Economic Development Administration Reauthorization Act of 2004 Implementation; Regulatory Revision

Federal RegisterAug 11, 2005

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DEPARTMENT OF COMMERCE

Economic Development Administration

13 CFR Chapter III

[Docket No.: 050729210-5210-01]

RIN 0610-AA63

Economic Development Administration Reauthorization Act of 2004 Implementation; Regulatory Revision

AGENCY:

Economic Development Administration, Department of Commerce.

ACTION:

Interim final rule.

SUMMARY:

On October 27, 2004, President Bush signed the Economic Development Administration Reauthorization Act of 2004 (the “

2004 Act

”) into law. The Economic Development Administration (“

EDA

”) publishes this interim final rule to reflect the amendments made to EDA's authorizing statute, the Public Works and Economic Development Act of 1965 (“

PWEDA

”), by the 2004 Act. In addition to tracking the statutory amendments to PWEDA, 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 regulations. The interim final rule also reorders and re-titles certain parts of the existing regulations in a more logical sequence, expands the construction and use of defined terms, and presents information to the reader in a more concise and overall user-friendly format.

DATES:

This interim final rule is effective October 1, 2005. Comments on this interim final rule must be received by EDA's Office of Chief Counsel no later than 5 p.m. e.s.t. on October 11, 2005.

ADDRESSES:

Comments on the interim final rule may be submitted through any of the following:

• Mail: Office of Chief Counsel, Room 7005, Department of Commerce, 1401 Constitution Avenue, NW., Washington, DC 20230.

• Facsimile: (202) 482-5671, Attention: Office of Chief Counsel. Please indicate “Comments on the Interim Final Rule” on the cover page.

• E-mail:

edaregs@eda.doc.gov.

Please state “Comments on the Interim Final Rule” in the subject line.

• Federal e-Rulemaking portal

http://www.regulations.gov.

Comments on the collections of information should be submitted to both EDA and the Office of Management and Budget (“

OMB

”) by mail, facsimile or e-mail submissions:

• EDA: Office of Chief Counsel, Room 7005, Department of Commerce, 1401 Constitution Avenue, NW., Washington, DC 20230; facsimile: (202) 482-5671; e-mail at

edaregs@eda.doc.gov,

Attention: Office of Chief Counsel. Please indicate “Comments on Collections of Information in EDA's Interim Final Rule” on each submission.

• OMB: Office of Management and Budget, Office of Information and Regulatory Affairs, Attention: EDA Desk Officer, 725 17th Street, NW., Washington, DC 20503; facsimile: (202) 395-7285; e-mail at

David_Rostker@omb.eop.gov,

Attention: EDA Desk Officer. Please indicate “Comments on Collections of Information in EDA's Interim Final Rule” on each submission.

FOR FURTHER INFORMATION CONTACT:

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:

Discussion of the Interim Final Rule

EDA is publishing this interim final rule (the “

Interim Final Rule

”) to reflect the amendments made to EDA's authorizing statute, PWEDA, by the 2004 Act (Pub. L. 108-373). In addition to tracking the statutory amendments to PWEDA, 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 regulations (the “

Former Regulations

”), codified at 13 CFR Chapter III. The Interim Final Rule also (i) reorders and re-titles certain parts of the Former Regulations in a more logical sequence, (ii) expands the construction and use of defined terms, and (iii) presents information to the reader in a more concise and overall user-friendly format. All capitalized terms not otherwise defined in this discussion have the meanings ascribed to them in the Interim Final Rule.

On February 3, 2005, the President announced the Strengthening America's Communities initiative, which consists of the intended consolidation and transfer of eighteen (18) federal economic and community development programs to and within the Department of Commerce (“

DOC

”). In addition, the President's Fiscal Year 2006 budget anticipates the initiative by proposing $27 million of administrative funding for EDA while eliminating all program funding. Despite the proposed elimination of program funding, EDA is promulgating the Interim Final Rule because (i) It is necessary to reflect and implement the amendments to PWEDA in the 2004 Act, (ii) it is necessary for the implementation and monitoring of existing EDA Investments, (iii) it is necessary for new Investments pursuant to appropriations for Fiscal Year 2005, (iv) it would be necessary for new Investments pursuant to appropriations for Fiscal Year 2006 that Congress may enact, and (v) it conforms certain areas of EDA policy and practice to current DOC policy and practice and existing case law.

Part 300—General Information

Part 300 (titled

General Information

) of the Interim Final Rule is EDA's introduction to the reader and establishes the foundation for the entire chapter. This foundation begins with presenting EDA's mission in § 300.1, which is “to lead the federal economic agenda by promoting innovation and competitiveness, preparing American regions for growth and success in the worldwide economy.” Section 300.1 has been revised to specifically state EDA's mission, as well as to highlight 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.

Section 300.2 is similar in scope to § 300.4 of the Former Regulations and provides the contact information for the EDA Headquarters office located in Washington, DC. This section also invites interested parties to visit EDA's Internet Web site at

www.eda.gov

for detailed contact information with respect to EDA's regional offices located throughout the United States. This information is also published by EDA in an annual notice of Federal Funding Opportunity (“

FFO

”).

The main focus of revising part 300 occurred in § 300.3, which introduces several new defined terms, as well as revised former defined terms, that are referenced throughout the chapter. EDA increased the use of defined terms to ensure clarity, consistency and technical precision, and encourages users of the Interim Final Rule to review the definitions in § 300.3. For example, the added defined terms “

Region

” or “

Regional

” reflect EDA's view that true economic development is measured by economic units of human, natural, technological, capital or other resources, defined geographically, and not necessarily by contiguous geographical areas or geographical areas defined by

political boundaries. The use of the terms “Region” or “Regional” intends to expand the narrowly-tailored “area” concept contained in the Former Regulations. EDA believes this change in scope is necessary in order for EDA's programs to foster meaningful and self-sustaining economic development through the United States.

The new defined terms “

Investment

” or “

Investment Assistance

” generally replace the use of the defined term “

grant

” in the Former Regulations. These defined terms reflect EDA's policy priority that EDA Investments (through the legal mechanism of a Grant or Cooperative Agreement) must generate a “return.” In this regard, EDA functions similar to a venture capital organization, although EDA typically measures any return on its Investments in the form of job creation and the generation of private capital investments, rather than a cash return or other more traditional financial measurements.

To create consistency in the Interim Final Rule, the new defined term “

Special Need

” generally tracks the criteria set forth in § 301.2(b)(3) of the Former Regulations, although EDA may enumerate additional circumstances constituting a Special Need in an FFO. Additionally, consistent with the amendment made to Section 3(4) of PWEDA by the 2004 Act, the definition of “

Eligible Recipient

” has been amended to remove an “area” as an qualified Eligible Recipient. The concepts of “cash or in-kind contributions” are referenced in § 301.4(a) of the Former Regulations; however, there are no meanings ascribed to such terms. Accordingly, the Interim Final Rule, in § 300.3, introduces the new defined terms “

In-Kind Contribution,

” “

Local Share

” and “

Matching Share.

”

Part 301—Eligibility, Investment Rate and Proposal and Application Requirements

Part 301 of the Interim Final Rule is an amalgamation of parts 301 and 304 of the Former Regulations, and sets forth (i) general applicant and Project eligibility, (ii) Investment Rate, (iii) proposal and application requirements, and (iv) proposal evaluation criteria common to all PWEDA-enumerated programs (excluding Trade Adjustment Assistance for Firms at part 315). Part 301 presents these general requirements in a more logical sequence than the Former Regulations and provides the user with a helpful roadmap to navigate through these threshold issues.

Part 301 is organized into five (5) subparts. 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 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. Part 301 should be read in conjunction with (i) part 302 (titled

General Terms and Conditions for Investment Assistance

), (ii) the specific part governing the EDA program under which a proponent proposes a Project, and (iii) the applicable FFO. For example, a proponent proposing a Public Works Project should consult subparts A, B, C and E of part 301 to determine its eligibility, the Project's eligibility, and the general proposal and application requirements. The proponent should also read subpart D of part 301 to determine the maximum Investment Rate (and corresponding Matching Share requirement) for the Project, although the Investment Rate for the Project is ultimately determined by EDA. In addition to reviewing part 301, the proponent should consult parts 302 and 305, in order to ascertain general terms and conditions for EDA Investment Assistance and specific Public Works Investment requirements. Finally, the proponent should consult the applicable FFO to determine any additional proposal and application requirements, evaluation criteria and EDA funding priorities, as well as any other information or requirements unique to EDA's competitive solicitation for a particular EDA program.

Subsections 301.1(a)-(d) provide the user with a roadmap (including references to applicable subparts of part 301) to determine (i) who is eligible to apply for Investment Assistance (

i.e.

, whether the applicant is an Eligible Applicant), (ii) whether the Project contemplated by the applicant is located in a Region subject to threshold economic distress levels, (iii) whether the sources of funding fulfill the Investment Rate and Matching Share requirements, and (iv) the proposal evaluation criteria used by EDA to select a Project for potential funding, as well as the formal application requirements that an Eligible Applicant must satisfy once its Project is invited for application by EDA. Subsection 301.1(e) indicates that a Project must also meet the general requirements set forth in part 302 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

). Subsection 301.2(a) is substantively the same as § 301.1(a) in the Former Regulations. This section states who is eligible to apply for EDA Investment Assistance by providing a cross-reference to the definition of Eligible Applicant in § 300.3.

Section 301.2(b) requires a non-profit organization to submit documentation verifying that it is working in cooperation with officials of a political subdivision of a State in order to establish its eligibility for Investment Assistance.

