Economic Development Administration: A Review of Elements of Its Statutory History
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Economic Development Administration: A
Review of Elements of Its Statutory History
-name redactedAnalyst in Federalism and Economic Development Policy
June 3, 2011
Congressional Research Service
7-....
www.crs.gov
R41241
CRS Report for Congress
Prepared for Members and Committees of Congress
Economic Development Administration: A Review of Elements of Its Statutory History
Summary
As the 112th Congress considers legislation reauthorizing the Public Works and Economic
Development Act of 1965 (PWEDA; P.L. 89-136), which created the Economic Development
Administration (EDA) and its programs, the PWEDA’s statutory evolution may inform Congress
in its deliberation. In reviewing the evolution of the PWEDA’s statutory authority, several
observations are worth making:
•
Congress has consistently used unemployment as the primary criterion to
determine eligibility for EDA assistance, but it has authorized the inclusion of
other criteria, resulting in up to 80% of counties being deemed eligible for
assistance.
•
Although Congress has cast a wide net in terms of the criteria for EDA eligibility,
it has remained focused on a singular mission: supporting private sector job
creation in economically depressed areas primarily through the financing of
infrastructure projects, including technology enhancements.
•
Congress has continued to promote multi-jurisdictional regional planning as a
core activity in support of EDA’s job creation mission.
•
The use of EDA public works-based assistance as an anti-recession tool has
generally been opposed by some in Congress and viewed as slow and costly in
generating jobs for the unemployed during a recession.
During its 46-year history, EDA has evolved from a cluster of programs targeted primarily to
rural communities experiencing long-term economic depression to an agency that has also been
called upon to target assistance to urban areas and to address issues confronting communities
experiencing sudden economic dislocation caused by factory shutdowns, foreign competition,
base closures, and disasters. Although Congress initially approved legislation that used
unemployment rates as the primary determinant of eligibility, it has also used per capita income
and other criteria to qualify areas for assistance. Supporters contend that this allows EDA to be
responsive to areas experiencing population outmigration, natural disasters, natural resource
depletion, military base closures, the sudden loss of manufacturing jobs, and other special needs,
while detractors contend that this broad targeting has diffused the agency’s resources.
As the programs of EDA evolved, Congress enacted legislation that standardized matching fund
requirements among programs, simplified the application process, encouraged regional
cooperation, established performance measures, and provided additional performance-based
funding to grant recipients. The 1998 amendments standardized the federal cost share at 50% of a
project’s cost, but allowed EDA to provide supplemental assistance to increase the EDA
contribution to no more than 80% of a project’s cost. The 2004 amendments allowed EDA to
waive completely the cost share requirements based on an EDA finding of insufficient taxing or
borrowing capacity.
In an effort to encourage regional cooperation, Congress conditioned the receipt of public works
and economic adjustment assistance on the development and implementation of a Comprehensive
Economic Development Strategy (CEDS) and required each grantee’s CEDS to be consistent with
local and district plans. Congress also directed EDA to award additional funds for outstanding
performance in the execution of grant activities. Most recently, with the passage of American
Recovery and Reinvestment Act (ARRA; P.L. 111-5), Congress returned to the practice of using
EDA assistance as a countercyclical tool. This report will be updated as events warrant.
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Economic Development Administration: A Review of Elements of Its Statutory History
Contents
Precursors to the Creation of EDA .................................................................................................. 1
Area Redevelopment Act: Placed-Based Federal Economic Development Assistance............. 2
Public Works Acceleration Act: Infrastructure-Based Economic Stimulus ............................... 3
Appalachian Regional Development Act: Federally Chartered Multi-state
Regionalism ............................................................................................................................ 4
Public Works and Economic Development Act of 1965: Building on Past Lessons ....................... 5
PWEDA Amendments of the 1970s: Wider Net, Same Mission ............................................... 7
Title VIII, EDA and Disaster Recovery............................................................................... 8
Title IX, Special Economic Development and Adjustment Assistance ............................... 9
Title X and Other EDA Anti-recession Legislation ............................................................. 9
PWEDA Amendments of 1976 ......................................................................................... 13
Redrafting EDA’s Authority: PWEDA Amendments of 1998 ................................................. 14
Refining the 1998 Amendments: EDA Reauthorization Act of 2004 ...................................... 16
Concluding Observations............................................................................................................... 17
Contacts
Author Contact Information........................................................................................................... 17
Acknowledgments ......................................................................................................................... 17
Congressional Research Service
Economic Development Administration: A Review of Elements of Its Statutory History
C
reated with the enactment of the Public Works and Economic Development Act of 1965
(PWEDA; P.L. 89-136), the Economic Development Administration has a 46-year history
of supporting job creation and long-term economic recovery efforts in the nation’s
economically distressed areas.1 The 112th Congress may consider legislation reauthorizing the
EDA, the authorizations of which expired at the end of FY2008. At least one bill, S. 782, which
would reauthorize the agency and its programs through FY2015, has been reported out of the
Senate Environment and Public Works Committee and placed on the Senate calendar. Also,
Congress is expected to consider funding for the agency and its programs as part of the
Commerce, Justice, Science Appropriations bill. As the 112th Congress considers these and other
legislative proposals that may reauthorize, amend, and fund the agency and its programs, a review
of the evolution of the agency’s statutory authority may inform Congress in its deliberations.2 In
considering the reauthorization of the agency and its programs, Congress will do so within the
larger policy context regarding other competing national issues, including efforts to reduce
federal spending in order to address federal budget deficits and the national debt, concerns about
duplication and fragmentation of federal economic development assistance, and efforts to support
economic recovery and job creation following the worst economic recession since the Great
Depression.
Precursors to the Creation of EDA
Congress authorized the creation of EDA with the aim of addressing the problems confronting
rural regions experiencing long-term economic depression. EDA and its programs were part of a
larger effort to address the causes of job loss and economic decline, including physical and
technological deficiencies, that hindered or detracted from an area’s economic competitiveness
and employment potential. When creating EDA, Congress drew on the lessons learned from three
other federal economic development laws that preceded it:
•
the Area Redevelopment Act of 1961 (ARA; P.L. 87-27);3
•
the Public Works Acceleration Act of 1963 (PWAA; P.L. 87-658);4 and
•
the Appalachian Regional Development Act of 1965 (ARDA; P.L. 89-4).5
Collectively, the three predecessor acts targeted assistance to projects in areas experiencing longterm economic stagnation as well as projects providing temporary public works employment as
an anti-recessionary measure in response to rising unemployment. Dominant themes and lessons
of each of these acts became integral parts of EDA’s mission of job creation and poverty
reduction in economically disadvantaged regions.6 Among the themes and issues that framed the
debates authorizing EDA and its predecessor agencies and programs were the following:
1
42 U.S.C. § 3121, 79 Stat. 552.
For a discussion of EDA issues in the 112th Congress, see CRS Report R41162, Economic Development
Administration: Reauthorization and Funding Issues in the 111th Congress, by (name redacted) and (name redacted).
