[Federal Register Volume 76, Number 21 (Tuesday, February 1, 2011)]
[Proposed Rules]
[Pages 5501-5503]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-1937]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 76, No. 21 / Tuesday, February 1, 2011 /
Proposed Rules
[[Page 5501]]
DEPARTMENT OF COMMERCE
Economic Development Administration
13 CFR Chapter III
[Docket No.: 110119042-1041-01]
RIN 0610-XA04
Request for Comments: Review and Improvement of EDA's Regulations
AGENCY: Economic Development Administration, Department of Commerce.
ACTION: Notice and request for comments.
-----------------------------------------------------------------------
SUMMARY: The Economic Development Administration (EDA) is an agency
within the U.S. Department of Commerce that leads the Federal economic
development agenda by making strategic grants-based investments. EDA's
regulations provide the framework through which the agency administers
its economic development assistance programs. EDA is beginning the
process of updating the agency's regulations and is committed to
ensuring that public feedback helps shape the revised regulations. As
part of the Administration's commitment to open government and in
response to Executive Order 13563 ``Improving Regulation and Regulatory
Review'', EDA requests input from the public on any obstacles created
by EDA's current regulations and ways to improve them to help the
agency better advance innovative economic development in the 21st
century. EDA expects that this process will result in an updated
rulemaking that reflects current economic development practice to
advance an innovative economy.
DATES: Comments must be received no later than 5 p.m. Eastern Time on
March 9, 2011.
ADDRESSES: You may submit comments by any of the following methods. All
comments must include ``Comments on EDA's regulations'' and Docket No.
110119042-1041-01.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Agency Web site: http://www.eda.gov/. EDA has created an
online feature for submitting comments. Follow the instructions at
http://www.eda.gov/.
E-mail: [email protected]. Include ``Comments on
EDA's regulations'' and Docket No. 110119042-1041-01 in the subject
line of the message.
Fax: (202) 482-5671, Attention: Office of Chief Counsel.
Please indicate ``Comments on EDA's regulations'' and Docket No.
110119042-1041-01 on the cover page.
Mail: Economic Development Administration, Office of Chief
Counsel, Suite D-100, U.S. Department of Commerce, 1401 Constitution
Avenue, NW., Washington, DC 20230. Please indicate ``Comments on EDA's
regulations'' and Docket No. 110119042-1041-01 on the envelope.
FOR FURTHER INFORMATION CONTACT: Jamie Lipsey, Attorney Advisor, U.S.
Department of Commerce, Economic Development Administration, Office of
Chief Counsel, 1401 Constitution Avenue, NW., Suite D-100, Washington,
DC 20230; telephone: (202) 482-4687.
SUPPLEMENTARY INFORMATION: Established under the Public Works and
Economic Development Act of 1965, as amended (42 U.S.C. 3121 et seq.)
(PWEDA), EDA's mission is to lead the Federal economic development
agenda by promoting competitiveness and preparing American regions for
growth and success in the worldwide economy. EDA partners with
stakeholders throughout the United States to foster job creation,
collaboration, and innovation. EDA's regulations, which are codified at
13 CFR chapter III, implement the agency's six economic development
assistance programs authorized under PWEDA, as well as the Trade
Adjustment Assistance for Firms Program and Trade Adjustment Assistance
for Communities Program, which are authorized under chapters 3, 4, and
5 of title II of the Trade Act of 1974, as amended (19 U.S.C. 2341 et
seq.).
In an opinion published in the Wall Street Journal on January 18,
2011, President Obama recognized that Federal regulations sometimes
fail to strike the correct balance, placing unreasonable burdens on
businesses that stifle innovation and have had a chilling effect on
growth and jobs. Also on January 18, 2011, the President signed
Executive Order 13563 ``Improving Regulation and Regulatory Review,''
which requires Federal agencies to review existing rules to remove
outdated regulations that stifle job creation and make the U.S. economy
less competitive.