See

Section 3(4)(A)(vi) of PWEDA. This stipulation is different from the provision in § 301.1(b) of the Former Regulations, which allows a non-profit organization to work in cooperation with a political subdivision of a State or an Indian Tribe. EDA removed the reference to an Indian Tribe in order to track the amendment to Section 207(a)(3) of PWEDA. Section 301.2(b) of the Interim Final Rule also provides that EDA may “waive” this cooperation requirement for certain Projects under parts 306 and 307 of a “significant” Regional or national scope (

See also

Section 608 of PWEDA. In describing the records to which these parties have access, § 302.14(b) includes a specific reference to computer programs and data processing software. EDA believes these materials (in addition to hardcopy records) are inherently part of the Eligible Recipient's records and, therefore, access to these materials is essential in order to perform a thorough and effective audit or examination.

Section 302.15 (consistent with Section 610 of PWEDA) provides that EDA will accept a certification from an Eligible Applicant, when such certification is accompanied by evidence satisfactory to EDA, that the Eligible Applicant meets the requirements for receiving Investment Assistance. Section 302.15 is substantively the same as § 316.17 in the Former Regulations (the reference to the availability of the Matching Share in § 316.17 of the Former Regulations is now contained in § 301.5 of the Interim Final Rule).

Section 302.16 (consistent with Section 212 of PWEDA) addresses Recipients' reporting requirements. This section generally follows § 316.18 of the Former Regulations; however, § 302.16(b) contains an explanatory sentence informing Recipients that EDA will use the reported data 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. Subsection 302.16(b) also 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). Additionally, to enable EDA to determine the economic development effect of Projects that provide service benefits, § 302.16(c) allows EDA to require that Recipients submit a Project service map and information from which EDA may determine whether services are provided to all segments of the assisted Region.

Section 302.17 states EDA's conflicts of interest policy. Users should also review the DOC regulations at 15 CFR 14.42 and 24.36(b)(3) for additional rules and requirements. Section 302.17 provides that an Interested Party shall not receive, directly or indirectly, any financial or personal benefits in connection with an Investment Assistance award. An Interested Party also shall not, directly or indirectly, solicit or accept any gift, gratuity, favor, entertainment or any other benefit having a monetary value for himself or herself or for another person or entity, from any person or organization that has obtained or seeks EDA Investment Assistance. These policies are consistent with internal EDA conflicts of interest rules and EDA believes that it is important to promulgate these provisions in the Interim Final Rule to ensure express public knowledge.

Section 302.18 sets forth a Recipient's post-approval requirements. Such requirements are generally applicable to all Projects assisted under PWEDA. These requirements are contained in various parts of the Former Regulations (

e.g.

, § 306.4) and have been moved to § 302.18 of the Interim Final Rule

because of their applicability to all EDA Investments. For Economic Adjustment Assistance Investments, Recipients must comply with the post-approval requirements set forth in § 307.6.

Section 316.19 of the Former Regulations is moved to § 305.5 for clarity and organization. In the event that an Economic Development District is not the Recipient of an Investment award involving construction, § 305.5 allows a District Organization to administer the Project for the Recipient upon the fulfillment of certain requirements. Section 305.5 is substantively the same as § 316.19 in the Former Regulations. Section 302.19 of the Interim Final Rule requires that a Recipient must, to the maximum extent permitted by law, indemnify and hold EDA harmless from any liability that EDA may incur due to the actions or omissions of the Recipient. This provision generally applies to all EDA Investments and is intended to insulate EDA where it is subject to a liability vis-à-vis any Recipient's actions or omissions.

Section 302.20 replaces part 317 (titled

Civil Rights

) in the Former Regulations and conforms EDA's civil rights policy and practice to existing DOC policy and practice (specifically, DOC's effectuation of Title VI of the Civil Rights Act of 1964, as amended (“

Title VI

”)) and existing case law. The introduction in § 317.1(a) in the Former Regulations has been rewritten to make clear that discrimination is prohibited with respect to Investment Assistance under PWEDA and Adjustment Assistance under the Trade Act of 1974, as amended (19 U.S.C. 2341

et seq.

) (the “

Trade Act

”). The statutes under § 317.1(a)(1)-(5) have been revised to increase clarity and utility.

The express anti-retaliatory provision in § 317.1(b) of the Former Regulations was not included in subsection 302.20(a)(1) of the Interim Final Rule because Section 601 of Title VI is covered by DOC's implementing regulations at 15 CFR part 8, specifically, the anti-retaliatory provision in 15 CFR 8.9. Similarly, subsections 302.20(a)(3) and (4) refer to DOC's implementing regulations at 15 CFR parts 8b and 20, respectively, because (i) 15 CFR 8b.26 makes Title VI enforcement provisions applicable to Section 504 of the Rehabilitation Act of 1973, as amended, and (ii) 15 CFR 20.14 contains a non-retaliatory provision in connection with the Age Discrimination Act of 1975, as amended. For the stand-alone gender discrimination provisions at 42 U.S.C. 3123 and 42 U.S.C. 6709, covered in subsection 302.20(a)(2), we have (i) placed a specific anti-retaliatory provision in § 302.20(c) and (ii) provided a cross-reference to the procedures set forth in 15 CFR 8.7 through 8.15.

Subsections 317.1(d)(2)-(5) were not included in the Interim Final Rule because 15 CFR 8.7 covers the compliance report and review requirements of all Recipients and Other Parties subject to 15 CFR part 8. This elimination was also based on the rationale that Recipients and Other Parties should not be subject to more rigorous reporting requirements than Recipients or beneficiaries of funding from other DOC bureaus also subject to 15 CFR part 8 (

see

Appendix A to 15 CFR part 8 for a full list of DOC bureaus). Specifically, 15 CFR 8.7(b) provides that “[e]ach recipient and other party subject to this part shall keep such [racial and ethnic data] records and submit * * * timely, complete and accurate compliance reports at such times and * * * containing such information as the responsible Department official may determine to be necessary to enable him to ascertain whether the recipient or such other party subject to this part has complied with this part.”

Subsections 317.1(f) and (g) were not included in part because EDA no longer maintains an Office of Civil Rights, the result of an agency-wide reorganization that took effect in January 2004. For the same reason, EDA will no longer use its Civil Rights Guidelines (referenced in part 317 of the Former Regulations) in pre-approval or post-approval operations of EDA Investments. However, to measure the economic development impact of EDA's programs across a broad population, the Interim Final Rule makes clear that EDA will evaluate Planning Investment applications based on the “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” (§ 303.3(a)(4)) and that Planning Organizations should ensure that their Strategy Committees include representatives of minority and labor groups (§ 303.6(a)). Additionally, subsections 317.1(f) and (g) were not included in the Interim Final Rule in an effort to bring EDA's program requirements and policies in line with other DOC bureaus.

The reporting requirement found at § 317.1(e) has been eliminated and redrafted at § 302.16(c) to emphasize EDA's goal to assess the economic development impact of its programs. Finally, § 302.20(d) effects the essential reporting requirement that Eligible Applicants provide assurances that they will comply with applicable laws, EDA and DOC regulations, and other applicable requirements prohibiting discrimination.

Part 303—Planning Investments and Comprehensive Economic Development Strategies

Part 303 combines the content of part 303 (

Planning Process and Strategies for District and other Planning Organizations supported by EDA

) and part 306 (

Planning Assistance

) in the Former Regulations. The major revision focus emphasizes that results-driven implementation, not just the writing of a “

Comprehensive Economic Development Strategy

” (or “

CEDS

”), is vital to successful performance under this program. The CEDS is also a crucial part of EDA's program portfolio, as part of an application for Investment Assistance under parts 305 (

Public Works and Economic Development Investments

) and 307 (

Economic Adjustment Assistance Investments

In § 303.1, “planning assistance” is revised to refer to “

Planning Investments

” as a defined term, referring to an Investment awarded under Section 203 of PWEDA. The first sentence of § 303.1 informs the reader that Planning Investments provide support to Planning Organizations for the development, implementation, revision or replacement of a CEDS. This language requires EDA to issue reimbursements to a Planning Organization solely on the basis of its preparation and delivery of an executed CEDS. The former definition of “

Planning Organization

” was simplified for clarity and a CEDS is referred to as such or as a Comprehensive Economic Development Strategy only. The alternate definition of “

Strategy

” in reference to a CEDS was removed from the chapter altogether, to avoid any possible confusion with the defined term “

Strategy Grant

” in part 307.

In § 303.3, the application evaluation criteria used for awarding Planning Investments to Planning Organizations is revised to correlate directly with the quality of work accomplished to develop a CEDS, the qualifications of an Eligible Applicant to implement the goals and objectives of a CEDS, and the involvement of the Region's business leadership in the preparation of a CEDS. Consistent with the focus on a well-prepared and demonstrable CEDS, a new section has been introduced, § 303.5, which states 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.

The requirements for an EDA-funded CEDS process, set forth in § 303.6, are revised to increase clarity and to introduce new provisions. One of the most important changes made is that a Strategy Committee (appointed for a Planning Organization) must represent the main economic interests of the relevant Region by including a majority of its representatives from businesses within the Region. This section also requires a Planning Organization to submit an initial CEDS that contains an analysis of the (a) opportunities for economic development and (b) problems contributing to economic distress in the relevant Region, rather than conduct an initial study on such issues. This obligation is revised primarily to make clear to Planning Organizations that a CEDS is required to be delivered to EDA prior to any implementation action.

Section 303.7 is organized with sub-headings to direct the reader's attention to specific technical requirements related to the preparation of a CEDS. Certain technical requirements have been enhanced; for example, the CEDS must include (a) a discussion of private sector participation in the CEDS work, rather than community participation, (b) a specific plan of action with certain criteria for gauging the implementation of the goals and objectives of the CEDS, and (c) specific performance measures for appraising the Planning Organization's development and execution of the CEDS. Additional technical requirements are new, including a required section in the CEDS that lists all suggested Projects for the applicable Region and a separate section involving a prioritization process for ranking Projects, programs and activities as they best address the Region's greatest needs.