3
75 Stat. 47.
4
76 Stat. 451.
5
79 Stat. 5.
6
The three acts cited above were themselves preceded by other federal legislation intended to support broad national
recovery and encourage development in economically depressed areas. President Franklin Roosevelt’s New Deal
initiatives included passage of the National Industrial Recovery Act of 1933 (NIRA). The act created the Public Works
(continued...)
2
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Economic Development Administration: A Review of Elements of Its Statutory History
•
the centralization of federal aid in contrast to decentralization and devolution of
responsibilities to state and local governments,
•
the allocation of funds to infrastructure development versus direct aid to the
unemployed and underemployed,
•
the targeting of federal funds to the most economically depressed areas versus
allocation of resources geographically throughout the country,
•
the use of public works as an anti-recession job creation tool,
•
the use of unemployment as the dominant factor to identify counties eligible for
assistance in contrast to a matrix of elements, and
•
the level of aid necessary to affect job growth and economic development.
Area Redevelopment Act: Placed-Based Federal Economic
Development Assistance
ARA, which was signed into law by President
Kennedy on May 1, 1961, was the direct
antecedent to the PWEDA. Passed by Congress
in the midst of an economic recession, ARA was
enacted after years of congressional debate
surrounding the structure, focus, and need for
targeted assistance to the nation’s long-term
economically depressed rural communities.
Passage of the act marked one of the earlier
federal efforts to support placed-based
economic development strategies as a means of
improving the economic well-being of persons
in poverty. The act also was noteworthy for
providing direct federal assistance to businesses
as well as indirectly supporting job creation
through infrastructure development. Similar
measures had been sponsored in previous
Congresses as a means of assisting rural
communities, particularly those of the Midwest
and Northeast, experiencing declining
employment in the manufacturing and mining
industries.
Two of the principal criticisms of ARA were
Area Redevelopment Act
1961-1965
Assistance was targeted to economically depressed
rural communities (redevelopment areas) to
implement Overall Economic Development Plans
(OEDP). Assistance included venture capital loans;
loans and grants for public facilities; technology and
market information; and research grants to investigate
the causes of, impacts of, and solutions to economic
decline. Funds could also be used to facilitate access to
other federal programs providing vocational retraining
of workers.
Eligibility was based on whether a community’s
unemployment rate met or exceeded 6% and whether
it met or exceeded the national average by
•
50% during the previous three years,
•
75% during the previous two years, or
•
100% during the previous year.
Assistance was also extended to rural communities
with high concentrations of low-income families.
Federal contributions to the cost of projects assisted
with ARA funds could not exceed 50%.
(...continued)
Administration (PWA), which spent $6 billion on the construction of public works projects in an effort to help move
the country out of the economic depression of the 1930s. The PWA was abolished in 1941. The National Resource
Board (NRB) was established in 1934 by E.O. 6777. The NRB included the Secretaries of Commerce, Interior, War,
Labor, and Agriculture, and the Federal Emergency Relief Administrator. It provided technical assistance in the
preparation of a comprehensive plan for public works. Its last successor agency, the National Resources Planning
Board, was abolished in 1943.
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Economic Development Administration: A Review of Elements of Its Statutory History
that it was ineffective in preventing the pirating of businesses from one region to another and that
it interfered with the marketplace, resulting in inefficient resource allocation. Other alleged
program deficiencies included inadequate funding, inflexible rules governing direct support for
businesses, and the lack of program incentives that would encourage or mandate multi-county
cooperation rather than competition among individual counties in the development and execution
of economic development plans.7
Public Works Acceleration Act: Infrastructure-Based
Economic Stimulus
PWAA was another initiative of the Kennedy
Administration. Approved by Congress in
September 1962, the PWAA was enacted in
response to an economic recession that lasted
from April 1960 to February 1961, according
to the National Bureau of Economic
Research.8 The recession was accompanied by
a rise in unemployment from a low of 5.2% in
May 1960 to 7.1% in May 1961.9
PWAA
1962 Countercyclical Economic Stimulus
Funds were used to accelerate previously approved or
authorized federal, state, and local government public
works projects. The act limited each state to no more
than 10% of the total amount appropriated and
restricted the selection of projects to those that
•
could be initiated immediately,
•
could be substantially completed within 12 months
after initiation,
The act had two objectives. It sought (1) to
introduce an immediate economic stimulus in
•
would contribute to lowering the unemployment
rate, and
response to the 1960-1961 recession by
providing temporary employment through
•
would address an essential public need.
accelerated construction of public works
Areas eligible for assistance included those designated as
projects and (2) to encourage long-term
redevelopment areas under ARA and communities
economic development and industrial
designated by the Department of Labor has having been
expansion in affected communities by
areas of substantial unemployment for nine of the
previous 12 months.
financing improvements to public works and
facilities. The PWAA authorized an
The act limited the federal government’s share of the
appropriation of $900 million to be allocated
cost of approved projects to no more than 50%.
However, the federal share could cover 75% of a
by the President from among federal, state,
project’s cost depending upon the economic and
and local projects authorized by Congress and
financial capacity of the state or local government.
required that at least $300 million be allocated
to redevelopment areas (these were longerterm economically depressed areas) as defined by ARA.10
One of the principal complaints lodged against the PWAA was that it dispensed funds to too many
areas for projects with too little economic value or impact. The net result was that many projects
7
U.S. Congress, House Committee on Public Works, Public Works and Economic Development Act of 1965, report to
accompany S. 1648, 89th Cong., 1st sess., June 22, 1965, H. Rept. 539 (Washington: GPO 1965), p. 3.