EDA is beginning the process of updating its regulations, which
provide the framework through which the agency selects, awards, and
administers its grant investments. Through this notice of inquiry
(NOI), EDA requests input from the public on any obstacles created by
EDA's current regulations and ways to improve them to help the agency
better advance innovative economic development in the 21st century. The
agency is particularly interested in learning of any perceived
impediments to contemporary economic development practices that are
produced as a cause or consequence of a particular regulation. Although
EDA welcomes comments on all of its regulations, the agency requests
particular input on those regulations that impact the creation and
growth of Regional Innovation Clusters (RICs). In addition, EDA has
identified potential issues in the area of property management on which
the agency requests comments, as discussed below. As part of the
Administration's commitment to open government, EDA is interested in
broad public and stakeholder participation in this effort and strives
to create a simplified regulatory system that balances the agency's
fiduciary and transparency responsibilities with good, common sense
customer service to our stakeholders and the American people.
1. Regional Innovation Clusters (RICs)
EDA supports the development and growth of RICs as proven economic
development tools through which American regions can create jobs and
grow their economies. A RIC is an active network of similar,
synergistic, or complementary organizations engaged in or with a
particular industry sector, with active channels for business
transactions, communications, and dialogue that share specialized
infrastructure, labor markets, and services and that are located within
a
[[Page 5502]]
defined geographic region. These active channels support the genesis of
business ideas, innovations, and initiatives that create new companies
and jobs. A RIC's region may cross municipal, county, and other
jurisdictional boundaries. A RIC often includes catalysts of innovation
and drivers of regional economic growth, such as local universities,
government research centers, and/or other research and development
resources. In addition, participants in the RIC may have strategic
partnerships with entities outside of the RIC's geographic region. A
successful RIC will leverage the region's unique competitive strengths
and find ways to nurture networks for business financing, business-to-
business sales, education, and workforce development. These networks
work in concert with local governments, venture capitalists, private
banks, workforce investment boards, non-profit organizations,
institutions of higher education (including community colleges), and
other public and private agencies and institutions.
EDA seeks information on whether its regulations appropriately
facilitate the creation and promotion of RICs and comments on ways the
regulations can better support RICs. EDA also seeks comments on any
impediments the regulations present to its stakeholders as they work
toward the creation and implementation of RICs. For example, should EDA
define what it means by a RIC in its ``Definitions'' section at 13 CFR
300.3 to provide stakeholders a clearer idea of what the agency seeks
to encourage? If so, is the description above adequate as a definition?
As another example, should EDA include a RIC analysis or strategy as
part of the technical requirements of Comprehensive Economic
Development Strategies as set out at 13 CFR 303.7(b)?
2. Property Management
EDA has become aware of a potential issue with its property
management regulations, which are set out at 13 CFR part 314. As
trustee of appropriated taxpayer dollars, EDA safeguards the public's
interest in grant assets, and the agency's property management
regulations provide the framework through which this is accomplished.
EDA takes and retains a security interest (the Federal Interest) in
property, including real and personal property, purchased or improved
with grant funds. See 13 CFR 314.1 and 314.2. The Federal Interest
helps ensure that project property is used for the economic development
purposes for which the grant was awarded. In general, EDA's regulations
require that property purchased or improved with EDA assistance remain
unencumbered and that the recipient hold title to the property for its
estimated useful life. In some instances, these regulations have proved
particularly challenging for public/private partnerships designed to
advance a community's economic development priorities. EDA seeks input
on innovative ways that would allow recipients to structure a project
(and property ownership, as appropriate) to accomplish relevant
economic development goals, while continuing to safeguard the Federal
Interest. For example, are there practical ways to secure the Federal
Interest without requiring the recordation of a Federal lien or other
encumbrance, or the recipient to hold title to project property?