EDA Planning Investments provide support in two (2) additional, specialized areas: Short-term Planning Investments and State plans. However, former part 306 has no individual sections addressing the requirements for Investment Assistance in these areas. In the Interim Final Rule, we have added specific sections, §§ 303.8 and 303.9, that distinguish the requirements for short-term Planning Investments and State plans. Unlike the Former Regulations, the assistance given to support short-term planning activities is laid out in detail. An applicant for short-term Planning Investments must provide performance measures similar to the ones required to be included in a CEDS and program reports during the term of the Planning Investment.

Part 304—Economic Development Districts

The part on Economic Development Districts (also referred to as a “

District

” or an “

EDD

” in § 300.3) has been revised for clarity and completeness, particularly by amending section titles and placing sub-headings within sections.

Section 304.1 sets forth the Regional eligibility requirements that must be satisfied in order for EDA to consider a District Organizations's request to designate a Region as an EDD, including submission of an EDA-approved CEDS. This section cross-references § 301.3(a)(1) to relate the economic distress criteria that at least one (1) geographic area in the Region must meet in order to be considered for a District designation. All provisions with respect to formation, organization and operation of a “

District Organization

” are contained in § 304.2. One major achievement of § 304.2 is that a District Organization's governing body's reporting requirements now conform to current legislative and DOC requirements. Two (2) new actions are required of a governing body: the District Organization and its board of directors must (a) make available to the public any audited statements, annual budgets and minutes of public meetings that are reasonably requested and (b) comply with all federal and State financial assistance reporting requirements and the conflicts of interest provisions set forth in § 302.17 of the chapter. Another new requirement (to the extent not in violation of State or local law) is a majority of “

Private Sector Representatives

” on the board of directors of a District Organization, which is defined in § 300.3 as any senior management official or executive holding a key decision-making position in any for-profit enterprise. Similarly, the governing body must include private sector delegates of workforce development boards, institutions of higher education, minority groups and labor groups.

The sections on District modification and District termination (§§ 302.4 and 302.6 in the Former Regulations) are combined into one new section, § 304.3. In addition to EDA's ability to terminate a Region's designation if the District no longer maintains the requirements for such designation (

i.e.

, regional eligibility and formation or organization requirements) or if the District requests termination, EDA may now terminate a Region's District designation based on performance. In this regard, poor performance with respect to the execution of its CEDS may be grounds for termination.

Information with respect to the performance evaluations of Economic Development Districts are incorporated into § 304.4 from another part of the Former Regulations (part 318). Pursuant to PWEDA, EDA will evaluate each District within three (3) years after the initial Investment award and at least once every three (3) years thereafter, so long as the District continues to receive Investment Assistance. Unlike the information formerly provided in § 318.2, the performance evaluation provisions of § 304.4 in the Interim Final Rule contain detailed standards by which an EDD will be evaluated, namely, the continuing Regional eligibility of the District, the management of the District Organization, and the implementation of its CEDS, including its contribution towards the retention and creation of employment.

Part 305—Public Works and Economic Development Investments

Part 305 is revised from current part 305 (

Grants for Public Works and Development Facilities

). This part was streamlined and organized in substance, in order to clarify only those obligations assumed by EDA or an Eligible Recipient, as the case may be. Public Works Investments comprise EDA's largest Investment program. Subpart A lays out general information regarding this program's scope and award and application requirements. The first section, § 305.1, is reworded to provide specific information on the purpose and scope of Public Works and Economic Development Investments. The criteria section (§ 305.2) remains unchanged and continues to specify 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 for a Public Works Investment to be made. In § 305.2(c), in line with Section 201 of PWEDA, the Interim Final Rule clearly indicates that 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.

The application requirements for Public Works Investments are set forth in § 305.3. This section is present in the Former Regulations; however, the reference to a mandatory identification of “other funds, both eligible federal and non-federal, that will make up the balance of the proposed project's financing, including any private sources of financing,” is removed. Rather,

§ 305.3(a)(4) instructs that any application for Public Works Investment Assistance must demonstrate how the proposed Project meets the proposal evaluation criteria set forth in § 301.8 of the chapter (

e.g.

, how the Investment exhibits a high level of local government or non-profit Matching Share). The purpose of this cross-reference to § 301.8 is to improve the readability and usefulness of the Interim Final Rule, and also to highlight the importance that EDA places on proposal and application requirements set forth in subpart E of part 301.

The section on Public Works Projects for design and engineering work was moved from subpart B and placed as § 305.4 under subpart A. This section was largely rewritten and reorganized for clarity, and now 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 programmatic emphasis on revising subpart B was to eliminate unnecessary provisions and establish clear guidance for EDA's and Recipients' duties. The following section titles and related text in the Former Regulations were removed in their entirety: (a)

Pilot program;

(b)

Project management conference;

(c)

Selection of the architect/engineer;

(d)

Advertising for bids;

(e)

Bid overrun;

(f)

Construction progress schedule;

(g)

Project development time schedule;

(h)

Controlling budget;

(i)

Disbursement of funds for grants;

(j)

Final inspection;

and (k)

Reports

Pilot program

(§ 305.5 in the Former Regulations) was initially created to allow EDA's Chicago regional office to develop a pilot program to waive certain EDA post-approval requirements. This provision is no longer necessary under PWEDA; therefore, it was eliminated. The section titled

Project management conference

(§ 305.6 in the Former Regulations) was eliminated because it addresses an administrative matter with respect to an accepted Investment award. The section titled

Selection of the architect/engineer

(§ 305.7 in the Former Regulations) was also eliminated, as requirements for the procurement of architect/engineer services and construction services are provided in 15 CFR parts 14 and 24, by which EDA is bound. Title 15 CFR part 14 establishes the uniform requirements for DOC grants awarded to institutions of higher education, hospitals, other non-profits and commercial organizations. Title 15 CFR part 24 establishes administrative rules for grants to State, local and Indian tribal governments. Therefore, EDA determined that there is no need to provide identical guidance in the Interim Final Rule and decided that the content of former §§ 305.6 and 305.7 be placed in a revised EDA guidance publication titled

Guidance for Approved Construction Projects

The section titles (a)

Advertising for bids

, (b)

Bid overrun

, (c)

Construction progress schedule

, (d)

Project development time schedule

, (e)

Controlling budget

, (f)

Disbursement of funds for grants

, (g)

Final inspection

, and (h)

Reports

(§§ 305.12, 305.13, 305.16, 305.20, 305.21, 305.24, 305.25 and 305.26 in the Former Regulations) and related text were all removed as administrative processes that are more suitable for the

Guidance for Approved Construction Projects

The first section under subpart B is § 305.5 titled

Project administration by District Organization

. This section was moved from former § 316.19 to part 305 because the provisions are applicable to construction projects only. The content of § 316.19 was reorganized and rewritten in line with applicable defined terms in § 300.3.

The sections

Construction Management services

and

Design/Build method of construction

(§§ 305.10 and 305.11 in the Former Regulations) are combined into one new section, § 305.6, and redrafted to address and account for the majority of EDA Public Works Investments that lend themselves to the traditional design/build method of construction. However, Recipients may employ other construction methods, too. If any method other than the design/build method is used, the Recipient is required to submit to EDA for approval a construction management services procurement plan and hire a third party design professional to oversee the construction services. The new section also includes specific procurement elements that the Recipient must address in its submitted plan, including the justification for the proposed method for procurement of construction management services and the scope of work with cost estimates and schedules. Additionally, a cross-reference to 15 CFR parts 14 and 24 informs the reader that any DOC requirements therein must be followed with respect to any selected procurement method.

Similar to the provisions placed in § 305.6 to inform the Recipient of necessary items that must be addressed in any construction management services procurement plan submitted to EDA, § 305.7 (

Services performed by the Recipient's own forces

) is revised to include information that the Recipient must submit to EDA to justify the use of “in-house forces.” One new specification is evidence that the in-house services requiring approval are routinely performed by the Recipient for all construction Projects performed by the Recipient (for example, inspection or legal). Further, § 305.8,

Recipient-furnished equipment and materials

, is revised to remove subsection (a) of § 305.9 in the Former Regulations as unnecessary text, largely because a Recipient should inherently select equipment and/or materials suitable for a desired use. The requirement that a Recipient submit with a “request for EDA approval either a paid invoice or current quotes from not less than three suppliers who normally distribute such equipment and/or materials,” is also removed because this competitive procurement concern is covered by applicable provisions of 15 CFR parts 14 and 24.

The section titled

Project phasing

(§ 305.8 in the Former Regulations) was entirely redrafted to increase clarity and utility. The section title is renamed

Project phasing and Investment disbursement

(§ 305.9 in the Interim Final Rule) to closely associate the concept of Project phasing with EDA funds disbursement. Unlike § 305.8 in the Former Regulations, this revised section 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 detailed construction cost estimates for each phase.

The last five (5) sections in subpart B, §§ 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 the Former Regulations. However, all of these sections have been rewritten to eliminate any ambiguity or extraneous provisions. For example, the section on Contract change orders removes subsections (c) and (d) of § 305.19 in the Former Regulations, which provide that “EDA will not approve financial participation in change orders that are solely for the purpose of using excess funds resulting from an underrun” and, with respect to a change order for a Project funded with one-year funds, EDA approval of the change order must be based on a determination that the required work is necessary and within the Project scope.