8
See Business Cycle Dating Committee, U.S. Business Cycle Expansions and Contractions, National Bureau of
Economic Research, Cambridge, MA, http://www.nber.org/cycles/cyclesmain.html. The decline in economic activity
was accompanied by a rise in unemployment from a low of 5.2% in May 1960 to 7.1% in May 1961.
9
See database available at U.S. Department of Labor, Bureau of Labor Statistics, Labor Force Statistics from the
Current Population Survey, Historical News Release Tables, Table A-7, Selected Unemployment Indicators,
Seasonally Adjusted, http://www.bls.gov/webapps/legacy/cpsatab7.htm.
10
P.L. 87-658, Sec. 3(d); 76 Stat. 542.
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Economic Development Administration: A Review of Elements of Its Statutory History
did not produce the desired results. Another criticism was that the legislation was slow to
implement and that the recovery was well underway before projects produced results.
Appalachian Regional Development Act: Federally Chartered
Multi-state Regionalism
The third act, ARDA, created a multi-state regional commission charged with developing and
coordinating federal assistance to economically depressed counties within the 13 member states.
Signed into law by President Johnson on March 9, 1965, only months before the passage of the
PWEDA, ARDA created the Appalachian Regional Commission (ARC), a regional development
entity chartered by Congress. ARDA remains current law and the ARC continues to operate.
ARDA of 1965
The ARC’s mission is to address development and related issues affecting the multi-state region and its sub-state
areas, particularly those experiencing long-term economic distress.
Assistance includes grants, loans, technical assistance for infrastructure, education, training, business development,
health, and housing aimed at addressing one of ARC’s four strategic goals: (1) improving job opportunities, (2)
strengthening workforce readiness, (3) improving infrastructure; (4) expanding the reach of the Appalachian
Development Highway System.
Eligibility is based on a county’s distress status as measured by unemployment rates, per capita income, and poverty
rates. ARC counties are grouped into five categories based on these measures of distress:
•
Distressed Counties have poverty and unemployment rates that are at least 150% of the national averages and per
capita incomes that are no more than 67% of the national average.
•
At-Risk Counties have poverty and unemployment rates at least 125% of the national averages and per capita
incomes that are no more than 67% of the national averages.
•
Transitional Counties are those that do not meet the thresholds for distressed or at-risk designation, but have
unemployment, poverty, or per capita income rates that are worse than the national averages.
•
Competitive Counties have poverty and unemployment rates that are equal to or less than the national averages.
•
Attainment Counties have poverty rates, unemployment rates, and per capita incomes that are at least equal to the
national rates.
The federal share of a project’s cost varies from 50% to 80% depending on the nature of the project and the
economic distress status of the area seeking assistance.
ARDA is noteworthy for several reasons, including its federal charter and the appointment of a
representative of the federal government as co-chair of the ARC. More importantly, ARDA
authorized the creation of several new programs, with most being administered by other federal
agencies. In so doing, it linked place-based physical and economic development policies and
programs with people-oriented social, workforce training, education, and health initiatives as part
of a comprehensive effort to improve an area’s competitive advantages.
Another innovation of ARDA was the establishment of Local Development Districts (LDDs).
These multi-county planning and development organizations help local governments identify the
development needs of their communities. Among the 13 member states that make up the ARC,
there are 420 counties that are divided into 72 LDDs.
Much of the criticism of the ARC is that success has occurred at the margins. That is, the ARC
has not been successful at moving the most distressed communities toward prosperity, as
measured by significant declines in poverty and unemployment rates and increased per capita
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Economic Development Administration: A Review of Elements of Its Statutory History
income.11 Other observers argue that the ARC has been successful in improving the region’s
overall competitiveness, wages, and general quality of life. Supporters of the ARC and its
regional development approach contend that Congress recognized that issues of poverty are
multi-faceted, involving not only jobs but also concerns about education, health, and other quality
of life factors.
Public Works and Economic Development Act of
1965: Building on Past Lessons
Building upon the experience gained under the previously enacted statutes, Congress approved
the PWEDA to address the economic development needs of distressed areas. President Johnson,
when submitting his legislative proposal calling for the creation of EDA, outlined several basic
principles that would guide the federal effort concerning these needs. The legislation would
provide the financial support needed to improve the physical deficiencies of distressed areas; it
would encourage private sector job creation in underdeveloped rural areas; and it would
encourage state and local government economic development planning, including supporting
multi-county regional planning entities.
As passed by Congress, the PWEDA reflected the lessons learned from previous legislation,
including many of the elements of the three previously cited statutes. The act affirmed Congress’s
commitment to placed-based economic development policies by tying eligibility to an area’s
unemployment rate and funding public works projects linked to commercial and industrial
development as a means of creating jobs and combating poverty. The act also established
Economic Development Districts (EDDs) comprising two or more redevelopment areas (RAs) as
a means of promoting regional coordination and cooperation in the formulation and execution of
Overall Economic Development Plans (OEDPs). The creation of EDDs was a significant
departure from the single-county approach under ARA and mirrored the role of Local
Development Districts created under ARDA. The legislation limited the federal share of a
project’s cost, thus requiring local participating entities to share the risk. In addition, the act relied
heavily on the use of unemployment data to define eligible RAs, but included alternative criteria
such as median income that had the net effect of expanding the number of EDA-eligible counties.
11
Associated Press, “Is Agency’s Work to End Appalachian Poverty Done?,” May 23, 2004, http://www.sullivancounty.com/nf0/june_2004/arc.htm.
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Economic Development Administration: A Review of Elements of Its Statutory History
PWEDA 1965
Title I, Public Works Grants, authorized grants to public agencies and nonprofit entities located in RAs to be
used to develop and implement OEDPs and to finance public works and public service activities. The act limited the
EDA grant to 50%-80% of a project’s costs.
Title II, Public Works Loans, authorized loans for the same activities covered under Title I. Loans could be used
by public entities and private businesses to cover 65% of the cost of developing land and facilities for commercial and
industrial use.
Title III, Planning and Technical Assistance, authorized grants and technical assistance to designated RAs for
long-term planning activities, feasibility studies, management assistance, and evaluation and research studies.
Title IV, Area Designation, established the unemployment thresholds used to designate RAs. RA designation was
based on whether an area’s unemployment rate met or exceeded 6% for the last calendar year and whether it was
•
1.5 times the national average unemployment rate for three of the previous four years,
•
1.75 times the national average unemployment rate for two of the previous three years, or
•
two times the national average unemployment rate for one of the previous two years.
