[Federal Register: September 27, 2006 (Volume 71, Number 187)]
[Rules and Regulations]
[Page 56657-56705]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27se06-25]
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Part III
Department of Commerce
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Economic Development Administration
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13 CFR Chapter III
Economic Development Administration Reauthorization Act of 2004
Implementation; Regulatory Revision; Final Rule
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DEPARTMENT OF COMMERCE
Economic Development Administration
13 CFR Chapter III
[Docket No.: 05072910-6229-06]
RIN: 0610-AA63
Economic Development Administration Reauthorization Act of 2004
Implementation; Regulatory Revision
AGENCY: Economic Development Administration, Department of Commerce.
ACTION: Final rule.
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SUMMARY: On August 11, 2005, the Economic Development Administration
(``EDA'') published an interim final rule to reflect the amendments
made to EDA's authorizing statute, the Public Works and Economic
Development Act of 1965, by the Economic Development Administration
Reauthorization Act of 2004. A ninety-three (93) day public comment
period followed the publication of the interim final rule, specifically
from August 11, 2005 through November 14, 2005. On December 15, 2005,
EDA published an interim final rule that amended certain provisions of
the August 11, 2005 interim final rule. EDA received a large number of
public comments on different portions of the August 11, 2005 interim
final rule. This final rule responds to all substantive comments
received during the public comment period and finalizes this rulemaking
proceeding based on comments received during the public comment period.
DATES: This rule is effective as of September 27, 2006.
FOR FURTHER INFORMATION CONTACT: Hina Shaikh, Esq., Attorney Advisor,
Office of Chief Counsel, Economic Development Administration,
Department of Commerce, Room 7005, 1401 Constitution Avenue, NW.,
Washington DC 20230; telephone: (202) 482-4687.
SUPPLEMENTARY INFORMATION:
Background
EDA published an interim final rule in the Federal Register (70 FR
47002) on August 11, 2005 (the ``Interim Final Rule''). The Interim
Final Rule reflects the amendments made to EDA's authorizing statute,
the Public Works and Economic Development Act of 1965 (42 U.S.C. 3121
et seq.) (``PWEDA''), by the Economic Development Administration
Reauthorization Act of 2004 (Pub. L. 108-373, 118 Stat. 1756 (2004))
(the ``2004 Act''). In addition, the Interim Final Rule reflects EDA's
current practices and policies in administering its economic
development programs that have evolved since the promulgation of EDA's
former regulations. The Interim Final Rule provided for a public
comment period from August 11, 2005 through October 11, 2005. EDA also
held a public hearing on September 1, 2005 on the Interim Final Rule.
On September 30, 2005, EDA published a final rule (70 FR 57124)
that extended the deadline for submitting public comments on the
Interim Final Rule from October 11, 2005 until November 14, 2005. The
September 30, 2005 final rule also delayed the effective date, from
October 1, 2005 until November 14, 2005, of (i) Sec. 304.2(c)(2) of
the Interim Final Rule, pertaining to membership requirements of a
District Organization's governing body; and (ii) Sec. 301.4 of the
Interim Final Rule, as the provisions of this section pertain to
Investment Rates for EDA Planning Investments. On November 14, 2005,
EDA published another final rule (70 FR 69053) delaying the effective
date of these provisions from November 14, 2005 until January 31, 2006.
All other provisions of the Interim Final Rule became effective on
October 1, 2005.
The conference report (H.R. Rep. No. 109-272, at 136-138 (2006)
(Conf. Rep.); the ``Conference Report'') accompanying the FY 2006
Science, State, Justice, Commerce and Related Agencies Appropriations
Act (Pub. L. 109-108, 119 Stat. 2290 (2005)) (the ``2006 Appropriations
Act'') expressed Congressional intent as to specific provisions of the
Interim Final Rule. On December 15, 2005, EDA published an interim
final rule (70 FR 74193) to immediately effect only those changes to
the Interim Final Rule specified in the Conference Report (the
``December 15, 2005 Rulemaking'').
After receiving extensive input from stakeholders, EDA is
publishing this final rule to respond to all comments received during
the public comment period on all aspects of the Interim Final Rule, and
to make additional revisions. The majority of public comments were part
of a mass mailing campaign, which resulted in EDA receiving hundreds of
identical or nearly identical pieces of mail in a calendar month. For
the most part, these comments expressed opinions on 13 CFR parts 300,
301, 302, 303, 304 and 307. This final rule also explains changes made
to the Interim Final Rule in response to the Congressional
recommendations set forth in the Conference Report and effected by the
December 15, 2005 Rulemaking. Capitalized terms used but not otherwise
defined in this final rule have the meanings ascribed to them in the
Interim Final Rule (see, e.g., 13 CFR 300.3, 303.2, 307.8, 314.1 and
315.2). Specifically, this final rule makes the following revisions to
the Interim Final Rule:
Part 300--General Information
Part 300 of the regulations specifically states EDA's mission and
highlights the policies and practices that EDA employs in order to
attract private capital investments and higher-skill, higher-wage jobs
to those Regions experiencing substantial and persistent economic
distress. In drafting the Interim Final Rule, the main revisions
occurred in Sec. 300.3, in which EDA introduced several new terms and
revised existing terms. Anticipating that an improved section of
definitions would assist readers in better understanding EDA's policies
and requirements, EDA increased the number of defined terms to ensure
clarity, consistency and technical precision.
This final rule further revises part 300 of the Interim Final Rule
by inserting the word ``development'' between the words ``economic''
and ``agenda'' in the second sentence in Sec. 300.1, to clarify that
EDA's mission is to lead sustainable economic development throughout
the United States.
EDA received one comment expressing difficulty in understanding the
difference between the definitions of ``District Organization'' and
``Economic Development District.'' EDA believes that both terms are
explained clearly in the Interim Final Rule and, therefore, this final
rule does not amend these terms. A District Organization is any
organization that meets the requirements of Sec. 304.2. The definition
of Economic Development District conveys that EDA may (at the request
of a District Organization) designate a geographic area, or a
``Region,'' as an Economic Development District if the Region satisfies
the requirements of Sec. 304.1. This final rule adds a minor
clarifying point to the definition of Economic Development District to
make clear that Districts designated prior to the effective date of the
Interim Final Rule would have been designated pursuant to a previous
version of this regulation at 13 CFR part 302.
We received five comments that stated the following: ``Part 300
eliminates the EDD designation and replaces it with `District
Organization' and specifically adds reference to `community or faith-
based non-profit organization.' With numerous unfunded and under-funded
EDDs around the nation[,] expanding the number of new
[[Page 56659]]
eligible recipients is not prudent use of already limited funding.''
The Interim Final Rule replaced the reference to an Economic
Development District in the definition of ``Eligible Recipient'' with
the term ``District Organization'' because a District Organization may
apply for and receive EDA Investment Assistance. In contrast, an
Economic Development District is a geographic description and cannot
apply for EDA Investment Assistance until it establishes a structure to
give voice to the interests in that Region. EDA has included faith-
based organizations in its investment portfolio since approximately
1969; therefore, the Interim Final Rule did not expand the number of
new Eligible Recipients. Rather, the Interim Final Rule demonstrates
EDA's commitment to making its programs fully available to community
and faith-based organizations by specifically identifying these non-
profit organizations as Eligible Recipients. For these reasons, this
final rule does not amend the definition of Eligible Recipient.
This final rule replaces the lead-in statement for the defined term
Eligible Recipient to ``Eligible Recipient means any of the
following:'', and clarifies that a consortium of Indian Tribes is
qualified to be an Eligible Recipient, similar to consortia of
political subdivisions and institutions of higher education. EDA did
not intend to exclude a consortium of Indian Tribes from the definition
of Eligible Recipient; this language was inadvertently dropped from the
text of the Interim Final Rule. Additionally, the definition of ``In-
Kind Contributions'' is revised by replacing the phrase ``Uniform
Administrative Requirements of 15 CFR parts 14 and 24 (as applicable)''
with the phrase ``requirements of 15 CFR parts 14 or 24, as
applicable.'' This final rule also expands the definition of ``Indian
Tribe'' to include a non-profit Indian corporation, Indian authority
and other non-profit Indian tribal organization or entity, provided
that the tribal organization or entity is wholly owned by, and
established for the benefit of, the Indian tribe. This language was
inadvertently dropped in the Interim Final Rule. EDA makes expressly
clear that these types of organizations are included in the definition
of Indian Tribe, consistent with the definition of Indian Tribe in
EDA's former regulations.
EDA received no public comments on the defined term ``Private
Sector Representative'' in the Interim Final Rule. However, the
Conference Report accompanying the 2006 Appropriations Act included a
specific direction by Congress for EDA to expand the definition of
Private Sector Representative. Accordingly, the December 15, 2005
Rulemaking expanded the definition to include a designee of any senior
management official or executive holding a key decision-making position
in any for-profit enterprise.
EDA received one question regarding ``whether the other Federal
grant programs will allow EDA funds to match their programs.'' Section
205 of PWEDA (42 U.S.C. 3145) and Sec. 301.6 of the Interim Final Rule
authorize EDA to supplement a grant awarded in another designated
Federal grant program up to the amount of the maximum allowable EDA
investment rate, even if the other Federal grant program has a lower
grant rate. An applicant should contact the Federal Agency making the
grant award to determine if its governing statute conflicts with PWEDA.
EDA received approximately 84 identical comments stating, ``While
we appreciate the theory and practice of forging local partnerships
based on shared economic interests of a `region,' the creation of
competing regional boundaries and definitions is confusing and
misleading.'' This final rule does not amend the definition of Region
or the term ``Regional'' because it sufficiently explains that self-
sustained economic development should occur across communities and
political boundaries. EDA believes that Regional partnerships, with
human, natural, technological and capital components, are essential to
the economic competitiveness of a Region.
EDA received one comment on the definition of ``Special Need'' in
Sec. 300.3. The commenter noticed a discrepancy between the phrase
``closure or restructuring of industrial firms'' in the definition of
Special Need and the phrase ``loss of a major community employer'' in
the list of circumstances set forth in Sec. 307.1. In response to this
comment, this final rule adds to the definition of Special Need the
circumstance of a Region losing a major employer.
Part 301--Eligibility, Investment Rate and Proposal and Application
Requirements
Part 301 of the regulations sets forth eligibility, maximum
allowable Investment Rate levels, and proposal and application
requirements common to all PWEDA-enumerated programs (excluding Trade
Adjustment Assistance for Firms at part 315). Part 301 presents these
requirements in a more logical sequence than EDA's former regulations
and provides the user with a helpful roadmap to navigate through these
threshold issues.
In general, subpart A presents an overview of eligibility
requirements, subpart B addresses applicant eligibility, subpart C
addresses Regional economic distress level requirements, subpart D sets
forth the maximum allowable Investment Rates and corresponding Matching
Share requirements for various Projects, and subpart E addresses the
proposal and application requirements, as well as the evaluation
criteria used by EDA in selecting Projects.
The economic distress criteria referenced in Sec. 301.3(a) for
Projects under parts 305 and 307 track sections 301 and 405 of PWEDA
(42 U.S.C. 3161 and 3175). EDA received one comment stating that,
``Requiring the per capita income to be eighty (80) percent or less of
the national average [per capita income] will result in ineligibility
of distressed areas located in higher income areas such as the
northeast United States.'' This final rule does not amend Sec.
301.3(a)(1)(ii) because it reflects the statutory provision set forth
in section 301(a)(1) of PWEDA (42 U.S.C. 3161), which provides that for
a Project to be eligible for a Public Works or Economic Adjustment
Assistance Investment, the Project must be located in a Region that
meets one or more of the following economic distress criteria: (i) Per
capita income of 80 percent or less of the national average; (ii) an
unemployment rate that is at least one percent greater than the
national average; or (iii) a Special Need, as determined by EDA.
EDA received approximately 100 identical or nearly identical
comments on Sec. 301.3(a)(4)(i), which provides that EDA will
determine economic distress levels according to unemployment rates or
per capita income levels based upon the most recent American Community
Survey (``ACS'') published by the U.S. Census Bureau for (i) the
applicable Region where the Project will be located (for Projects
seeking to qualify under Sec. 301.3(a)(1)), (ii) the geographic area
where substantial direct Project benefits will occur (for Projects
seeking to qualify under Sec. 301.3(a)(2)), or (iii) the geographic
area of poverty or unemployment (for Projects seeking to qualify under
Sec. 301.3(a)(3)). These comments stated, ``While we support the
concept of the ACS tool, the vast majority of the nation's small
metropolitan and rural communities are years away from having access to
ACS data.''
While EDA understands that the ACS is still not available for some
geographies (e.g., census tracts,
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townships, or certain cities and counties), EDA believes that the ACS
is the most accurate and reliable metric currently available to measure
the economic distress of a Region (or other geographic area). Where a
recent ACS is not yet available, or will not be available, the
regulation makes clear that EDA will use the most recent Federal data
from other sources, including data available from the Census Bureau and
the Bureaus of Economic Analysis, Labor Statistics, Indian Affairs or
any other Federal source determined by EDA to be appropriate. For
improved clarity and understanding, this final rule amends the last
sentence in Sec. 301.3(a)(4)(i) by rephrasing ``the most recent data
available through the government of the State in which the Region is
located'' as ``the most recent data available from the State.''
For economic distress based upon a Special Need, EDA will conduct
an independent analysis of the facts and circumstances in a given case.
See Sec. 301.3(a)(4)(ii).
Section 301.4 reflects the new Investment Rate determination
structure in section 204 of PWEDA (42 U.S.C. 3144; see also sections
205 and 206 of PWEDA (42 U.S.C. 3145 and 3146)). Generally, as stated
in section 204(a) of PWEDA and in Sec. 301.4(b)(1), the maximum
Investment Rate for a Project must not exceed the sum of fifty (50)
percent, plus an additional thirty (30) percent, based on the
``relative needs'' of the Region where the Project is located.
EDA received approximately 812 identical or nearly identical
comments on the Investment Rate provisions for all EDA programs. The
majority of these comments stated: ``We are very concerned about
changes to EDA matching rates for all agency investments, including
planning grants, public works investments and economic adjustment
assistance. We fear the increased costs to our local communities for
both EDA planning grants and infrastructure projects will put our
future economic progress in jeopardy.'' We received approximately 153
comments that opposed the change in EDA Investment Rates for Planning
grants only. These comments stated that the ``new range from a minimum
of 30% Federal to 70% local to a maximum of 80% Federal and 20% local''
is likely to put a greater financial burden on rural local governments.
The December 15, 2005 Rulemaking addressed these two sets of comments,
as described in detail below.
In the Interim Final Rule, EDA provided maximum allowable
Investment Rate categories of 30% and 40% for those Regions eligible
for Investment Assistance under PWEDA, but which are experiencing lower
levels of economic distress. The Conference Report accompanying the
2006 Appropriations Act directed EDA to revise this regulation.
Accordingly, the December 15, 2005 Rulemaking provided that Projects
located in Regions demonstrating (i) a 24-month unemployment rate at
least 1% greater than the national average or (ii) per capita income
not more than 80% of the national average will be eligible to receive a
maximum allowable Investment Rate of 50%. This revision eliminated the
30% and 40% maximum allowable Investment Rate categories. The higher
threshold levels of economic distress for the 60%, 70% and 80% maximum
allowable Investment Rate categories remain the same as provided in the
Interim Final Rule.
The December 15, 2005 Rulemaking also revised Sec. 301.4(b) to the
extent that it applies to Planning Investments, by placing a subsection
titled Projects under part 303 at Sec. 301.4(b)(3), which includes the
following provisions for determining the Investment Rates for Planning
Investments: (i) All Planning Investments will receive a minimum
Investment Rate of 50%; (ii) except as otherwise provided in section
204(c) of PWEDA (42 U.S.C. 3144) and Sec. 301.4(b)(5), the maximum
allowable Investment Rate for Planning Investments will be the maximum
allowable Investment Rate set forth in Table 1 of Sec. 301.4 for the
most economically distressed county or other equivalent political unit
(e.g., parish) within the Region; (iii) the maximum allowable
Investment Rate will not exceed 80%; and (iv) in compelling
circumstances, the Assistant Secretary may waive the requirement in
paragraph (ii) above. The Assistant Secretary cannot delegate the
authority to grant this waiver.
This final rule revises Sec. 301.4(b)(2) by replacing the phrase
``paragraphs (b)(3) and (4)'' with ``paragraph (b)(5).'' References to
paragraphs (b)(3) and (b)(4) were inapplicable in the Interim Final
Rule, as Special Need Projects concern Investments under parts 305 and
307 only. Such Projects are, however, eligible for a maximum allowable
Investment Rate of one hundred (100) percent under Sec. 301.4(b)(5).
For subject-verb agreement, this final rule also revises Table 2 of
Sec. 301.4 by amending the phrase ``Projects of non-profit
organizations that the Assistant Secretary determines has exhausted its
effective borrowing capacity'' to ``Projects of non-profit
organizations that the Assistant Secretary determines have exhausted
their effective borrowing capacity.''
Additionally, this final rule revises Sec. 301.7 by replacing the
phrase ``an EDA Pre-application for Federal Assistance'' with the
phrase ``a Pre-application for Investment Assistance.'' This amendment
corresponds to a similar change EDA made to the title of its pre-
application (Form ED-900P) after publication of the Interim Final Rule.
This final rule also designates the paragraph under Sec. 301.7 as (a)
and re-designates provisions (a), (b) and (c) as (1), (2) and (3), in
order to add a second paragraph (b) which states that for certain
programs, EDA may instruct an Eligible Applicant to submit an
application for Investment Assistance in lieu of the pre-application
for Investment Assistance. EDA adds this provision to ensure clarity
regarding EDA's proposal and application requirements.
To clarify the distinction between proposal evaluation criteria and
proposal selection criteria, this final rule deletes the third sentence
in Sec. 301.8 in its entirety, and replaces the phrase ``the
applicable FFO'' in Sec. 301.9(a)(3) with ``the funding priority
considerations identified in the applicable FFO.'' In the lead-in
statement to paragraphs (a) through (e) of Sec. 301.8, we also replace
the word ``may'' with ``will,'' to have consonant wording with relevant
FFOs. This final rule also adds the word ``criteria'' to the title of
Sec. 301.9.
Part 302--General Terms and Conditions for Investment Assistance
Part 302 sets forth the general terms and conditions for EDA
Investment Assistance. The majority of provisions in this part were
transferred from part 316 of EDA's former regulations. Part 302 applies
to all Investments under PWEDA and certain provisions, such as Sec.
302.5, apply to the Trade Adjustment Assistance for Firms program under
the Trade Act (see part 315). This part covers a variety of EDA
requirements for Investment Assistance, including environmental reviews
of Projects, relocation assistance and land acquisition requirements,
inter-governmental review of Projects, and Recipients' reporting,
record-keeping, post-approval and civil rights requirements. EDA
received no public comments on Sec. Sec. 302.1 through 302.15 of the
Interim Final Rule. For consistency throughout the chapter, this final
rule amends the last sentence in Sec. 302.1 by replacing the phrase
``annual FFO'' with ``applicable FFO.'' This final rule makes
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no further revisions to Sec. Sec. 302.1 through 302.15.
EDA received approximately 109 identical or nearly identical
comments on Sec. 302.16(b) of the Interim Final Rule, in connection
with Recipients' reporting requirements. This section implements
section 212 of PWEDA (42 U.S.C. 3152), which requires recipients to
submit reports that contain an evaluation of the effectiveness of the
investment assistance provided under PWEDA. These comments expressed
concern ``about the new requirement that all performance data and
information submitted by grantees be from independent sources.''
Subsection 302.16(b) provides that data used by Recipients in preparing
reports must be accurate and verifiable, as determined by EDA, and must
come from independent sources (whenever possible). While EDA
appreciates that locating independent sources has time and cost
implications, we believe it is very important that the data used by a
Recipient is verified when possible by a reliable source independent of
the Recipient. The Recipient is the primary source for information on
the effectiveness of the Investment Assistance provided and fulfillment
of the objectives of PWEDA, and therefore, reported data must be
accurate and verifiable as determined by EDA. Whenever possible, the
Recipient should cross-check these data with an independent secondary
source to avoid conscious or unconscious biases and errors. For the
reasons stated above, this final rule does not change Sec. 302.16(b).
Section 302.17 of the regulations states EDA's conflicts of
interest policy. In the Interim Final Rule, EDA moved the conflicts of
interest provisions for revolving loan fund (``RLF'') Grants from Sec.
308.15(e) of EDA's former regulations to Sec. 302.17(c) to improve
organization and referencing facility. EDA received approximately 87
identical or nearly identical comments on Sec. 302.17(c)(3), which
provides that former board members of a Recipient of an RLF Grant and
members of his or her Immediate Family cannot receive a loan from the
RLF for a period of two years from the date that the board member last
served on the RLF's board of directors. Generally, these comments
expressed opposition to ``the change in the waiting period from one
year to two years, along with the elimination of the `exemption clause'
with [regard to] public disclosure.'' Some comments also expressed
concern that Sec. 302.17(c)(3) ``place[s] an undue burden on those
individuals that serve in the local public arena and are now unable to
participate in the RLF for a proposed two year period.''
EDA does not intend for Sec. 302.17(c)(3) to burden or penalize
local community business participants for their membership on a
District Organization's governing body or on an RLF Recipient's board
of directors. We increased the one-year period to a two-year period in
Sec. 302.17(c)(3) to be consistent with section 606 of PWEDA (42
U.S.C. 3216), which directs an Eligible Applicant to execute a binding
agreement, for the two-year period beginning on the date on which the
Investment Assistance is awarded, requiring it to refrain from
employing, offering any office or employment to, or retaining for
professional services, certain persons associated with EDA or the
Department. Because of the importance of section 606 of PWEDA, EDA's
formal application for Investment Assistance includes a certification
that must be signed by an authorized official of the Eligible
Applicant.
Similarly, Sec. 302.17(c)(3) prohibits the conduct of any business
(e.g., the issuance of an RLF loan) by a former RLF Recipient board
member and the RLF Recipient for a two-year period after leaving the
board member position. As a general matter, if a potential or actual
conflict arises, a former RLF Recipient board member has a fiduciary
duty to disclose the conflict. We removed the conflict waiver exception
found in Sec. 308.15(e) of EDA's former regulations because public
disclosure of an actual or potential conflict, regardless of whether
the benefit conferred is substantial or de minimus, can potentially
damage the credibility of the RLF Recipient's decision-making process.
The removal of the conflict waiver exception makes EDA's conflicts of
interest rules for RLFs consistent with its general conflicts of
interest policy (see Sec. 302.17(a)). For these reasons, this final
rule does not amend Sec. 302.17(c)(3). EDA received no comments on the
conflicts of interest provisions for the Trade Adjustment Assistance
for Firms program, as set forth in Sec. 315.15.
EDA received no public comments on Sec. Sec. 302.18 through 302.20
of the Interim Final Rule. These sections of part 302 remain as
provided in the Interim Final Rule.
Part 303--Planning Investments and Comprehensive Economic Development
Strategies
Part 303 was revised in the Interim Final Rule to emphasize that
results-driven implementation, not just the writing of a
``Comprehensive Economic Development Strategy'' (or ``CEDS''), is vital
to successful performance under EDA's Planning program. The CEDS is a
crucial part of EDA's program portfolio and is required to be in place
before a Recipient may receive a Public Works Investment or Economic
Adjustment Assistance under parts 305 or 307. Part 303 discusses the
application and award requirements for Planning Investments and the
requirements for CEDS, State plans and short-term Planning Investments.
To ensure clarity, this final rule revises the first sentence in
Sec. 303.1 by amending the phrase ``related to short-term Planning
Investments and State plans'' to ``and for related short-term Planning
Investments and State plans.'' For consistency with the definition of
Eligible Recipient in Sec. 300.3, this final rule also amends the
second sentence in Sec. 303.1 by replacing the phrase ``Economic
Development Districts'' with ``District Organizations.'' We received
one comment stating that Sec. 303.1 ``expand[s] eligibility for
planning assistance to community development corporations and non-
profit regional development organizations.'' EDA did not expand the
list of Eligible Recipients for Planning Investments because public and
private non-profit organizations already are included in the definition
of Eligible Recipient in Sec. 300.3. Rather, we included community
development corporations and non-profit regional development
organizations in our introductory discussion addressing the purpose and
scope of Planning Investments.
We received approximately 130 identical comments expressing
``concern about several of the application requirements, including the
primary focus on creating `higher-skill, higher-wage jobs' and
involving business leaders in every phase of the CEDS process.''
Section 303.1 states that the purpose of EDA Planning Investments in
part includes assistance for short-term Planning Investments and State
plans designed to create and retain higher-skill, higher-wage jobs. EDA
believes this goal must be achieved particularly in the most
economically distressed Regions, as that is where high levels of
unemployment and underemployment exist. Additionally, in considering an
application for a Planning Investment under Sec. 303.3(a), EDA will
consider the involvement of the Region's business leadership in the
preparation of the CEDS, short-term planning activities, or in the
development of State plans. In line with its goal of fostering Regional
partnerships, EDA believes that communities and Regions must access
expert resources and interact with business leaders and entrepreneurs
in
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order to improve their economy and to create private sector jobs.
EDA received approximately 136 identical comments on the definition
of ``Planning Organization'' found in Sec. 303.2, which expressed
strong opposition to ``the removal of the specific reference to
District Organizations and Indian tribes as the primary planning
partners of the agency.'' The Interim Final Rule simplified the former
definition of Planning Organization by replacing the references to
Economic Development Districts and Indian Tribes with the term
``Recipient.'' The definition of Eligible Recipient in Sec. 300.3
includes District Organizations and Indian Tribes; therefore, the
definition of Planning Organization in Sec. 303.2 involves no
substantive change from EDA's former regulations. To clarify the
functions of a Planning Organization, this final rule amends the
definition of Planning Organization by inserting the phrase ``and
implement'' after the word ``develop.''
EDA received two comments on the application requirements for
Planning Investments set forth in Sec. 303.3(a). The comments
expressed, ``It seems redundant to require a `pre-application' when
seeking a planning grant, as mentioned in the interim final rule; it
seems that this is unnecessary with the mid-year and annual reports
required currently.'' The commenters questioned whether a pre-
application for Investment Assistance is necessary for all Planning
Investments. By adding a new subsection to Sec. 301.7 as discussed in
detail above, EDA makes it clear in this final rule that in certain
circumstances, EDA may instruct an Eligible Applicant or Recipient to
submit an application for Investment Assistance rather than a pre-
application. To ensure that the title of Sec. 303.3 conforms to its
content, this final rule adds ``and evaluation criteria'' to the title.
In addition, we restate the lead-in statement for paragraphs (a)(1)
through (5) as ``In addition, applications for Planning Investments
must include information about the following,'' and delete the phrase
``Quality of'' in paragraph (a)(1) to make clear that EDA requires
Eligible Applicants to provide the information described in Sec.
303.3(a) for all Planning Investment applications. We also make a
grammatical revision to Sec. 303.3(a)(5) by replacing the word
``during'' with ``through.''
Section 303.3(b) provides that funded Recipients will be evaluated
on the extent of continuing distress within the Region, their past
performance, and the overall effectiveness of their CEDS. For
conformity with the revisions we make to Sec. 303.3(a) in this final
rule, we replace the phrase ``requirements of'' with ``criteria set
forth in'' in Sec. 303.3(b).
We received approximately 212 comments on Sec. 303.4(c). The
majority of these comments expressed ``concern about the lack of
details on the funding of [P]lanning grants'' and stated that the
Interim Final Rule is ``vague on the link between receiving a
designation as a District Organization and annual and long-term
financial support from EDA.'' EDA did not intend for Sec. 303.4(c) to
suggest that Investment Assistance to Planning Organizations would be
``one-time only'' awards. We fully expect to continue our successful
partnership with Planning Organizations representing Economic
Development Districts (as well as to fund designated but unfunded
Districts). This final rule clarifies the regulation by stating that
EDA will provide a Planning Investment for the period of time required
to develop, revise or replace, and implement a CEDS, generally in
``thirty-six (36) month renewable Investment award periods.'' The
phrase ``thirty-six (36) month renewable Investment award periods''
clarifies that the regulation contemplates continuation of EDA's
historic relationship with Districts.
Consistent with the focus on obtaining a well-prepared and
demonstrable CEDS, Sec. 303.5 provides that Planning Investments may
be used to pay only direct and indirect costs (administrative or
otherwise) attributable to the development and implementation of a
CEDS. EDA received approximately 279 identical or nearly identical
comments on this provision, which expressed strong opposition to
limiting direct and indirect costs to activities related to the CEDS.
As provided in Sec. 303.5(a), EDA determines allowable costs by
reference to ``applicable Federal cost principles,'' namely, the
following Office of Management and Budget (``OMB'') Circulars: Circular
No. A-122 titled ``Cost Principles for Nonprofit Organizations'' (2 CFR
part 230); Circular No. A-21 titled ``Cost Principles for Education
Institutions'' (2 CFR part 220); and Circular No. A-87 titled ``Cost
Principles for State, Local and Indian Tribal Governments'' (2 CFR part
225). Upon closer examination of Sec. 303.5, EDA believes subsection
(c) regarding allowable ``indirect costs'' is superfluous inasmuch as
these costs would be eligible consistent with EDA's application of
these OMB circulars to indirect cost rates. Therefore, this final rule
removes Sec. 303.5(c) in its entirety.
This final rule also removes Sec. 303.5(b) in its entirety because
the express statement that Planning Investments may only be used to pay
the costs attributable to the EDA-approved scope of work (i.e., for the
purpose of developing and implementing a CEDS) does not distinguish
Planning Investments from any other EDA Investment. Generally, all EDA
Investment Assistance may be used to pay costs of activities that are
directly attributable to the Project's scope of work. To ensure clarity
and better understanding of the concepts explained above, this final
rule reformats Sec. 303.5 and revises the sentence to indicate that
Planning Investments may be used to pay the direct and indirect costs
incurred by a Planning Organization in the development, replacement or
revision, and implementation of a CEDS and for related short-term
planning activities. Rewritten in this manner, EDA believes Sec. 303.5
is consistent with the Senate Report accompanying the 2004 Act, which
states that authorized uses of funds under section 203 of PWEDA include
``administrative expenses to support the on-going formulation and
implementation of comprehensive economic development strategies.'' S.
Rep. No. 108-382, at 4 (2004).
Section 303.6(a) requires that a Strategy Committee (appointed by a
Planning Organization) represent the main economic interests of the
relevant Region by including a majority of its representatives from
businesses within the Region. The Strategy Committee is tasked with
developing (and revising or replacing as necessary) the Planning
Organization's CEDS. EDA received approximately 585 identical or nearly
identical comments on Sec. 303.6(a), which expressed strong
``oppos[ition] to efforts [that] reduce the involvement and control of
local government officials in strategic planning and development
activities.'' In order to sustain long-term Regional economic growth,
EDA believes that contributions from the private sector are paramount
for the CEDS development. We do not believe this requirement is
restrictive or that it minimizes local government participation in
local development activities. Rather, when Sec. 303.6(a) is read in
its entirety, it requires that innovative public and private leaders
create a strong sense of Regional cooperation in order to develop a
viable CEDS.
We received one comment on Sec. 303.6(c). This section requires
Planning Organizations to be accountable to EDA for updated CEDS
performance. The commenter opined that this provision ``does not go far
enough,'' and stated that ``[t]here needs
[[Page 56663]]
to be some requirement that [Planning] [O]rganizations put a plan for
self-sufficiency in each CEDS, and that they attain self-sufficiency
within 10 years of first receiving EDA Investment Assistance.'' EDA
does not intend to implement such a requirement absent Congressional
authorization.
To improve the structure of Sec. 303.7(a) and improve readability,
this final rule amends the second sentence in Sec. 303.7(a) by
deleting the phrase ``, and assigning lead organizations
responsibilities for execution of the CEDS'' and placing ``and'' before
the word ``identifying.'' We received one comment asking for EDA to
define the word ``critical'' in the last sentence of Sec. 303.7(a).
This final rule does not revise this sentence in Sec. 303.7(a) at this
time because EDA believes it sufficiently relates that the creation of
a successful CEDS depends heavily on its participants. If CEDS
development galvanizes a partnership between business and government,
it will play a ``critical'' or essential role in enabling and
strengthening Regional economies.
Section 303.7(b) lists specific technical requirements related to
the preparation of the CEDS document. These requirements include (i) a
discussion of private sector participation in the CEDS work, rather
than community participation, (ii) a specific plan of action with
certain criteria for gauging the implementation of the goals and
objectives of the CEDS, and (iii) specific performance measures for
appraising the Planning Organization's development and execution of the
CEDS. We received approximately 83 identical comments stating support
of these requirements. The commenters stated that ``the new technical
requirements of the CEDS process are sound and beneficial to local
development efforts.'' This final rule amends Sec. 303.7(b)(7) by
replacing the phrase, ``A section identifying economic clusters that
are growing or in decline within the Region'' with ``A section
identifying economic clusters within the Region, focusing on those that
are growing or in decline.'' We revise Sec. 303.7(b)(7) as such to
clarify that Planning Organizations should identify all economic
clusters in the Region and specify those that are growing or in
decline. For clarity, we also insert the word ``development'' after
``economic'' in Sec. 303.7(b)(10).
Section 303.9 outlines EDA's requirements for short-term Planning
Investment Assistance. This final rule amends Sec. 303.9(c) by
replacing the phrase ``program reports'' with ``progress reports,'' as
the incorrect use of the word ``program'' in the Interim Final Rule was
an oversight.
EDA received two comments expressing that part 303 ``focus[es]
solely on the CEDS without clearly defining who will be responsible for
implementation of the [CEDS].'' As noted earlier, the Strategy
Committee is tasked with developing (and revising or replacing as
necessary) the CEDS. EDA believes it is the responsibility of the
District Organization as a whole to implement the technical elements of
the CEDS, which are set forth in Sec. 303.7(b).
We received one comment asking if there are any changes in the
Interim Final Rule for Planning Investments to Indian Tribes. All
Planning Investments, whether awarded to District Organizations, Indian
Tribes, community development corporations, non-profit regional
planning organizations or other Eligible Recipients (as listed in Sec.