Part 306—Training, Research and Technical Assistance Investments

The content of part 306 with respect to Local and National Technical

Assistance Investments and University Center Projects was primarily reorganized, shortened and rewritten for increased understanding and inclusiveness of all pertinent information. Subpart A (

Local Technical Assistance

) is combined with the substance of subpart C (

National Technical Assistance, Training, Research, and Evaluation

) and re-titled

Local and National Technical Assistance

. Specifically, § 306.1(a), dealing with the scope of Local and National Technical Assistance Investments, captures all possible purposes for such Investments, including those laid out in Section 207 of PWEDA. Two new purposes, as provided in PWEDA, include (a) studies that evaluate the effectiveness of EDA Investments coordinated with projects funded under other federal statutes and agencies and (b) the assessment, marketing and establishment of business clusters and associations. Section 306.1(d) tracks the language in Section 207(b) of PWEDA, which states that EDA may provide Local and National Technical Assistance (i) through officers or employees of DOC, (ii) pay funds made available to carry out subpart A to Federal Agencies, and (iii) employ private individuals, partnerships, businesses, corporations, or appropriate institutions under contracts entered into for Local and National Technical Assistance Investments.

Sections 307.2 and 307.10 in the Former Regulations are combined into one new section and re-titled

Award requirements

(§ 306.2 in the Interim Final Rule). In addition to the evaluation criteria listed under both of these sections, EDA will also evaluate the extent to which the proposed Project meets the criteria outlined in the applicable FFO. Similarly, the content of §§ 307.3 and 307.11 in the Former Regulations is merged into § 306.3 and re-titled

Application requirements

(in the Former Regulations, each section is called

Award and grant rate requirements

). With regard to the Investment Rate for Local and National Technical Assistance Investments, the detailed information provided in subsection (c) of each section is removed and replaced with a cross-reference to § 301.4(b)(3), which tables the relevant Investment Rates for all EDA Investments. The cross-reference to § 301.4(b)(3) is made in applicable sections of all parts relating to specific EDA programs (

i.e.

, parts 303-307) to draw attention to the new organization of the Interim Final Rule.

The title of Subpart B is changed from

University Center Program to University Center Economic Development Program

. The second sentence under § 307.5 (

Purpose and scope

) in the Former Regulations was replaced with two sentences that communicate: “institutions of higher education have many assets* * *that can address local economic problems” and with EDA Investment Assistance, such institutions establish research centers (“

University Centers

”) that provide technical assistance to public and private sector organizations.

To mirror the organization and sequence of §§ 306.2 and 306.3 in subpart A, §§ 306.5 and 306.6 are named

Award requirements

and

Application requirements

, respectively. In § 306.5, in addition to the general evaluation and selection criteria set forth in part 301, the first sentence provides that EDA will evaluate a proposed Project subject to the competitive selection process outlined in the applicable FFO. Further, the following criteria provision replaces subsection (e) in § 307.6 in the Former Regulations: “Addresses the economic development needs, issues and opportunities of the Region and will benefit distressed areas in the Region.” In § 306.6, instead of stipulating a timeframe “generally not to exceed twelve months,” the revised section states that EDA will provide Investment Assistance under subpart B for the period of time required to complete the Project's scope of work, as outlined in the applicable FFO. A cross-reference to § 301.4(b)(3) is given for information regarding the applicable Investment Rate for University Center Projects.

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. Section 306.7 incorporates information regarding the performance evaluations of University Centers from another part of the Former Regulations (part 318). Consistent with Section 506(d)(2) of PWEDA, § 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.

Part 307—Economic Adjustment Assistance Investments

EDA has extensively considered, examined and revised part 308 in the Former Regulations, resulting in a set of provisions in part 307 of the Interim Final Rule that improves the understanding of some rather complex provisions. The reading of this part has been greatly improved by making effective use of defined terms in subparts A and B.

Subpart A, covering Economic Adjustment Assistance Investments, is revised to follow PWEDA and read more concisely. In § 307.1(a), the list of causes of adverse economic changes was condensed by creating a definition of “

Federally-Declared Disaster

” that includes fishery failures and fishery resource disasters pursuant to the Magnuson-Stevens Fishery Conservation and Management Act, as amended (16. U.S.C. 1861a(a)). This list now also includes “loss of manufacturing jobs.” Similarly, because the term “Special Need” is defined in § 300.3 of the chapter, § 307.2 has been shortened.

Section 308.3 in the Former Regulations, titled

Use of Economic Adjustment grants

, is renamed

Use of Economic Adjustment Assistance Investments

in § 307.3 of the Interim Final Rule. Substantively, this section contains the same content as in the Former Regulations. However, “Strategy Grant” is a new defined term specific to subpart A, referring to Economic Adjustment Assistance Investments that help develop CEDS to alleviate long-term economic deterioration or a sudden and severe economic dislocation. Likewise, an “

Implementation Grant

” is defined as an Economic Adjustment Assistance Investment used to fund a Project implementing a CEDS. Any use of the word “strategy” outside of the defined term “Strategy Grant” is replaced with the defined term “CEDS” to help distinguish and enhance understanding of both terms. The content of § 308.3(b) has been moved to a new part of the Interim Final Rule, part 309 (titled

Redistributions of Investment Assistance

), in line with Section 217 of PWEDA, and restated for accuracy.

Section 308.4 in the Former Regulations, titled

Selection and evaluation factors

, is renamed

Award requirements

in § 307.4 of the Interim Final Rule, parallel with similar provisions in other program parts. This section has been reorganized and sub-titled for clarity and substantively contains information identical to that in the Former Regulations. Section

308.3(c)(2)(iv), regarding the use of In-Kind Contributions, has been moved to a more suitable subsection in § 307.18(d) of the Interim Final Rule, as this provision is applicable to revolving loan fund (“

RLF

”) Grants only.

Section 307.5 on application requirements significantly condenses § 308.5 in the Former Regulations for clarity and improved comprehension. For example, subsection (c) was removed in its entirety, as non-EDA funds and In-Kind Contributions may comprise the Matching Share of

any

Project's eligible costs, so long as the applicant can show that the Matching Share is committed to the Project, will be available as needed, and is not encumbered in any way that conflicts with the requirements of EDA Investment Assistance. Matching Share sources are part of the general eligibility criteria applicable to all EDA programs. Therefore, this provision has been placed in a new section of part 301 called

Matching Share requirements

(§ 301.5).

The last section in subpart A, § 308.6 in the Former Regulations, has been redrafted at § 307.6 in the Interim Final Rule (titled

Economic Adjustment Assistance post-approval requirements

) 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, § 307.6 now references parts 305 and 306 for additional requirements that Implementation Grants must fulfill (in addition to the post-approval stipulations set forth in § 302.18), and part 303 for additional requirements that Strategy Grants must achieve.

The defined terms in § 308.8 in the Former Regulations have been extensively rewritten for accuracy and completeness, and some defined terms have been removed because of infrequent use in subpart B (

see

§ 307.8 in the Interim Final Rule). For instance, “

Program income

” and “

Secondary market

” are deleted because these terms are not referenced anywhere in the subpart in the Former Regulations. The defined terms “

Exempt Security,

” “

Sale,

” “

SEC,

” “

Security

” and “

RLF Third Party

” are new to § 307.8, and have been introduced in large part to interpret the provisions of Section 209(d)(2) and (4) of PWEDA. The definition for “

Securitization

” has been revised to make clear that “techniques such as the sale of loans,” as placed in the current definition of the word, are not Securitization transactions. The new defined term “

Sale

” explains that after an RLF Recipient sells its RLF portfolio (or a portion thereof) to a third party, the third party may participate in a subsequent Securitization offered in a secondary market transaction.

With respect to RLF Plans, § 308.9 in the Former Regulations is reorganized and rewritten at § 307.9 in the Interim Final Rule. Subsections 308.9(b)(3) and (4) in the Former Regulations concerning the requirement that “strategic objectives” and “administrative procedures” be shown in the RLF Plan have been replaced with the following language to stress the importance on specific components by which EDA will evaluate an RLF Plan:

“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.”

This section also includes a new subsection (c) that indicates that an RLF Recipient must request and obtain EDA approval prior to any modification of an RLF Plan. Similar to § 307.9, § 308.10 (

Pre-loan requirements

) in the Former Regulations is condensed and reorganized in § 307.10 of the Interim Final Rule by placing the substance of subsection (b) into a third subsection.

The major emphasis on rewriting § 307.11, which discusses the addition of lending areas and the merger of RLFs, was to (a) correlate the substance of the section to applicable provisions in Section 209 of PWEDA, (b) eliminate information no longer applicable due to the passage of the 2004 Act, and (c) explain and expand important concepts in an orderly, coherent manner with the use of defined terms. The title of the section has been changed from

Lending areas and modification of lending areas

Addition of lending areas; merger of RLFs,

which highlights the increased flexibility that PWEDA affords to RLF Recipients for consolidating and merging RLF Grants. Subsection (a)(1) lays out the preconditions that must be met in order for EDA to approve the creation of a “

New Lending Area.

” Some of these conditions are: (a) EDA must have disbursed the full amount of its Investment Assistance to the RLF Recipient, and (b) the RLF Recipient must show that the “

Additional Lending Area

” is consistent with its CEDS, or modify its CEDS for any such Additional Lending Area, both of which were not in the Former Regulations. Subsections (a)(1) and (2) have been deleted, as February 1, 1999 was the effective date of the Economic Development Administration Reform Act of 1998 (the “

1998 Act

”). The purpose of the language was to ensure that no disparity would exist between RLFs in various stages of funding at the time of the passage of the 1998 Act. With the enactment of the 2004 Act on October 27, 2004, the February 1, 1999 reference is no longer applicable.