Eligibility was also extended to
•
areas where median family income was less than 40% of the national average;
•
economically depressed Indian reservations;
•
areas that experienced the loss of a major employer or an abrupt rise in unemployment that exceeded the
national unemployment rate by 50%; and
•
areas designated Special Impact Areas under the Economic Opportunity Act of 1964 (EOA; P.L. 88-452), 78 Stat.
504, which directed federal anti-poverty funds principally to impoverished urban neighborhoods.
Title V, Regional Commissions, authorized the establishment of multi-state regional commissions aimed at
encouraging states to establish economic development plans for depressed areas.
Title VI, Administration, created the positions of Assistant Secretary and EDA Administrator, and directed the
Commerce Department to establish an Advisory Committee on Regional Economic Development.
Title VII, Miscellaneous, delineated the powers of the Secretary of Commerce to carry out the act.
One of the criticisms of EDA that has endured since its inception is the high percentage of
communities that continue to qualify as economically distressed. Over the life of the program,
according to estimates included in a Rutgers University study, 60%-90% of counties met the
qualifications for designation as economically distressed.12
As passed by Congress, the PWEDA included grants to public agencies and nonprofit entities for
public works projects, loans to businesses, and technical assistance and grants to redevelopment
areas to be used to develop OEDPs. Title V of the act authorized the creation of five regional
commissions modeled after the ARC.13
12
Robert Lake, Robin Leichenko, and Amy Glasmeier, et al., EDA and U.S. Economic Distress: 1965-2000, Rutgers
University, New Brunswick, NJ, July 2004, pp. xiii and 18, http://www.eda.gov/PDF/
2004JulyEDAandU.S.EconomicDistressReport.pdf.
13
In both form and intent, Title V sought to recreate multi-state regional commissions similar to the ARC, including
the appointment of a federal co-chair to head each regional commission. It authorized the creation of the New England
Regional Commission, Upper Great Lakes Regional Commission, Ozarks Regional Commission, Coastal Plains
Regional Commission, and Four Corners Regional Commission. Unlike the ARC, the responsibilities of these regional
commissions were limited to planning and coordination activities. P.L. 91-123 amendments directed the Secretary of
Commerce to provide technical assistance to the commissions to cover the matching grant requirements of other federal
(continued...)
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PWEDA Amendments of the 1970s: Wider Net, Same Mission
The 1970s were an active legislative period for EDA as Congress passed not less than six acts
reauthorizing and amending the PWEDA. Three of
them added new titles to the PWEDA. Congressional
PWEDA Amendments of
consideration of these measures underscored the
the 1970s
competing philosophies regarding the federal role in
Title VIII, Economic Recovery for
Disaster Areas, included areas affected by
economic development. On the one hand, some
disasters among those eligible for assistance.
policymakers supported a limited federal role in
economic development, arguing that government
Title IX, Special Economic Adjustment
Assistance, extended assistance to areas
intervention distorts the marketplace, while others
affected by sudden and abrupt loss or
embraced policies that were intended to reduce
anticipated loss of a major employer.
regional deficiencies and improve the competitiveness
Title X, Jobs Opportunity Assistance,
of depressed areas. Congress not only embraced
authorized accelerated public works spending
physical development policies and programs such as
to combat rising unemployment caused by an
EDA assistance programs, but, as a part of President
economic recession.
Nixon’s “New Federalism” initiative, it also moved to
consolidate manpower training programs, such as
those authorized by the Comprehensive Employment and Training Act of 1973, and other
physical development programs. They were consolidated under the Community Development
Block Grant program authorized by Title I of the Housing and Community Development Act of
1974, P.L. 93-383.
During this period, the expectations placed on EDA increased. The agency evolved from a cluster
of programs targeted primarily to depressed rural communities to an agency that was also called
upon to direct assistance to urban areas and to address issues confronting communities
experiencing sudden and abrupt economic dislocation caused by factory shutdowns, foreign
competition, base closures, and disasters. Beyond these changes, Congress also debated, and at
times approved, the use of EDA funds as an anti-recessionary measure. This included providing
standby authority to the President to be used to allocate additional funds for public works projects
as a means of creating jobs and priming the economic pump.
By the end of the decade, Congress had approved legislation that increasingly relied on
unemployment rates as the primary factor used to determine EDA eligibility and authorized EDA
to provide economic adjustment and trade adjustment assistance to communities experiencing or
with the potential for experiencing sudden and abrupt economic dislocation.
(...continued)
programs and to establish long-range economic development plans.
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Title VIII, EDA and Disaster Recovery
As early as 1970, President Nixon proposed amending the PWEDA to include “staff support,
technical advice and financial assistance to those communities affected by major disasters.”14
Four years later, Congress passed the Disaster Relief
Act of 1974, P.L. 93-288. Title V of the act amended
Title VIII
the PWEDA by adding a new Title VIII—Economic
EDA-funded disaster recovery activities include:
Recovery for Disaster Areas.15 The new title made
•
planning and technical assistance grants
explicit the funding of disaster recovery assistance
that support state and local efforts to
activities that EDA had undertaken in the past. Title
develop long-term recovery plans;
VIII gave EDA specific authority to provide
•
implementation of post-disaster job
assistance to areas affected by disasters, including
creation
and retention strategies;
planning assistance, coordination of other federal
grants, loans, and technical assistance in support of
•
capitalization of Revolving Loan Funds to
help affected local businesses access
the restoration of an area’s employment base. The act
capital;
also authorized the creation of Recovery Planning
•
new construction and improvements to
Councils (RPCs) that included federal, state, and local
existing, publicly owned commercial and
representatives. The RPCs were charged with
industrial facilities; and
developing and implementing five-year recovery
investment plans for the affected areas. Congress
•
disaster mitigation activities, such as
infrastructure improvements intended to
repealed this authority in 1988.
reduce the impact or risk of future
disasters.
At its discretion, Congress may appropriate
supplemental or special funding to aid the long-term
economic recovery of areas affect by major disasters. Alternatively, EDA, without prior
congressional approval, may provide assistance through its regular programs, particularly
economic adjustment assistance funds.
At least one evaluation of EDA’s response to the 1993 Midwest floods found that EDA disaster
recovery assistance was effective in responding to the longer-term recovery needs of affected
communities. The report also noted that EDDs played an important role in helping local
communities plan and implement recovery strategies, and that EDA should make disaster
mitigation and preparedness part of the local planning process.16
14
U.S. President (Nixon), “Special Message to the Congress on Federal Disaster Assistance,” Public Papers of the
Presidents of the United States: Richard M. Nixon (Washington: GPO, 1970), p. 381.