303.1), are governed by the requirements of part 303. The Interim Final
Rule made no specific changes to this part with respect to Planning
Investments to Indian Tribes. Investments to Indian Tribes are subject
to the same requirements as other Eligible Recipients and the
discussion in this preamble applies equally to them.
EDA received approximately 81 identical comments expressing concern
that the Interim Final Rule is ``silent on the transition period and
guidelines for thousands of local communities already covered by an
existing CEDS, whether prepared by a District Organization, Indian
[T]ribe or other [P]lanning [O]rganization.'' EDA does not believe that
administrative or instructional guidelines on how Planning
Organizations will transition to comply with the requirements of parts
303 and 304 belong in a set of regulations. This final rule does not
amend the regulations at this time. However, EDA is cognizant that
Recipients require a reasonable amount of time to comply with the new
requirements. To that end, EDA is providing a one-year period for all
Planning Organizations to demonstrate compliance with the requirements
with parts 303 and 304. For all awards made in FY 2006, the Planning
Organization must demonstrate compliance with all new requirements one
year from the date of receiving EDA Investment Assistance.
Part 304--Economic Development Districts
Part 304 on Economic Development Districts (also referred to as a
``District'' or an ``EDD'' in Sec. 300.3) sets forth the Regional
eligibility requirements that must be satisfied in order for EDA to
consider a District Organization's request to designate a Region as an
EDD, including submission of an EDA-approved CEDS, and the District
Organization's formation and organizational requirements. This part
also contains provisions relating to termination and performance
evaluations of District Organizations. As described in detail below,
the December 15, 2005 Rulemaking revised sections in this part in
accordance with the Conference Report accompanying the 2006
Appropriations Act.
All provisions with respect to formation, organization and
operation of a District Organization are contained in Sec. 304.2. EDA
received over one thousand identical or nearly identical comments on
the provision in Sec. 304.2(c)(2), which requires a District
Organization's governing body to include a majority of Private Sector
Representatives (as defined in Sec. 300.3). The majority of these
comments ``adamantly opposed [ ] the new requirements that shift the
governing bodies of [District Organizations] from the majority control
of local government officials to unnamed private sector
representatives.'' Section 304.2(c)(2) never became effective on
October 1, 2005, as the September 30, 2005 and November 14, 2005 final
rules delayed its effective date until January 31, 2006.
As directed in the Conference Report accompanying the 2006
Appropriations Act, EDA revised Sec. 304.2(c)(2) in the December 15,
2005 Rulemaking as follows: (i) A District Organization's governing
body must, unless otherwise prohibited by applicable State or local
law, include at least one (1) Private Sector Representative, together
with one (1) or more of the following: Executive directors of chambers
of commerce, or representatives of institutions of post-secondary
education, workforce development groups, or labor groups, all of which
(including the Private Sector Representative) must comprise in the
aggregate a minimum of 35% of the District Organization's governing
body; and (ii) if the District Organization demonstrates an inability
to locate a Private Sector Representative to serve on its governing
body following extensive due diligence (as determined by EDA), the
Assistant Secretary may waive the Private Sector Representative
requirement. The December 15, 2005 Rulemaking also added a provision
stating that the District Organization's governing body will also have
at least a simple majority of its membership who are elected officials
and/or employees of a general purpose unit of local government who have
been appointed to represent the government.
[[Page 56664]]
EDA received approximately 795 identical or nearly identical
comments on Sec. 304.2(d), which provides that District Organizations
may contract for services to accomplish approved scopes of work for
Planning Investments. The majority of these comments stated, ``We are
specifically opposed to * * * minimizing local government participation
in local planning and development activities.'' As directed in the
Conference Report accompanying the 2006 Appropriations Act, EDA revised
Sec. 304.2(d) in the December 15, 2005 Rulemaking to specify that a
District Organization will engage in the full range of economic
development activities listed in its EDA-approved CEDS, which may
include (i) coordinating and implementing economic development
activities in the District; (ii) carrying out economic development
research, planning, implementation and advisory functions identified in
the CEDS; and (iii) coordinating the development and implementation of
the CEDS with other local, State, Federal and private organizations.
This subsection continues to give District Organizations the discretion
to contract for services as necessary.
EDA also received public comment on sections describing District
termination, specifically subsections 304.3(b) and (c). EDA received
approximately 520 identical or nearly identical comments on Sec.
304.3(b). These comments expressed concern ``that the agency has added
new criteria for the termination of District Organizations that are
subjective and lack any appeals process.'' We received approximately 87
identical or nearly identical comments on Sec. 304.3(c), which
expressed concern ``that the agency may use the [Federal Funding
Opportunity] process to change its policies, guidelines and performance
standards without public comment.''
Section 304.3(b)(2) provides that EDA may terminate a Region's
designation as an Economic Development District when EDA determines
that the District Organization fails to execute its CEDS according to
the development, implementation and other performance measures set
forth in the CEDS. In accordance with the Conference Report
accompanying the 2006 Appropriations Act, the December 15, 2005
Rulemaking added a new subsection (c) to Sec. 304.3 to clarify that
prior to terminating a District's designation under subsection
304.3(b)(2), EDA will consult with the District Organization and
consider all facts and circumstances surrounding the District
Organization's operations. Section 304.3(c) also provides that EDA will
not terminate a District's designation based on circumstances beyond
the control of the District Organization (e.g., natural disaster, plant
closure, overall economic downturn, sudden and severe economic
dislocation, or other situation).
This final rule does not amend Sec. 304.3(d). We believe that the
December 15, 2005 Rulemaking changes to Sec. 304.3 safeguard District
Organizations adequately with respect to District termination. EDA
cannot use the Federal Funding Opportunity announcement process to
change the regulatory standards for termination or modification of the
designation of Economic Development Districts.
Information with respect to the performance evaluations of District
Organizations, formerly codified in part 318 of EDA's former
regulations, is now incorporated into Sec. 304.4. Pursuant to PWEDA,
EDA will evaluate each District Organization within three (3) years
after the initial Investment award and at least once every three (3)
years thereafter, so long as the District Organization continues to
receive Investment Assistance. On Sec. 304.4(a), we received
approximately 415 identical comments stating that ``most of the
requirements for grantee performance measurements are very vague and
open to varying agency interpretations among the different regional
offices.'' We do not believe that the provisions of Sec. 304.4(a) are
vague. In fact, unlike EDA's former regulations, the performance
evaluation provisions of Sec. 304.4(a) contain specific requirements
for Economic Development Districts, such as the continuation of
Regional eligibility of the District, the management of the District
Organization, and the implementation of its CEDS. EDA's regional
offices are directed to interpret and apply EDA's regulations
consistently and uniformly across all regions in the United States. For
these reasons, this final rule does not amend Sec. 304.4(a).
Last, EDA received four comments expressing ``concern with the
elimination of up to 10% additional assistance if a project is located
within a designated Economic Development District.'' Because former
section 403 of PWEDA was eliminated by the 2004 Act, EDA removed from
its regulations the ten (10) percent EDA ``bonus'' funding for certain
Projects located in Economic Development Districts. Because EDA must
implement its statutory mandate of PWEDA, EDA is unable to reinstate
the ten (10) percent bonus.
Part 305--Public Works and Economic Development Investments
Part 305 describes general information about the scope of EDA's
Public Works program, award and application requirements, and
provisions for EDA's and Recipients' duties. EDA received no public
comments on this part. Section 305.1 provides information on the
purpose and scope of Public Works and Economic Development Investments.
The criteria section (Sec. 305.2) specifies the scope of activities
eligible for consideration of a Public Works Investment in subsection
(a), and sets forth a list of determinations in subsection (b) that EDA
must reach in order to award a Public Works Investment.
The application requirements for Public Works Investments are set
forth in Sec. 305.3. The section on Public Works Projects for design
and engineering work was moved from subpart B and placed as Sec. 305.4
under subpart A. This section includes a provision to ensure awareness
that EDA's funding of a Project for design and engineering work does
not in any way commit EDA to fund construction of the Project.
The first section under subpart B is Sec. 305.5, titled Project
administration by District Organization. These provisions are included
in this subpart because the provisions are applicable to construction
projects only. Section 305.6 combines two former sections titled
Construction Management services and Design/Build method of
construction (Sec. Sec. 305.10 and 305.11 of EDA's former regulations)
and addresses and accounts for the majority of Public Works Investments
that lend themselves to the traditional design/build method of
construction. However, Recipients may employ other construction
methods, too. This final rule amends the second sentence of Sec.
305.6(a) by replacing the phrase ``design-build'' with ``design/bid/
build.''
Similar to the provisions in Sec. 305.6, Sec. 305.7 includes
information that the Recipient must submit to EDA to justify the use of
``in-house forces.'' Section 305.8 provides that Recipients of EDA
construction awards must obtain prior approval for the use of furnished
equipment and materials. Requests must show that costs claimed for
furnished equipment and materials are competitive with local market
costs for similar equipment and materials. Section 305.9 contains
specific information that the Recipient must provide to EDA for
approval of any Project that necessitates phasing, including a
description of elements to be completed in each phase and
[[Page 56665]]
detailed construction cost estimates for each phase. The last five (5)
sections in subpart B, Sec. Sec. 305.10 (Bid underrun), 305.11
(Contract awards; early construction start), 305.12 (Project sign),
305.13 (Contract change orders) and 305.14 (Occupancy prior to
completion), contain the same substance as found in EDA's former
regulations. However, EDA rewrote these sections in the Interim Final
Rule to eliminate ambiguity or extraneous provisions.
Except for the revision made in Sec. 305.6(a) stated above, this
final rule does not amend part 305 of the Interim Final Rule.
Part 306--Training, Research and Technical Assistance Investments
Part 306 was primarily reorganized, shortened and rewritten in the
Interim Final Rule for increased understanding and inclusiveness of all
pertinent information. Section 306.1(a), dealing with the scope of
Local and National Technical Assistance Investments, captures diverse
purposes for such Investments. Section 306.2, titled Award
requirements, is the combination of Sec. Sec. 307.2 and 307.10 of
EDA's former regulations. Similarly, the content of Sec. Sec. 307.3
and 307.11 in EDA's former regulations was merged into Sec. 306.3 and
re-titled Application requirements. Section 306.3(c) specifically
cross-references Sec. 301.4(b)(4), which sets forth the governing
provisions for determining applicable Investment Rates for Projects
under part 306. A cross-reference to Sec. 301.4(b) is made in
applicable sections of all parts relating to specific EDA programs
(i.e., parts 303-307).
EDA received approximately seven comments on Sec. 306.3(c) which
stated that the provision is ``much too demanding in terms of local
match required.'' Section 301.4(b)(4) ties the maximum allowable
Investment Rate for Local and National Technical Assistance Projects to
that otherwise applicable to the Region in which the Project will be
located. Section 301.4(b)(4) also authorizes a maximum Investment Rate
of up to a one hundred (100) percent for Projects of a national scope
under 13 CFR part 306 and for all other projects under 13 CFR part 306,
in appropriate circumstances. We believe the maximum allowable
Investment Rates for Local and National Technical Assistance
Investments are fair and will preserve the Local Share requirement to
make certain Recipients commit their own funds to help ensure the
success of the Projects.
In the Interim Final Rule, the title of subpart B was changed from
University Center Program to University Center Economic Development
Program. To mirror the organization and sequence of Sec. Sec. 306.2
and 306.3 in subpart A, Sec. Sec. 306.5 and 306.6 are named Award
requirements and Application requirements, respectively. Section 306.5
states that EDA provides Investment Assistance to University Center
Projects based on the selection criteria in part 301, the competitive
selection process outlined in the applicable FFO, and the extent to
which the Eligible Applicant demonstrates other more specific, related
criteria.
Section 306.6 sets forth application requirements for University
Center Projects. Section 306.6(c) cross-references Sec. 301.4(b)(4)
for information regarding the applicable Investment Rate for University
Center Projects. EDA received approximately fourteen comments on Sec.
306.6(c), each that stated ``we are very troubled by the proposal to
change the match requirements on the EDA [U]niversity [C]enter grant[s]
and strongly oppose such a move.'' Section 206 of PWEDA (42 U.S.C.
3146) requires EDA to consider the ``relative needs'' of eligible
areas. As noted above, we believe Sec. 301.4(b) appropriately takes
``relative needs'' into account for purposes of determining the maximum
allowable Investment Rates and the Local Share requirements for EDA
Investments. Accordingly, this final rule does not amend Sec.
306.6(c).
The University Center Economic Development Program establishes a
three-year competitive cycle in which performance evaluations occurring
within three (3) years after the initial Investment award will
determine if a University Center may qualify to compete again for
Investment Assistance. Consistent with section 506(d)(2) of PWEDA (42
U.S.C. 3196), Sec. 306.7 contains an additional performance evaluation
standard by which University Centers will be evaluated. At a minimum,
University Centers will be evaluated specifically with regard to their
contributions to providing technical assistance, conducting applied
research, meeting program performance objectives and disseminating
Project results in accordance with the scope of work funded during the
evaluation period.
This final rule adopts part 306 of the Interim Final Rule in its
entirety.
Part 307--Economic Adjustment Assistance Investments
EDA extensively considered and examined part 308 of EDA's former
regulations in order to draft part 307 of the Interim Final Rule. This
part was greatly improved by making effective use of defined terms in
subpart A (covering Economic Adjustment Assistance Investments) and in
subpart B (covering special requirements for RLF Grants). EDA did not
receive any public comments on subpart A of part 307, covering
Sec. Sec. 307.1 through 307.6. This final rule amends Sec. Sec.
307.1, 307.2 and 307.4 as described below.
To ensure conformity between the titles of Sec. Sec. 307.1 and
307.2 and their respective contents, this final rule changes the title
of Sec. 307.1 to Purpose and the title of Sec. 307.2 to Criteria for
Economic Adjustment Assistance Investments. For improved clarity, we
also move Sec. 307.1(b) to Sec. 307.2 and delete Sec. 307.2(b) in
its entirety because an identical statement is already in Sec.
307.4(d). This final rule revises Sec. 307.4(d) to read as ``Funding
priority considerations for Economic Adjustment Assistance may be set
forth in an FFO.''
In drafting the Interim Final Rule, EDA revised subpart A to follow
PWEDA and read more concisely. For example, in Sec. 307.3 (titled Use
of Economic Adjustment Assistance Investments), EDA introduced the new
defined terms ``Strategy Grant,'' referring to Economic Adjustment
Assistance Investments that help develop CEDS to alleviate long-term
economic deterioration or a sudden and severe economic dislocation, and
``Implementation Grant,'' defined as an Economic Adjustment Assistance
Investment used to fund a Project implementing a CEDS. Section 308.4 in
EDA's former regulations, titled Selection and evaluation factors, was
renamed Award requirements in Sec. 307.4, parallel with similar
provisions in other program parts, and reorganized and sub-titled for
clarity.
EDA redrafted in the Interim Final Rule Sec. 307.6 to emphasize
and cross-reference relevant parts or subparts in the chapter with
respect to Strategy Grants and Implementation Grants. For instance,
Implementation Grants involving construction must meet the requirements
for Public Works Investments, whereas Implementation Grants not
involving construction must follow the requirements for Local and
National Technical Assistance Investments. Accordingly, the Interim
Final Rule references parts 303, 305 and 306 in Sec. 307.6 for
additional requirements that Strategy Grants and Implementation Grants,
as appropriate, must fulfill (in addition to the post-approval
stipulations set forth in Sec. 302.18).
Except for an amendment made to Sec. 307.9 as explained below,
this final rule does not substantively amend subpart B of part 307.
However, we have
[[Page 56666]]
re-ordered some of the sections in subpart B to logically separate pre-
approval actions from post-approval actions. The following discussion
summarizes the provisions of this subpart. The first section, Sec.
307.7, states that subpart B sets forth the requirements applicable to
Economic Adjustment Assistance Grants used to capitalize or
recapitalize RLFs. To ensure accuracy and completeness in this subpart,
EDA rewrote in the Interim Final Rule the defined terms in Sec. 307.8,
which relate to RLF Grants. EDA also introduced new defined terms, such
as ``Exempt Security,'' ``Sale,'' ``SEC,'' ``Security'' and ``RLF Third
Party,'' in large part to interpret the provisions of section 209(d)(2)
and (4) of PWEDA (42 U.S.C. 3149).
The requirements for RLF Plans are set forth in Sec. 307.9, which
states that EDA will evaluate an RLF Plan based on its ability to
``demonstrate an adequate understanding of commercial loan portfolio
management procedures, including loan processing, underwriting,
closing, disbursements, collections, monitoring, and foreclosures''
(see Sec. 307.9(b)(3)). We received two comments opposing the
provision in Sec. 307.9 that requires the RLF Plan be submitted to and
approved by EDA and passed by resolution of the RLF Recipient's
governing board prior to initial disbursement of EDA funds. The
commenters indicated that from a practical standpoint, it may not be
possible for a State or large city to pass a resolution accepting an
RLF Plan; however, a resolution requirement may be more reasonable for
a non-profit organization. In response to these comments and in order
to maintain necessary flexibility in EDA's grant-making processes and
requirements, this final rule revises the second sentence in Sec.
307.9 to require that the Plan be submitted to and approved by EDA. EDA
will require a resolution by the RLF Recipient's governing board on a
case-by-case basis.
This final rule moves Sec. 307.16, titled Disbursement of funds to
Revolving Loan Funds, to Sec. 307.11 because it describes certain pre-
approval requirements that must be satisfied prior to any disbursement
of EDA funds (e.g., evidence of fidelity bond coverage; establishment
of an EDA funds account). This section was revised and reorganized in
the Interim Final Rule from Sec. 308.16 of EDA's former regulations.
Section 307.12 makes explicit the general rule that RLF Income must be
placed into the RLF Capital base for the purpose of making loans or
paying for eligible and reasonable administrative costs associated with
the RLF's operations. Section 307.12(c) provides a priority of payment
schedule for proceeds on a defaulted RLF loan that is not subject to
liquidation pursuant to Sec. 307.20.
The next three sections, Sec. Sec. 307.13, 307.14 and 307.15
(titled Records and retention; Revolving Loan Fund semi-annual and
annual reports; and Prudent management of Revolving Loan Funds), are
substantively the same as Sec. Sec. 308.13, 308.14 and 308.15 of EDA's
former regulations. The main focus of the revision to these sections,
as seen in the Interim Final Rule, was to incorporate defined terms to
improve the explanation of the specific documentation, accounting and
reporting requirements. Additionally, the conflicts of interest
provisions in Sec. 308.15(e) in EDA's former regulations were moved to
Sec. 302.17(c) to improve organization and referencing facility.
This final rule moves Sec. 307.17 (titled Effective utilization of
Revolving Loan Funds) to Sec. 307.16. This section was slightly
reworded in the Interim Final Rule from what appeared in Sec. 308.17
of EDA's former regulations. Those revisions largely incorporated the
use of defined terms (e.g., Closed Loan; RLF Capital). This final rule
also moves Sec. 307.18 (titled Uses of capital) to Sec. 307.17. This
section sets forth specific restrictions on the use of RLF Capital.
Section 307.17(d) clarifies that In-Kind Contributions may satisfy
Matching Share requirements when specifically authorized in the RLF
Grant and may be used to provide technical assistance to borrowers or
for eligible RLF administrative costs.
This final rule moves Sec. 307.11, which addresses the addition of
lending areas and the merger of RLFs, to Sec. 307.18. In this section,
EDA (i) correlated the substance of the section to applicable
provisions in section 209 of PWEDA (42 U.S.C. 3149), (ii) eliminated
information no longer applicable due to the passage of the 2004 Act,
and (iii) explained and expanded important concepts in an orderly,
coherent manner with the use of defined terms. In the Interim Final
Rule, EDA changed the title of the section from Lending areas and
modification of lending areas to Addition of lending areas; merger of
RLFs, to highlight the increased flexibility that PWEDA affords to RLF
Recipients for consolidating and merging RLF Grants. Section
307.18(a)(1) sets forth the preconditions that must be met in order for
EDA to approve the creation of a ``New Lending Area.'' Similarly, Sec.
307.18(b) sets forth the preconditions for EDA to approve a single RLF
Recipient's or multiple RLF Recipients' merger of RLFs. The
requirements in subparagraphs (1) and (2) are substantively the same
regarding single RLF Recipients and multiple RLF Recipients. Each must
meet the requirements to obtain annual report status (set forth in
Sec. 307.14) and amend and consolidate the RLF Plans to account for
the merger. Prior to EDA's disbursement of additional funds to the RLF
Recipient (or surviving RLF Recipient), EDA must determine a new
Investment Rate for the New Lending Area.
EDA drafted Sec. Sec. 307.19 and 307.20 of the Interim Final Rule
as new provisions to accomplish the authorization for EDA's Assistant
Secretary to ``assign or transfer assets of a revolving loan fund to a
third party for the purpose of liquidation'' and ``take such actions as
are appropriate to enable revolving loan fund operators to sell or
securitize loans'' (see section 209(d)(2)(B) and (C) of PWEDA (42
U.S.C. 3149)). First, in any Sale or Securitization in which an RLF
Recipient may participate, Sec. 307.19 requires compliance with the
Securities Act of 1933, the Securities Exchange Act of 1934 and any
rule or regulation made public by the Securities and Exchange
Commission (see section 209(d)(4) of PWEDA (42 U.S.C. 3149)). The RLF
Recipient must use all proceeds from any Sale or Securitization to make
additional RLF loans. Second, Sec. 307.20 provides the terms that will
govern any partial or full liquidation of an RLF Recipient's RLF loans.
In the case of an EDA-approved termination of an RLF Grant, EDA may
assign or transfer assets of the RLF to an RLF Third Party for
liquidation.
Section 307.21 provides the process for termination of RLFs.
Subsection 307.21(b) provides a new authority that allows EDA to
approve a request from an RLF Recipient to terminate an RLF Grant. The
last section, Sec. 307.22, was rephrased in the Interim Final Rule for
clarity and completeness and covers the same material found at Sec.
308.19 of EDA's former regulations.
EDA did not receive any specific comments on Sec. Sec. 307.7
through 307.21 of subpart B. However, we received approximately 87
identical or nearly identical comments expressing general ``concern
that RLF administrators are required to receive regular approval from
EDA for a variety of activities and decisions.'' Other comments stated,
``The EDA RLF program should not have additional constraining
administrative oversight requirements imposed on it so as to interfere
with the core mission of the program to provide capital and credit to
regions and businesses not served by traditional lenders.'' EDA
[[Page 56667]]
believes the new RLF provisions in subpart B are consistent with the
Senate Report accompanying the 2004 Act, which calls for the Assistant
Secretary to ``promulgate regulations to improve the administration of
[RLFs], consolidate [RLFs] at the grantee's request and transfer RLF
portfolio assets to third parties for liquidation.'' S. Rep. No. 108-
382, at 6 (2004). Specifically, the strengthened audit and reporting
requirements do not alter the original intent and scope of the RLF
program or impose new cost burdens on RLF Recipients.
Part 308--Performance Incentives
Part 308 incorporates new sections 215 and 216 of PWEDA (42 U.S.C.
3154a; 42 U.S.C. 3154b). EDA received no comments on this part, nor
does this final rule amend this part. The discussion below summarizes
the part 308 provisions.
For any construction Project awarded under parts 305 or 307 that is
completed under projected cost pursuant to section 211 of PWEDA (42
U.S.C. 3151), Sec. 308.1(a) provides that EDA may in its discretion
allow the Recipient to use the excess funds to either increase the
Investment Rate of the Project to the maximum percentage allowable
under Sec. 301.4 for which the Project was eligible at the time of the
Investment award, or further improve the Project consistent with its
purpose.
Additionally, section 215 of PWEDA (42 U.S.C. 3154a) authorizes the
Assistant Secretary to make performance awards in connection with
grants to Recipients for Public Works or Economic Adjustment Assistance
Investments. Section 308.2(a) provides that, with respect to any such
Investment, the Assistant Secretary may grant a performance award to
the Recipient (on a discretionary basis) in an amount not to exceed ten
(10) percent of the Project's Investment award. As discussed in the
Conference Report accompanying the 2006 Appropriations Act, EDA revised
Sec. 308.2(b) in the December 15, 2005 Rulemaking to better adhere to
section 215 of PWEDA (42 U.S.C. 3154a). Specifically, EDA replaced the
requirement that project performance be ``exceptional'' with the ``meet
or exceeds'' threshold in section 215(b)(2) of PWEDA (42 U.S.C. 3154a).
Section 308.2(c) provides that a Recipient may receive a
performance award no later than three (3) years following the Project's
closeout. Following section 215(e)-(f) of PWEDA (42 U.S.C. 3154a),
Sec. 308.2(d) provides that performance awards may fund up to one
hundred (100) percent of the cost of an eligible Project or any other
authorized activity under PWEDA, and for the purpose of meeting the
non-Federal share requirement of PWEDA or any other statute, the
performance award amount will be treated as non-Federal funds.
Additionally, EDA will set forth in an applicable FFO the requirements,
qualifications, guidelines and procedures for performance awards, with
all performance awards being subject to the availability of funds (see
Sec. 308.2(e)).
With respect to planning performance awards, Sec. 308.3 tracks the
language of section 216 of PWEDA (42 U.S.C. 3154b). Section 308.3
introduces that a Recipient may be eligible to receive a planning
performance award in an amount not to exceed five (5) percent of the
amount of the applicable Investment. As with performance awards made to
Recipients of Public Works or Economic Adjustment Assistance
Investments, the Assistant Secretary will make such awards on a
discretionary basis. As set forth in Sec. 308.3(a), such awards are
predicated on a finding that the Recipient actively participated in the
economic development activities of the District and that the Project
demonstrated exceptional fulfillment of one (1) or more components of
the applicable CEDS.
Part 309--Redistributions of Investment Assistance
The provisions in part 309 of the Interim Final Rule are new and
were not in EDA's former regulations. EDA received no comments on this
part. Except for a minor revision made to Sec. 309.1(a) as described
below, this final rule does not amend this part. The discussion below
summarizes part 309.
In accordance with new section 217 of PWEDA (42 U.S.C. 3154c),
information with respect to redistributions of Investment funds for
Planning, Public Works, and Training, Research and Technical Assistance
Investments is presented in Sec. 309.1. Specifically, Sec. 309.1(a)
provides that a Recipient under any program governed by parts 303, 305
and 306 may directly expend the Investment Assistance, or, with prior
EDA approval, redistribute such funds in the form of a subgrant to
another Eligible Recipient that qualifies for EDA Investment Assistance
under the same program part as the Recipient. All subgrants must be
subject to the same terms and conditions applicable to the Recipient
under the original Investment award. To improve sentence structure,
this final rule changes the phrase ``Except as provided by * * *.'' to
``Except as provided in * * *.'' in the first sentence of Sec.
309.1(a). Subsection 309.1(b) stipulates that Investment Assistance
received under parts 303 or 305 may not be redistributed to a for-
profit entity.
Section 309.2 addresses redistributions under part 307 for Economic
Adjustment Assistance Investments. This section reads similarly to
Sec. 309.1. However, a Recipient under part 307 may redistribute
Investment funds to another Eligible Recipient in the form of a Grant
or to a non-profit and private for-profit entity in the form of a loan
(or loan guarantee) under subpart B of part 307.
Part 310--Special Impact Areas
Part 310 corresponds to new section 214 of PWEDA (42 U.S.C. 3154),
which allows the Assistant Secretary to waive the CEDS requirements of
section 302 of PWEDA (42 U.S.C. 3162) for a Project that will fulfill a
``pressing need'' of the Region or prominently address or alleviate
Regional underemployment or unemployment. EDA did not receive any
public comments on part 310. EDA does not make any changes to this
part.
Section 310.1 generally tracks section 214 of PWEDA (42 U.S.C.
3154), but makes clear that any waiver of the requirements of section
302 of PWEDA (42 U.S.C. 3162) applies only to an individual Project,
not to all Projects located within the Region.
Section 310.2(a) interprets the ``pressing need'' language of the
new PWEDA provision and reflects standard EDA policy priorities, based
on, among other things, assistance to Indian Tribes, rural and severely
distressed Regions, and the existence of a Special Need. Similarly,
subsections 310.2 (b) and (c) set forth quantitative measures of
excessive unemployment and as indicators of useful employment
opportunities, such as the Project's prospective job creation,
commitment of financial investment by private entities, and application
of innovative technology.
Part 311--[Reserved]
Part 312--[Reserved]
Part 313--[Reserved]
Part 314--Property
Part 314 sets forth the rules governing the uses of and EDA's
interests in Property acquired, in whole or in part, or improved with
EDA Investment Assistance. The changes made by the Interim Final Rule
to the Real Property provisions in subpart B primarily reflect EDA
policies regarding the increasing use of ``public-private''
partnerships to spur Regional economic development. EDA received no
comments on this part.
[[Page 56668]]
The discussion below explains changes made to Sec. Sec. 314.1, 314.4,
314.6, 314.7 and 314.10 by this final rule and summarizes changes
previously made by the Interim Final Rule to specific sections of part
314.
In the Interim Final Rule, EDA revised defined terms from EDA's
former regulations and added new defined terms in Sec. 314.1 for
clarity and consistency. For example, the definition of ``Adequate
Consideration'' includes the concept of ``fair market value'' (i.e.,
the purchase price agreed upon between a buyer and a seller acting in
good faith, both having full knowledge of the material facts and
circumstances surrounding the contemplated transaction). In comparison,
EDA's former regulations used a ``fair and reasonable'' determination
to define Adequate Consideration. This final rule removes the defined
terms ``Encumbrance'' and ``Encumber.'' These terms were defined in
Sec. 314.1 as having the meaning ascribed to them in Sec. 314.6.
Inasmuch as the title of Sec. 314.6 is Encumbrances, the reader will
have no difficulty in finding and understanding EDA's discussion of
these terms. For improved accuracy and understanding, this final rule
also amends the definition of ``Estimated Useful Life'' to make clear
that this term refers to the time span over which EDA participates and
realizes the economic development benefits of its Investment in a
Project.
Section 314.2(a) provides that (i) Property acquired or improved,
in whole or in part, with Investment Assistance is held in trust by the
Recipient for the benefit of the Project and (ii) EDA maintains an
equitable reversionary interest in such Property for the Estimated
Useful Life of the Project (defined as the ``Federal Interest'').
Section 314.2(b) is the same as the provisions set forth in EDA's
former regulations and provides that when the Federal government is
fully compensated for the Federal Share of Property acquired or
improved, in whole or in part, with Investment Assistance, the Federal
Interest is extinguished and the Federal government has no further
interest in the Property.
Section 314.3, titled Authorized use of Property, provides the
circumstances in which Recipients may use Property acquired or
improved, in whole or in part, with Investment Assistance. For example,
Sec. 314.3(d) allows EDA to approve the transfer of Property from a
Recipient to a Successor Recipient (or between two Successor
Recipients) and clarifies that the process necessary to effectuate a
substitution of the Recipient (or Successor Recipient) involves
transferring the Project Property between the parties. The provision in
Sec. 314.3(f) was introduced in the Interim Final Rule and was not
present in EDA's former regulations. This provision authorizes EDA to
approve, and a Recipient to undertake, an incidental use of Property
that does not interfere with the scope or economic purpose of the
Project. This incidental use is conditioned upon the Recipient's
compliance with applicable law and the terms and conditions of the
Investment Assistance.
Section 314.4(a) provides that, with certain exceptions, the
Federal government must be compensated for the Federal Share whenever,
during the Estimated Useful Life of the Project, any Property acquired
or improved (in whole in part) with Investment Assistance is Disposed
of, encumbered, or no longer used for the purpose of the Project. This
final rule amends Sec. 314.4(a) by replacing the phrase ``Uniform
Administrative Requirements for Grants at 15 CFR parts 14 and 24'' with
the phrase ``requirements at 15 CFR parts 14 or 24, as applicable.''
Section 314.4(b) sets out additional Unauthorized Uses of Property
prior to the release of EDA's interest. Section 314.4(c) generally
tracks Sec. 314.4(b) of EDA's former regulations and sets forth the
remedies available to EDA to recover the Federal Share in the event of
an Unauthorized Use. This final rule adds a new sentence to subsection
(c) to restore the language that previously was set out in Sec.
314.5(d) of EDA's former regulations, which specifies that payment of
the Federal Share in accord with this section extinguishes the Federal
Interest in the Property. Section 314.5(d) of EDA's former regulations
was moved to Sec. 314.2(b) in the Interim Final Rule, which covers
Federal Interest provisions. We are adding a similar statement to Sec.
314.4(c) concerning Unauthorized Use of Property to clarify that once
the Federal Share is repaid, EDA has no continuing interest in the
ownership, use or Disposition of the Property.
Section 314.5 defines ``Federal Share'' and is substantively the
same as Sec. 314.5(a) of EDA's former regulations. Similarly, Sec.
314.6 is substantively the same as Sec. 314.6 of EDA's former
regulations (although the provisions are reordered to present the
general rule and exceptions in a more logical sequence) and, with
certain exceptions, prohibits the encumbrance of Recipient-owned
Property. To improve clarity, this final rule revises the first
sentence in Sec. 314.6(a) by eliminating the phrase ``(collectively,
an ``Encumbrance'' or to ``Encumber'').'' Further, this final rule adds
the phrase ``, except to secure a grant or loan made by a Federal
Agency or State agency or other public body participating in the same
Project'' after the words ``or otherwise encumbered'' in the first
sentence of Sec. 314.6(a). This revision aims to simplify program
administration by allowing such encumbrances to remain on EDA-assisted
Properties without requiring the administrative step of requesting and
obtaining specific EDA approval. As a matter of policy, EDA
automatically approves such requests and, therefore, the extra step is
unnecessary. Section 314.6(b)(1) sets out a similar provision that
authorized EDA to approve an encumbrance on Project Property when the
Recipient has encumbered the Property at the behest of another Federal
Agency. This final rule removes Sec. 314.6(b)(1) in its entirety and
re-numbers paragraphs (b)(2), (b)(3) and (b)(4) as paragraphs (b)(1),
(b)(2) and (b)(3), respectively.