Section 307.11(b) lays out 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. For example, a single RLF Recipient and multiple RLF Recipients must meet the requirements to obtain annual report status (set forth in § 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.

The revisions to § 308.12 in the Former Regulations make explicit in § 307.12 in the Interim Final Rule 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. The text of subsections (b) and (e) are incorporated into subsection (a), which lays out the general rule. Subsection (b) follows the substance of subsection (d) (in the Former Regulations), with a subheading called

Compliance Guidelines

for efficient referencing. In subsection (c), subtitled

Priority of Payments on Defaulted RLF Loans,

the consideration of proceeds on defaulted RLF loans has been clarified and expounded by including priority payment specifications.

The next three sections, §§ 307.13, 307.14 and 307.15 (titled

Record and retention; Revolving Loan Fund semi-annual and annual reports;

and

Prudent management of Revolving Loan Funds

), are substantively the same as §§ 308.13, 308.14 and 308.15 in the Former Regulations. The main focus in revising these sections has been to incorporate defined terms to improve the understanding of specific documentation, accounting and reporting requirements. For example, § 308.13(a) in the Former Regulations refers to “loan files” when discussing documents and records that an RLF

Recipient must retain. The correct phrase that should be referenced is “Closed Loan files” because this term includes the defined term “

Closed Loan,

” which refers to a loan for which all required documentation has been received, reviewed and executed by an RLF Recipient. The conflicts of interest provisions in § 308.15(e) in the Former Regulations have been moved to § 302.17(c) in the Interim Final Rule to improve organization and referencing facility. Section 302.17(c) also has been condensed by the use of defined terms.

Section 307.16 (titled

Disbursement of funds to Revolving Loan Funds

) is a considerably revised and reorganized adaptation of § 308.16 in the Former Regulations. As a matter of organization, subsection (d) (subtitled

Pre-Disbursement Requirements

) in the Former Regulations has been moved to subsection (a). Former subsections (a), (b) and (c) have been re-numbered accordingly. The subtitle of subsection (d) has been changed from

Interest-bearing account

EDA Funds Account

. The degree of detail in subsection (e) on delayed disbursements of Grant funds was considered inappropriate for a set of regulations, and, therefore, reduced from two paragraphs to one paragraph. Similarly, subsection (f) on the terms that govern the cash Local Share and/or In-Kind Contributions in an RLF has been shortened.

The section titled

Effective utilization of Revolving Loan Funds

(§ 307.17) is a marginal rewording of § 308.17 in the Former Regulations. The revisions largely incorporate the use of defined terms (

e.g.

, Closed Loan; RLF Capital). In contrast, portions of § 307.18 on the

Uses of Capital

have been significantly modified from § 308.18 in the Former Regulations. For example, the first paragraph under § 308.18 in the Former Regulations has been made into subsection (a), which states two general premises that (a) RLF Capital must be used to make RLF loans that are consistent with an RLF Plan and (b) each loan agreement must clearly present the purpose of the loan. Subsection (b) follows subtitled

Restrictions on the Use of RLF Capital

and therein, subsection (b)(6)(i) has been reworded for clarity to the following:

“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;”

The content of subsection (c) has been condensed and the subtitle has been changed for accuracy from

Credit otherwise available

Credit Not Otherwise Available

. Additionally, § 307.18 adds an additional subsection (subsection (d),

Use of In-Kind Contributions

) to clarify 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. Last, subsection (e) encompasses revised content of subsection (a) in the Former Regulations, concerning loan guaranty agreements. The subtitle has been changed to refer to

Loan Guaranty Agreements

rather than

Loan guarantees.

The next two sections, 307.19 and 307.20, are entirely new provisions that are written to accomplish the authorization, as provided in PWEDA, 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” (Section 209(d)(2)(B) and (C)). First, in any Sale or Securitization in which an RLF Recipient may participate, § 307.19 (

RLF loan portfolio Sales and Securitization

) 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 (PWEDA, Section 209(d)(4)). The RLF Recipient must use all proceeds from any Sale or Securitization to make additional RLF loans. Second, § 307.20 (

Partial liquidation and liquidation upon termination

) 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 § 307.20 also contains a subsection on the priority of payments applicable to proceeds resulting from a liquidation upon termination.

The provisions of the next section, § 307.21 on the

Termination of Revolving Loan Funds,

have been expanded from the provisions set forth in § 314.4(c) (titled

Unauthorized use

) in the Former Regulations. However, § 307.21(b) introduces a new EDA authority: EDA may approve a request from an RLF Recipient to terminate an RLF Grant. With respect to variances, the last section, § 307.22, is rephrased for clarity and completeness and covers the same material found at § 308.19 in the Former Regulations.

Part 308—Performance Incentives

Part 308 of the Interim Final Rule has been incorporated based on new Sections 215 and 216 of PWEDA. For any Public Works or Economic Adjustment Assistance Investment that is completed under projected cost, § 308.1(a) states that EDA may in its discretion allow the Recipient to use the excess funds to either (i) increase the Investment Rate of the Project to the maximum percentage allowable under § 301.4 of the Interim Final Rule for which the Project was eligible at the time of the Investment award or (ii) further improve the Project consistent with its purpose.

Additionally, PWEDA now authorizes the Assistant Secretary to make performance awards in connection with grants to Recipients for construction-related 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) no later than three (3) years following the Project's closeout in an amount not to exceed ten (10) percent of the Project's Investment award. As required by Section 215(b)(2) of PWEDA, § 308.2(b) specifies factors that the Assistant Secretary will consider in making performance awards, including whether the Recipient meets or exceeds (i) targeted start and completion dates and (ii) projections for job creation and private sector capital investment.

The provisions of § 308.2(c) mirror those in Section 215(e) and (f) of PWEDA. Performance awards may fund up to one hundred (100) percent of the cost of eligible Projects or any other authorized activities under PWEDA. Further, for the purpose of meeting the non-federal share requirement of PWEDA or any other statute, the amount of a performance award will be treated as non-federal funds.

With respect to planning performance awards, § 308.3 tracks the language of Section 216 of PWEDA. Section 308.3 introduces, as stated in Section 216(a) of PWEDA, that a District Organization 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 § 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. Performance awards and planning performance awards are mutually exclusive, although not specifically designated as such in part 308.

Part 309—Redistributions of Investment Assistance

Similar to part 308, the provisions of part 309 are new and were not in the Former Regulations. Information with respect to redistributions of Investment funds under parts 303, 305 and 306 (for Planning, Public Works, and Training, Research and Technical Assistance Investments) is presented in § 309.1. In some instances, a Recipient may need to fund specific components of the scope of work that EDA has approved for the Project. These situations may necessitate the need to redistribute EDA Investment funds to another entity, in order to get the specific component completed.

Under a new section of PWEDA, Section 217, 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 applicable program part as the Recipient. Accordingly, § 309.1(a) presents this information; all subgrants must be subject to the same terms and conditions applicable to the Recipient under the original Investment award. 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 § 309.1. However, a Recipient under part 307 may redistribute Investment funds to (i) another Eligible Recipient in the form of a Grant or (ii) 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 of the Interim Final Rule corresponds to new Section 214 of PWEDA titled

Special Impact Areas,

which allows the Assistant Secretary to waive the requirements of Section 302 of PWEDA (regarding CEDS requirements) for Projects that fulfill a pressing need of the area or prominently address or alleviate area underemployment or unemployment. Section 310.1 of the Interim Final Rule generally tracks PWEDA Section 214, but makes clear that any waiver of the requirements of PWEDA Section 302 applies only to an individual Project,

not

to all Projects located within the area.

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, §§ 310.2 (b) and (c) set forth quantitative measures of excessive unemployment and as indicators of useful employment opportunities such as job creation, financial investment and application of innovative technology.

Part 311—[Reserved]

Part 312—[Reserved]

Part 313—[Reserved]

Part 314—Property

Part 314 of the Interim Final Rule 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. Substantive changes have been made to the Real Property provisions contained in subpart B primarily to reflect EDA policies regarding the increasing use of “public-private” partnerships to spur economic development. Section 314.1 contains the definitions specifically applicable to part 314 (many of these definitions appear in § 314.2 and other sections of part 314 in the Former Regulations). EDA has added new defined terms in part 314 for clarity and consistency.

Notably, the defined term “

Adequate Consideration

” now appears in § 314.1 and differs materially from the definition contained in § 314.3(c) of the Former Regulations. The concept of Adequate Consideration is revised to begin with a fair market value concept (

i.e.

, the purchase price agreed upon by a willing buyer and willing seller, both having full knowledge of the material facts and circumstances surrounding the contemplated sale/purchase). In determining Adequate Consideration, § 314.1 provides that EDA may adjust the Property's fair market value (which is usually established by a third party appraisal) to account for any services, property exchanges, contractual commitments, acts of forbearance or other considerations that are in furtherance of the authorized purposes of the Investment Assistance that are received by the Recipient or Owner in exchange for such Property. In comparison, the Former Regulations use a “fair and reasonable” determination to establish Adequate Consideration. EDA believes that Adequate Consideration may be determined with greater precision by starting at fair market value and adjusting this amount downward (or possibly upward) to account for the facts and circumstances in a given case.

