[Code of Federal Regulations] [Title 13, Volume 1] [Revised as of January 1, 2003] From the U.S. Government Printing Office via GPO Access [CITE: 13CFR316.2] [Page 587-588] TITLE 13--BUSINESS CREDIT AND ASSISTANCE CHAPTER III--ECONOMIC DEVELOPMENT ADMINISTRATION, DEPARTMENT OF COMMERCE PART 316--GENERAL REQUIREMENTS FOR FINANCIAL ASSISTANCE--Table of Contents Sec. 316.2 Excess capacity. (a) Definitions. For purposes of this section only the following definitions apply: Beneficiary means a firm or group of firms, a public or private enterprise or organization that provides a commercial product or service and that directly benefits from an EDA-assisted project. Capacity means the maximum amount of a product or service that can be supplied to the market area over a sustained period by existing enterprises through the use of present facilities and customary work schedules for the industry. Commercial product or service means a product or service sold on the open market in competition with another provider's product or service of the same kind. Demand means the actual quantity of a commercial product or service that users are willing to purchase in the market area served by the intended beneficiary of the EDA assisted project. Efficient capacity means that part of capacity derived from the use of contemporary structures, machinery and equipment, designs, and technologies. Existing competitive enterprise means an established operation which either produces or delivers the same kind of commercial product or service to all or a substantial part of the market area served by the intended beneficiary of the EDA assisted project. Firm means any enterprise which produces or sells a commercial product or service. Market Area means the geographic area within which commercial products or services compete for purchase by customers. Product or service means a good, material, or commodity, or the availability of a service or facility. Section 208 means section 208 of PWEDA. (1) A section 208 study is a detailed economic analysis/evaluation of competitive impact. (2) A section 208 report is a summary of supply/demand factors. (3) A section 208 exemption may apply to a project having one or more of the characteristics listed in paragraph (e) of this section. (b) Under section 208: (1) No financial assistance under PWEDA shall be extended to any project when the result would be to increase the production of products or services when there is not sufficient demand for such products or services, to employ the efficient capacity of existing competitive commercial or industrial enterprises; and (2) When EDA considers extending assistance for a project that benefits a firm or industry that provides a commercial product or service, the beneficiary is subject to a 208 report, study, or exemption, resulting in a finding that the project will or will not violate section 208. A section 208 study or report is required, except as provided in paragraph (e) of this section. (c) The following procedures shall be followed to the extent necessary to provide EDA with sufficient information to prepare a 208 study or report: (1) The beneficiary shall submit, as early as possible, the following information with regard to each commercial product or service affected by the project: (i) A detailed description of the commercial product or service; (ii) Current and projected amount and value of annual sales or receipts; (iii) Market area; and (iv) Name of other suppliers and amount of commercial product or service presently available in the market area. (2) If the beneficiary has conducted or commissioned a relevant market study, it shall be made available to [[Page 588]] EDA as early as possible, for possible use by EDA in the 208 study or report. (d) A section 208 report will form an acceptable basis on which to make a section 208 compliance finding when the beneficiary's projected new or additional annual output is less than one percent of the last recorded annual output in the market area, or when it is otherwise apparent that a 208 study is not required to determine that the project will not violate section 208. (e) Unless EDA determines that circumstances require a section 208 study or report, EDA will make a finding of compliance with section 208 without doing a section 208 report or study for those projects with known beneficiaries, and which have one or more of the following characteristics: (1) The project is primarily for the use and benefit of the community as a whole without significantly expanding the output of commercial products or services; (2) The project is primarily to be used for non-production or non- distribution purposes; (3) The project will replace or restore capacity recently destroyed by flood, fire, wind, or other natural disaster, without contributing to significant expansion of the previously existing supply of the same kinds of commercial products or services; (4) The project will assure the retention of physical capacity and/ or employment without significantly expanding the existing supply of the same kinds of commercial products or services; (5) The project will assure the reopening of facilities closed within two years of the date of reopening, if the facility will provide the same kinds of products or services as previously provided, without a significant increase in output; (6) The project will replace, rebuild or modernize, within the same commuting area, facilities which within the previous two years have been, or are to be, displaced by official governmental action, without a change in the kind or significant increase in output of the commercial product or service previously provided; (7) The project assures completion of a project previously assisted by EDA, where further funding is required because of revised project cost estimates, rather than for additional productive capacity; (8) The project is wholly or primarily for planning, technical assistance, research, evaluation, other studies, or for the training of workers, and not for the direct benefit of a firm or an industry that produces a commercial product or service; or (9) No firm benefitted by the project will use 50 percent or more of any EDA-financed service or facility. [64 FR 5482, Feb. 3, 1999, as amended at 64 FR 69879, Dec. 14, 1999]