Section 314.7(a) sets forth the requirement that a Recipient must
hold title to the Real Property required for a Project at the time
Investment Assistance is awarded and must maintain title at all times
during the Estimated Useful Life of the Project (the ``General Rule'').
Section 314.7(c) sets forth the exceptions to the General Rule. For
example, Sec. 314.7(c)(1) addresses the situation where Investment
Assistance will be used to purchase Real Property required for a
Project. Under Sec. 314.7(c)(1), EDA may determine that the Recipient
satisfies the title ownership requirement of Sec. 314.7(a) if the
Recipient has entered into a Real Property purchase agreement and
provides reasonable assurances that it will obtain fee title for the
Real Property needed for a Project prior to or concurrent with the
initial disbursement of Investment Assistance.
Subsections 314.7(c)(5) and (6) address situations where the EDA-
approved purpose of the Project is to construct facilities benefiting
Real Property owned by the Recipient (Sec. 314.7(c)(5)) or privately-
owned Real Property (Sec. 314.7(c)(6)), where the benefited Real
Property will ultimately be sold or leased to private parties. These
provisions replace Sec. 314.7(c)(3) and (4) in EDA's former
regulations and generally apply to all types of Real Property,
including but not limited to industrial and commercial parks. For
improved sentence structure and accuracy, this final rule reformats
subsections (c)(5)(i)(D) and (c)(6)(i)(D) of Sec. 314.7 to clarify
that the sale or lease of any portion of a Project during its Estimated
Useful Life must be for
[[Page 56669]]
Adequate Consideration, and the terms and conditions of the Investment
Assistance and the purpose(s) of the Project must continue to be
fulfilled after the sale or lease. EDA may waive these requirements
under the specific circumstance provided in both subsections, namely,
after the ten (10) year anniversary of the date upon which the
Investment Assistance was awarded. This final rule also removes the
references in Sec. Sec. 314.7(c)(5)(i)(E) and 314.7(c)(6)(i)(E) to the
number of times a Project is transferred, because EDA believes that the
five (5) year anniversary periods (similar to the ten (10) year
anniversary period noted above) are more accurate measures of whether a
Project is continuing to serve the purpose(s) for which the underlying
EDA Investment was made.
Section 314.8 is substantively the same as Sec. 314.8 of EDA's
former regulations and generally provides that for all Projects
involving the acquisition, construction or improvement of a building,
the Recipient must execute a lien, covenant or other statement of EDA's
interest in such Real Property. Any lien, covenant or statement of
EDA's interest must be perfected and recorded (in accordance with local
law) in the jurisdiction in which the Real Property is located. Section
314.9 is substantively the same as Sec. 314.9 of EDA's former
regulations and provides that for all Projects involving the
acquisition or improvement of significant items of Personal Property,
the Recipient must execute a security interest or other statement of
EDA's interest in such Personal Property. Any security interest or
statement must be perfected and recorded in accordance with applicable
law and with continuances re-filed, as appropriate.
Subsections 314.10(a) through (c) are substantively the same as
subsections 314.11(a) through (c) of EDA's former regulations. This
final rule eliminates the phrase ``, in whole or in part,'' from Sec.
314.10(a). In addition, in Sec. 314.10(c)(1), we replace the phrase
``paragraph (a)'' with ``paragraphs (a) or (b),'' for conformance with
Sec. 314.11(c)(1) of EDA's former regulations.
The Interim Final Rule added a new section to EDA's regulations at
Sec. 314.10(d). This section sets forth the procedures for requesting
a release of EDA's Real Property or tangible Personal Property interest
pursuant to section 601(d)(2) of PWEDA (42 U.S.C. 3211) and Sec.
314.10. This final rule revises the second sentence of Sec.
314.10(d)(1) to read as follows: ``In addition to the restrictions set
forth in paragraph (c) of this section, the release may be conditioned
upon some activity of the Recipient intended to be pursued as a
consequence of the release.'' EDA makes these revisions to ensure
clarity and to ensure consistency among different provisions of Sec.
314.10.
Part 315--Trade Adjustment Assistance for Firms
The Interim Final Rule substantially revised the Trade Adjustment
Assistance for Firms (``TAA'') program provisions of EDA's former
regulations. In the Interim Final Rule, part 315 was reorganized and
simplified primarily by expanding the use of defined terms and by
adding a new subpart D on Adjustment Proposals. This final rule adopts
part 315 without substantive change except for amendments made to
Sec. Sec. 315.5, 315.6, 315.7, 315.8 and 315.16.
Among the new definitions in Sec. 315.2, the defined terms
``Increase in Imports'' and ``Contributed Importantly'' describe two
(2) of the most important concepts of the TAA program. In order for EDA
to determine that a petitioning Firm demonstrates injury, the
petitioning Firm must show that An Increase in Imports Contributed
Importantly to its (i) decline in sales or production and (ii) loss of
employment. EDA received two (2) comments suggesting that the defined
term ``Increase in Imports'' is an ``outdated condition required to
qualify domestic manufacturers for needed TAA.'' The commenters stated
that ``when significant market-share has been captured by imports,
there may not be an increase in imports because of general economic
conditions whereby the demand for a particular product may decline.''
This final rule does not amend the definition of ``Increase in
Imports'' because the definition tracks section 251(c) of the Trade Act
(19 U.S.C. 2341) precisely and is intended to provide for more
consistent application in injury determinations.
The new term ``Decreased Absolutely'' imposes a five (5) percent
minimum injury threshold requirement in the measurement of a Firm's
decline in sales or production. EDA received approximately seven
comments on this defined term which stated that the five (5) percent
minimum injury threshold requirement will deny access to further
qualified Firms, making it more difficult for them to qualify for the
TAA program. This final rule does not amend the definition of
``Decreased Absolutely.'' EDA has imposed this new threshold to (i)
eliminate certification of Firms whose decline in sales or production
is de minimis and, therefore, less certain to be attributable to an
Increase in Imports, and (ii) help ensure that limited TAA program
funds are provided to the most merit-worthy Firms facing difficult
adjustment problems as a result of an Increase in Imports. Similarly,
the definitions of ``Predecessor'' and ``Successor'' Firms set forth in
the Interim Final Rule provide guidance for the circumstance where a
petitioning Firm relies on the economic injury suffered by a corporate
predecessor. These defined terms make clear that the Successor must
have been in business less than two (2) years and must have purchased
substantially all of the assets of the Predecessor.
Section 315.5 consolidates into one section the scope of
operations, selection, evaluation and award requirements of the Trade
Adjustment Assistance Centers (``TAACs''), the non-profit and
university-affiliated organizations that administer the TAA program
nationwide through Cooperative Agreements with EDA. For consistency
throughout the chapter, we amend the last sentence in Sec. 315.5(a)(1)
by replacing the phrase ``annual FFO'' with ``applicable FFO.'' For
improved understanding and formatting, this final rule also deletes the
lead-in phrase in Sec. 315.5(b) and replaces the semicolon in Sec.
315.5(b)(1) with a period. Additionally, we revise Sec. 315.5(b)(2) by
making clear that EDA may invite new TAAC proposals through an FFO.
Section 315.6 consolidates into one section the eligibility,
evaluation and award requirements for Firms seeking Adjustment
Assistance under the TAA program. This final rule amends the title of
Sec. 315.6 to read as Firm eligibility for Adjustment Assistance, to
more accurately reflect the section's contents, and removes the
subtitles in paragraphs (a) through (c). Further, for clarity and
conciseness, we replace the first sentence in Sec. 315.6(a)(3) with
the sentence in Sec. 315.6(a)(4), and marginally revise the second
sentence in Sec. 315.6(a)(3).
Section 315.7 outlines the requirements for injury determinations
based on a twelve-month (12) decline (Sec. 315.7(b)(1)), an interim
sales or production decline (Sec. 315.7(b)(2)), or an interim
employment decline (Sec. 315.7(b)(3)). This section makes clear that
in order to be certified under any of these circumstances, a Firm must
meet all of the requirements of the applicable subsection. We received
approximately eight comments on Sec. 315.7(b), three of which
expressed opposition to the applicable twelve-month (12) and six-month
(6) periods of comparison outlined in Sec. Sec. 315.7(b)(1) and
315.7(b)(3), and five of which expressed that the ``change to require
six-month interim periods from the currently quarterly interim periods
[in Sec. 315.7(b)(2)] will limit the number of
[[Page 56670]]
potentially eligible [F]irms to enter the program.'' EDA increased the
injury periods for an interim sales or production decline and an
interim employment decline to help ensure that limited TAA program
funds are provided to the most merit-worthy Firms facing difficult
adjustment problems as a result of an Increase in Imports into the
United States. Section 315.7 as set forth in the Interim Final Rule
adds consistency and integrity to these injury determination
requirements by ensuring that (i) injury has occurred recently and (ii)
injury is not due to seasonal fluctuations in sales, production or
employment. This final rule amends the second sentence in Sec.
315.7(a) by deleting the phrase ``all of'' and replacing the word
``requirements'' with ``circumstances.''
Section 315.8, titled Processing petitions for certification,
generally tracks Sec. 315.10 of EDA's former regulations. This final
rule amends this section to include a reference to Form ED-840P, which
a petitioning Firm must complete and submit to EDA in order to apply
for Adjustment Assistance. This final rule also replaces the lead-in
sentence of Sec. 315.8(b) to include the new title of the form.
Additionally, in response to comments received on this regulation,
Sec. 315.8(b)(5) is revised to add the requirement that a petitioning
Firm also must submit to EDA one (1) copy of a complete auditor's
certified financial report for the entire period covering the petition,
or if not available, one (1) copy of the complete profit and loss
statements, balance sheets and supporting statements prepared by the
Firm's accountants for the entire period covered by the petition.
Public companies should submit copies of their most recent Form 10-K
annual reports (or Form 10-Q quarterly reports, as appropriate) filed
with the U.S. Securities and Exchange Commission for the entire period
covered by the petition. This final rule also eliminates Sec.
315.8(b)(6) and re-designates subsections (b)(7) and (b)(8) as (b)(6)
and (b)(7), respectively. As requested, EDA is eliminating the
requirement that Firms submit Federal income tax returns and State
employment tax returns in order to reduce respondent burden in
completing and submitting petitions (on Form ED-840P).
Although the substantive provisions in Sec. 315.8 were not
modified in the Interim Final Rule, one commenter raised a concern on
the process prescribed in paragraphs (c) (relating to formal EDA
acceptance of a petition for certification) and (g) (relating to the
time of the determination after acceptance of a petition). The
commenter contended that these paragraphs do not comport with the
underlying statutory provision that requires EDA to make a
determination about certification not later than 60 days after the date
the petition is ``filed'' (see 19 U.S.C. Sec. 2341(d)). EDA believes
the requirements of paragraphs (c) and (g) of this section (discussed
below) are fully consistent with the statute. Moreover, these
provisions have been in the EDA regulations without substantive change
since 1995 (although the Interim Final Rule provides that EDA will send
notice of a technically deficient petition to the sponsoring TAAC
instead of to the petitioning firm). This final rule does not change
either paragraph (c) or (g) of Sec. 315.8 from the version published
in the Interim Final Rule.
In evaluating petitions for determinations of certification under
paragraphs (c) and (g) of Sec. 315.8 of the Interim Final Rule, EDA
employs a two-stage process. First, EDA conducts a technical review
based on the requirements set forth in paragraph (b) of Sec. 315.8 to
determine if a petition has been properly filed and can be accepted for
investigation. Second, EDA examines the ``accepted'' petition to
determine whether the firm is eligible for program benefits based on
the claims set forth in the petition. EDA works closely with the TAACs
upon receipt of a petition and during the early stages of the petition
evaluation process to ensure that eligible firms are not denied access
to the TAA program due to technical defects in their petitions. The
submission of accurate petitions also decreases the time it takes EDA
to certify firm eligibility. EDA intends to work more closely with the
TAACs to ensure that petitions submitted by firms through the TAACs
meet technical petition filing requirements. For its part, EDA will
endeavor to process accepted petitions in an expeditious manner and
well in advance of the 60-day review period required by the statute and
by paragraph (g) of Sec. 315.8 of the Interim Final Rule.
The commenter also recommended that EDA drop the new regulations
and look for ways to streamline the certification process. For the
reasons noted above, EDA believes it has streamlined significant
aspects of the certification process in response to comments. Moreover,
in addition to these new regulations, EDA has placed into service a new
petition for certification that streamlines the petition process. This
final rule includes those provisions necessary to enable EDA to
demonstrate it is administering the Trade Adjustment Assistance Program
in a manner consistent with the requirements of law.
Section 315.9, titled Hearings, and Sec. 315.11, titled Appeals,
final determinations and termination of certification, divide Sec.
315.11 of EDA's former regulations to address separately these distinct
topics. As set forth in the Interim Final Rule, subpart C, titled
Protective Provisions, contains standard provisions consistent with the
Trade Act and EDA policy on recordkeeping (Sec. 315.12), audit and
examination (Sec. 315.13), certifications (Sec. 315.14) and conflicts
of interest (Sec. 315.15).
Subpart D, titled Adjustment Proposals, presents provisions
reflecting long-standing practices of EDA and the TAACs in evaluating
Adjustment Proposals. This final rule changes the title of Sec. 315.16
to Adjustment Proposal Requirements and removes the word ``process'' in
the lead-in statement. To clarify the appropriate uses of TAA program
funds, this final rule also adds a new subsection (d) to Sec. 315.16
to read as follows: ``The Adjustment Assistance identified in the
Adjustment Proposal must consist of specialized consulting services
designed to assist the Firm in becoming more competitive in the global
marketplace. For this purpose, Adjustment Assistance generally consists
of knowledge-based services such as market penetration studies,
customized business improvements, and designs for new products.
Adjustment Assistance does not include expenditures for capital
improvements or for the purchase of business machinery or supplies.''
Finally, subpart E, titled Assistance to Industries, is effectively
unchanged from EDA's former regulations, tracking the current statutory
provisions of the Trade Act.
Classification
Prior notice and opportunity for public comment are not required
for rules concerning public property, loans, grants, benefits, and
contracts (5 U.S.C. 553(a)(2)). Because prior notice and an opportunity
for public comment are not required pursuant to 5 U.S.C. 553, or any
other law, the analytical requirements of the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.) are inapplicable. Therefore, a regulatory
flexibility analysis has not been prepared.
Executive Order No. 12866
It has been determined that this final rule is significant for
purposes of Executive Order 12866.
[[Page 56671]]
Congressional Review Act
This final rule is not major under the Congressional Review Act (5
U.S.C. 801 et seq.)
Executive Order No. 13132
Executive Order 13132 requires agencies to develop an accountable
process to ensure ``meaningful and timely input by State and local
officials in the development of regulatory policies that have
federalism implications.'' ``Policies that have federalism
implications'' is defined in Executive Order 13132 to include
regulations that have ``substantial direct effects on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various levels
of government.'' It has been determined that this final rule does not
contain policies that have federalism implications.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.)
(``PRA'') requires that a Federal agency consider the impact of
paperwork and other information collection burdens imposed on the
public and, under the provisions of PRA section 3507(d), obtain
approval from OMB for each collection of information it conducts,
sponsors, or requires through regulations. Notwithstanding any other
provision of law, no person is required to respond to, nor shall any
person be subject to a penalty for failure to comply with a collection
of information subject to the PRA unless that collection displays a
currently valid OMB Control Number.
The following table provides a complete list of the collections of
information (and corresponding OMB Control Numbers) set forth in this
final rule. These collections of information are necessary for the
proper performance and functions of EDA. Subsequent to the August 11,
2005 publication of the Interim Final Rule (as amended by the December
15, 2005 Rulemaking), EDA undertook an extensive review of its
collections of information, and thereby changed the title of four (4)
of its collections of information and consolidated three (3)
collections of information into existing information collections.
------------------------------------------------------------------------
Part or section of this Form/title/OMB
final rule Nature of request Control Number
------------------------------------------------------------------------
301.2; 301.10............... With an application ED-900A, Application
for Investment for Investment
Assistance, a non- Assistance (0610-
profit Eligible 0094).
Applicant must
include a
resolution passed
by an authorized
representative of a
political
subdivision of a
State.
301.3(a); 301.10; An Eligible ED-900P, Pre-
305.3(a)(1). Applicant must Application for
substantiate Investment
Regional Assistance (0610-
eligibility and 0094).
justify the
requested EDA
Investment
Assistance based
on, for example,
the unemployment
rate, per capita
income levels, or a
Special Need (as
determined by EDA)
in the Region in
which the Project
will be located.
The Eligible
Applicant also must
identify and submit
to EDA the source
of data used to
substantiate
Regional
eligibility (e.g.,
ACS data, other
Federal data for
the Region in which
the Project will be
located, or data
available through
the State
government).
301.4(b)(1)(i); 305.3(a)(1). An Eligible ED-900P, Pre-
Applicant must Application for
provide information Investment
on the severity of Assistance (0610-
the Region's 0094).
unemployment and
its duration, the
per capita income
levels and extent
of the Region's
unemployment or
outmigration.
301.4(b)(4)................. An Eligible ED-900P, Pre-
Applicant for a Application for
Project under part Investment
306 must provide Assistance (0610-
information to show 0094).
that the Project
merits an increase
to the Investment
Rate because of the
Project's
infeasibility
without such an
increase, or
because the Project
will be of no or
only incidental
benefit to the
Eligible Applicant.
301.5; 301.10............... An Eligible ED-900A, Application
Applicant must for Investment
provide information Assistance (0610-
to show that 0094).
Matching Share
funds will be
available for the
Project.
301.7....................... An Eligible ED-900P, Pre-
Applicant must Application for
submit an Investment
Investment proposal Assistance (0610-
on EDA's pre- 0094).
application (on
Form ED-900P or any
successor form).
301.7(a)(1); 301.10(a) and For Projects ED-900A, Application
(b). selected from for Investment
successful pre- Assistance (0610-
applications, EDA 0094).
will invite those
Eligible Applicants
to submit formal
applications for
Investment
Assistance (on Form
ED-900A or any
successor form).
301.10(b)(3)................ An Eligible ED-900A, Application
Applicant for a for Investment
construction Assistance (0610-
Project under parts 0094).
305 or 307 must
include with its
application for
Investment
Assistance a CEDS
acceptable to EDA
(pursuant to part
303) or otherwise
incorporate by
reference a current
CEDS that EDA
approves for the
proposed Project.
302.7(a).................... Recipients must Award Amendment
submit requests for Request (0610-
amendments to 0102).
Investment awards
in writing to EDA
for approval and
provide information
and documentation
as EDA deems
necessary.
302.9(a).................... An Eligible ED-900A, Application
Applicant must for Investment
furnish comments on Assistance (0610-
the Project from 0094).
the relevant
governmental
authority in the
Region or proof of
efforts to obtain
comments if none
were provided by
the governmental
authority.
[[Page 56672]]
302.10(b)(1)................ An Eligible ED-900A, Application
Applicant must for Investment
certify to EDA the Assistance (0610-
names of any 0094).
persons engaged by
or on behalf of the
Eligible Applicant
for the purpose of
expediting
Investment
Assistance
applications made
to EDA.
302.14(a)................... Recipients shall Audits of States,
keep records of the Local Governments,
amount and and Non-Profit
disposition of Organizations, OMB
awards of Circular A-133.
Investment
Assistance, the
total cost of the
Project, the amount
and nature of the
portion of the
Project costs
provided by other
sources and other
records that would
facilitate an
effective audit.
302.15...................... An Eligible ED-900P, Pre-
Applicant must Application for
certify (and submit Investment
evidence thereof Assistance (0610-
satisfactory to 0094).
EDA) that it meets
the requirements
for receiving
Investment
Assistance.
302.16(b)................... Recipients are Government
required to submit Performance and
reports consisting Results Act
of data-specific (``GPRA'')
evaluations of the Performance
Project's Validation Forms
effectiveness. (0610-0098).
302.16(c)................... EDA may require a Project Service Map
Recipient to (0610-0102).
provide a ``Project
service map'' and
other information
in order to
determine which
segments of the
Region are being
assisted with the
Investment
Assistance.
302.20(d)................... Recipients and Other ED-900A, Application
Parties must submit for Investment
written assurances Assistance (0610-
to EDA that they 0094).
will comply with
anti-discriminatory
laws and
regulations.
303.9(c).................... Eligible Applicants GPRA Performance
for short-term Validation Forms
Planning Investment (0610-0098).
Assistance must
provide performance
measures acceptable
to EDA, and provide
EDA with progress
reports during the
term of the
Planning Investment.
304.1; 304.4(a)............. To have a Region Comprehensive
certified as an Economic
EDD, a District Development
Organization must Strategies and
submit information Planning
showing that the Investments (0610-
Region contains at 0093).
least one area
subject to the
relevant economic
distress criteria,
is able to foster
development on a
larger scale than
in a single area,
has an EDA-approved
CEDS and obtains
commitments from a
majority of the
relevant counties
and States.
304.2(c)(2); 304.4(b)....... The District ED-900A, Application
Organization must for Investment
demonstrate that Assistance (0610-
its governing body 0094);
is broadly Comprehensive
representative of Economic
the principal Development
economic interests Strategies and
of the Region. Planning
Investments (0610-
0093).
304.2(c)(4)................. The District Comprehensive
Organization must Economic
notify the public Development
of its annual Strategies and
meetings, its Planning
decisions, the Investments (0610-
results of 0093).
programs, and as
reasonably
requested, the
results of audited
statements, annual
budgets, and
minutes of public
meetings.
305.2(b); 305.3(a)(3)....... An Eligible ED-900A, Application
Applicant must show for Investment
that the Public Assistance (0610-
Works Project will 0094); Construction
promote: the growth Investments (0610-
of industrial or 0096).
commercial plants,
the creation of
long-term
employment
opportunities
primarily for low-
income families,
and the fulfillment
of the Region's
pressing needs.
305.4(c).................... In order to receive ED-900A, Application
any portion of the for Investment
Investment Assistance (0610-
Assistance for 0094); Construction
design and Investments (0610-
engineering work, 0096).
an Eligible
Applicant must
submit and certify
information that
documents
compliance with the
Investment awards
of all design and
engineering
contracts.
305.5....................... In order to allow a ED-900A, Application
District for Investment
Organization to Assistance (0610-
administer the 0094); Construction
Project for another Investments (0610-
Recipient, the 0096).
Recipient must make
this request and
submit information
to EDA showing that
the Recipient does
not have the
current staff
capacity to
administer the
project, the
District
Organization would
be more effective
than another local
business or
organization, the
District
Organization would
not subcontract the
work, and the costs
of District
Organization
administration will
not exceed the
allowable costs
were the Recipient
administering it.
305.6....................... A Recipient may use ED-900A, Application
an alternate for Investment
construction Assistance (0610-
procurement method 0094); Construction
to the traditional Investments (0610-
design/bid/build. 0096).
If an alternate
method is used, the
Recipient must
submit to EDA for
approval a
construction
services
procurement plan
and the Recipient
must use a design
professional to
oversee the process.
[[Page 56673]]
305.7....................... The Recipient may ED-900A, Application
use ``in-house for Investment
forces'' for Assistance (0610-
design, 0094); Construction
construction, Investments (0610-
inspection, legal 0096).
services or other
work on the Project
if it submits a
sufficient
justification to
EDA.
305.8(a); 305.8(b).......... Recipients of EDA ED-900A. Application
construction awards for Investment
must obtain prior Assistance (0610-
approval for the 0094); Construction
use of furnished Investments (0610-
equipment and 0096).
materials. Requests
must show that
costs claimed for
furnished equipment
and materials are
competitive with
local market costs
for similar
equipment and
materials.
305.9....................... An EDA construction ED-900A, Application
award Recipient for Investment
must submit Assistance (0610-
information to EDA 0094); Construction
regarding why Investments (0610-
phasing is 0096).
necessary, a
description of the
phasing, related
costs and
schedules, and
certification that
the Recipient will
pay for overruns
and that it is
capable of paying
for incurred costs
before the first
disbursement.
305.10...................... If at the Construction
construction Investments (0610-
contract bid 0096).
opening, the lowest
responsive bid is
less than total
Project cost, the
Recipient will
notify EDA to
determine whether
Investment funds
should be
deobligated from
the Project.
305.11...................... Recipients may issue Construction
a notice permitting Investments (0610-
construction under 0096).
contract to
commence prior to
an EDA
determination of
award compliance
and eligibility for
cost reimbursement,
but will proceed at
their own risk
until EDA review
and concurrence.
The EDA regional
office may request
information from
the Recipient to
make a
determination of
award compliance.
305.12...................... EDA requires a Construction
Recipient to erect Investments (0610-
a project sign or 0096).
signs at the
Project
construction site
to indicate that
the Federal
government is
participating in
the Project. The
regional office
will provide
mandatory
specifications for
Project signage.
305.13...................... Recipients involved Construction
in a contract Investments (0610-
change order must 0096).
submit them to EDA
for review.
306.2....................... EDA selects Projects ED-900P, Pre-
for Local and Application for
National Technical Investment
Assistance based on Assistance (0610-
the criteria in 0094).
part 301 and the
extent to which the
Eligible Applicant
demonstrates that
the Project will
achieve more
specific objectives
in the Region (as
set forth in Sec.
306.2) and meets
the criteria in the
applicable FFO.
306.5....................... EDA provides ED-900P, Pre-
Investment Application for
Assistance to Investment
University Center Assistance (0610-
Projects based on 0094).
the selection
criteria in part
301, the
competitive
selection process
outlined in the
applicable FFO, and
the extent to which
the Eligible
Applicant
demonstrates other
more specific,
related criteria.
307.5(a).................... Each application for ED-900A, Application
Economic Adjustment for Investment
Assistance must Assistance (0610-
include or 0094).
incorporate by
reference (if so
approved by EDA) a
CEDS.
307.9....................... All RLF Recipients RLF Standard Terms
must submit to EDA and Conditions
an RLF Plan. (0610-0095).
307.11(a)................... Prior to the RLF Standard Terms
disbursement of EDA and Conditions
funds, RLF (0610-0095).
Recipients must
provide in a form
acceptable to EDA
evidence of
fidelity bond
coverage and
evidence of
certification in
accordance with
Sec. 307.15(b)(1).
307.11(e)................... If the Recipient RLF Standard Terms
receives Grant and Conditions
funds and the RLF (0610-0095).
loan disbursement
is subsequently
delayed beyond 30
days, the Recipient
must notify the
applicable grants
officer and return
such non-disbursed
funds to EDA.
307.12(a)(4)................ RLF Recipients must ED-209I, Income and
complete an RLF Expense Statement
Income and Expense (0610-0095).
Statement.
307.13(a)................... RLF Recipients must RLF Standard Terms
maintain Closed and Conditions
Loan files and all (0610-0095).
related documents,
books of account,
computer data files
and other records
over the term of
the Closed Loan and
for a three-year
period from the
date of final
disposition of such
Closed Loan.
307.13(b)................... RLF Recipients must RLF Standard Terms
maintain adequate and Conditions
accounting records (0610-0095).
to substantiate the
amount of RLF
Income expended for
eligible
administrative
costs and retain
records of
administrative
expenses incurred
for activities and
equipment relating
to the operation of
the RLF.
[[Page 56674]]
307.14(a)................... All RLF Recipients ED-209S, Semi-Annual
must submit semi- Report (0610-0095).
annual reports to
EDA.
307.14(a)................... EDA may approve the ED-209A, Annual
substitution of Report (0610-0095).
annual reports for
semi-annual reports
upon written
request by the RLF
Recipient if the
conditions set
forth in Sec.
307.14(a)(1)-(4)
are met.
307.14(b)................... All Recipients must ED-209S, Semi-Annual
certify as part of Report (0610-0095).
the semi-annual or ED-209A, Annual
annual report that Report (0610-0095).
the RLF is
operating in
accordance with the
RLF Plan, and
describe any
modifications to
the RLF Plan to
ensure effective
use of the RLF.
307.14(c)................... An RLF Recipient ED-209I, Income and
using either fifty Expense Statement
percent or more (or (0610-0095).
more than $100,000)
of RLF Income for
administrative
costs in a 12-month
reporting period
must submit a
completed Income
and Expense
Statement annually
to the appropriate
EDA regional office.
307.15(b)(1)................ Within sixty (60) RLF Standard Terms
days prior to the and Conditions
initial (0610-0095).
disbursement of EDA
funds, an
independent
accountant familiar
with the
Recipient's
accounting system
shall certify to
EDA and the
Recipient that such
system is adequate
to identify,
safeguard and
account for all RLF
operations.
307.15(b)(2)................ Prior to the RLF Standard Terms
disbursement of any and Conditions
EDA funds, an RLF (0610-0095).
Recipient must
certify that
standard loan
documents necessary
for lending are in
place and that
these documents
have been reviewed
by its legal
counsel for
adequacy and
compliance with the
terms and
conditions of the
Grant and
applicable State
and local law.
307.16(b)................... Recipients must RLF Standard Terms
promptly notify EDA and Conditions
in writing of any (0610-0095).
condition that may
adversely affect
their ability to
meet prescribed
schedule deadlines.
Recipients must
submit a written
request for
continued use of
Grant funds beyond
a missed deadline
for disbursement of
RLF funds.
307.17(e)................... After the full RLF Standard Terms
disbursement of and Conditions
Grant funds, RLF (0610-0095)
Capital may be used
to guarantee loans
of private lenders,
provided the
Recipient has
obtained prior
written approval
from EDA of its
proposed loan
activities and
submitted to EDA
the three listed
items. The
Recipient must also
amend its RLF Plan
to accommodate any
EDA-approved loan
guaranty activities.
307.19...................... With prior approval RLF Standard Terms
from EDA, a and Conditions
Recipient may enter (0610-0095).
into a Sale or
Securitization of
all or a portion of
its RLF loan
portfolio.
307.21(b)................... EDA may approve a RLF Standard Terms
request from a and Conditions
Recipient to (0610-0095).
terminate an RLF
Grant.
part 310.................... Upon the application Comprehensive
of an Eligible Economic
Applicant, EDA may Development
designate the Strategies and
Region which the Planning
Project will serve Investments (0610-
as a Special Impact 0093).
Area and waive the
CEDS requirement if
the Eligible
Applicant
demonstrates that
its proposed
Project will
directly fulfill a
pressing need and
assist in
preventing
excessive
unemployment.
314.3(f).................... With EDA's prior Property Management
written approval, a 0610-0103.
Recipient may
undertake an
incidental use of
Property that does
not interfere with
the scope of the
Project or the
economic purpose
for which the
Investment was
made, provided it
satisfies the
conditions set
forth in Sec.
314.3(f).
314.6(b).................... In order to use EDA- ED-900A, Application
funded property to for Investment
secure a mortgage Assistance (0610-
or deed of trust or 0094); Construction
encumber the Investments (0610-
property, the 0096).
Recipient must
provide information
that satisfies one
or more of the
exceptions set
forth in Sec.
314.6(b).
314.7(a) and (c)............ The Recipient must ED-900A, Application
provide information for Investment
that satisfies EDA Assistance (0610-
that the Recipient 0094); Construction
has title to the Investments (0610-
Real Property and 0096).
all easements,
rights-of-way,
permits or long-
term leases, unless
it can provide
information proving
it meets an
exception to the
rule.
314.7(b).................... The Recipient must ED-900A, Application
provide information for Investment
regarding all Assistance (0610-
encumbrances on the 0094); Construction
Real Property to Investments (0610-
EDA. 0096).
[[Page 56675]]
314.8....................... Recipients must ED-900A, Application
execute a lien, for Investment
covenant or other Assistance (0610-
statement of EDA's 0094); Construction
interest in all Investments (0610-
Property acquired 0096).
or improved with
EDA Investment
Assistance and
record it in the
proper jurisdiction.
314.9....................... Recipients must ED-900A, Application
execute a security for Investment
interest or other Assistance (0610-
statement of EDA's 0094); Construction
interest in Investments (0610-
Personal Property 0096).
acquired or
improved by EDA
funds and record
the interest in
accordance with
applicable law.
314.10...................... If a Recipient 0610-0103.
wishes for EDA to
release its Real
Property or
tangible Personal
Property interest
before the
expiration of the
Property's
Estimated Useful
Life, it must
submit a request to
EDA and either file
a covenant of use
precluding
inherently
religious
activities or
purchase EDA's
Federal Share in
such Property.
315.5(b).................... Current or ED-900A, Application
prospective TAACs for Investment
must submit either Assistance (0610-
a new or amended 0094).
application to EDA,
along with a
proposed budget,
narrative scope of
work and other
information as may
be requested by EDA.
315.5(c).................... TAACs must submit GPRA Performance
information Validation Form
regarding (0610-0098).
performance to be
evaluated by EDA.
315.6(a)(1); 315.7; 315.8... Firms must provide ED-840P, Petition by
specific a Firm for
information to EDA Certification of
in order to be Eligibility to
certified for Apply for Trade
participation in Adjustment
the TAA program. Assistance (0610-
0091).
315.6(a)(2); 315.6(a)(3); A Certified Firm ED-840P, Petition by
315.16. must submit an a Firm for
Adjustment Proposal Certification of
to EDA for Eligibility to
approval. If EDA Apply for Trade
approves the Adjustment
Adjustment Assistance (0610-
Proposal, the Firm 0091).
may then request
Adjustment
Assistance from the
TAAC.
315.9....................... In order to have a ED-840P, Petition by
public hearing, a a Firm for
Person with a Certification of
Substantial Eligibility to
Interest in an Apply for Trade
accepted petition Adjustment
for TAA Assistance (0610-
certification must 0091).
submit a request
that follows this
section's
procedures.
315.12...................... Each TAAC shall keep GPRA Performance
records disclosing Validation Form
the use of all TAA (0610-0098).
funds.
------------------------------------------------------------------------
List of Subjects
13 CFR Part 300
Financial assistance, Distressed region, Headquarters, Regional
offices.
13 CFR Part 301
Eligibility requirements, Applicant requirements, Economic distress
levels, Investment rates, Match share requirements, Application
requirements, Proposal selection.