15
88 Stat. 160.
16
Roger Rasnake, et al., EDA’s Response to the Midwest Floods of 1993: An Evaluation, Aquirre International, 1998.
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Economic Development Administration: A Review of Elements of Its Statutory History
Title IX, Special Economic Development and Adjustment Assistance
The PWEDA Extension Act of 1974, P.L. 93-423, reauthorized EDA programs through 1976,
including $175 million over two years for a new title (Title IX, Special Economic Development
and Adjustment Assistance, SEAA).17 The new title targeted funds to states and local areas
experiencing or under the threat of experiencing sudden
economic dislocation, including, but not limited to, rising
Title IX
unemployment caused by the actions of the federal
SEAA program was intended to assist
government, including compliance with environmental
eligible areas to address the special needs
arising from actual or threaten severe loss
requirements. It allowed local governments and states to
of jobs.
undertake eligible activities directly or to distribute funds
to public and private entities, although no funds could be
Eligible areas included states and local
governments, RAs and EDDS.
directly awarded to private for-profit entities. Further, the
act allowed EDA to transfer to the Department of Labor
Grant applicants were required to submit
funds to cover unemployment compensation benefits for
to EDA a plan describing the area’s needs
and activities to be undertaken.
dislocated workers. This was one of the more controversial
provisions of the act.
Eligible activities included public facilities,
The Senate report (S. Rept. 93-1055) accompanying the
Senate version of the authorizing legislation (S. 3641)
distinguished SEAA assistance from that provided under
other titles of the PWEDA and addressed the
unemployment compensation issue by noting that
public services, business development,
planning, unemployment compensation,
rent supplements, mortgage payment
assistance, research, technical assistance,
training, and worker relocation.
The principal purpose of title IX is to reduce hardships to working individuals and their
families caused by these unforeseen dislocations.… [T]itle IX as proposed addresses
immediate problems and aims to maintain jobs or restore them with due haste, at once
minimizing human hardship and restoring balance to local economies. Payments to the
unemployed are an important and necessary part of this assistance.18
The report noted that two other laws, Trade Adjustment Assistance and the Disaster Relief Act,
included similar provisions for unemployment compensation.
Title X and Other EDA Anti-recession Legislation
From 1971 through 1976, Congress passed and the President signed five acts extending and
amending EDA’s statutory authority. Two of these measures included explicit countercyclical
initiatives enacted in response to economic recessions. They were
•
the Job Opportunities Program of 1974 (Title X of PWEDA), and
•
the Public Works Employment Act of 1976.
A third act, the 1971 PWEDA Amendments Act, included provisions that were countercyclical in
intention and effect, but not in name.
17
88 Stat. 1164.
U.S. Congress, Senate Public Works Committee, Public Works and Economic Development, report to accompany S.
3641, 93rd Cong., 2nd sess., August 22, 1974, S. Rept. 93-1055 (Washington: GPO, 1974), p. 12.
18
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Special Impact Area Program, 1971
The Public Works and Economic Development Act Amendments and the Appalachian Regional
Development Act Amendments of 1971, P.L. 92-65, Title I, extended EDA programs for two
years, through FY1973.19 The 1971 reauthorization act was notable for two reasons: (1) it did not
explicitly include funding for an accelerated
public works program intended to address
Special Impact Areas
high unemployment caused by the 1971
The act
recession, and (2) it included provisions
•
established new criteria defining “special impact
requiring EDA to allocate a minimum
areas” to include areas having large concentrations
percentage of funds to special impact areas.
of low-income households; rural areas experiencing
substantial outmigration; regions with high
The act was passed after President Nixon
unemployment; areas affected by abrupt increases in
unemployment, such as that caused by the closure
vetoed an earlier version of the legislation (S.
of a factory; and areas experiencing long-term (10575), which included a $2 billion
year) decline in employment;
authorization that would have extended the
•
required that not less than 25% or more than 35%
PWAA program (under Title I of S. 575) in an
of
appropriated funds be awarded to projects in
effort to stimulate job creation during the
special impact areas;
recession. In his veto message, the President
•
eliminated the requirements that projects in special
objected to PWAA extension on the grounds
impact areas be consistent with OEDPs and have
that the measure fell short of being an
long-term benefits, and instead required that the
effective tool in creating jobs “when they are
funded projects provide “immediate useful work to
needed, where they are needed, for the persons
unemployed and underemployed persons in the
who most need them.”20 When the President
area”;
vetoed this measure (S. 575), he cited the
•
allowed EDA to cover 80%-100% of the public
experience under the 1962 PWAA. He noted
works cost share in special impact areas, depending
that major deficiencies of the PWAA as a
on the financial resources of the state or local
government.
countercyclical job creation tool included long
lead times and concerns that the program, with
its heavy focus on construction, would not provide job opportunities to those most in need:
veterans and unskilled labor. Instead, the President endorsed the Emergency Employment Act of
1971, which provided funding for public service jobs.21 The President also urged Congress to
support his Rural and Urban Community Development Revenue Sharing proposal.22
19
85 Stat. 166.
U.S. President (Nixon), “Veto of the Accelerated Public Works Bill,” Public Papers of the Presidents of the United
States: Richard Nixon, 1971 (Washington: GPO, 1972), pp. 785-788.
21
During the second session of the 92nd Congress, President Nixon vetoed another public works bill (H.R. 16071) that
would have broadened the definition of Economic Development Districts to include areas experiencing substantial
unemployment and would have provided federal unemployment compensation, mortgage, and rental assistance to
eligible households. President Nixon objected to the program changes for the same reasons he had opposed S. 575,
which sought to extend the PWAA; he contended that the action would not provide timely relief and would be
ineffective in creating jobs or stimulating timely economic development. See President Nixon, “Memorandum of
Disapproval of Nine Bills, Public Works and Economic Development Act Amendments of 1972 (H.R. 16071),” Public
Papers of the Presidents, Richard Nixon 1972 (Washington: GPO 1974), p. 376.
22
Elements of the Rural and Urban Community Development Revenue Sharing proposal would eventually become a
part of the Community Development Block Grant program enacted by Congress in 1974 as Title I of the Housing and
Community Development Act of 1974, P.L. 93-383.
