement might be reformulated or further clarified. The revised Ozarks Action Plan (Pages 210 ff. ) makes judicious use of its management information research which was generated during the last several years as part of the Ozarks Regional Commission research program. In this respect the Action Plan adopts an organic approach, essential to the economic development problem. Chapter V (Policy Considerations, Investment Requirements, and Returns) relates policy and alternative economic plans to the real world. This together with considered value judgments as to which course is most and/or least desirable is a most useful end-product of the Ozarks Action Plan. Although the last word on this subject has not yet been written, the emphasis on job creation appears to be a sound approach. The various investment 79 plans as presented, however, require additional justification and backup. As noted in the OBE review of this Plan (June 21, 1971), "there is the implication that if this capital is made available, the programmed invest- ment will follow. This is too simple an approach. The major problem in implementing the plan will be to induce the industries sought after actually to locate in the Ozarks. " To summarize -- the current Ozarks Plan contains a wealth of information which should facilitate the forward planning effort of that Region for the years ahead. 80 U.S. DEPARTMENT OF COMMERCE Office of the Secretary Washington, D.C. 20230 June 23, 1971 MEMORANDUM FOR FREDERICK H. EATON FROM: Alexander N. Christakis $JC SUBJECT: Review of the Ozarks Regional Commission Action Plan (May 1, 1971) The Ozarks Regional Commission (ORC) Action Plan appears to be a document whose objectives may be described as follows: 1. To stimulate and stretch the imagination of the reader. 2. To clarify, define, name, expound, and argue major issues of economic development of the Region. 3. To design and analyze alternative policy-action configurations. 4. To create simplified models (paradigms), heuristic expositions and frameworks. 5. To improve intellectual communication and cooperation among the various participants of the economic development process through the use of analytic techniques, precise concepts, and suitable language. To plan the future development of a Region is, at the simplest level, difficult because important aspects of the future are not only unknown but unthought of. The decision-maker or planner, though knowing his own inadequacy as well as the inadequacy of his advisors, must nevertheless 81 2 make decisions now which have implications on the future quality of life of the Region. The possibilities for the future depend upon an under- standing of the present and past, but they also involve the making of imaginative leaps as well as extrapolations. The intent of the Ozarks Action Plan, as outlined in Chapter IV, is: "To provide a systems approach to economic development as a desirable and effective management tool to meet the goal of closing the gap between per capita income in the Region and the Nation. The implementation of this Action Plan is dependent upon national policy decisions and cooperative effort by national, state and local govern- ments as those governmental levels become involved with private enterprise to create the desired economic development. " It appears that ORC has adopted human communication as the main agent for regional problem solving. The Commission seems to find in new developments in communication science, like computer based manage- ment information systems, some basis for a qualified hope for the future of the Region. Recognizing the multidimensional nature of development - human, economic, institutional -- the ORC is determined to develop a capability to handle, interpret, and distribute large volumes of data on: (1) The Region itself and its residents, (2) Ongoing and proposed programs and projects in the Region, and (3) Opportunities for public and private investment in the Region. 82 3 According to the Economic Development Act of 1965 the ORC is responsible to "develop, on a continuing basis, comprehensive and coordinated plans and programs and establish priorities thereunder, giving due consideration to other Federal, State, and local planning in the Region. " Since most of the factors impinging on the socio-ecological system of the Region are beyond the direct control of the Commission, the ability of ORC to accom- plish its mandated responsibility will, according to the authors of the document, "depend upon the accuracy, comprehensibility, and compre- hensiveness of the information available to satisfy the above three items. " The reader of the document is left with the impression that the economic crisis of the Region can be amerliorated by providing the means to trans- mit, store, and process information. Notwithstanding the utility of a Regional Resource Management Information System (RRMIS), one should not fail to acknowledge that the observed regional economic crises are more likely attributable to the absence or breakdown of those shared systems of interpretation by which alone com- munications have meaning and enable human beings to influence each other. This "interpretative gap" is only partly taken care of in the ORC document, mainly through the development of alternative regional goals in such a way "as to provide a common denominator for the evaluation and comparison of diverse programs. " These goals, when properly elaborated, should provide the contextual base towards the invention of a "willed future" Section 503(a) of the Economic Development Act of 1965, as amended. 83 for the Region. It is felt that the ORC approach to development planning represents an initial step in that direction. The ORC Approach . The ORC approach to the Regional Action Planning Process is schematically- depicted in Figure 1. 3 of the ORC document. The diagram shown in Figure 1. 3 represents the basic conceptual framework underlying the whole exposition of the regional plan. The major components of the process are identified as being: State of the Region Is sues Goals Strategies Programs and Projects. Each of those components is discussed and elaborated in the document. The most relevant conceptual linkages between the various sub -components are also identified for the benefit of the reader. In this fashion the document attempts to establish a common conceptual base and/or language for the "better" communication among the managers of the Region. A simplified diagram of the planning process is included in this memorandum as Figure 1 in an effort to review the ORC document from the perspective of a "futures -creative" planning mode. 84 5 Starting with the model of the present shown as Step 1 one arrives at the logical (or baseline) future in Step 3 through the manipulation of the present (usually quantitative) shown as Step 2. These three steps are very adequately discussed in Chapter II of the ORC document ("Economic, Physical and Social Survey of the Region"). Steps 4, 5, and 6 represent the truly futures -creative mode of planning. In Step 4 a model of the future (or of alternative futures) is developed. This model is manipulated in Step 5 to derive in Step 6 the change and action implications. These three steps have partially been developed in Chapter III ("Planning and Goal for Regional Economic Development"). The desirable changes derived from the model of the future generate the "willed future" which is fed into the model of the present (Step 1) continu- ously changing the present data base. This important feedback (backward linkage) of the future into the present is addressed in the ORC document through the development and use of a Regional Resource Management Information System (RRMIS). The RRMIS is proposed as the major management tool for effectuating in an adaptive mode (which includes both judgmental and analytic modes) the "willed future" of the Region. The essence of futures -creative planning, therefore, is to use the future as an operational means to effect changes in the present, and through such 85 6 changes to bring the conceived future into being. By constructing an anticipation, developing a data base for it, and manipulating it backwards one derives the changes and sets of policies that need to be pursued if the anticipated preferred future is to be translated into current reality. The ORC document incorporates some important ingredients of the futures - creative mode of planning described briefly above. Section A of Chapter III ("Planning and Goal for Regional Economic Development"), and in particular Tables 3. 3 through 3.14, inclusive, represent an attempt towards the de- velopment of an anticipation data base as indicated in Step 4 of Figure 1. This data base should, however, be expanded to include other important components of economic development planning like growth center and population distribution strategy, and, more importantly, value systems and institutional patterns that will be more prevalent and applicable to the model of the future. In other words, to project today's settlement patterns and today's values and standards upon tomorrow is the conventional ■way of extending and perpetuating the present. It appears, therefore, that the major weakness of the ORC document in its present form is that it mixes conventional forecasting with the more sophisticated normative approach to planning, which involves the whole task of identifying and valuing future goals . Another weakness of the document is the excessive use of system jargon like system, priorities, innovative techniques, and so on, sometimes without any real contextual need. This makes the document appear more 7 like a response to a request for proposal (RFP) than a plan whose main objective is to generate some action by the people and the managers of the Region. A related point is that in its present form the ORC plan does not make a clear distinction between what is operational i. e. , usable as a decision-making aid, and what is strictly conceptual. For example, the reader does not get a clear impression of which portions of the RRMIS are presently operational and are being used by the regional planners. Conclusion. The ORC document represents a credible attempt to develop a "common denominator" for better communication among the different actors partici- pating in the economic development of a multi- state Region. As such it does not explicate the roles that the Federal, State and local agencies are expected to play in effectuating any one of the six alternative income gap closure goals. In a way, the Ozarks Regional Commission sees its role as being one of a "look-out" institution. The main objective of a regional "look-out" institution should be to anticipate and identify the issues confronting the Region and to develop alternative solutions and ways to communicate them among decision-making bodies of higher and lower levels of government. Recognizing the multi-level multi-goal nature of the regional system, the ORC espouses the development of an RRMIS in the hope that it will significantly improve the judgment and the communication among the managers of the Region. 