13 CFR Part 302
Environmental review, Federal policy and procedures, Inter-
governmental review, Fees, Pre-approval requirements, Project
administration, Reporting and audit requirements, Conflicts of
interest, Post-approval requirements, Civil rights.
13 CFR Part 303
Planning, Award and application requirements, Comprehensive
economic development strategy, State plans, Short-term planning
investments.
13 CFR Part 304
Economic development district, Organizational requirements,
District modification and termination, Performance evaluations.
13 CFR Part 305
Public works, Economic development, Award and application
requirements, Requirements for approved projects.
13 CFR Part 306
Training, Research, Technical assistance, Award and application
requirements, University centers, Performance evaluations.
13 CFR Part 307
Economic adjustment assistance, Award and application requirements,
Revolving loan fund, Pre-loan requirements, Merger, Income, Record and
reporting requirements, Sales and securitizations, Liquidation,
Termination.
13 CFR Part 308
Performance awards, Planning performance awards.
13 CFR Part 309
Redistribution requirements, Investment assistance.
13 CFR Part 310
Special impact area, Excessive unemployment, Special need.
13 CFR Part 311
[Reserved]
13 CFR Part 312
[Reserved]
13 CFR Part 313
[Reserved]
13 CFR Part 314
Federal interest, Authorized use, Property, Federal share, Title,
Release, Property interest.
13 CFR Part 315
Administrative practice and procedure, Trade adjustment assistance,
Eligible petitioner, Firm selection, Certification requirements,
Recordkeeping and audit requirements, Adjustment proposals.
Regulatory Text
0
For reasons discussed above, 13 CFR chapter III is revised to read as
follows:
13 CFR CHAPTER III
Economic Development Administration, Department of Commerce
Part
300 General Information
301 Eligibility, Investment Rate and Proposal and Application
Requirements
302 General Terms and Conditions for Investment Assistance
[[Page 56676]]
303 Planning Investments and Comprehensive Economic Development
Strategies
304 Economic Development Districts
305 Public Works and Economic Development Investments
306 Training, Research and Technical Assistance Investments
307 Economic Adjustment Assistance Investments
308 Performance Incentives
309 Redistributions of Investment Assistance
310 Special Impact Areas
311 [Reserved]
312 [Reserved]
313 [Reserved]
314 Property
315 Trade Adjustment Assistance for Firms
PART 300--GENERAL INFORMATION
Sec.
300.1 Introduction and mission.
300.2 EDA Headquarters and regional offices.
300.3 Definitions.
Authority: 42 U.S.C. 3121; 42 U.S.C. 3122; 42 U.S.C. 3211;
Department of Commerce Organization Order 10-4.
Sec. 300.1 Introduction and mission.
EDA was created by Congress pursuant to the Public Works and
Economic Development Act of 1965 to provide financial assistance to
both rural and urban distressed communities. EDA's mission is to lead
the Federal economic development agenda by promoting innovation and
competitiveness, preparing American regions for growth and success in
the worldwide economy. EDA will fulfill its mission by fostering
entrepreneurship, innovation and productivity through Investments in
infrastructure development, capacity building and business development
in order to attract private capital investments and higher-skill,
higher-wage jobs to Regions experiencing substantial and persistent
economic distress. EDA works in partnership with distressed Regions to
address problems associated with long-term economic distress as well as
to assist those Regions experiencing sudden and severe economic
dislocations, such as those resulting from natural disasters,
conversions of military installations, changing trade patterns and the
depletion of natural resources. EDA Investments generally take the form
of Grants to or Cooperative Agreements with Eligible Recipients.
Sec. 300.2 EDA Headquarters and regional offices.
(a) EDA's Headquarters Office is located at: U.S. Department of
Commerce, Economic Development Administration, 14th Street and
Constitution Avenue, NW., Washington, DC 20230.
(b) EDA has regional offices throughout the United States and each
regional office's contact information may be found on EDA's Internet
Web site at http://www.eda.gov or in the notice of Federal Funding
Opportunity published annually by EDA. Please contact the appropriate
regional office to learn about EDA Investment opportunities in your
Region.
Sec. 300.3 Definitions.
As used in this chapter, the following terms shall have the
following meanings:
Assistant Secretary means the Assistant Secretary for Economic
Development within the Department.
Comprehensive Economic Development Strategy or CEDS means a
strategy that meets the requirements of Sec. 303.7 of this chapter.
Cooperative Agreement means the financial assistance award of EDA
funds to an Eligible Recipient under PWEDA, where substantial
involvement is expected between EDA and the Eligible Recipient in
carrying out the activities contemplated in an agreement between the
parties. See 31 U.S.C. 6305.
Department means the U.S. Department of Commerce.
District Organization means an organization meeting the
requirements of Sec. 304.2 of this chapter.
Economic Development District or District or EDD means any Region
in the United States designated by EDA as an Economic Development
District under Sec. 304.1 of this chapter (or such regulation as was
previously in effect before the effective date of this section) and
also includes any economic development district designated as such
under section 403 of PWEDA, as in effect on February 10, 1999.
EDA means the Economic Development Administration within the
Department.
Eligible Applicant means an entity qualified to be an Eligible
Recipient or its authorized representative.
Eligible Recipient means any of the following:
(1) City or other political subdivision of a State, including a
special purpose unit of State or local government engaged in economic
or infrastructure development activities, or a consortium of political
subdivisions;
(2) State;
(3) Institution of higher education or a consortium of institutions
of higher education;
(4) Public or private non-profit organization or association,
including a community or faith-based non-profit organization, acting in
cooperation with officials of a political subdivision of a State;
(5) District Organization;
(6) Indian Tribe or a consortium of Indian Tribes; or
(7) Private individual or for-profit organization, but only for
Training, Research and Technical Assistance Investments under part 306
of this chapter.
Federal Agency means a department, agency or instrumentality of the
United States government.
Federal Funding Opportunity or FFO means the notice EDA publishes
annually at http://www.grants.gov and on EDA's Internet Web site at
http://www.eda.gov that describes the amounts, particular application
procedures, funding priorities, special circumstances and other
relevant information concerning EDA's Investment programs for the year.
EDA may also periodically publish FFOs on specific programs or
initiatives.
Federally-Declared Disaster means a Presidentially-Declared
Disaster, a fisheries resource disaster pursuant to section 312(a) of
the Magnuson-Stevens Fishery Conservation and Management Act, as
amended (16 U.S.C. 1861a(a)), or other federally-declared disasters
pursuant to applicable law.
Grant means the financial assistance award of EDA funds to an
Eligible Recipient under PWEDA, where the Eligible Recipient bears
responsibility for carrying out the activities contemplated in an
agreement between the parties. See 31 U.S.C. 6304.
Immediate Family means a person's spouse, parents, grandparents,
siblings, children and grandchildren, but does not include distant
relatives, such as cousins, unless the distant relative lives in the
same household as the person.
In-Kind Contribution(s) means non-cash contributions, which may
include contributions of space, equipment, services and assumptions of
debt that are fairly evaluated by EDA and that satisfy applicable
Federal cost principles and the requirements of 15 CFR parts 14 or 24,
as applicable.
Indian Tribe means any Indian tribe, band, nation, pueblo, or other
organized group or community, including any Alaska Native Village or
Regional Corporation as defined in or established under the Alaska
Native Claims Settlement Act, as amended (43 U.S.C. 1601 et seq.), that
is recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians. This term includes the governing body of an Indian tribe, non-
profit Indian corporation (restricted to
[[Page 56677]]
Indians), Indian authority, or other non-profit Indian tribal
organization or entity; provided that the Indian tribal organization or
entity is wholly owned by, and established for the benefit of, the
Indian tribe or Alaska Native Village.
Interested Party means any officer, employee or member of the board
of directors or other governing board of the Recipient, including any
other parties that advise, approve, recommend or otherwise participate
in the business decisions of the Recipient, such as agents, advisors,
consultants, attorneys, accountants or shareholders. An Interested
Party also includes the Interested Party's Immediate Family and other
persons directly connected to the Interested Party by law or through a
business arrangement.
Investment or Investment Assistance means an EDA Grant or
Cooperative Agreement entered into by EDA and a Recipient.
Investment Rate means, as set forth in Sec. 301.4 of this chapter,
the amount of the EDA Investment in a particular Project expressed as a
percentage of the total Project costs.
Local Share or Matching Share means the non-EDA funds and any In-
Kind Contributions that are approved by EDA and provided by Recipients
or third parties as a condition of an Investment. The Matching Share
may include funds from other Federal Agencies only if authorized by
statute that allows such use, which may be determined by EDA's
reasonable interpretation of such authority.
Presidentially-Declared Disaster means a major disaster or
emergency declared under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, as amended (42 U.S.C. 5121 et seq.).
Private Sector Representative means, with respect to any for-profit
enterprise, any senior management official or executive holding a key
decision-making position, or that person's designee.
Project means the proposed or authorized activity (or activities)
the purpose of which fulfills EDA's mission and program requirements as
set forth in PWEDA and this chapter and which may be funded in whole or
in part by EDA Investment Assistance.
PWEDA means the Public Works and Economic Development Act of 1965,
as amended (42 U.S.C. 3121 et seq.), including the comprehensive
amendments made by the Economic Development Administration
Reauthorization Act of 2004 (Pub. L. 108-373, 118 Stat. 1756).
Recipient means an entity receiving EDA Investment Assistance,
including any EDA-approved successor to the entity.
Region or Regional means an economic unit of human, natural,
technological, capital or other resources, defined geographically.
Geographic areas comprising a Region need not be contiguous or defined
by political boundaries, but should constitute a cohesive area capable
of undertaking self-sustained economic development. For the limited
purposes of determining economic distress levels and Investment Rates
pursuant to part 301 of this chapter, a Region may also comprise a
specific geographic area defined solely by its level of economic
distress, as set forth in Sec. Sec. 301.3(a)(2) and 301.3(a)(3) of
this chapter.
Regional Commission means any of the following:
(1) The Appalachian Regional Commission established under chapter
143 of title 40, United States Code;
(2) The Delta Regional Authority established under subtitle F of
the Consolidated Farm and Rural Development Act (7 U.S.C. 2009aa et
seq.);
(3) The Denali Commission established under the Denali Commission
Act of 1998 (42 U.S.C. 3121 note; 112 Stat. 2681-637 et seq.); or
(4) The Northern Great Plains Regional Authority established under
subtitle G of the Consolidated Farm and Rural Development Act (7 U.S.C.
2009bb et seq.).
Special Impact Area means a Region served by a Project for which
the requirements of section 302 of PWEDA and Sec. 303.7 of this
chapter have, upon an application filed by an Eligible Recipient
pursuant to section 214 of PWEDA and part 310 of this chapter, been
waived in whole or in part by the Assistant Secretary.
Special Need means a circumstance or legal status arising from
actual or threatened severe unemployment or economic adjustment
problems resulting from severe short-term or long-term changes in
economic conditions, including:
(1) Substantial outmigration or population loss;
(2) Underemployment; that is, employment of workers at less than
full-time or at less skilled tasks than their training or abilities
permit;
(3) Military base closures or realignments, defense contractor
reductions-in-force, or U.S. Department of Energy defense-related
funding reductions;
(4) Natural or other major disasters or emergencies;
(5) Extraordinary depletion of natural resources;
(6) Closing or restructuring of an industrial firm or loss of a
major employer;
(7) Negative effects of changing trade patterns; or
(8) Other circumstances set forth in an FFO.
State means a State of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam,
American Samoa, the Commonwealth of the Northern Mariana Islands, the
Republic of the Marshall Islands, the Federated States of Micronesia,
and the Republic of Palau.
Trade Act means title II, chapters 3 and 5, of the Trade Act of
1974, as amended (19 U.S.C. 2341 et seq.).
United States means all of the States.
PART 301-- ELIGIBILITY, INVESTMENT RATE AND PROPOSAL AND
APPLICATION REQUIREMENTS
Subpart A--General
Sec.
301.1 Overview of eligibility requirements.
Subpart B--Applicant Eligibility
301.2 Applicant eligibility.
Subpart C--Economic Distress Criteria
301.3 Economic distress levels.
Subpart D--Investment Rates and Matching Share Requirements
301.4 Investment rates.
301.5 Matching share requirements.
301.6 Supplementary investment assistance.
Subpart E--Proposal and Application Requirements; Evaluation Criteria
301.7 Investment assistance proposal.
301.8 Proposal evaluation criteria.
301.9 Proposal selection criteria.
301.10 Formal application requirements.
Authority: 42 U.S.C. 3121; 42 U.S.C. 3141-3147; 42 U.S.C. 3149;
42 U.S.C. 3161; 42 U.S.C. 3175; 42 U.S.C. 3192; 42 U.S.C. 3194; 42
U.S.C. 3211; 42 U.S.C. 3233; Department of Commerce Delegation Order
10-4.
Subpart A--General
Sec. 301.1 Overview of eligibility requirements.
In order to receive EDA Investment Assistance, an applicant and the
Project proposed by the applicant must satisfy each of the following
requirements:
(a) The applicant must be an Eligible Applicant as set forth in
subpart B of this part;
(b) The Region in which the Project will be located must meet the
economic distress criteria set forth in subpart C of this part;
(c) The sources of funding for the Project must fulfill the
Investment Rate
[[Page 56678]]
and Matching Share requirements set forth in subpart D of this part;
(d) EDA must select the Eligible Applicant's Project and the
Eligible Applicant must satisfy the formal application requirements set
forth in subpart E of this part; and
(e) The Project must meet the general requirements set forth in
part 302 (General Terms and Conditions for Investment Assistance) and
the specific program requirements (as applicable) set forth in part 303
(Planning Investments and Comprehensive Economic Development
Strategies), part 304 (Economic Development Districts), part 305
(Public Works and Economic Development Investments), part 306
(Training, Research and Technical Assistance Investments), or part 307
(Economic Adjustment Assistance Investments) of this chapter.
Subpart B--Applicant Eligibility
Sec. 301.2 Applicant eligibility.
(a) An Eligible Applicant for EDA Investment Assistance is defined
in Sec. 300.3 of this chapter.
(b) An Eligible Applicant that is a non-profit organization must
include in its application for Investment Assistance a resolution
passed by (or a letter signed by) an authorized representative of a
general purpose political subdivision of a State, acknowledging that it
is acting in cooperation with officials of such political subdivision.
EDA may waive this cooperation requirement for certain Projects of a
significant Regional or national scope under parts 306 or 307 of this
chapter. See Sec. Sec. 306.3(b), 306.6(b) and 307.5(b) of this
chapter.
Subpart C--Economic Distress Criteria
Sec. 301.3 Economic distress levels.
(a) Part 305 (Public Works and Economic Development Investments)
and part 307 (Economic Adjustment Assistance Investments).
(1) Except as otherwise provided by this paragraph (a), for a
Project to be eligible for Investment Assistance under parts 305 or 307
of this chapter, the Project must be located in a Region that, on the
date EDA receives an application for Investment Assistance, is subject
to one (or more) of the following economic distress criteria:
(i) An unemployment rate that is, for the most recent twenty-four
(24) month period for which data are available, at least one (1)
percent greater than the national average unemployment rate;
(ii) Per capita income that is, for the most recent period for
which data are available, eighty (80) percent or less of the national
average per capita income; or
(iii) A Special Need, as determined by EDA.
(2) A Project located within an Economic Development District,
which is located in a Region that does not meet the economic distress
criteria of paragraph (a)(1) of this section, is also eligible for
Investment Assistance under parts 305 or 307 of this chapter if EDA
determines that the Project will be of ``substantial direct benefit''
to a geographic area within the District that meets the criteria of
paragraph (a)(1) of this section. For this purpose, a Project provides
a ``substantial direct benefit'' if it provides significant employment
opportunities for unemployed, underemployed or low-income residents of
the geographic area within the District.
(3) A Project located in a geographic area of poverty or high
unemployment that meets the requirements of paragraph (a)(1) of this
section, but which is located in a Region that overall does not meet
the requirements of paragraph (a)(1) of this section, is eligible for
Investment Assistance under parts 305 or 307 of this chapter without
regard to political or other subdivisions or boundaries.
(4) EDA will determine the economic distress levels pursuant to
this subsection at the time EDA receives an application for Investment
Assistance as follows:
(i) For economic distress levels based upon the unemployment rate
or per capita income requirements, EDA will base its determination upon
the most recent American Community Survey (``ACS'') published by the
U.S. Census Bureau for either: The Region where the Project will be
located (paragraph (a)(1) of this section), the geographic area where
substantial direct Project benefits will occur (paragraph (a)(2) of
this section), or the geographic area of poverty or high unemployment
(paragraph (a)(3) of this section), as applicable. Where a recent ACS
is not available, EDA will base its decision upon the most recent
Federal data from other sources (including data available from the
Census Bureau and the Bureaus of Economic Analysis, Labor Statistics,
Indian Affairs or any other Federal source determined by EDA to be
appropriate). If no Federal data are available, an Eligible Applicant
must submit to EDA the most recent data available from the State.
(ii) For economic distress based upon a Special Need, EDA will
conduct the independent analysis it deems necessary under the facts and
circumstances of a given case. Eligible Applicants are encouraged to
submit reliable data substantiating their claim of a Special Need.
(b) Part 303 (Planning Investments) and part 306 (Training,
Research and Technical Assistance Investments). There are no minimum
economic distress level requirements for Investment Assistance awarded
to Projects under parts 303 or 306 of this chapter.
(c) Part 304 (Economic Development Districts). For EDA to designate
a Region as an Economic Development District under part 304 of this
chapter, such Region must:
(1) Contain at least one (1) geographic area that fulfills the
economic distress criteria set forth in paragraph (a)(1) of this
section and is identified in an approved CEDS; and
(2) Meet the Regional eligibility requirements set forth in Sec.
304.1 of this chapter.
(d) EDA reserves the right to reject any documentation of Project
eligibility that it determines is inaccurate or otherwise unreliable.
Subpart D--Investment Rates and Matching Share Requirements
Sec. 301.4 Investment rates.
(a) Minimum Investment Rate. There is no minimum Investment Rate
for a Project.
(b) Maximum Investment Rate.
(1) General rule. Except as otherwise provided by this paragraph
(b) or paragraph (c) of this section, the maximum EDA Investment Rate
for all Projects shall, after the application of Table 1 in paragraph
(b)(1)(ii) of this subsection, not exceed the sum of: (x) Fifty (50)
percent, plus (y) up to an additional thirty (30) percent based on the
relative needs of the Region in which the Project is located, as
determined by EDA.
(i)(A) Relative needs. In determining the relative needs of the
Region in which the Project is located, EDA will prioritize allocations
of its Investment Assistance to ensure that the level of economic
distress of a Region, rather than a preference for a specific
geographic area or a specific type of economic distress, is the primary
factor in allocating its Investment Assistance. In making this
determination, EDA will take into consideration the following measures
of economic distress:
(1) The severity of the unemployment rate and the duration of the
unemployment in the Region;
(2) The per capita income levels and the extent of underemployment
in the Region;
(3) The outmigration of population and the extent to which such
[[Page 56679]]
outmigration is causing economic injury in the Region; and
(4) Such other factors as EDA deems relevant in determining the
relative needs of the Region in which the Project is located.
(B) A Project is eligible for the maximum allowable Investment Rate
as determined by EDA between the time EDA receives the application for
Investment Assistance and the time that EDA awards Investment
Assistance to the Project; however, the burden is on the Eligible
Applicant to establish the relative needs of the Region in which the
Project is located.
(ii) Table 1. Table 1 of this paragraph sets forth the maximum
allowable Investment Rate for Projects located in Regions subject to
certain levels of economic distress. In cases where Table 1 produces
divergent results (i.e., where Table 1 produces more than one (1)
maximum allowable Investment Rate based on the Region's levels of
economic distress), the higher Investment Rate produced by Table 1
shall be the maximum allowable Investment Rate for the Project.
Table 1
------------------------------------------------------------------------
Maximum
allowable
Projects located in regions in which: investment
rates
(percentage)
------------------------------------------------------------------------
(A) The twenty-four (24) month unemployment rate is at 80
least 225% of the national average; or.................
(B) The per capita income is not more than 50% of the 80
national average.......................................
(C) The twenty-four (24) month unemployment rate is at 70
least 200% of the national average; or.................
(D) The per capita income is not more than 60% of the 70
national average.......................................
(E) The twenty-four (24) month unemployment rate is at 60
least 175% of the national average; or.................
(F) The per capita income is not more than 65% of the 60
national average.......................................
(G) The twenty-four (24) month unemployment rate is at 50
least 1% greater than the national average; or.........
(H) The per capita income is not more than 80% of the 50
national average.......................................
------------------------------------------------------------------------
(2) Projects subject to a Special Need. EDA shall determine the
maximum allowable Investment Rate for Projects subject to a Special
Need (as determined by EDA pursuant to Sec. 301.3(a)(1)(iii)) based on
the actual or threatened overall economic situation of the Region in
which the Project is located. However, unless the Project is eligible
for a higher Investment Rate pursuant to paragraph (b)(5) of this
section, the maximum Investment Rate for any Project subject to a
Special Need shall be eighty (80) percent.
(3) Projects under part 303.
(i) The minimum Investment Rate for Projects under part 303 of this
chapter shall be fifty (50) percent.
(ii) Except as otherwise provided in paragraph (b)(3)(iii) of this
section or in paragraph (b)(5) of this section, the maximum allowable
Investment Rate for Projects under part 303 of this chapter shall be
the maximum allowable Investment Rate set forth in Table 1 for the most
economically distressed county or other equivalent political unit
(e.g., parish) within the Region. The maximum allowable Investment Rate
shall not exceed eighty (80) percent.
(iii) In compelling circumstances, the Assistant Secretary may
waive the application of the first sentence in paragraph (b)(3)(ii) of
this section. The Assistant Secretary shall not delegate the authority
to grant a waiver under this paragraph.
(4) Projects under part 306. The maximum allowable Investment Rate
for Projects under part 306 of this chapter shall generally be
determined based on the relative needs (as determined under paragraph
(b)(1) of this section) of the Region which the Project will serve.
However, for Projects of a national scope under part 306 of this
chapter and for all other Projects under part 306 of this chapter
(after the application of paragraph (b)(1) of this section), the
Assistant Secretary has the discretion to establish a maximum
Investment Rate of up to one hundred (100) percent where the Project:
(i) Merits, and is not otherwise feasible without, an increase to
the Investment Rate; or
(ii) Will be of no or only incidental benefit to the Eligible
Recipient.
(5) Special Projects. Table 2 of this paragraph sets forth the
maximum allowable Investment Rate for certain special Projects as
follows:
Table 2
------------------------------------------------------------------------
Maximum
allowable
Projects investment
rates
(percentage)
------------------------------------------------------------------------
Projects of Indian Tribes............................... 100
Projects under part 307 of this chapter located in 100
Presidentially-Declared Disaster areas for which EDA
receives an application for Investment Assistance for
post-disaster economic recovery efforts pursuant to a
supplemental appropriation within eighteen (18) months
of the date of such declaration........................
Projects of States or political subdivisions of States 100
that the Assistant Secretary determines have exhausted
their effective taxing and borrowing capacity, or
Projects of non-profit organizations that the Assistant
Secretary determines have exhausted their effective
borrowing capacity.....................................
Projects under parts 305 or 307 that receive performance 100
awards pursuant to Sec. 308.2 of this chapter........
Projects located in a District that receive planning 100
performance awards pursuant to Sec. 308.3 of this
chapter................................................
------------------------------------------------------------------------
(c) Federal Funding Opportunity notices may provide additional
Investment Rate criteria and standards to ensure that the level of
economic distress of a Region, rather than a preference for a
geographic area or a specific type of economic distress, is the primary
factor in allocating Investment Assistance.
[[Page 56680]]
Sec. 301.5 Matching share requirements.
The required Matching Share of a Project's eligible costs may
consist of cash or In-Kind Contributions. In addition, the Eligible
Applicant must show that the Matching Share is committed to the
Project, will be available as needed and is not or will not be
conditioned or encumbered in any way that would preclude its use
consistent with the requirements of the Investment Assistance.
Sec. 301.6 Supplementary investment assistance.
(a) Pursuant to a request by an Eligible Applicant, EDA Investment
Assistance may supplement grants awarded in another ``designated
Federal grant program,'' if the Eligible Applicant qualifies for
financial assistance under such program, but is unable to provide the
required non-Federal share because of the Eligible Applicant's economic
situation. For purposes of this section, a ``designated Federal grant
program'' means any Federal grant program that:
(1) Provides assistance in the construction or equipping of public
works, public service or development facilities;
(2) Is designated by EDA as eligible for supplementary Investment
Assistance under this section; and
(3) Assists Projects that are otherwise eligible for Investment
Assistance and consistent with the Eligible Applicant's CEDS.
(b) For Projects located in Regions meeting the criteria of Sec.
301.3(a), the EDA Investment Assistance, combined with funds from a
designated Federal grant program, may be at the maximum allowable
Investment Rate, even if the designated Federal grant program has a
lower grant rate. If the designated Federal grant program has a grant
rate higher than the maximum EDA Investment Rate, the combination of
EDA Investment and other Federal funds may exceed the EDA Investment
Rate; provided, the EDA share of total funding does not exceed the
maximum allowable Investment Rate.
Subpart E--Proposal and Application Requirements; Evaluation
Criteria
Sec. 301.7 Investment Assistance proposal.
(a) The EDA Investment Assistance process begins with the
submission of an Investment Assistance proposal. Investment proposals
are submitted on a Pre-application for Investment Assistance (Form ED-
900P or any successor form) that may be obtained from EDA's Internet
Web site at http://www.eda.gov or from the appropriate regional office.
EDA generally accepts proposals on a competitive and continuing basis
to respond to market forces in Regional economies. The timing with
which competitive investment opportunities arise, as determined by the
criteria set forth in Sec. 301.8, paired with the availability of
funds in a given fiscal year, will affect EDA's ability to participate
in any given Project. EDA will evaluate all proposals using the
criteria set forth in Sec. 301.8 and will:
(1) Solicit a formal application from the proponent;
(2) Return the proposal to the proponent for specified deficiencies
and suggest resubmission upon corrections; or
(3) Deny the proposal for specifically stated reasons and notify
the proponent.
(b) For certain programs, EDA may instruct an Eligible Applicant to
submit an Application for Investment Assistance (Form ED-900A or any
successor form) in lieu of the Pre-application for Investment
Assistance (Form ED-900P or any successor form).
Sec. 301.8 Proposal evaluation criteria.
EDA will screen all proposals for the feasibility of the budget
presented and conformance with EDA statutory and regulatory
requirements. EDA will assess the economic development needs of the
affected Region in which the proposed Project will be located (or will
service), as well as the capability of the proponent to implement the
proposed Project. EDA will also consider the degree to which an
Investment in the proposed Project will satisfy one (1) or more of the
following criteria:
(a) Is market-based and results driven. An Investment will
capitalize on a Region's competitive strengths and will positively move
a Regional economic indicator measured and evaluated by EDA on a
performance matrix system, such as EDA's Balanced Scorecard or other
performance matrix. These Regional economic indicators include measures
such as an increased number of higher-skill, higher-wage jobs,
increased tax revenue, or increased private sector investment resulting
from an Investment.
(b) Has strong organizational leadership. An Investment will have
strong leadership, relevant Project management experience and a
significant commitment of human resources talent to ensure a Project's
successful execution.
(c) Advances productivity, innovation and entrepreneurship. An
Investment will embrace the principles of entrepreneurship, enhance
Regional industry clusters and leverage and link technology innovators
and local universities to the private sector to create the conditions
for greater productivity, innovation, and job creation.
(d) Looks beyond the immediate economic horizon, anticipates
economic changes and diversifies the local and Regional economy. An
Investment will be part of an overarching, long-term Comprehensive
Economic Development Strategy that enhances a Region's success in
achieving a rising standard of living by supporting existing industry
clusters, developing emerging new clusters or attracting new Regional
economic drivers.
(e) Demonstrates a high degree of local commitment. An Investment
will exhibit:
(1) High levels of local government or non-profit Matching Share
and private sector leverage;
(2) Clear and unified leadership and support by local elected
officials; and
(3) Strong cooperation among the business sector, relevant Regional
partners and Federal, State and local governments.
(f) Other criteria as set forth in the applicable FFO.
Sec. 301.9 Proposal selection criteria.
(a) EDA will review completed proposal materials for compliance
with the requirements set forth in PWEDA, this chapter, the applicable
FFO and other applicable Federal statutes and regulations. From those
proposals that meet EDA's technical and legal requirements, EDA will
select proposals for further consideration based on:
(1) The availability of funds;
(2) The competitiveness of the proposals based on the criteria set
forth in Sec. 301.8; and
(3) The funding priority considerations identified in the
applicable FFO.
(b) EDA will endeavor to notify proponents regarding whether their
proposals are selected as soon as practicable.
Sec. 301.10 Formal application requirements.
(a) General. For Projects selected from successful proposals, EDA
will invite the proponents to submit a formal application for
Investment Assistance. The appropriate regional office will provide
application materials and guidance in completing them. The applicant
will generally have thirty (30) days to submit the completed
application materials to the applicable regional office. EDA staff will
work with the applicant to resolve application deficiencies.
(b) Formal application. Each formal application for EDA Investment
Assistance must:
[[Page 56681]]
(1) Include evidence of applicant eligibility (as set forth in
Sec. 301.2) and of economic distress (as set forth in Sec. 301.3);
(2) Identify the sources of funds, both eligible Federal and non-
EDA, and In-Kind Contributions that will constitute the required
Matching Share for the Project (see the Matching Share requirements
under Sec. 301.5); and
(3) For construction Projects under parts 305 or 307 of this
chapter, include a CEDS acceptable to EDA pursuant to part 303 of this
chapter or otherwise incorporate by reference a current CEDS that EDA
approves for the Project. The requirements of the preceding sentence
shall not apply to:
(i) Strategy Grants, as defined in Sec. 307.3 of this chapter; and
(ii) Projects located in a Region designated as a Special Impact
Area pursuant to part 310 of this chapter.
PART 302--GENERAL TERMS AND CONDITIONS FOR INVESTMENT ASSISTANCE
Sec.
302.1 Environment.
302.2 Procedures in disaster areas.
302.3 Project servicing for loans, loan guaranties and Investment
Assistance.
302.4 Public information.
302.5 Relocation assistance and land acquisition policies.
302.6 Additional requirements; Federal policies and procedures.
302.7 Amendments and changes.
302.8 Pre-approval Investment Assistance costs.
302.9 Inter-governmental review of Projects.
302.10 Attorneys' and consultants' fees; employment of expediters
and administrative employees.
302.11 Economic development information clearinghouse.
302.12 Project administration, operation and maintenance.
302.13 Maintenance of standards.
302.14 Records and audits.
302.15 Acceptance of certifications by Eligible Applicants.
302.16 Reports by recipients.
302.17 Conflicts of interest.
302.18 Post-approval requirements.
302.19 Indemnification.
302.20 Civil rights.
Authority: 19 U.S.C. 2341 et seq.; 42 U.S.C. 3150; 42 U.S.C.
3152; 42 U.S.C. 3153; 42 U.S.C. 3192; 42 U.S.C. 3193; 42 U.S.C.
3194; 42 U.S.C. 3211; 42 U.S.C. 3212; 42 U.S.C. 3216; 42 U.S.C.
3218; 42 U.S.C. 3220; 42 U.S.C. 5141; Department of Commerce
Delegation Order 10-4.
Sec. 302.1 Environment.
EDA will undertake environmental reviews of Projects in accordance
with the requirements of the National Environmental Policy Act of 1969,
as amended (Pub. L. 91-190; 42 U.S.C. 4321 et seq., as implemented
under 40 CFR chapter V) (``NEPA''), and all applicable Federal
environmental statutes, regulations and Executive Orders. These
authorities include the implementing regulations of NEPA requiring EDA
to provide public notice of the availability of project-specific
environmental documents, such as environmental impact statements,
environmental assessments, findings of no significant impact, and
records of decision, to the affected or interested public, as specified
in 40 CFR 1506.6(b). Depending on the Project's location, environmental
information concerning specific Projects can be obtained from the
Environmental Officer in the appropriate EDA regional office as listed
in the applicable FFO.
Sec. 302.2 Procedures in disaster areas.
When non-statutory EDA administrative or procedural conditions for
Investment Assistance awards under PWEDA cannot be met by an Eligible
Applicant as the result of a disaster, EDA may waive such conditions.
Sec. 302.3 Project servicing for loans, loan guaranties and
Investment Assistance.
EDA will provide Project servicing to borrowers who received EDA
loans or EDA-guaranteed loans and to lenders who received EDA loan
guaranties under any EDA-administered program. Project servicing
includes but is not limited to loans made under PWEDA prior to the
effective date of the Economic Development Administration Reform Act of
1998, the Trade Act and the Community Emergency Drought Relief Act of
1977 (Pub. L. 95-31; 42 U.S.C. 5184 note).
(a) EDA will continue to monitor such loans and loan guaranties in
accordance with the applicable loans or loan guaranty program(s).
(b) Borrowers and lenders shall submit to EDA any requests for
modifications of their loan or loan guaranty agreements with EDA, as
applicable. EDA shall consider and respond to such modification
requests in accordance with applicable laws and policies, including the
budgetary constraints imposed by the Federal Credit Reform Act of 1990,
as amended (2 U.S.C. 661c(e)).
(c) In the event that EDA determines it necessary or desirable to
take actions to protect or further the interests of EDA in connection
with loans, loan guaranties or evidence of purchased debt, EDA may:
(1) Assign or sell at public or private sale or otherwise dispose
of for cash or credit, in its discretion and upon such terms and
conditions as it shall determine to be reasonable, any evidence of
debt, contract, claim, personal or real property, or security assigned
to or held by it in connection with any EDA loans, EDA-guaranteed loans
or Investment Assistance extended under PWEDA;
(2) Collect or compromise all obligations assigned to or held by it
in connection with any EDA loans, EDA-guaranteed loans or Investment
Assistance awarded under PWEDA until such time as such obligations may
be referred to the Attorney General of the United States for suit or
collection; and
(3) Take any and all other actions determined to be necessary or
desirable in purchasing, servicing, compromising, modifying,
liquidating, or otherwise administratively processing or disposing of
loans or loan guaranties made or evidence of purchased debt in
connection with any EDA loans, EDA-guaranteed loans or Investment
Assistance awarded under PWEDA.
