(a) Designations.—

(1) In general.—The Appalachian Regional Commission, in accordance with criteria the Commission may establish, each year shall—

(A) designate as “distressed counties” those counties in the Appalachian region that are the most severely and persistently distressed;

(B) designate as “at-risk counties” those counties in the Appalachian region that are most at risk of becoming economically distressed; and

(C) designate two categories of economically strong counties, consisting of—

(i) “competitive counties”, which shall be those counties in the region that are approaching economic parity with the rest of the United States; and

(ii) “attainment counties”, which shall be those counties in the region that have attained or exceeded economic parity with the rest of the United States.

(2) Annual review of designations.—The Commission shall—

(A) conduct an annual review of each designation of a county under paragraph (1) to determine if the county still meets the criteria for the designation; and

(B) renew the designation for another one-year period only if the county still meets the criteria.

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(b) Distressed Counties.—In program and project development and implementation and in the allocation of appropriations made available to carry out this subtitle, the Commission shall give special consideration to the needs of counties for which a distressed county designation is in effect under this section.

(c) Economically Strong Counties.—

(1) Competitive counties.—Except as provided in paragraphs (3) and (4), assistance under this subtitle for a project that is carried out in a county for which a competitive county designation is in effect under this section shall not be more than 30 percent of the project cost.

(2) Attainment counties.—Except as provided in paragraphs (3) and (4), amounts may not be provided under this subtitle for a project that is carried out in a county for which an attainment county designation is in effect under this section.

(3) Exceptions.—Paragraphs (1) and (2) do not apply to—

(A) a project on the Appalachian development highway system authorized by section 14501 of this title;

(B) a local development district administrative project assisted under section 14321(a)(1)(A) of this title; or

(C) a multicounty project that is carried out in at least two counties designated under this section if—

(i) at least one of the participating counties is designated as a distressed county under this section; and

(ii) the project will be of substantial direct benefit to at least one distressed county.

(4) Waiver.—

(A) In general.—The Commission may waive the requirements of paragraphs (1) and (2) for a project when the recipient of assistance for the project shows the existence of any of the following:

(i) a significant pocket of distress in the part of the county in which the project is carried out.

(ii) a significant potential benefit from the project in at least one area of the region outside the designated county.

(B) Reports to congress.—The Commission shall submit to the Committee on Environment and Public Works of the Senate and the Committee on Transportation and Infrastructure of the House of Representatives an annual report describing each waiver granted under subparagraph (A) during the period covered by the report.