87 ^ -v d ^— ■ - O co +j rt 0) d r— 1 -rJ U « h ■3 c * x) < j5 rf on n) -d XJ d 1 1 Sg o d -t-> 3 h ik *' in CM 73 fl m L H d £ h V > • rt -rt n) V m GO : "The ratio of population to total employment is a rough measure of population pressure, ratio of people who have a pressing need to work (not necessarily desiring work) to those actually employed." This statement is cryptic to say the least. On the same page it is assumed that the reason for outmigration is P P a job shortage since the /E for the Ozarks is higher than the /E for the nation. This is not necessarily true. First, outmigration has been shown in several studies to be a function of demographic characteristics of indi- viduals residing in the area and not a function of employment conditions in the area in which they reside.* This being the case, the discussion of out- migration on page 38 is incorrect. p Second, and limiting the usefulness of /E generally, is the fact that the composition of the population must be controlled for. Since the Ozarks region has a higher percentage of people age 65+ (retirement ages) p than the U.S., one would expect the Ozarks to have a higher /E than the U.S. It is not clear whether the population composition is or is not p taken into consideration in the /E ratio. Apparently it is not. Similarly, Table 2.4 (Employment and Components of Change) is not well explained either in the text or in Appendix C. Again, in a similar vein Table 2.5 (Per Capita Personal Income) either does not take decrease in value of the dollar in to account or if it does, does not so state. Thus, the actual per capita income difference between the Ozarks and the U.S. may not be as disparate between 1940 and 1967 as the table indicates. This is relevant as later the * See for example, Ira S. Lowry, Migration and Metropolitan Growth , (Uni- versity of California, Los Angles, 1966) particularly pages 93-98. 93 plan identifies closing the income gap as its fundamental and apparently only goal. In general a number of the tables that are presented could be better explained. In places the use of economic concepts is fuzzy or outright in- correct. For example, on page 122 the following statement is made: "Seeking an increase in participation rates would indicate that the Region is willing to accept any job, at any wage, so long as it contributes to an increase in per capita incomes. Increasing labor productivity (output per man- hour) for a given capital stock leads most directly to a program of vocational training." Conventionally the labor force participation rate refers to the average pro- pensity of individuals to seek employment, not to obtain it, which is implied in the citation above and on page 121. Why that implies accepting any job is not clear. It is also not clear that vocational training will increase productivity on current capital stock. Vocational training will increase productivity only if one presumes that current laborers are incompetent to run the capital in place, and have not "learned by doing", a dubious assumption. Also, one must consider that on-the-job training may be more "cost-effective" than vocational education. This chapter concludes by suggesting that the Ozarks Regional Com- mission will (1) identify specific industry and tailor assistance to private beneficiaries and (2) provide generalized assistance through public investment. However, no locational criteria for such investments are enunciated, although mention is made of growth poles. If the ORC is aware of agglomeration effects associated with growth poles or centers, they presumably will wish to establish a locational assistance preference policy in order not to scatter investments inefficiently over a large area. 94 Chapter III. Planning and Goals for Regional Economic Development This chapter is somewhat confusingly organized, e.g., measurement concepts and calculations are discussed first, then recent trends in develop- ment goal indicators and then alternative goals for the Ozarks region. Also the terminology used in this chapter is somewhat different than that typically found in economic development plans. However, the awareness of the inter- action between demographic factors and economic conditions is laudable. Some attempt should be made to account for this interaction, sketched in Figure 3.3. The stated goal of the Ozarks Regional Commission is to close the per capita income gap between the Ozarks region and the U.S. average. Six alternative statements of this goal are made reflecting two different dates for accomplishment (1975 or 1980) and three different amounts of gap closure (1007o, 757o, 507,). Certainly this is not the only goal that is available and that the Commission could pursue. Yet other goals are not reviewed nor a discussion of "why this goal" undertaken. The latter is particularly im- portant since the ORC apparently will attempt to tie all its programs and projects to the fulfillment of this single income gap closure goal. We did not check many of the numerical estimates presented in this chapter, presuming that these manipulations are correct. Similarly we will not quibble with the assumptions, except to raise an eyebrow at the as- sumption that 257, of the new jobs to be induced will earn $8,500 (1958 dollars) a year and the rest $6,000 (1958 dollars) a year. 95 8 In discussing the estimated capital requirements to close the per capita income gap several things strike us. Has the ORC made any attempt to handle the depreciation and reinvestment problem? The discussion on page 148 hints at this but apparently addresses something quite different, and does so incorrectly. It assumes among other things that marginal changes in productivity on new capital cause average wage rate changes for the region. Also, the correctness of the Cobb-Douglas analysis is not clear to us. The questions of industrial mix and investment mix are not addressed. Certainly the type of capital investment is important. No defense is made of using Klein's estimate of the historical capital/output ratio for the U.S. Table 3.4 presented on page 145 gives us some trouble. It assumes that the population will grow at the 1960-1970 rate. Studies show that the rate of growth in job opportunities has a significant positive impact on the rate of in-migration. If the Commission is successful in its stimulation efforts, the population should grow faster than the 1960-1970 rate. Further- more, it has also been shown that increasing the relative number of job opportunities in an area, particularly low income areas, increases the rate of labor force participation, particularly among so called secondary workers. Thus, Table 3.4 apparently understates both the population and the labor force, the latter doubly so as discussed above. The later discussion, see page 154, of the demographic factors is in error as described above. The tax revenue loss estimates presented in Table 3.14 and Appendix E are not clear nor necessarily correct. If national resources (public and private) not used in the region are left idle, the estimates may be approxi- mately correct. But, if the resources can be applied outside the region, 96 and with a 67o national unemployment rate they presumptively can be, the tax revenue losses will be less than estimated. In addition, using regional specific tax information would be an improvement on using the national average tax percentage of 367o of income. The discussion on page 166, specifically the second and third paragraphs, is different to say the least. The contention that a search procedure is not an evaluation procedure is strange. We believe a search is a qualified evaluation. But then, why make the point in the first place? Further, the discussion contends that: "A program which coincides with a particular strategy may show up very poorly when subjected to program evaluation; and, conversely, a program completely outside any strategy may show up on evaluation as very desirable . " How can this be? Strategies relate programs to the primary goal, implying that a program within a strategy should show up well on evaluation. Furthermore, if programs outside of the strategy show up on evaluation as very desirable perhaps it implies the strategy is poorly formed. The contention that "each major strategy can be viewed as a subgoal" is equally hard to accept. This is tantamont to saying that means can be viewed as ends. The planned output of a major strategy may be a subgoal, but not the strategy. It appears from the discussion of strategies that activi- ties, strategies and "subgoals" are confused; moreover, on page 189 a subgoal is defined which is definitely not a strategy. However commendable (and we think it is), the outline provided on pages 171-6 one still wishes that this material was connected to some specific quantified objectives. 97 10 In reference to goals and strategies, it will be difficult for the Commission to effectively relate all its proposed programs and actions to the single goal of income gap closure. The goal-variable technique is effective only to the degree that various programs can be related, prefer- ably quantitatively to the primary goal. The Commission may find that it must specify additional goals, subgoals and/or objectives in order to plan, monitor and evaluate its activities due to the difficulty of relating all actions to a single goal. For example, how does one measure the contribution of health related activities to the income gap closure goal. Of course, improved health facilities and improved accessibility to them may raise real incomes, but there is no indication that the Commission considered this. Even if recognized, the contribution to the income closure gap is still exceedingly difficult to estimate. Is there not a "hidden" goal here? Somewhat surprising is the statement on page 191 that: "...in terms of ultimate goals, it would be substantially more beneficial to exceed the easily achieved goals than to try and fail to achieve the more difficult ones." This statement as a general concept is simply not defensible. One concludes Chapter III feeling that ORC has some definite thoughts about the "way to go". Yet one wonders what they are? The whole matter of priorities is not addressed, perhaps because ORC feels with only one goal they need no priorities. However, even the Ozark Regional Commission strate- gies need to have priority assessments, i.e., how will resources be allocated among alternative strategies or ways of doing things. 