Sec. 302.4 Public information.
The rules and procedures regarding public access to EDA's records
pursuant to the Freedom of Information Act of 1967, as amended (5
U.S.C. 552), and the Privacy Act of 1974, as amended (5 U.S.C. 552a),
are at 15 CFR part 4.
Sec. 302.5 Relocation assistance and land acquisition policies.
Recipients of EDA Investment Assistance under PWEDA and the Trade
Act (States and political subdivisions of States and non-profits
organizations, as applicable) are subject to the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970, as
amended (Pub. L. 91-646; 42 U.S.C. 4601 et seq.). See 15 CFR part 11
and 49 CFR part 24 for specific compliance requirements.
Sec. 302.6 Additional requirements; Federal policies and procedures.
Recipients are subject to all Federal laws and to Federal,
Department and EDA policies, regulations and procedures applicable to
Federal financial assistance awards, including but not limited to 15
CFR part 14, the Uniform Administrative Requirements for Grants and
Cooperative Agreements with Institutions of Higher Education,
Hospitals, other Non-Profit and Commercial Organizations, and 15 CFR
part 24, the Uniform Administrative Requirements for Grants and
Cooperative Agreements to State and Local Governments, as applicable.
Sec. 302.7 Amendments and changes.
(a) Recipients shall submit requests for amendments to Investment
awards in writing to EDA for approval and shall provide such
information and
[[Page 56682]]
documentation as EDA deems necessary to justify the request.
(b) Any changes to Projects made without EDA's approval are made at
the Recipient's risk of non-payment of costs, suspension, termination
or other applicable EDA action with respect to the Investment.
Sec. 302.8 Pre-approval Investment Assistance costs.
Project activities carried out before approval of Investment
Assistance shall be carried out at the sole risk of the Eligible
Applicant. Such activity is subject to the rejection of the
application, the disallowance of costs, or other adverse consequences
as a result of non-compliance with EDA or Federal requirements,
including but not limited to procurement requirements, civil rights
requirements, Federal labor standards, or Federal environmental,
historic preservation and related requirements.
Sec. 302.9 Inter-governmental review of projects.
(a) When an Eligible Applicant is not a State, Indian Tribe or
other general purpose governmental authority, the Eligible Applicant
must afford the appropriate general purpose local governmental
authority (the ``Authority'') in the Region a minimum of fifteen (15)
days to review and comment on a proposed Project under EDA's Public
Works and Economic Development program or a proposed construction
Project or RLF Grant under EDA's Economic Adjustment Assistance
program. Under these programs, Eligible Applicants shall furnish the
following with their applications: If no comments are received from the
Authority, a statement of efforts made to obtain such comments; or, if
comments are received from the Authority, a copy of the comments and a
statement of any actions taken to address such comments.
(b) As required by 15 CFR part 13 and Executive Order 12372,
``Intergovernmental Review of Federal Programs,'' as amended, if a
State has adopted a process under Executive Order 12372 to review and
coordinate proposed Federal financial assistance and direct Federal
development (commonly referred to as the ``single point of contact
review process''), all Eligible Applicants must also give State and
local governments a reasonable opportunity to review and comment on the
proposed Project, including review and comment from area-wide planning
organizations in metropolitan areas, as provided for in 15 CFR part 13.
Sec. 302.10 Attorneys' and consultants' fees; employment of
expediters and administrative employees.
(a) General. Investment Assistance awarded under PWEDA shall not
directly or indirectly reimburse any attorneys' or consultants' fees
incurred in connection with obtaining Investment Assistance and
contracts under PWEDA.
(b) Employment of expediters and administrative employees.
Investment Assistance under PWEDA shall not be awarded to any Eligible
Applicant, unless the owners, partners or officers of the Eligible
Applicant:
(1) Certify to EDA the names of any attorneys, agents and other
persons engaged by or on behalf of the Eligible Applicant for the
purpose of expediting applications made to EDA in connection with
obtaining Investment Assistance under PWEDA and the fees paid or to be
paid to the person for expediting the applications; and
(2) Upon EDA's request, execute an agreement binding the Eligible
Applicant, for the two-year (2) period beginning on the date on which
the Investment Assistance is awarded to the Eligible Applicant, to
refrain from employing, offering any office or employment to or
retaining for professional services any person who, on the date on
which the Investment Assistance is awarded or within the one-year (1)
period ending on that date:
(i) Served as an officer, attorney, agent or employee of the
Department; and
(ii) Occupied a position or engaged in activities that the
Assistant Secretary determines involved discretion with respect to the
award of Investment Assistance under PWEDA.
Sec. 302.11 Economic development information clearinghouse.
Pursuant to section 502 of PWEDA, EDA maintains an economic
development information clearinghouse on its Internet Web site at
http://www.eda.gov.
Sec. 302.12 Project administration, operation and maintenance.
EDA shall approve Investment Assistance awards only if, as
determined in its sole discretion, the Project for which such
Investment Assistance is awarded will be properly and efficiently
administered, operated and maintained.
Sec. 302.13 Maintenance of standards.
All laborers and mechanics employed by contractors or
subcontractors on Projects receiving Investment Assistance under PWEDA
shall be paid wages at rates not less than those prevailing on similar
construction in the locality, as determined by the U.S. Secretary of
Labor in accordance with subchapter IV of chapter 31 of title 40,
United States Code. EDA shall not extend any Investment Assistance
under this chapter for a Project without first obtaining adequate
assurance that these labor standards will be maintained upon the
construction work. The U.S. Secretary of Labor shall have, with respect
to the labor standards specified in this provision, the authority and
functions set forth in Reorganization Plan No. 14 of 1950 (15 FR 3176
(May 25, 1950); 64 Stat. 1267) and section 3145 of title 40, United
States Code.
Sec. 302.14 Records and audits.
(a) Records. Recipients of Investment Assistance under PWEDA shall
keep such records as EDA shall require, including records that fully
disclose:
(1) The amount and the disposition by the Recipient of the proceeds
of the awarded Investment Assistance;
(2) The total cost of the Project that the Investment Assistance
funds;
(3) The amount and nature of the portion of Project costs provided
by other sources; and
(4) Such other records as EDA determines will facilitate an
effective audit.
(b) Audits. The Recipient shall permit the Assistant Secretary, the
Inspector General of the Department, the Comptroller General of the
United States and/or any of their respective agents or representatives
access to its properties in order to examine all books, correspondence,
and records, including without limitation computer programs and data
processing software, to verify the Recipient's compliance with
Investment Assistance requirements.
Sec. 302.15 Acceptance of certifications by Eligible Applicants.
EDA will accept an Eligible Applicant's certifications, accompanied
by evidence satisfactory to EDA, that the Eligible Applicant meets the
requirements for receiving Investment Assistance.
Sec. 302.16 Reports by Recipients.
(a) In general, each Recipient must submit reports to EDA at
intervals and in the manner that EDA shall require, except that EDA
shall not require any report to be submitted more than ten (10) years
after the date of closeout of the Investment Assistance.
(b) Each report must contain a data-specific evaluation of the
effectiveness of the Investment Assistance provided in fulfilling the
Project's purpose (including alleviation of economic distress) and in
meeting the objectives
[[Page 56683]]
of PWEDA. Data used by a Recipient in preparing reports shall be
accurate and verifiable as determined by EDA, and from independent
sources (whenever possible). EDA will use this data and report to
fulfill its performance measurement reporting requirements under the
Government Performance and Results Act of 1993 and to monitor internal,
Investment and Project performance through an internal performance
measurement system, such as the EDA Balanced Scorecard or other system.
(c) To enable EDA to determine the economic development effect of
Projects that provide service benefits, EDA may require that Recipients
submit a Project service map and information from which to determine
whether services are provided to all segments of the Region being
assisted.
Sec. 302.17 Conflicts of interest.
(a) General. It is EDA's and the Department's policy to maintain
the highest standards of conduct to prevent conflicts of interest in
connection with the award of Investment Assistance or its use for
reimbursement or payment of costs (e.g., procurement of goods or
services) by or to the Recipient. A conflict of interest generally
exists when an Interested Party participates in a matter that has a
direct and predictable effect on the Interested Party's personal or
financial interests. A conflict may also exist where there is an
appearance that an Interested Party's objectivity in performing his or
her responsibilities under the Project is impaired. For example, an
appearance of impairment of objectivity may result from an
organizational conflict where, because of other activities or
relationships with other persons or entities, an Interested Party is
unable to render impartial assistance, services or advice to the
Recipient, a participant in the Project or to the Federal government.
Additionally, a conflict of interest may result from non-financial gain
to an Interested Party, such as benefit to reputation or prestige in a
professional field.
(b) Prohibition on direct or indirect financial or personal
benefits.
(1) An Interested Party shall not receive any direct or indirect,
financial or personal benefits in connection with the award of
Investment Assistance or its use for payment or reimbursement of costs
by or to the Recipient. Recipients shall establish safeguards to
prohibit an Interested Party from using its position for a purpose that
constitutes or presents the appearance of personal or organizational
conflicts of interest or of personal gain. See also 15 CFR 14.42 and
24.36(b)(3); Forms SF-424B and SF-424D.
(2) An Interested Party shall also not, directly or indirectly,
solicit or accept any gift, gratuity, favor, entertainment or other
benefit having monetary value, for himself or herself or for another
person or entity, from any person or organization which has obtained or
seeks to obtain Investment Assistance from EDA.
(3) Costs incurred in violation of any conflicts of interest rules
contained in this chapter or in violation of any assurances by the
Recipient may be denied reimbursement.
(4) See Sec. 315.15 of this chapter for special conflicts of
interest rules for Trade Adjustment Assistance Investments.
(c) Special rules for Revolving Loan Fund (``RLF'') Grants. In
addition to the rules set forth in this section:
(1) An Interested Party of a Recipient of an RLF Grant shall not
receive, directly or indirectly, any personal or financial benefits
resulting from the disbursement of RLF loans;
(2) A Recipient of an RLF Grant shall also not lend RLF funds to an
Interested Party; and
(3) Former board members of a Recipient of an RLF Grant and members
of his or her Immediate Family shall not receive a loan from such RLF
for a period of two (2) years from the date that the board member last
served on the RLF's board of directors.
Sec. 302.18 Post-approval requirements.
(a) General. A Recipient must comply with all financial,
performance, progress report and other requirements set forth in the
terms and conditions of the Investment Assistance, including any
special terms and applicable Federal cost principles (collectively,
``Post-Approval Requirements''). A Recipient's failure to comply with
Post-Approval Requirements may result in the disallowance of costs,
termination of the Investment Assistance award, or other adverse
consequences to the Recipient.
(b) Part 307 (Economic Adjustment Assistance Investments).
Recipients of Economic Adjustment Assistance Investments under part 307
of this chapter must comply with the Post-Approval Requirements set
forth in Sec. 307.6 of this chapter.
Sec. 302.19 Indemnification.
To the maximum extent permitted by law, a Recipient shall indemnify
and hold EDA harmless from any liability that EDA may incur due to the
actions or omissions of the Recipient.
Sec. 302.20 Civil rights.
(a) Discrimination is prohibited by a Recipient or Other Party (as
defined in paragraph (b) of this section) with respect to a Project
receiving Investment Assistance under PWEDA or by an entity receiving
Adjustment Assistance (as defined in Sec. 315.2 of this chapter) under
the Trade Act, in accordance with the following authorities:
(1) Section 601 of Title VI of the Civil Rights Act of 1964, as
amended (42 U.S.C. 2000d et seq.) (proscribing discrimination on the
basis of race, color, or national origin), and the Department's
implementing regulations found at 15 CFR part 8;
(2) 42 U.S.C. 3123 (proscribing discrimination on the basis of sex
in Investment Assistance provided under PWEDA) and 42 U.S.C. 6709
(proscribing discrimination on the basis of sex under the Local Public
Works Program), and the Department's implementing regulations found at
15 CFR 8.7 through 8.15;
(3) Section 504 of the Rehabilitation Act of 1973, as amended (29
U.S.C. 794) (proscribing discrimination on the basis of disabilities),
and the Department's implementing regulations found at 15 CFR part 8b;
(4) The Age Discrimination Act of 1975, as amended (42 U.S.C. 6101
et seq.) (proscribing discrimination on the basis of age), and the
Department's implementing regulations found at 15 CFR part 20; and
(5) Other Federal statutes, regulations and Executive Orders, as
applicable.
(b) Definitions. (1) For purposes of this section, an ``Other
Party'' means an ``other party subject to this part,'' as defined in 15
CFR 8.3(l), and includes an entity which (or which is intended to)
creates and/or saves fifteen (15) or more permanent jobs as a result of
Investment Assistance; provided that such entity is also either
specifically named in the application as benefiting from the Project,
or is or will be located in an EDA building, port, facility, or
industrial, commercial or business park constructed or improved in
whole or in part with Investment Assistance prior to EDA's final
disbursement of Investment Assistance funds.
(2) Additional applicable definitions are provided in 15 CFR part
8.
(c) No Recipient or Other Party shall intimidate, threaten, coerce
or discriminate against any person for the purpose of interfering with
any right or privilege secured by 42 U.S.C. 3123 or 42 U.S.C. 6709, or
because the person has made a complaint, testified, assisted or
participated in any manner in an investigation, proceeding or hearing
under this section.
[[Page 56684]]
(d) All Recipients of Investment Assistance under PWEDA, all Other
Parties and all entities receiving Adjustment Assistance under the
Trade Act must submit to EDA written assurances that they will comply
with applicable laws, EDA regulations, Department regulations, and such
other requirements as may be applicable, prohibiting discrimination.
(e) Reporting and other procedural matters are set forth in 15 CFR
parts 8, 8a, 8b, 8c and 20.
PART 303--PLANNING INVESTMENTS AND COMPREHENSIVE ECONOMIC
DEVELOPMENT STRATEGIES
Sec.
303.1 Purpose and scope.
303.2 Definitions.
303.3 Application requirements and evaluation criteria.
303.4 Award requirements.
303.5 Eligible administrative expenses.
303.6 EDA-funded CEDS process.
303.7 Requirements for Comprehensive Economic Development
Strategies.
303.8 Requirements for State plans.
303.9 Requirements for short-term Planning Investments.
Authority: 42 U.S.C. 3143; 42 U.S.C. 3162; 42 U.S.C. 3174; 42
U.S.C. 3211; Department of Commerce Organization Order 10-4.
Sec. 303.1 Purpose and scope.
The purpose of EDA Planning Investments is to provide support to
Planning Organizations for the development, implementation, revision or
replacement of Comprehensive Economic Development Strategies, and for
related short-term Planning Investments and State plans designed to
create and retain higher-skill, higher-wage jobs, particularly for the
unemployed and underemployed in the nation's most economically
distressed Regions. EDA's Planning Investments support partnerships
with District Organizations, Indian Tribes, community development
corporations, non-profit regional planning organizations and other
Eligible Recipients. Planning activities supported by these Investments
must be part of a continuous process involving the active participation
of Private Sector Representatives, public officials and private
citizens, and include:
(a) Analyzing local economies;
(b) Defining economic development goals;
(c) Determining Project opportunities; and
(d) Formulating and implementing an economic development program
that includes systematic efforts to reduce unemployment and increase
incomes.
Sec. 303.2 Definitions.
In addition to the defined terms set forth in Sec. 300.3 of this
chapter, the following terms used in this part shall have the following
meanings:
Planning Investment means the award of EDA Investment Assistance
under section 203 of PWEDA and this part.
Planning Organization means a Recipient whose purpose is to develop
and implement a CEDS for a specific EDA-approved Region under section
203 of PWEDA.
Strategy Committee means the committee or other entity identified
by the Planning Organization as responsible for the development,
implementation, revision or replacement of the CEDS for the Planning
Organization.
Sec. 303.3 Application requirements and evaluation criteria.
(a) For Planning Investment awards, EDA uses the general
application evaluation criteria set forth in Sec. 301.8 of this
chapter. In addition, applications for Planning Investments must
include information about the following:
(1) The proposed scope of work for the development, implementation,
revision or replacement of the CEDS, or the relation of the CEDS to the
proposed short-term planning activities or the State plan;
(2) Qualifications of the Eligible Applicant to implement the goals
and objectives resulting from the CEDS, short-term planning activities
or the State plan;
(3) The involvement of the Region's business leadership at each
stage of the preparation of the CEDS, short-term planning activities or
State plan;
(4) Extent of broad-based representation and involvement of the
Region's civic, business, labor, minority and other interests in the
Eligible Applicant's economic development activities; and
(5) Feasibility of the proposed scope of work to create and retain
higher-skill, higher-wage jobs through implementation of the CEDS.
(b) In addition to the criteria set forth in paragraph (a) of this
section, funded Recipients are evaluated on the basis of the extent of
continuing economic distress within the Region, their past performance,
and the overall effectiveness of their CEDS.
(c) For Planning Investment awards to a State, the Assistant
Secretary shall also consider the extent to which the State will
integrate and coordinate its CEDS with local and Economic Development
District plans.
(d) The Investment Rates for Planning Investments will be
determined in accordance with Sec. 301.4 of this chapter.
Sec. 303.4 Award requirements.
(a) Planning Investments shall function in conjunction with any
other available Federal, State or local planning assistance to ensure
adequate and effective planning and economical use of funds.
(b) Except in compelling circumstances as determined by the
Assistant Secretary, EDA will not provide Planning Investments for
multiple CEDS that address the needs of an identical or substantially
similar Region.
(c) EDA will provide a Planning Investment for the period of time
required to develop, revise or replace, and implement a CEDS, generally
in thirty-six (36) month renewable Investment award periods.
Sec. 303.5 Eligible administrative expenses.
In accordance with applicable Federal cost principles, Planning
Investments may be used to pay the direct and indirect costs incurred
by a Planning Organization in the development, implementation, revision
or replacement of a CEDS and for related short-term planning
activities.
Sec. 303.6 EDA-funded CEDS process.
If EDA awards Investment Assistance to a Planning Organization to
develop, revise or replace a CEDS, the Planning Organization must
follow the procedures set forth in this section:
(a) The Planning Organization must appoint a Strategy Committee.
The Strategy Committee must represent the main economic interests of
the Region and must include Private Sector Representatives as a
majority of its membership. In addition, the Planning Organization
should ensure that the Strategy Committee includes public officials,
community leaders, representatives of workforce development boards,
institutions of higher education, minority and labor groups, and
private individuals. The Strategy Committee representing Indian Tribes
or States may vary.
(b) The Planning Organization must develop and submit to EDA a CEDS
that:
(1) Complies with the requirements of Sec. 303.7; and
(2) Was made available for review and comment by the public for a
period of at least thirty (30) days prior to submission to EDA.
(c)(1) After obtaining EDA approval of the CEDS, the Planning
Organization must submit annually an updated CEDS performance report to
EDA.
(2) The Planning Organization must submit a new or revised CEDS to
EDA at least every five (5) years, unless EDA or the Planning
Organization determines
[[Page 56685]]
that a new or revised CEDS is required earlier due to changed
circumstances.
(3) Any updated CEDS performance report that results in a change of
the requirements set forth in Sec. 303.7(b)(3) of the EDA-accepted
CEDS or any new or revised CEDS, must be available for review and
comment by the public in accordance with paragraph (b)(2) of this
section.
(d) If EDA determines that implementation of the CEDS is
inadequate, it will notify the Planning Organization in writing and the
Planning Organization shall submit to EDA a new or revised CEDS.
(e) If any part of a Region is covered by one or more of the
Regional Commissions as set forth in section 404 of PWEDA, the Planning
Organization shall ensure that a copy of the CEDS is provided to the
Regional Commission(s).
Sec. 303.7 Requirements for Comprehensive Economic Development
Strategies.
(a) General. CEDS are designed to bring together the public and
private sectors in the creation of an economic roadmap to diversify and
strengthen Regional economies. The CEDS should analyze the Regional
economy and serve as a guide for establishing Regional goals and
objectives, developing and implementing a Regional plan of action, and
identifying investment priorities and funding sources. Public and
private sector partnerships are critical to the implementation of the
integral elements of a CEDS set forth in paragraph (b) of this section.
As a performance-based plan, the CEDS will serve a critical role in a
Region's efforts to defend against economic dislocations due to global
trade, competition and other events resulting in the loss of jobs and
private investment.
(b) Technical requirements. A CEDS must be the result of a
continuing economic development planning process, developed with broad-
based and diverse public and private sector participation, and shall
contain the following:
(1) A background of the economic development situation of the
Region with a discussion of the economy, population, geography,
workforce development and use, transportation access, resources,
environment and other pertinent information;
(2) An in-depth analysis of economic and community development
problems and opportunities, including:
(i) Incorporation of relevant material from other government-
sponsored or supported plans and consistency with applicable State and
local workforce investment strategies; and
(ii) An identification of past, present and projected future
economic development investments in the Region covered;
(3) A section setting forth goals and objectives necessary to solve
the economic development problems of the Region;
(4) A discussion of community and private sector participation in
the CEDS effort;
(5) A section listing all suggested Projects and the projected
numbers of jobs to be created as a result thereof;
(6) A section identifying and prioritizing vital Projects, programs
and activities that address the Region's greatest needs or that will
best enhance the Region's competitiveness, including sources of funding
for past and potential future Investments;
(7) A section identifying economic clusters within the Region,
focusing on those that are growing or in decline;
(8) A plan of action to implement the goals and objectives of the
CEDS, including:
(i) Promoting economic development and opportunity;
(ii) Fostering effective transportation access;
(iii) Enhancing and protecting the environment;
(iv) Maximizing effective development and use of the workforce
consistent with any applicable State or local workforce investment
strategy;
(v) Promoting the use of technology in economic development,
including access to high-speed telecommunications;
(vi) Balancing resources through sound management of physical
development; and
(vii) Obtaining and utilizing adequate funds and other resources;
and
(9) A list of performance measures used to evaluate the Planning
Organization's successful development and implementation of the CEDS,
including but not limited to the following:
(i) Number of jobs created after implementation of the CEDS;
(ii) Number and types of investments undertaken in the Region;
(iii) Number of jobs retained in the Region;
(iv) Amount of private sector investment in the Region after
implementation of the CEDS; and
(v) Changes in the economic environment of the Region; and
(10) A section outlining the methodology for cooperating and
integrating the CEDS with a State's economic development priorities.
(c) Consideration of non-EDA funded CEDS.
(1) In determining the acceptability of a CEDS prepared
independently of EDA Investment Assistance or oversight for Projects
under parts 305 and 307 of this chapter, EDA may in its discretion
determine that the CEDS is acceptable without fulfilling all the
requirements of paragraph (b) of this section. In doing so, EDA shall
consider the circumstances surrounding the application for Investment
Assistance, including emergencies or natural disasters and the
fulfillment of the requirements of section 302 of PWEDA.
(2) If the CEDS for a Project under parts 305 and 307 of this
chapter is developed under another federally-supported program, it must
include acceptable performance measures similar to those set forth in
paragraph (b) of this section and information on the state of the
Regional economy. To the maximum extent practicable, the CEDS shall be
consistent and coordinated with any existing economic development plan
for the Region.
Sec. 303.8 Requirements for State plans.
(a) As a condition of a State receiving a Planning Investment:
(1) The State must have or develop a CEDS that meets the
requirements of Sec. 303.7;
(2) Any State plan developed with Planning Investment Assistance
must, to the maximum extent practicable, be developed cooperatively by
the State, political subdivisions of the State, and the Economic
Development Districts located wholly or partially in the State; and
(3) The State must submit to EDA an annual report on any State plan
receiving Planning Investment Assistance.
(b) Before awarding a Planning Investment to a State, EDA shall
consider the extent to which the State will take into account local and
District economic development plans.
Sec. 303.9 Requirements for short-term Planning Investments.
(a) In addition to providing support for CEDS and State plans, EDA
may also provide Investment Assistance to support short-term planning
activities. EDA may provide such Investment Assistance to:
(1) Develop the economic development planning capacity of States,
cities and other Eligible Applicants experiencing economic distress;
(2) Assist in institutional capacity building; or
(3) Undertake innovative approaches to economic development.
(b) Eligible activities may include but are not limited to updating
a portion of
[[Page 56686]]
a CEDS, economic analysis, development of economic development policies
and procedures, and development of economic development goals.
(c) Applicants for short-term Planning Investments must provide
performance measures acceptable to EDA that can be used to evaluate the
success of the program and provide EDA with progress reports during the
term of the Planning Investment, as set forth in the Investment
agreement.
PART 304--ECONOMIC DEVELOPMENT DISTRICTS
Sec.
304.1 Designation of Economic Development Districts: Regional
eligibility.
304.2 District Organizations: Formation, organizational requirements
and operations.
304.3 District modification and termination.
304.4 Performance evaluations.
Authority: 42 U.S.C. 3122; 42 U.S.C. 3171; 42 U.S.C. 3172; 42
U.S.C. 3196; Department of Commerce Organization Order 10-4.
Sec. 304.1 Designation of Economic Development Districts: Regional
eligibility.
Upon the request of a District Organization (as defined in Sec.
304.2), EDA may designate a Region as an Economic Development District
if such Region:
(a) Contains at least one (1) geographic area that is subject to
the economic distress criteria set forth in Sec. 301.3(a)(1) of this
chapter and is identified in an approved CEDS;
(b) Is of sufficient size or population and contains sufficient
resources to foster economic development on a scale involving more than
a single geographic area subject to the economic distress criteria set
forth in Sec. 301.3(a)(1) of this chapter;
(c) Has an EDA-approved CEDS that
(1) Meets the requirements under Sec. 303.7 of this chapter;
(2) Contains a specific program for intra-District cooperation,
self-help, and public investment; and
(3) Is approved by each affected State and by the Assistant
Secretary;
(d) Obtains commitments from at least a majority of the counties or
other areas within the proposed District, as determined by EDA, to
support the economic development activities of the District; and
(e) Obtains the concurrence with the designation request from the
State (or States) in which the proposed District will be wholly or
partially located.
Sec. 304.2 District Organizations: Formation, organizational
requirements and operations.
(a) General. A ``District Organization'' is an entity that
satisfies the formation and organizational requirements under
paragraphs (b) and (c) of this section.
(b) Formation. A District Organization must be organized as one of
the following:
(1) A public organization formed through an inter-governmental
agreement providing for the joint exercise of local government powers;
or
(2) A public organization established under State-enabling
legislation for the creation of multi-jurisdictional area-wide planning
organizations; or
(3) A non-profit organization incorporated under the applicable
non-profit statutes of the State in which it is incorporated.
(c) Organization and governance.
(1) Each District Organization must meet the requirements of this
paragraph (c) concerning membership composition, the maintenance of
adequate staff support to perform its economic development functions,
and its authorities and responsibilities for carrying out economic
development functions. The District Organization's board of directors
(or other governing body) must also meet these requirements.
(2) The District Organization must demonstrate that its governing
body is broadly representative of the principal economic interests of
the Region, and, unless otherwise prohibited by applicable State or
local law, must include at least one (1) Private Sector Representative
and one (1) or more of the following: Executive Directors of Chambers
of Commerce, or representatives of institutions of post-secondary
education, workforce development groups or labor groups, all of which
must comprise in the aggregate a minimum of thirty-five (35) percent of
the District Organization's governing body. The governing body shall
also have at least a simple majority of its membership who are elected
officials and/or employees of a general purpose unit of State, local or
Indian tribal government who have been appointed to represent the
government. Upon the District Organization's showing of its inability
to locate a Private Sector Representative to serve on its governing
body following extensive due diligence, the Assistant Secretary may
waive the Private Sector Representative requirement. The Assistant
Secretary shall not delegate the authority to grant a waiver under this
paragraph.
(3) The District Organization must be assisted by a professional
staff drawn from qualified persons in economic development, planning,
business development or related disciplines.
(4) The governing bodies of District Organizations must provide
access for persons who are not members to make their views known
concerning ongoing and proposed District activities in accordance with
the following requirements:
(i) The District Organization must hold meetings open to the public
at least once a year and shall also publish the date and agenda of such
meetings sufficiently in advance to allow the public a reasonable time
to prepare in order to participate effectively.
(ii) The District Organization shall adopt a system of
parliamentary procedures to assure that board members and others have
access to an effective opportunity to participate in the affairs of the
District.
(iii) The District Organization shall provide information
sufficiently in advance of decisions to give the public adequate
opportunity to review and react to proposals. District Organizations
should communicate technical data and other material to the public so
they may understand the impact of public programs, available options
and alternative decisions.
(iv) The District Organization must make available to the public
such audited statements, annual budgets and minutes of public meetings,
as may be reasonably requested.
(v) The District Organization and its board of directors must
comply with all Federal and State financial assistance reporting
requirements and the conflicts of interest provisions set forth in
Sec. 302.17 of this chapter.
(d) Operations. (1) The District Organization shall engage in the
full range of economic development activities listed in its EDA-
approved CEDS. These activities may include:
(i) Coordinating and implementing economic development activities
in the District;
(ii) Carrying out economic development research, planning,
implementation and advisory functions identified in the CEDS; and
(iii) Coordinating the development and implementation of the CEDS
with other local, State, Federal and private organizations.
(2) The District Organization may at its option contract for
services to accomplish the activities listed in paragraphs (d)(1)(i)
through (iii) of this section.
Sec. 304.3 District modification and termination.
(a) Modification. Upon the request of a District Organization and
with the
[[Page 56687]]
concurrence of the State or States affected (unless such concurrence is
waived by the Assistant Secretary), EDA may modify the geographic
boundaries of a District, if it determines that such modification will
contribute to a more effective program for economic development.
(b) Termination. EDA may, upon sixty (60) days prior written notice
to the District Organization, member counties and other areas
determined by EDA and each affected State, terminate a Region's
designation as an Economic Development District when:
(1) A District or District Organization no longer meets the
requirements of Sec. Sec. 304.1 or 304.2; or
(2) EDA determines that the District Organization fails to execute
its CEDS according to the development, implementation and other
performance measures set forth therein; or
(3) A District Organization has requested termination.
(c) Prior to terminating a District Organization under paragraph
(b)(2) of this section, EDA will consult with the District Organization
and consider all facts and circumstances regarding the District
Organization's operations. EDA will not terminate a District's
designation based on circumstances beyond the control of the District
Organization (e.g., natural disaster, plant closure, overall economic
downturn, sudden and severe economic dislocation, or other situation).
(d) EDA may further modify or terminate a Region's designation as a
District according to the standards set forth in an FFO.
Sec. 304.4 Performance evaluations.
(a) EDA shall evaluate the management standards, financial
accountability and program performance of each District Organization
within three (3) years after the initial Investment award and at least
once every three (3) years thereafter, so long as the District
Organization continues to receive Investment Assistance. EDA's
evaluation shall assess:
(1) The continuing Regional eligibility of the District, as set
forth in Sec. 304.1;
(2) The management of the District Organization, as set forth in
Sec. 304.2; and
(3) The implementation of the CEDS, including the District
Organization's performance and contribution towards the retention and
creation of employment, as set forth in Sec. 303.7 on this chapter.
(b) For peer review, EDA shall ensure the participation of at least
one (1) other District Organization in the performance evaluation on a
cost-reimbursement basis.
PART 305--PUBLIC WORKS AND ECONOMIC DEVELOPMENT INVESTMENTS
Subpart A--General
Sec.
305.1 Purpose and scope.
305.2 Award requirements.
305.3 Application requirements.
305.4 Projects for design and engineering work.
Subpart B--Requirements for Approved Projects
305.5 Project administration by District Organization.
305.6 Allowable methods of procurement for construction services.
305.7 Services performed by the Recipient's own forces.
305.8 Recipient-furnished equipment and materials.
305.9 Project phasing and Investment disbursement.
305.10 Bid underrun.
305.11 Contract awards; early construction start.
305.12 Project sign.
305.13 Contract change orders.
305.14 Occupancy prior to completion.
Authority: 42 U.S.C. 3211; 42 U.S.C. 3141; Department of
Commerce Organization Order 10-4.
Subpart A--General
Sec. 305.1 Purpose and scope.
Public Works and Economic Development Investments (``Public Works
Investments'') intend to help the nation's most distressed communities
revitalize, expand and upgrade their physical infrastructure to attract
new industry, encourage business expansion, diversify local economies
and generate or retain long-term private sector jobs and investments.
The primary goal of these Investments is the creation of new, or the
retention of existing, long-term private sector job opportunities in
communities experiencing significant economic distress as evidenced by
chronic high unemployment, underemployment, low per capita income,
outmigration, or a Special Need. These Investments also intend to
assist communities in attracting private capital investment and higher-
skill, higher-wage job opportunities and to promote the successful
long-term economic recovery of a Region.
Sec. 305.2 Award requirements.
(a) Project scope. Public Works Investments may fund the following
activities:
(1) Acquisition or development of land and improvements for use in
a public works, public service or other type of development facility;
or
(2) Acquisition, design and engineering, construction,
rehabilitation, alteration, expansion, or improvement of such a
facility, including related machinery and equipment.
(b) Requirements. A Public Works Investment may be made if EDA
determines that:
(1) The Project will, directly or indirectly:
(i) Improve the opportunities for the successful establishment or
expansion of industrial or commercial plants or facilities in the
Region where the Project is located;
(ii) Assist in the creation of additional long-term employment
opportunities in the Region; or
(iii) Primarily benefit the long-term unemployed and members of
low-income families in the Region;
(2) The Project will fulfill a pressing need of the Region, or a
part of the Region, in which the Project is located; and
(3) The Region in which the Project is located has a CEDS and the
Project is consistent with the CEDS.
(c) Not more than fifteen (15) percent of the annual appropriations
made available to EDA to fund Public Works Investments may be made in
any one (1) State.
Sec. 305.3 Application requirements.