Additionally, the defined terms “

Encumbrance

” or “

Encumber

,” “

Federal Share

,” “

Federal Interest

,” “

Successor Recipient

” and “

Unauthorized Use

” are defined in § 314.1 by a cross-reference to the applicable section in part 314 and are discussed in turn below. Section 314.1 removes the defined terms of “

Project

” and “

Recipient

,” which are defined in § 314.2 of the Former Regulations, as these terms are now defined in § 300.3 since they have general applicability to all EDA programs. Subsection 314.2(a) is redrafted to clarify 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. Subsection 314.2(a) also illustrates the overarching scope of the Federal Interest by providing an example of how EDA's Real Property interest in a building construction Project protects the Federal Interest by securing the Recipient's compliance with matters such as the purpose, scope and use of the Project. Subsection 314.2(b) follows § 314.5(d) of the 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 of the Interim Final Rule is re-titled

Authorized use of Property

(§ 314.3 of the Former Regulations is titled

Use of property

) and provides the circumstances in which Recipients may use Property acquired or improved, in whole or in part, with Investment Assistance. Subsections 314.3(a), (b), (c) and (e) are substantively the same as the corresponding provisions in the Former Regulations (as discussed above, the definition of Adequate Consideration is revised to reflect a fair market value

concept). Subsection 314.3(d) allows EDA to approve the transfer of Property from a Recipient to a Successor Recipient (or between Successor Recipients) and clarifies the substitution concept (set forth in § 314.1(c) of the Former Regulations) by stating that the mechanism to effectuate a substitution of the Recipient (or Successor Recipient) is the transfer of the Project Property between the parties. Finally, new subsection 314.3(f) 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 no adverse effect of the incidental use on the economic useful life of the Property.

Subsection 314.4(a) of the Interim Final Rule generally follows § 314.4(a) of the Former Regulations and 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. Section 314.4(b) provides additional Unauthorized Uses of Property prior to the release of EDA's interest. Subsection 314.4(b) is substantively the same as § 314.11(c)(1) of the Former Regulations with respect to the Unauthorized Use of Property prior to the release of EDA's interest in such Property, except that the Interim Final Rule now references “any purpose prohibited by applicable law.” EDA made this change to make clear that a Recipient may not use Project Property for any purpose in violation of applicable law. Subsection 314.4(c) of the Interim Final Rule generally tracks § 314.4(b) of the Former Regulations and sets forth the remedies available to EDA to recover the Federal Share in the event of an Unauthorized Use. Additionally, a specific cross-reference to the RLF Grant termination provisions contained in § 307.21 is added to § 314.4(c) to preserve EDA's remedies for the Unauthorized Use of RLF Grant funds.

Section 314.5 explains the definition of “

Federal Share

” and is substantively the same as § 314.5(a) of the Former Regulations. EDA added an example of a Federal Share calculation to assist the user in understanding the Federal Share concept. Subsection 314.5(b) of the Former Regulations is removed, as EDA believes that discounting the Federal Share for a Recipient's leasehold interest in Property (where such leasehold interest is less than the remaining depreciable life of the Property) does not accurately account for the current fair market value of the Property attributable to EDA's Investment in the Project and may, therefore, result in unjust enrichment to the owner of the Property. In such circumstances, a Recipient may wish to seek a contribution or reimbursement from the owner of the Property for that portion of the Federal Share attributable to the Property's value that will ultimately benefit the owner.

Subsection 314.5(c) of the Former Regulations is removed, as EDA believes that requiring the Recipient to compensate EDA for the Federal Share in the event of an EDA-approved transfer of Project Property is inconsistent with § 314.3(d), which provides that a Successor Recipient is subject to the terms and conditions of the Investment Assistance (

i.e.

, the Successor Recipient takes the place of the Recipient and the Project continues). If a Recipient were to reimburse EDA for the Federal Share upon an EDA-approved transfer, EDA would have no further interest in the Property pursuant to § 314.2(b) of the Interim Final Rule and the Recipient would in essence be effectuating a “buyout” of EDA's interest and not a transfer of the Property. Section 314.6 is substantively the same as § 314.6 of the 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.

Subsection 314.7(a) sets forth the general rule (with certain exceptions which are discussed below) 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

”). Subsection 314.7(a) clarifies § 314.7(a) of the Former Regulations, which did not provide for when and how long a Recipient must hold title to Real Property. In addition, § 314.7(a) follows § 314.7(a) of the Former Regulations by providing that a Recipient must furnish satisfactory evidence 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 EDA-determined acceptable time period. Subsection 314.7(b) is substantively the same as § 314.7(b) of the Former Regulations and requires the Recipient to disclose to EDA all Encumbrances with respect to Real Property.

In general, § 314.7(c) sets forth the exceptions to the General Rule. Subsection 314.7(c)(1) is added to address situations where Investment Assistance will be used to purchase Real Property required for a Project. Pursuant to § 314.7(c)(1), EDA may determine that certain Real Property purchase agreements, along with reasonable assurances from the Recipient that it will obtain fee title for the Real Property needed for a Project, will be acceptable for purposes of the Recipient meeting the title ownership requirements. Subsections 314.7(c)(2), (3) and (4) are substantively the same as the introduction and subsections (c)(1) and (2) of § 314.7(c) in the Former Regulations.

Subsections 314.7(c)(5) and (6) address situations where the EDA-approved purpose of a Project is to construct facilities benefiting Real Property owned by the Recipient (§ 314.7(c)(5)) or privately owned Real Property (§ 314.7(c)(6)), where the benefited Real Property will ultimately be sold or leased to private parties. These provisions replace §§ 314.7(c)(3) and (4) in the Former Regulations and generally apply to all types of Real Property, including but not limited to industrial and commercial parks. In comparison, the Former Regulations apply only to industrial or commercial parks. The Interim Final Rule intends to balance established principles of Federal grant law that prevent direct private benefits resulting from EDA Investment Assistance with marketplace realities of public-private partnerships in developing private property and subsequent alienations of such Real Property to spur economic development. EDA is interested in receiving comments from economic development practitioners and property developers concerning whether these provisions present a workable framework in which to facilitate these types of public-private partnerships.

Section 314.8 is substantively the same as § 314.8 of the 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. Subsection 314.8(c) tracks § 314.8(c) of the Former Regulations and provides an exemption from this requirement where the EDA

Investment is only a small part of a larger project.

Section 314.9 is substantively the same as § 314.9 of the Former Regulations and generally 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. Section 314.10 of the Former Regulations (providing rules relating to RLFs) has been incorporated into the RLF provisions contained in subpart B of part 307 of the Interim Final Rule.

Subsections 314.10(a) through (c) are substantively the same as §§ 314.11(a) through (c) of the Former Regulations. Subsection 314.10(d) is new to the Interim Final Rule and 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 and § 314.10.

Under subsection 314.10(d), a Recipient must disclose to EDA the intended future use of the Real Property or tangible Personal Property for which the release is sought. 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 prohibiting (at a minimum) the use of the Real Property or tangible Personal Property for (i) inherently religious activities in violation of applicable federal law, and (ii) any purpose in violation of the nondiscrimination requirements set forth in § 302.20. The covenant of use must be recorded in the appropriate jurisdiction in accordance with §§ 314.8 or 314.9, as applicable (

see

§ 314.10(d)(2)(i)). A Recipient (or successor Recipient) who intends or foresees the use of the Real Property or tangible Personal Property for inherently religious activities following the release of EDA's interest may be required to compensate EDA for the Federal Share of such Property. In subsection 314.10(d)(2)(ii), EDA recommends that a Recipient who intends or foresees the use of the Real Property or tangible Personal Property (including by any successor Recipient) for inherently religious activities should contact EDA well in advance of requesting a release pursuant to § 314.10.

Part 315—Trade Adjustment Assistance for Firms

Part 315 substantially revises the Former Regulations for the Trade Adjustment Assistance for Firms (“

TAA

”) program, pursuant to Chapter 3 of Title II of the Trade Act. The new part reorganizes, clarifies and simplifies the Former Regulations, primarily by expanding the use of defined terms and by adding a new subpart D on Adjustment Proposals.

Among the new definitions in § 315.2, the defined terms “

Increase in Imports

” and “

Contributed Importantly

” greatly enhance the readability of the part by incorporating in single defined terms two (2) of the most important concepts of the TAA program. An Increase in Imports that Contributed Importantly to a petitioning Firm's (i) decline in sales or production and (ii) loss of employment is a necessary component of every finding of injury under the TAA program. These definitions track the Trade Act precisely and intend to provide for more consistent application in injury determinations.

The new defined term “

Decreased Absolutely

” imposes a five percent (5%) threshold minimum injury requirement in the measurement of a Firm's decline in sales or production. EDA has imposed this threshold to 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. Similarly, new definitions of “

Predecessor

” and “

Successor

” Firms provide new guidance for the circumstance, often encountered in administration of the TAA program, where a petitioning Firm relies on the economic injury suffered by a corporate predecessor. The new definitions 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. Further, the Successor must have continued virtually all of the Predecessor's operations by producing the same type of products, in the same plant, utilizing most of the same machinery and most of its former workers; finally, the Predecessor may no longer be in operation.

Section 315.5 consolidates into one (1) section the scope of operations, selection, evaluation and award requirements of Trade Adjustment Assistance Centers (“

TAACs

”), the non-profit organizations that administer the TAA program nationwide through Cooperative Agreements with EDA. While the substance of these provisions remains essentially unchanged, the consolidation of these provisions into one (1) section should enhance understanding and operation of this key program relationship.

Section 315.6 consolidates into one (1) section the selection, evaluation and award requirements for Firms seeking Adjustment Assistance under the TAA program. As with § 315.5, the substance of these provisions has not changed significantly from the Former Regulations, but the re-organization and presentation greatly clarifies basic program requirements.

Section 315.7 consolidates and simplifies TAA program certification requirements. This section outlines the requirements for injury determinations based on a twelve-month (12) decline (§ 315.7(a)), an interim sales decline (§ 315.7(b)) and an interim employment decline (§ 315.7(c)). The section makes clear that in order to be certified under any of these subsections, a Firm must meet all of the requirements of that subsection; a Firm cannot meet some of the requirements of one (1) subsection and some of another to attain certification. Substantively, in addition to the minimum injury threshold requirement for a decline in sales or production incorporated into the defined term “

Decreased Absolutely

” described above, this section increases the injury periods for interim sales or production decline and interim employment decline to “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.” This change 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.