1 >«X 11 Chapter IV. The Action Plan This chapter reveals a major approach or tool or strategy of the Ozarks Regional Commission; namely, the Regional Resource Management Infor- mation System (RRMIS) . The system consists of numerous subsystems, e.g., employment, contract manufacturing, new product development, growth and high technology industries attraction, resources development, leisure industry development, resource industry expansion, venture capital, health industries market and identification, etc. subsystems. The discussion accompanying the identification of the subsystems is primarily concerned with the expected usefulness of the subsystems and some specific examples of information using projects. The emphasis on the "information approach" as a major strategy raises several questions. First, what is the expected benefit of the infor- mation system(s) relative to its dollar and opportunity costs? Second, is information (data) available to be fed into the system? Third, what will be the costs of data collection? Fourth, what will be the reliability and validity parameters of the information? Fifth, how do potential users view the system? Sixth, to what degree are the subsystems interactive? Seventh, how much of the system is just conceptual, how much has been designed and "checked out" and how much is in actual operation? Eighth, how will the system contribute to goal attainment? To be most effective the RRMIS should be tied into a conceptual framework like that illustrated in Figure 3.3, page 138. That is, not only should the data be cross-classified, but the RRMIS should be compatible in its output with a model such as Figure 3.3 so that various interactions and 99 12 events can be simulated. At least a refinement of Figure 3.3 should be used to orient the development of the RRMIS . On page 222, under the discussion of the new product development subsystem, the statement is made: "...(the) last selection requirement is that of ORC objective fulfillment. Does the product help raise per capita income in the Ozarks Region? Does it provide jobs for young people? Does it raise the general level of intellect in the Region? What are the diseconomies? (etc.)" These "objectives" (1) have not been stated before (the reader wonders how many other hidden "objectives he may have missed) , (2) are not quantified and dated, and (3) imply- that something other than the goal of closing the per capita income gap is important. This chapter also devotes a good deal of attention to transportation, primarily highways. It states that the initial or priority Ozarks Access Highway System consists of 1 to 5 mile segments and some 30 to 40 mile seg- ments, designed primarily to improve local access. The Appalachia Regional Commission has received more than a little criticism for its highway projects, much of it on the grounds that the highway links constructed were primarily local serving. At the very least this suggests a re-evaluation of the highway program. Also, these local access improvements are not necessarily compatible with promotion of tourism, export industries, etc. Furthermore, the justi- fications presented for these highway segments are qualitative and speculative and do not appear to be based on demand, or projected demand, analysis. This chapter also discusses briefly the econometric model which is alleged to be basic to the coordination, management and planning functions. 100 13 Actually what is discussed is the algorithm employed to "solve the model" and not the model itself. For example, what are the arguments of the functions, and, for that matter what are the functions? In numerous places in this chapter dollar benefits of possible actions are stated but no explication of those statements are given and even more frustrating they are not accompanied by estimates of the public and private costs that will have to be incurred. Also much of the discussion in this chapter is based on studies that were "contracted-out". In this situ- ation one often wonders how well these studies were integrated into an overall research design and if cross-functional trade-offs have been considered. This chapter suffers in clarity of intended actions because of the could, would, should syndrome. Chapter V. Policy Considerations, Investment Requirements and Returns The policy alternatives in this chapter deal primarily with altern- ative national policies and strategies. A more detailed discussion of ORC policy and strategy would be more appropriate, particularly as it relates to alternative national policies and strategies. The Investment Alternatives Related to Goals section analyzes six "goals". Actually the six goals are basically the same thing, per capita income gap closure and differ only in percent of gap to be closed and timing. These alternative "goals" are useful as measures in that they indicate how much of the per capita income gap will be closed assuming different amounts and timing of investment. However, the discussion implies that the real determinant of goal attainment is simply the total amount of federal funding 101 14 obtained. Further, Table 5.2 seems to imply that the distribution of funds by program is immaterial and that with X dollars of support Y result is always obtained. It is true, however, that no satisfactory relationship has ever been found between public and private investment except that they are associated. Thus, the criticism of the Table 5.2 boils down to the fact that ORC has not revealed its preferences or intentions with respect to alternative investment programs . The information given on pages 360-363 is more useful in interpreting the intentions of the ORC. If one uses this proposed allocation of resources as an indicator of priorities, it is evident that major emphasis will be placed on highway construction, as well as on leisure and tourism facilities, industry related facilities and vocational education facilities. But the priorities should be made explicit, trade-offs explicitly considered and then major activities clearly stated. The chapter concludes by stating: "Two major purposes were among the several considerations involved in developing this Plan: (1) To make it possible for commitment decisions today to be made with a greater awareness of future implications; and (2) To make it possible that future decisions can be made more rapidly, more economically, and with more favorable response." Although at the mechanical level we are uncertain as to whether this has been accomplished, we believe at the conceptual level that the plan and the intended actions will do this more than adequately. 102 15 EVALUATION BY DEPARTMENT OF COMMERCE FOR DEVELOPMENT PLANS This section considers the relationship between the plan submitted by the Ozarks Regional Commission and the guidelines for plans provided by the Department of Commerce. This guidance is contained in three documents: (1) Guidelines for Program Formulation for Regional Action Planning Commissions (August, 1967), (2) Title 13 of the Code of Federal Regulations (July, 1967), and (3) a memorandum from the Secretary of Commerce to the Director, Bureau of the Budget (January, 1968). With respect to (1) above, the document is in general conformance. Obviously, there are deviations in detail from all the guidelines. In this case the plan, in our opinion, gives inadequate attention to baseline pro- jections under differing assumptions about the national growth rate. The plan also does not provide sufficient operational goals and objectives in terms of economic development outputs." With respect to the Code of Federal Regulations the plan also ap- pears to be in general conformance. Some of the discussion could be made more explicit, e.g., the failure or inadequacy of the current infrastructure to support development, but in general sufficient information is provided. With respect to (3) above, the plan is also in general compliance, except that, as noted earlier, the priorities issue is not adequately ad- dressed. This makes it difficult to determine in what order the ORC will undertake activities and which activities are deemed most important. The 1967 guidelines state: Goals express the direction toward which the Commission wishes the regional economy to move and provide the targets by which progress can be measured. Current, operational goals are essential and should be closely related to the base case forecasts developed in the analysis phase. 103 L6 OVERALL APPRAISAL IN TERMS OF BATTELLE CRITERIA In earlier work, Battelle evolved some criteria for evaluating the process of planning and the plans resulting from such processes.* While we are in general favorably disposed toward the indicated ORC approach and feel some confidence in the ORC staff, we feel that the plan needs strengthening, in terms of our criteria, with respect to the following issues: (1) Objectives and "sub-goals" are not clearly identified nor quantified, for example relating to educational attainment, housing, etc. (2) There is a lack of statements about the relative priority of goals, objectives, strategies and programs as viewed by the commission. (3) Alternatives to achieve the various subgoals and objectives are not clearly developed, examined and ranked. (4) Alternative strategies are not examined and compared as to their merits for achieving the primary goal and objectives . (5) Apparently, the primary goal (income gap closure) and the implicit objectives were not re-examined in light of the probability and costs of attaining them. (6) The use of a single goal (income gap closure) is not shown to adequately represent the direction in which the regional economy is to move. APPRAISAL IN TERMS OF PLAN DESIGN INTENTIONS On page 1, it is suggested that the plan is designed to achieve five purposes. We conclude by briefly giving our impression of the degree to which these purposes were achieved. These are: * D. Schiffel, H. Hovey, et al, Final Report on Evaluation of Economic Development Administration Planning Grants (May, 1970), Chapter 5. 104 17 1 . Present a picture of the situation within the Ozarks Region its institutional and cultural "environment ", its available assets and their utilization . We have not found a discussion of the institutional and cultural environments as these terms are normally used. The discussion of available assets and their utilization appears adequate. 