(a) Each application for Public Works Investment Assistance must:
(1) Include evidence of eligibility, as provided in part 301 of
this chapter;
(2) Include, or incorporate by reference, a CEDS (as provided in
Sec. 303.7 of this chapter);
(3) Demonstrate how the proposed Project meets the criteria of
Sec. 305.2; and
(4) Demonstrate how the proposed Project meets the proposal
evaluation criteria set forth in Sec. 301.8 of this chapter.
(b) The Investment Rate for Public Works Investments will be
determined in accordance with Sec. 301.4 of this chapter.
Sec. 305.4 Projects for design and engineering work.
In the case of Public Works Investment Assistance awarded solely
for design and engineering work, the following additional application
requirements and terms shall apply:
(a) EDA may determine that a separate Investment for design and
engineering is warranted due to the technical complexity or
environmental sensitivity of the construction Project;
(b) The purpose of the Investment may be limited to the development
and
[[Page 56688]]
production of all documents required for the construction of the
proposed construction Project in a format and in sufficient quantity to
permit advertisement and award of a construction contract soon after
securing construction financing for the Project;
(c) EDA will not disburse any portion of the Investment Assistance
until it receives and certifies compliance with the Investment award of
all design and engineering contracts; and
(d) EDA's funding of the Project for design and engineering work
does not in any way commit EDA to fund construction of the Project.
Subpart B--Requirements for Approved Projects
Sec. 305.5 Project administration by District Organization.
(a) When a District Organization is not the Recipient or co-
Recipient of Investment Assistance, the District Organization may
administer the Project for the Recipient if EDA determines fulfillment
of the following conditions:
(1) The Recipient has requested (either in the application or by
separate written request) that the District Organization for the Region
in which the Project is located administer the Project;
(2) The Recipient certifies and EDA finds that:
(i) Administration of the Project is beyond the capacity of the
Recipient's current staff and would require hiring additional staff or
contracting for such services;
(ii) No local organization or business exists that could administer
the Project in a more efficient or cost-effective manner than the staff
of the District Organization; and
(iii) The staff of the District Organization would administer the
Project without sub-contracting the work; and
(3) The allowable costs for the administration of the Project by
the District Organization's staff will not exceed the amount that would
be allowable to the Recipient.
(b) EDA must approve the request either by approving the
application in which the request is made or by separate specific
written approval.
Sec. 305.6 Allowable methods of procurement for construction
services.
(a) Recipients may use alternate construction procurement methods
to the traditional design/bid/build procedures (including lump sum or
unit price-type construction contracts). These methods include but are
not limited to design/bid/build, construction management at risk and
force account. If an alternate method is used, the Recipient shall
submit to EDA for approval a construction services procurement plan and
the Recipient must use a design professional to oversee the process.
The Recipient shall submit the plan to EDA prior to advertisement for
bids and shall include the following, as applicable:
(1) Justification for the proposed method for procurement of
construction services;
(2) The scope of work with cost estimates and schedules;
(3) A copy of the proposed construction contract;
(4) The name and qualifications of the selected design
professional; and
(5) Procedures to be used to ensure full and open competition,
including the selection criteria.
(b) For all procurement methods, the Recipient must comply with the
procurement standards set forth in 15 CFR parts 14 or 24, as
applicable.
Sec. 305.7 Services performed by the Recipient's own forces.
In certain circumstances, the Recipient may wish to consider having
a portion or all of the design, construction, inspection, legal
services or other work and/or services in connection with the Project
performed by personnel who are employed by the Recipient either full-
time or part-time. EDA may approve the use of such ``in-house forces''
if:
(a) The services are routinely performed by the Recipient for all
construction Projects performed by the Recipient (for example,
inspection or legal); or
(b) The Recipient has a special skill required for the construction
of the Project (for example, construction of unique Indian structures);
or
(c) The Recipient has made all reasonable efforts to obtain a
contractor but has failed to do so because of uncontrollable factors
such as the remoteness of the Project site or an overabundance of
construction work in the Region; or
(d) The Recipient demonstrates substantial cost savings.
Sec. 305.8 Recipient-furnished equipment and materials.
The Recipient may wish to incorporate into the Project equipment or
materials that it will secure through its own efforts, subject to the
following requirements:
(a) EDA must approve any use of Recipient-furnished equipment and
materials. EDA may require that major equipment items be subject to a
lien in favor of EDA and may also require a statement from the
Recipient regarding expected useful life and salvage value of such
equipment;
(b) EDA may require the Recipient to establish that the expense
claimed for such equipment or materials is competitive with current
local market costs; and
(c) Acquisition of Recipient-furnished equipment and/or materials
under this section is also subject to the requirements of 15 CFR parts
14 or 24, as applicable.
Sec. 305.9 Project phasing and Investment disbursement.
(a) EDA may authorize in advance the award of construction
contracts in phases, provided the Recipient submits a request that
includes each of the following:
(1) Valid reasons justifying why the Project must be phased;
(2) Description of the specific elements to be completed in each
phase;
(3) Detailed construction cost estimates for each phase;
(4) Time schedules for completing all phases of the Project;
(5) Certification that the Recipient can and will fund any
overrun(s); and
(6) Certification that the Recipient is capable of paying incurred
costs prior to the first disbursement of EDA funds.
(b) EDA will begin disbursement of funds after receipt of evidence
sufficient to EDA of compliance with all Investment award conditions.
EDA may approve the disbursement of funds prior to the tender of all
construction contracts if the Recipient can demonstrate to EDA's
satisfaction that a severe financial hardship will result without such
approval.
Sec. 305.10 Bid underrun.
If at the construction contract bid opening, the lowest responsive
bid is less than the total Project cost, the Recipient will notify EDA
to determine whether Investment funds should be deobligated from the
Project.
Sec. 305.11 Contract awards; early construction start.
EDA must determine that the award of all contracts necessary for
design and construction of the Project facilities is in compliance with
the terms and conditions of the Investment award in order for the costs
to be eligible for EDA reimbursement. Pending this determination, the
Recipient may issue a notice permitting construction under the contract
to commence. If construction commences prior to EDA's determination,
the Recipient proceeds at
[[Page 56689]]
its own risk until EDA review and concurrence. The EDA regional office
will advise the Recipient of the requirements necessary to obtain EDA's
determination.
Sec. 305.12 Project sign.
The Recipient shall be responsible for the construction, erection
and maintenance in good condition throughout the construction period of
a sign or signs at a conspicuous place at the Project site indicating
that the Federal government is participating in the Project. The EDA
regional office will provide mandatory specifications for the signage.
Sec. 305.13 Contract change orders.
(a) If it becomes necessary to alter the construction contracts
post-execution, the Recipient and contractor shall agree to a formal
contract change order.
(b) All contract change orders must receive EDA review for
compliance with the terms and conditions of the Investment award, even
if the Recipient is to pay for all additional costs resulting from the
change or the change order reduces the contract price.
(c) Work on the Project may continue pending EDA review of the
contract change order, but all such work will be at the Recipient's
risk until EDA completes its review.
Sec. 305.14 Occupancy prior to completion.
Occupancy of any part of the Project prior to final acceptance is
entirely at the Recipient's risk and must follow the requirements of
local and State law.
PART 306--TRAINING, RESEARCH AND TECHNICAL ASSISTANCE INVESTMENTS
Subpart A--Local and National Technical Assistance
Sec.
306.1 Purpose and scope.
306.2 Award requirements.
306.3 Application requirements.
Subpart B--University Center Economic Development Program
306.4 Purpose and scope.
306.5 Award requirements.
306.6 Application requirements.
306.7 Performance evaluations of University Centers.
Authority: 42 U.S.C. 3147; 42 U.S.C. 3196; 42 U.S.C. 3211;
Department of Commerce Organization Order 10-4.
Subpart A--Local and National Technical Assistance
Sec. 306.1 Purpose and scope.
(a) Local and National Technical Assistance Investments may:
(1) Determine the causes of excessive unemployment,
underemployment, low per capita income, outmigration or other problems
throughout the nation;
(2) Formulate and implement economic development tools, models, and
innovative techniques that will alleviate or prevent conditions of
excessive unemployment or underemployment;
(3) Formulate and implement economic development programs to
increase local, regional and national capacity;
(4) Evaluate the effectiveness and economic impact of programs,
projects and techniques to alleviate economic distress and promote
economic development;
(5) Conduct project planning and feasibility studies;
(6) Provide management and operational assistance;
(7) Establish business outreach centers;
(8) Disseminate information about effective programs, projects and
techniques that alleviate conditions of economic distress and promote
economic development;
(9) Assess, market and establish business clusters and
associations; or
(10) Perform other activities determined by EDA to be appropriate
under the Local and National Technical Assistance program.
(b) Investment Assistance may not be used to start or expand a
private business.
(c) EDA may identify specific training, research or technical
assistance Projects it will fund, which will be subject to competition.
Ordinarily, these Projects are specified in an FFO, which will provide
the specific requirements, timelines and the appropriate points of
contact and addresses.
(d) In providing Local and National Technical Assistance under this
subpart, EDA, in addition to making Investments, may:
(1) Provide Local and National Technical Assistance through
officers or employees of the Department;
(2) Pay funds made available to carry out this subpart to Federal
Agencies; or
(3) Employ private individuals, partnerships, businesses,
corporations, or appropriate institutions under contracts entered into
for this purpose.
Sec. 306.2 Award requirements.
EDA selects Projects for Local and National Technical Assistance
Investments in accordance with the general evaluation and selection
criteria set forth in part 301 of this chapter and the extent to which
the Project:
(a) Strengthens the capacity of local, State or national
organizations and institutions to undertake and promote effective
economic development programs targeted to Regions of distress;
(b) Benefits distressed Regions;
(c) Demonstrates innovative approaches to stimulate economic
development in distressed Regions;
(d) Is consistent with an EDA-approved CEDS, as applicable, for the
Region in which the Project is located; and
(e) Meets the criteria outlined in the applicable FFO.
Sec. 306.3 Application requirements.
(a) EDA will provide Investment Assistance under this subpart for
the period of time required to complete the Project's scope of work,
generally not to exceed twelve (12) to eighteen (18) months.
(b) For a Project of significant Regional or national scope, EDA
may waive the requirement set forth in Sec. 301.2(b) of this chapter
that the non-profit organization act in cooperation with officials of a
political subdivision of a State.
(c) The Investment Rate for Investments under this subpart shall be
determined in accordance with Sec. 301.4(b)(4) of this chapter.
Subpart B--University Center Economic Development Program
Sec. 306.4 Purpose and scope.
The University Center Economic Development Program is intended to
help improve the economies of distressed Regions. Institutions of
higher education have many assets, such as faculty, staff, libraries,
laboratories and computer systems that can address local economic
problems and opportunities. With Investment Assistance, institutions of
higher education establish and operate research centers (``University
Centers'') that provide technical assistance to public and private
sector organizations with the goal of enhancing local economic
development.
Sec. 306.5 Award requirements.
EDA provides Investment Assistance to University Center Projects in
accordance with the general evaluation and selection criteria set forth
in part 301 of this chapter, the competitive selection process outlined
in the applicable FFO, and the extent to which the Project:
(a) Addresses the economic development needs, issues and
opportunities of the Region and will benefit distressed areas in the
Region;
(b) Provides service and value that are unique and will maximize
coordination with other organizations in the Region;
[[Page 56690]]
(c) Has the commitment and support (both financial and non-
financial) of the highest management levels of the sponsoring
institution;
(d) Outlines activities consistent with the expertise of the
proposed staff, academic programs and other resources available within
the sponsoring institution; and
(e) Documents past experience of the sponsoring institution in
operating technical assistance programs.
Sec. 306.6 Application requirements.
(a) EDA will provide Investment Assistance under this subpart for
the period of time required to complete the Project's scope of work, as
specifically outlined in the applicable FFO.
(b) For a Project of significant Regional or national scope, EDA
may waive the requirement set forth in Sec. 301.2(b) of this chapter
that the non-profit organization act in cooperation with officials of a
political subdivision of a State.
(c) The Investment Rate for Investments under this subpart shall be
determined in accordance with Sec. 301.4(b)(4) of this chapter.
(d) At least eighty (80) percent of EDA funding must be allocated
to direct costs of program delivery.
Sec. 306.7 Performance evaluations of University Centers.
(a) EDA will:
(1) Evaluate each University Center within three (3) years after
the initial Investment award and at least once every three (3) years
thereafter, so long as such University Center continues to receive
Investment Assistance; and
(2) Assess the University Center's contribution to providing
technical assistance, conducting applied research, meeting program
performance objectives (as evidenced by retention and creation of
employment opportunities) and disseminating Project results in
accordance with the scope of work funded during the evaluation period.
(b) The performance evaluation will determine in part whether a
University Center can compete to receive Investment Assistance under
the University Center Economic Development Program for the following
Investment Assistance cycle.
(c) For peer review, EDA shall ensure the participation of at least
one (1) other University Center in the performance evaluation on a
cost-reimbursement basis.
PART 307--ECONOMIC ADJUSTMENT ASSISTANCE INVESTMENTS
Subpart A--General
Sec.
307.1 Purpose.
307.2 Criteria for Economic Adjustment Assistance Investments.
307.3 Use of Economic Adjustment Assistance Investments.
307.4 Award requirements.
307.5 Application requirements.
307.6 Economic Adjustment Assistance post-approval requirements.
Subpart B--Special Requirements for Revolving Loan Funds and Use of
Grant Funds
307.7 Revolving Loan Funds established for business lending.
307.8 Definitions.
307.9 Revolving Loan Fund Plan.
307.10 Pre-loan requirements.
307.11 Disbursement of funds to Revolving Loan Funds.
307.12 Revolving Loan Fund Income.
307.13 Records and retention.
307.14 Revolving Loan Fund semi-annual and annual reports.
307.15 Prudent management of Revolving Loan Funds.
307.16 Effective utilization of Revolving Loan Funds.
307.17 Uses of capital.
307.18 Addition of lending areas; merger of RLFs.
307.19 RLF loan portfolio Sales and Securitizations.
307.20 Partial liquidation and liquidation upon termination.
307.21 Termination of Revolving Loan Funds.
307.22 Variances.
Authority: 42 U.S.C. 3211; 42 U.S.C. 3149; 42 U.S.C. 3161; 42
U.S.C. 3162; 42 U.S.C. 3233; Department of Commerce Organization
Order 10-4.
Subpart A--General
Sec. 307.1 Purpose.
The purpose of Economic Adjustment Assistance Investments is to
address the needs of communities experiencing adverse economic changes
that may occur suddenly or over time, including but not limited to
those caused by:
(a) Military base closures or realignments, defense contractor
reductions in force, or U.S. Department of Energy defense-related
funding reductions;
(b) Federally-Declared Disasters;
(c) International trade;
(d) Long-term economic deterioration;
(e) Loss of a major community employer; or
(f) Loss of manufacturing jobs.
Sec. 307.2 Criteria for Economic Adjustment Assistance Investments.
(a) Economic Adjustment Assistance Investments are intended to
enhance a distressed community's ability to compete economically by
stimulating private investment in targeted economic sectors through use
of tools that:
(1) Help develop and implement a CEDS;
(2) Expand the capacity of public officials and economic
development organizations to work effectively with businesses;
(3) Assist in overcoming major obstacles identified in the CEDS;
(4) Enable communities to plan and coordinate the use of Federal
resources and other resources available to support economic recovery,
development of Regional economies, or recovery from natural or other
disasters; or
(5) Encourage the development of innovative public and private
approaches to economic restructuring and revitalization.
(b) Economic Adjustment Assistance Investments may be made when the
Project funded by the Investment will help the Region meet a Special
Need. The Region in which a Project is located must have a CEDS with
which the Project is consistent (except that this requirement shall not
apply to Strategy Grants described in Sec. 307.3).
Sec. 307.3 Use of Economic Adjustment Assistance Investments.
Economic Adjustment Assistance Investments may be used to develop a
CEDS to alleviate long-term economic deterioration or a sudden and
severe economic dislocation (a ``Strategy Grant''), or to fund a
Project implementing such a CEDS (an ``Implementation Grant'').
(a) Strategy Grants support developing, updating or refining a
CEDS.
(b) Implementation Grants support the execution of activities
identified in a CEDS. Specific activities may be funded as separate
Investments or as multiple elements of a single Investment. Examples of
Implementation Grant activities include:
(1) Infrastructure improvements, such as site acquisition, site
preparation, construction, rehabilitation and equipping of facilities;
(2) Provision of business or infrastructure financing through the
capitalization of Recipient-administered Revolving Loan Funds
(``RLFs''), which may include loans, loan guaranties and interest rate
buy-downs to facilitate business lending activities;
(3) Market or industry research and analysis;
(4) Technical assistance, including organizational development such
as business networking, restructuring or improving the delivery of
business services, or feasibility studies;
(5) Public services;
(6) Training; and
(7) Other activities justified by the CEDS that satisfy applicable
statutory and regulatory requirements.
[[Page 56691]]
Sec. 307.4 Award requirements.
(a) General. EDA will select Economic Adjustment Assistance
Projects in accordance with part 301 of this chapter and the additional
criteria provided in paragraphs (b) and (c) of this section, as
applicable.
(b) Strategy Grants. EDA will review Strategy Grant proposals to
ensure that the proposed activities conform to the CEDS requirements
set forth in Sec. 303.7 of this chapter.
(c) Implementation Grants.
(1) EDA will review Implementation Grant proposals for the extent
to which:
(i) The applicable CEDS meets the requirements in Sec. 303.7 of
this chapter; and
(ii) The proposed Project is identified as a necessary element of
or consistent with the applicable CEDS.
(2) Revolving Loan Fund Grants. For Eligible Applicants seeking to
capitalize or recapitalize an RLF, EDA will review the proposals for:
(i) The need for a new or expanded public financing tool to enhance
other business assistance programs and services targeting economic
sectors and locations described in the CEDS;
(ii) The types of financing activities anticipated; and
(iii) The capacity of the RLF organization to manage lending
activities, create networks between the business community and other
financial providers, and implement the CEDS.
(d) Funding priority considerations for Economic Adjustment
Assistance may be set forth in an FFO.
Sec. 307.5 Application requirements.
(a) Each application for Economic Adjustment Assistance must:
(1) Include or incorporate by reference (if so approved by EDA) a
CEDS, except that a CEDS is not required when applying for a Strategy
Grant; and
(2) Explain how the proposed Project meets the criteria set forth
in Sec. 307.2.
(b) For a technical assistance Project of significant Regional or
national scope under this subpart, EDA may waive the requirement set
forth in Sec. 301.2(b) of this chapter that the non-profit
organization act in cooperation with officials of a political
subdivision of a State.
Sec. 307.6 Economic Adjustment Assistance post-approval requirements.
In addition to the post-approval requirements set forth in Sec.
302.18 of this chapter:
(a) Strategy Grants shall comply with the applicable provisions of
part 303 of this chapter;
(b) Implementation Grants involving construction shall comply with
the provisions of subpart B of part 305 of this chapter;
(c) Implementation Grants not involving construction shall comply
with the applicable provisions of subpart A of part 306 of this
chapter; and
(d) RLF Grants shall comply with the requirements set forth in this
part and in the following publications:
(1) EDA's RLF Standard Terms and Conditions; and
(2) The compliance supplement to OMB Circular A-133 (the
``Compliance Supplement''). The Compliance Supplement is available via
the Internet at http://www.omb.gov.
Subpart B--Special Requirements for Revolving Loan Funds and Use of
Grant Funds
Sec. 307.7 Revolving Loan Funds established for business lending.
Economic Adjustment Assistance Grants to capitalize or recapitalize
RLFs most commonly fund business lending, but may also fund public
infrastructure or other authorized lending activities. The requirements
in this subpart B apply to RLFs established for business lending
activities. Special award conditions may contain appropriate
modifications of these requirements to accommodate non-business RLF
awards.
Sec. 307.8 Definitions.
In addition to the defined terms set forth in Sec. 300.3 of this
chapter, the following terms used in this part shall have the following
meanings:
Closed Loan means any loan for which all required documentation has
been, received, reviewed and executed by an RLF Recipient.
Exempt Security means a Security that is not subject to certain SEC
or Federal Reserve Board rules.
Guaranteed Loan means a loan made and serviced by a third party
lending institution under a loan guaranty agreement providing that an
RLF Recipient will purchase the guaranteed portion of the loan in the
event of borrower default.
Prudent Lending Practices means generally accepted underwriting and
lending practices for public loan programs, based on sound judgment to
protect Federal and lender interests. Prudent Lending Practices include
loan processing, documentation, loan approval, collections, servicing,
administrative procedures, collateral protection and recovery actions.
Prudent Lending Practices provide for compliance with local laws and
filing requirements to perfect and maintain a security interest in RLF
collateral.
Recapitalization Grants are Investments of additional Grant funds
to increase the capital base of an RLF.
Revolving Phase means that stage of the RLF's business lending
activities that commences immediately after all Grant funds have been
disbursed to the RLF Recipient.
RLF Capital means, at any point in time, the aggregate amount of
cash held by the RLF Recipient from any of the following sources: Grant
funds; Local Share; repayments of principal from RLF loans; and RLF
Income. The initial RLF capital base is normally comprised of EDA funds
and the cash Local Share.
RLF Income means interest earned on outstanding loan principal and
RLF accounts holding RLF funds (excluding interest earned on excess
funds pursuant to Sec. 307.16(c)(2)), all fees and charges received by
the RLF, and other income generated from RLF operations. An RLF
Recipient may use RLF Income only to capitalize the RLF for financing
activities and to cover eligible and reasonable costs necessary to
administer the RLF, unless otherwise provided for in the Grant
agreement or approved in writing by EDA. RLF Income excludes repayments
of principal and any interest remitted to the U.S. Treasury pursuant to
Sec. 307.16(c)(2)(i).
RLF Third Party, for purposes of this subpart B only, means an
Eligible Recipient or for-profit entity selected by EDA through a
request for proposals or Cooperative Agreement to facilitate and/or
manage the intended liquidation of an RLF.
Sale means an EDA-approved sale by an RLF Recipient of its RLF loan
portfolio (or a portion thereof) to a third party. A third party may
participate in a subsequent Securitization offered in a secondary
market transaction and collateralized by the underlying RLF loan
portfolio (or a portion thereof).
SEC or the Commission means the U.S. Securities and Exchange
Commission.
Securitization refers to the financing technique of securing an
investment of new capital with a stream of income generated by
aggregating similar instruments such as loans or mortgages into a new
transferable Security.
Security means any investment instrument issued by a corporation,
government or other organization which offers evidence of debt or
equity.
Sec. 307.9 Revolving Loan Fund Plan.
All RLF Recipients shall manage RLFs in accordance with an RLF plan
(the ``RLF Plan'' or ``Plan'') as described in this section. The Plan
shall be submitted to and approved by EDA.
(a) Format and content.
[[Page 56692]]
(1) Part I of the Plan titled ``Revolving Loan Fund Strategy''
shall summarize the CEDS and business development objectives and shall
describe the RLF's financing strategy, policy and portfolio standards.
(2) Part II of the Plan titled ``Operational Procedures'' shall
serve as the internal operating manual for the RLF Recipient. The
administrative procedures for operating the RLF must be consistent with
Prudent Lending Practices.
(b) Evaluation of RLF Plans. EDA will use the following criteria in
evaluating Plans:
(1) The Plan must be consistent with the CEDS or EDA-approved
strategy for the Region;
(2) The Plan must identify the strategic purpose of the RLF and
must describe the selection of the financing strategy and lending
criteria, including:
(i) An analysis of the local capital market and the financing needs
of the targeted businesses; and
(ii) Financing policies and portfolio standards that are consistent
with EDA policies and requirements; and
(3) The Plan must demonstrate an adequate understanding of
commercial loan portfolio management procedures, including loan
processing, underwriting, closing, disbursements, collections,
monitoring, and foreclosures. It shall also provide sufficient
administrative procedures to prevent conflicts of interest and to
ensure accountability, safeguarding of assets and compliance with
Federal and local laws.
(c) Modification of RLF Plans. An RLF Recipient must request and
obtain EDA approval prior to any modification of the Plan.
Sec. 307.10 Pre-loan requirements.
(a) RLF Recipients must adopt procedures to review the impacts of
prospective loan proposals on the physical environment. The Plan must
provide for compliance with applicable environmental laws and other
regulations, including but not limited to parts 302 and 314 of this
chapter. The RLF Recipient must also adopt procedures to comply, and
ensure that potential borrowers comply, with applicable environmental
laws and regulations.
(b) RLF Recipients must ensure that prospective borrowers,
consultants, or contractors are aware of and comply with the Federal
statutory and regulatory requirements that apply to activities carried
out with RLF loans. RLF loan agreements shall include applicable
Federal requirements to ensure compliance and RLF Recipients must adopt
procedures to diligently correct instances of non-compliance, including
loan call stipulations.
(c) All RLF loan documents and procedures must protect and hold the
Federal government harmless from and against all liabilities that the
Federal government may incur as a result of providing an RLF Grant to
assist directly or indirectly in site preparation or construction, as
well as the direct or indirect renovation or repair of any facility or
site. These protections apply to the extent that the Federal government
may become potentially liable as a result of ground water, surface,
soil or other natural or man-made conditions on the property caused by
operations of the RLF Recipient or any of its borrowers, predecessors
or successors.
Sec. 307.11 Disbursement of funds to Revolving Loan Funds.
(a) Pre-disbursement requirements. Prior to any disbursement of EDA
funds, RLF Recipients are required to provide in a form acceptable to
EDA:
(1) Evidence of fidelity bond coverage for persons authorized to
handle funds under the Grant award in an amount sufficient to protect
the interests of EDA and the RLF. Such insurance coverage must exist at
all times during the duration of the RLF's operation; and
(2) Evidence of certification in accordance with Sec.
307.15(b)(1).
(b) Timing of request for disbursements. An RLF Recipient shall
request disbursements of Grant funds only to close a loan or disburse
RLF funds to a borrower. The RLF Recipient must disburse the RLF funds
to a borrower within thirty (30) days of receipt of the Grant funds.
Any Grant funds not disbursed within the thirty (30) day period shall
be refunded to EDA pursuant to paragraph (e) of this section.
(c) Amount of disbursement. The amount of a disbursement of Grant
funds shall not exceed the difference, if any, between the RLF Capital
and the amount of a new RLF loan, less the amount, if any, of the Local
Share required to be disbursed concurrent with the Grant funds.
However, RLF Income held to reimburse eligible administrative costs
need not be disbursed in order to draw additional Grant funds.
(d) EDA funds account. The RLF Recipient shall establish and
maintain an interest-bearing account designated as the ``EDA funds
account,'' indicating that monies deposited therein are held for
funding approved Closed Loans. The RLF Recipient shall withdraw funds
or order a transfer from the EDA funds account for lending to eligible
borrowers or return of funds to EDA.
(e) Delays. If the RLF Recipient receives Grant funds and the RLF
loan disbursement is subsequently delayed beyond thirty (30) days, the
RLF Recipient must notify the applicable grants officer and return such
non-disbursed funds to EDA. Grant funds returned to EDA shall be
available to the RLF Recipient for future draw-downs. When returning
prematurely drawn Grant funds, the RLF Recipient must clearly identify
on the face of the check or in the written notification to the
applicable grants officer ``EDA,'' the Grant award number, the words
``Premature Draw,'' and a brief description of the reason for returning
the Grant funds.
(f) Local Share.
(1) Cash Local Share of the RLF may only be used for lending
purposes. The cash Local Share must be used either in proportion to the
Grant funds or at a faster rate than the Grant funds.
(2) When an RLF has a combination of In-Kind Contributions and cash
Local Share, the cash Local Share and the Grant funds will be disbursed
proportionately as needed for lending activities, provided that the
last twenty (20) percent of the Grant funds may not be disbursed until
all cash Local Share has been expended. The full amount of the cash
Local Share shall remain for use in the RLF.
Sec. 307.12 Revolving Loan Fund Income.
(a) General requirements. RLF Income must be placed into the RLF
Capital base for the purpose of making loans or paying for eligible and
reasonable administrative costs associated with the RLF's operations.
RLF Income may fund administrative costs, provided:
(1) Such RLF Income and the administrative costs are incurred in
the same twelve-month (12) reporting period;
(2) RLF Income that is not used for administrative costs during the
twelve-month (12) reporting period is made available for lending
activities;
(3) RLF Income shall not be withdrawn from the RLF Capital base in
a subsequent reporting period for any purpose other than lending
without the prior written consent of EDA; and
(4) The RLF Recipient completes an RLF Income and Expense Statement
(the ``Income and Expense Statement'') as required under Sec.
307.14(c).
(b) Compliance guidelines. When charging costs against RLF Income,
RLF Recipients must comply with applicable OMB cost principles and RLF
audit guidelines as found in:
[[Page 56693]]
(1) OMB Circular A-87 for State, local, and Indian tribal
governments, OMB Circular A-122 for non-profit organizations other than
institutions of higher education, hospitals or organizations named in
OMB Circular A-122 as not subject to such circular, and OMB Circular A-
21 for educational institutions; and
(2) OMB Circular A-133 for Single Audit Act requirements for
States, local governments, and non-profit organizations and the
Compliance Supplement, as appropriate.
(c) Priority of payments on defaulted RLF loans. When an RLF
Recipient receives proceeds on a defaulted RLF loan that is not subject
to liquidation pursuant to Sec. 307.20, such proceeds shall be applied
in the following order of priority:
(1) First, towards any costs of collection;
(2) Second, towards outstanding penalties and fees;
(3) Third, towards any accrued interest to the extent due and
payable; and
(4) Fourth, towards any outstanding principal balance.
Sec. 307.13 Records and retention.
(a) Closed Loan files and related documents. The RLF Recipient
shall maintain Closed Loan files and all related documents, books of
account, computer data files and other records over the term of the
Closed Loan and for a three-year (3) period from the date of final
disposition of such Closed Loan. The date of final disposition of a
Closed Loan is the date:
(1) Principal, interest, fees, penalties and all other costs
associated with the Closed Loan have been paid in full; or
(2) Final settlement or discharge and cessation of collection
efforts of any unpaid amounts associated with the Closed Loan have
occurred.
(b) Administrative records. RLF Recipients must at all times:
(1) Maintain adequate accounting records and source documentation
to substantiate the amount and percent of RLF Income expended for
eligible RLF administrative costs.
(2) Retain records of administrative expenses incurred for
activities and equipment relating to the operation of the RLF for three
(3) years from the actual submission date of the last semi-annual or
annual report that covers the period that such costs were claimed, or
for five (5) years from the date the costs were claimed, whichever is
less.
(3) Make available for inspection retained records, including those
retained for longer than the required period. The record retention
periods described in this section are minimum periods and such
prescription does not limit any other record retention requirement of
law or agreement. In no event will EDA question claimed administrative
costs that are more than three (3) years old, unless fraud is at issue.
Sec. 307.14 Revolving Loan Fund semi-annual and annual reports.
(a) Frequency of reports. All RLF Recipients, including those
receiving Recapitalization Grants for existing RLFs, must submit semi-
annual reports. EDA may approve the substitution of annual reports for
semi-annual reports upon written request by the Recipient if the
following conditions have been met:
(1) At least one (1) year has passed from the date that the RLF has
loaned an aggregate amount equal to its initial RLF Capital base;
(2) The RLF Recipient has timely submitted accurate semi-annual
reports for the preceding two (2) years;
(3) The RLF Recipient has ensured completion and submission to EDA
of required periodic audits for the most recent audit period within the
preceding two (2) years; and
(4) EDA determines that the RLF is in compliance with all
applicable RLF requirements.
(b) Report contents. RLF Recipients must certify as part of the
semi-annual or annual report to EDA that the RLF is operating in
accordance with the applicable RLF Plan. RLF Recipients must also
describe (and propose pursuant to Sec. 307.9) any modifications to the
RLF Plan to ensure effective use of the RLF as a strategic financing
tool.
(c) RLF Income and Expense Statement.
(1) An RLF Recipient using either fifty (50) percent or more (or
more than $100,000) of RLF Income for administrative costs in the
twelve-month (12) reporting period must submit a completed Income and
Expense Statement annually to the appropriate regional office within
ninety (90) days of the end of its fiscal year. An RLF Recipient using
less than fifty (50) percent and less than $100,000 of RLF Income for
administrative costs in the twelve-month (12) reporting period must
prepare and retain for four (4) years a completed Income and Expense
Statement for the applicable fiscal year, which shall be made available
to EDA upon request.
(2) Performance measures. As part of the semi-annual or annual
report, RLF Recipients shall submit to EDA the information identified
as the ``Core Performance Measures'' in the special award conditions of
the Grant documents. EDA will advise RLF Recipients within a reasonable
time of any required modifications to the information submitted.
Sec. 307.15 Prudent management of Revolving Loan Funds.
(a) Accounting principles.
(1) RLFs shall operate in accordance with generally accepted
accounting principles (``GAAP'') as in effect from time to time in the
United States and the provisions outlined in OMB Circular A-133 and the
Compliance Supplement, as applicable.
(2) In accordance with GAAP, a loan loss reserve may be recorded in
the RLF Recipient's financial statements to show the fair market value
of an RLF's loan portfolio, provided this loan loss reserve is non-
funded and represents non-cash entries.
(b) Loan and accounting system documents.
(1) Within sixty (60) days prior to the initial disbursement of EDA
funds, an independent accountant familiar with the RLF Recipient's
accounting system shall certify to EDA and the RLF Recipient that such
system is adequate to identify, safeguard and account for all RLF
Capital, outstanding RLF loans and other RLF operations.
(2) Prior to the disbursement of any EDA funds, the RLF Recipient
shall certify that standard RLF loan documents reasonably necessary or
advisable for lending are in place and that these documents have been
reviewed by its legal counsel for adequacy and compliance with the
terms and conditions of the Grant and applicable State and local law.
The standard loan documents must include, at a minimum, the following:
(i) Loan application;
(ii) Loan agreement;
(iii) Promissory note;
(iv) Security agreement(s);
(v) Deed of trust or mortgage (as applicable);
(vi) Agreement of prior lien holder (as applicable); and
(vii) Guaranty agreement (as applicable).