20
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On August 5, 1971, after having his veto sustained by Congress, President Nixon signed a bill
that, as noted above, extended EDA for two years (and the ARC for four years).23 Under the
provisions of P.L. 92-65, not less than 25% or more than 35% of total appropriations for each of
FY1972 and FY1973 could be allocated for projects in special impact areas. According to the
House report accompanying the bill, H.R. 9922, these limits were imposed to strike a balance
between projects that were necessary for long-term economic development and projects that were
undertaken to assist in providing urgently needed employment.24 The act also included a
provision that prohibited EDA from terminating an area’s eligibility for assistance for three years.
Many observers viewed the special impact area designation as a modest recasting of the PWAA.
The House report noted that projects eligible in special impact areas “include the types of
construction projects that would have been eligible under the PWAA.” The report also noted,
“This is to ensure that such projects would have an immediate effect on areas having high
unemployment.”25
Two years later, on June 19, 1973, President Nixon reluctantly signed P.L. 93-46, a one-year
extension of EDA, stating that he was convinced that the program had not delivered on creating
job opportunities for the poor and that it overlapped other federal programs. The President had
previously proposed replacing the program with a more focused effort to stimulate economic
development as part of a proposal calling for the creation of a rural and urban community
development revenue sharing program within his “New Federalism” initiative.26 The
Administration was unsuccessful in getting congressional approval for a block grant proposal that
would have consolidated EDA, the Small Business Administration, and the Farmers Home
Administration rural development programs.
23
U.S. President (Nixon), “Statement of Signing Bill Extending Special Assistance to Depressed Rural Areas,” Public
Papers of the Presidents of the United States: Richard Nixon, 1971 (Washington: GPO, 1972), p. 863,
http://www.presidency.ucsb.edu/ws/index.php?pid=3103&st=&st1=.
24
U.S. Congress, House Public Works Committee, Public Works and Economic Development Act Amendments and
Appalachian Regional Development Act Amendments of 1971, report to accompany H.R. 9922, 92nd Cong., 1st sess.,
July 21, 1971, H. Rept. 92-372 (Washington: GPO, 1971), pp. 2-3.
25
Ibid., p. 1251.
26
U.S. President (Nixon), “Statement About Signing Three Bills Providing for Health Care, Economic Development in
Rural Areas, and Airport Construction,” June 19, 1973, http://www.presidency.ucsb.edu/ws/index.php?pid=3873&st=
public +works&st1=.
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Title X, Job Opportunities Program, 1974
Title III of the Special Emergency and Unemployment Assistance Act (SEUAA; P.L. 93-567),
amended the PWEDA and created the Jobs Opportunities Program (JOP), Title X of the
PWEDA.27 It directed EDA to undertake
job creation activities in areas experiencing
JOP Eligible Areas
high levels of unemployment. The JOP was
Eligible areas are
part of the SEUAA effort to provide
•
areas with unemployment rates of 6.5% or higher for
countercyclical assistance to combat an
three consecutive months,
entrenched recession that began in
•
areas eligible for CETA funding, or
November 1973 and ended in March
28
1975. The act also extended
•
PWEDA redevelopment areas.
unemployment insurance benefits and
45% to 60% of program funds were to be allocated to urban
created public service jobs under the
areas with 30% to 40% of funded projects located in rural
areas.
Comprehensive Employment and Training
Act (CETA).
Grants could be used to cover 80% of a project’s costs.
The JOP was a departure from past PWAA
and EDA-based countercyclical efforts. It directed the Department of Commerce, in consultation
with the Department of Labor, to fund projects that would significantly reduce an area’s
unemployment rate and that were labor intensive. As defined by program regulations, labor
intensive projects included those projects where at least 60% of project funds were spent for
direct labor costs.29 Program regulations also required that at least 50% of the program funds
were to be dispensed to projects where not more than 25% of JOP funds would be used to cover
non-labor costs. In addition, JOP grants could be awarded to other federal agencies and regional
commissions to finance job creation and retention activities.
Public Works Employment Act, 1976
On July 22, 1976, Congress overrode a presidential veto to enact
the Public Works Employment Act of 1976, P.L. 94-369.30 Title I,
Local Public Works Capital Development and Investment Act,
authorized the Department of Commerce to award grants to cover
100% of the costs of state and local public works projects,
including
•
the completion of plans for such projects, or
•
the state or local share of federally financed public works
projects.
Title I authorized EDA to award grants only to projects that could
be undertaken within 90 days of approval of a grant in an effort to
Title I of PWEA
Title I authorized projects that
could be undertaken within 90
days of approval of the grant.
Title I assistance was triggered
when the national unemployment
rate exceeded 6.5% for 3
consecutive months and made
available only to states and
communities whose
unemployment rate exceeded the
national rate.
27
88 Stat. 1853.
See Business Cycle Dating Committee, U.S. Business Cycle Expansions and Contractions, National Bureau of
Economic Research, Cambridge, MA, http://www.nber.org/cycles.html.
29
U.S. Department of Commerce, Economic Development Administration, “PART 313—Job Opportunities Program,”
40 Federal Register 25672, June 18, 1975.
30
90 Stat. 999.
28
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Economic Development Administration: A Review of Elements of Its Statutory History
stimulate employment in the construction industry. In addition, Title I directed EDA to give
priority to pubic works projects of local governments. Title II, Antirecession Provision,
authorized the Department of the Treasury to make payments to state and local governments for
public service jobs intended to help the state and local governments maintain basic services.
President Ford, in his veto of the original bill (S. 3201), stated in his veto message that the bill
was inflationary and that the measure would reduce unemployment by less than one-tenth of 1%.
He argued that the bill would create fewer new jobs than his own proposals, that the recovery
would be well underway when the new jobs were created, that the price of $25,000 per job
created was “intolerably high,” and that the bill’s price tag of $3.95 billion was inflationary.
Instead, he endorsed H.R. 11860, the Supplemental Community Development Employment
Assistance Act, which would have provided supplemental Community Development Block Grant
(CDBG) assistance using unemployment data as the basis for distributing funds during any
calendar quarter to communities and states. Supplemental funds were to be used for job intensive
activities that were consistent with a jurisdiction’s community development plan.31
PWEDA Amendments of 1976
In 1976, Congress passed the Public Works
and Economic Development Act Amendments
of 1976, P.L. 94-487, amending and extending
EDA programs for three years through
FY1979.32 The act explicitly stated that
assistance provided under it was to be made
available to both rural and urban areas. The act
reduced from 250,000 to 25,000 the minimum
population size for an area to be eligible for
designation as a redevelopment area and
expanded the definition of eligible area to
include communities where the unemployment
rate exceeded the national average during the
preceding 24-month period.