2 . Clarify the major objectives of the proposed Action Plan . We find the discussion of the Action Plan en- lightening but it does not, in our opinion, clarify the major objectives. 3 . Sketch the needed changes in social and economic factors . The document may or may not do this ef- fectively depending on how one defines social factors. We believe the plan addresses these factors, but could do so more effectively. 4. Present a detailed review of the measures chosen to achieve the objectives and to bring about the needed systems change . The document does this although the chosen measures are not clear. 5 . Broadly assess the chosen measures against the ob - jectives . In our view the plan does do this. SUMMARY Although we have been critical of the plan submitted by the Ozarks Regional Commission, there is much sound reasoning and grasp of the development process displayed in the plan. And, we hope the criticism is taken as con- structive. Even though the plan is not clear in places about what (and how) the Commission will do, we feel the Commission staff is to be commended on its grasp of the complexity of the economic development problem. It would aid the plan immeasureably to have a section to the effect "this is what we will do". The general approach of the Commission is sound, although some of the details are incorrect. 105 RMC, Inc. A REVIEW OF THE OZARKS REGIONAL COMMISSION ACTION PLAN The 1971 draft of the Ozarks Regional Commission's Action Plan is a comprehensive document covering the various aspects of the region's development. Although most of the essentials are there (see its Contents in the appendix to this chapter), the document seems to be poorry organized. Subheadings do not appear to be in any particular order that would designate the relative importance and the sequence of analytical procedures. The plan contains an excellent review of regional economic theory and concepts, but digressions are so numerous and detailed that the document becomes overly long (376 pp. plus appendices). In contrast, some program areas that are simply and clearly described do not give the reader any idea of how much has been accomplished in the area under discussion. The time-phasing of research and development is at best vague in presentation. The analytical phase on the availability, inventory, trends, problems, and potentials of the Ozark Region's natural and human resources is informative and satisfactory under existing guidelines. An extensive and intensive analysis of selected economic indicators revealed that the region lagged the nation in every category, particularly so in the rate of increase in total employment (30/100), manufacturing earnings per capita (43/100), and per capita bank deposits (47/100) during 1967. Regional population, migration, and employment rates of change and trends are clearly presented. An income analysis indicated lower salaries and wages in the region's industrial sectors relative to the nation, axcept for strongly 106 unionized and/or highly- ski lied labor sectors. These latter sectors accounted for only 16 percent of regional employment, whereas the majority of Ozarks employment opportunities were in low-paying industries. The regional economy is examined with the aid of location concentration and productivity analyses of two-digit sectors. Results identify the concentration of relatively low productivity within particular Ozark industrial sectors. The plan contains an adequate inventory of natural resources with particular emphasis on the region's mineral wealth and recreation resources. Highway and airport development progress is outlined in detail on the basis of state reports and estimates of physical requirements and costs, but the needs are not con- vincingly related to economic development problems and potential. GOALS A lengthy discussion of the income gap concept sets the stage for defining a set of six alternative regional goals associated with the per capita income gap. These goals involve wiping out 100, 75, or 50 percent of the gap within 5 or 10 year periods. Instead of selecting one goal, the Commission makes selection contingent on: the level of federal funds to be made available for public invest- ment, national assignment of a target growth rate specified for a period, and the establishment of additional national growth policies. This may be a permissable form of temporizing on the issue of commitment. It may, however, ol cure and diffuse efforts needed to make meaningful advances on the gap objective. Both the projections and tabulations of employment and income requirements to meet two of the alternative goals are impressively presented, although some arbitrary assumptions are made about: • the stability and applicability of a national capital/output ratio, • the marginal productivity of labor, • the average wage level associated with additional jobs created, and • the U. S. national averages in general, as each of these is applied to regional calculations. These simplifications either disregard present and future differences between region and nation in productivity and availability of resources, or they tacitly assume differences will be overcome. 107 The use of basic mathematics results in concrete measures that are based on particular assumptions and accompanied by a proliferation of tables and data. It is then further assumed that these essentially timeless, aggregated, and non- spatial measures can be applied to represent the problems and potentials of the region, until an elaborate and expensive management information system can be established. After the income gap is established and alternative projections of investment, employment, and income requirements are made, the commission correctly points out that some very extraordinary rates of growth in these factors will be necessary to achieve the targets. This leads to the conclusion that the alternative goals suggested are not obtainable with commission investment funds currently available. The reader cannot help but feel that either a longer target period would be more reasonable, or the regional goal should be to achieve rates of growth in income and employment that are above the national rates but not necessarily equivalent to those required to close the gap within the planning decade. STRATEGIES Strategies are defined as relating programs to goals in the procedure of searching out solutions based on particular criteria. As in earlier drafts, the Ozarks planning strategies are very broadly defined, with the exception of the one to educate and train the Ozarks' people to increase their earning power. Even this strategy does not indicate the type of persons and the training categories that will receive concentrated attention. Nevertheless, the outline of substrategy hierarchies is more useful because of its scope and detail. In fact, these 5 substrategy hierarchies taken together represent 8 programs within which a sequence of steps identifies research to obtain infor- mation for defining projects. This list is fairly complete but the commission does not set any priority preferences on these programs. This is in keeping with a general lack of commitment by the commission to actual programs and projects 108 at the current stage of their planning process. What is apparent is that the commission is not yet at the stare of actual program evaluation, although a logical evaluation procedure is described in Appendix B. In this respect, the document presents only the framework of evaluation. A large number of further research studies are called for in identifying, measuring, promoting and manipulating regional development faci rs through- out the substrategies, more so than in other regional plans to date. Program quantification is not recognized as a critical feature. Only examples of program quantifications are given in the report. These examples are simply but effectively illustrated (pp. 172-174); changing the industrial mix, increasing the productivity of workers, and creating additional employment can each raise total regional income and possibly per capita income in measurable terms. In order to determine, for promotion, which industries present cost advantages, the productivity of labor in each regional sector has been compared to its national counterpart. Results are to be interfaced with product demand analysis and vocational, technical, or industrial training programs. There also is in Chapter III a discussion about the reasons for and the procedure of coordinating planning and development among agencies. PROGRAMS AND PROJECTS To begin the chapter on the Action Plan, there appears the one and only summary in the plan document. Tins precedes the introduction of a systems approach to regional analysis that stresses consideration of interaction and interrelationships between economic and social activities. Then the main tool of systems analysis — the Regional Resources Management Information System — is introduced, and the need for this system is justified on the grounds that it will rapidly and efficiently make possible: the identification of program benefits, program complementarity or duplication, and comprehensive evaluation of program investments. The system will depend on a massive economic and 109 social data base; it is supposed to make calculations easier for model-building and various other indicators. Great expectations are held for the ability of the system to ease the calculations of location costs and investments costs for facilities, disregarding the possibility that firms may or may not locate for reasons outside of the information system. With regard to resource development objectives, a conflict could result between (a) finding new uses for old resources and encouraging new resource development based on venture capital aid, and (b) wo riving to coordinate resource based activities in such a way as to minimize conflict with the quality of the Ozarks' environment. To expect one billion dollars to be invested within five years in leisure industi'y activities may be unwarranted, in view of the many "if's" associated with such development. The indicated payoffs require a firm substantiation of markets, particularly in view of etra- regional competition and the current leveling off in the growth of national income. More promise may be contained in feasibility studies for expanding six mineral-resource industries. Once again, however, the report does not make clear the actual progress in these feasibility studies and other individual projects. Thus, it is not always possible to determine what has been done in contrast to what the commission wants to do or will be able to do. Several potential development projects are discussed in detail. These involve the cooperation of several agencies within the region. Discussions on agricultural cooperatives, a regional development bank, and an International Trade Development Zone are imaginative but lack an instrumentality for implementation. An extensive human resource development program emphasizes information systems and includes the proposal of a Human Resources Management Institute. Various means of training and educating the labor force are proposed, but there is perhaps an overly optomistic assumption about federal-agency grants of supplemental funds to support the program, and about overall cooperation. 