(c) Interest rates. An RLF Recipient may make loans and may
guarantee loans to eligible borrowers at interest rates and under
conditions determined by the RLF Recipient to be appropriate in
achieving the goals of the RLF. However, the minimum interest rate an
RLF can charge is four (4) percentage points below the lesser of the
current money center prime interest rate quoted in the Wall Street
Journal, or the maximum interest rate allowed under State law. In no
event shall the interest rate be less than four (4) percent.
[[Page 56694]]
However, should the prime interest rate listed in the Wall Street
Journal exceed fourteen (14) percent, the minimum RLF interest rate is
not required to be raised above ten (10) percent if doing so
compromises the ability of the RLF Recipient to implement its financing
strategy.
(d) Private leveraging. (1) RLF loans must leverage private
investment of at least two dollars for every one dollar of such RLF
loans. This leveraging requirement applies to the RLF portfolio as a
whole rather than to individual loans and is effective for the duration
of the RLF's operation. To be classified as leveraged, private
investment must be made within twelve (12) months prior to approval of
an RLF loan, as part of the same business development Project, and may
include:
(i) Capital invested by the borrower or others;
(ii) Financing from private entities; or
(iii) The non-guaranteed portions and ninety (90) percent of the
guaranteed portions of the U.S. Small Business Administration's 7(A)
loans and 504 debenture loans.
(2) Private investments shall not include accrued equity in a
borrower's assets.
Sec. 307.16 Effective utilization of Revolving Loan Funds.
(a) Loan closing and disbursement schedule.
(1) RLF loan activity must be sufficient to draw down Grant funds
in accordance with the schedule prescribed in the award conditions for
loan closings and disbursements to eligible RLF borrowers. The schedule
usually requires that the RLF Recipient lend the entire amount of the
initial RLF Capital base within three (3) years of the Grant award.
(2) If an RLF Recipient fails to meet the prescribed lending
schedule, EDA may de-obligate the non-disbursed balance of the RLF
Grant. EDA may allow exceptions where:
(i) Closed Loans approved prior to the schedule deadline will
commence and complete disbursements within forty-five (45) days of the
deadline;
(ii) Closed Loans have commenced (but not completed) disbursement
obligations prior to the deadline; or
(iii) EDA has approved a time schedule extension pursuant to Sec.
307.16(b).
(b) Time schedule extensions.
(1) RLF Recipients shall promptly inform EDA in writing of any
condition that may adversely affect their ability to meet the
prescribed schedule deadlines. RLF Recipients must submit a written
request to EDA for continued use of Grant funds beyond a missed
deadline for disbursement of RLF funds. RLF Recipients must provide
good reason for the delay in their extension requests by demonstrating
that:
(i) The delay was unforeseen or beyond the control of the RLF
Recipient;
(ii) The financial need for the RLF still exists;
(iii) The current and planned use and the anticipated benefits of
the RLF will remain consistent with the current CEDS and the RLF Plan;
and
(iv) The proposal of a revised time schedule is reasonable. An
extension request must also provide an explanation as to why no further
delays are anticipated.
(2) EDA is under no obligation to grant a time extension and in the
event an extension is denied, EDA may deobligate all or part of the
unused Grant funds and terminate the Grant.
(c) Capital utilization standard.
(1) During the Revolving Phase, RLF Recipients must manage their
repayment and lending schedules to provide that at all times at least
seventy-five (75) percent of the RLF Capital is loaned or committed.
The following exceptions apply:
(i) An RLF Recipient that anticipates making large loans relative
to the size of its RLF Capital base may propose a Plan that provides
for maintaining a capital utilization percentage greater than twenty-
five (25) percent; and
(ii) EDA may require an RLF Recipient with an RLF Capital base in
excess of $4 million to adopt a Plan that maintains a proportionately
higher percentage of its funds loaned.
(2) When the percentage of loaned RLF Capital falls below the
applicable capital utilization percentage, the dollar amount of the RLF
funds equivalent to the difference between the actual percentage of RLF
Capital loaned and the applicable capital utilization percentage is
referred to as ``excess funds.''
(i) Sequestration of excess funds. If the RLF Recipient fails to
satisfy the applicable capital utilization percentage requirement for
two (2) consecutive reporting intervals, EDA may require the RLF
Recipient to deposit excess funds in an interest-bearing account
separate from the EDA funds account. The portion of interest earned on
the account holding excess funds attributable to the RLF Grant shall be
remitted to the U.S. Treasury. RLF Recipients must obtain EDA's written
authorization to withdraw any sequestered funds.
(ii) Persistent non-compliance. An RLF Recipient will generally be
allowed a reasonable period of time to lend excess funds and achieve
the applicable capital utilization percentage. However, if an RLF
Recipient fails to achieve the applicable capital utilization
percentage after a reasonable period of time, as determined by EDA, it
may be subject to sanctions such as suspension or termination.
Sec. 307.17 Uses of capital.
(a) General. RLF Capital shall be used for the purpose of making
RLF loans that are consistent with an RLF Plan or such other purposes
approved by EDA. To ensure that RLF funds are used as intended, each
loan agreement must clearly state the purpose of each loan.
(b) Restrictions on use of RLF Capital. RLF Capital shall not be
used to:
(1) Acquire an equity position in a private business;
(2) Subsidize interest payments on an existing RLF loan;
(3) Provide for borrowers' required equity contributions under
other Federal Agencies' loan programs;
(4) Enable borrowers to acquire an interest in a business either
through the purchase of stock or through the acquisition of assets,
unless sufficient justification is provided in the loan documentation.
Sufficient justification may include acquiring a business to save it
from imminent closure or to acquire a business to facilitate a
significant expansion or increase in investment with a significant
increase in jobs. The potential economic benefits must be clearly
consistent with the strategic objectives of the RLF;
(5) Provide RLF loans to a borrower for the purpose of investing in
interest-bearing accounts, certificates of deposit or any investment
unrelated to the RLF; or
(6) Refinance existing debt, unless:
(i) The RLF Recipient sufficiently demonstrates in the loan
documentation a ``sound economic justification'' for the refinancing
(e.g., the refinancing will support additional capital investment
intended to increase business activities). For this purpose, reducing
the risk of loss to an existing lender(s) or lowering the cost of
financing to a borrower shall not, without other indicia, constitute a
sound economic justification; or
(ii) RLF Capital will finance the purchase of the rights of a prior
lien holder during a foreclosure action which is necessary to preclude
a significant loss on an RLF loan. RLF Capital may be used for this
purpose only if there is a high probability of receiving compensation
from the sale of assets sufficient to cover an RLF's costs plus a
reasonable portion of the outstanding RLF loan within eighteen
[[Page 56695]]
(18) months following the date of refinancing;
(c) Credit not otherwise available. RLF Recipients must determine
and clearly demonstrate in the loan documentation for each RLF loan
that credit is not otherwise available on terms and conditions that
permit the completion or successful operation of the activity to be
financed.
(d) Use of In-Kind Contributions. In-Kind Contributions may satisfy
Matching Share requirements when specifically authorized in the terms
and provisions of the RLF Grant and may be used to provide technical
assistance to borrowers or for eligible RLF administrative costs.
(e) Loan guaranty agreements. Prior to the full disbursement of
Grant funds, the RLF Recipient shall not use RLF Capital to guarantee
loans made by other lending institutions. After the full disbursement
of Grant funds, RLF Capital may be used to guarantee loans of private
lenders, provided the RLF Recipient has obtained prior written approval
from EDA of its proposed loan guaranty activities and submitted to EDA:
(1) The maximum guaranty percentage offered by the RLF Recipient
and accepted by the lender;
(2) The loan guaranty agreement which must (at a minimum) document:
(i) The RLF Recipient's maximum liability;
(ii) The respective rights, representations and obligations of the
RLF Recipient and lender with regard to collection procedures,
servicing requirements, borrower delinquency, events of defaults and
termination of the loan guaranty agreement;
(iii) The responsible party's obligations in the event of any
foreclosure, bankruptcy or insolvency proceeding;
(iv) The responsible party's obligations with respect to collateral
disposition and the call provisions for the Guaranteed Loan; and
(v) The distribution of interest income and loan fees, if any, to
the RLF; and
(3) Certification from the RLF Recipient's legal counsel that the
loan guaranty agreement is valid and enforceable under applicable State
law; and
(4) An amended RLF Plan accommodating the loan guaranty activities
approved by EDA (as necessary).
Sec. 307.18 Addition of lending areas; merger of RLFs.
(a)(1) Addition of Lending Areas. An RLF Recipient shall make loans
to implement and assist economic activity only within its EDA-approved
lending area, as set forth and defined in the RLF Grant and the Plan.
An RLF Recipient may add an additional lending area (an ``Additional
Lending Area'') to its existing lending area to create a new merged
lending area (the ``New Lending Area'') only with EDA's prior written
approval and subject to the following provisions and conditions:
(i) EDA shall have disbursed the full amount of its Investment
Assistance to the RLF Recipient;
(ii) The Additional Lending Area must fulfill the economic distress
criteria for Economic Adjustment Investments under this part and in
accordance with Sec. 301.3(a) of this chapter;
(iii) Prior to EDA's disbursement of additional funds to the RLF
Recipient (for example, through a recapitalization), EDA shall
determine a new Investment Rate for the New Lending Area based on the
criteria set forth in Sec. 301.4 of this chapter;
(iv) The RLF Recipient must demonstrate that the Additional Lending
Area is consistent with its CEDS, or modify its CEDS for any such
Additional Lending Area, in accordance with Sec. 307.9(b)(1);
(v) The RLF Recipient shall modify its Plan to incorporate the
Additional Lending Area and revise its lending strategy, as necessary;
(vi) The RLF Recipient shall execute an amended RLF Grant award
agreement, as necessary; and
(vii) The RLF Recipient fulfills any other conditions reasonably
requested by EDA.
(2) The New Lending Area designation shall remain in place
indefinitely following EDA approval.
(b) Merger of RLFs.
(1) Single RLF Recipient. An RLF Recipient with more than one (1)
EDA-funded RLF Grant may consolidate two (2) or more EDA-funded RLFs
into one (1) surviving RLF with EDA's prior written approval and
provided:
(i) It meets the requirements to obtain annual report status
identified in paragraphs (a)(2) through (a)(4) of Sec. 307.14;
(ii) It demonstrates a rational basis for undertaking the merger
(for example, the lending area(s) and borrower criteria identified in
different RLF Plans are compatible, or will be compatible, for all RLFs
to be consolidated);
(iii) It amends and consolidates its Plan to account for the merger
of RLFs, including items such as the New Lending Area (including any
Additional Lending Area(s)), its lending strategy and borrower
criteria;
(iv) Prior to EDA's disbursement of additional funds to the RLF
Recipient (for example, through a recapitalization), EDA shall
determine a new Investment Rate for the New Lending Area based on the
criteria set forth in Sec. 301.4 of this chapter; and
(v) The RLF Recipient fulfills any other conditions reasonably
requested by EDA.
(2) Multiple RLF Recipients. Two (2) or more RLF Recipients may
consolidate their EDA-funded RLFs into one (1) surviving RLF with EDA's
prior written approval and provided:
(i) The surviving RLF Recipient meets the requirements to obtain
annual report status identified in paragraphs (a)(2) through (a)(4) of
Sec. 307.14;
(ii) The surviving RLF Recipient amends and consolidates its Plan
to account for the merger of RLFs, including items such as the New
Lending Area (including any Additional Lending Area(s)), its lending
strategy and borrower criteria;
(iii) Prior to EDA's disbursement of additional funds to the
surviving RLF Recipient (for example, through a recapitalization), EDA
shall determine a new Investment Rate for the New Lending Area based on
the criteria set forth in Sec. 301.4 of this chapter;
(iv) EDA must provide written approval of the merger agreement(s),
modifications and revisions to the Plans and any other related
amendments thereto;
(v) All applicable RLF Grant assets of the discharging RLF
Recipient(s) transfer to the surviving RLF Recipient as of the merger's
effective date; and
(vi) The surviving RLF Recipient becomes fully responsible for
administration of the RLF Grant assets transferred and fulfills all
surviving RLF Grant requirements and any other conditions reasonably
requested by EDA.
Sec. 307.19 RLF loan portfolio Sales and Securitizations.
EDA may take such actions as appropriate to enable an RLF Recipient
to sell or securitize RLF loans, except that EDA may not issue a
Federal guaranty covering any issued Security. With prior approval from
EDA, an RLF Recipient may enter into a Sale or a Securitization of all
or a portion of its RLF loan portfolio, provided:
(a) An RLF Recipient must use all proceeds from any Sale or
Securitization (net of reasonable transaction costs) to make additional
RLF loans;
(b) An RLF Recipient must request EDA to subordinate its interest
in all or a portion of any RLF loan portfolio sold or securitized;
[[Page 56696]]
(c) No Security collateralized by RLF loans and other RLF property
and offered in a secondary market transaction pursuant to a
Securitization shall be treated as an Exempt Security for purposes of
the Securities Act of 1933, as amended (15 U.S.C. 77a et seq.), or the
Securities Exchange Act of 1934, as amended (15 U.S.C. 78a et seq.)
(the ``Exchange Act''), unless exempted by a rule or regulation issued
by the Commission; and
(d) Except as provided in paragraph (c), no provision of this
section supersedes or otherwise affects the application of the
``securities laws'' (as such term is defined in section 3(a)(47) of the
Exchange Act) or the rules, regulations or orders issued by the
Commission or a self-regulatory organization under the Commission.
Sec. 307.20 Partial liquidation and liquidation upon termination.
(a) Partial liquidation. EDA may require an RLF Recipient to
transfer any RLF loans that are more than one hundred and twenty (120)
days delinquent to an RLF Third Party for liquidation.
(b) Liquidation upon termination. When EDA approves the termination
of an RLF Grant, EDA may assign or transfer assets of the RLF to an RLF
Third Party for liquidation.
(c) Terms. The following terms will govern any liquidation:
(1) EDA shall have sole discretion in choosing the RLF Third Party;
(2) The RLF Third Party may be an Eligible Applicant or a for-
profit organization not otherwise eligible for Investment Assistance;
(3) EDA may enter into an agreement with the RLF Third Party to
liquidate the assets of one (1) or more RLFs or RLF Recipients;
(4) EDA may allow the RLF Third Party to retain a portion of the
RLF assets, consistent with the agreement referenced in paragraph
(c)(3) of this section, as reasonable compensation for services
rendered in the liquidation; and
(5) EDA may require additional reasonable terms and conditions.
(d) Distribution of proceeds. The proceeds resulting from any
liquidation upon termination shall be distributed in the following
order of priority:
(1) First, for any third party liquidation costs;
(2) Second, for the payment of EDA's Federal Share (as defined in
Sec. 314.5 of this chapter); and
(3) Third, if any proceeds remain, to the RLF Recipient.
Sec. 307.21 Termination of Revolving Loan Funds.
(a) EDA may suspend or terminate an RLF Grant for cause, including
but not limited to the following reasons:
(1) Failure to operate the RLF in accordance with the Plan, the RLF
Grant or this part;
(2) Failure to obtain prior EDA approval for material changes to
the Plan, including provisions for administering the RLF;
(3) Failure to submit timely progress, financial and audit reports
as required by the RLF Grant and Sec. 307.14; and
(4) Failure to comply with the conflicts of interest provisions set
forth in Sec. 302.17.
(b) EDA may approve a request from an RLF Recipient to terminate an
RLF Grant. The RLF Recipient must compensate the Federal government for
the Federal Share of the RLF property, including the current value of
all outstanding RLF loans. However, with EDA's prior approval, upon a
showing of compelling circumstances, the RLF Recipient may use for
other economic development activities a portion of RLF property that
EDA determines is attributable to RLF Income.
(c) Upon termination, distribution of proceeds shall occur in
accordance with Sec. 307.20(d).
Sec. 307.22 Variances.
EDA may approve variances to the requirements contained in this
subpart, provided such variances:
(a) Are consistent with the goals of the Economic Adjustment
Assistance program and with an RLF Plan;
(b) Are necessary and reasonable for the effective implementation
of the RLF;
(c) Are economically and financially sound; and
(d) Do not conflict with any applicable legal requirements,
including Federal, State and local law.
PART 308--PERFORMANCE INCENTIVES
Sec.
308.1 Use of funds in Projects constructed under projected cost.
308.2 Performance awards.
308.3 Planning performance awards.
Authority: 42 U.S.C. 3151; 42 U.S.C. 3154a; 42 U.S.C. 3154b;
Department of Commerce Delegation Order 10-4.
Sec. 308.1 Use of funds in Projects constructed under projected cost.
(a) If the Assistant Secretary determines before closeout of a
construction Project funded under parts 305 or 307 of this chapter that
the cost of the Project, based on the designs and specifications that
were the basis of the Investment Assistance, has decreased because of a
decrease in costs, EDA may in its discretion approve the use of the
excess funds (or a portion of the excess funds) by the Recipient to:
(1) Increase the Investment Rate of the Project to the maximum
percentage allowable under Sec. 301.4 of this chapter for which the
Project was eligible at the time of the Investment award; or
(2) Further improve the Project consistent with its purpose.
(b) EDA, in its sole discretion, may use any amount of excess funds
remaining after application of paragraph (a) of this section for other
eligible Investments.
(c) In the case of Projects involving funds transferred from other
Federal Agencies, EDA will consult with the transferring Agency
regarding the use of any excess funds.
Sec. 308.2 Performance awards.
(a) A Recipient of Investment Assistance under parts 305 or 307 of
this chapter may receive a performance award in connection with an
Investment made on or after the date of enactment of section 215 of
PWEDA in an amount not to exceed ten (10) percent of the amount of the
Investment award.
(b) To receive a performance award, a Recipient must demonstrate
Project performance in one (1) or more of the areas listed in this
paragraph, weighted at the discretion of the Assistant Secretary:
(1) Meet or exceed the Recipient's projection of jobs created;
(2) Meet or exceed the Recipient's projection of private sector
capital invested;
(3) Meet or exceed target dates for Project start and completion
stated at the time of Investment approval;
(4) Fulfill the proposal evaluation criteria set forth in Sec.
301.8 of this chapter; or
(5) Demonstrate other unique Project performance characteristics as
determined by the Assistant Secretary.
(c) A Recipient may receive a performance award no later than three
(3) years following the Project's closeout.
(d) A performance award may fund up to one hundred (100) percent of
the cost of an eligible Project or any other authorized activity under
PWEDA. For the purpose of meeting the non-Federal share requirement of
PWEDA or any other statute, the amount of a performance award shall be
treated as non-Federal funds.
(e) The applicable FFO will set forth the requirements,
qualifications, guidelines and procedures for performance awards to be
made during
[[Page 56697]]
the applicable fiscal year, with all performance awards being subject
to the availability of funds.
Sec. 308.3 Planning performance awards.
(a) At the discretion of the Assistant Secretary, a Recipient of
Investment Assistance awarded on or after the date of enactment of
section 216 of PWEDA located in an EDA-funded Economic Development
District may receive a planning performance award in an amount not to
exceed five (5) percent of the amount of the applicable Investment
award if EDA determines no later than three (3) years following
closeout of the Project that:
(1) The Recipient, through the Project, actively participated in
the economic development activities of the District;
(2) The Project demonstrated exceptional fulfillment of one (1) or
more components of, and is otherwise in accordance with, the applicable
CEDS, including any job creation or job retention requirements; and
(3) The Recipient demonstrated exceptional collaboration with
Federal, State and local economic development entities throughout the
development of the Project.
(b) The Recipient shall use the planning performance award to
increase, up to one hundred (100) percent, the Federal share of the
cost of a Project under this chapter.
(c) The applicable FFO may set forth additional requirements,
qualifications and guidelines for planning performance awards.
PART 309--REDISTRIBUTIONS OF INVESTMENT ASSISTANCE
Sec.
309.1 Redistributions under parts 303, 305 and 306.
309.2 Redistributions under part 307.
Authority: 42 U.S.C. 3154c; 42 U.S.C. 3211; Department of
Commerce Delegation Order 10-4.
Sec. 309.1 Redistributions under parts 303, 305 and 306.
(a) General. Except as provided in paragraph (b) of this section, a
Recipient of Investment Assistance under parts 303, 305 or 306 of this
chapter may directly expend such Investment Assistance or, with prior
EDA approval, may redistribute such Investment Assistance in the form
of a subgrant to another Eligible Recipient that qualifies for
Investment Assistance under the same part of this chapter as the
Recipient, to fund required components of the scope of work approved
for the Project. All subgrants made pursuant to this section shall be
subject to the same terms and conditions applicable to the Recipient
under the original Investment Assistance award and must satisfy the
requirements of PWEDA and of this chapter.
(b) Exception. A Recipient may not make a subgrant of Investment
Assistance received under parts 303 or 305 of this chapter to a for-
profit entity.
Sec. 309.2 Redistributions under part 307.
(a) A Recipient of Investment Assistance under part 307 of this
chapter may directly expend such Investment Assistance or, with prior
EDA approval, may redistribute such Investment Assistance in the form
of:
(1) A subgrant to another Eligible Recipient that qualifies for
Investment Assistance under part 307 of this chapter; or
(2) Pursuant to part 307, subpart B, a loan or other appropriate
assistance to non-profit and private for-profit entities.
(b) All redistributions of Investment Assistance made pursuant to
this section shall be subject to the same terms and conditions
applicable to the Recipient under the original Investment Assistance
award and must satisfy the requirements of PWEDA and of this chapter.
PART 310--SPECIAL IMPACT AREAS
Sec.
310.1 Special Impact Area.
310.2 Pressing need; alleviation of unemployment or underemployment.
Authority: 42 U.S.C. 3154; Department of Commerce Organization
Order 10-4.
Sec. 310.1 Special Impact Area.
Upon the application of an Eligible Recipient, and with respect to
that Eligible Recipient's Project only, the Assistant Secretary may
designate the Region which the Project will serve as a Special Impact
Area if the Eligible Recipient demonstrates that its proposed Project
will:
(a) Directly fulfill a pressing need and
(b) Be useful in alleviating or preventing conditions of excessive
unemployment or underemployment, or assist in providing useful
employment opportunities for the unemployed or underemployed residents
of the Region.
Sec. 310.2 Pressing need; alleviation of unemployment or
underemployment.
(a) The Assistant Secretary may find a pressing need to exist if
the Region which the Project will serve:
(1) Has a unique or urgent circumstance that would necessitate
waiver of the CEDS requirements of Sec. 303.7 of this chapter;
(2) Involves a Project undertaken by an Indian Tribe;
(3) Is rural and severely distressed;
(4) Is undergoing a transition in its economic base as a result of
changing trade patterns (e.g., the Region is certified as eligible by
the North American Development Bank Program or the Community Adjustment
and Investment Program);
(5) Exhibits a substantial reliance on a natural resource for its
economic well-being;
(6) Has been designated as a Federally-Declared Disaster area; or
(7) Has a Special Need.
(b) For purposes of this part, excessive unemployment exists if the
twenty-four (24) month unemployment rate is at least 225% of the
national average or the per capita income is not more than 50% of the
national average. A Region demonstrates excessive underemployment if
the employment of a substantial percentage of workers in the Region is
less than full-time or at less skilled tasks than their training or
abilities would otherwise permit. Eligible Recipients seeking a Special
Impact Area designation under this criterion must present appropriate
and compelling economic and demographic data.
(c) Eligible Recipients may demonstrate the provision of useful
employment opportunities by quantifying and evidencing the Project's
prospective:
(1) Creation of jobs;
(2) Commitment of financial investment by private entities; or
(3) Application of innovative technology that will lead to the
creation of jobs or the commitment of financial investment by private
entities.
PART 311 [RESERVED]
PART 312 [RESERVED]
PART 313 [RESERVED]
PART 314--PROPERTY
Subpart A--General
Sec.
314.1 Definitions.
314.2 Federal Interest.
314.3 Authorized use of Property.
314.4 Unauthorized Use of Property.
314.5 Federal Share.
314.6 Encumbrances.
Subpart B--Real Property
314.7 Title.
314.8 Recorded statement.
Subpart C--Personal Property
314.9 Recorded statement--title.
Subpart D--Release of EDA's Property Interest
314.10 Procedures for release of EDA's Property interest.
[[Page 56698]]
Authority: 42 U.S.C. 3211; Department of Commerce Organization
Order 10-4.
Subpart A--General
Sec. 314.1 Definitions.
In addition to the defined terms set forth in Sec. 300.3 of this
chapter, the following terms shall have the following meanings:
Adequate Consideration means the fair market value at the time of
sale or lease of any Property, as adjusted, in EDA's sole discretion,
by any services, property exchanges, contractual commitments, acts of
forbearance or other considerations that are in furtherance of the
authorized purposes of the Investment Assistance, which are received by
the Recipient or Owner in exchange for such Property.
Disposition or Dispose means the sale, lease, abandonment or other
disposition of any Property and also includes the Unauthorized Use of
such Property.
Estimated Useful Life, as used in this part, means the period of
years that constitutes the expected useful lifespan of a Project, as
determined by EDA, during which EDA anticipates obtaining the economic
development benefits of its Investment.
Federal Interest has the definition ascribed to it in Sec.
314.2(a).
Federal Share has the definition ascribed to it in Sec. 314.5.
Owner means a fee owner, transferee, lessee or optionee of any
Property. The term Owner also includes the holder of other interests in
a Property where the interests are such that the holder effectively
controls the use of such Property.
Personal Property means all tangible and intangible property other
than Real Property.
Property means Real Property, Personal Property and mixed property.
Real Property means any land, whether raw or improved, and includes
structures, fixtures, appurtenances and other permanent improvements,
excluding moveable machinery and equipment. Real Property includes land
that is improved by the construction of Project infrastructure such as,
but not limited to, roads, sewers and water lines that are not situated
on or under the land, where the infrastructure contributes to the value
of such land as a specific purpose of the Project.
Successor Recipient means an EDA-approved transferee of Property
pursuant to Sec. 314.3(d). A Successor Recipient must be an Eligible
Recipient of Investment Assistance.
Unauthorized Use means any use of Property acquired or improved in
whole or in part for purposes not authorized by EDA Investment
Assistance, PWEDA or this chapter, as set forth in Sec. 314.4.
Sec. 314.2 Federal Interest.
(a) Property that is acquired or improved, in whole or in part,
with Investment Assistance shall be held in trust by the Recipient for
the benefit of the Project for the Estimated Useful Life of the
Project, during which period EDA retains an undivided equitable
reversionary interest in the Property (the ``Federal Interest''). The
Federal Interest secures compliance with matters such as the purpose,
scope and use of a Project and is often reflected by a recorded lien,
statement or other recordable instrument setting forth EDA's Property
interest in a Project (e.g., a mortgage, covenant, or other statement
of EDA's Real Property interest in the case of a Project involving the
acquisition, construction or improvement of a building. See Sec.
314.8.)
(b) When the Federal government is fully compensated for the
Federal Share of Property acquired or improved, in whole or in part,
with Investment Assistance, the Federal Interest is extinguished and
the Federal government has no further interest in the Property.
Sec. 314.3 Authorized Use of Property.
(a) The Recipient or Owner must use any Property acquired or
improved in whole or in part with Investment Assistance only for the
authorized purpose of the Project and such Property must not be
Disposed of or encumbered without EDA's prior written authorization.
(b) Where EDA and the Recipient determine that Property acquired or
improved in whole or in part with Investment Assistance is no longer
needed for the original purpose of the Investment Assistance, EDA, in
its sole discretion, may approve the use of such Property in other
Federal grant programs or in programs that have purposes consistent
with those authorized by PWEDA and by this chapter.
(c) Where EDA determines that the authorized purpose of the
Investment Assistance is to develop Real Property to be leased or sold,
such sale or lease is permitted provided it is for Adequate
Consideration and the sale is consistent with the authorized purpose of
the Investment Assistance and with all applicable Investment Assistance
requirements including but not limited to nondiscrimination and
environmental compliance.
(d) EDA, in its sole discretion, may approve the transfer of any
Property from a Recipient to a Successor Recipient (or from one
Successor Recipient to another Successor Recipient). The Recipient will
remain responsible for complying with the rules of this part and the
terms and conditions of the Investment Assistance for the period in
which it is the Recipient. Thereafter, the Successor Recipient must
comply with the rules of this part and with the same terms and
conditions as were applicable to the Recipient (unless such terms and
conditions are otherwise amended by EDA). The same rules apply to EDA-
approved transfers of Property between Successor Recipients.
(e) When acquiring replacement Personal Property of equal or
greater value than Personal Property originally acquired with
Investment Assistance, the Recipient may, with EDA's approval, trade in
such Personal Property originally acquired or sell the original
Personal Property and use the proceeds for the acquisition of the
replacement Personal Property; provided that the replacement Personal
Property is for use in the Project. The replacement Personal Property
is subject to the same requirements as the original Personal Property.
In extraordinary and compelling circumstances, the Assistant Secretary
may approve the replacement of Real Property used in a Project.
(f) With EDA's prior written approval, a Recipient may undertake an
incidental use of Property that does not interfere with the scope of
the Project or the economic purpose for which the Investment was made;
provided that the Recipient is in compliance with applicable law and
the terms and conditions of the Investment Assistance, and the
incidental use of the Property will not violate the terms and
conditions of the Investment Assistance or otherwise adversely affect
the economic useful life of the Property. Eligible Applicants and
Recipients should contact the appropriate regional office (whose
contact information is available via the Internet at http://www.eda.gov
) for guidelines on obtaining approval for incidental use of
Property under this section.
Sec. 314.4 Unauthorized Use of Property.
(a) Except as provided in Sec. Sec. 314.3 (regarding the
authorized use of Property) or 314.10 (regarding the release of EDA's
interest in certain Property), or as otherwise authorized by EDA, the
Federal government must be compensated by the Recipient for the Federal
Share whenever, during the Estimated Useful Life of the Project, any
Property acquired or improved in whole or in part with Investment
Assistance is Disposed of, encumbered, or no longer
[[Page 56699]]
used for the purpose of the Project; provided that for equipment and
supplies, the requirements at 15 CFR parts 14 or 24, as applicable,
including any supplements or amendments thereto, shall apply.
(b) Additionally, prior to the release of EDA's interest, Real
Property or tangible Personal Property acquired or improved with EDA
Investment Assistance may not be used:
(1) In violation of the nondiscrimination requirements of Sec.
302.20 of this chapter or in violation of the terms and conditions of
the Investment Assistance; or
(2) For any purpose prohibited by applicable law.
(c) Where the Disposition, encumbrance or use of any Property
violates paragraphs (a) or (b) of this section, EDA may assert its
interest in the Property to recover the Federal Share for the Federal
government and may take such actions as authorized by PWEDA and this
chapter, including but not limited to the actions provided in
Sec. Sec. 302.3 and 307.21 of this chapter. EDA may pursue its rights
under paragraph (a) of this section and this paragraph (c) to recover
the Federal Share, plus costs and interest. When the Federal government
is fully compensated for the Federal Share, the Federal Interest is
extinguished as provided in Sec. 314.2(b), and EDA will have no
further interest in the ownership, use or Disposition of the Property.
Sec. 314.5 Federal Share.
For purposes of this part, ``Federal Share'' means that portion of
the current fair market value of any Property (after deducting actual
and reasonable selling and repair expenses, if any, incurred to put the
Property into marketable condition) attributable to EDA's participation
in the Project. The Federal Share excludes that portion of the current
fair market value of the Property attributable to acquisition or
improvements before or after EDA's participation in the Project, which
are not included in the total Project costs. For example, if the total
Project costs are $100, consisting of $50 of Investment Assistance and
$50 of Matching Share, the Federal Share is fifty (50) percent. If the
Property is disposed of when its current fair market is $250, the
Federal Share is $125 (i.e., fifty (50) percent of $250). If $10 is
spent to put the Property into salable condition, the Federal Share is
$120 (i.e., fifty (50) percent of ($250-$10)).
Sec. 314.6 Encumbrances.
(a) General. Except as provided in paragraph (b) of this section or
as otherwise authorized by EDA, Recipient-owned Property acquired or
improved in whole or in part with Investment Assistance must not be
used to secure a mortgage or deed of trust or in any way collateralized
or otherwise encumbered, except to secure a grant or loan made by a
Federal Agency or State agency or other public body participating in
the same Project. An encumbrance includes but is not limited to
easements, rights-of-way or other restrictions on the use of any
Property.
(b) Exceptions. Subject to EDA's approval, which will not be
unreasonably withheld or unduly delayed, paragraph (a) of this section
does not apply to:
(1) Recipient-owned Property that is subject to an encumbrance at
the time EDA approves the Project, where EDA determines that the
requirements of Sec. 314.7(b) are met;
(2) Encumbrances arising solely from the requirements of a pre-
existing water or sewer facility or other utility encumbrances, which
by their terms extend to additional Property connected to such
facilities; and
(3) Encumbrances in cases where all of the following are met:
(i) EDA, in its sole discretion, determines that there is good
cause for a waiver of paragraph (a) of this section;
(ii) All proceeds secured by the encumbrance on the Property shall
be available only to the Recipient and shall be used only for the
Project for which the Investment Assistance applies or for related
activities of which the Project is an essential part;
(iii) A grantor/lender will not provide funds without the security
of a lien on the Property; and
(iv) There is a reasonable expectation, as determined by EDA, that
the Recipient will not default on its obligations.
(c) Encumbering Recipient-owned Property, other than as permitted
in this section, is an Unauthorized Use of the Property under Sec.
314.4.
Subpart B--Real Property
Sec. 314.7 Title.
(a) General. The Recipient must hold title to the Real Property
required for a Project at the time the Investment Assistance is awarded
or as provided by paragraph (c) of this section and must maintain title
at all times during the Estimated Useful Life of the Project, except in
those limited circumstances as provided in paragraph (c) of this
section. The Recipient must also furnish evidence, satisfactory in form
and substance to EDA, that title to Real Property required for a
Project (other than property of the United States) is vested in the
Recipient and that any easements, rights-of-way, State or local
government permits, long-term leases or other items required for the
Project have been or will be obtained by the Recipient within an
acceptable time, as determined by EDA.
(b)(1) The Recipient must disclose to EDA all encumbrances,
including but not limited to the following:
(i) Liens;
(ii) Mortgages;
(iii) Reservations;
(iv) Reversionary interests; and
(v) Other restrictions on title or on the Recipient's interest in
the Property.