In addition, EDA seeks comments on the possibility of providing for
additional flexibility with respect to the agency's encumbrance and
subordination requirements as set out at 13 CFR 314.6 and 314.7. When
EDA assistance is used to acquire or improve real property, the
recipient must provide to EDA a locally recorded security interest in
the property improved with grant funds. Such security interest can
include a lien, mortgage, or another enumerated form of encumbrance. In
the event that a project fails for any reason, EDA can recover the fair
market value of its interest in the property and use those funds to
make additional grants that will provide further opportunities for job
creation. When EDA approves encumbrances on real property acquired or
approved with program grant funds, EDA generally does not allow the
Federal Interest to be subordinated to any other interest. However,
given the realities of project development and real estate financing,
EDA sometimes will allow (on a case-by-case basis) the Federal Interest
to be subordinated provided that: EDA determines to its satisfaction
that the recipient's financial standing is strong; the recipient will
not default on its obligations; and the project cannot happen without
the subordination. See 13 CFR 314.6(b).
The agency's subordination requirements provide needed flexibility
when long-term financing is available and when the level of risk to the
Federal Interest can be assessed at the outset. However, it has come to
EDA's attention that the requirements may not provide the necessary
flexibility when short-term financing is involved. Some financing tools
available to recipients may be restricted to a relatively short period
of time. For example, the credit allowance period under the New Markets
Tax Credit (NMTC) Program is seven years (see IRC 45D(a)(3)). Projects
involving NMTC investments often refinance at the conclusion of the
credit allowance period (see the NMTC Program FAQs for more information
on the program, which are available on the U.S. Department of the
Treasury's Web site at http://www.cdfifund.gov/docs/nmtc/2009/NMTC%20Compliance%20Monitoring%20FAQ.pdf). Also, in some cases, short-
term financing is the only type of financing that a recipient can
realistically obtain. In such circumstances, other project lenders
often want EDA to agree at the time project financing is negotiated to
subordinate its interest in the future after the short-term loan
matures so that follow-on financing can be put into place. Because
future market conditions are uncertain, EDA cannot make the findings
under 13 CFR 314.6(b) needed to subordinate the Federal Interest. A
current agreement to subordinate in the future puts the Federal
Interest at increased risk; are there mechanisms available to make that
risk acceptable if it allows promising economic development projects to
go forward?
Would it be useful for EDA's regulations to specifically provide
for situations where short-term project financing is the only tool
available? Specifically, should EDA agree to subordinate the Federal
Interest in the future when future market conditions, the strength of
the recipient, and the success of the project are largely unknown? In
what situations should this tool be exercised? What award conditions
should EDA require in connection with such arrangements? In some
circumstances, EDA is able to hedge against risk by, for example,
requiring a non-profit applicant to add a city or other local
government body as a co-applicant. This avenue is not available in all
cases. Given this, are there alternative mechanisms that can protect
the Government's interest in case the project fails so that EDA can
recover the Federal Interest to make new grants?
Although the examples above center on how EDA's regulations affect
RIC development and adjustments to EDA's property management
requirements, as noted above, EDA seeks public comments on any aspect
of the regulations. Comments that identify potential regulatory
impediments to economic development and make corresponding
recommendations, as well as the commenter's experiences complying with
the regulation at issue, will be instructive.
Comments should be submitted to EDA as described in the ADDRESSES
[[Page 5503]]
section of this notice. EDA strongly encourages the use of the online
feature on the agency's Web site to share comments and suggestions on
improving the agency's regulations. The feature is easily accessible on
EDA's Web site and offers participants an opportunity to view the
comments of others. As noted above, the online commenting feature can
be accessed at http://www.eda.gov/. EDA will consider all comments
submitted in response to this NOI that are received by 5 p.m. Eastern
Time on March 14, 2011, as referenced under DATES. EDA will not accept
public comments accompanied by a request that a part or all of the
material be treated confidentially for any reason; EDA will not
consider such comments and will return such comments and materials to
the commenter. All public comments in response to this NOI must be in
writing (including fax or e-mail) and will be a matter of public
record. All comments submitted will be available for public inspection
and copying at http://www.regulations.gov.
Dated: January 25, 2011.
Brian P. McGowan,
Deputy Assistant Secretary for Economic Development and Chief Operating
Officer.
[FR Doc. 2011-1937 Filed 1-31-11; 8:45 am]
BILLING CODE 3510-24-P