10 The section on the Community Development and Environmental Echancement Program is so general that the program, as described, could be applicable to any region at any period in time. The many facets and subsystems of the large MS will provide detailed community profiles. It is not clear to the reader how much of these data are now available. The system is going to be expensive and it should be subjected to rigorous benefit-cost analysis. An extensive transportation program for the Ozarks is not evaluated or justified with benefit-cost analysis and is strongly engineering- rather than economics-oriented. As in other regional plans, the transportation program is not tied closely to regional goals. An ambitious health care delivery system contains many innovative concepts involving well-organized and automated facilities, the financing of which are not clear. Development stages include study, demonstration and design, and an expensive implementation phase,but the driving forces for implementation are not identified. Neither is a cost-effectiveness analysis included. The Housing program would identify demand factors before analyzing other aspects of the industry. Although innovations in home-production and production processes w< Id be promoted, nothing is said about problems of contractor profit- margins and the lack of incentives with regard to low-income housing. COORDINATION AND IMPLEMENTATION (THROUGH THE SYSTEMS APPROACH) Difficulties are recognized in getting inter-agency coordination, cooperation and actual commitments to the same goals and priorities. Before expounding the regional resources management information system's advantages at length, the plan notes that the system is designed to achieve coordination in government budgeting processes, and has the potential to coordinate one million federal, state, and local activities. From its description, the ORC Econometric System in fact refers to retrieval, planning, and report generation activities. The complex non-linear optimizing 111 program will require a complete set of data subsystems, the chronological existence of which is not certain. In addition, data accuracy and completeness are treated much too lightly, particularly with regard to when, how, and by whom the data systems will be fully established. These problems must be seriously considered if the system is to provide optimal solutions and program selections for economic development. The commission hopes to see functional reorganization of certain state agencies toward achieving the regional goal of closing the income gap. By 1972, each state supposedly will have economic program management capability to assure the effective implementation of the action specified in this plan document, based on the technical and analytical support of the commission. The functions of these offices, if made operational, will indeed have a strong potential influence (p. 344) on development strategies of each state and local agency, and on the private sector. Objectives are then restated in the same general categories as the first draft of the Ozarks plan. These objectives are followed by a mere laundr}'- list of program management functions, which does not reveal the mechanism of authority and implementation. The late sections of the plan utilize a lot of general catch-words such as systems, evaluation, priorities, tradeoffs, criteria, and innovative techniques without presenting actual examples. There seems to be a lot of repetition of concepts involved in developing the various subsystems at the multi-county level. Some space is devoted to outlining the potential role of the commission, and the contents of state investment plans are briefly discussed. Vocational- technical training was emphasized in these plans and benefits were outlined. Surprisingly, the importance of background and planning studies and the Regional Resources MIS were placed in higher priority than the educationa' development activities (p. 355). Previous development plans are deemed to have lacked effective developmental structure, and it was noted that the current focus should 112 now be on human resources, the MIS, and research studies. State plans imply priorities by estimating investment expenditure requirements within program categories. The state plans specified the numb r of projects and costs for: industrial parks, sites, and utilities: $44. 2 million, technical training facilities: $38.6 million, leisure and tourism facilities; $38.5 million, health facilities: $24. 5 million, transportation-related investments: $20 million, and airports: $15. 3 million. The time-phasing, locations, and benefit estimates of these projects are not given. In conclusion, the amounts of public expenditures in categories are ranked by the. commission as follows: • environmental development, • employment development, • human resource development, • natural resource development, and • coordination and management. However, subsequent action is made dependent on the results of program and project evaluation during the first two years and on the actual funds available. About 80 percent federal funding is unofficial!}' requested. During 1971, aa optimal budget expenditure pattern for regional development of the Ozarks is expected from the established planning system. Raising the level of information available to decision-makers and increasing the mobility of resources comprise the main framework of the Ozarks development program. But, the Ozarks plan, perhaps unwittingly, makes a serious attempt to convince the reader that the tools and techniques of analysis, computer models, 13 computerized information systems, and "future" research are more important than the regional development programs themselves. Within the current plan, the program impact evaluation procedure that has been described could be effective, but it has not yet been utilized. Inter- relating programs is recognized as important, but programs have not actually been examined from that aspect. Commitments are deemed very important, but the commission has not made definite commitments to goals, strategies, and programs. 114 June 21, 1971 U.S. DEPARTMENT OF COMMERCE Office of Business Economics Washington, D.C. 20230 Comments on the Ozarks Regional Commission Action Plan Mr. E. L« Stewart, Jr. Federal Chairman The Ozarks Regional Commission Room 2099-B Department of Commerce Washington, D. C. 20230 The Ozarks Regional Commission Action Plan, dated May 1, 1971 is a well written comprehensive document. In contrast to many plans of the same type, it lays a theoretical basis for the requisite analysis and then attempts to analyze and formulate within that system. It does an excellent job of presenting various views on and approaches to regional growth, regional development, systems analysis, etc. However, although the Plan sets up an analytical system, it fails to follow that with an empirical framework within which to carry out the analysis and plan formulation. As a result of the absence of such a framework, the analysis and recommendations necessarily become a series of independent and comparatively unrelated statements. That is, total per capita income is chosen as the key economic measure and bringing it up to the national average is the goal chosen. It would appear logical that the analysis of factors responsible for the low income of the area and recommendations for improving per capita income would be couched in terms of the area's personal income structure from which per capita income derives. This is not done, however. Instead, the industry analysis focuses mainly on value added in manufacturing. This leads to two weaknesses. First, value added is not an appropriate measure to use in conjunction with personal income. Value added includes the returns to capital as well as to labor, and a portion, or all, of the return to capital may go out of the area in the form of Federal income taxes, investment of undistributed profits in other geographic areas, and dividends to stock- holders residing outside of the Ozarks. Second, analysis of value added in manufacturing fails to consider the rest (and larger portion) of an area's economy. If a change is brought about in one portion of an area's economy, inevitably, there will be associated changes throughout the other segments of that economy* These (MORE) 115 other changes must be taken into account in developing a program. Failure to do so may lead to an unbalanced industrial structure that is worse than the initial one. Also, the analysis of value-added is quite superficial. For ex- ample, it is stated that with one exception, average wages in each industry are lower in the Ozarks than in the Nation. Later, the analysis points out that manhour costs per unit of value added are below-average in a number of industries. How important are these? Are they basic or residentiary industries? What does this relation- ship mean with respect to nonwage factor costs? Are profits dis- proportionately high? Do profits in these industries accrue mainly or entirely to residents of the Ozarks or to residents of other areas? The foregoing criticism is offered in what is intended to be a con- structive sense, for there is available to the Commission a detailed picture of the personal income structure of the Ozarks, both in total and for each geographic subarea. These data are available from OBE and the proposed plan could be evaluated by tracing the effects, direct and indirect, of proposed programs upon the relevant components of personal income rather than by use of value added. Several miscellaneous points may be noted. In the discussion of the capital investment required, there is the implication that if this capital is made available, the programmed investment will follow. This is too simple an approach. The major problem in implementing the plan will be