(2) No encumbrance will be acceptable if, as determined by EDA, the
encumbrance interferes with the construction, use, operation or
maintenance of the Project during its Estimated Useful Life.
(c) Exceptions. The following are exceptions to the requirements of
paragraph (a) of this section that the Recipient hold title to the Real
Property required for a Project.
(1) Where the acquisition of Real Property required for a Project
is contemplated as part of an Investment Assistance award, EDA may
determine that an agreement for the Recipient to purchase the Real
Property will be acceptable for purposes of paragraph (a) of this
section if:
(i) The Recipient provides EDA with reasonable assurances that it
will obtain fee title to the Real Property prior to or concurrent with
the initial disbursement of the Investment Assistance; and
(ii) EDA, in its sole discretion, determines that the terms and
conditions of the purchase agreement adequately safeguard the Federal
government's interest in the Real Property.
(2) EDA may determine that a long-term leasehold interest for a
period not less than the Estimated Useful Life of the Real Property
required for a Project will be acceptable for purposes of paragraph (a)
of this section if:
(i) Fee title to the Real Property is not otherwise obtainable; and
(ii) EDA, in its sole discretion, determines that the terms and
conditions of the lease adequately safeguard the Federal government's
interest in the Real Property.
(3) When a Project includes construction within a railroad's right-
of-way or over a railroad crossing, EDA may find it acceptable for the
work to be completed by the railroad and for the railroad to continue
to own, operate and maintain that portion of the Project, if required
by the railroad; and provided
[[Page 56700]]
that, the construction is a minor but essential component of the
Project.
(4) When a Project includes construction on a State-owned or local
government-owned highway (i.e., where the Recipient is not the State or
local government owner), EDA may find it acceptable for the State or
local government to own, operate and maintain that portion of the
Project, if required by the State or local government; provided that,
construction is a minor but essential component of the Project, the
construction is completed in accordance with EDA requirements, and the
State or local government provides assurances to EDA that the:
(i) State or local government will operate and maintain the
improvements for the Estimated Useful Life of the Project;
(ii) State or local government will not sell the improvements for
the Estimated Useful Life of the Project; and
(iii) Use of the Property will be consistent with the authorized
purposes of the Project.
(5)(i) When an authorized purpose of the Project is to construct
facilities to serve Real Property owned by the Recipient, including but
not limited to industrial or commercial parks, for sale or lease to
private parties, such sale or lease is permitted so long as:
(A) In cases where an authorized purpose of the Project is to sell
Real Property, the Recipient provides evidence sufficient to EDA that
it holds title to the Real Property required for such Project prior to
the disbursement of any portion of the Investment Assistance and will
retain title until the sale of the Property;
(B) In cases where an authorized purpose of the Project is to lease
Real Property, the Recipient provides evidence sufficient to EDA that
it holds title to the Real Property required for such Project prior to
the EDA disbursement of any portion of the Investment Assistance and
will retain title for the entire Estimated Useful Life of the Project;
(C) The Recipient completes the Project according to the terms of
the Investment Assistance;
(D) The sale or lease of any portion of the Project during its
Estimated Useful Life must be for Adequate Consideration and the terms
and conditions of the Investment Assistance and the purpose(s) of the
Project must continue to be fulfilled after such sale or lease;
provided, however, that EDA may waive this provision for any sale or
lease occurring after the ten (10) year anniversary of the award date
of the Investment Assistance;
(E) The Recipient agrees that the termination, cessation,
abandonment or other failure on behalf of the Recipient, purchaser or
lessee to complete the Project by the five (5) year anniversary of the
award date of the Investment Assistance constitutes a failure on behalf
of the Recipient to use the Real Property for the economic purposes
justifying the Project; and
(F) The Recipient agrees that a violation of this paragraph by the
Recipient, purchaser or lessee constitutes an Unauthorized Use of the
Real Property and the Recipient must further agree to compensate EDA
for the Federal government's Federal Share of the Project in the case
of such Unauthorized Use.
(ii) EDA may also condition the sale or lease on the satisfaction
by the Recipient, purchaser or lessee (as the case may be) of any
additional requirements that EDA may impose, including but not limited
to EDA's pre-approval of the sale or lease.
(6)(i) When an authorized purpose of the Project is to construct
facilities to serve privately-owned Real Property, including but not
limited to industrial or commercial parks, the ownership, sale or lease
of such Real Property is permitted so long as:
(A) The Owner provides evidence sufficient to EDA that it holds
title to the Real Property improved or benefited by the EDA Investment
Assistance prior to the disbursement of any portion of the Investment
Assistance and will retain title to the Real Property for the entire
Estimated Useful Life of the Property or until the sale of such Real
Property;
(B) The Recipient and the Owner agree to use Real Property improved
or benefited by the EDA Investment Assistance only for the authorized
purposes of the Project and in manner consistent with the terms and
conditions of the EDA Investment Assistance for the Estimated Useful
Life of the Project;
(C) The Recipient must provide adequate assurances that the Owner
will complete the Project according to the terms of the Investment
Assistance;
(D) The sale or lease of any portion of the Project during its
Estimated Useful Life must be for Adequate Consideration and the terms
and conditions of the Investment Assistance and the purpose(s) of the
Project must continue to be fulfilled after such sale or lease;
provided, however, that EDA may waive this provision for any sale or
lease occurring after the ten (10) year anniversary of the award date
of the Investment Assistance;
(E) The Recipient agrees that the termination, cessation,
abandonment or other failure on behalf of the Recipient, Owner,
purchaser or lessee to complete the Project by the five (5) year
anniversary of the award date of the Investment Assistance constitutes
a failure on behalf of the Recipient to use the Real Property for the
economic purposes justifying the Project; and
(F) The Recipient further agrees that a violation of this paragraph
by the Owner, purchaser or lessee constitutes an Unauthorized Use of
the Real Property and the Recipient must further agree to compensate
EDA for the Federal government's Federal Share of the Project in the
case of such Unauthorized Use.
(ii) EDA may also condition its Investment Assistance on the
satisfaction by the Recipient, Owner or by the purchaser or lessee (as
the case may be) of any additional requirements that EDA may impose,
including but not limited to EDA's pre-approval of a sale or lease.
Sec. 314.8 Recorded statement.
(a) For all Projects involving the acquisition, construction or
improvement of a building, as determined by EDA, the Recipient shall
execute a lien, covenant or other statement of EDA's interest in the
Property acquired or improved in whole or in part with the EDA
Investment Assistance. The statement shall specify the Estimated Useful
Life of the Project and shall include, but not be limited to, the
Disposition, encumbrance and Federal Share requirements. The statement
shall be satisfactory in form and substance to EDA.
(b) The statement of EDA's interest must be perfected and placed of
record in the Real Property records of the jurisdiction in which the
Real Property is located, all in accordance with applicable law.
(c) Facilities in which the EDA Investment is only a small part of
a large project, as determined by EDA, may be exempted from the
requirements of this section.
Subpart C--Personal Property
Sec. 314.9 Recorded statement--title.
For all Projects which EDA determines involve the acquisition or
improvement of significant items of Personal Property, including but
not limited to ships, machinery, equipment, removable fixtures or
structural components of buildings, the Recipient shall execute a
security interest or other statement of EDA's interest in the Personal
Property, acceptable in form
[[Page 56701]]
and substance to EDA, which statement must be perfected and placed of
record in accordance with applicable law, with continuances re-filed as
appropriate. Whether or not a statement is required by EDA to be
recorded, the Recipient must hold title to the Personal Property
acquired or improved as part of the Project, except as otherwise
provided in this part.
Subpart D--Release of EDA's Property Interest
Sec. 314.10 Procedures for release of EDA's Property interest.
(a) General. Upon the request of a Recipient and before the
expiration of the Estimated Useful Life of a Project, EDA may release
any Real Property or tangible Personal Property interest held by EDA,
in connection with Investment Assistance after the date that is twenty
(20) years after the date on which the Investment Assistance was
awarded.
(b) Exception. EDA releases all of its Real Property and tangible
Personal Property interests in Projects awarded under the Public Works
Employment Act of 1976 (Pub. L. 94-369), as amended by the Public Works
Employment Act of 1977 (Pub. L. 95-28).
(c)(1) Unauthorized Use. Notwithstanding the release of EDA's
interest pursuant to paragraphs (a) or (b) of this section, Real
Property or tangible Personal Property acquired or improved with
Investment Assistance may not be used:
(i) In violation of the nondiscrimination requirements set forth in
Sec. 302.20 of this chapter; or
(ii) For inherently religious activities prohibited by applicable
Federal law.
(2) Violation of this paragraph (c) constitutes an Unauthorized Use
of the Real Property or of the tangible Personal Property.
(d) Release.
(1) Except as provided in paragraph (b) of this section, the
release of EDA's interest pursuant to this section is not automatic; it
requires EDA's approval, which will not be withheld except for good
cause, as determined in EDA's sole discretion. In addition to the
restrictions set forth in paragraph (c) of this section, the release
may be conditioned upon some activity of the Recipient intended to be
pursued as a consequence of the release.
(2) When requesting a release of EDA's interest pursuant to
paragraph (a) of this section, the Recipient will be required to
disclose to EDA the intended future use of the Real Property or the
tangible Personal Property for which the release is requested.
(i) A Recipient not intending to use the Real Property or tangible
Personal Property for inherently religious activities following EDA's
release will be required to execute a covenant of use. A covenant of
use with respect to Real Property shall be recorded in the jurisdiction
where the Real Property is located in accordance with Sec. 314.8. A
covenant of use with respect to items of tangible Personal Property
shall be perfected and recorded in accordance with applicable law, with
continuances re-filed as appropriate. See Sec. 314.9. A covenant of
use shall (at a minimum) prohibit the use of the Real Property or the
tangible Personal Property:
(A) For inherently religious activities in violation of applicable
Federal law; and
(B) For any purpose that would violate the nondiscrimination
requirements set forth in Sec. 302.20 of this chapter.
(ii) EDA may require a Recipient (or its successors in interest)
who intends or foresees the use of Real Property or tangible Personal
Property for inherently religious activities following the release of
EDA's interest to compensate EDA for the Federal Share of such
Property. EDA recommends that a Recipient who intends or foresees the
use of Real Property or tangible Personal Property (including by
successors of the Recipient) for inherently religious activities to
contact EDA well in advance of requesting a release pursuant to this
section.
PART 315--TRADE ADJUSTMENT ASSISTANCE FOR FIRMS
Subpart A--General Provisions
Sec.
315.1 Purpose and scope.
315.2 Definitions.
315.3 Confidential Business Information.
315.4 Eligible petitioners.
315.5 TAAC scope, selection, evaluation and awards.
315.6 Firm eligibility for Adjustment Assistance.
Subpart B--Certification of Firms
315.7 Certification requirements.
315.8 Processing petitions for certification.
315.9 Hearings.
315.10 Loss of certification benefits.
315.11 Appeals, final determinations and termination of
certification.
Subpart C--Protective Provisions
315.12 Recordkeeping.
315.13 Audit and examination.
315.14 Certifications.
315.15 Conflicts of interest.
Subpart D--Adjustment Proposals
315.16 Adjustment Proposal Requirements.
Subpart E--Assistance to Industries
315.17 Assistance to Firms in import-impacted industries.
Authority: 42 U.S.C. 3211; 19 U.S.C. 2341 et seq.; Department of
Commerce Organization Order 10-4.
Subpart A--General Provisions
Sec. 315.1 Purpose and scope.
The regulations in this part set forth the responsibilities of the
Secretary of Commerce under chapter 3 of title II of the Trade Act
concerning Trade Adjustment Assistance for Firms. The statutory
authority and responsibilities of the Secretary of Commerce relating to
Adjustment Assistance are delegated to EDA. EDA certifies Firms as
eligible to apply for Adjustment Assistance, provides technical
Adjustment Assistance to Firms and other recipients, and provides
assistance to organizations representing trade injured industries.
Sec. 315.2 Definitions.
In addition to the defined terms set forth in Sec. 300.3 of this
chapter, the following terms used in this part shall have the following
meanings:
Adjustment Assistance means technical assistance provided to Firms
or industries under chapter 3 of title II of the Trade Act.
Adjustment Proposal means a Certified Firm's plan for improving its
economic situation.
Certified Firm means a Firm which has been determined by EDA to be
eligible to apply for Adjustment Assistance.
Confidential Business Information means any information submitted
to EDA or a TAAC by a Firm that concerns or relates to trade secrets
for commercial or financial purposes, which is exempt from public
disclosure under 5 U.S.C. 552(b)(4), 5 U.S.C. 552b(c)(4) and 15 CFR
part 4.
Contributed Importantly, with respect to an Increase in Imports,
refers to a cause which is important but not necessarily more important
than any other cause. Imports will not be considered to have
Contributed Importantly if other factors were so dominant, acting
singly or in combination, that the worker separation or threat thereof
or decline in sales or production would have been essentially the same,
irrespective of the influence of imports.
Decreased Absolutely means a Firm's sales or production has
declined by a minimum of five (5) percent relative to its sales or
production during the applicable prior time period, and:
(1) Irrespective of industry or market fluctuations; and
[[Page 56702]]
(2) Relative only to the previous performance of the Firm.
Directly Competitive means:
(1) Articles which are substantially equivalent for commercial
purposes (i.e., are adapted to the same function or use and are
essentially interchangeable); and
(2) Oil or natural gas (exploration, drilling or otherwise
produced).
Firm means an individual proprietorship, partnership, joint
venture, association, corporation (including a development
corporation), business trust, cooperative, trustee in bankruptcy or
receiver under court decree and including fishing, agricultural
entities and those which explore, drill or otherwise produce oil or
natural gas. For purposes of receiving benefits under this part, when a
Firm owns or controls other Firms, the Firm and such other Firms, may
be considered a single Firm when they produce like or Directly
Competitive articles or are exerting essential economic control over
one or more production facilities. Such other Firms include:
(1) Predecessor--see the following definition for Successor;
(2) Successor--a newly established Firm (that has been in business
less than two years) which has purchased substantially all of the
assets of a previously operating company (or in some cases a whole
distinct division) (such prior company, unit or division, a
``Predecessor'') and is able to demonstrate that it continued the
operations of the Predecessor which has operated as an autonomous unit,
provided that there were no significant transactions between the
Predecessor unit and any related parent, subsidiary, or affiliate that
would have affected its past performance, and that separate records are
available for the Predecessor's operations for at least two years
before the petition is submitted. The Successor Firm must have
continued virtually all of the Predecessor Firm's operations by
producing the same type of products, in the same plant, utilizing most
of the same machinery and equipment and most of its former workers, and
the Predecessor Firm must no longer be in existence;
(3) Affiliate--a company (either foreign or domestic) controlled or
substantially beneficially owned by substantially the same person or
persons that own or control the Firm filing the petition; or
(4) Subsidiary--a company (either foreign or domestic) that is
wholly owned or effectively controlled by another company.
Increase in Imports means an increase of imports of Directly
Competitive or Like Articles with articles produced by such Firm that
Contributed Importantly to the applicable Total or Partial Separation
or threat thereof, and to the applicable decline in sales or
production.
Like Articles means any articles which are substantially identical
in their intrinsic characteristics.
Partial Separation means, with respect to any employment in a Firm,
either:
(1) A reduction in an employee's work hours to eighty (80) percent
or less of the employee's average weekly hours during the year of such
reductions as compared to the preceding year; or
(2) A reduction in the employee's weekly wage to eighty (80)
percent or less of his/her average weekly wage during the year of such
reduction as compared to the preceding year.
Person means an individual, organization or group.
Record means any of the following:
(1) A petition for certification of eligibility to qualify for
Adjustment Assistance;
(2) Any supporting information submitted by a petitioner;
(3) The report of an EDA investigation with respect to petition;
and
(4) Any information developed during an investigation or in
connection with any public hearing held on a petition.
Significant Number or Proportion of Workers means five (5) percent
of a Firm's work force or fifty (50) workers, whichever is less. An
individual farmer or fisherman is considered a Significant Number or
Proportion of Workers.
Substantial Interest means a direct material economic interest in
the certification or non-certification of the petitioner.
TAAC means a Trade Adjustment Assistance Center, as more fully
described in Sec. 315.5.
Threat of Total or Partial Separation means, with respect to any
group of workers, one or more events or circumstances clearly
demonstrating that a Total or Partial Separation is imminent.
Total Separation means, with respect to any employment in a Firm,
the laying off or termination of employment of an employee for lack of
work.
Sec. 315.3 Confidential Business Information.
EDA will follow the procedures set forth in 15 CFR 4.9 for the
submission of Confidential Business Information. Submitters should
clearly mark and designate as confidential any Confidential Business
Information.
Sec. 315.4 Eligible petitioners.
Eligible petitioners for assistance under this part shall be:
(a) Trade Adjustment Assistance Centers (``TAACs''). A TAAC can be
a(n):
(1) University affiliate;
(2) State or local government affiliate; or
(3) Non-profit organization.
(b) Firms; or
(c) Organizations assisting or representing industries in which a
substantial number of Firms or workers have been certified as eligible
to apply for Adjustment Assistance under sections 223 or 251 of the
Trade Act, including:
(1) Existing agencies;
(2) Private individuals;
(3) Firms;
(4) Universities;
(5) Institutions;
(6) Associations;
(7) Unions; or
(8) Other non-profit industry organizations.
Sec. 315.5 TAAC scope, selection, evaluation and awards.
(a) TAAC purpose and scope.
(1) TAACs are available to assist Firms in obtaining Adjustment
Assistance in all fifty (50) U.S. States, the District of Columbia and
the Commonwealth of Puerto Rico. TAACs provide Adjustment Assistance in
accordance with this part either through their own staffs or by
arrangements with outside consultants. Information concerning TAACs
serving particular areas may be obtained from the TAAC Web site at
http://www.taacenters.org or from EDA. See the applicable FFO for the
appropriate points of contact and addresses.
(2) Prior to submitting a petition for Adjustment Assistance to
EDA, a Firm should determine the extent to which a TAAC can provide the
required Adjustment Assistance. EDA will provide Adjustment Assistance
through TAACs whenever EDA determines that such assistance can be
provided most effectively in this manner. Requests for Adjustment
Assistance will normally be made through TAACs.
(3) TAACs generally provide Adjustment Assistance to a Firm by
providing the following:
(i) Assistance to a Firm in preparing its petition for
certification;
(ii) Assistance to a Certified Firm in diagnosing its strengths and
weaknesses and developing its Adjustment Proposal; and
(iii) Assistance to a Certified Firm in the implementation of its
Adjustment Proposal.
[[Page 56703]]
(b) TAAC selection.
(1) EDA invites currently funded TAACs to submit either new or
amended applications; provided they have performed in a satisfactory
manner and complied with previous and/or current conditions in their
Cooperative Agreements with EDA and contingent upon availability of
funds. Such TAACs shall submit an application on a form approved by
OMB, as well as a proposed budget, narrative scope of work, and such
other information as requested by EDA. Acceptance of an application or
amended application for a Cooperative Agreement does not assure funding
by EDA.
(2) EDA may invite new TAAC proposals through an FFO. If such a
proposal is acceptable, EDA will invite an application on a form
approved by OMB. An application will require a narrative scope of work,
proposed budget and such other information as requested by EDA.
Acceptance of an application does not assure funding by EDA.
(c) TAAC evaluation.
(1) EDA generally evaluates currently funded TAACs based on:
(i) Performance under Cooperative Agreements with EDA and
compliance with the terms and conditions of such Cooperative
Agreements;
(ii) Proposed scope of work, budget and application or amended
application; and
(iii) Availability of funds.
(2) EDA generally evaluates new TAACs based on:
(i) Competence in administering business assistance programs;
(ii) Background and experience of staff;
(iii) Proposed scope of work, budget and application; and
(iv) Availability of funding.
(d) TAAC award requirements.
(1) EDA generally funds TAACs for twelve (12) months.
(2) There are no Matching Share requirements for Adjustment
Assistance provided by the TAACs to Firms for certification or for
administrative expenses of the TAACs.
Sec. 315.6 Firm eligibility for Adjustment Assistance.
(a) Firms participate in the Trade Adjustment Assistance for Firms
program in accordance with the following:
(1) Firms apply for certification through a TAAC by completing a
petition for certification. The TAAC will assist Firms in completing
such petitions (at no cost to the Firms);
(2) Firms certified in accordance with the procedures described in
Sec. Sec. 315.7 and 315.8 must prepare an Adjustment Proposal for
Adjustment Assistance from the TAAC, and submit it to EDA for approval;
and
(3) EDA determines whether the Adjustment Assistance requested in
the Adjustment Proposal is eligible based upon the evaluation criteria
set forth in subpart D of this part. A Certified Firm may submit a
request to the TAAC for Adjustment Assistance to implement an approved
Adjustment Proposal.
(b) For certification, EDA evaluates Firms' petitions strictly on
the basis of fulfillment of the requirements set forth in Sec. 315.7.
(c) (1) Firms generally receive Adjustment Assistance over a two-
year (2) period.
(2) Matching Share requirements are as follows:
(i) Each Firm must pay at least twenty-five (25) percent of the
cost of the preparation of its Adjustment Proposal. Each Firm
requesting $30,000 or less in total Adjustment Assistance in its
approved Adjustment Proposal must pay at least twenty-five (25) percent
of the cost of that Adjustment Assistance. Each Firm requesting more
than $30,000 in total Adjustment Assistance in its approved Adjustment
Proposal must pay at least fifty (50) percent of the cost of that
Adjustment Assistance.
(ii) Organizations representing trade-injured industries must pay
at least fifty (50) percent of the total cash cost of the Adjustment
Assistance, in addition to appropriate in-kind contributions.
Subpart B--Certification of Firms
Sec. 315.7 Certification requirements.
(a) EDA may certify a Firm as eligible to apply for Adjustment
Assistance under section 251(c) of the Trade Act if it determines that
the petition for certification meets one of the requirements set forth
in paragraph (b) of this section. In order to be certified, a Firm must
meet the criteria listed under any one of the three (3) circumstances
in paragraph (b) of this section.
(b)(1) Twelve-month (12) decline. Based upon a comparison of the
most recent twelve-month (12) period for which data are available and
the immediately preceding twelve-month (12) period:
(i) A Significant Number or Proportion of Workers in the Firm has
undergone Total or Partial Separation or a Threat of Total or Partial
Separation;
(ii) Either sales or production of the Firm has Decreased
Absolutely; or sales or production, or both, of any article that
accounted for not less than twenty-five (25) percent of the total
production or sales of the Firm during the twelve-month (12) period
preceding the most recent twelve-month (12) period for which data are
available have Decreased Absolutely; and
(iii) An Increase in Imports has occurred; or
(2) Interim sales or production decline. Based upon an interim
sales or production decline:
(i) Sales or production has Decreased Absolutely for, at minimum,
the most recent six-month (6) period during the most recent twelve-
month (12) period for which data are available as compared to the same
six-month (6) period during the immediately preceding twelve-month (12)
period;
(ii) During the same base and comparative period of time as sales
or production has Decreased Absolutely, a Significant Number or
Proportion of Workers in such Firm has undergone Total or Partial
Separation or a Threat of Total or Partial Separation; and
(iii) During the same base and comparative period of time as sales
or production has Decreased Absolutely, an Increase in Imports has
occurred; or
(3) Interim employment decline. Based upon an interim employment
decline:
(i) A Significant Number or Proportion of Workers in such Firm has
undergone Total or Partial Separation or a Threat of Total or Partial
Separation during, at a minimum, the most recent six-month (6) period
during the most recent twelve-month (12) period for which data are
available as compared to the same six-month (6) period during the
immediately preceding twelve-month (12) period; and
(ii) Either sales or production of the Firm has Decreased
Absolutely during the twelve-month (12) period preceding the most
recent twelve-month (12) period for which data are available; and
(iii) An Increase in Imports has occurred.
Sec. 315.8 Processing petitions for certification.
(a) Firms shall consult with a TAAC for guidance and assistance in
the preparation of their petitions for certification.
(b) A Firm seeking certification shall complete a Petition by a
Firm for Certification of Eligibility to Apply for Trade Adjustment
Assistance (Form ED-840P or any successor form) with the following
information about such Firm:
(1) Identification and description of the Firm, including legal
form of organization, economic history, major ownership interests,
officers, directors, management, parent company,
[[Page 56704]]
Subsidiaries or Affiliates, and production and sales facilities;
(2) Description of goods and services produced and sold;
(3) Description of imported Directly Competitive or Like Articles
with those produced;
(4) Data on its sales, production and employment for the two most
recent years;
(5) One (1) copy of a complete auditor's certified financial report
for the entire period covering the petition, or if not available, one
(1) copy of the complete profit and loss statements, balance sheets and
supporting statements prepared by the Firm's accountants for the entire
period covered by the petition; publicly-owned corporations should
submit copies of the most recent Form 10-K annual reports (or Form 10-Q
quarterly reports, as appropriate) filed with the U.S. Securities and
Exchange Commission for the entire period covered by the petition;
(6) Information concerning its major customers and their purchases
(or its bids, if there are no major customers); and
(7) Such other information as EDA considers material.
(c) EDA shall determine whether the petition has been properly
prepared and can be accepted. Promptly thereafter, EDA shall notify the
petitioner that the petition has been accepted or advise the TAAC that
the petition has not been accepted, but may be resubmitted at any time
without prejudice when the specified deficiencies have been corrected.
Any resubmission will be treated as a new petition.
(d) EDA will publish a notice of acceptance of a petition in the
Federal Register.
(e) EDA will initiate an investigation to determine whether the
petitioner meets the requirements set forth in section 251(c) of the
Trade Act and Sec. 315.7.
(f) A petitioner may withdraw a petition for certification if EDA
receives a request for withdrawal before it makes a certification
determination or denial. A Firm may submit a new petition at any time
thereafter in accordance with the requirements of this section and
Sec. 315.7.
(g) Following acceptance of a petition, EDA will:
(1) Make a determination based on the Record as soon as possible
after the petitioning Firm or TAAC has submitted all material. In no
event may the determination period exceed sixty (60) days from the date
on which EDA accepted the petition; and
(2) Either certify the petitioner as eligible to apply for
Adjustment Assistance or deny the petition. In either event, EDA shall
promptly give written notice of action to the petitioner. Any written
notice to the petitioner or any parties as specified in Sec. 315.10(d)
of a denial of a petition shall specify the reason(s) for the denial. A
petitioner shall not be entitled to resubmit a petition within one (1)
year from the date of denial, provided, EDA may waive the one-year (1)
limitation for good cause.
Sec. 315.9 Hearings.
EDA will hold a public hearing on an accepted petition if the
petitioner, or any person, organization, or group found by EDA to have
a Substantial Interest in the proceedings, submits a request for a
hearing no later than ten (10) days after the date of publication of
the Notice of Acceptance in the Federal Register, under the following
procedures:
(a) The petitioner and other interested Persons shall have an
opportunity to be present, to produce evidence and to be heard;
(b) A request for public hearing must be delivered by hand or by
registered mail to EDA. A request by a Person other than the petitioner
shall contain:
(1) The name, address and telephone number of the Person requesting
the hearing; and
(2) A complete statement of the relationship of the Person
requesting the hearing to the petitioner and the subject matter of the
petition, and a statement of the nature of its interest in the
proceedings.
(c) If EDA determines that the requesting party does not have a
Substantial Interest in the proceedings, a written notice of denial
shall be sent to the requesting party. The notice shall specify the
reasons for the denial;
(d) EDA shall publish a notice of a public hearing in the Federal
Register, containing the subject matter, name of petitioner, and date,
time and place of the hearing; and
(e) EDA shall appoint a presiding officer for the hearing who shall
respond to all procedural questions.
Sec. 315.10 Loss of certification benefits.
A Firm may fail to obtain benefits of certification, regardless of
whether its certification is terminated, for any of the following
reasons:
(a) Failure to submit an acceptable Adjustment Proposal within two
(2) years after date of certification. While approval of an Adjustment
Proposal may occur after the expiration of such two-year (2) period, a
Firm must submit an acceptable Adjustment Proposal before such
expiration;
(b) Failure to submit documentation necessary to start
implementation or modify its request for Adjustment Assistance
consistent with its Adjustment Proposal within six (6) months after
approval of the Adjustment Proposal, where two (2) years have elapsed
since the date of certification. If the Firm anticipates needing a
longer period to submit documentation, it should indicate the longer
period in its Adjustment Proposal. If the Firm is unable to submit its
documentation within the allowed time, it should notify EDA in writing
of the reasons for the delay and submit a new schedule. EDA has the
discretion to accept or refuse a new schedule;
(c) EDA has denied the Firm's request for Adjustment Assistance,
the time period allowed for the submission of any documentation in
support of such request has expired, and two (2) years have elapsed
since the date of certification; or
(d) Failure to diligently pursue an approved Adjustment Proposal
where two (2) years have elapsed since the date of certification.
Sec. 315.11 Appeals, final determinations and termination of
certification.
(a) Any petitioner may appeal in writing to EDA from a denial of
certification, provided that EDA receives the appeal by personal
delivery or by registered mail within sixty (60) days from the date of
notice of denial under Sec. 315.8(g). The appeal must state the
grounds on which the appeal is based, including a concise statement of
the supporting facts and applicable law. The decision of EDA on the
appeal shall be the final determination within the Department. In the
absence of an appeal by the petitioner under this paragraph, the
determination under Sec. 315.8(g) shall be final.
(b) A Firm, its representative or any other interested domestic
party aggrieved by a final determination under paragraph (a) of this
section may, within sixty (60) days after notice of such determination,
begin a civil action in the United States Court of International Trade
for review of such determination, in accordance with section 284 of the
Trade Act.
(c) Whenever EDA determines that a Certified Firm no longer
requires Adjustment Assistance or for other good cause, EDA will
terminate the certification and promptly publish notice of such
termination in the Federal Register. The termination will take effect
on the date specified in the published notice.
[[Page 56705]]
(d) EDA shall immediately notify the petitioner and shall state the
reasons for any termination.
Subpart C--Protective Provisions
Sec. 315.12 Recordkeeping.
Each TAAC shall keep records that fully disclose the amount and
disposition of Trade Adjustment Assistance program funds so as to
facilitate an effective audit.
Sec. 315.13 Audit and examination.
EDA and the Comptroller General of the United States shall have
access for the purpose of audit and examination to any books,
documents, papers, and records of a Firm, TAAC or other recipient of
Adjustment Assistance pertaining to the award of Adjustment Assistance.
Sec. 315.14 Certifications.
EDA will provide no Adjustment Assistance to any Firm unless the
owners, partners, members, directors or officers thereof certify:
(a) The names of any attorneys, agents, and other Persons engaged
by or on behalf of the Firm for the purpose of expediting applications
for such Adjustment Assistance; and
(b) The fees paid or to be paid to any such Person.
Sec. 315.15 Conflicts of interest.
EDA will provide no Adjustment Assistance to any Firm under this
part unless the owners, partners, or officers execute an agreement
binding them and the Firm for a period of two (2) years after such
Adjustment Assistance is provided, to refrain from employing, tendering
any office or employment to, or retaining for professional services any
Person who, on the date such assistance or any part thereof was
provided, or within one (1) year prior thereto, shall have served as an
officer, attorney, agent, or employee occupying a position or engaging
in activities which involved discretion with respect to the provision
of such Adjustment Assistance.
Subpart D--Adjustment Proposals
Sec. 315.16 Adjustment Proposal Requirements.
EDA evaluates Adjustment Proposals based on the following:
(a) EDA must receive the Adjustment Proposal within two (2) years
after the date of the certification of the Firm;
(b) The Adjustment Proposal must include a description of any
Adjustment Assistance requested to implement such proposal, including
financial and other supporting documentation as EDA determines is
necessary, based upon either:
(1) An analysis of the Firm's problems, strengths and weaknesses
and an assessment of its prospects for recovery; or
(2) If EDA so determines, other available information;
(c) The Adjustment Proposal must:
(1) Be reasonably calculated to contribute materially to the
economic adjustment of the Firm (i.e., that such proposal will
constructively assist the Firm to establish a competitive position in
the same or a different industry);
(2) Give adequate consideration to the interests of a sufficient
number of separated workers of the Firm, by providing, for example,
that the Firm will:
(i) Give a rehiring preference to such workers;
(ii) Make efforts to find new work for a number of such workers;
and
(iii) Assist such workers in obtaining benefits under available
programs; and
(3) Demonstrate that the Firm will make all reasonable efforts to
use its own resources for its recovery, though under certain
circumstances, resources of related Firms or major stockholders will
also be considered; and
(d) The Adjustment Assistance identified in the Adjustment Proposal
must consist of specialized consulting services designed to assist the
Firm in becoming more competitive in the global marketplace. For this
purpose, Adjustment Assistance generally consists of knowledge-based
services such as market penetration studies, customized business
improvements, and designs for new products. Adjustment Assistance does
not include expenditures for capital improvements or for the purchase
of business machinery or supplies.
Subpart E--Assistance to Industries
Sec. 315.17 Assistance to Firms in import-impacted industries.
(a) Whenever the International Trade Commission makes an
affirmative finding under section 202(B) of the Trade Act that
increased imports are a substantial cause of serious injury or threat
thereof with respect to an industry, EDA shall provide to the Firms in
such industry assistance in the preparation and processing of petitions
and applications for benefits under programs which may facilitate the
orderly adjustment to import competition of such Firms.
(b) EDA may provide Adjustment Assistance, on such terms and
conditions as EDA deems appropriate, for the establishment of industry-
wide programs for new product development, new process development,
export development or other uses consistent with the purposes of the
Trade Act and this part.
(c) Expenditures for Adjustment Assistance under this section may
be up to $10,000,000 annually per industry, subject to availability of
funds, and shall be made under such terms and conditions as EDA deems
appropriate.
Dated: September 19, 2006.
Benjamin Erulkar,
Deputy Assistant Secretary and Chief Operating Officer, Economic
Development Administration.
[FR Doc. 06-8035 Filed 9-26-06; 8:45 am]
BILLING CODE 3510-24-P