PWEDA Amendments of 1976
Extended EDA assistance programs through FY1979.
Made mandatory the authority of EDA to reduce the
state and local matching share of public works and
facilities grants.
Allowed EDA to waive or reduce a community
development corporation’s matching fund requirement if
EDA found that the organization had exhausted its
borrowing capacity.
Allowed EDA to provide additional grant funds for
projects experiencing cost overruns.
Allowed EDA to pay additional funds on behalf of
private-sector borrowers in order to reduce interest
paid by such borrowers on loan guarantees.
Allowed EDA to provide interest-free loans to
Most notably, the act called for the convening
redevelopment areas to be used to fund economic
of a White House Conference on Balanced
development activities including land acquisition and
National Growth and Economic Development,
redevelopment.
with a report that was to be transmitted to
Included $1 billion in standby authority for antiCongress by the President. The White House
recessionary job creation programs (JOP) that would be
Conference on Balanced National Growth and
triggered during any period when the national
unemployment rate exceeded 7% for three consecutive
Economic Development was held over a fivemonths.
day period, from January 29, 1978, to
February 2, 1978. A report on the findings and
recommendations of the conference was transmitted to Congress by President Carter on January
19, 1979. In his transmittal message, the President noted that
31
U.S. President (Ford), “Veto of the Public Works Employment Act of 1976,” Public Papers of the Presidents of the
United States: Gerald R. Ford 1976, Book II (Washington: GPO, 1979), pp. 1979-1980.
32
90 Stat. 2331.
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An important outcome of the Conference was the general agreement among the delegates
that no massive new Federal spending programs were needed. Instead, they called for more
effective government, more balanced decisions, and a real partnership among levels of
government and the private sector in meeting persistent social and economic problems.33
The Carter Administration failed in its attempts to expand EDA.34 In the waning days of his
Administration, President Carter signed P.L. 96-506, a bill authorizing a three-year extension of
EDA and its programs through FY1982.35 EDA and its programs continued to be funded by
annual appropriations, but were not reauthorized again until 1998.
Redrafting EDA’s Authority: PWEDA Amendments of 1998
In 1998, Congress reauthorized EDA and its programs for five years. The legislation, the
Economic Development Administration and Appalachian Regional Development Act of 1998,
P.L. 105-393, provided little substantive change to the statute but was principally a redrafting of
the act’s provisions in an effort to improve clarity. The amendments tightened eligibility criteria,
standardized matching fund requirements, simplified the application process, encouraged regional
cooperation, and introduced performance measures.36 The act terminated eligibility for
redevelopment areas previously designated under ARA; however, it expanded the definition of
eligible area to include those areas, as determined by EDA, that had experienced or were
expected to experience severe unemployment or economic adjustment problems resulting from
severe long-term or short-term changes in economic conditions. Under previous legislation, areas
once designated as redevelopment areas were permanently grandfathered in. The act limited EDA
funds to 50% of a project’s cost, but included provisions that allowed EDA to cover an additional
30% of a project’s cost based on a community’s economic condition. In addition, the act
standardized the federal minimum cost share at 50% among the types of EDA assistance provided
(i.e., public works grants versus economic adjustment assistance). Under the previous legislation,
the federal share varied among EDA programs. For instance, prior to the 1998 amendments, the
federal share of a project’s cost funded by the public works grant program could not exceed 50%
of the total cost of a project, while the federal share of a project funded by the economic
adjustment assistance program typically could not exceed 75% of the total cost of a project.
33
U.S. President (Carter), “Message to the Congress Transmitting a Report, White House Conference on Balanced
National Growth and Economic Development,” January 19, 1979, Public Papers of the Presidents, Book I, p. 69,
http://www.presidency.ucsb.edu/ws/index.php?pid=32413.
34
Congress twice rejected a 1979 proposal by the Carter Administration that would have reorganized and expanded
EDA by transferring the Small Business Administration and Farmers Home Administration development programs to
the agency and consolidating EDA’s existing programs. The Carter Administration was able to win congressional
support for another federal economic development initiative: Urban Development Action Grants (UDAGs). In 1977,
Congress passed the Housing and Community Development Act of 1977, P.L. 95-128, 91 Stat. 1125, which created the
UDAG program, administered by the Department of Housing and Urban Development. The new program represented a
departure from previous federal efforts, including EDA programs, in support of local economic development. It
provided a direct investment of public funds in private sector commercial, residential, or industrial projects. As a
condition of this public assistance, private sector participants were required to commit $3 in private sector funds for
every $1 in UDAG assistance. In addition, HUD was required to award funds competitively to projects based on the
relative degree of distress and projected impact on a community as measured by projected tax revenues generated and
private sector jobs created and retained.
35
94 Stat. 2745.
36
112 Stat. 3596.
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The requirement that recipients, typically EDA-designated multi-county Economic Development
Districts, develop an Overall Economic Development Plan (OEDP) as a condition for public
works and economic development adjustment assistance was replaced by a requirement for a
similarly structured Comprehensive Economic Development Strategy (CEDS). The act also
allowed development plans and strategies developed under other federally funded programs to
substitute for the CEDS requirement if that plan was consistent with EDA requirements.
PWEDA 1998
Economic Development Partnerships.
Title I, Economic Development Partnerships Cooperation and Coordination, reaffirmed Congress’s
commitment to address the economic development needs of the nation’s distressed communities and directed EDA
to provide assistance to states, local governments, and sub-state and multi-state regional organizations aimed at
alleviating economic distress, encouraging public-private economic development partnerships, and promoting
technological and infrastructure capacity that kept pace with the global economy.
Title II, Grants for Public Works and Economic Development, authorized EDA to award grants to eligible
recipients for public works, economic adjustment assistance, planning and administrative expenses, training, research,
and technical assistance. The statute limited EDA funds to 50% of a project’s cost, but allowed EDA to provide
supplemental assistance to increase EDA contributions to no more than 80% of a project’s cost. Exceptions included
research grants and grants to Native American communities, for which EDA could waive the matching requirement.