to induce the industries sort after to actually locate in the Ozarks. The statement that the demand for outputs of industries selected for development should be strong enough to absorb the extra output without causing losses in the industry is wishful thinking. Given an economy in rough equilibrium (a necessary assumption for development planning) the development of a new industry in an area means that the newly- acquired industry either migrated from some other area, or, in the case of a newly established industry, that it would have gone into another area had it not come into the Ozarks. Most industries attracted into the Ozarks will displace a roughly equal amount of that same industry elsewhere. This does not mean, however, that development of industry in the Ozarks will not cause a net addition to the Nation's product. Such an addition can be made provided the unutilized resources of the Ozarks are brought into the production process. However, most of the net addition to the national economy will come in the form of additional output from a number of industries, and not necessarily from the one induced into the developing area. (MORE) 16 Finally, the section (pp. 182-183) discussing the necessity for the region to have an economic advantage in the industries selected for development is extremely weak. I would suggest that there should be a substantial portion of the report devoted to analyzing the reasons why these industries have not developed in the past and why, in light of this failure to develop, they can be expected to develop in the future. ROBERT E. GRAHAM, JR. Chief Regional Economics Division Office of Business Economics CC: Fred Eaton 117 Date : June 14, 1971 U.S. DEPARTMENT OF COMMERCE Bureau of the Census Washington, D.C. 20233 OFFICE OF THE DIRECTOR To From Mr. E. L. Stewart, Jr. Federal Cochairman Ozarks Regional Commission Walter F. Ryan ['■ : (i£-?C L Associate Director 'L Subiect: Ozarks Plan This is in reference to the Ozarks Plan which Mr. Eaton sent to me for comments. We note that the Census Bureau is a substantial source of the statistical information included in the report. You are probably aware that the final area reports from our 1967 Economic Censuses were issued during the last year, while we are now in the process of releasing the State reports from the 1970 Census of Population and Housing. These data will be useful in evaluating program performance or in establishing re- vised objectives in the future. Mr. Benjamin Kaplan, Chief of our Statistical Indicators Division, has been in contact with a number of the regional planning commissions to discuss how these data can best be utilized in area planning efforts. He will be pleased to work with your staff in order to facilitate the transfer of the desired information. 118 Form CD-121 UNITED STATES GOVERNMENT (11-63) Pres. by A.O. 206-10) Memorandum U.S. DEPARTMENT OF COMMERCE XHSftXXKXKXKXMXMX EDA TO FROM Ken Deavers Ted Schaerf DATE: June 9, 1971 In reply refer to: SUBJ ECT- Review of Ozarks Regional Commission (ORC) Action Plan, 5/1/71. ORC and Federal Co-chairman Bud Stewart are to be commended for producing a well-reasoned, well-organized Action Plan. The applied economics in the first part of the document confront the problems and potentials of the Ozark Region in a realistic manner. The concept of closing the demographic and productivity gaps as a precondition to income equalization is, in my opinion, the proper approach toeconomic development. The benefit of this approach is that the older parts of the plan, which had appeared in earlier versions, are now brought into the focus of economic calculus and streamlined. The result is this more tightly-organized document- and it hangs well together. The calculus on tax benefits (pp. I6lf. ) by itself is a strong argument why investment in the economic develop- ment regions should be undertaken. I have only a couple of points in the way of criticism and some deal with sequencing and format rather than substance. The Action Plan is written clearly and explicitly and parts of it, at least, could be used as a handbook on planning. With this in mind, I feel that block diagrams and flow charts, which suggest stepwife calculations or operations, should be numbered sequentially to enhance the usefulness of the graphics. Secondly, the short description of the Community Development Program (p. 276f. ) is followed by the Transportation System Program which, in turn, if followed by the Housing and New Towns Programs (pp. 320ff. ). It seems to me more logical and more effective to have the first and the last two programs follow one another rather than to have them separated by the Transportation System Program. Finally, I come to a point of substance. On p. 17 five major ORC strategies are listed. I believe one essential strategy is missing but it could be derived by elevating the earlier mentioned Community Development, Housing, and New Towns Programs from the program to the strategy level. The result of this omission, I feel, is that the relationship between housing, social overhead and industrial develop- ment is not treated at all. These topics are treated, but in a compart- mentalized rather than in the systems approach which in so many other places enhances the quality of the document. The systems approach and the relevant Benefit/Cost calculations applied to the relationships between the three programs-or better yet-to the 6th BUY U.S. SAVINGS BONDS REGULARLY ON THE PAYROLL SAVINGS PLAN 119 strategy would eventually lead to the selection of places where these types of investment can be made optimally. I do not raise this point out of some doctrinaire attachment to growth center theories. Quite pragmatically, the urbanization of a dispersed and 50 percent rural population is necessary if it is to become an industrial labor force. Economies of scale can be sought not only in industrial parks, but also in manpower training, infrastructure, and social overhead programs. These few points of criticism notwithstanding, the ORC Action Plan is a competent piece of work. 20 JUW 18 1971 U.S. DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration Rockville. Md. 20852 Reply to Attn of: AS 5 subject: Comments on "The Ozarks Regional Commission Action Plan" to: Mr. E. L. Stewart, Jr., The Ozarks Regional Commission, (RCOI) Room 2099, Main Commerce. The attached NOAA comments were prepared in response to your memorandum of May 27, 1971, which transmitted a copy of the Ozarks Regional Commission Action Plan for review. ( Vox iAj . L^T^WVCUU^Q i. John W. Townsend, Jr. Associate Administrator Attachment cc: Mr. F. Eaton 121 NOAA Review of the Ozarks Regional Commission Action Plan , May 1, 1971 This comprehensive regional development plan addresses a broad range of development concepts, surveys and goals for regional economic development . This review has been prepared "from the standpoint of (NOAA) agency expertise, identifying potential contributions to the plans, goals and objectives," which is the focus specified for DOC Intradepartmental Committee members in the memorandum on Regional Plans Review Process approved by the Secretary. Because of the inland location of the Ozarks only a portion of NOAA's wide range of services and facilities are applicable. These include: Local public weather forecasts and warnings Warnings of tornadoes and other severe local storms River and flood forecasts and warnings Geodetic surveys State climatological activities Public natural disaster education and preparedness activities Marine weather services for lakes and inland waterways Seismological risk and engineering data, studies and services. These information services are useful for many planning, developmental, and operational activities. Recreational and leisure-time resources appear to be especially attrac- tive in the Ozarks, not only for residents but also for visitors from the numerous large cities in the immediate surrounding area. Therefore tourism and transportation are important for development. Related NOAA services that should experience continued growth in the area include localized public weather forecasts and warnings, warnings of tornadoes and other severe local storms which are not infrequent in the area, river and flood forecasts and warnings, marine weather services for the several large lakes, numerous smaller lakes, and shipping on in- land waterways. Recreational use of small craft on lakes is especially sensitive to moderate to strong winds, to squalls, and to severe local storms. Adequate networks of horizontal and vertical control will be needed in such areas for planning of installations of dams and related recreational communities. Seismic experience especially in southeastern 122 -2- Missouri has been such that seismological risk and engineering data are important for planning purposes in the Ozarks. Other essential NOAA services in the area include aviation weather and warning services, together with aeronautical chart services on behalf of air transportation operations, and fire-weather services on behalf of forestry. 