Section 315.8, titled

Processing petitions for certification

, generally tracks current § 315.10. Among the minor changes is confirmation in subsection (a) of the TAAC's mandatory role in processing the certification petition. Section 315.9, titled

Hearings

, and § 315.11, titled

Appeals, final determinations and termination of certification

, divide § 315.11 in the Former Regulations to address separately these distinct topics. Further, § 315.11 in the Interim Final Rule incorporates the provisions of former § 315.12, given the logical connection of appeals, final determinations and terminations. While § 315.9 continues to track the statutory hearing requirements of the Trade Act, it eliminates many of the procedural provisions of former

§ 315.11, since EDA has no record of any hearings having been requested or conducted during its administration of the TAA program.

Section 315.10, titled

Loss of Certification Benefits

, eliminates the extension currently available to Firms in § 315.13(b) of the Former Regulations to provide supplemental documentation for its Adjustment Proposal according to an amended schedule. EDA believes that this provision is inconsistent with the provisions of the Trade Act.

New subpart C, titled

Protective Provisions

, incorporates new but standard provisions, all consistent with the Trade Act and EDA policy, on recordkeeping (§ 315.12), audit and examination (§ 315.13), certifications (§ 315.14) and conflicts of interest (§ 315.15). Subpart D, titled

Adjustment Proposals

, presents new provisions reflecting long-standing practices of EDA and the TAACs in evaluating Adjustment Proposals. Essentially, the Adjustment Proposal must: (i) Be reasonably calculated to contribute materially to the economic well-being of the Firm; (ii) give adequate consideration to the interests of a sufficient number of separated workers of the Firm; and (iii) demonstrate that the Firm will make all reasonable efforts to use its own resources for its recovery. Finally, subpart E, titled

Assistance to Industries

, remains effectively unchanged from the 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 rule is economically significant for purposes of Executive Order 12866.

Congressional Review Act

This Interim 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 interim 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.

The following table provides a list of collections of information and the corresponding OMB Control Numbers. Public comments are sought regarding whether these proposed collections of information are necessary for the proper performance and function of the agency, including (i) the practical utility of the information; (ii) the accuracy of the burden estimate; (iii) the opportunities to enhance the quality, utility, and clarity of the information to be collected; and (iv) ways to minimize the burden of each collection of information, including the use of automated collection techniques or other forms of information technology. Send comments on these or any other aspects of the collections of information to EDA and OMB as provided under

ADDRESSES

Part or section in IFR

Nature of request

Form/OMB control number

301.2, 301.10

Along with an application for Investment Assistance, a non-profit Eligible Applicant must include a resolution passed by an authorized representative of a political subdivision of a State

ED-900A (0610-0094).

301.3(a), 301.10, 305.3(a)(1)

Eligible Applicant must describe the economic distress levels justifying the Investment Assistance (unemployment, per capita income, Special Need, substantial direct benefit or pocket of poverty)

ED-900P (0610-0094).

301.4(b)(1)(i), 305.3(a)(1)

Eligible Applicant must provide information on the severity of the Region's unemployment rate and its duration, the per capita income levels and extent of Region's unemployment or outmigration

ED-900P (0610-0094).

301.4(b)(3)

Eligible Applicant must provide information to show that the Project merits an otherwise increased Investment Rate because of a Project's infeasibility with the normal Investment Rate or the lack of benefit to the Eligible Applicant

ED-900P (0610-0094).

301.5, 301.10

Eligible Applicant must provide information to show that Matching Share funds will be available to the Project

ED-900A (0610-0094).

301.7

Eligible Applicant must submit its Investment proposal on a preapplication form

ED-900P (0610-0094).

301.7(a)

Eligible Applicant must submit information on a formal application

ED-900A (0610-0094).

301.10(a), (b)

Eligible Applicant must submit a formal application for Investment Assistance

ED-900A (0610-0094).

301.10(b)(3)

Eligible Applicant must provide CEDS acceptable to EDA pursuant to part 303

ED-900P (0610-0094).

302.7(a)

Recipients must submit requests for amendments to Investment awards and provide such information and documentation as EDA deems necessary

0610-0102.

302.9(a)

Eligible Applicant must furnish comments on the Project from the relevant government authority or proof of efforts to receive comments if none were provided

ED-900A (0610-0094).

302.10(b)(1)

Eligible Applicant must certify the names of persons involved in expediting applications made to EDA

ED-900A (0610-0094).

302.14(a)

Recipients shall keep records of the amount and disposition of awards of 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 for an effective audit

OMB Circular A-133.

302.15

Eligible Applicant must certify that it meets the requirements for Investment Assistance

ED-900P (0610-0094).

302.16(b)

Recipients are required to submit reports consisting of data-specific evaluations of the Project's effectiveness

GPRA Performance Validation Forms (0610-0098).

302.16(c)

Recipient may be required to provide a “Project service map” to determine which segments of the Region are being assisted

0610-0102.

302.20(d)

Recipients and Other Parties must submit written assurances to EDA that they will comply with anti-discriminatory laws and regulations

ED-900A (0610-0094).

303.9(c)

Eligible Applicant for a short-term Planning Investment must provide performance measures and program reports to EDA

GPRA Performance Validation Forms (0610-0098).

304.1; 304.4(a)

To have a Region certified as an EDD, a District Organization must submit information showing that the Region contains at 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

Comprehensive Economic Development Strategy Guidelines (0610-0093).

304.2(c)(2); 304.4(b)

The District Organization must demonstrate that its governing body is broadly representative of the principal economic interests of the Region

ED-900A (0610-0094); Comprehensive Economic Development Strategy Guidelines (0610-0093).

304.2(c)(4)

The District Organization must notify the public of its annual meetings, its decisions, the results of programs, and as reasonably requested, the results of audited statements, annual budgets, and minutes of public meetings

Comprehensive Economic Development Strategy Guidelines (0610-0093).

305.2(b); 305.3(a)(3)

An Eligible Applicant must show that the Public Works Project will promote: the growth of industrial or commercial plants, the creation of long-term employment opportunities primarily for low-income families, and the fulfillment of the Region's pressing needs

ED-900A (0610-0094); Requirements for Approved Construction Investments—Ninth Edition (Revised) (0610-0096).

305.4(c)

In order to receive any portion of the Investment Assistance for design and engineering work, an Eligible Applicant must submit and certify information that documents compliance with the Investment awards of all design and engineering contracts

ED-900A (0610-0094); Requirements for Approved Construction Investments—Ninth Edition (Revised) (0610-0096).

305.5

To allow a District Organization to administer the Project for another Recipient, the 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

ED-900A (0610-0094); Requirements for Approved Construction Investments—Ninth Edition (Revised) (0610-0096).

305.6

The Recipient must submit a construction services procurement plan if using an alternate method

ED-900A (0610-0094); Requirements for Approved Construction Investments—Ninth Edition (Revised) (0610-0096).

305.7

The Recipient may use “in-house forces” for design, construction, inspection, legal services or other work on the Project if it submits a sufficient justification to EDA

ED-900A (0610-0094); Requirements for Approved Construction Investments—Ninth Edition (Revised) (0610-0096).

305.8(a); 305.8(b)

Recipients wishing to use their own equipment and materials must have them approved by EDA, may be required to submit a statement regarding their expected useful life, and may be required to establish that their price is competitive with current market value

ED-900A (0610-0094); Requirements for Approved Construction Investments—Ninth Edition (Revised) (0610-0096).

305.9

To award construction contracts in phases, a Recipient must submit information to EDA regarding why phasing is necessary, a description of the phasing, its costs, its schedule, and certifications that the Recipient will pay for overruns and that it is capable of paying for incurred costs before the first disbursement

ED-900A (0610-0094); Requirements for Approved Construction Investments—Ninth Edition (Revised) (0610-0096).

305.10

Recipient must notify EDA if there is a bid underrun

Requirements for Approved Construction Investments—Ninth Edition (Revised) (0610-0096).

305.13

Recipients involved in a contract change order must submit them to EDA for review

Requirements for Approved Construction Investments—Ninth Edition (Revised), (0610-0096).

306.2

EDA selects Projects for Local and National Technical Assistance based on the criteria in part 301 and the extent to which the Project achieves more specific, related objectives in the Region and meets the criteria in the applicable FFO

ED-900P (0610-0094).

306.5

University Center Projects receive Investment Assistance based on the selection criteria in part 301, the selection process in the relevant FFO, and other more specific, related criteria

ED-900P (0610-0094).

307.5(a)

Each application for Economic Adjustment Assistance must include or incorporate by reference (if so approved by EDA) a CEDS

ED-900A (0610-0094).

307.9

All RLF Recipients must submit to EDA an RLF Plan

RLF Standard Terms and Conditions (0610-0095).

307.12(a)(4)

RLF Recipients must complete an RLF Income and Expense Statement

ED-209I (0610-0095).

307.13(a)

RLF Recipients must 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 period from the date of final disposition of such Closed Loan

RLF Standard Terms and Conditions (0610-0095).

307.13(b)

RLF Recipients must maintain adequate accounting records 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

RLF Standard Terms and Conditions (0610-0095).

307.14(a)

All RLF Recipients must provide EDA with semi-annual reports

ED-209S (0610-0095).

307.14(a)

Submission to EDA of an annual report

ED-209A (0610-0095).

307.14(b)

All Recipients must certify as part of the semi-annual or annual report that 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

ED-209S (0610-0095).

ED-209A (0610-0095).

307.14(c)

An RLF Recipient using either fifty percent or more (or 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

ED-209I (0610-0095).