Title III, Eligibility, specified that as a condition for receiving public works or economic adjustment assistance
funds, an area had to meet the following criteria:
•
per capita income below 80% of the national average;
•
unemployment rate at least 1% above the national average for the most recent 24-month period; or
•
a demonstrated special need for assistance arising from actual or threatened severe unemployment or economic
adjustment.
In addition, the eligible area had to have a Comprehensive Economic Development Strategy approved by EDA.
Title IV, Economic Development Districts, EDDs were required to establish CEDS that identified the economic
development plans and strategies that would promote job creation.
Title V, Administration, established an economic development clearinghouse.
VI, Miscellaneous, included a provision requiring an annual report to Congress.
VII, Authorization, extended PWEDA authority through FY2003.
In addition, the act encouraged cooperation among EDA, other federal agencies, states, and multistate entities, including extending technical assistance to eligible entities to improve coordinated
planning efforts. To receive assistance, states were required to devise comprehensive economic
development strategies consistent with local and district plans. As an incentive for projects to be
located in an EDD, the act allowed EDA to cover an additional 10% of the cost of a project if the
applicant was actively participating in EDD activities and the project was consistent with the
EDD’s CEDS. The act required all recipients of assistance to submit regular reports to the
Secretary of Commerce on the effectiveness of the assistance in meeting the need it was designed
to address. The creation of program performance measures was undertaken in accordance with
the 1993 Government Performance and Results Act (GPRA).37
37
Enacted during the first year of the Clinton Administration as part of its Reinventing Government Initiative, GPRA
required federal agencies to establish standards measuring their performance and effectiveness.
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Refining the 1998 Amendments: EDA Reauthorization Act of 2004
On October 27, 2004, President George W. Bush signed the Economic Development
Administration Reauthorization Act (EDARA; P.L. 108-373), which amended and extended EDA
authority through FY2008.38 The amendments of 2004 were a further refinement of the 1998
reauthorization legislation. EDARA reaffirmed the federal government’s commitment to assist or
empower economically distressed communities experiencing chronic high unemployment and
low per capita income as well as those experiencing sudden economic dislocation. The act
emphasized that such assistance should be focused on promoting regionalism and increasing the
capacity of regions to compete in the global economy. It also declared that assistance should be
used to take advantage of opportunities created by advances in technology, to promote productive
reuse of abandoned industrial facilities, and to reclaim brownfields.
Highlights of 2004 Amendments
The act
•
gave RLF grantees the flexibility to amend and consolidate existing RLF grant agreements, transfer revolving loan
funds, assign RLF assets to third parties for liquidation, and sell or securitize loans;
•
directed EDA to award additional funds for outstanding performance in the execution of grant activities;
•
retained the existing eligibility criteria allowing an area to qualify for assistance if, for the most recent 24-month
period for which data were available, its per capita income did not exceed 80% of the national average, or its
unemployment rate was at least 1% greater than the national average, or the Secretary of Commerce designated
the area as having experienced a special need for economic assistance;
•
included new provisions awarding additional funds to grantees for outstanding performance in the execution of
EDA plans and activities, up to 10% for projects grants and up to 5% for planning grants;
•
provided RLF increased flexibility in the management of RLF funds, including flexibility to amend and consolidate
existing RLF grant agreements, to transfer revolving loan funds, to assign RLF assets to third parties for
liquidation, and to sell or securitize loans;
•
directed EDA to establish and maintain an Internet presence for its central information clearinghouse created
with the passage of the 1998 EDA reauthorization act;
•
included a provision authorizing $5 million to be used by EDA to fund Brightfields Demonstration projects
where funds would be used to finance projects employing one or more solar energy technologies located on
reclaimed brownfield sites; and
•
required EDA to present in its annual reports the amount of aid provided to each state as well as information on
projected and actual leveraging of private sector investments.
The act made no substantive changes to the federal-local cost share requirements for EDA, but it
did simplify the language, allowing EDA to consolidate the provisions requiring a minimum
federal cost share of 50% of project cost with the provision allowing EDA to award supplemental
grants covering an additional 30% of the cost of a project based on the relative need or financial
capacity of the assisted area. It also allowed EDA to waive completely the matching fund
requirements for Indian tribes and for certain states, local governments, and nonprofit
organizations if EDA determined that an entity had exhausted its taxing or borrowing capacity.
Although much of the act may be seen as a housecleaning effort intended to simplify the
provisions of the act, there were several substantive changes, including those provisions intended
38
118 Stat. 1756. Legislation (S. 2778) to reauthorize the statute is pending in the 111th Congress.
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Economic Development Administration: A Review of Elements of Its Statutory History
to improve the administration of RLF and to provide additional funds (performance grants) for
outstanding execution of plans and projects. These awards were intended to encourage
collaboration among federal, state, and local partners in the development and execution of an
EDD’s CEDS. The act rewarded recipients whose projects were completed under budget by
allowing grantees to use excess funds to improve projects or to cover the non-federal share of
other projects.
Concluding Observations
During its 46-year history, EDA has remained relatively unchanged in its mission and the means
of achieving it. The agency’s mission is still the promotion of economic development in the
nation’s distressed areas, and the means of achieving that mission are primarily still regional
planning and the shared financing of public works, public facilities, and technology
enhancements in support of private sector commercial and industrial development projects.
Congress has acted to refine the programs’ components and focus. Originally targeted to rural
areas experiencing long-term economic depression associated with the decline in manufacturing
and mining jobs accompanied by the outmigration of population, EDA assistance today is
directed to rural and urban areas experiencing long-term economic deterioration or sudden
economic dislocation caused by the loss of a major employer; foreign competition; disasters; and
federal actions, including base closures and environmental actions.
The context in which EDA has carried out its mission has changed. At its inception, EDA was
focused on addressing regional inequities and promoting balanced regional growth. Today, EDA
views its mission as strengthening the competitiveness of regional economies and creating jobs in
a global context, and as part of a larger effort involving other elements such as job training and
workforce development.
Author Contact Information
(name redacted)
Analyst in Federalism and Economic Development
Policy
[redacted]@crs.loc.gov, 7-....
Acknowledgments
The author is grateful to Julius C. Jefferson, Jr., Information Research Specialist, for his assistance in
identifying and retrieving essential background material for this report.
Congressional Research Service
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