123 June 11, 1971 Reply to . Attn of: R&A/USTS U.S. DEPARTMENT OF COMMERCE United States Travel Service Washington, D.C. 20230 Subject: Ozarks Plan Mr. E. L. Stewart, Jr. Federal Co -Chairman, Office of Regional Economic Coordination This Ozarks Plan appears to reflect to reflect an in-depth analysis of the particular region. Furthermore, it points out the need for detailed comprehensive planning, in order to have any long-term effectiveness, a critical observation which is often neglected. Our comments are primarily general in nature and apply to many of the other action plans, as well as this one. Although we appreciate the measurement problems which are involved, we would suggest that the concept of the income gap, as currently applied, raises a number of serious questions which need to be answered. One question is, how much of the indicated gap should really be attributed to variation in cost of living in different areas of the country? If one looks only at the variations in cost of housing and annual property taxes, much of the variance appears to be absorbed. The previous example is only one of many factors reflected in the income gap or income variance. In any event, an unadjusted comparison between such parameters does not appear to accurately measure poverty or lack of opportunity. It would appear to be helpful if there were greater recognition that there will always be some income variations throughout the nation. Additional means should be developed to adjust income parameters to refine out the purely situational economic variance. In a more philosophic vein, a question arises as to the awareness on the part of many population subgroups of the amount of trade-off needed between their cultural heritage and the necessary environment for the type of economic and industrial development discussed in this plan. In the area of effecting specific improvements in economic develop- ment, this plan appears to give primary emphasis to labor and public investment stimulants. It might be helpful to expand consideration of the organizational (managerial /skill levels) factor which will be required. One of the problems which has apparently plagued many private firms which attempt to expand into a relatively underdeveloped area, is the inability to bring in the number of qualified managerial and skilled personnel to get the plant etc., running, conduct the training required, and to sustain operations until primarily local people can take over. In many cases, the needed personnel refuse such relocation because they feel that schools might be substandard, metropolitan facilities lacking, as well as a variety of other considerations. The net result, in such cases, would appear to be that if any plant is eventually developed in the area, it often 24 will be a relatively low wage, low technology operation. Whether this is necessarily bad, is somewhat debatable. The local population may be quite pleased with such a development, although a planner might be horrified if most of the new industry were of this type. The Action Plan generally recognized these possi- bilities but did not appear to give adequate recognition to the possibility that the local population, or at least the current generation, might not be interested in anything more than relatively low-wage employment, perhaps even seasonal employment. In short, the plan could probably be increased in effectiveness if it were directed more toward the desires of the local inhabitants. The general impression that high technology industry should be the ideal goal raises serious questions, both in terms of probable success as well as in terms of actual benefits received. The Action Plan might profit from a deeper analysis of the "Health, Education, & Welfare" facilities or situation in the particular region. Assuming that the region suffers from inadequate facilities in this area, a targeted improvement could possibly be more effective in terms of long-term development than anything else. The residents would obviously receive the greatest benefit. However, it might help to facilitate attracting new industries and required personnel. While we do not suggest that this be the only targeted improvement, it is likely to be one of the most significant requirements. In the area of natural resources, we would suggest that lead is not likely to make any substantial contribution in terms of future economic growth. At the present time, this metal has lost one of its biggest markets (paint) and appears likely to lose another shortly (gasoline). With regard to iron and coal, there might be possibilities of developing a basic steel industry, particularly with the new marine artery which has developed. With regard to the section on the leisure industry. The Plan appears to effectively reach some of the key problems (transportation and lack of development). It might be helpful if more emphasis were now directed toward transportation problems. Although this area of the nation appears to have great prospects, it is admittedly up against the fact that the bulk of the U. S„ population resides quite a distance away (East Coast). As a result, it would appear helpful to develop a master plan covering egress to the various recreation areas, etc., both by air and automobile. William Dircks, Director Office of Research & Analysis cc : Mr. Eaton 125 APPENDIX C EXECUTIVE ORDER NO, 11386 DATED DECEMBER 2 8, 1967 ESTAB L ISH I NG FEDERAL ADVISORY COUNCIL 127 Presidential Documents Title 3 — THE PRESIDENT Executive Order 11386 PRESCRIBING ARRANGEMENTS FOR COORDINATION OF THE ACTIVI- TIES OF REGIONAL COMMISSIONS AND ACTIVITIES OF THE FEDERAL GOVERNMENT RELATING TO REGIONAL ECONOMIC DEVELOPMENT, AND ESTABLISHING THE FEDERAL ADVISORY COUNCIL ON REGIONAL ECONOMIC DEVELOPMENT WHEREAS the proper discharge of Federal responsibilities under the Appalachian Regional Development Act of 1965 (79 Stat. 5, 40 U.S.C. App.) and the Public Works and Economic Development Act of 1965 (79 Stat. 552, 42 U.S.C. 3121 et seq.), as amended by Public Law 90-103, 81 Stat. 257, requires that the participation of the Federal Government in regional development activities be effectively coordinated; WHEREAS the President is required by the Appalachian Regional Develop- ment Act of 1965 to provide effective and continuing liaison between the Federal Government and the Appalachian Regional Commission; WHEREAS the Secretary of Commerce has responsibility under the Public Works and Economic Development Act of 1965 for Federal economic development activities designed to alleviate conditions of substantial and persistent unemployment and underemployment in economically distressed areas and regions of the Nation; WHEREAS the Secretary of Commerce is directed by the Public Works and Economic Development Act of 1965 to coordinate the Federal Cochairmen appointed to regional commissions established before or after the date of that Act; WHEREAS the Secretary of Commerce is required by the Public Works and Economic Development Act of 1965 to provide effective and continuing liaison between the Federal Government and each regional commission established under Title V of that Act; and WHEREAS the Secretary of Commerce has been Chairman of the President's Review Committee for Development Planning in Alaska, established to provide general direction and guidance to the Federal Field Committee for Development Planning in Alaska, established by Executive Order No. 11182, dated October 2, 1964; NOW, THEREFORE, by virtue of the authority vested in me by the Appalachian Regional Development Act of 1965, the Public Works and Economic Development Act of 1965, and section 301 of Title 3 of the United States Code, and as President of the United States, it is ordered as follows: SECTION 1. Functions of the Secretary of Commerce. The Secretary of Commerce shall — (a) Provide the effective and continuing liaison required by section 104 of the Appalachian Regional Development Act of 1965 and by section 503(c) of the Public Works and Economic Development Act of 1965 between the Federal Government and each regional commission established under those FEDERAL REGISTER, VOL. 33, NO. 1 — WEDNESDAY, JANUARY 3, 1968 128 THE PRESIDENT Acts, and between the Federal Government and the Federal Field Committee for Development Planning in Alaska (hereinafter referred to as "the Field Committee"). (b) Obtain a coordinated review within the Federal Government of plans and recommendations submitted by the commissions and the Field Committee. (c) Provide guidance and policy direction to the Federal Cochairmen and the Chairman of the Field Committee with respect to their Federal functions. (d) Promote the effective coordination of the activities of the Federal Government relating to regional economic development. (e) In carrying out the functions set forth in section 1 (a), (b), (c), and (d) the Secretary of Commerce shall — (1) Review the regional economic development plans and programs submitted to him by the Federal Cochairmen, budgetary recommendations, the standards for development underlying those plans, programs and budgetary recommendations, and legislative recommendations; and advise the Federal Cochairmen of the Federal policy with respect to those matters, and where appropriate, submit recommendations to the Director of the Bureau of the Budget. (2) Review and advise the Chairman of the Field Committee with respect to the tentative plans and recommendations of the Field Committee, and receive and consider the final plans and recommendations of the Field Committee and transmit them to the heads of interested Federal departments and agencies and to the President. (3) Resolve any questions of policy which may arise between a Federal Cochairman and a Federal department or agency in the implementation of regional development programs. (4) Appoint a Special Assistant and other staff as required to assist him in carrying out these functions. SEC. 2. Establishment of the Council, (a) There is hereby established the Federal Advisory Council on Regional Economic Development, hereinafter referred to as "the Council." (b) The Council shall be composed of the following members: The Secretary of Commerce, who shall be the Chairman of the Council (hereinafter referred to as "the Chairman"), the Secretary of Agriculture, the Secretary of the Army, the Secretary of Health, Education, and Welfare, the Secretary of Housing and Urban Development, the Secretary of the Interior, the Secretary of Labor, the Secretary of Transportation, the Director of the Office of Economic Opportunity, the Administrator of the Small Business Administra- tion, the Federal Cochairman of the Appalachian Regional Commission, such Federal Cochairman as are appointed by the President under authority of Title V of the Public Works and Economic Development Act of 1965, and the Chairman of the Field Committee. (c) Whenever matters within the purview of the Council may be of interest to heads of Federal departments or agencies not represented on the Council under section 2(b) of this order, the Chairman may consult with the heads of such departments and agencies and may invite them to participate in meetings and deliberations of the Council. FEDERAL REGISTER, VOL. 33, NO. 1 — WEDNESDAY, JANUARY 3, 1968 129 THE PRESIDENT (d) The Council shall meet at the call of the Chairman. SEC. 3. Functions of the Council. The Council shall assist the Secretary of Commerce in carrying out the functions set forth in section 1 of this order, and shall, as requested by the Secretary of Commerce — (a) Review proposed long-range economic development plans prepared by the regional commissions and the Field Committee. (b) Recommend desirable development objectives and programs for such regions and Alaska. (c) Review proposed designations of additional economic development regions under Title V of the Public Works and Economic Development Act of 1965. (d) Review Federal programs relating to regional economic development, develop basic policies and priorities with respect to such programs, and recommend administrative or legislative action needed to stimulate and further regional economic development. (e) Review proposed department or agency