307.15(b)(1)

Within 60 days prior to the initial 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

RLF Standard Terms and Conditions (0610-0095).

307.15(b)(2)

Prior to the disbursement of any EDA funds, an RLF 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

RLF Standard Terms and Conditions (0610-0095).

307.16(a)

Prior to the disbursement of EDA funds, RLF Recipients must provide in a form acceptable to EDA evidence of fidelity bond coverage and evidence of certification in accordance with § 307.15(b)(1)

RLF Standard Terms and Conditions (0610-0095).

307.16(e)

If the Recipient receives Grant funds and the RLF loan disbursement is subsequently delayed beyond 30 days, the Recipient must notify the applicable grants officer and return such non-disbursed funds to EDA

RLF Standard Terms and Conditions (0610-0095).

307.17(b)

Recipients must promptly notify EDA in writing of any 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

RLF Standard Terms and Conditions (0610-0095).

307.18(e)

After the full disbursement of Grant funds, RLF 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

RLF Standard Terms and Conditions (0610-0095).

307.19

With prior approval from EDA, a Recipient may enter into a Sale or Securitization of all or a portion of its RLF loan portfolio

RLF Standard Terms and Conditions (0610-0095).

307.21(b)

EDA may approve a request from a Recipient to terminate an RLF Grant

RLF Standard Terms and Conditions (0610-0095).

Part 310

Upon the application of an Eligible Applicant, EDA may designate the Region which the Project will serve as a Special Impact Area if the Eligible Applicant demonstrates that its proposed Project will directly fulfill a pressing need and assist in preventing excessive unemployment

0610-0104.

314.3(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 it satisfies the conditions set forth in § 314.3(f)

0610-0103.

314.6(b)

In order to use EDA-funded property to secure a mortgage or deed of trust or encumber the property, the Recipient must provide information that satisfies one or more of the exceptions set forth in § 314.6(b)

ED-900A (0610-0094); Requirements for Approved Construction Investments—Ninth Edition (Revised) (0610-096).

314.7(a) and 314.7(c)

The Recipient must provide information that satisfies EDA that the Recipient has title to the Real Property and all easements, rights-of-way, permits or long-term leases, unless it can provide information proving it meets an exception to the rule

ED-900A (0610-0094); Requirements for Approved Construction Investments—Ninth Edition (Revised) (0610-096).

314.7(b)

The Recipient must provide information regarding all encumbrances on the Real Property to EDA

ED-900A (0610-0094); Requirements for Approved Construction Investments—Ninth Edition (Revised) (0610-096).

314.8

Recipients must execute a lien, covenant or other statement of EDA's interest in all Property acquired or improved with EDA Investment Assistance and record it in the proper jurisdiction

ED-900A (0610-0094); Requirements for Approved Construction Investments—Ninth Edition (Revised) (0610-096).

314.9

Recipients must execute a security interest or other statement of EDA's interest in Personal Property acquired or improved by EDA funds and record the interest in accordance with applicable law

ED-900A (0610-0094); Requirements for Approved Construction Investments—Ninth Edition (Revised) (0610-096).

314.10

If a Recipient 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

0610-0103.

315.5(b)

Current or prospective TAAC's must submit either new or amended applications to EDA along with a budget, narrative scope of work and other information

ED-900A (0610-0094).

315.5(c)

TAACs must submit information regarding performance to be evaluated by EDA

GPRA Performance Validation Form (0610-0098).

315.6(a)(1), 315.7, 315.8

Firms must supply information to be certified for participation in TAA

ED-840P (0610-0091).

315.6(a)(2), 315.6(a)(3), 315.16

Certified firms must submit an adjustment proposal to the TAAC and EDA and, if approved, may then request assistance from the TAAC

0610-0105.

315.9

In order to have a public hearing, a Person with a Substantial Interest in an accepted petition for TAA certification must submit a request that follows the section's procedures

0610-0106.

315.12

Each TAAC shall keep records disclosing the use of all TAA funds

GPRA Performance Validation Form (0610-0098).

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.

List of Subjects

13 CFR Part 300

Organization and functions (Government agencies), Reporting and recordkeeping requirements.

13 CFR Part 301

Community development, Grant programs—housing and community development.

13 CFR Part 302

Community development, Grant programs—business, Grant programs—housing and community development, Technical assistance.

13 CFR Part 303

Community development, Reporting and recordkeeping requirements.

13 CFR Part 304

Community development.

13 CFR Part 305

Community development, Community facilities, Grant programs—housing and community development.

13 CFR Part 306

Community development, Grant programs—housing and community development, Research, Technical assistance.

13 CFR Part 307

Business and industry, Community development, Grant programs—business, Grant programs—housing and community development, Reporting and recordkeeping requirements, Research, Technical assistance.

13 CFR Part 308

Community development, Grant programs—business, Grant programs—housing and community development, Reporting and recordkeeping requirements, Technical assistance.

13 CFR Part 309

Community development, Grant programs—housing and community development.

13 CFR Part 310

Community development, Grant programs—housing and community development, Manpower training programs.

13 CFR Part 314

Community development, Grant programs—housing and community development.

13 CFR Part 315

Administrative practice and procedure, Community development, Grant programs—business, Reporting and recordkeeping requirements, Trade adjustment assistance.

Regulatory Text

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

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.

§ 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 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.

§ 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.

§ 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

CEDS

means a strategy that meets the requirements of § 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 § 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 § 304.1 of this chapter 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 a(n):

(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

(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

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 Uniform Administrative Requirements of 15 CFR parts 14 and 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.

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

Investment Assistance

means an EDA Grant or Cooperative Agreement entered into by EDA and a Recipient.

Investment Rate(s)

means, as set forth in § 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

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.

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 (Public Law 108-373).

Recipient

means an entity receiving EDA Investment Assistance, including any EDA-approved successor to the entity.

Region

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 §§ 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 § 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) Closure or restructuring of industrial firms;

(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.

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

§ 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 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

§ 301.2

Applicant eligibility.

(a) An Eligible Applicant for EDA Investment Assistance is defined in § 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

§§ 306.3(b), 306.6(b) and 307.5(b) of this chapter.

Subpart C—Economic Distress Criteria

§ 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 is 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 is 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 geographical 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 geographical area within the District.

(3) A Project located in a geographical 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 geographical area where substantial direct Project benefits will occur (paragraph (a)(2) of this section), or the geographical 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 is available, an Eligible Applicant must submit to EDA the most recent data available through the government of the State in which the Region is located.

(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) geographical 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 § 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

§ 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 (c) of this section, the maximum EDA Investment Rate for all Projects shall, after the application of Table 1 in paragraph (b)(i)(ii) of this section, 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:

(

) The severity of the unemployment rate and the duration of the unemployment in the Region;

(

) The per capita income levels and the extent of underemployment in the Region;

(

) The outmigration of population and the extent to which such outmigration is causing economic injury in the Region; and

(

) 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

Projects located in regions in which:

Maximum allowable investment rates (percentage)

(A) The twenty-four (24) month unemployment rate is at least 225% of the national average; or

(B) The per capita income is not more than 50% of the national average

(D) The per capita income is not more than 60% of the national average

(E) The twenty-four (24) month unemployment rate is at least 175% of the national average; or

(F) The per capita income is not more than 65% of the national average

(G) The twenty-four (24) month unemployment rate is at least150% of the national average; or

(H) The per capita income is not more than 70% of the national average

(I) The twenty-four (24) month unemployment rate is at least 133% of the national average; or

(J) The per capita income is not more than 75% of the national average

(K) The twenty-four (24) month unemployment rate is at least 1% greater than the national average; or

(L) The per capita income is not more than 80% of the 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 § 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 paragraphs (b)(3) or (4) of this section, the maximum Investment Rate for any Project subject to a Special Need shall be eighty (80) percent.

(3)

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.

(4)

Special Projects.

Table 2 of this paragraph sets forth the maximum allowable Investment Rate for certain special Projects as follows:

Table 2

Projects

Maximum allowable investment rates (percentage)

Projects of Indian Tribes

100

Projects under part 307 of this chapter located in 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

100

Projects of States or political subdivisions of States that the Assistant Secretary determines have exhausted their effective taxing and borrowing capacity or Projects of non-profit organizations that the Assistant Secretary determines has exhausted its effective borrowing capacity

100

Projects under parts 305 or 307 that receive performance awards pursuant to § 308.2 of this chapter

100

Projects located in a District that receive planning performance awards pursuant to § 308.3 of this chapter

100

(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.

§ 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.

§ 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 § 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

§ 301.7

Investment Assistance proposal.

The EDA Investment Assistance process begins with the submission of an Investment Assistance proposal. Investment proposals are submitted on an EDA Pre-application for Federal 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 § 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 § 301.8 and will:

(a) Solicit a formal application from the proponent;

(b) Return the proposal to the proponent for specified deficiencies and suggest resubmission upon corrections; or

§ 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. Furthermore, EDA will select proposals competitively based on strategic areas of interest and priority considerations identified in the applicable FFO. EDA may 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 between the business sector, relevant Regional partners and Federal, State and local governments.

(f) Other criteria as set forth in the applicable FFO.

§ 301.9

Proposal selection.

(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 meeting EDA's technical and legal requirements, EDA will select proposals for further consideration based on:

(1) The availability of funds; and

(2) The competitiveness of the proposals, judging by the criteria and priorities set forth in § 301.8; and

(3) The applicable FFO.

(b) EDA will endeavor to notify proponents regarding whether their proposals are selected as soon as practicable.

§ 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:

(1) Include evidence of applicant eligibility (as set forth in § 301.2) and of economic distress (as set forth in § 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 § 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 § 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

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