regional economic development plans. (f) Recommend surveys and studies needed to assist the Secretary of Commerce and the Council in carrying out their functions. SEC. 4. Responsibilities of the Participating Federal Agencies, (a) Each Federal department and agency the head of which is referred to in section 2(b) of this order shall, as may be necessary, furnish assistance to the Council in accordance with the provisions of section 214 of the Act of May 3, 1945 (59 Stat. 134,31 U.S.C.691). (b) The head of each such Federal department or agency shall designate an Assistant Secretary or equivalent level official who shall have primary and continuing responsibility for the participation and cooperation of that department or agency in regional economic development as required by this order. (c) The head of each such Federal department or agency shall keep the Secretary of Commerce and the Council informed of all proposed regional economic development plans of his department or agency. (d) The head of each such Federal department or agency shall, consonant with law and within the limits of available funds, cooperate with the Council and with the Secretary of Commerce in carrying out their functions under this order. Such cooperation shall include, as may be appropriate, (1) furnishing relevant available information, (2) making studies and preparing reports, (3) in connection with the development of programs, priorities, and operations of the department or agency, giving full consideration to any plans and recommenda- tions for the economic development of the various regions, including recommendations made by the Council, and (4) advising on the work of the Council as the Chairman may from time to time request. SEC. 5. Responsibilities of the Federal Cochairmcn and the Chairman of the Field Committee. The Federal Cochairmen, and the Chairman of the Field Committee as appropriate, shall FEDERAL REGISTER. VOL. 33, NO. 1— WEDNESDAY, JANUARY 3, 1968 130 THE PRESIDENT (a) Maintain continuing liaison with the Secretary of Commerce with respect to the activities of the regional commissions and the Field Committee. (b) Adhere to general Federal policies affecting regional economic develop- ment that are established by the Secretary of Commerce. (c) Inform the appropriate Federal departments and agencies of programs and projects to be considered by the commissions, and attempt to obtain a consensus within the Federal Government through consultation with appro- priate Federal agency representatives before casting a vote on any such matter. (d) Represent the participating Federal departments and agencies in connection with the activities of the regional commissions. (e) Submit to the Secretary of Commerce regional economic development plans and programs of the regional commissions, budgetary recommendations, legislative recommendations, and progress reports, as requested by the Secretary of Commerce, on the activities of the regional commissions. (f) Submit reports required by section 304 of the Appalachian Regional Development Act of 1965 and by section 510 of the Public Works and Economic Development Act of 1965 to the Secretary of Commerce for review prior to transmittal to the President or the Congress. SEC. 6. Appalachian Program, (a) Funds appropriated pursuant to sections 201 and 401 of the Appalachian Regional Development Act of 1965 shall be available to the Federal Cochairman of the Appalachian Regional Commission for the purposes of carrying out that Act. (b) The Federal Cochairman of the Appalachian Regional Commission is delegated the functions conferred upon the President by sections 214(a), 302(a), and 302(c) of the Appalachian Regional Development Act of 1965, which shall be exercised by him in accordance with the provisions of this order. SEC. 7. Construction. Nothing in this order shall be construed as subjecting any function vested by law in, or assigned pursuant to law to, any Federal department or agency, to the authority of the Council or the Secretary of Commerce, or as abrogating or restricting any such function in any manner. SEC. 8. Definition. Except as the context may otherwise require, any reference herein to any Act, or to any provision of any Act, shall be deemed to be a reference thereto as amended from time to time. SEC. 9. Prior Executive Orders, (a) Executive Order No. 11182, as amended, is hereby further amended as follows: (1) By changing the heading of the order so as to read as follows: "ESTABLISHING THE FEDERAL FIELD COMMITTEE FOR DEVELOP- MENT PLANNING IN ALASKA". (2) By striking the words "the Housing and Home Finance Administrator" from section 1(b) and by inserting in lieu thereof the words "the Secretary of Housing and Urban Development, the Director of the Office of Economic Opportunity". (3) By substituting the following for subsection (a) of section 2: "(a) Subject to the general direction and guidance of the Secretary of Commerce, the Field Committee shall serve as the principal instrumentality for developing coordinated plans for Federal programs which contribute to FEDERAL REGISTER, VOL. 33, NO. 1 — WEDNESDAY, JANUARY 3, 1968 131 THE PRESIDENT economic and resources development in Alaska and for recommending appropriate action by the Federal Government to carry out such plans." (4) By striking from sections 3(e) and 3(f) the words "Review Committee" and by inserting in lieu thereof the words "Secretary of Commerce." (5) By revoking Part II. The President's Review Committee for Develop- ment Planning in Alaska, established by that Part, shall be deemed to be hereby abolished. (6) By redesignating Part III and section 31 thereof as Part II and section 21, respectively. (7) By redesignating Part IV and sections 41, 42, and 43 as Part III and sections 31, 32, and 33, respectively, and by striking from the redesignated section 33 the words "and the Review Committee". (b) The Federal Development Committee for Appalachia, established by Executive Order No. 11209 of March 25, 1965, is hereby abolished and that order is hereby revoked. /S/ LYNDON B. JOHNSON THE WHITE HOUSE, December 28, 1967. [F.R. Doc. 68-111; Filed, Jan. 2, 1968; 10:37 a.m.] FEDERAL REGISTER. VOL. 33, NO. 1 — WEDNESDAY, JANUARY 3, 1968 132 APPENDIX D OUTLINE OF PLAN REVIEW PROCESS 133 OUTLINE OF REGIONAL PLAN REVIEW PROCESS A. Introduction The review process described in this statement reflects experience to date in conducting the Federal review of region: plans. The procedure is based on several premises: 1 . The individual Regional Commission plan has been developed by the Federal Cochairman and the Commissio staff in close consultation with member agencies of the Regional Advisory Council. 2. Before the plan is referred to the Department of Commerce, Federal Agencies at the regional level have made review and provided inputs. 3. The review provided for herein is at the Federal headquarters level and the Federal Cochairman will involve hi Commission, as required by Commission policy and practice, in responding to recommendations an suggestions from the agencies and guidance from the Secretary of Commerce. B. Purposes The principal purposes to be achieved in the review process are: 1. To provide the Secretary and Federal Cochairman with appraisals by expert sources on problems and solution in the regional plan; 2. To inform the review elements (agencies of the Department of Commerce and other concerned department and agencies of the Executive Branch) of regional problems and proposed solutions by the Commission; 3. To permit review elements to identify areas of cooperation with the Regional Commission; and 4. To provide the Secretary and the Federal Cochairman a basis for formulating budget requests. C. Review Elements The review elements are: 1. The Secretary of Commerce; 2. The Assistant Secretary for Economic Development; 3. The Special Assistant to the Secretary of Commerce for Regional Economic Coordination (SAREC); 4. Member agencies of the Federal Advisory Council on Regional Economic Development (FACRED); and 5. Department of Commerce (DOC) Intradepartmental Committee. 134 Review Schedule (Steps) 1. Draft plan submitted by Federal Cochairman to SAREC. SAREC performs review and provides comments to the Federal Cochairman within 15 days. 2. SAREC transmits draft plan to Secretary for preliminary information purposes. 3. Draft plan distributed by SAREC or by the Federal Cochairman to the Assistant Secretary for Economic Development, the DOC Intradepartmental Committee, and member agencies of FACRED suggesting a 60-day deadline for comment. 4. Federal Cochairman submits to SAREC a report on his disposition of review element comments. SAREC prepares recommendations to the Secretary on the plan and review element comments within 15 days of receipt of Federal Cochairman's report. 5. Secretary of Commerce supplies guidance to the Federal Cochairman. 6. The Regional Commission takes action on the plan and the Federal Cochairman resubmits to Secretary of Commerce. 7. Secretary of Commerce reviews and submits the plan and his recommendations to the White House, notifying the Federal Cochairman and review elements of his actions. Focus of Review by Review Elements 1 . SAREC— The review in SAREC considers the following: (a) Does the plan meet the minimum acceptable planning requirements outlined in Secretary of Commerce memorandum of January 10, 1968 to Director, Bureau of the Budget? (b) Does the plan meet the requirements of Section 307.5 in Title 13 of the Code of Federal Regulations published July 14, 1967? (c) Does the plan respond to written guidance from the Secretary of Commerce beginning with his memorandum of January 28, 1970? 2. Assistant Secretary for Economic Development -Review by this office should include: (a) Are the Commission's projections consistent with national trends, EDA information regarding conditions in the region, and public investment payoffs? (b) How do EDA plans for redevelopment areas and districts relate to the regional plan? (c) What are the opportunities for mutually-supportive coordination between EDA activities and the programs proposed in the plan? 3. DOC Intradepartmental Commit tee —Members review the plan from the standpoint of their agency expertise, identifying potential contributions to the plan's goals and objectives. (List of member agencies attached.) 4. FACRED- FACRED review should be concerned principally with policy considerations and improvement of coordination. (List of member agencies attached.) (a) Review for conflicts in authority, jurisdiction, and legislation. 135 PE T.fl ATE UNIVERSITY LIBRARIES HIIIIIIII A0D0D7D c 1 L J q Sa3 ^TESO^